-----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, UyKKAF2okot/qSuBF7fWRAtMAm3diVYtBLgrv/nuimqrpDljsCSm/gRcVCIuiIyP U/CbZaO+mUpjbWObJClNYA== 0000891618-96-000819.txt : 19960613 0000891618-96-000819.hdr.sgml : 19960613 ACCESSION NUMBER: 0000891618-96-000819 CONFORMED SUBMISSION TYPE: S-1/A PUBLIC DOCUMENT COUNT: 19 FILED AS OF DATE: 19960610 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INFOSEEK CORP CENTRAL INDEX KEY: 0000920729 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ADVERTISING [7310] IRS NUMBER: 770353450 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-04142 FILM NUMBER: 96578621 BUSINESS ADDRESS: STREET 1: 2620 AUGUSTINE DR STREET 2: SUITE 250 CITY: SANTA CLARA STATE: CA ZIP: 95054 MAIL ADDRESS: STREET 1: 2620 AUGUSTINE DR SUITE 250 STREET 2: 2620 AUGUSTINE DR SUITE 250 CITY: SANTA CLARA STATE: CA ZIP: 95054 S-1/A 1 AMENDMENT NO.4 TO FORM S-1 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 10, 1996. REGISTRATION NO. 333-4142 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- AMENDMENT NO. 4 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------------- INFOSEEK CORPORATION (Exact name of Registrant as specified in its charter) --------------------- CALIFORNIA 7379 77-0353450 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification Number)
2620 AUGUSTINE DRIVE, SUITE 250 SANTA CLARA, CALIFORNIA 95054 (408) 567-2700 (Address, including zip code, and telephone number, including area code, of the Registrant's principal executive offices) --------------------- ROBERT E. L. JOHNSON, III PRESIDENT AND CHIEF EXECUTIVE OFFICER INFOSEEK CORPORATION 2620 AUGUSTINE DRIVE, SUITE 250 SANTA CLARA, CALIFORNIA 95054 (408) 567-2700 (Name and address, including zip code, and telephone number, including area code, of agent for service) --------------------- Copies to: EDWARD M. LEONARD, ESQ. JEFFREY D. SAPER, ESQ. JACQUELINE E. COWDEN, ESQ. HOWARD S. ZEPRUN, ESQ. FRANKLIN P. HUANG, ESQ. JAN-MARC VAN DER SCHEE, ESQ. MIRIAM RIVERA, ESQ. WILSON SONSINI GOODRICH & ROSATI, BROBECK, PHLEGER & HARRISON LLP PROFESSIONAL CORPORATION TWO EMBARCADERO PLACE 650 PAGE MILL ROAD 2200 GENG ROAD PALO ALTO, CALIFORNIA 94304-1150 PALO ALTO, CALIFORNIA 94303 (415) 493-9300 (415) 424-0160
--------------------- 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, as amended (the "Securities Act"), check the following box. / / If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, 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 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 THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 INFOSEEK CORPORATION CROSS-REFERENCE SHEET SHOWING LOCATION IN PROSPECTUS OF INFORMATION REQUIRED BY ITEMS OF FORM S-1
FORM S-1 REGISTRATION STATEMENT ITEM AND HEADING HEADING OR LOCATION IN PROSPECTUS ------------------------------------------ ------------------------------------------ 1. Forepart of the Registration Statement and Outside Front Cover Page of Prospectus.... Outside Front Cover Page 2. Inside Front and Outside Back Cover Pages of Prospectus............................. Inside Front Cover Page 3. Summary Information, Risk Factors and Ratio of Earnings to Fixed Charges........ Prospectus Summary; The Company; Risk Factors 4. Use of Proceeds........................... Prospectus Summary; Use of Proceeds 5. Determination of Offering Price........... Outside Front Cover Pages; Underwriters 6. Dilution.................................. Dilution 7. Plan of Distribution...................... Outside Front Cover Page; Underwriters 8. Description of Securities to be Registered................................ Prospectus Summary; Capitalization; Description of Capital Stock 9. Interests of Named Experts and Counsel.... Experts; Legal Matters 10. Information with Respect to the Registrant............................ Outside and Inside Front Cover Pages; Prospectus Summary; The Company; Risk Factors; Use of Proceeds; Dividend Policy; Capitalization; Dilution; Selected Financial Data; Management's Discussion and Analysis of Financial Condition and Results of Operations; Business; Management; Certain Transactions; Principal Shareholders; Description of Capital Stock; Shares Eligible for Future Sale; Experts; Financial Statements 11. Disclosure of Commission Position on Indemnification for Securities Act Liabilities............................... Not Applicable
3 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION JUNE 10, 1996 3,000,000 SHARES LOGO COMMON STOCK ------------------ All of the shares of Common Stock offered hereby are being sold by Infoseek Corporation ("Infoseek" or the "Company"). Prior to this Offering, there has been no public market for the Common Stock of the Company. It is currently estimated that the initial public offering price will be between $10.00 and $12.00 per share. The Common Stock has been approved for quotation on the Nasdaq National Market under the symbol "SEEK." See "Underwriting" for a discussion of the factors to be considered in determining the initial public offering price. ------------------ THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 5. ------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. - ------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------- PRICE UNDERWRITING PROCEEDS TO DISCOUNTS AND TO PUBLIC COMMISSIONS COMPANY(1) - ------------------------------------------------------------------------------------------------- Per Share................... $ $ $ - ------------------------------------------------------------------------------------------------- Total(2).................... $ $ $ - ------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------
(1) Before deducting expenses of this Offering estimated at $850,000. (2) The Company has granted the Underwriters a 30-day option to purchase up to 450,000 additional shares of Common Stock solely to cover over-allotments, if any. To the extent that the option is exercised, the Underwriters will offer the additional shares at the Price to Public shown above. If the option is exercised in full, the total Price to Public, Underwriting Discounts and Commissions, and Proceeds to Company will be $ , $ and $ , respectively. See "Underwriting." ----------------------- The shares of Common Stock are offered by the several Underwriters, subject to prior sale, when, as and if delivered to and accepted by them, and subject to the right of the Underwriters to reject any order in whole or in part. It is expected that delivery of the shares of Common Stock will be made at the offices of Alex. Brown & Sons Incorporated, Baltimore, Maryland, on or about , 1996. ALEX. BROWN & SONS MERRILL LYNCH & CO. INCORPORATED THE DATE OF THIS PROSPECTUS IS , 1996 4 3 PAGES OF ARTWORK INCORPORATED BY REFERENCE TO AMENDMENT NO. 1 ------------------------ IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. 2 5 PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information and financial statements and notes thereto appearing elsewhere in this Prospectus. It is the Company's belief that this Prospectus may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended ("Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"). Actual results and the timing of certain events could differ materially from those projected in the forward-looking statements as a result of certain factors described under "Risk Factors" commencing on page 5 and described elsewhere in this Prospectus. THE COMPANY Infoseek develops and provides branded, comprehensive Web-based navigational services that help users access and personalize the vast resources of the Internet. The Company's primary service offering, Infoseek Guide, is a free service targeted at individual users. The Company believes that Infoseek Guide goes beyond the functionality offered by other search engines and directory services, by aggregating and packaging the resources of the Internet to serve individuals' unique and personal interests and create rich Internet experiences. The Company believes that Infoseek Guide has been well received by consumers and has achieved a strong brand presence among Web users. The Company's objective is to establish itself as the dominant, branded navigational service provider on the Internet in order to reach the greatest audience. The Company seeks to build a high volume of traffic on its services to provide a preferred platform for content providers and advertisers to reach their target audiences. To achieve its objective, the Company intends to: enhance the attractiveness of its service to users through the addition of new features and functionality; develop and license innovative technologies which can differentiate its service and scale with the growth of the Internet; offer advertisers high impact, innovative advertising products; distribute its service widely through software companies, access providers and others; and form relationships with leading third party content providers. The Company's service is differentiated by its underlying search technology, which is noted for its high accuracy and fast searching capability. Based on this technology, Infoseek Guide has won a number of industry awards including"Number 1 Rated Search Engine" (PC Computing Sept 95), "Best of the Test" (Internet World May 96) and "MVP: Internet Tools" (PC Computing Dec 95). The Company is currently working on its next generation search engine, Ultraseek, which the Company plans to release in the second half of 1996. Ultraseek will enable the searching of a much greater number of Web sites at even faster speeds with the same level of accuracy for which Infoseek Guide is currently known. The Company believes that Infoseek Guide is also differentiated through its design, which integrates the capabilities of a search engine and a directory to combine specific responses to search queries with communities of related Web, USENET and branded third party content and targeted, related advertising. By creating communities of context-specific information in real-time for users, Infoseek Guide addresses the needs of consumers for relevant and related information, enables content providers to reach interested audiences, and allows advertisers to deliver advertisements to a target group of potential buyers. The Web is emerging as an important new advertising medium. According to Forrester Research, Inc., the market for Internet-based advertising will reach approximately $700 million by 1998, from $37 million in 1995. The Company believes it is well positioned to take advantage of this growth by serving the needs of advertisers. By creating communities where users' interests are matched with advertisements, by tracking impressions and by offering a significant volume of Web traffic, Infoseek Guide enables advertisers to undertake measurable, targeted, cost-effective and interactive advertising. During the quarter ended March 31, 1996, over 120 advertisers placed advertisements on Infoseek Guide. The Company is actively exploring new technologies which will allow it to track user behavior and interests, and therefore even more closely match the interests of audience and advertisers. The Company believes that distributing and marketing its services widely is key to successfully growing its audience. The Company was able to gain access to a large audience and build early brand awareness through its initial relationship with Netscape Communications Corporation ("Netscape") as the sole premier "Net Search" navigational service on the Netscape Web page. Beginning April 11, 1996, Netscape implemented a new "Net Search" display, in which several navigational service providers are rotated through the most visible position on the page. In order to maximize its exposure, the Company has also broadened its channels of distribution through other entities including Microsoft Corporation, NETCOM On-Line Communication Services, Inc., NYNEX Information Technologies Company ("NYNEX"), Quarterdeck Corporation, and Verity, Inc. and will continue to broaden its channels of distribution through additional entities. The Company has also established key strategic alliances with leading media companies including Reuters NewMedia Inc. and IDG Holdings, Inc. for content provisions and with distribution companies including NYNEX and Kanematsu Corporation for further national and international distribution. 3 6 THE OFFERING Common Stock offered by the Company......... 3,000,000 shares Common Stock to be outstanding after the Offering........................ 24,946,228 shares(1) Use of proceeds............................. For general corporate purposes, including capital expenditures and working capital. Nasdaq National Market symbol............... SEEK
SUMMARY FINANCIAL DATA (in thousands, except per share data)
INCEPTION YEARS ENDED THREE MONTHS ENDED (AUGUST 30, 1993) DECEMBER 31, MARCH 31, TO DECEMBER 31, ------------------ ------------------ 1993 1994 1995 1995 1996 ----------------- ------- ------- ------- ------- STATEMENTS OF OPERATIONS DATA: Total revenues.................... $ -- $ -- $ 1,032 $ 5 $ 1,731 Gross profit...................... -- -- 418 (74) 1,041 Operating loss.................... (27) (1,520) (3,393) (426) (3,509) Net loss.......................... $ (27) $(1,510) (3,296) (422) (3,568) Pro forma net loss per share (2)............................. $ (0.13) $ (0.02) $ (0.14) Shares used in computing pro forma net loss per share (2).......... 25,863 25,966 25,914
MARCH 31, 1996 ----------------------------------------------- PRO FORMA ACTUAL PRO FORMA(3) AS ADJUSTED(3)(4) -------- ------------ ----------------- BALANCE SHEET DATA: Cash and cash equivalents...................... $ 10,114 $ 18,202 $ 48,042 Working capital................................ 7,131 15,219 45,059 Total assets................................... 15,747 23,835 53,675 Total shareholders' equity..................... 8 5,203 46,890
- --------------- (1) Based on the number of shares outstanding as of March 31, 1996 and the issuance of 673,500 shares of Convertible Preferred Stock and 375,001 shares of Redeemable Convertible Preferred Stock in April 1996. Excludes 4,440,876 options and warrants outstanding at March 31, 1996, of which 311,537 were exercisable as of such date. See "Management--1996 Stock Option/Stock Issuance Plan" and Notes 5, 7 and 10 of Notes to Financial Statements. (2) See Note 1 of Notes to Financial Statements. (3) Reflects the issuance of 673,500 shares of Convertible Preferred Stock and 375,001 shares of Redeemable Convertible Preferred Stock for net proceeds of $8,088,000 in April 1996. (4) Adjusted to reflect the sale to the public of 3,000,000 shares of Common Stock offered by the Company at an assumed initial public offering price of $11.00 per share and the application of the estimated net proceeds therefrom. See "Use of Proceeds" and "Capitalization." ---------------- Except as set forth in the financial statements or as otherwise indicated, all information in this Prospectus (i) reflects the automatic conversion upon the closing of the Offering of all of the Company's outstanding shares of Preferred Stock into shares of Common Stock, and the associated conversion of outstanding warrants to purchase Preferred Stock into warrants to purchase Common Stock, (ii) does not reflect exercises of options or warrants after March 31, 1996, (iii) reflects a 3-for-4 reverse stock split to be effected prior to the effectiveness of this Offering, and (iv) assumes that the Underwriters' over-allotment option is not exercised. 4 7 RISK FACTORS It is the Company's belief that this Prospectus may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Actual results and the timing of certain events could differ materially from those projected in the forward-looking statements as a result of the risk factors set forth below and other factors discussed elsewhere in this Prospectus. In addition to the other information contained in this Prospectus, investors should carefully consider the following risk factors: Extremely Limited Operating History; Anticipation of Continued Losses. The Company has an extremely limited operating history, which makes it difficult to manage future operations or predict future operating results. The Company was formed in August 1993, did not commence generating revenues until January 1995 and has generated limited revenues to date. The Company has incurred significant net losses since inception and expects to continue to incur significant losses on a quarterly and annual basis for the foreseeable future. As of March 31, 1996, the Company had an accumulated deficit of $8.4 million. The Company and its prospects must be considered in light of the risks, costs and difficulties frequently encountered by companies in their early stage of development, particularly companies in the new and rapidly evolving Internet market. In order to be successful, the Company must, among other things, continue to attract, retain and motivate qualified personnel, successfully implement its advertising program, continue to upgrade its technologies and commercialize products and services incorporating such technologies, respond to competitive developments and successfully expand its internal infrastructure. Moreover, due to the intense competition in the emerging markets addressed by the Company, the Company must seek to expand all aspects of its business rapidly, which increases the challenges facing the Company making it more difficult for the Company to recover from business errors. The Company has achieved only limited revenues to date, and its ability to generate significant revenues is subject to substantial uncertainty. There can be no assurance that the Company will be able to address any of these challenges or will be able to sustain revenue growth or achieve profitability. See "Selected Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." Potential Fluctuations in Future Results. As a result of the Company's extremely limited operating history as well as the very recent emergence of the market addressed by the Company, the Company has neither internal nor industry-based historical financial data for any significant period of time upon which to base planned operating expenses. The Company has incurred significant net losses to date. Substantially all of the Company's revenues have been generated from the sale of advertising, and the Company expects revenue for the foreseeable future to continue to be derived substantially from advertising sales. Moreover, most of the Company's contracts with advertising customers have terms of three months or less, with options to cancel at any time. Accordingly, future sales and operating results are difficult to forecast. In addition, significant portions of the Company's revenues to date have been derived from sales to a limited number of customers, and the Company currently anticipates that future quarters will continue to reflect this trend. Therefore, the cancellation or deferral of a small number of advertising contracts or license agreements could have a material adverse effect on the Company's business, results of operations and financial condition. The Company's expense levels are based in part on its expectations as to future revenues and to a large extent are fixed. The Company may not be able to adjust spending in a timely manner to compensate for any unexpected revenue shortfall. Accordingly, any significant shortfall in relation to the Company's expectations would have an immediate adverse impact on the Company's business, results of operations and financial condition. Moreover, the Company plans to significantly increase its operating expenses to fund greater levels of research and development, increase its sales and marketing operations (including payments to Netscape of up to $5 million), develop new distribution channels and broaden its customer support capabilities. To the extent that any expenses in 1996 precede or are not subsequently and timely followed by increased revenues, the Company's business, results of operations and financial condition will be materially adversely affected. 5 8 The Company expects that its results of operations may also fluctuate significantly in the future as a result of a variety of factors, including: the continued rate of growth, usage and acceptance of the Internet; the rate of acceptance of the Internet as an advertising medium; demand for the Company's products and services; the advertising budgeting cycles of individual advertisers; the introduction and acceptance of new or enhanced products or services by the Company or by its competitors; the Company's ability to anticipate and effectively adapt to a developing market and to rapidly changing technologies; the Company's ability to effectively expand its operations and manage such expansion; the Company's ability to attract, retain and motivate qualified personnel; initiation, renewal or expiration of significant contracts such as the Company's distribution relationship with NYNEX; pricing changes by the Company or its competitors; specific economic conditions in the Internet market; general economic conditions and other factors. In addition, the Company may elect from time to time to make certain pricing, service or marketing decisions or acquisitions that could have a short-term material adverse effect on the Company's business, results of operations and financial condition and may not generate the long-term benefits intended. Due to all of the foregoing factors, it is likely that in some future period, the Company's operating results may be below the expectations of public market analysts and investors. In such event, the price of the Company's Common Stock would likely be materially adversely affected. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." The Company's revenues in the near term will also be dependent to a material degree on the Company's relationship with NYNEX. In March 1996, the Company and NYNEX entered into a one year agreement, which provides that, beginning in May 1996, the Company will prominently display the BigYellow logo, which represents NYNEX's interactive shopping directory ("BigYellow"), as the exclusive comprehensive shopping directory within Infoseek Guide. In exchange for such exclusivity, NYNEX will pay to the Company up to an aggregate of $4.6 million in monthly payments, which amount will be decreased proportionately if the number of impressions of the BigYellow logo is below a specified number. NYNEX may extend the term of the agreement for additional one year periods, with the fee to be determined based upon Infoseek's then current advertising rate structure. In addition, NYNEX has the right to cancel or renegotiate the agreement based upon certain relative traffic volumes on the BigYellow and Infoseek Guide sites. There can be no assurance that the NYNEX arrangement will prove to be mutually beneficial or that it will be continued after its initial term. Furthermore, the current traffic levels are below those required in order for the Company to receive the maximum payment from NYNEX, and there can be no assurance that the Company will be able to produce the levels of traffic that NYNEX has negotiated. See "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Business -- Marketing and Distribution of the Infoseek Brand" and "-- Infoseek Products and Services." Developing Market; Unproven Acceptance of Internet Advertising and of the Company's Products and Services. The market for the Company's products and services has only recently begun to develop, is rapidly evolving and is characterized by an increasing number of market entrants with products and services for use on the Internet. The Company's future success is highly dependent upon the increased use of the Internet for information publication, distribution and commerce. In particular, because the Company expects to derive substantially all of its revenues in the foreseeable future from sales of Internet advertising, the future success of the Company is highly dependent on the development of the Internet as an advertising medium. The Internet as an advertising medium has not been available for a sufficient period of time to gauge its effectiveness as compared with traditional advertising media. In addition, most of the Company's current advertising customers have limited or no experience using the Internet as an advertising medium, have not devoted a significant portion of their advertising expenditures to such advertising and may not find such advertising to be effective for promoting their products and services relative to advertising in traditional media. Also, certain advertising filter software programs are available that limit or remove advertising from an Internet user's desktop. Such software, if generally adopted by users, may have a material adverse effect upon the viability of advertising on the Internet. 6 9 In addition, the Company's success will depend in large part upon the continued growth in the use of the Internet and in particular the use of the Internet for commercial purposes. There can be no assurance that Internet usage and commerce will become widespread or that extensive content (such as Web pages and USENET News groups) will continue to be provided over the Internet. Issues concerning the commercial use of the Internet such as security, reliability, cost, ease of access and use, quality of service and acceptance of advertising, remain unresolved and may negatively impact the growth of Internet usage or the acceptance of the Internet as an advertising medium. To the extent that the Internet continues to experience growth in the number of users and amount of traffic, there can be no assurance that the Internet infrastructure will continue to be able to support the demands placed on it by such growth. In addition, the Internet could lose its viability due to delays in the development or adoption of new standards and protocols to handle increased levels of Internet activity, or due to increased governmental regulation. There can be no assurance that the infrastructure or complementary services necessary to make the Internet a viable commercial marketplace will be developed, or, if developed, that the Internet will become a viable commercial marketplace for products and services such as those offered by the Company and its advertising customers. The Company is in a new and rapidly evolving industry, with demand for and market acceptance of recently introduced products and services being subject to a high level of uncertainty. Accordingly, it is difficult to predict its size, stability and the extent of its growth, if any. There can be no assurance that the market for the Company's products and services will develop or that demand for the Company's products or services by Internet users or by advertisers will emerge or become sustainable. If the market fails to develop, develops more slowly than expected or becomes saturated with competitors, or if the Company's products and services do not achieve or sustain acceptance by Internet users or advertisers, the Company's business, results of operations and financial condition will be materially adversely affected. See "Business -- Industry Background." Reliance on Advertising Revenues. The Company has derived substantially all of its revenues to date from the sale of advertisements, and expects such dependence on advertising revenue to continue. The Company's current business model to generate revenues through the sale of advertising on the Internet is unproven. The Company's advertising revenues to date have been derived from a limited number of advertising customers. In addition, substantially all of the Company's advertising contracts to date have been for terms of three months or less, with options to cancel at any time. These contracts generally guarantee a minimum of impressions (displays of the advertisement to the user) per month, most typically, one million impressions. There can be no assurance that current advertisers will continue to purchase advertising space and services from the Company or that sufficient impressions will be achieved or available, or that the Company will be able to successfully attract additional advertisers. The Company's ability to generate significant advertising revenues will depend, among other things, on advertisers' acceptance of the Internet as an attractive and sustainable medium, the development of a large base of users of the Company's products and services with demographic characteristics attractive to advertisers, the successful expansion of the Company's advertising capabilities and advertising sales force, and strong acceptance of the Company's services by Internet users. Furthermore, there is intense competition among sellers of advertising space on the Internet, and a variety of pricing models offered by different vendors for a range of advertising services, making it difficult to project future levels of advertising revenues and pricing models that will be adopted by the industry or individual companies. In addition, certain advertising filter software programs are available that limit or remove advertising from an Internet user's desktop. Such software, if generally adopted by users, may have a material adverse effect upon the viability of advertising on the Internet. Accordingly, there can be no assurance that the Company will be successful in generating significant future advertising revenues, and failure to do so will have a material adverse effect on the Company's business, results of operations and financial condition. See "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Business -- Industry Background" and "-- Advertising Sales and Services." 7 10 Change in Netscape Relationship and Dependence on Other Third Party Distribution Relationships. From March 1995 through March 1996, the Company's service was listed as the sole premier navigational service on the Netscape Web page accessible via the "Net Search" button. As of March 31, 1996, approximately 85% of the traffic to the Company's Infoseek Guide service was derived through the Netscape Web page. In March 1996, Infoseek entered into a new agreement with Netscape, which provides that Infoseek will be listed as a non-exclusive premier provider of navigational services on Netscape's Web page for the period April 10, 1996 to March 31, 1997. Currently, Netscape's Web page displays four additional premier providers. During the 30 day period from April 11 through May 10, 1996, the Company's average daily traffic was approximately 47% of its average daily traffic for the 30 day period immediately prior to the change from being Netscape's sole premiere provider to one of five premier providers. There can be no assurance that the Company will be able to maintain or increase its current level of traffic and any failure to do so could materially and adversely impact advertising revenues. In addition, the Company cannot anticipate the impact on Infoseek traffic of any changes Netscape may make to this service, to its Web page or its other services, or the effect on advertising revenues that may be generated from such traffic. Infoseek's agreement with Netscape provides for payments of up to an aggregate of $5 million to Netscape over the term of the agreement. The Company has the right to terminate the agreement at the end of six months, in which case the payment to Netscape would be reduced to an aggregate of approximately $2.5 million. Furthermore, if traffic is decreased significantly as a result of these or other changes in the Netscape relationship and the Company is unable to develop alternative viable distribution channels, advertising revenues would probably be adversely affected, while the $5 million Netscape obligation would not be reduced, unless the Company determines to terminate the relationship at six months, the result being that the Company's business, results of operations and financial condition would be materially and adversely affected. The Company has also entered into distribution agreements and informal relationships with other software vendors and operators of online networks and Web sites. Although none of these relationships currently represents a significant portion of the Company's traffic, the Company expects that they will become more important, in part, due to the change in the Netscape relationship. The Company's business relationships with these other companies consist of cooperative marketing programs and licenses to include the Company's products and services in online networks or services offered by these parties, which are intended to increase the use and visibility of the Company's products and services. These distribution arrangements, including the arrangement with Netscape, typically are not exclusive, and are terminable upon little or no notice. There is no assurance that Netscape or any of these other companies will not terminate their relationship with the Company or develop their own product offerings competitive with those of the Company. If Netscape or any of these other companies were to terminate or reduce their joint marketing activities with the Company, increase the fees or otherwise change the terms on which the Company's products and services are accessed through such companies' Web sites, develop and market their own competitive products and services, or promote competing products and services from other third parties, or if these relationships do not result in high-level usage of the Company's services, the Company's business, results of operations and financial condition could be materially and adversely affected. Technological Change and New Products and Services. The market for Internet products and services is characterized by technological change, changing customer needs, frequent new product introductions and evolving industry standards. These market characteristics are exacerbated by the emerging nature of this market and the fact that many companies are expected to introduce new Internet products and services in the near future. The Company's future success will depend in significant part on its ability to continually and on a timely basis introduce new products, services and technologies and to continue to improve the performance, features and reliability of the Company's products and services in response to both evolving demands of the marketplace and competitive product offerings. The Company currently employs information retrieval technology licensed from the Applied Computing Systems Institute of Massachusetts, Inc. ("ACSIOM"), an entity related to the University of Massachusetts. The Company is developing a new search engine technology, Ultraseek, which is 8 11 being designed to significantly improve retrieval and Web page indexing capabilities beyond the ACSIOM technology. The Company has also recently licensed certain software technologies from XSoft, a division of XEROX Corporation ("XEROX"), which technology will be licensed to the Company on a partially exclusive basis for the first year of the contract. Infoseek has entered into a software license agreement with HNC Software Inc. ("HNC") to license certain technology from HNC to automate the development of the Company's Web Directory ("Directory") feature. It is not yet clear that these technologies and services under development, and many of the Company's new products and product enhancements which have been only recently introduced will achieve significant market acceptance. There can be no assurance that any new or proposed product or service will attain market acceptance. Failure of the Company to successfully design, develop, test, market and introduce new and enhanced technologies and services, in particular, Ultraseek or any enhancements of the Company's current search technology, or the failure of the Company's recently introduced products and services to achieve market acceptance could have a material adverse effect upon the Company's business, operating results and financial condition. There can be no assurance that the Company will not experience difficulties that could delay or prevent the successful development, introduction or marketing of new or enhanced technologies, products and services, or that the Company's new or recently introduced products and services will adequately meet the requirements of the marketplace and achieve significant market acceptance. Due to certain market characteristics, including technological change, changing customer needs, frequent new product and service introductions and evolving industry standards, timeliness of introduction of these new products and services is critical. Delays in the introduction of new products and services may result in customer dissatisfaction and may delay or cause a loss of advertising revenue. There can be no assurance that the Company will be successful in developing new products or services or improving existing products and services that respond to technological changes or evolving industry standards, that the Company will not experience difficulties that could delay or prevent the successful development, introduction and marketing of new or improved products and services, or that its new products and services will adequately meet the requirements of the marketplace and achieve market acceptance. In addition, new or enhanced products and services introduced by the Company may contain undetected errors that require significant design modifications. This could result in a loss of customer confidence and user support, thus adversely affecting the use of the Company's products and services, which in turn would have a material adverse effect upon the Company's business, results of operations or financial condition. If the Company is unable to develop and introduce new or improved products or services in a timely manner in response to changing market conditions or customer requirements, the Company's business, operating results and financial condition will be materially adversely affected. In addition, if the Company is unable to remain competitive with its competitors, its business, operating results and financial condition may be materially adversely affected as well. See "-- Dependence on Technology Suppliers" and "Business -- Technology." Dependence on Technology Suppliers. The Company is dependent currently upon several suppliers for the integral components of its current and future technologies. The Company has a non-exclusive, perpetual license to certain technology from ACSIOM relating to text indexing and retrieval. The ACSIOM technology is currently the core technology used by the Company in its search engine. Although the Company is currently developing its own proprietary core search engine technology, there can be no assurance that Ultraseek will be successfully designed, developed, tested, marketed and introduced or accepted by the marketplace in a timely manner. In the event that Ultraseek, or an alternative technology, is not successfully introduced and accepted in a timely manner, the Company will continue to be dependent upon its license from ACSIOM. Given the technological changes occurring in the industry, there is no assurance that the ACSIOM technology will remain a competitive technology in the future. In addition, in April 1996, the Company licensed certain software technology from HNC. The Company intends to utilize the software technology to develop an advertising and audience 9 12 management system to optimize the matching of advertisements with the appropriate audience. The software will be modified according to the Company's specifications to integrate it into the Company's advertisement placement system. This technology will be licensed to the Company for an initial five year term beginning upon the initial acceptance of the software by the Company. The Company expects that the proposed technology will provide significant technological improvements to the Company's advertising and audience management systems. Furthermore, in May 1996, the Company licensed certain additional software technology from HNC that is intended to allow the Company to enhance the Company's Web Directory feature. Infoseek expects to use this technology to automate the construction of Directory categories, assignment of Web pages to each Directory category and the creation of abstracts for each Web page included in the Directory. All of these processes are currently being performed manually. Accordingly, the Company is depending upon the proposed technology to reduce the cost of expanding its Directory feature. This technology will be licensed to the Company for an initial five year term beginning upon the initial acceptance of the software by the Company. There can be no assurance that the HNC technology will function as anticipated or will provide the intended benefits which could require the Company to incur significantly increased costs to expand its Directory feature. The Company has also licensed certain software technologies from XEROX to be used for the linguistic analysis of search terms. This technology will be licensed to the Company on a partially exclusive basis for the first year. In addition, the Company may develop other technology alliances and enter into other license arrangements with technology vendors. There can be no assurance that the HNC or XEROX technologies will be successfully designed, developed and tested, or, that if the technologies are successfully developed, any product or service into which the technologies are incorporated will be successfully accepted by the marketplace. Any failure of HNC, XEROX, ACSIOM or any future technology vendor to provide prompt and effective support and maintenance to the Company, or to continue to upgrade their respective technologies in order to continue to be competitive, could have a material adverse effect on the Company's business, results of operations and financial condition. See "-- Technological Change and New Products and Services" and "Business -- Technology." Dependence Upon Third Party Content Development. A key element of the Company's strategy involves the use of unique content developed by third parties exclusively for Infoseek. A significant majority of the Company's relationships with such third parties, however, have only recently been developed and are contracted on three month trial bases. There can be no assurance that these content sponsors will continue to provide content that is unique to Infoseek, that they will not seek to charge the Company a significant fee for the supply of such content, that they will not enter into similar arrangements with or provide similar content to the Company's competitors, that they will continue their relationship with the Company, or that they will not establish their own services to compete against the Company for advertising revenue. Nor can there be any assurance that the Company's current or future third-party content providers will provide content that is attractive to Web users or that their efforts will result in significant revenue to the Company. Any failure of these parties to develop and maintain high-quality and attractive content could result in dilution to the Infoseek brand and could have a material adverse effect on the Company's business, results of operations and financial condition. See "Business -- Infoseek Navigational Services." Intense Competition. The market for Internet products and services is highly competitive, with no substantial barriers to entry, and the Company expects that competition will continue to intensify. In addition, the market for the Company's products and services has only recently begun to develop, is rapidly evolving and is characterized by an increasing number of market entrants with competing products and services. The Company does not believe this market will support the increasing number of competitors and their products and services. Although the Company believes that the diverse segments of the Internet market may provide opportunities for more than one supplier of products and services similar to those of the Company, it is possible that a single supplier may 10 13 dominate one or more market segments. Accordingly, any failure of the Company to provide product and service offerings that achieve success in the short-term could result in an insurmountable loss in marketshare and brand acceptance, and could, therefore, have a material adverse and long-term effect upon the Company's business, results of operations and financial condition. A number of companies offer competitive products and services addressing certain of the Company's target markets. These companies include America Online, Inc., Digital Equipment Corporation, Excite, Inc., Lycos, Inc., The McKinley Group, Open Text Corporation, CompuServe Corporation, Prodigy Services Company and Yahoo! Corporation. In addition, the Company competes with metasearch services that allow a user to search the databases of several catalogs and directories simultaneously. The Company also competes indirectly with database vendors that offer information search and retrieval capabilities with their core database products. In the future, the Company may encounter competition from providers of Web browser software, including Netscape and Microsoft Corporation ("Microsoft"), online services and other providers of other Internet products and services who elect to incorporate their own search and retrieval features into their offerings. Many of the Company's existing and potential competitors have significantly greater financial, technical and marketing resources than the Company. The Company may also be adversely affected by competition from licensees of its products and technology, current and future advertisers, as well as from its current, future and former content providers. There can be no assurance that the Company's competitors will not develop Internet products and services that are superior to those of the Company or that achieve greater market acceptance than the Company's offerings. Moreover, a number of the Company's current advertising customers, licensees and licensors have also established relationships with certain of the Company's competitors and future advertising customers, licensees and licensors may establish similar relationships. In addition, the Company competes with online services and other Web site operators as well as traditional offline media such as print and television for a share of advertisers' total advertising budgets. There can be no assurance that the Company will be able to compete successfully against its current or future competitors or that competition will not have a material adverse effect on the Company's business, results of operations and financial condition. See "Business -- Competition." Management of Growth; Need to Establish Infrastructure; Recent Management Additions. The rapid growth that the Company believes is necessary to successfully offer its products and services has placed, and is expected to continue to place, a significant strain on the Company's managerial, operational and financial resources. The Company continues to expand its operations and increase its dependence and reliance on computer generated information. This evolution necessitates continuous reassessment of the appropriateness of the Company's computerized data and systems. The Company's current management information system is cumbersome and inefficient and requires a significant amount of manual effort using personal computer spreadsheets in order to process and analyze information. This situation makes it difficult for management to obtain timely and accurate information. The Company is evaluating a number of new financial and management controls, reporting systems and procedures, as well as its information systems and technology. Such expansion efforts will create significant strain upon the Company's existing resources. In addition, during the 12 month period from March 31, 1995 to March 31, 1996, the Company hired its President and Chief Executive Officer, Executive Vice President and Chief Financial Officer, Vice President-Engineering, Vice President-Worldwide Advertising, Vice President Chief Marketing Officer, Vice President-Product Management and Editor. Moreover, the Company grew from 11 employees to 71 employees during that same period, and the Company expects the number of employees to continue to grow over the next 12 months. There can be no assurance that the Company will be able to effectively manage the expansion of its operations, that the Company's new management team will work together effectively, that the Company will be able to attract and retain qualified personnel, that the Company's systems, procedures or controls will be adequate to support the Company's operations or that Company 11 14 management will be able to achieve the rapid execution necessary to fully exploit any potential market opportunity for the Company's products and services and media properties. In addition, the Company intends to establish at least one mirror, or duplicate, site in another geographic location, which will create additional operational and management complexities, including the need for continual updating and maintenance of directory listings among geographically dispersed network servers. Any inability to effectively manage growth could have a material adverse effect on the Company's business, results of operations and financial condition. See "Business -- Employees" and "Management." Intellectual Property and Proprietary Rights. The Company's success depends significantly upon its proprietary technology. The Company currently relies on a combination of copyright and trademark laws, trade secrets, confidentiality procedures and contractual provisions to protect its proprietary rights. The Company generally enters into confidentiality agreements with its employees and consultants. The Company seeks to protect its software, documentation and other written materials under trade secret and copyright laws, which afford only limited protection. In addition, the Company currently has six United States patent applications pending. There can be no assurance that any pending applications will be approved, that if issued any such patent will not be challenged, and that if challenged, any such patent(s) will not be invalidated. There can be no assurance that any issued patent will provide the Company with any competitive advantages or will not be challenged by third parties. The Company has registered and applied for registration for certain service marks and trademarks, and will continue to evaluate the registration of additional service marks and trademarks as appropriate. Despite the Company's efforts to protect its proprietary rights, unauthorized parties may attempt to copy aspects of the Company's products or services or to obtain and use information that the Company regards as proprietary. In addition, the laws of some foreign countries do not protect proprietary rights to as great an extent as do the laws of the United States. Litigation may be necessary to protect the Company's proprietary technology. Any such litigation may be time-consuming and costly. There can be no assurance that the Company's means of protecting its proprietary rights will be adequate or that the Company's competitors will not independently develop similar technology or duplicate the Company's products or services or design around patents or other intellectual property rights of the Company. There have been substantial amounts of litigation in the information technology industry regarding intellectual property rights. There can be no assurance that the Company will develop proprietary products or services or technologies that are patentable or that the patents of others will not have a material adverse effect on the Company's ability to do business. In addition, there can be no assurance that third parties will not in the future claim infringement by the Company with respect to current or future products or services, trademarks or other proprietary rights, or that the Company will not counterclaim against any such parties in such actions. Any such claims or counterclaims could be time-consuming, result in costly litigation, cause product release delays, require the Company to redesign its products or services or require the Company to enter into royalty or licensing agreements, any of which could have a material adverse effect upon the Company's business, operating results and financial condition. Such royalty or licensing agreements, if required, may not be available on terms acceptable to the Company or at all. See "-- Government Regulation and Legal Uncertainties," "-- Liability for Information Retrieved from the Internet" and "Business -- Intellectual Property and Proprietary Rights." Capacity Constraints and System Failure. A key element of the Company's strategy is to generate a high volume of traffic to its products and services. Accordingly, the performance of the Company's products and services is critical to the Company's reputation, its ability to attract advertisers to the Company's Web sites and market acceptance of these products and services. Any system failure that causes interruptions or that increases response time of the Company's products and services would result in less traffic to the Company's Web sites and, if sustained or repeated, would reduce the attractiveness of the Company's products and services to advertisers and customers. In addition, an increase in the volume of searches conducted through the Company's products and services could strain the capacity of the software, hardware or telecommunications lines 12 15 deployed by the Company, which could lead to slower response time or system failures. As the number of Web pages and users increase, there can be no assurance that the Company's products, services and systems will be able to scale appropriately. The Company is also dependent upon Web browser companies and Internet and online service providers for access to its products and services, and users have experienced and may in the future experience difficulties due to system or software failures or incompatibilities not within the Company's control. The Company is also dependent on hardware suppliers for prompt delivery, installation and service of servers and other equipment and services used to provide its products and services. Any disruption in the Internet access and service provided by the Company or its service providers could have a material adverse effect upon the Company's business, results of operations and financial condition. The process of managing advertising within large, high traffic Web sites such as the Company's is an increasingly important and complex task. The Company relies on internal advertising inventory management and analysis systems to provide enhanced internal reporting and customer feedback on advertising. To the extent that any extended failure of the Company's advertising management system results in incorrect advertising insertions, the Company may be exposed to "make good" obligations with its advertising customers, which, by displacing advertising inventory, could have a material adverse effect on the Company's business, results of operations and financial condition. In addition, the Company's operation depends upon its ability to maintain and protect its computer systems located in Santa Clara, California. This system is vulnerable to damage from fire, floods, earthquakes, power loss, telecommunications failures, break-ins and similar events. The Company does not currently have a disaster recovery plan in effect. Despite the implementation of network security measures by the Company, its servers are also vulnerable to computer viruses, break-ins and similar disruptive problems. Computer viruses, break-ins or other problems caused by third parties could lead to interruptions, delays in or cessation of service to users of the Company's products and services. The occurrence of any of these risks could have a material adverse effect on the Company's business, results of operations and financial condition. See "Business -- Facilities." Dependence on Key Personnel. The Company's future performance depends in significant part upon the continued contributions of its key technical and senior management personnel including, in particular, Robert E.L. Johnson, III, the Company's President and Chief Executive Officer and Steven T. Kirsch, a founder and the Chairman of the Board of the Company, none of whom is bound by an employment agreement. The Company provides incentives such as salary, benefits and option grants (which are typically subject to vesting over four years) to attract and retain qualified employees. The loss of the services of Mr. Johnson or Mr. Kirsch or any of the Company's officers or other key employees could have a material adverse effect on the Company's business, operating results and financial condition. The Company's future success also depends on its continuing ability to attract and retain highly qualified technical and management personnel. Competition for such personnel is intense, and there can be no assurance that the Company can retain its key technical and management employees or that it can attract, assimilate or retain other highly qualified technical and management personnel in the future. See "Business -- Employees" and "Management." Government Regulation and Legal Uncertainties. The Company is not currently subject to direct regulation by any government agency, other than regulations applicable to businesses generally, and there are currently few laws or regulations directly applicable to access to or commerce on the Internet. It is possible that a number of laws and regulations may be adopted with respect to the Internet, covering issues such as user privacy, pricing and characteristics and quality of products and services. For example, the recently enacted Telecommunications Reform Act of 1996 imposes criminal penalties on anyone who distributes obscene, lascivious or indecent communications on the Internet. The adoption of any such laws or regulations may decrease the growth of the Internet, which could in turn decrease the demand for the Company's products, increase the Company's cost of doing business, or otherwise have an adverse effect on the Company's business, results of operations or financial condition. Moreover, the applicability to the Internet of existing laws governing issues such as property ownership, copyright, trade secret, libel and personal privacy is uncertain. Any such new legislation or regulation could have a material 13 16 adverse effect on the Company's business, results of operations or financial condition. See "-- Intellectual Property and Proprietary Rights." Liability for Information Retrieved from the Internet. Because Internet services provided by the Company require the Company to link users to information which is downloaded, indexed and distributed from Web pages published by a large number of Internet Web sites and content providers, there is potential that claims will be made against the Company on theories such as defamation, negligence, copyright or trademark infringement, distribution of obscene, lascivious or indecent communications or other theories of liability based on the nature and content of such materials. Such claims have been brought, and sometimes successfully pressed, against online services in the past. Additionally, claims could be made against the Company for copyright infringement based on the improper dissemination of information. Although the Company carries general liability insurance, the Company's insurance may not cover potential claims of this type, or may not be adequate to indemnify the Company for all liability that may be imposed. Any imposition of liability that is not covered by insurance or is in excess of insurance coverage could have a material adverse effect on the Company. No Prior Public Market; Determination of Public Offering Price; Potential Volatility of Stock Price. Prior to this Offering there has been no public market for the Company's Common Stock, and there can be no assurance that an active public market for the Common Stock will develop or be sustained after the Offering. The initial offering price will be determined by negotiation among the Company and the Underwriters based upon several factors and may not be indicative of future market prices. See "Underwriting" for information relating to the method of determining the initial public offering price. The trading price of the Company's Common Stock could be subject to wide fluctuations in response to a number of factors, including quarterly variations in operating results, announcements of technological innovations or new products and services, applications or product enhancements by the Company or its competitors, changes in financial estimates by securities analysts and other events. In addition, the stock markets in general, and the market prices for Internet-related companies in particular, have historically experienced extreme volatility that at times has been unrelated to the operating performance of such companies. The trading price of the Common Stock could also be subject to significant fluctuations in response to variations in quarterly results of operations, announcements of new products or acquisitions by the Company or its competitors, governmental regulatory action, other developments or disputes with respect to proprietary rights, general trends in the industry and overall market conditions and other factors. These broad market fluctuations may adversely affect the market price of the Company's Common Stock. See "Underwriting." Shares Eligible for Future Sale; Registration Rights. Sales of a substantial number of shares of Common Stock in the public market following this Offering could adversely affect the market price for the Common Stock. The number of shares of Common Stock available for sale in the public market is limited by restrictions under the Securities Act of 1933, as amended (the "Securities Act"), and lock-up agreements under which the holders of such shares have agreed that they will not directly or indirectly offer, sell, contract to sell, grant an option to purchase, grant a security interest in, hypothecate or otherwise sell or dispose of any of their shares of Common Stock of the Company for a period of 180 days after the date of this Prospectus, which lockups may not be released without the prior written consent of Alex. Brown & Sons Incorporated. However, Alex. Brown & Sons Incorporated may, in its sole discretion and at any time without notice, release all or any portion of the securities subject to lock-up agreements. As a result of the lock-up agreements with the Underwriters on the date of this Prospectus, no shares other than the 3,000,000 shares offered hereby will be eligible for sale. Upon the expiration of the lock-up agreements 180 days after the date of this Prospectus, an aggregate of approximately 13,514,626 shares will first become eligible for sale into the public market immediately following the Offering, based on shares outstanding at March 31, 1996 and including the issuance of 1,048,501 shares of Convertible Preferred Stock in April 1996. In addition, the Company intends to register, on the effective date of this Offering, a total of 187,500 shares of Common Stock reserved for issuance under the Company's 14 17 Employee Stock Purchase Plan and, after the effective date of this Offering, a total of 5,625,000 shares of Common Stock subject to outstanding options or reserved for issuance under the Company's 1996 Stock Option Plan/Stock Issuance Plan. All shares issued under such benefits plans will also be subject to lock-up agreements until 180 days following the date of this Prospectus. In addition, upon expiration of the lock-up agreements referred to above, holders of approximately 21,579,512 shares of Common Stock and warrants and options to purchase 1,345,000 shares of Common Stock will be entitled to certain registration rights with respect to such shares. If such holders, by exercising their registration rights, cause a large number of shares to be registered and sold in the public market, such sales could have an adverse effect on the market price for the Company's Common Stock. See "Shares Eligible for Future Sale." Control by Existing Shareholders; Certain Anti-Takeover Provisions Affecting Shareholders. Upon completion of this Offering, the present directors, executive officers and principal shareholders of the Company and their affiliates will beneficially own approximately 63% of the outstanding Common Stock, and will be able to control all matters requiring shareholder approval, including approval of significant corporate transactions. Under the General Corporations Law of California, the Company's shareholders are currently entitled to cumulate their votes for the election of directors. The Company's Amended and Restated Articles of Incorporation and Bylaws provide, however, that cumulative voting will no longer be permitted at such time as the Company's stock is publicly traded in a manner that meets certain standards established by the General Corporations Law of California. The Company expects that the requirements shall have been met and cumulative voting shall have been eliminated by the record date for its next annual meeting of shareholders. Accordingly, the principal shareholders of the Company, who collectively hold approximately 15,891,140 of the Company's outstanding stock, will be able to control election of all directors of the Company. The Company's Board of Directors has the authority to issue up to 5,000,000 shares of Preferred Stock and to determine the price, rights, preferences, privileges and restrictions, including voting rights, of those shares without any further vote or action by the shareholders. The rights of the holders of Common Stock will be subject to, and may be adversely affected by, the rights of the holders of any Preferred Stock that may be issued in the future. The issuance of Preferred Stock could have the effect of making it more difficult for a third party to acquire a majority of the outstanding voting stock of the Company. These provisions along with the provisions of the Company's Bylaws described above, could delay or make more difficult a proxy contest involving the Company, which could adversely affect the market price of the Company's Common Stock. See "Description of Capital Stock -- Preferred Stock and -- Certain Provisions of the Company's Articles of Incorporation and Bylaws." Dilution. Purchasers in this Offering will suffer an immediate and substantial dilution in the net tangible book value of the Common Stock from the initial public offering price. Additional dilution is likely to occur upon exercise of options granted by the Company. See "Dilution." No Specific Use of Proceeds. The Company expects that it will use the net proceeds of this Offering for general corporate purposes, including working capital, payment of the Company's one year obligation to Netscape of up to $5 million for the listing as a non-exclusive premier provider of navigational services on the Netscape Web page and approximately $6 million in 1996 for capital expenditures in connection with the Company's business expansion. The Company has no other specific plans as to the use of the net proceeds from this Offering. Pending use, the Company plans to invest the net proceeds in investment-grade, interest-bearing securities. Accordingly, management will have significant flexibility in applying the net proceeds of this Offering. See "Use of Proceeds." Future Capital Needs; Uncertainty of Additional Financing. The Company currently anticipates that the net proceeds of this Offering and its recently completed $18,138,000 Series E Preferred Stock financing, together with available funds and cash flows generated from advertising revenues, will be sufficient to meet its anticipated needs for working capital, capital expenditures and business expansion for at least the next 12 months. Thereafter, the Company may need to raise 15 18 additional funds. The Company may need to raise additional funds sooner in order to fund more rapid expansion, to develop new or enhanced services or products, to respond to competitive pressures or to acquire complementary products, businesses or technologies. If additional funds are raised through the issuance of equity or convertible debt securities, the percentage ownership of the shareholders of the Company will be reduced, shareholders may experience additional dilution and such securities may have rights, preferences or privileges senior to those of the holders of the Company's Common Stock. There can be no assurance that additional financing will be available on terms favorable to the Company, or at all. If adequate funds are not available or are not available on acceptable terms, the Company may not be able to fund its expansion, take advantage of unanticipated acquisition opportunities, develop or enhance services or products or respond to competitive pressures. Such inability could have a material adverse effect on the Company's business, results of operations and financial condition. See "Use of Proceeds" and "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity and Capital Resources." 16 19 THE COMPANY The Company was incorporated in California in August 1993. The Company's principal executive office is located at 2620 Augustine Drive, Suite 250, Santa Clara, California 95054 and its telephone number at such location is (408) 567-2700. Infoseek is a registered service mark of the Company and the Infoseek logo, Infoseek Guide, Infoseek Professional, and Ultraseek are trademarks of the Company. This Prospectus also includes trademarks of companies other than Infoseek. USE OF PROCEEDS The net proceeds to the Company from the sale of the 3,000,000 shares of Common Stock offered by the Company hereby are estimated to be approximately $29,840,000 ($34,443,500 if the Underwriter's overallotment option is exercised in full), at an assumed initial public offering price of $11.00 per share to the public and after deducting estimated underwriting discounts and commissions and estimated offering expenses. The primary purposes of this Offering are to create a public market for the Common Stock, to facilitate future access to public markets and to obtain additional equity capital. The Company expects that it will use the net proceeds of this Offering for general corporate purposes, including working capital, payment of a portion of the Company's one year obligation to Netscape of up to $5 million for the listing as a non-exclusive premier provider of navigational services on the Netscape Web page and capital expenditures, including approximately $6 million in 1996 currently budgeted for the purchase of computer equipment and improvements to the Company's management information systems in connection with the Company's business expansion. The Company has no other specific plans as to the use of the net proceeds from this Offering. A portion of the net proceeds may also be used for the acquisition of businesses, products and technologies that are complementary to those of the Company. The Company has no present plans, agreements or commitments and its not currently engaged in any negotiations with respect to any such transaction. Pending use, the Company plans to invest the net proceeds in investment-grade, interest-bearing securities. See "Risk Factors -- No Specific Use of Proceeds." DIVIDEND POLICY The Company has never declared or paid any cash dividends on its capital stock, and does not expect to pay cash dividends on its Common Stock in the foreseeable future. The Company currently intends to retain its earnings, if any, for use in its business. 17 20 CAPITALIZATION The following table sets forth the capitalization of the Company (i) at March 31, 1996, (ii) pro forma as of such date, to give effect to the net proceeds from sale of 673,500 shares of Convertible Preferred Stock and 375,001 shares of Redeemable Convertible Preferred Stock for $8,088,000 in April 1996, and (iii) pro forma as adjusted to give effect to (a) the automatic conversion of all outstanding shares of Preferred Stock into Common Stock upon the closing of this Offering and (b) the receipt by the Company of the estimated net proceeds from the sale of 3,000,000 shares of Common Stock pursuant to this Offering at an assumed initial public offering price of $11.00 per share:
MARCH 31, 1996 ------------------------------------- PRO FORMA ACTUAL PRO FORMA AS ADJUSTED ------- --------- ----------- (IN THOUSANDS, EXCEPT SHARE DATA) Short-term obligations.................................. $ 914 $ 914 $ 914 ======= ======= Long-term obligations................................... $ 2,490 $ 2,490 $ 2,490 Redeemable convertible preferred stock, no par value; 1,125,000 shares issued and outstanding, actual; 1,500,001 shares issued and outstanding, pro forma; and no shares issued and outstanding, pro forma as adjusted.............................................. 8,954 11,847 -- Shareholders' equity: Preferred stock, no par value; 5,000,000 shares authorized; no shares issued or outstanding........ -- -- -- Convertible preferred stock, no par value; 27,890,378 shares authorized, no shares authorized, pro forma as adjusted; 15,394,175 shares issued and outstanding, actual; 16,067,675 shares issued and outstanding, pro forma; and no shares issued and outstanding, pro forma as adjusted................. 7,441 12,636 -- Common stock, no par value; 45,000,000 shares authorized, actual and pro forma; 60,000,000 shares authorized, pro forma as adjusted; 4,378,552 shares issued and outstanding, actual; 4,378,552 shares issued and outstanding, pro forma; and 24,946,228 shares issued and outstanding, pro forma as adjusted(1)........................................ 6,390 6,390 60,713 Accumulated deficit................................... (8,401) (8,401) (8,401) Deferred compensation................................. (4,796) (4,796) (4,796) Notes receivable from shareholders.................... (626) (626) (626) ------- ------- Total shareholders' equity......................... 8 5,203 46,890 ------- ------- Total capitalization.......................... $11,452 $19,540 $49,380 ======= =======
- --------------- (1) Excludes, as of March 31, 1996: (i) 4,340,876 shares of Common Stock issuable upon exercise of stock options outstanding under the Company's Stock Option Plan and an additional 1,067,408 shares reserved for issuance under such plan; and (ii) 100,000 shares of Convertible Preferred Stock issuable upon exercise of outstanding warrants (convertible into warrants to purchase 100,000 shares of Common Stock upon the closing of this Offering). Subsequent to March 31, 1996, the Company: (i) adopted, subject to shareholder approval, the 1996 Stock Option/Stock Issuance Plan to replace the Stock Option Plan and approved an increase in the total number of shares authorized for issuance thereunder from 5,437,500 to 5,625,000; (ii) granted options to purchase a total of 125,250 shares of Common Stock at a weighted average exercise price of $7.67 per share; and (iii) adopted, subject to shareholder approval, the Employee Stock Purchase Plan and reserved a total of 187,500 shares for future issuance thereunder. See "Management -- 1996 Stock Option/Stock Issuance Plan" and Notes 5, 7 and 10 of Notes to Financial Statements. 18 21 DILUTION The pro forma net tangible book value of the Company's Common Stock as of March 31, 1996 was $17,012,922, or approximately $0.78 per share. Pro forma net tangible book value per share represents the amount of the Company's shareholders' equity, less intangible assets, divided by the shares of Common Stock outstanding after giving pro forma effect to (i) the sale of $8,088,000 of Preferred Stock in April 1996 and (ii) the conversion of all outstanding shares of Preferred Stock into Common Stock upon completion of this Offering. Dilution per share represents the difference between the amount per share paid by purchasers of shares of Common Stock in this Offering made hereby and the as adjusted net tangible book value per share of Common Stock immediately after completion of this Offering. After giving effect to the sale of 3,000,000 shares of Common Stock offered by the Company hereby at an assumed offering price of $11.00 per share to the public and after deducting the estimated underwriting discounts and estimated offering expenses, the as adjusted net tangible book value of the Company as of March 31, 1996 would have been $46,852,922 or $1.88 per share. This represents an immediate increase in net tangible book value of $1.10 per share to existing shareholders and an immediate dilution in net tangible book value of $9.12 per share to purchasers of Common Stock in this Offering, as illustrated in the following table: Assumed public offering price per share........................... $11.00 Net tangible book value per share at March 31, 1996............. $0.78 Increase in net tangible book value per share attributable to new investors................................................ 1.10 ------ Pro forma net tangible book value per share after the Offering.... 1.88 ------ Dilution per share to new investors............................... $ 9.12 ======
The following table sets forth on a pro forma basis, as described above, as of March 31, 1996 the number of shares of Common Stock purchased from the Company, the total consideration paid and the average price per share paid by the existing shareholders and by new public investors (assuming an initial public offering price of $11.00 per share to the public and before deduction of estimated underwriting discounts and commissions and offering expenses):
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE ----------------------- ----------------------- PRICE NUMBER PERCENT AMOUNT PERCENT PER SHARE ----------- ------- ----------- ------- --------- Existing shareholders(1)............... 21,946,228 88% $25,667,704 44% $ 1.17 New shareholders(1).................... 3,000,000 12 33,000,000 56 $ 11.00 ----------- ------- ----------- ------- Total......................... 24,946,228 100% $58,667,704 100% ========== ====== ========== ======
- --------------- (1) Assumes no exercise of the following stock options and warrants outstanding as of March 31, 1996: (i) options to purchase a total of 4,340,876 shares of Common Stock at a weighted average exercise price of $0.80 per share; and (ii) warrants to purchase 100,000 shares of Convertible Preferred Stock at an exercise price of $0.80 per share (convertible into warrants to purchase 100,000 shares of Common Stock at an average exercise price of $0.80 upon the closing of this Offering). Subsequent to March 31, 1996, the Company: (i) adopted, subject to shareholder approval, the 1996 Stock Option/Stock Issuance Plan to replace the Stock Option Plan and approved an increase in the total number of shares authorized for issuance thereunder from 5,437,500 to 5,625,000, (ii) granted options to purchase a total of 125,250 shares of Common Stock at a weighted average exercise price of $7.67 per share; and (iii) adopted, subject to shareholder approval, the Employee Stock Purchase Plan and reserved a total of 187,500 shares for future issuance thereunder. To the extent options or warrants are exercised, there will be further dilution to new investors in the Offering. See "Management -- 1996 Stock Option/Stock Issuance Plan" and Notes 5, 7 and 10 of Notes to Financial Statements. 19 22 SELECTED FINANCIAL DATA The following selected financial data should be read in conjunction with the Company's financial statements and related notes thereto and Management's Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this Prospectus. The statements of operations data for the period from inception (August 30, 1993) to December 31, 1993 and for the years ended December 31, 1994 and 1995 and the balance sheet data at December 31, 1994 and 1995, are derived from and qualified by reference to the financial statements of the Company which have been audited by Ernst & Young LLP, independent auditors. The statements of operations data for the three month periods ended March 31, 1995 and 1996 and the balance sheet data as of March 31, 1996 are derived from unaudited financial statements included elsewhere herein and are prepared on a basis consistent with the Company's audited financial statements and, in management's opinion, fairly state the Company's financial position and results of operation as of such dates and for the periods then ended, and include all adjustments, consisting only of normal recurring accruals, necessary for a fair presentation of the information.
INCEPTION YEARS ENDED THREE MONTHS ENDED (AUGUST 30, 1993) DECEMBER 31, MARCH 31, TO DECEMBER 31, ------------------- ------------------- 1993 1994 1995 1995 1996 ----------------- ------- ------- ------- ------- (IN THOUSANDS, EXCEPT PER SHARE DATA) STATEMENTS OF OPERATIONS DATA: Revenues: Advertising........................ $ -- $ -- $ 849 $ -- $ 1,656 Subscription....................... -- -- 184 5 75 ---- ------- ------- ----- ------- Total revenues............. -- -- 1,033 5 1,731 Cost of revenues..................... -- -- 615 79 690 ---- ------- ------- ----- ------- Gross profit......................... -- -- 418 (74) 1,041 Operating expenses: Research and development........... 8 1,063 1,175 177 934 Sales and marketing................ -- 97 1,488 77 2,757 General and administrative......... 19 360 1,148 98 860 ---- ------- ------- ----- ------- Total operating expenses... 27 1,520 3,811 352 4,551 ---- ------- ------- ----- ------- Operating loss....................... (27) (1,520) (3,393) (426) (3,510) Interest income (expense) net........ -- 10 98 4 (58) ---- ------- ------- ----- ------- Net loss............................. $ (27) $(1,510) $(3,296) $ (422) $(3,568) ==== ======= ======= ===== ======= Pro forma net loss per share(1)...... $ (0.13) $ (0.02) $ (0.14) ======= ===== ======= Shares used in computing pro forma net loss per share(1).............. 25,863 25,966 25,914 ======= ===== =======
DECEMBER 31, MARCH ------------------------------- 31, 1993 1994 1995 1996 ------- ------- ------- ------- BALANCE SHEET DATA: Cash, cash equivalents and short-term investments.... $ 177 $ 568 $ 1,626 $10,114 Working capital (deficit)............................ (99) 458 92 7,131 Total assets......................................... 318 859 5,123 15,747 Long-term obligations................................ -- 210 838 2,640 Total shareholders' equity........................... 27 520 2,142 8
- --------------- (1) See Note 1 of Notes to Financial Statements for an explanation of the determination of the shares used in computing pro forma net income (loss) per share. 20 23 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS It is the Company's belief that this Prospectus may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Actual results could differ materially from those projected in the forward-looking statements as a result of the risk factors commencing on page 5 as well as other factors described below and elsewhere in this Prospectus. OVERVIEW Infoseek was formed in August 1993 to develop and provide Internet and World Wide Web ("Web") navigational services. From inception (August 30, 1993) to March 31, 1995, the Company's operations were limited and consisted primarily of start-up activities, including recruiting personnel, raising capital, research and development, and the negotiation and execution of an agreement with ACSIOM to license an information retrieval search engine developed at the University of Massachusetts. The Company introduced its first products and services in 1995. During 1995 and for the first quarter of 1996, the Company derived its revenues substantially from the sale of advertisements on its Web pages and, to a lesser extent, from subscription fees for the Company's services. During these periods, advertising revenues accounted for approximately 82% and 96%, respectively, of total revenues. The Company expects to continue to derive substantially all of its revenues for the foreseeable future from selling advertising space on its Web sites. Advertising revenues are derived principally from short-term advertising contracts in which the Company guarantees a minimum number of impressions (displays of an advertisement to the user) for a fixed fee. Advertising revenues are recognized ratably over the term of the contract during which services are provided, and are stated net of customer discounts. Also included in advertising revenues is the exchange by the Company of advertising space on the Company's Web sites for reciprocal advertising space in other media publications or other Web sites or receipt of applicable goods and services. Revenues from these exchange transactions are recorded as advertising revenues at the estimated fair value of the goods and services received and are recognized when both the Company's advertisements and reciprocal advertisements are run or applicable goods or services are received. Although such revenues have been insignificant to date, the Company believes these exchange transactions are of value, particularly in the marketing of the Infoseek brand, and expects to continue to engage in these transactions in the future. The Company has also derived revenues during 1995 and the first quarter of 1996 from fees related to a premium subscription service offered to business and professional users. Revenues from this service are recognized over the period the service is provided. The Company's current business model to generate revenues through the sale of advertising on the Internet is unproven. There can be no assurance that current advertisers will continue to purchase advertising space and services from the Company or that the Company will be able to successfully attract additional advertisers. See "Risk Factors -- Reliance on Advertising Revenues." The Company has an extremely limited operating history, which makes it difficult to manage future operations or predict future operating results. The Company did not commence generating revenues until 1995 and has generated limited revenues to date. The Company has incurred significant net losses since inception and expects to continue to incur significant losses on a quarterly and annual basis for the foreseeable future. As of March 31, 1996, the Company had an accumulated deficit of $8.4 million. The Company and its prospects must be considered in light of the risks, costs and difficulties frequently encountered by companies in their early stage of development, particularly companies in the new and rapidly evolving Internet market. In order to be successful, the Company must, among other things, continue to attract, retain and motivate qualified personnel, successfully implement its advertising program, continue to upgrade its technologies and commercialize products and services incorporating such technologies, respond to competitive developments and successfully expand its internal infrastructure. As a result of the Company's extremely limited operating history as well as the very recent emergence of the market addressed by 21 24 the Company, the Company has neither internal nor industry-based historical financial data for any significant period of time upon which to base planned operating expenses. Moreover, most of the Company's contracts with advertising customers have terms of three months or less, with options to cancel at any time. Accordingly, future sales and operating results are difficult to forecast. In addition, significant portions of the Company's revenues to date have been derived from sales to a limited number of customers, and the Company currently anticipates that future quarters will continue to reflect this trend. Therefore, the cancellation or deferral of a small number of advertising contracts or license agreements could have a material adverse effect on the Company's business, results of operations and financial condition. The Company's expense levels are based in part on its expectations as to future revenues and to a large extent are fixed. The Company may not be able to adjust spending in a timely manner to compensate for any unexpected revenue shortfall. Accordingly, any significant shortfall in relation to the Company's expectations would have an immediate adverse impact on the Company's business, results of operations and financial condition. The Company expects that its results of operations may also fluctuate significantly in the future as a result of a variety of factors, including the continued rate of growth, usage and acceptance of the Internet; the rate of acceptance of the Internet as an advertising medium; demand for the Company's products and services; the advertising budgeting cycles of individual advertisers; the introduction and acceptance of new or enhanced products or services by the Company or by its competitors; the Company's ability to anticipate and effectively adapt to a developing market and to rapidly changing technologies; the Company's ability to effectively expand its operations and manage such expansion; the Company's ability to attract, retain and motivate qualified personnel; initiation, renewal or expiration of significant contracts such as the Company's distribution relationship with NYNEX; pricing changes by the Company or its competitors; specific economic conditions in the Internet market; general economic conditions and other factors. In addition, the Company may elect from time to time to make certain pricing, service or marketing decisions or acquisitions that could have a short-term material adverse effect on the Company's business, results of operations and financial condition and may not generate the long-term benefits intended. Due to all of the foregoing factors, it is likely that in some future period, the Company's operating results may be below the expectations of public market analysts and investors. In such event, the price of the Company's Common Stock would likely be materially adversely affected. See "Risk Factors -- Extremely Limited Operating History; Anticipation of Continued Losses," " -- Potential Fluctuations in Future Results" and " -- Developing Market; Unproven Acceptance of Internet Advertising and of the Company's Products and Services." RESULTS OF OPERATIONS From inception through the first quarter of 1995, the Company's operations were limited and consisted primarily of start-up activities. Accordingly, the Company believes that year-to-year comparisons of 1993 against 1994, year-to-year comparisons of 1994 against 1995, and period-to-period comparisons of the first quarter of 1996 against the comparable period in 1995, are not meaningful. Accordingly the Company has not included such comparisons in the following discussion. Likewise, because of the Company's limited operations in 1995, the Company believes that future period-to-period comparisons against 1995 may also not be meaningful. See "Risk Factors -- Extremely Limited Operating History; Anticipation of Continued Losses." Total Revenues For 1995 and the first quarter of 1996, total revenues were $1,032,290 and $1,730,905, respectively. In the second quarter of 1995, the Company began selling advertising space on its Web sites. For 1995 and the first quarter of 1996, advertising revenues were $848,650 and $1,655,691, respectively, representing 82% and 96% of total revenues in such respective periods. The balance of total revenues during these periods was derived from subscription fees for a premium service offered to business and professional users. 22 25 In March 1996, the Company and NYNEX entered into a one year agreement, which provides that, beginning in May 1996, the Company will prominently display the BigYellow logo, which represents NYNEX's interactive shopping directory, as the exclusive comprehensive shopping directory within Infoseek Guide. In exchange for such exclusivity, NYNEX will pay to the Company up to an aggregate of $4.6 million in monthly payments, which amount will be decreased proportionately if the number of impressions of the BigYellow logo is below a specified number. NYNEX may extend the term of the agreement for additional one year periods, with the fee to be determined based upon Infoseek's then current advertising rate structure. In addition, NYNEX has the right to cancel or renegotiate the agreement based upon certain relative traffic volumes on the BigYellow and Infoseek Guide sites. There can be no assurance that the NYNEX arrangement will prove to be mutually beneficial or that it will be continued after its initial term or that the Company will be able to produce the levels of traffic that NYNEX has negotiated. See "Risk Factors -- Potential Fluctuations in Future Results," " -- Reliance on Advertising Revenues" and "-- Developing Market; Unproven Acceptance of Internet Advertising and of the Company's Products and Services," "-- Change in Netscape Relationship and Dependence on Other Third Party Distribution Relationships" and "Business -- Marketing and Distribution of the Infoseek Brand." Cost of Revenues For 1995 and the first quarter of 1996, cost of revenues were $614,622 and $689,480, respectively, representing 60% and 40% of total revenues in such respective periods. Cost of revenues consist primarily of expenses associated with the enhancement, maintenance and support of the Company's Web sites, including telecommunications costs and equipment depreciation. Cost of revenues also includes expenses associated with the licensing of certain third-party technologies, consisting in 1995 and the first quarter of 1996 primarily of amortization of the initial license fee for the ACSIOM search engine, as well as on-going royalties based on usage of the product. The initial license fee is amortized at a rate of $37,316 per quarter, commencing with the first quarter of 1995 and ending in the second quarter of 1996. Royalty fees to ACSIOM were paid commencing in the first quarter of 1995 and will continue as long as the Company utilizes the subject technology. Operating Expenses The Company's operating expenses have increased significantly in absolute dollar amounts each quarter in 1995 and 1996, as the Company has transitioned from the product development stage to the marketing of its services and products and expansion of its business. The Company expects operating expenses will continue to increase in the future as the Company continues to seek to expand its business. The Company recorded aggregate deferred compensation of $5,226,400 during the fourth quarter of 1995 and first quarter of 1996 in connection with certain stock options granted in the fourth quarter of 1995 and the first quarter of 1996. The amortization of such deferred compensation is being charged to operations over the vesting periods of the options, which are typically four years. For 1995 and the first quarter of 1996, the amortized expenses were $43,900 and $386,650, respectively. The amortization of this deferred compensation will continue to have an adverse effect on the Company's results of operations. See Note 6 of Notes to Financial Statements. Research and Development. For 1995 and the first quarter of 1996, research and development expenses were $1,174,849 and $933,988, respectively, representing 114% and 54% of total revenues in such respective periods. Research and development expenses consist principally of personnel costs and equipment depreciation. Costs related to research, design and development of products and services have been charged to research and development expense as incurred. See Note 1 of Notes to Financial Statements. The Company believes that a significant level of product development expenses is required to remain competitive. Accordingly, the Company anticipates that it will continue to devote substantial resources to product development and that these costs will substantially increase in absolute dollars in future periods. 23 26 Sales and Marketing. For 1995 and the first quarter of 1996, sales and marketing expenses were $1,488,492 and $2,756,579, respectively, representing 144% and 159% of total revenues in such respective periods. Sales and marketing expenses consist primarily of compensation of sales and marketing personnel and promotional expenses. Sales and marketing expenses in the first quarter of 1996 also included payments made to Netscape pursuant to an advertising revenue sharing arrangement for the listing of the Company's product on the Netscape Web page. Historically a large portion of the Company's traffic was derived through Netscape's Web page. During 1995, the Company paid no fees to appear on Netscape's Web page. The Company recorded $200,000 to sales and marketing expense as the estimated fair value of the services received from Netscape during 1995. From January 1, 1996 to March 31, 1996, the Company was listed as the sole premier "Net Search" partner on the Netscape Web page for which the Company paid Netscape 50% of the related net advertising revenue. In March 1996, Infoseek entered into an agreement with Netscape, which provides that Infoseek will be listed as a non-exclusive premier provider of navigational services on Netscape's Web page for the period April 10, 1996 to March 31, 1997. During the 30 day period from April 11 through May 10, 1996, the Company's average daily traffic was approximately 47% of its average daily traffic for the 30 day period immediately prior to the change from being Netscape's sole premier provider to one of five premier providers. There can be no assurance that the Company will be able to maintain or increase its current level of traffic. This agreement with Netscape provides for payments of up to an aggregate of $5 million to Netscape over the course of the term of the agreement. The Company has the right to terminate the agreement at the end of six months, in which case payments to Netscape would be reduced by an aggregate of approximately $2.5 million. The Company expects to continue hiring additional sales and marketing personnel and to increase promotional and advertising expenses, and anticipates that these costs will substantially increase in absolute dollars in future periods. See "Risk Factors -- Change in Netscape Relationship and Dependence on Other Third Party Distribution Relationships." General and Administrative. For 1995 and the first quarter of 1996, general and administrative expenses were $1,147,507 and $860,111, respectively, representing 111% and 50% of total revenues in such respective periods. General and administrative expenses consist primarily of compensation of administrative and executive personnel, occupancy costs and fees for professional services. The Company anticipates that its general and administrative expenses will continue to increase significantly in absolute dollar amounts as the Company expands its administrative and executive staff, relocates to new facilities, adds infrastructure and incurs additional costs related to being a public company, such as expenses related to directors' and officers' insurance, investor relations programs and increased professional fees. Income Taxes Due to the Company's loss position, there was no provision for income taxes for any of the periods presented. At December 31, 1995, the Company had federal and state net operating loss carryforwards of approximately $4 million and $600,000, respectively. The federal net operating loss carryforwards will expire beginning in 2008 through 2010, if not utilized, and the state net operating loss carryforwards will expire in the years 1998 through 2000. Certain future changes in the share ownership of the Company, as defined in the Tax Reform Act of 1986 and similar state provisions, may restrict the utilization of carryforwards. A valuation allowance has been recorded for the entire deferred tax asset as a result of uncertainties regarding the realization of the asset due to the lack of earnings history of the Company. See Note 8 of Notes to Financial Statements. LIQUIDITY AND CAPITAL RESOURCES From inception through March 31, 1996, the Company financed its operations and met its capital expenditure requirements primarily through cash proceeds from private sales of stock totaling $15,887,302. The Company had $1,625,967 and $10,124,023 in cash and cash equivalents and short term investments at December 31, 1995 and March 31, 1996, respectively. In April 1996, the Company raised additional net proceeds of $8,088,000 from private sales of Preferred Stock. 24 27 In 1995 and the first quarter of 1996, operating activities used cash of $1,468,104 and $2,074,806, respectively. The net cash used during these periods was primarily due to net losses and increases in accounts receivable, partially offset by increases in accrued liabilities and in 1995 an increase in accounts payable. In 1995 and the first quarter of 1996, investing activities used net cash of $3,325,522 and $750,993, respectively, primarily associated with the purchase of property and equipment and net short-term investments. Financing activities generated cash of $5,354,602 and $11,810,726 in 1995 and the first quarter of 1996, respectively, primarily from preferred stock sales and equipment loans. Following is a summary of the Company's commitments for the next five years:
- -------------------------------------------------------------------------------- COMMITMENT AMOUNT - -------------------------------------------------------------------------------------------- - - Facilities leases and equipment loans at $3,717,137. March 31, 1996. - -------------------------------------------------------------------------------------------- - - Amortization of initial fees for license $37,316 per quarter, ending second quarter of technology from Acsiom. of 1996. - -------------------------------------------------------------------------------------------- - - Support fees and royalty payments in $10,000 per quarter plus 4% of certain connection with license of technology from related revenues as long as Company Acsiom. continues to utilize the subject technology. - -------------------------------------------------------------------------------------------- - - Amounts payable to Netscape pursuant to Up to $5,000,000. March 1996 Agreement. - -------------------------------------------------------------------------------------------- - - Customization, installation, sub-license Approximately $180,000 in the aggregate start-up and monthly license fees in through 1997. connection with the license of certain software technology from HNC. - -------------------------------------------------------------------------------------------- - - Royalty fee based on a percentage of In order to maintain the exclusivity of the certain future related revenues in arrangement, certain annual minimum connection with the license of certain royalties are required, which are expected software technology from HNC. to be approximately $60,000 in the aggregate through 1997. - -------------------------------------------------------------------------------------------- - - Installation, license and maintenance fees Approximately $250,000 in the aggregate in connection with the license of certain through 1997. additional software technology from HNC. - -------------------------------------------------------------------------------------------- - - Royalty payments to XEROX in connection Up to $200,000 per year in 1996 and 1997, with license of certain linguistic and $300,000 in 1998. analysis technology from XEROX. - -------------------------------------------------------------------------------------------- - - Payments for certain technology previously $60,000 per year through 1999. licensed by the Company and fully expensed, that the Company has determined subsequently not to include in its products and services. - --------------------------------------------------------------------------------------------
The Company has no other material commitments and expects to incur significant capital expenditures to support expansion of the Company's business. The Company expects to use the net proceeds of this Offering for the uses referenced in the previous paragraph as well as general corporate purposes, including the expansion of the Company's product development and sales and marketing organizations and working capital. Furthermore, from time to time the Company expects to evaluate the acquisition of products, businesses and technologies that complement the Company's business, for which a portion of the net proceeds may be used. The Company does not, however, currently have any understandings, commitments or agreements with respect to any such acquisitions. Management expects that cash in excess of current requirements will be invested in investment grade, short-term interest-bearing securities. See "Risk Factors -- No Specific Use of Proceeds." 25 28 The Company currently anticipates that the net proceeds of this Offering and its recent Series E Preferred Stock financing, together with available funds and cash flows generated from advertising revenues, will be sufficient to meet its anticipated needs for working capital, capital expenditures and business expansion for at least the next 12 months. Thereafter, the Company may need to raise additional funds. The Company may need to raise additional funds sooner, however, in order to fund more rapid expansion, to develop new or enhanced services or products, to respond to competitive pressures or to acquire complementary products, businesses or technologies. If additional funds are raised through the issuance of equity or convertible debt securities, the percentage ownership of the shareholders of the Company will be reduced, shareholders may experience additional dilution and such securities may have rights, preferences or privileges senior to those of the holders of the Company's Common Stock. There can be no assurance that additional financing will be available on terms favorable to the Company, or at all. If adequate funds are not available or are not available on acceptable terms, it would limit the Company's ability to fund expansion, take advantage of acquisition opportunities, develop or enhance services or products or respond to competitive pressures. Such limitation could have a material adverse effect on the Company's business, results of operations and financial condition. See "Risk Factors -- Future Capital Needs; Uncertainty of Additional Financing." 26 29 BUSINESS Infoseek develops and provides branded, comprehensive Web-based navigational services that help users access and personalize the vast resources of the Internet. The Company's primary service offering, Infoseek Guide, is a free service targeted at individual users. The Company believes that Infoseek Guide goes beyond the functionality offered by other search engines and directory services, by aggregating and packaging the resources of the Internet to serve individuals' unique and personal interests and create rich Internet experiences. The Company believes that Infoseek Guide has been well received by consumers and has achieved a strong brand presence among Web users. Infoseek Guide has won a number of industry awards including "Number 1 Rated Search Engine" (PC Computing Sept 95), "Best of the Test " (Internet World May 96) and "MVP: Internet Tools " (PC Computing Dec 95). The Company is currently working on its next generation search engine, Ultraseek, which the Company plans to release in the second half of 1996. Ultraseek will enable the searching of a much greater number of Web sites at even faster speeds with the same level of accuracy for which Infoseek Guide is currently known. INDUSTRY BACKGROUND The Internet was originally created by the U.S. government to facilitate the exchange of information and electronic mail ("email") between a limited number of academic institutions, defense contractors and government agencies. The Internet was commercialized in the late 1980s and 1990s and technological enhancements have since extended the Internet's reach to consumers and businesses. The most important technological enhancement to the Internet was the creation of the World Wide Web (the "Web") in the early 1990s. The Web is an interactive environment, which facilitates the exchange of multimedia-rich information and entertainment resources among users worldwide. In addition, recent technological developments have enabled consumers and businesses to use the Web for buying and selling products and services. As a result, the Web has changed, and will continue to change the way in which people exchange information, communicate with each other and distribute products worldwide. According to a February 1996 issue of Business Week, there were approximately 200,000 Web sites in January 1996. A number of factors have contributed to the growth of the Web. The open nature of the Web enables any individual or organization to publish a Web site. New software-based authoring tools have lowered the cost of publishing content on the Web relative to conventional publishing methods and enabled new, exciting forms of multimedia content. The cost of delivering content to a large audience is lower than that of conventional media, consisting only of the cost of maintaining and operating computer equipment. In addition, the interactive nature of the Internet provides an environment in which content providers can track the appeal of their content by measuring the number of visits to a Web site and can respond quickly to consumers' changing tastes and needs. The dramatic increase in Web-based information and entertainment has increased the appeal of the Web to consumers and has driven the high growth in traffic on the Web. Continued enhancement to the Internet, such as support for secured transactions, multimedia offering technology and new compression technologies, should continue to attract new content providers to this medium. According to International Data Corporation, the number of Internet users is forecasted to increase from 56 million at the end of 1995 to 200 million by the end of 1999. Navigating the Web The rapid growth in content on the Web combined with the Web's unindexed nature presents significant challenges for consumers seeking Internet-based information and resources. Until the emergence of navigational tools, users had to know a lengthy Web address for each specific site, or had to move from Web site to Web site using hypertext links, searching for relevant information. Content providers and advertisers also faced difficulties in making the existence and location of their Web sites widely known and available to their target audiences. 27 30 A number of tools have emerged to assist users in locating information on the Web, including Web directories and search engines. Web directories are typically compiled manually and list Web sites by specific topics of interest. Directories generally list Web sites by their hypertext address, enabling a user to go directly to the listed site by clicking on the address. Entries in a directory also may contain Web site descriptions or reviews. Search engines offer users the ability to search Web sites based upon specific word or phrase queries. Search engines typically use automated software that "crawls" the Web to continuously capture and store updated Web site information. The information is then indexed in a database in order to provide immediate retrieval of relevant Web site listings in response to a query. Although search engines and directories help users navigate the Web, the Company believes that these tools have certain limitations and that there is an opportunity to provide added value to the consumer experience. One of the problems not solved by most search engines and directories is that once consumers have found specific Web sites of interest, the services do not place that information in a broader context of other related and relevant Web resources. Consumers must often make iterative searches or move from Web site to Web site in order to achieve a complete response to their search, find related information and feel that they have fully explored the Internet resources available to them. The Company believes that there is an opportunity to provide more comprehensive services that not only provide specific and relevant responses to consumer searches, but also aggregate and package the rich content resources of the Web in order to serve a consumer's unique and personal interests and create a rich Internet experience. The Company believes that consumers will respond to services that aggregate specific and relevant responses to queries with other relevant and related Web sites, targeted advertising, personalized news services, discussion groups, and other resources. The Company believes that services which bring together relevant content from among the vast resources on the Internet will enhance the consumer's Internet experience, attract a high volume of traffic and build brand loyalty. Advertising on the Web With the growth in the number of Internet users and content providers, the Internet has begun to develop the attributes of a conventional mass medium, where advertising subsidizes content delivered to users. Forrester Research, Inc. estimates that spending on Web-based advertising will increase from $37 million in 1995 to approximately $700 million by 1998. Moreover, the 1995 Commerce Net/Nielsen Internet Demographics Survey indicates that on average, Web users are upscale, professional and educated, providing an attractive demographic profile for advertisers. Advertisers have recognized that the interactive nature of the Internet can provide an environment where advertising may become more effective than it is in other more conventional print and broadcast media. The interactive and global nature of the Internet has the potential to enable advertisers to target specific audiences, measure the popularity of advertising content and make timely changes in response, reach worldwide audiences cost-effectively, and create innovative and interactive advertisements. The Company believes that increases in transmission bandwidth through higher speed Internet connections, and wider multimedia enabling technologies for the Web, such as Java, VRML and others, will also increase the appeal and effectiveness of advertisements and make the Web an even more attractive platform for advertising. Advertisers currently face difficulties, however, in placing their advertisements strategically on the Web. It is difficult for advertisers to understand the volume and demographics of traffic patterns on Web sites. As a result, advertisers can find it difficult to make the existence and location of their advertisements widely known and target their audiences effectively. The Company believes that, in the near term, advertisers will migrate to sites which can offer a high number of impressions per day. The Company also believes that, over time, advertisers will be attracted to those services that experience a high volume of traffic, track consumers carefully and deliver advertisers audiences that 28 31 fit specific buying profiles. In order to provide such audiences to advertisers, services and sites must develop technologies to enable them to conduct complex demographic and psychographic profiling of their consumers. By understanding their audiences, services and sites will be able to match advertisements with buyers, resulting in targeted, high impact advertising ("narrowcasting" or "microcasting"). The Company believes that those sites and services which both garner a high volume of traffic and offer advertisers the ability to target specific audiences effectively will be in the best position to take advantage of the advertising opportunity on the Web. THE INFOSEEK SOLUTION Infoseek develops and provides branded, comprehensive Web-based navigational services that help users access and personalize the vast resources of the Internet. Infoseek's primary service offering, Infoseek Guide, not only provides specific and relevant responses to consumer searches, but also aggregates and packages the resources of the Internet in order to serve a consumer's unique and personal interests. By integrating the capabilities of a search engine and a directory, Infoseek packages specific responses to search queries with communities of related Web, USENET and branded third party content and targeted, related advertising. By creating communities of related information in real-time for users, Infoseek Guide satisfies the needs of consumers to access relevant and related information, the needs of content providers to reach interested audiences, and the needs of advertisers to deliver advertisements to a targeted group of potential buyers. With every search on Infoseek Guide, the consumer receives some or all of the following: specific and relevant Web site listings in response to the query, a directory of other related Web sites, related and appropriate advertising, unique editorials on related subjects by well-known third party content providers, links to relevant discussion groups and other resources. For example, a user who enters the query "rock music concerts in San Francisco" would find not only a listing of relevant Web pages, but would also find a link to the Billboard Online section of the iZone (a third-party sponsored editorial feature related to popular music) and a directory of related topics including regional music, alternative music, music stores, and jazz that would be linked to other related Web sites. The user may also see advertising appropriate to the user's interests in rock music. The Company believes that the creation of real-time content enhances a user's Internet experience by immediately linking the user to an environment of relevant and related content and information. The Company also believes that its service has the following advantages: - State-of-the-Art Searching. The search engine underlying Infoseek Guide, which has been licensed from ACSIOM, is noted for its high accuracy and ability to quickly perform complex searches. The Company's search engine has won a number of industry awards, including "Number 1 Rated Search Engine" (PC Computing Sept 95), "Best of the Test " (Internet World May 96) and "MVP: Internet Tools " (PC Computing Dec 95). The Company is currently working on its next generation search engine, Ultraseek, which the Company plans to release in the second half of 1996. Ultraseek will enable the searching of a much greater number of Web sites at even faster speeds with the same level of accuracy for which Infoseek Guide is currently known. - Search-in-Context. Infoseek Guide integrates search and directory functions, providing not only specific responses to user queries, but also direct links in real-time to areas of content of interest that contain relevant content related to the specific request. Through this approach, consumers can either find specific answers to a search query or access a broader environment of other relevant and related information on the Internet. - Co-branded third party content. Infoseek Guide incorporates timely and unique third party content created exclusively for Infoseek by leading media publishers. The range and breadth of material on the Web is often confusing for consumers, which makes branded, credible information providers more visible and valuable. Infoseek believes it adds value to the consumer experience by including editorial material from these branded content providers in 29 32 response to user searches. Current third party content providers include: Conde Nast Publications, MacWorld, PC World and SportsLine. The Company plans to continue to enhance the attractiveness of its service to users through additional features and functionality. Infoseek is currently developing several enhancements to Infoseek Guide, which will allow for personalization of content and advertising according to user interests. These enhancements are expected to be released by fall 1996, and will allow users to create permanent filters for Internet-based information such as newswires, stock quotes, USENET listings and other Internet resources. The Company believes that by matching the interests of users with appropriate content and advertisements and by offering the significant traffic generated by Infoseek's services, it delivers better value to content providers and advertisers seeking to reach larger or more targeted audiences. The Company believes that through its service, content providers gain increased exposure to interested users since these users are linked to broader communities of related content when undertaking search requests. For example, Billboard Online, one of the Company's third-party providers, would be listed in response to most queries regarding music related items. Infoseek's services provide advertisers with an increased ability to undertake measurable, targeted, cost-effective and interactive advertising on the Internet. The Company's services provide advertisers with the flexibility to target the mass audience of the Internet by advertising on the Company's general search pages, to target special interest groups by placing advertisements on directory pages, or, to narrowcast advertisements to specific audiences by placing advertising only when the user's query contains a specific word that has been designated as a key word for a particular advertiser. The Company believes that each of these types of advertising can provide significant value to advertisers. While larger, mass market campaigns increase brand awareness, narrower campaigns through directory ads or keyword ads provide opportunities to engage in high response, product specific advertising. The Company is also actively exploring new technologies which will allow compilation of anonymous profiles of user behavior and interests, to more closely match the interests of audiences and advertisers. BUSINESS STRATEGY The Company's objective is to establish itself as the dominant branded media navigation and content aggregation service provider on the Internet. The Company seeks to build a high volume of traffic on its services to provide a preferred platform for content providers and advertisers to reach their target audiences. At the core of the Company's strategy, the Company seeks to provide real-time, content rich Web communities that create value for the user and establish the Company's platform as an attractive medium for advertisers. The Company's strategy contains the following key elements: Create Brand Recognition and Consumer Loyalty. The Company believes that, as with many conventional media, branding and consumer loyalty on the Internet are highly dependent on the aggregation and packaging of content into innovative and appealing products and the effective marketing of such products to consumers. To this end, the Company developed Infoseek Guide, a navigation and content aggregation service that differentiates the Company's service and enhances a user's Internet experience through the real-time creation of Web communities. The Company intends to build upon its technical and media expertise to develop innovative new services, as well as enhance and expand existing service offerings. The Company also promotes its brand through online and print advertising and other promotional activities. The Company believes that these promotional campaigns are an important component in building brand awareness in the emerging Internet market. Create Innovative Solutions for Advertisers. The Company seeks to provide advertisers with innovative solutions to effectively reach their target audiences through the Internet. The Company currently offers a broad range of customized alternatives for advertisers, providing advertisers with the flexibility to target mass audiences or specific communities, or link advertisements to keyword 30 33 searches. In addition, the Company is actively exploring new technologies which will enable advertisers to utilize user demographic, profile, and psychographic information. For example, the Company has entered into an agreement with HNC which provides that the Company and HNC will jointly develop an advertising and management system to anonymously track individual usage behavior that is based upon technology developed by HNC. The Company believes that these innovative advertising approaches, which will allow advertisers to microcast advertisements to specific user types based on sophisticated analysis of searching behavior, will significantly differentiate the Company's services. Utilize Leading-edge Search and Directory Technologies. The Company believes that technology is an important component in differentiating its services. Accordingly, the Company develops and licenses from third parties leading-edge technologies which aid the Company in providing Internet users with quick, precise and thorough search results, and comprehensive state-of-the art directory services. For example, the Company is currently working on its next generation search engine, Ultraseek, which the Company plans to release in the second half of 1996. Ultraseek will enable the searching of a much greater number of Web sites at even faster speeds with the same level of accuracy for which Infoseek Guide is currently known. The Company also intends to develop, through its relationship with HNC, leading-edge, proprietary technology for the automated abstracting and categorization of Web sites. Create and Expand Branded Content Partnerships. The Company seeks to co-brand its service offerings with recognized third-party content in order to enhance the value of the Infoseek brand. The Company believes that the use of third party branded content may lead to higher perceived editorial value and provide incremental distribution outlets and cross-promotion opportunities. In addition, by not developing content in-house, the Company is able to lower editorial costs. The Company has developed a series of third-party sponsored editorial Web pages, called iZones, that cover special interest group topics, such as music, sports or travel. The sponsors are companies with either product or publishing brands relevant to the category, such as SportsLine, a sports news and information service. The Company intends to aggressively build and extend the branded content available through Infoseek Guide by continuing to develop alliances with leading media companies and content providers. Maximize Audience Reach through Distribution Relationships. The Company seeks to form relationships that maximize audience reach and create alternate distribution channels to the Company's services. The Company established as one of its earliest and primary distribution channels an initial relationship with Netscape to be the sole premier "Net Search" navigational service on the Netscape Web page. This relationship enabled the Company to gain access to a large audience and build early brand awareness. Netscape has since implemented a new "Net Search" display, in which several navigational service providers are rotated through the most visible position on the page. In order to maximize exposure, the Company has broadened and will continue to broaden its distribution channels through other relationships, such as with Microsoft, NETCOM, NYNEX, Verity and Quarterdeck. The Company intends to continue to aggressively expand its distribution relationships. Leverage Media and Technical Expertise. The Company believes that the Internet represents a technology-driven mass medium in which advertising will subsidize content. As a result, in-depth knowledge and understanding of publishing, advertising, technology and media will be critical elements to success for any navigational service company. To this end, the Company has assembled a management team with a depth of experience in these areas. The Company's executive officers have experience at Time, McGraw-Hill, Cahners Publishing, Foote Cone & Belding, US News & World Report, Frame Technology, 3COM, Apple, NetFRAME, Mastercard International and The Wall Street Journal. The Company also believes that directly establishing and maintaining relationships with advertisers will become increasingly important in maintaining and capturing incremental advertising market share. Accordingly, the Company has assembled a highly experienced, direct sales force to promote and accelerate advertising sales. 31 34 INFOSEEK NAVIGATIONAL SERVICES Infoseek's primary service offering, Infoseek Guide, is a navigation and content aggregation service targeted towards individuals and offered free to users. In addition to Infoseek Guide, the Company offers Infoseek Professional, a subscription-based service featuring premium content from commercial information databases and targeted to business and professional users. The Company plans to continue to introduce new services for individual and organizational markets over time. The Company's current and future service offerings are described below: Infoseek Guide Infoseek Guide, the Company's primary navigation and content aggregation service, assists users in locating relevant information on the Internet. Infoseek Guide provides to the user fast and relevant search results in response to the user's query. Moreover, Infoseek Guide's integrated search and browse functions guide the user to a real-time generated, personalized, Web community related to the area of inquiry. Infoseek Guide is offered free of charge to Internet users. Introduced in January 1996, Infoseek Guide is a successor to the Company's initial search service launched in April 1995. Infoseek Guide integrates multiple methods of obtaining information from the Internet. Users are presented with four principal resources -- Search, Directory, iZones and Toolbar -- from which they can launch specific queries, browse or access proprietary content. - Search: The Search function allows the user to effect query-based searches of the Web, USENET News and other premium content databases or the Directory. To perform a search, a user types a query in the search box and is then presented a highly specific response from a search of the entire database. A search can be effected using either simple keywords, full text (natural languages) or more formalogic formats such as boolean. For example, a user can search for "Olympics and Atlanta" or type in "Tell Me About the Atlanta Olympic Games." The Search function utilizes sophisticated techniques to allow users to obtain specific results for queries, such as "AT&T", "NeXT," "49ers" or "Vitamin C," which can pose significant challenges to other search services, due to the case sensitive, numerical or singular letter aspect of the query. Infoseek Guide has won a number of industry awards including "Number 1 Rated Search Engine" (PC Computing Sept 95), "Best of the Test " (Internet World May 96) and "MVP: Internet Tools " (PC Computing Dec 95). In addition, the Company is currently working on its next generation search engine, Ultraseek, which the Company plans to release in the second half of 1996. Ultraseek will enable the searching of a much greater number of Web sites at even faster speeds with the same level of accuracy for which Infoseek Guide is currently known. - Directory: Directory is a hierarchical listing of Web pages that have been selected and abstracted by the Company and organized by category. As of March 31, 1996, Directory consisted of over 25,000 abstracted entries. Directory enables a user to click on a directory entry such as Arts & Entertainment or Sports, and to look through a hierarchy of relevant Internet sites for areas of interest. For example, under Sports, the user can proceed from Baseball to Players, and finally, to Ken Griffey Jr. Directory assists the user by providing abstracts of each directory entry. In addition, the Company has entered into an agreement with HNC to license certain technology from HNC which is intended to allow the Company to enhance the Company's Web Directory feature. Infoseek expects to use this technology to automate the construction of Directory categories, the assignment of Web pages to each Directory category and the creation of abstracts for each Web page included in the Directory, as well as to increase the number of entries in the Directory. - iZone: iZones are special interest editorial features created exclusively for Infoseek by leading third party content providers. In response to specific user queries, Infoseek Guide displays a prompt to link a user to context relevant iZones. For example, if the user effects a golf-related query, the search response will provide an iZone button that enables access to an 32 35 iZone created by iGolf. Each iZone contains a short editorial on a specific topic of interest and links to other relevant and related Web sites. iZones provide sponsors with an opportunity to reach a community of consumers having an interest in the sponsor's product, and creates a pathway to the sponsor's editorials and Web page. The Company's iZone sponsors as of April 25, 1996 are:
-------------------------------------------------- SPONSOR IZONE DESCRIPTION Billboard Online/BPI Communications The Front Row Pop music Campus Concepts Campus Commons Student life Epicurious/Conde Nast Publications, Inc. The Dining Room Food and drink HomeArts/The Hearst Corporation The Living Room Home and lifestyle Hoover's Online/The Reference Press, Inc. Company Profiles Company profiles InterZine Productions iGolf Golf Imaging Publishing, Inc./The Net CyberArts Fine art online Inc. Online The Enterprise Zone Small business information Inc. Online The Inc. 500 Tips for small businesses Macworld Online/IDG Macintosh Shareware Shareware for Macs MoneyHunter/MoneyHunt Properties LLC Growth Capital Entrepreneurial information Next Generation Online/Imagine Publishing, Inc. The Arcade Computer/video games PC World Online/IDG Silicon Alley Personal computers Quote.com Stock Quotes Stock quote lookups SportsLine USA The Sports Arena Sports news TV1/New Century Productions TV Times Television schedules Viewz Home Computing Computers for at-home use Women's Wire/Wire Networks/News Update Fashion Plate Fashion trends
- Toolbar: The Toolbar is a set of buttons available on the Infoseek user interface that provide users simple and instantaneous access to certain premier content providers in areas of general interest, such as news, weather, stock prices and interactive shopping directories. For example, the toolbar options Fast Facts and World News allow the user to directly access such resources as Reuters world news, directories of email addresses, phone numbers, and reference materials such as online dictionaries and a thesaurus. The Toolbar also allows users direct access to a listing of iZones and the ability to initiate new searches. The following is an illustration of the Company's current Toolbar: Picture of current toolbox, including: Infoseek Guide Logo and icons used to access new searches, BigYellow, World News, Fast Facts, The iZone. Infoseek Guide operates with most popular Web browsers. Although browser features vary by manufacturer and version, Infoseek Guide automatically configures itself to conform to the specific features of each user's browser. Where available, Infoseek Guide employs advanced features such as frames, which organize the screen format into clickable areas to enhance the usability of the service and the appeal to advertisers. iSeek. Infoseek recently released iSeek, a new software program. iSeek is an extension of the Infoseek Guide that can be downloaded directly onto the user's desktop and makes it easier for the user to access Infoseek Guide. In its first release in March 1996, iSeek consists of a collection of "hot buttons" that connect users directly to Infoseek Guide. A user who clicks on "Stock Quotes" or "Headline News," for example, can be connected to a personalized portfolio, or the latest headlines. 33 36 Future Enhancements. The Company plans to continue to enhance the attractiveness of its service to users through additional features and functionality. Infoseek is currently developing several enhancements to Infoseek Guide, which will allow for personalization of content and advertising according to user interests. These enhancements are expected to be released by fall 1996, and will allow users to create permanent filters for Internet-based information such as newswires, stock quotes, USENET listings and other Internet resources. Infoseek Professional. Infoseek Professional is a subscription-based service targeted primarily to professional and business users of commercial online data and content. Infoseek Professional provides access to multiple, premium content databases in addition to the standard collections of Web pages, USENET News, and wire services more widely available on the Internet. Infoseek Professional provides a lower cost means to access a broad range of information databases as compared to individual premium service subscriptions. Infoseek Professional has not been a source of significant revenues to date for the Company. TECHNOLOGY The Company believes it can differentiate itself by developing innovative proprietary technology and integrating technology licensed from third parties where appropriate. The Company's strategy is to develop and license only technologies that are able to scale with the growth in content on the Internet, in order to enable the Company to cost-effectively adapt and grow with the Internet. Core Search Engine Technology The Company's current search engine technology is based upon technology licensed perpetually from ACSIOM to the Company. The Company's search engine has won a number of industry awards, including "Number 1 Rated Search Engine" (PC Computing Sept 95), "Best of the Test " (Internet World May 96) and "MVP: Internet Tools " (PC Computing Dec 95). The Company's search engine seeks to deliver high accuracy, which is characterized by the level of precision and the level of recall. Precision and recall are two criteria by which the effectiveness of a search engine technology is often measured. Precision is a measure of how effectively a search engine calculates the relevance of documents that match the query. Recall is a measure of what percentage of the total number of relevant documents in the database are found during the search. Together, these two measures of search engine performance tend to be the most important factors to users in evaluating the accuracy and usefulness of a search engine. For example, in a database of 100 documents with two documents that exactly match the desired query, the ideal search engine would retrieve only the two matching documents, thereby achieving both 100% precision and 100% recall. In addition, due to the dynamic nature of the Internet, the retrieval of up-to-date information has become another key factor for the evaluation of Internet search services. To bring current information to the user, the Company's technology refreshes its entire database of Web pages no less frequently than every four weeks, while regularly updating with new Web pages. This enables Infoseek Guide to deliver accurate, relevant and up-to-date search results. Infoseek's search engine is able to recognize proper nouns and analyze keyword proximity. A request in Infoseek Guide for "Pete Rose" will return the former baseball player and not a large selection of flowers or other persons named "Pete," thereby retrieving more accurate results. In addition, the technology is case-sensitive, so that it can distinguish between a search for "NeXT," the computer company, and "next," the common word. Another key element of the technology include its ability to "stem" words so that all tenses and inflections of a word (such as stop, stops, stopped and stopping) are considered in the search. Stemming, improperly performed, results in the retrieval of large volumes of irrelevant information. The technology also makes use of operators that can filter documents by either requiring a specific term to appear in all search results or rejecting any 34 37 results containing a specific term. Field operators are also used so that a search term may be linked to or excluded from a specific portion, or field, of a document, such as the title of a document. To facilitate the ease of use of the service, Infoseek Guide includes a sophisticated technology to interpret "natural language" queries. Although most current search engines also provide natural language capabilities, the results achieved may differ dramatically. The Infoseek technology is based upon a weighting of various factors such as the case of the words in the search phrase, how common the words appear in usage, word proximity and how the words appear in the pages searched. By using the stemming, case-sensitivity, word proximity, operators and other algorithms in the search engine, Infoseek Guide is able to retrieve highly accurate and relevant results. The Company has also provided a proprietary Web spider which works in conjunction with the original ACSIOM technology to enhance the performance of the search engine. A Web spider is software that identifies and catalogs pages on the Web. This catalog, when indexed with text retrieval software such as the Company's search engine, can be quickly accessed by keyword or phrase. Together, the search engine technology and the Web spider technology are used to index Web pages, the Directory, iZone pages, and other sources of content. When the user submits a query, such as "Explain the lyrics to Penny Lane", the engine searches the Web index created by the Web spider, the indices for the iZone and other content, to provide a list of 'hits' ordered by the relevance of the hits to the user's query. The Company is currently working on its next generation search engine, Ultraseek, which the Company plans to release in the second half of 1996. Ultraseek will enable the searching of a much greater number of Web sites at even faster speeds with the same level of accuracy for which Infoseek Guide is currently known. To enhance the capabilities of Ultraseek, the Company has recently licensed certain software technologies from XEROX for the linguistic analysis of document content and search terms. The Company will pay a royalty to XEROX based on the usage of the technology, an amount up to $200,000 per year in 1996 and 1997, and $300,000 in 1998. After payment of such $700,000 in royalties, the Company will have a fully paid, perpetual license to the technology. This technology will be licensed to the Company on a partially exclusive basis for the first year and on a nonexclusive basis thereafter. In addition, the Company has entered into an agreement with HNC to license certain technology from HNC that is intended to allow the Company to enhance the Company's Web Directory feature. Infoseek expects to use this technology to automate the construction of Directory categories, the assignment of Web pages to each Directory category and the creation of abstracts for each Web page included in the Directory. All of these processes are currently being performed manually. Accordingly, the Company is depending upon the proposed technology to reduce the cost of expanding its Directory feature. This technology will be licensed to the Company for an initial five year term beginning upon the initial acceptance of the software by the Company. There can be no assurance that the HNC technology will function as anticipated or will provide the intended benefits, and any such deficiency could require the Company to incur significant increased costs to expand its Directory as planned. See "Risk Factors -- Dependence on Technology Suppliers." Advertising Management Infoseek has developed certain proprietary systems for the instantaneous placement of advertisements with targeted audiences on appropriate Infoseek Guide Web pages. Infoseek's advertising management systems are capable of presenting in real-time advertising that corresponds to a user's inquiry. If certain key words have been purchased by more than one advertiser, the system automatically determines which advertisement is displayed based upon the number of impressions under contract and delivered to date. As part of the Company's proprietary advertising management system, Infoseek also maintains a database that tracks the number of searches of each word queried by Infoseek users, the number of browses through each Directory category and the number of 35 38 impressions of each advertisement. This system assists the Company in estimating the number of expected impressions of specific advertisement options marketed by the Company or otherwise sought by advertisers. In April 1996, the Company licensed certain software technology from HNC. The Company intends to utilize the software technology to develop an advertising and audience management system to optimize the matching of advertisements with the appropriate audience. The software will be modified according to the Company's specifications to integrate it into the Company's advertisement placement system. This technology will be licensed to the Company for an initial five year term beginning upon the initial acceptance of the software by the Company. The Company expects that the proposed technology will provide significant technological improvements to the Company's advertising and audience management systems. The Company expects the proposed technology to provide significant technological improvements to the Company's advertising and audience management systems. There can be no assurance that such system will be successfully developed. See "Risk Factors -- Dependence on Technology Suppliers." ADVERTISING SALES Infoseek derives substantially all of its revenues from the sale of advertisements. These advertisements appear on the Infoseek Guide Web page when a user enters the service, performs a search, or browses through the Directory or Toolbar. Advertising revenues represented 82% and 96% of the Company's total revenues for fiscal 1995 and the first quarter of 1996, respectively. The Company believes it has been able to achieve its advertising revenues to date primarily through the extensive knowledge and relationship-base of its direct-sales force and through the products and technological advantages it can offer advertisers. Sales Force As of March 31, 1996, Infoseek's advertising sales staff consisted of 20 representatives located in Santa Clara, New York, San Francisco, Atlanta and Boston. The staff collectively has advertising experience at media firms such as Anderson Lembke, Datamation, Cahners Publishing, Foote Cone & Belding, Inc., Hachette Filipacchi, Hearst New Media, US News & World Report, Inc., and Yankee Publishing Inc. The Company believes that having an internal sales force with significant prior experience will allow it to better understand and meet advertisers' needs, increase its access to potential advertisers and maintain strong relationships with its existing base of advertising clients. The Company plans to increase its staff during the remainder of 1996. In Europe, Asia and Latin America, the Company intends to establish working relationships with international advertising representation firms. No definitive arrangement with any international firms have been reached to date. Advertising Products and Pricing The Company offers advertisers four main advertising options that may be purchased individually or in packages: general rotation, topic pages, keyword and special placement. These options all contain hypertext links to the advertiser's home page. To date, most of Infoseek's contracts with advertisers have terms of three months or less. General Rotation: General rotation advertisements rotate on a random basis through Infoseek Guide on search result pages and pages accessed through the Toolbar. General rotation advertising offers advertisers seeking to establish brand recognition across the broad, general population the broadest reach of Infoseek users. General rotation advertisements are typically sold in blocks of one thousand impressions to be generated over a four week period, currently at a CPM (cost per thousand impressions) of $13 to $23 depending upon the number of impressions purchased. To date, most general rotation advertisers have purchased blocks of one million impressions, which are currently priced at a rate card CPM of $18. 36 39 Topic Pages: Topic page advertisements appear when an Infoseek user browses through Directory topic pages, such as Careers and Employment, Stocks, and Health and Medicine. These advertisements allow advertisers to target an audience with a specific area of interest. Like general rotation advertisements, topic page advertisements are sold in blocks of impressions over a four week period. Because of the greater selectivity of the audience, current CPMs range from $19 to $39 with a rate card CPM of $25 for one million impressions. Keyword: Keyword advertisements are displayed when an Infoseek user's search contains a particular keyword selected by the advertiser. This option offers the advertiser a highly targeted, self-selected audience. Through its proprietary advertising management system, the Company tracks every word that is queried by Infoseek users. From it, the Company has identified approximately 200 keywords that are most frequently queried by Infoseek users and requested by advertisers. The current four week rate card CPM for a keyword is $50, with a $1,000 minimum. Special Placement: Special placement advertisements are displayed on special feature pages, such as iZones and in other manners customized to the needs or requests of the advertiser. Special placement advertisements include advertisements placed on special editorial pages. For example, Infoseek is offering special advertising placements within a series of editorial features, games and other items created by the Company revolving around the 1996 Atlanta Games. The Company seeks to bundle these advertising options to create packages that offer the greatest value to advertisers. Pricing for special placements is determined on a case-by-case basis. Technological Advantages for Advertisers The online medium offers advertisers the ability to "narrowcast" their advertisements. For example, car manufacturers can display their advertisements when a user executes a car-related search. Infoseek's technology additionally enables clients to monitor the effectiveness of their advertisements by tracking click-through rates (the number of viewers who click to an advertiser's site) to learn more about their target audiences. Infoseek advertising sales representatives work closely with advertisers to understand the data and integrate it into their overall advertising strategy. The Company is exploring new technologies to enhance user behavior tracking and advertising management capabilities. See "Business -- Technology" and "Risk Factors -- Technological Change and New Products." Major Advertisers During the course of the first quarter of 1996, over 120 advertisers placed advertisements on the Company's service. The following is a list of the Company's top advertisers for that quarter, including the percentage of revenues attributable to such advertiser for such quarter, as measured by net revenues. Adaptec -- 3% AT&T -- 3% Cathay Pacific -- 2% c/net -- 2% Discovery Channel -- 4% Free Ride Media -- 8% GTE -- 1% Hearst New Media -- 2% IBM -- 1% Intel -- 1% Internet Shopping Network -- 8% Marketplace MCI -- 2% Microsoft -- 7% Netscape -- 2% Nissan -- 1% NYNEX -- 2% Roguewave Software -- 1% SportsLine -- 3% Starwave -- 1% Swatch -- 1% 37 40 MARKETING AND DISTRIBUTION OF THE INFOSEEK BRAND Marketing The Company's strategy is to build brand for Infoseek through online and trade advertising, trade shows, print media and promotions. The Company's current print media campaign includes aggressively marketing in publications such as The Wall Street Journal, Internet World, WebWeek, Advertising Age and Adweek Network. In addition, the Company cross-promotes with content providers through advertising swaps both in online media and traditional print and broadcast media. In addition, the Company seeks to establish relationships with key marketing partners. To that effect, the Company has entered into a co-marketing relationship with Sun Microsystems, Inc. ("Sun") under which Infoseek has agreed to use Sun equipment exclusively for use with an Ultraseek-branded search service. In return, Infoseek will receive advantageous terms on its purchases of certain Sun equipment and the two companies shall widely promote each other's products and services. Distribution The Company seeks to form relationships that maximize audience reach and create alternate distribution channels to the Company's services. The Company has developed the following significant distribution relationships: Browser Vendors: The Company has relationships with Netscape, Microsoft, Quarterdeck, NETCOM, NetManage and Freeloader. Each of these companies distributes software to its customers which is used to navigate the Web. Infoseek Guide is listed by each of these companies as a navigational service available to their users. The terms of these relationships vary widely, both in the prominence given to Infoseek Guide relative to other alternatives and the compensation paid by Infoseek for the traffic. All of these companies feature Infoseek Guide as a key navigational tool and engage in certain promotional activities. From March 1995 through March 1996, the Company's service was listed as the sole premier navigational service on the Netscape Web page accessible via the "Net Search" button. As of March 31, 1996, approximately 85% of the traffic to the Company's Infoseek Guide service was derived through the Netscape Web page. In March 1996, Infoseek entered into a new agreement with Netscape, which provides that Infoseek will be listed as a premier provider of navigational services on Netscape's Web page for the period April 10, 1996 to March 31, 1997. Currently, Netscape's Web page displays four additional premier providers. During the 30 day period from April 11 through May 10, 1996, the Company's average daily traffic was approximately 47% of its average daily traffic for the 30 day period immediately prior to the change from being Netscape's sole premier provider to one of five premier providers. There can be no assurance that the Company will be able to maintain or increase its current level of traffic and any failure to do so could materially and adversely impact advertising revenues. In addition, the Company cannot anticipate the impact of any changes Netscape may make to this service, to its Web page or its other services, on Infoseek traffic, or the effect on advertising revenues that may be generated from such traffic. Infoseek's agreement with Netscape provides for payments of up to an aggregate of $5 million to Netscape over the term of the agreement. The Company has the right to terminate the agreement at the end of six months, in which case the payment to Netscape would be reduced to an aggregate of approximately $2.5 million. See "Risk Factors -- Change in Netscape Relationship and Dependence on Other Third Party Relationships". Strategic Relationships: In March 1996, the Company and NYNEX entered into a one year agreement, which provides that, beginning in May 1996, the Company will prominently display the BigYellow logo, which represents NYNEX's interactive shopping directory, as the exclusive comprehensive shopping directory within Infoseek Guide. In exchange for such exclusivity, NYNEX will pay to the Company up to an aggregate of $4.6 million in monthly payments, which amount will be decreased proportionately if the number of impressions of the BigYellow logo is below a specified number. NYNEX may extend the term of the agreement for additional one year periods, with the fee to be determined based upon Infoseek's then current advertising rate structure. See "Risk Factors -- Potential Fluctuations in Future Results." 38 41 The Company has recently entered into a distribution agreement with Verity, Inc. ("Verity") under which Verity will provide a link to Infoseek Guide on the user interface of a new Verity product called Topics Search for Exchange, which is designed for internal corporate use, often referred to as "intranets." Infoseek Guide complements Verity's product by creating a gateway for intranet users of Verity's product to access the Internet. Verity is a leading supplier of corporate search and retrieval products and services for workgroups and local area networks. The addition of the Infoseek Guide link will allow Verity's users to search for information on their corporate network or across the Internet. Infoseek will pay Verity a percentage of the advertising revenues derived from such searches. The Company has entered into a memorandum of understanding and a marketing alliance agreement with Kanematsu Corporation ("Kanematsu"), a large Japanese trading company and a shareholder of the Company, to create a strategic alliance. Under the initial phase of the alliance, the parties will establish a Japanese Internet search and retrieval service containing listings of Japanese Web sites written in Japanese and a Japanese translation of the Infoseek Guide Directory. A subsequent phase of the alliance is intended to create Infoseek Japan, a joint venture in Japan 40% owned by Infoseek and 60% owned by Kanematsu. Under terms of the memorandum of understanding, Kanematsu will contribute capital and Infoseek will contribute certain technologies. Infoseek Japan will be responsible for its own advertising marketing and sales. Other Web Sites: Infoseek promotes the creation of hyperlinks between Infoseek Guide and other Web sites. Approximately 3,000 sites on the Web currently contain pointers to Infoseek Guide, often with the Infoseek logo prominently displayed on their sites. COMPETITION The market for Internet products and services is highly competitive, with no substantial barriers to entry, and the Company expects that competition will continue to intensify. In addition, the market for the Company's products and services has only recently begun to develop, is rapidly evolving and is characterized by an increasing number of market entrants with competing products and services. The Company does not believe this market will support the increasing number of competitors and their products and services. Although the Company believes that the diverse segments of the Internet market may provide opportunities for more than one supplier of products and services similar to those of the Company, it is possible that a single supplier may dominate one or more market segments. Accordingly, any failure of the Company to provide product and service offerings that achieve success in the short-term could result in an insurmountable loss in marketshare and brand acceptance, and could, therefore, have a material adverse and long-term effect upon the Company's business, results of operations and financial condition. A number of companies offer competitive products and services addressing certain of the Company's target markets. These companies include America Online, Inc., Digital Equipment Corporation, Excite, Inc., Lycos, Inc., The McKinley Group, Open Text Corporation, CompuServe Corporation, Prodigy Services Company and Yahoo! Corporation. In addition, the Company competes with metasearch services that allow a user to search the databases of several catalogs and directories simultaneously. The Company also competes indirectly with database vendors that offer information search and retrieval capabilities with their core database products. In the future, the Company may encounter competition from providers of Web browser software, including Netscape and Microsoft, online services and other providers of other Internet products and services who elect to incorporate their own search and retrieval features into their offerings. Many of the Company's existing and potential competitors have significantly greater financial, technical and marketing resources than the Company. The Company may also be adversely affected by competition from licensees of its products and technology, current and future advertisers, as well as from its current, future and former content providers. There can be no assurance that the Company's competitors will not develop Internet products and services that are superior to those of 39 42 the Company or that achieve greater market acceptance than the Company's offerings. Moreover, a number of the Company's current advertising customers, licensees and licensors have also established relationships with certain of the Company's competitors and future advertising customers, licensees and licensors may establish similar relationships. In addition, the Company competes with online services and other Web site operators as well as traditional offline media such as print and television for a share of advertisers' total advertising budgets. There can be no assurance that the Company will be able to compete successfully against its current or future competitors or that competition will not have a material adverse effect on the Company's business, results of operations and financial condition. RESEARCH AND DEVELOPMENT During 1995 and the first quarter of 1996, the Company spent $1,174,849 and $933,988, respectively, on research and development activities. As of March 31, 1996, the Company had a research and development staff of 26 full-time employees located at the Company's headquarters in Santa Clara, California. The Company currently employs information retrieval technology licensed from ACSIOM, an entity related to the University of Massachusetts, but is developing a new search engine technology, Ultraseek, which is being designed to significantly improve retrieval and Web page indexing capabilities beyond the ACSIOM technology. The Company has also licensed certain software technologies from XEROX, which the Company intends to use for the linguistic analysis of search terms. This technology will be licensed to the Company on a partially exclusive basis for the first year of the contract. Infoseek has entered into an agreement with HNC to license certain technology from HNC to automate the development of the Company's Web Directory feature. Infoseek expects to use this technology to enhance the Directory development process by automating the creation of Directory entries, as well as the abstracts within the Directory entries. In addition to these technologies and services under development, many of the Company's new products and product enhancements have been only recently introduced and it is not yet clear that such products will achieve significant market acceptance. See "Risk Factors -- Technological Change and New Products and Services." INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS The Company's success depends significantly upon its proprietary technology. The Company currently relies on a combination of copyright and trademark laws, trade secrets, confidentiality procedures and contractual provisions to protect its proprietary rights. The Company seeks to protect its software, documentation and other written materials under trade secret, patent and copyright laws, which afford only limited protection. The Company currently has six United States patent applications pending. There can be no assurance that the pending applications will be approved, or that if issued, such patents will not be challenged, and if such challenges are brought, that such patents will not be invalidated. There can be no assurance that the Company will develop proprietary products or technologies that are patentable, that any issued patent will provide the Company with any competitive advantages or will not be challenged by third parties, or that the patents of others will not have a material adverse effect on the Company's ability to do business. The Company has registered and applied for registration for certain service marks and trademarks, and will continue to evaluate the registration of additional service marks and trademarks, as appropriate. The Company generally enters into confidentiality agreements with its employees and with its consultants and customers. Litigation may be necessary to protect the Company's proprietary technology. Any such litigation may be time-consuming and costly. Despite the Company's efforts to protect its proprietary rights, unauthorized parties may attempt to copy aspects of the Company's products or services or to obtain and use information that the Company regards as proprietary. In addition, the laws of some foreign countries do not protect proprietary rights to as great an extent as do the laws of the United States. There can be no assurance that the Company's means of protecting 40 43 its proprietary rights will be adequate or that the Company's competitors will not independently develop similar technology or duplicate the Company's products or design around patents issued to the Company or other intellectual property rights of the Company. There have been substantial amounts of litigation in the computer industry regarding intellectual property rights. There can be no assurance that third parties will not in the future claim infringement by the Company with respect to current or future products, trademarks or other proprietary rights, or that the Company will not counterclaim against any such parties in such actions. Any such claims or counterclaims could be time-consuming, result in costly litigation, cause product release delays, require the Company to redesign its products or require the Company to enter into royalty or licensing agreements, any of which could have a material adverse effect upon the Company's business, operating results and financial condition. Such royalty or licensing agreements, if required, may not be available on terms acceptable to the Company or at all. See "Risk Factors -- Intellectual Property and Proprietary Rights." EMPLOYEES As of March 31, 1996, the Company had 71 full-time employees, including 26 in research and development, 29 in sales and marketing and 16 in finance and administration. The Company's future performance depends in significant part upon the continued service of Robert E.L. Johnson, III, the Company President and Chief Executive Officer and Steven T. Kirsch, a founder and the Chairman of the Board of the Company, as well as its other key technical and senior management personnel, none of whom is bound by an employment agreement. The Company provides incentives such as salary, benefits and option grants (which are typically subject to vesting over four years) to attract and retain qualified employees. The loss of the services of Mr. Johnson or Mr. Kirsch or any of the Company's officers or other key employees could have a material adverse effect on the Company's business, operating results and financial condition. The Company's future success also depends on its continuing ability to attract and retain highly qualified technical and management personnel. See "Risk Factors -- Management of Growth; Need to Establish Infrastructure; Recent Management Changes" and "-- Dependence on Key Personnel." FACILITIES The Company's principal administrative, sales, marketing, and research and development facility is located in approximately 13,000 square feet of space in Santa Clara, California. This facility is leased pursuant to multiple leases through Spieker Properties, L.P. and Innovative Information Systems, Inc. with the approval of Spieker Properties, L.P. The leases expire with respect to 2,976 square feet, 3,571 square feet, 1,072 square feet, 3,760 square feet and 1,777 square feet in June 1996, December 1997, February 1998, March 31, 1999 and February 2000, respectively. The Company recently signed a lease for another building in New York for office space. The lease for this second facility, which totals approximately 3,376 square feet, expires in May 2001. The Company believes that its existing facilities are adequate for its current needs and that additional space will be available as needed. There can be no assurance that a system failure at the Company's principal location would not adversely affect the performance of the Company's products and services. See "Risk Factors -- Capacity Constraints and System Failure." 41 44 MANAGEMENT EXECUTIVE OFFICERS AND DIRECTORS The executive officers and directors of the Company, and their ages as of March 31, 1996, are as follows:
NAME AGE POSITION - ----------------------------------- --- ------------------------------------------------- Steven T. Kirsch................... 39 Chairman of the Board and Director Robert E. L. Johnson, III.......... 38 President, Chief Executive Officer and Director Leonard J. LeBlanc................. 55 Executive Vice President, Finance, Chief Financial Officer and Assistant Secretary Karl A. Spangenberg................ 49 Vice President, Worldwide Advertising Andrew E. Newton................... 53 Vice President, General Counsel and Secretary Craig I. Forman.................... 34 Vice President, Product Management and Editor James N. Desrosier................. 41 Vice President, Chief Marketing Officer John S. Nauman..................... 48 Vice President, Engineering Oliver D. Curme(2)................. 42 Director H. DuBose Montgomery............... 47 Director Matthew J. Stover(1)(2)............ 40 Director John E. Zeisler(1)(2).............. 43 Director
- --------------- (1) Member of Audit Committee (2) Member of Compensation Committee Steven T. Kirsch, a founder of the Company, has been a director of the Company since August 1993 and Chairman of the Board of Directors since December 1995. From September 1993 to November 1995, Mr. Kirsch also served as President and Chief Executive Officer of the Company. From January 1990 to December 1993, Mr. Kirsch served as Vice President, New Product Development at Frame Technology Corporation, a software engineering company which he co-founded. Mr. Kirsch holds a B.S. degree in electrical engineering and an M.S. degree in computer science from the Massachusetts Institute of Technology. Robert E.L. Johnson, III joined the Company in November 1995 as President and Chief Executive Officer, and has served as a director of the Company since November 1995. From November 1989 to November 1995, Mr. Johnson served in various capacities at Time Inc., a media company, including Senior Vice President, Corporate Development and President, Time Inc. Asia. Mr. Johnson holds a B.S.E. degree in basic engineering from Princeton University. Leonard J. LeBlanc joined the Company in March 1996 as Executive Vice President and Chief Financial Officer and was appointed Assistant Secretary in April 1996. From September 1993 to December 1994, Mr. LeBlanc served as Senior Vice President and Chief Financial Officer at GTECH Corporation, a computer systems company. From January 1990 to December 1992, Mr. LeBlanc was Executive Vice President and Chief Financial Officer at Cadence Design Systems, Inc., a software company. Mr. LeBlanc holds B.S. and M.S. degrees in chemistry from College of the Holy Cross and an M.S. degree in finance from George Washington University. Karl A. Spangenberg joined the Company in December 1995 as Vice President, Worldwide Advertising. From March 1994 to November 1995, Mr. Spangenberg served as Publisher for Datamation, a trade magazine produced by Cahners Publishing. Prior to that, Mr. Spangenberg served in various capacities, including Group Vice President, Strategic Planning from March 1993 to February 1994 for the Construction Information Group at McGraw-Hill, a publishing company, and Senior Vice President, Advertising for Business Week, from January 1991 to February 1993. Mr. Spangenberg holds a B.A. degree in English from Yale College and an M.A. in English from the State University of New York at Buffalo. Andrew E. Newton, a co-founder of the Company, has served as Vice President and General Counsel since January 1994 and Secretary since March 1994. From February 1990 to November 1993, 42 45 Mr. Newton was Vice President and General Counsel of Frame Technology Corporation, a software engineering company. Mr. Newton holds an A.B. degree in English from Dartmouth College and a J.D. degree from Columbia University School of Law. Mr. Newton is a member of the bar of the States of California, New York and Massachusetts. Craig I. Forman joined the Company in February 1996 as Vice President, Product Management and Editor. From March 1995 to February 1996, Mr. Forman served as Director and Editor, Business Information Services International at Dow Jones & Co., a business information company. Mr. Forman also served as Tokyo Bureau Chief at The Wall Street Journal, a media company, from August 1993 to March 1995 and as Deputy Bureau Chief and Foreign Correspondent, London from September 1987 to August 1993, also at The Wall Street Journal. Mr. Forman holds an A.B. degree in public and international affairs from Princeton University and an M.S.L. in law studies from the Yale Law School. James N. Desrosier joined the Company in March 1996 as Vice President, Chief Marketing Officer. From March 1990 to March 1996, Mr. Desrosier held a number of positions including Senior Vice President, Global Brand Marketing, Vice President, Debit Product Management and Marketing, and Vice President, Advertising at MasterCard International Incorporated, an electronic payments, systems, and products company. Mr. Desrosier holds an A.B. degree in philosophy from Kenyon College. John S. Nauman joined the Company in February 1996 as Vice President, Engineering. From November 1993 to February 1996, Mr. Nauman served as Vice President, Engineering and then Vice President, Development at NetFRAME Systems, a hardware and software engineering company. From November 1989 to October 1993, he was Senior Director of Networking and Communication Development and then Business Unit Manager, Integrated Technologies at Apple Computer Inc. Mr. Nauman holds a B.S. degree in mathematics from the University of Oklahoma, an M.B.A. from the University of Santa Clara and an M.S. in electrical engineering from Stanford University. Oliver D. Curme has served as a director of the Company since May 1995. Since January 1988, Mr. Curme has been a General Partner of certain venture capital funds associated with Battery Ventures III, L.P., a venture capital firm. Mr. Curme also serves as a director of HNC Software Inc. as well as several privately held technology companies. Mr. Curme holds a B.S. in biochemistry from Brown University and an M.B.A. from Harvard Business School. H. Dubose Montgomery has served as a director of the Company since June 1994. Since 1976, Mr. Montgomery has been a General Partner at Menlo Ventures, a group of venture capital funds, in Menlo Park, California. Mr. Montgomery also serves as a director of Endovascular Technologies, Gilead Sciences, Matrix Pharmaceuticals, and a number of privately held companies. Mr. Montgomery holds a B.S. degree in management science and B.S. and M.S. degrees in electrical engineering and computer science from the Massachusetts Institute of Technology and an M.B.A. from Harvard Business School. Matthew J. Stover has served as a director of the Company since March 1996. Mr. Stover also serves as a director of a number of private companies. Since January 1994, Mr. Stover has served as President and Chief Executive Officer of NYNEX Information Resources Company, a Delaware corporation and international marketing information services provider, and Chairman of the Board of NYNEX Information Technologies Company, a wholly owned subsidiary of NYNEX Information Resources Company. Prior to that, Mr. Stover served as President and Chief Executive Officer of AGS Computers, Inc. from December 1992 to December 1993 and as Vice President, Public Affairs and Corporate Communications of NYNEX Corporation from May 1990 to December 1992. Mr. Stover holds a B.A. in English language and literature from Yale University and a certificate from the Executive Program of the University of Virginia, Colgate Darden School of Business Administration. John E. Zeisler has served as a director of the Company since May 1995. Since July 1995, Mr. Zeisler has served as Senior Vice President, Marketing at NETCOM, an internet company. From 1992 to 1994 he served as President and Chief Executive Officer of Pensoft Corporation, a software 43 46 company. From 1987 to 1991, Mr. Zeisler was a co-founder and Vice President, Marketing at Claris Corporation, a software company. Mr. Zeisler holds a B.S. degree in communications from Boston University. The Company currently has authorized six directors. Each director holds office until the next annual meeting of shareholders or until his or her successor is duly elected and qualified. Certain directors have been elected by the holders of Preferred Stock pursuant to the Company's Amended and Restated Articles of Incorporation and a voting agreement contained in the Third Amended and Restated Investors' Rights Agreement dated April 19, 1996 between the Company and the Investors listed in Schedule A thereto. See "Certain Transactions." Except for grants of stock options pursuant to the Company's Stock Option Plan, directors of the Company do not receive compensation for services provided as a director. The Company also does not pay compensation for committee participation or special assignments of the Board of Directors. There are no family relationships among any of the directors and executive officers of the Company. The Audit Committee will review and act on and report to the Board of Directors with respect to various auditing and accounting matters, including the selection of the Company's auditors, the scope of the annual audits, fees to be paid to the auditors, the performance of the Company's auditors and the accounting practices of the Company. The Compensation Committee will establish salaries, incentives and other forms of compensation for officers and other employees of the Company and administers the incentive compensation and benefit plans of the Company. EXECUTIVE COMPENSATION The following table sets forth the compensation earned by the Company's current and former Chief Executive Officer and the two other most highly compensated executive officers whose salary and bonus for 1995 were in excess of $100,000 for services rendered in all capacities to the Company and its subsidiaries for that fiscal year (collectively, the "Named Officers"). No other executive officer who held office at December 31, 1995 met the definition of a "most highly compensated executive officer" within the meaning of the SEC's executive compensation rules for this period. SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION ------------ SECURITIES ANNUAL COMPENSATION UNDERLYING NAME AND PRESENT -------------------------- OPTIONS PRINCIPAL POSITION SALARY($) BONUS($) (1) (#)(2) - --------------------------------------------------- --------- ------------ ------------ Steven T. Kirsch(3)................................ $ 82,500 $ -- -- Former President and Chief Executive Officer Robert E. L. Johnson, III(4)....................... $ 12,179 $ -- 1,200,000 President and Chief Executive Officer Andrew E. Newton................................... $ 128,333 $ 40,000 -- Vice President, General Counsel and Secretary Karl A. Spangenberg(5)............................. $ 15,417 $ -- 375,000 Vice President, Worldwide Advertising
- --------------- (1) Bonus earned in 1995 and paid in 1996. (2) The options listed in the table were granted under the Company's Stock Option Plan. See "Management -- Option Grants in Last Fiscal Year -- Footnote 1" for a description of the terms of these options. The option outstanding under the Stock Option Plan will be incorporated into 44 47 the new 1996 Stock Option/Stock Issuance Plan, but will continue to be governed by their existing terms. See "Management -- 1996 Stock Option/Stock Issuance Plan." (3) Mr. Kirsch served as President and Chief Executive Officer from January 1995 through November 1995. (4) Mr. Johnson became President and Chief Executive Officer in December 1995. In 1996, he will be compensated at an annual base salary rate of $200,000 and is eligible to earn a maximum bonus of $200,000. (5) Karl A. Spangenberg joined the Company in December 1995 as Vice President, Worldwide Advertising, is compensated at an annual rate of $125,000 and is eligible for a maximum bonus of $400,000. OPTION GRANTS IN LAST FISCAL YEAR The following table contains information concerning stock option grants made to each of the Named Officers for the 1995 fiscal year. No stock appreciation rights were granted to these individuals during such year. INDIVIDUAL GRANTS(1)
POTENTIAL REALIZABLE VALUE AT ASSUMED NUMBER OF ANNUAL RATES OF SECURITIES STOCK PRICE UNDERLYING % OF TOTAL APPRECIATION OPTIONS OPTIONS GRANTED EXERCISE FOR OPTION TERM(4) GRANTED TO EMPLOYEES IN PRICE EXPIRATION ------------------ NAME (#)(1) FISCAL YEAR(2) ($/SH)(3) DATE 5%($) 10%($) - ------------------------ ---------- --------------- --------- -------- ------- -------- Robert E.L. Johnson, III................... 1,200,000 34.9% $0.1334 12/10/02 $65,120 $151,840 Karl A. Spangenberg..... 375,000 10.9% $0.1334 11/30/02 $20,350 $ 47,450
- --------------- (1) These options were granted under the Company's Stock Option Plan. The grant date for these options are as follows: Mr. Johnson: December 11, 1995; Mr. Spangenberg: December 13, 1995. Each option has a maximum term of seven years measured from the grant date, subject to earlier termination upon the optionee's cessation of service with the Company. 150,000 of Mr. Johnson's option shares were fully vested and immediately exercisable on the date of grant. Mr. Johnson will vest, and the option will become exercisable, with respect to the remaining 1,050,000 option shares in a series of monthly installments of 25,000 shares commencing on the date seven months from the grant date. Mr. Spangenberg will vest, and his option will become exercisable, as to 25% of the shares upon his completion of one year of service measured from the grant date, and with respect to the balance of the shares in a series of equal monthly installments over the 36 months of service thereafter. These options will terminate in the event the Company is acquired by merger or asset sale, unless these options are assumed by the acquiring company. The options outstanding under the Stock Option Plan will be incorporated into the new 1996 Stock Option/Stock Issuance Plan, but will continue to be governed by their existing terms. See "Management -- 1996 Stock Option/Stock Issuance Plan." (2) The Company granted options to purchase 3,438,262 shares of Common Stock during 1995. (3) The exercise price may be paid in cash or in shares of the Company's Common Stock valued at fair market value on the exercise date. The Company may also finance the option exercise by loaning the optionee sufficient funds to pay the exercise price for the purchased shares, together with any federal and state income tax liability incurred by the optionee in connection with such exercise. (4) The 5% and 10% assumed annual rates of compounded stock price appreciation are mandated by rules of the Securities and Exchange Commission. There is no assurance that the actual stock 45 48 price appreciation over the 7-year option term will be at the assumed 5% and 10% levels or at any other defined level. Unless the market price of the Common Stock appreciates over the option term, no value will be realized from the option grants made to the executive officers. OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES The following table sets forth information concerning option exercises and option holdings for the year ended December 31, 1995 with respect to each of the Named Officers. No options were exercised by the Named Officers during such year. No stock appreciation rights were exercised during such year or were outstanding at the end of that year. FISCAL YEAR-END OPTION VALUES
NUMBER OF VALUE OF SECURITIES UNDERLYING UNEXERCISED UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT FY-END (#) AT FY-END($)(1) ---------------------------- ----------------------------- NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - ------------------------------------- ---------- ------------- ----------- ------------- Robert E.L. Johnson, III............. 150,000 1,050,000 $ 159,990 $ 1,119,930 Karl A. Spangenberg.................. -- 375,000 $ -- $ 399,975
- --------------- (1) Based on the deemed fair market value of the Company's Common Stock at December 31, 1995, $1.20 per share (as determined by the Company's Board of Directors), less the exercise price payable for such shares, $0.1334. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The Compensation Committee of the Company's Board was formed in April 1996 and is currently comprised of Messrs. Curme, Stover and Zeisler. None of these individuals was at any time during the fiscal year ended December 31, 1995, or at any other time, an officer or employee of the Company. No member of the Compensation Committee of the Company serves as a member of the Board of Directors or compensation committee of any entity that has one or more executive officers serving as a member of the Company's Board of Directors or Compensation Committee. 1996 STOCK OPTION/STOCK ISSUANCE PLAN The Company's 1996 Stock Option/Stock Issuance Plan (the "1996 Plan") is intended to serve as the successor equity incentive program to the Company's Stock Option Plan (the "Predecessor Plan"). The 1996 Plan was adopted by the Board of Directors on April 10, 1996 and is subject to approval by shareholders. 5,625,000 shares of Common Stock have been authorized for issuance under the 1996 Plan. This share reserve is comprised of (i) the shares which remained available for issuance under the Predecessor Plan, including the shares subject to outstanding options thereunder and the shares otherwise available for future grant, plus (ii) an additional increase of approximately 218,591 shares. The outstanding options under the Predecessor Plan will be incorporated into the 1996 Plan at the time the Underwriting Agreement for this Offering is executed, and no further option grants or share issuances will be made under the Predecessor Plan. The incorporated options will continue to be governed by their existing terms, unless the Plan Administrator (with the consent of any optionee whose rights are diminished) elects to extend one or more features of the 1996 Plan to those options. However, except as otherwise noted below, the outstanding options under the Predecessor Plan contain substantially the same terms and conditions summarized below for the Discretionary Option Grant Program in effect under the 1996 Plan. The 1996 Plan is divided into three separate components: (i) the Discretionary Option Grant Program under which eligible individuals in the Company's employ or service may, at the discretion of the Plan Administrator, be granted options to purchase shares of Common Stock at an exercise price not less than 85% of their fair market value on the grant date, (ii) the Stock Issuance Program under which such individuals may, in the Plan Administrator's discretion, be issued shares of 46 49 Common Stock directly, through the purchase of such shares at a price not less than 85% of their fair market value at the time of issuance or as a bonus tied to the performance of services, and (iii) the Automatic Option Grant Program under which option grants will automatically be made at periodic intervals to eligible non-employee Board members to purchase shares of Common Stock at an exercise price equal to 100% of their fair market value on the grant date. The Discretionary Option Grant Program and the Stock Issuance Program will be administered by the Compensation Committee of the Board. The Compensation Committee as Plan Administrator will have complete discretion to determine which eligible individuals are to receive option grants or stock issuances, the time or times when such option grants or stock issuances are to be made, the number of shares subject to each such grant or issuance, the status of any granted option as either an incentive stock option or a non-statutory stock option under the Federal tax laws, the vesting schedule to be in effect for the option grant or stock issuance and the maximum term for which any granted option is to remain outstanding. In no event, however, may any one participant in the 1996 Plan receive option grants or direct stock issuances for more than 500,000 shares per calendar year. In the event that the Company is acquired by merger or asset sale, each outstanding option under the Discretionary Option Grant Program, which is not to be assumed or replaced by the successor corporation, will automatically accelerate in full, and all unvested shares under the Stock Issuance Program will immediately vest, except to the extent the Company's repurchase rights with respect to those shares are to be assigned to the successor corporation. The Plan Administrator will have the authority under the Discretionary Option Grant and Stock Issuance Programs to grant options and to structure repurchase rights so that the shares subject to those options or repurchase rights will automatically vest in the event the individual's service is terminated, whether involuntarily or through a resignation for good reason, within 12 months following (i) a merger or asset sale in which those options are assumed or those repurchase rights are assigned or (ii) a change in control of the Company effected by a successful tender offer for more than 50% of the outstanding voting stock or by proxy contest for the election of Board members. Options currently outstanding under the Predecessor Plan will terminate upon an acquisition of the Company by merger or asset sale, unless those options are assumed or replaced by the acquiring entity. Outstanding options under the Predecessor Plan that are assumed or replaced in the acquisition will not accelerate upon the subsequent termination of the optionee's employment, except in the case of Messrs. LeBlanc and Derosier under certain circumstances. See "Employment Contracts and Change of Control Arrangements." The Plan Administrator will also have discretion to issue limited stock appreciation rights under the Discretionary Option Grant Program which will provide the holders with the right, upon the successful completion of a hostile tender offer for more than 50% of the Company's outstanding voting securities, to surrender their outstanding options for a cash distribution from the Company in an amount per surrendered option share equal to the excess of (i) the highest reported price per share paid in effecting the take-over (ii) the option exercise price payable per share. No stock appreciation rights are outstanding under the Predecessor Plan. The Plan Administrator has the authority to effect the cancellation of outstanding options under the Discretionary Option Grant Program (including options incorporated from the Predecessor Plan) in return for the grant of new options for the same or different number of option shares with an exercise price per share based upon the fair market value of the Common Stock on the new grant date. Under the Automatic Option Grant Program, eligible non-employee Board members will receive a series of option grants over their period of Board service. However, a non-employee Board member who is affiliated, whether as a partner, principal, officer or employee, with an entity which owns 2% or more of the shares of any class of the Company's outstanding stock will not be eligible to receive any automatic option grants under such program during his or her period of Board service. 47 50 Each individual who is first elected or appointed as an eligible non-employee Board member on the date the Underwriting Agreement for this Offering is executed will receive an option grant on such date for 7,500 shares of Common Stock, provided such individual has not otherwise been in the prior employ of the Company and has not received any prior option grants from the Company. Each otherwise eligible individual who first becomes a non-employee Board member at any time thereafter will receive a similar 7,500 share option grant on the date such individual joins the Board, provided such individual has not been in the prior employ of the Company. In addition, on the date of each Annual Stockholders Meeting, beginning with the Annual Meeting of Shareholders for the 1996 fiscal year, each eligible non-employee Board member who is to continue to serve as a non-employee Board member will automatically be granted an option to purchase 3,750 shares of Common Stock provided such individual has served on the Board for at least six months. There will be no limit on the number of such 3,750 share option grants any one eligible non-employee Board member may receive over his or her period of continued Board service. Each automatic grant will have a term of 10 years, subject to earlier termination following the optionee's cessation of Board service. Each automatic option will be immediately exercisable; however, any unvested shares so purchased will be subject to repurchase should the optionee cease service as a Board member prior to vesting in those shares. Each grant will vest in four successive equal annual installments over the optionee's period of Board service, with the first installment to vest upon the Board member's completion of one year of Board service from the date of grant. However, each outstanding option will immediately vest upon (i) certain changes in the ownership or control of the Company or (ii) the optionee's death or disability while serving as a Board member. The Board may amend or modify the 1996 Plan at any time, however, the Automatic Option Grant Program cannot be amended more frequently than once every six months. The 1996 Plan will terminate on April 9, 2006, unless sooner terminated by the Board. EMPLOYEE STOCK PURCHASE PLAN The Company's Employee Stock Purchase Plan (the "Purchase Plan") was adopted by the Board of Directors on April 10, 1996 and is subject to approval by shareholders. The Purchase Plan is designed to allow eligible employees of the Company and participating subsidiaries to purchase shares of Common Stock, at semi-annual intervals, through their periodic payroll deductions under the Purchase Plan, and a reserve of 187,500 shares of Common Stock has been established for this purpose. The Purchase Plan will be implemented in a series of successive offering periods, each with a maximum duration of 24 months. However, the initial offering period will begin at the time the Underwriting Agreement is executed and priced in connection with this Offering and will end on the last business day in July 1998. Individuals who are eligible employees on the start date of any offering period may enter the Purchase Plan on that start date or on any subsequent quarterly entry date (the first business day of February, May, August and November each year). Individuals who first become eligible employees after the start date of the offering period may join the Purchase Plan on any subsequent quarterly entry date within that period. Payroll deductions may not exceed 10% of base salary, and the accumulated payroll deductions of each participant will be applied to the purchase of shares on his or her behalf on each semi-annual purchase date (the last business day in January and July) at a purchase price per share equal to 85% of the lower of (i) the fair market value of the Common Stock on the participant's entry date into the offering period or (ii) the fair market value on the semi-annual purchase date. In no event, however, may any participant purchase more than 500 shares on any one semi-annual purchase date. 48 51 The Purchase Plan will terminate on the earlier of (i) the last business day of July 2006, (ii) an earlier date determined by the Board or (iii) the date all shares available for issuance have been sold. EMPLOYMENT CONTRACTS AND CHANGE OF CONTROL ARRANGEMENTS None of the Named Officers have employment contracts with the Company, and all Named Officers' employment is terminable at will. However, Messrs. Johnson, LeBlanc, Spangenberg and Desrosier each have employment offer letters which provide that they are entitled to receive certain severance payments if they are terminated without cause. Mr. Johnson will be entitled to severance payments equal to six months salary and continued participation in the Company's medical plans for six months if he is terminated without cause at any time. Messrs. LeBlanc and Desrosier will be entitled to severance payments equal to six months salary, continued participation in the Company's medical plans for six months, and continued vesting in their stock options for six months (twelve months for Mr. LeBlanc), if they are terminated without cause within two years of their date of employment. Mr. LeBlanc will also be entitled to his severence benefits if he voluntarily terminates his employment following certain changes in control of the Company that result in diminished job responsibilities. In addition, upon certain changes in control of the Company during the period ending three years from the commencement of Mr. Desrosier's employment, Mr. Desrosier's vesting in his stock options may be accelerated by twelve months. Mr. Spangenberg is entitled to severance payments equal to four months compensation, and continued participation in the Company's medical plans for four months, if he is terminated without cause within eighteen months of his date of employment. In connection with an acquisition of the Company by merger or asset sale, each outstanding option held by the Chief Executive Officer and the other executive officers under the 1996 Plan will automatically accelerate in full and all unvested shares of Common Stock held by such individuals subject to direct issuances made under the 1996 Plan will immediately vest in full, except to the extent such options are to be assumed by, and the Company's repurchase rights with respect to these shares are to be assigned to, the successor corporation. In addition, the Compensation Committee as Plan Administrator of the 1996 Plan will have the authority to provide for the accelerated vesting of the shares of Common Stock subject to outstanding options held by the Chief Executive Officer or any other executive officer or the shares of Common Stock subject to direct issuances held by such individual, in connection with the termination of the officer's employment following: (i) a merger or asset sale in which these options are assumed or the Company's repurchase rights with respect to unvested shares are assigned or (ii) certain hostile changes in control of the Company. LIMITATION ON LIABILITY AND INDEMNIFICATION MATTERS The Company's Amended and Restated Articles of Incorporation limit the liability of directors to the maximum extent permitted by California law. Such limitation of liability has no effect on the availability of equitable remedies, such as injunctive relief or rescission. The Company's Bylaws provide that the Company shall indemnify its directors and officers and may indemnify its other employees and agents to the fullest extent permitted by law. The Company believes that indemnification under its Bylaws covers at least negligence and gross negligence on the part of indemnified parties. The Company's Bylaws also permit the Company to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in such capacity, regardless of whether the Bylaws would permit indemnification. The Company has entered, or plans to enter, into agreements to indemnify its directors and officers, in addition to the indemnification provided for in the Company's Bylaws. These agreements, among other things, indemnify the Company's directors and executive officers for certain expenses (including attorneys' fees), judgments, fines and settlement amounts incurred by any such person in 49 52 any action or proceeding, including any action by or in the right of the Company, arising out of such person's services as a director or executive officer of the Company, any subsidiary of the Company or any other company or enterprise to which the person provides services at the request of the Company. The Company believes that these provisions and agreements are necessary to attract and retain qualified directors and executive officers. At present, there is no pending litigation or proceeding involving any director, officer, employee or agent of the Company where indemnification will be required or permitted. The Company is not aware of any threatened litigation or proceeding that might result in a claim for such indemnification. 50 53 CERTAIN TRANSACTIONS Each of Steven T. Kirsch, Victoria J. Blakeslee, Ed R. Miller, Zara Tepper Haimo, Todd Jonz, Andrew Bensky, James Roskind, and Andrew E. Newton (collectively, the "Founders") was involved in the founding and organization of the Company and may be considered a promoter of the Company. Described below are items of value received by each of the founders in connection with services provided to the Company. In the Founders Agreement dated February 1, 1994 as amended on June 30, 1994 (the "Founders Agreement"), the Company issued an aggregate of 3,780,000 shares of Common Stock to the Founders at a purchase price of $0.01 per share, which was paid in cash. The Company retained a right to repurchase the shares of Common Stock sold pursuant to the Founders Agreement in the event that any founder terminated his employment prior to completing a four-year vesting period, as defined in the Founders Agreement. Each of the Founders, individually, purchased the number of shares set forth immediately following his or her name: Steven T. Kirsch (1,387,500); Victoria J. Blakeslee (637,500); Ed R. Miller (405,000); Zara Tepper Haimo (375,000); Todd Jonz (375,000); Andrew Bensky (225,000); James Roskind (225,000); and Andrew E. Newton (150,000). In March 1995, the Company repurchased 154,688 unvested shares of Common Stock held by James Roskind for $0.01 per share. In March 1996, the Company repurchased 179,688 unvested shares of Common Stock held by Todd Jonz for $0.01 per share. The Founders, at the time of the issuance of Series A Preferred Stock, individually, purchased the number of shares of Series A Preferred Stock set forth immediately following his or her name: Steven T. Kirsch (4,500,000); Victoria J. Blakeslee (187,500); Ed R. Miller (75,000); Zara Tepper Haimo (300,000); Todd Jonz (300,000); James Roskind (300,000); and Andrew E. Newton (225,000). Since the Company's inception in August 1993, the Company has issued, in private placement transactions, the following shares of Preferred Stock: 7,385,864 shares of Series A Preferred Stock for an aggregate purchase price of $984,782 on February 25, 1994, March 18, 1994, June 30, 1994 and July 22, 1994 (279,869 of which shares were forfeited back to the Company on March 18, 1995); 2,594,416 shares of Series B Preferred Stock for an aggregate purchase price of $1,176,135 on June 30, 1994; 5,600,014 shares of Series C Preferred Stock for an aggregate purchase price of $4,480,006 on May 4, 1995 and June 30, 1995; and 2,267,251 shares of Series E Preferred Stock for an aggregate purchase price of $18,137,964 on March 29, 1996, April 12, 1996 and April 19, 1996. Each outstanding share of Preferred Stock shall be converted into one share of Common Stock upon the closing of this Offering. The following table summarizes purchases, valued in excess of $60,000, of shares of Preferred Stock by directors, executive officers, and five percent shareholders of the Company and persons associated with them. No shares of Series D Preferred Stock were purchased by any such persons or entities. The price per share paid by such persons or entities was $0.133, $0.453, $0.80, and $8.00 for the Series A, Series B, Series C and Series E Preferred Stock, respectively.
SHARES ---------------------------------------------------- INVESTOR(1) SERIES A SERIES B SERIES C SERIES E - ------------------------------------------ ---------- ---------- ---------- ---------- Steven T. Kirsch(2)....................... 4,500,000 Menlo Ventures VI, L.P.(3)................ 2,238,972 2,500,000 Andrew E. Newton.......................... 133,426 130,116 Battery Ventures III, L.P.(4)............. 2,500,000 NYNEX Information Technologies Company(5).............................. 1,125,000
- --------------- (1) Shares held by affiliated persons and entities have been aggregated. See "Principal Shareholders." (2) Steven T. Kirsch, the Chairman of the Board of the Company, has been elected as a director of the Company by the holders of the Series A Preferred Stock pursuant to the Company's 51 54 Amended and Restated Articles of Incorporation and a voting agreement contained in the Third Amended and Restated Investors' Rights Agreement dated April 19, 1996 between the Company and the Investors listed on Schedule A thereto. The right of the Preferred Stock holders to designate a director shall terminate upon the consummation of this Offering. (3) H. DuBose Montgomery, a General Partner of Menlo Ventures, has been elected as a director of the Company by the holders of the Series B Preferred Stock pursuant to the Company's Amended and Restated Articles of Incorporation and a voting agreement contained in the Third Amended and Restated Investors' Rights Agreement dated April 19, 1996 between the Company and the Investors listed on Schedule A thereto. The right of preferred shareholders to designate a director shall terminate upon the consummation of this Offering. (4) Oliver D. Curme, a General Partner of Battery Ventures, has been elected as a director of the Company by the holders of the Series C Preferred Stock pursuant to the Company's Amended and Restated Articles of Incorporation and a voting agreement contained in the Third Amended and Restated Investors' Rights Agreement dated April 19, 1996 between the Company and the Investors listed on Schedule A thereto. The right of the Preferred Stock holders to designate a director shall terminate upon the consummation of this Offering. (5) Matthew J. Stover, Chairman of the Board of NYNEX Information Technologies Company, has been elected as a director of the Company by the holders of the Series E Preferred Stock pursuant to the Company's Amended and Restated Articles of Incorporation and a voting agreement contained in the Third Amended and Restated Investors' Rights Agreement dated April 19, 1996 between the Company and the Investors listed on Schedule A thereto. The right of the Preferred Stock holders to designate a director shall terminate upon the consummation of this Offering. Pursuant to the Redemption Agreement between the Company and NYNEX, dated March 29, 1996, and the Redemption Agreement between the Company and Kanematsu, dated April 12, 1996, the Company has granted to NYNEX and Kanematsu certain rights to require the Company to redeem the Series E Preferred Stock held by such entities at the lesser of the fair market value or $8.00 per share. The Redemption Agreements terminate upon the conversion of the Series E Preferred Stock pursuant to the Company's initial public offering with aggregate proceeds of at least $15 million. The Company has entered into a Software License Agreement (the "License"), dated March 29, 1996 with NYNEX to allow NYNEX to use and reproduce certain licensed software in any medium for NYNEX's internal use only. The license is royalty-free during the initial trial term, but may be renewed either (i) for subsequent annual terms for a specified percentage of collected revenues or an annual minimum payment of $3 million or (ii) for a subsequent ten year term for a lump sum payment of $4 million. In March 1996, the Company and NYNEX entered into a one year agreement, which provides that, beginning in May 1996, the Company will prominently display the BigYellow logo, which represents NYNEX's interactive shopping directory, as the exclusive comprehensive shopping directory within Infoseek Guide. In exchange for such exclusivity, NYNEX will pay to the Company up to an aggregate of $4.6 million in monthly payments, which amount will be decreased proportionately if the number of impressions of the BigYellow logo is below a specified number. NYNEX may extend the term of the agreement for additional one year periods, with the fee to be determined based upon Infoseek's then current advertising rate structure. On May 4, 1995, the Company entered into an Amended and Restated Put Option Agreement whereby the Company was granted the right to require certain investors, including Menlo Ventures VI, L.P., to purchase shares of Series D Preferred Stock at an aggregate price of up to $2,352,269.60 if the Company's total revenues exceed an aggregate of $8,000,000 during two consecutive fiscal quarters. The Put Option shall terminate upon the earliest to occur of a specified list of events, including an underwritten public offering of the Company's Common Stock registered 52 55 under the Securities Act of 1933 on Form S-1 with aggregate gross proceeds of at least $10,000,000 at an offering price of not less than $1.80 per share. The Company entered into four Stock Purchase Agreements on January 24, 1996 with Robert E.L. Johnson III, an executive officer of the Company, whereby Mr. Johnson purchased a total of 374,998 shares of the Company's Common Stock at $0.80 per share held in the names of IRA's for the benefit of Mr. Johnson and as custodian for his minor children. On January 30, 1996 the Company entered into an Employee Stock Purchase Agreement with Mr. Johnson pursuant to which he purchased 75,000 shares of Common Stock at $0.80 per share. Payment for the shares purchased on January 30, 1996 was made with a Promissory Note. The Company entered into a Stock Purchase Agreement on March 28, 1996 with Leonard J. Le Blanc, an executive officer of the Company, for the purchase of 37,500 shares of the Company's Common Stock at $4.00 per share. Payment for the shares so purchased was made with a Promissory Note. The Company entered into a Stock Purchase Agreement on March 9, 1996 with John S. Nauman, an executive officer of the Company, for the purchase of 150,000 shares of the Company's Common Stock at $1.33 per share. Payment for the shares so purchased was made with a Promissory Note. The Company entered into a Stock Purchase Agreement on March 7, 1996 with Craig I. Forman, an executive officer of the Company, for the purchase of 150,000 shares of the Company's Common Stock at $1.33 per share. Payment for the shares so purchased was made with a Promissory Note. The Company entered into the Internet Search Service Access Agreement between the Company and NETCOM dated October 13, 1995, as amended on March 20, 1996. John E. Zeisler is a director of the Company and an officer of NETCOM. The Company entered into a License and Software Distribution Agreement with HNC on April 25, 1996 and a Software License Agreement with HNC on May 8, 1996. Oliver D. Curme is a director of both the Company and HNC Software Inc. In addition, Battery Ventures, L.P., of which Mr. Curme is a General Partner of a General Partner, has been a 10% shareholder of HNC. The holders of shares of Common Stock issued upon conversion of the Series A, Series B, Series C, and Series E Preferred Stock are entitled to certain registration rights. See "Description of Capital Stock -- Registration Rights." The Company has granted options to certain of its directors and executive officers. See "Management -- Option Grants in Last Fiscal Year" and "Principal Shareholders." The Company believes that all of the transactions set forth above were made on terms no less favorable to the Company than could have been obtained from unaffiliated third parties. All future transactions, including loans, between the Company and its officers, directors, principal shareholders and their affiliates will be approved by a majority of the Board of Directors, including a majority of the independent and disinterested outside directors on the Board of Directors. 53 56 PRINCIPAL SHAREHOLDERS The following table sets forth certain information regarding beneficial ownership of the Company's Common Stock as of March 31, 1996 by (i) each person who is known by the Company to own beneficially more than 5% of the Company's Common Stock, (ii) each of the Company's directors, (iii) each of the Named Officers, and (iv) all current officers and directors as a group.
SHARES PERCENT BENEFICIALLY BENEFICIALLY OWNED(1)(2)(3) OWNED(1)(2) --------------------- ----------- BEFORE AFTER NAME AND ADDRESS OF BENEFICIAL OWNERS NUMBER OFFERING OFFERING - --------------------------------------------------------- ----------- -------- -------- Steven T. Kirsch(4) ..................................... 6,012,503 27.4% 24.1% Infoseek Corporation 2620 Augustine Drive, Suite 250 Santa Clara, CA 95054 Menlo Ventures VI, L.P(5)................................ 4,815,097 21.9% 19.3% Building 4, Suite 100 3000 Sand Hill Road Menlo Park, CA 94025 Battery Ventures III, L.P................................ 2,500,000 11.4% 10.0% 200 Portland Street Boston, MA 02114 NYNEX Information Technologies Company................... 1,125,000 5.1% 4.5% 35 Village Road Middleton, MA 01946 Andrew E. Newton......................................... 638,542 2.9% 2.6% Robert E.L. Johnson, III(6).............................. 599,998 2.7% 2.4% John E. Zeisler.......................................... 12,500 * * Oliver D. Curme(7)....................................... 2,500,000 11.4% 10.0% H. Dubose Montgomery(8).................................. 4,815,097 21.9% 19.3% Matthew J. Stover(9)..................................... 1,125,000 5.1% 4.5% Karl A. Spangenberg...................................... -- * * All Directors and Executive Officers as a group (12 persons)(10).............................. 16,041,140 72.6% 63.8%
- --------------- * Less than 1%. (1) Except as indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all shares of Common Stock. (2) The number of shares of Common Stock beneficially owned includes the shares issuable pursuant to stock options that may be exercised within 60 days after March 31, 1996. Shares issuable pursuant to such options are deemed outstanding for computing the percentage of the person holding such options but are not deemed outstanding for computing the percentage of any other person. For purposes of this table, the number of shares outstanding at March 31, 1996 includes the issuance of 1,048,501 shares of Convertible Preferred Stock in April 1996. The number of shares of Common Stock outstanding after this Offering includes the 3,000,000 shares of Common Stock being offered for sale by the Company in this Offering. (3) Assumes no exercise of the Underwriters' over-allotment option. See "Underwriting." (4) Includes 37,500 shares held by the Kirsch Family Trust, an aggregate of 87,503 shares held by the children of Mr. Kirsch, and 5,887,500 shares held in the name of trusts for the benefit of Mr. Kirsch. 54 57 (5) Includes 71,160 shares owned by Menlo Entrepreneurs Fund VI, L.P. (6) Includes an aggregate of 209,436 held by Mr. Johnson in custody for his children, and includes an aggregate of 165,562 shares held in two IRAs for the benefit of Mr. Johnson. Also includes 150,000 shares issuable pursuant to stock options that may be exercised within 60 days after March 31, 1996. (7) Represents 2,500,000 shares beneficially owned by Battery Ventures III, L.P. Mr. Curme, a director of the Company is a General Partner of Battery Partners, III, L.P., the general partner of Battery Ventures III, L.P., and he disclaims beneficial ownership of these shares except to the extent of his pecuniary interest therein. (8)Includes 71,160 shares owned by Menlo Entrepreneurs Fund VI, L.P. and 4,743,937 shares owned by Menlo Ventures VI, L.P. Mr. Montgomery, a director of the Company, is a general partner of Menlo Ventures Management VI, L.P., which is the general partner of each of the foregoing venture funds. Mr. Montgomery disclaims beneficial ownership of these shares except to the extent of his pecuniary interest therein. (9) Represents 1,125,000 shares beneficially owned by NYNEX Information Technologies Company. Mr. Stover, a director of the Company is the Chairman of the Board of NYNEX Information Technologies Company, an indirect wholly owned subsidiary of NYNEX Corporation and he disclaims beneficial ownership of these shares. (10) Includes 150,000 shares subject to options, including those identified in note (6). 55 58 DESCRIPTION OF CAPITAL STOCK The authorized capital stock of the Company upon the closing of this Offering will consist of 60,000,000 shares of Common Stock, no par value, and 5,000,000 shares of Preferred Stock, no par value. COMMON STOCK As of March 31, 1996, and including the issuance of 1,048,501 shares of Convertible Preferred Stock in April 1996, there were 21,946,228 shares of Common Stock outstanding held of record by 51 shareholders. There will be 24,946,228 shares of Common Stock outstanding after giving effect to the sale of the shares of Common Stock offered hereby. The holders of Common Stock are entitled to one vote per share on all matters to be voted upon by the shareholders. Subject to preferences that may be applicable to any outstanding Preferred Stock, the holders of Common Stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by the Board of Directors out of funds legally available therefor. See "Dividend Policy." In the event of the liquidation, dissolution or winding up of the Company, the holders of Common Stock are entitled to share ratably in all assets remaining after payment of liabilities, subject to prior distribution rights of Preferred Stock, if any, then outstanding. The Common Stock has no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to the Common Stock. All outstanding shares of Common Stock are fully paid and nonassessable, and the shares of Common Stock to be issued upon completion of this Offering will be fully paid and nonassessable. PREFERRED STOCK The Company's Articles of Incorporation authorize 5,000,000 shares of Preferred Stock. The Board of Directors has the authority to issue the Preferred Stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof, including dividend rights, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any series or the designation of such series, without further vote or action by the shareholders. The issuance of Preferred Stock may have the effect of delaying, deferring or preventing a change in control of the Company without further action by the shareholders and may adversely affect the voting and other rights of the holders of Common Stock. The issuance of Preferred Stock with voting and conversion rights may adversely affect the voting power of the holders of Common Stock, including the loss of voting control to others. At present, the Company has no plans to issue any of the Preferred Stock. REGISTRATION RIGHTS After this Offering, the holders of 21,579,512 shares of Common Stock and holders of warrants and options to purchase 1,345,000 shares of Common Stock will be entitled to certain rights with respect to the registration of such shares under the Securities Act. Under the terms of the agreement between the Company and the holders of such registrable securities, if the Company proposes to register any of its securities under the Securities Act, either for its own account or for the account of other security holders exercising registration rights, such holders are entitled to notice of such registration and are entitled to include shares of such Common Stock therein. Certain of such shareholders benefitting from these rights may also require the Company to file a registration statement under the Securities Act at the Company's expense with respect to their shares of Common Stock, and the Company is required to use its diligent reasonable efforts to effect such registration. Further, holders may require the Company to file additional registration statements on Form S-3 at the Holder's expense. These rights are subject to certain conditions and limitations, among them the right of the underwriters of an offering to limit the number of shares included in such registration in certain circumstances. 56 59 TRANSFER AGENT AND REGISTRAR The Transfer Agent and Registrar for the Common Stock is First National Bank of Boston, whose telephone number is (617) 575-2000. SHARES ELIGIBLE FOR FUTURE SALE Prior to this Offering, there has been no market for the Common Stock of the Company. Therefore, future sales of substantial amounts of Common Stock in the public market could adversely affect market prices prevailing from time to time. Furthermore, since only a limited number of shares will be available for sale shortly after this Offering because of certain contractual and legal restrictions on resale (as described below), sales of substantial amounts of Common Stock of the Company in the public market after the restrictions lapse could adversely affect the prevailing market price and the ability of the Company to raise equity capital in the future. Upon completion of this Offering, the Company will have outstanding an aggregate of 24,946,228 shares of Common Stock. Of these outstanding shares of Common Stock, the 3,000,000 shares sold in this Offering will be freely tradeable without restriction or further registration under the Securities Act, unless purchased by an "affiliate" of the Company, as that term is defined in Rule 144 under the Securities Act (an "Affiliate"). The remaining 21,946,228 shares of Common Stock existing are "restricted securities" as that term is defined in Rule 144 under the Act ("Restricted Shares"). Restricted Shares may be sold in the public market only if registered or if they qualify for an exemption from registration under Section 4(1) Rules 144, 144(k) or 701 promulgated under the Securities Act, which are summarized below. Sales of the Restricted Shares in the public market, or the availability of such shares for sale, could adversely affect the market price of the Common Stock. All holders of Common Stock and options to purchase Common Stock have agreed pursuant to certain "lockup" agreements that they will not, directly or indirectly, offer, sell, pledge, contract to sell, grant any option to purchase, grant a security interest in, hypothecate or otherwise sell or dispose of the shares of Common Stock owned by them or that could be purchased by them through the exercise of options to purchase Common Stock of the Company for a period of 180 days after the date of this Prospectus, which lock-ups may not be released without the prior written consent of Alex. Brown & Sons Incorporated. As a result of these contractual restrictions, notwithstanding possible earlier eligibility for sale under the provisions of Section 4(1) or Rules 144, 144(k) and 701, shares subject to lock-up agreements will not be saleable until the agreements expire. The number of outstanding shares (based on shares outstanding at March 31, 1996 and including the issuance of 1,048,501 shares of Convertible Preferred Stock in April 1996) that will be available for sale in the public market, after giving effect to lock-up agreements, will be as follows: (i) no shares of Common Stock will be eligible for sale as of the date of this Prospectus, (ii) 13,514,626 shares of Common Stock will be eligible for sale beginning 180 days after the date of this Prospectus, subject in some cases to certain volume and other limitations, and (iii) the approximately 8,433,477 remaining Restricted Shares will not be eligible for sale pursuant to Rule 144 until the expiration of their two-year holding periods. In general, under Rule 144 as currently in effect, beginning 90 days after the date of this Prospectus, a person (or persons whose shares are aggregated) who has beneficially owned Restricted Shares for at least two years (including the holding period of any prior owner except an Affiliate) would be entitled to sell within any three-month period a number of shares that does not exceed the greater of: (i) one percent of the number of shares of Common Stock then outstanding; or (ii) the average weekly trading volume of the Common Stock during the four calendar weeks preceding the filing of a Form 144 with respect to such sale. Sales under Rule 144 are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about the Company. Under Rule 144(k), a person who is not deemed to have been an Affiliate of the Company at any time during the 90 days preceding a sale, and who has beneficially 57 60 owned the shares proposed to be sold for at least three years (including the holding period of any prior owner except an Affiliate), is entitled to sell such shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144; therefore, unless otherwise restricted, "144(k) shares" may therefore be sold immediately upon the completion of this Offering. In addition, any employee, officer or director of or consultant to the Company who purchased his or her shares pursuant to a written compensatory plan or contract may be entitled to rely on the resale provisions of Rule 701. Rule 701 permits such a holder to sell his or her Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. Rule 701 further provides that non-affiliates may sell such shares in reliance on Rule 144 without having to comply with the public information, volume limitation or notice provisions of Rule 144. In both cases, a holder of Rule 701 shares is required to wait until 90 days after the date of this Prospectus before selling such shares. The Company's Stock Option Plan requires that the holders of shares issued upon exercise of options under such plan will not offer, sell contract to sell or grant any option to sell or grant any option to purchase or otherwise dispose of the shares of Common Stock owned by them for a period of 180 days after the effective date of this Offering. The Company has agreed not to offer, sell, contract to sell or otherwise dispose of any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock or any rights to acquire Common Stock for a period 180 days after the date of this Prospectus, without the prior written consent of the Representatives of the Underwriters, subject to certain limited exceptions. The Company intends to file one or more registration statements on Form S-8 under the Securities Act to register all shares of Common Stock subject to outstanding stock options and Common Stock issued or issuable pursuant to the Company's 1996 Stock Option/Stock Issuance Plan and Common Stock issuable pursuant to the Company's Employee Stock Purchase Plan. See "Management -- 1996 Stock Option/Stock Issuance Plan," and "-- Employee Stock Purchase Plan." Accordingly, shares registered under such registration statements will, subject to Rule 144 volume limitations applicable to an Affiliate and the lapsing of the Company's repurchase options, be available for sale in the open market, except to the extent that such shares are subject to vesting restrictions with the Company or the contractual restrictions described above. 58 61 UNDERWRITING Subject to the terms and conditions of the Underwriting Agreement, the Underwriters named below (the "Underwriters"), through their Representatives, Alex. Brown & Sons Incorporated and Merrill Lynch, Pierce, Fenner & Smith Incorporated, have severally agreed to purchase from the Company the following respective number of shares of Common Stock at the initial public offering price less the underwriting discounts and commissions set forth on the cover page of this Prospectus:
NUMBER OF UNDERWRITER SHARES ------------------------------------------------------------------------- ---------- Alex. Brown & Sons Incorporated.......................................... Merrill Lynch, Pierce, Fenner & Smith Incorporated................................................ ---------- Total....................................................... 3,000,000 =========
The Underwriting Agreement provides that the obligations of the Underwriters are subject to certain conditions precedent and that the Underwriters will purchase all shares of the Common Stock offered hereby if any of such shares are purchased. The Company has been advised by the Representatives of the Underwriters that the Underwriters propose to offer the shares of Common Stock to the public at the initial public offering price set forth on the cover page of this Prospectus and to certain dealers at such price less a concession not in excess of $ per share. The Underwriters may allow, and such dealer may reallow, a concession not in excess of $ per share to certain other dealers. After the initial public offering, the offering price and other selling terms may be changed by the Representatives of the Underwriters. The Company has granted to the Underwriters an option, exercisable not later than 30 days after the date of this Prospectus, to purchase up to 450,000 additional shares of Common Stock at the public offering price less the underwriting discounts and commissions set forth on the cover page of this Prospectus. To the extent that the Underwriters exercise such option, each of the Underwriters will have a firm commitment to purchase approximately the same percentage thereof that the number of shares of Common Stock to be purchased by it shown in the above table bears to 450,000, and the Company will be obligated, pursuant to the option, to sell such shares to the Underwriters. The Underwriters may exercise such option only to cover over-allotments made in connection with the sale of Common Stock offered hereby. If purchased, the Underwriters will offer such additional shares on the same terms as those on which the 3,000,000 shares are being offered. The Company has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. All shareholders of the Company have agreed not to offer, sell or otherwise dispose of any shares of Common Stock for a period of 180 days after the date of this Prospectus, which agreements may not be released without the prior consent of Alex. Brown & Sons Incorporated. See "Shares Eligible for Future Sale." Reuters NewMedia Inc., a shareholder of the Company, may purchase up to 454,546 shares in the Offering (assuming an initial public offering price of $11.00 per share), for investment purposes only, and with no present intention to resell the shares. Upon such purchase, Reuters NewMedia Inc. will hold approximately 2% of the outstanding capital stock of the Company. The Representatives of the Underwriters have advised the Company that the Underwriters do not intend to confirm sales to any account over which they exercise discretionary authority. Prior to this Offering, there has been no public market for the Common Stock of the Company. Consequently, the initial public offering price for the Common Stock has been determined by negotiation between the Company and the Representatives of the Underwriters. Among the factors considered in such negotiations were prevailing market conditions, the results of operations of the 59 62 Company in recent periods, the market capitalizations and stages of development of other companies which the Company and the Representatives of the Underwriters believed to be comparable to the Company, estimates of the business potential of the Company, the present state of the Company's development and other factors deemed relevant. LEGAL MATTERS The validity of the issuance of the shares of Common Stock offered hereby will be passed upon for the Company by Brobeck, Phleger & Harrison LLP, Palo Alto, California. Certain legal matters in connection with this Offering will be passed upon for the Underwriters by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto, California. EXPERTS The financial statements of Infoseek Corporation at December 31, 1994 and 1995 and for the period from August 30, 1993 (inception) through December 31, 1993 and the years ended December 31, 1994 and 1995 appearing in this Prospectus and Registration Statement have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. ADDITIONAL INFORMATION The Company has filed with the Securities and Exchange Commission, Washington, D.C. 20549, a Registration Statement on Form S-1 under the Securities Act with respect to the Common Stock offered hereby. This Prospectus does not contain all of the information set forth in the Registration Statement and the exhibits and schedules to the Registration Statement. For further information with respect to the Company and such Common Stock offered hereby, reference is made to the Registration Statement and the exhibits and schedules filed as a part of the Registration Statement. Statements contained in this Prospectus concerning the contents of any contract or any other document referred to are not necessarily complete; reference is made in each instance to the copy of such contract or document filed as an exhibit to the Registration Statement. Each such statement is qualified in all respects by such reference to such exhibit. The Registration Statement, including exhibits and schedules thereto, may be inspected without charge at the Securities and Exchange Commission's principal office in Washington, D.C. 20549, and copies of all or any part thereof may be obtained from such office after payment of fees prescribed by the Securities and Exchange Commission. 60 63 INFOSEEK CORPORATION ------------------ INDEX TO FINANCIAL STATEMENTS
PAGE ----- Infoseek Corporation: Report of Independent Auditors................................................... F-2 Balance Sheets................................................................... F-3 Statements of Operations......................................................... F-4 Statements of Shareholders' Equity (Deficit)..................................... F-5 Statements of Cash Flows......................................................... F-6 Notes to Financial Statements.................................................... F-7
F-1 64 REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS The Board of Directors and Shareholders Infoseek Corporation We have audited the accompanying balance sheets of Infoseek Corporation as of December 31, 1994 and 1995, and the related statements of operations, shareholders' equity (deficit), and cash flows for the period from August 30,1993 (inception) through December 31, 1993 and for the years ended December 31, 1994 and 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Infoseek Corporation at December 31, 1994 and 1995, and the results of its operations and its cash flows for the period from August 30, 1993 (inception) through December 31, 1993 and for the years ended December 31, 1994 and 1995, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP San Jose, California February 27, 1996, except as to Note 10, as to which the date is May 15, 1996 F-2 65 INFOSEEK CORPORATION BALANCE SHEETS
DECEMBER 31, ------------------------- 1994 1995 ----------- ----------- MARCH 31, PRO FORMA 1996 SHAREHOLDERS' ----------- EQUITY MARCH 31, (UNAUDITED) 1996 ------------- (UNAUDITED) ASSETS Current assets: Cash and cash equivalents........................................ $ 568,120 $ 1,129,096 $10,114,023 Short-term investments........................................... -- 496,871 -- Accounts receivable, less allowance for doubtful accounts of $41,500 in 1995 and $49,387 in 1996............................ -- 498,567 858,239 Other current assets............................................. 19,303 110,901 303,357 ----------- ----------- ----------- Total current assets...................................... 587,423 2,235,435 11,275,619 Property and equipment: Computer and office equipment.................................... 367,423 3,102,894 4,281,051 Furniture and fixtures........................................... 8,125 85,212 154,919 Leasehold improvements........................................... 5,927 22,020 22,020 ----------- ----------- ----------- 381,475 3,210,126 4,457,990 Less accumulated depreciation and amortization................... 109,819 397,569 692,336 ----------- ----------- ----------- Net property and equipment....................................... 271,656 2,812,557 3,765,654 Purchased technology, net of accumulated amortization.............. -- 74,632 37,316 Deposits........................................................... -- -- 668,359 ----------- ----------- ----------- Total assets.............................................. $ 859,079 $ 5,122,624 $15,746,948 =========== =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable................................................. $ 11,394 $ 1,222,585 $ 1,040,757 Accrued payroll and payroll related expenses..................... 4,000 70,768 264,095 Accrued royalties................................................ -- 35,736 918,895 Other accrued liabilities........................................ 113,627 575,767 1,007,199 Short-term obligations........................................... -- 238,453 913,931 ----------- ----------- ----------- Total current liabilities................................. 129,021 2,143,309 4,144,877 Long-term obligations.............................................. -- 687,596 2,489,833 Maintenance fees due third parties................................. 210,000 150,000 150,000 Commitments Redeemable convertible preferred stock, no par value: Authorized shares -- included in convertible preferred stock authorized Issued and outstanding shares -- 1,125,000 in 1996, and none pro forma, aggregate redemption value of $12,375,000; aggregate liquidation preference of $9,000,000 in 1996................... -- -- 8,953,846 $ -- Shareholders' equity: Preferred stock, no par value: Authorized shares -- 5,000,000 pro forma Issued and outstanding shares -- none pro forma................ -- -- -- -- Convertible preferred stock, no par value: Authorized shares -- 27,890,378 in 1996; Issued and outstanding shares -- 9,420,541 in 1994, 15,580,294 in 1995, 15,394,175 in 1996, and none pro forma; aggregate liquidation preference of $7,321,277 in 1996................. 2,019,549 6,694,544 7,440,698 -- Common stock, no par value: Authorized shares -- 45,000,000 in 1996 Issued and outstanding shares -- 3,782,812 in 1994, 4,000,011 in 1995, 4,378,552 in 1996, and 20,897,727 pro forma......... 37,830 2,410,333 6,389,813 22,784,357 Accumulated deficit.............................................. (1,537,321) (4,833,008) (8,400,509) (8,400,509) Deferred compensation............................................ -- (2,080,300) (4,795,850) (4,795,850) Notes receivable from shareholders............................... -- (49,850) (625,760) (625,760) ----------- ----------- ----------- ----------- Total shareholders' equity................................ 520,058 2,141,719 8,392 $ 8,962,238 =========== ----------- ----------- ----------- Total liabilities and shareholders' equity................ $ 859,079 $ 5,122,624 $15,746,948 =========== =========== ===========
See accompanying notes. F-3 66 INFOSEEK CORPORATION STATEMENTS OF OPERATIONS
PERIOD FROM AUGUST 30, 1993 THREE MONTHS ENDED (INCEPTION) TO YEARS ENDED DECEMBER 31, MARCH 31, DECEMBER 31, -------------------------- ------------------------ 1993 1994 1995 1995 1996 --------------- ----------- ------------ ---------- ----------- (UNAUDITED) Revenues: Advertising............ $ -- $ -- $ 848,650 $ -- $ 1,655,691 Subscription........... -- -- 183,640 5,402 75,214 -------- ----------- ----------- --------- ----------- Total revenues........... -- -- 1,032,290 5,402 1,730,905 Cost of revenues......... -- -- 614,622 79,292 689,480 -------- ----------- ----------- --------- ----------- Gross profit............. -- -- 417,668 (73,890) 1,041,425 Operating expenses: Research and development......... 8,290 1,062,915 1,174,849 176,357 933,988 Sales and marketing.... -- 96,704 1,488,492 77,218 2,756,579 General and administrative...... 19,045 360,676 1,147,507 98,121 860,111 -------- ----------- ----------- --------- ----------- Total operating expenses............... 27,335 1,520,295 3,810,848 351,696 4,550,678 -------- ----------- ----------- --------- ----------- Operating loss........... (27,335) (1,520,295) (3,393,180) (425,586) (3,509,253) Interest income (expense): Interest income........ -- 15,089 114,689 3,574 6,247 Interest expense....... -- (4,780) (17,196) (30) (64,495) -------- ----------- ----------- --------- ----------- -- 10,309 97,493 3,544 (58,248) -------- ----------- ----------- --------- ----------- Net loss................. $ (27,335) $(1,509,986) $ (3,295,687) $ (422,042) $(3,567,501) ======== =========== =========== ========= =========== Pro forma net loss per share.................. $ (0.13) $ (0.02) $ (0.14) =========== ========= =========== Shares used in computing pro forma net loss per share.................. 25,862,923 25,966,048 25,914,408 =========== ========= ===========
See accompanying notes. F-4 67 INFOSEEK CORPORATION STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
CONVERTIBLE NOTES TOTAL PREFERRED STOCK COMMON STOCK RECEIVABLE SHAREHOLDERS' ------------------------- ---------------------- ACCUMULATED DEFERRED FROM EQUITY SHARES AMOUNT SHARES AMOUNT DEFICIT COMPENSATION SHAREHOLDERS (DEFICIT) ---------- ------------ --------- ---------- ----------- ------------ ------------ ------------- Balance at August 30, 1993......... -- $ -- -- $ -- $ -- $ -- $ -- $ -- Net loss........ -- -- -- -- (27,335 ) -- -- (27,335) ---------- ----------- --------- ---------- ----------- ----------- --------- ----------- Balance at December 31, 1993............ -- -- -- -- (27,335 ) -- -- (27,335) Issuance of common stock to founders... -- -- 3,780,000 37,800 -- -- -- 37,800 Issuance of Series A convertible preferred stock for cash and conversion of note payable, net of issuance costs......... 6,826,125 899,452 -- -- -- -- -- 899,452 Issuance of Series B convertible preferred stock for cash, net of issuance costs......... 2,594,416 1,120,097 -- -- -- -- -- 1,120,097 Exercise of common stock options....... -- -- 2,812 30 -- -- -- 30 Net loss........ -- -- -- -- (1,509,986 ) -- -- (1,509,986) ---------- ----------- --------- ---------- ----------- ----------- --------- ----------- Balance at December 31, 1994............ 9,420,541 2,019,549 3,782,812 37,830 (1,537,321 ) -- -- 520,058 Issuance of Series A preferred stock for purchased technology.... 559,739 223,895 -- -- -- -- -- 223,895 Repurchase of common stock from founder....... -- -- (154,688) (1,547) -- -- -- (1,547) Issuance of Series C convertible preferred stock for cash, net of issuance costs......... 5,600,014 4,430,100 -- -- -- -- -- 4,430,100 Issuance of warrants for shares of Series C convertible preferred stock......... -- 21,000 -- -- -- -- -- 21,000 Issuance of common stock to employee for note receivable.... -- -- 371,887 49,850 -- -- (49,850) -- Unearned compensation related to stock options....... -- -- 2,124,200 -- (2,124,200 ) -- -- Amortization of unearned compensation related to stock options....... -- -- -- -- -- 43,900 -- 43,900 Fair value assigned to services provided by Netscape...... -- -- -- 200,000 -- -- -- 200,000 Net loss........ -- -- -- -- (3,295,687 ) -- -- (3,295,687) ---------- ----------- --------- ---------- ----------- ----------- --------- ----------- Balance at December 31, 1995............ 15,580,294 6,694,544 4,000,011 2,410,333 (4,833,008 ) (2,080,300 ) (49,850) 2,141,719 Cancellation of Series A preferred stock issued for purchased technology (unaudited)... (279,869) -- -- -- -- -- -- -- Unearned compensation related to stock options (unaudited)... -- -- -- 3,102,200 -- (3,102,200 ) -- -- Amortization of unearned compensation related to stock options (unaudited)... -- -- -- -- -- 386,650 -- 386,650 Issuance of Series E convertible preferred stock for cash, net of issuance costs (unaudited)... 93,750 746,154 -- -- -- -- -- 746,154 Repurchases of common stock (unaudited)... -- -- (179,688) (1,797) -- -- -- (1,797) Issuance of common stock to officer (unaudited)... -- -- 374,999 300,000 -- -- -- 300,000 Issuance of common stock to officers for notes receivable (unaudited)... -- -- 412,499 610,000 -- -- (610,000) -- Exercise of common stock options (unaudited)... -- -- 26,404 3,167 -- -- -- 3,167 Cancelation of note receivable and return of unvested shares by employee (unaudited)... -- -- (255,673) (34,090) -- -- 34,090 -- Net loss (unaudited)... -- -- -- -- (3,567,501 ) -- -- (3,567,501) ---------- ----------- --------- ---------- ----------- ----------- --------- ----------- Balance at March 31, 1996 (unaudited)..... 15,394,175 $ 7,440,698 4,378,552 $6,389,813 $(8,400,509) $(4,795,850 ) $ (625,760) $ 8,392 ========== =========== ========= ========== =========== =========== ========= ===========
See accompanying notes. F-5 68 INFOSEEK CORPORATION STATEMENTS OF CASH FLOWS
PERIOD FROM AUGUST 30, 1993 THREE MONTHS ENDED (INCEPTION) TO YEARS ENDED DECEMBER 31, MARCH 31, DECEMBER 31, ------------------------- ----------------------- 1993 1994 1995 1995 1996 -------------- ----------- ----------- --------- ----------- (UNAUDITED) OPERATING ACTIVITIES Net loss...................................... $(27,335) $(1,509,986) $(3,295,687) $(422,042) $(3,567,501) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization............... -- 109,819 437,013 69,597 332,083 Amortization of unearned compensation related to stock options.................. -- -- 43,900 -- 386,650 Amortization of warrants issued in connection with term loan................. -- -- 21,000 -- -- Fair value assigned to services provided by Netscape.................................. -- -- 200,000 -- -- Changes in operating assets and liabilities: Accounts receivable....................... -- -- (498,567) (4,000) (359,672) Other current assets...................... (69,850) 50,547 (91,598) (3,592) (192,456) Accounts payable.......................... 68,628 (57,234) 1,211,191 19,377 (181,828) Accrued payroll........................... -- 4,000 66,768 -- 193,327 Accrued royalties......................... -- -- 35,736 -- 883,159 Other accrued liabilities................. -- 113,627 462,140 42,484 431,432 Maintenance fees due third parties........ -- 210,000 (60,000) (70,000) -- -------- ----------- ----------- --------- ----------- Net cash used in operating activities......... (28,557) (1,079,227) (1,468,104) (368,176) (2,074,806) INVESTING ACTIVITIES Purchase of short-term investments............ -- -- (2,483,011) -- -- Proceeds from sales and maturities of available-for-sale investments.............. -- -- 1,986,140 -- 496,871 Purchase of property and equipment............ (71,129) (310,346) (2,828,651) (47,511) (1,247,864) -------- ----------- ----------- --------- ----------- Net cash used in investing activities......... (71,129) (310,346) (3,325,522) (47,511) (750,993) FINANCING ACTIVITIES Term loan..................................... -- -- 965,860 -- 2,572,749 Repayments of term loan....................... -- -- (39,811) -- (95,034) Issuance of note payable...................... 277,151 380,000 -- -- -- Payment of deposit on term loan............... -- -- -- -- (668,359) Repayment of note payable..................... -- (57,151) -- -- -- Proceeds from sale of convertible preferred stock, net of issuance costs................ -- 1,419,549 4,430,100 -- 746,154 Proceeds from sale of redeemable convertible preferred stock, net of issuance costs...... -- -- -- -- 8,953,846 Proceeds from sale of common stock............ -- 37,830 -- -- 303,167 Repurchase of common stock.................... -- -- (1,547) -- (1,797) -------- ----------- ----------- --------- ----------- Net cash provided by financing activities..... 277,151 1,780,228 5,354,602 -- 11,810,726 -------- ----------- ----------- --------- ----------- Net increase (decrease) in cash and cash equivalents................................. 177,465 390,655 560,976 (415,687) 8,984,927 Cash and cash equivalents at beginning of period...................................... -- 177,465 568,120 568,120 1,129,096 -------- ----------- ----------- --------- ----------- Cash and cash equivalents at end of period.... $177,465 $ 568,120 $ 1,129,096 $ 152,433 $10,114,023 ======== =========== =========== ========= ===========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES Unearned compensation related to stock options amounted to $2,124,200 and $3,102,200 for the year ended December 31, 1995 and the three months ended March 31, 1996, respectively. See accompanying notes. F-6 69 INFOSEEK CORPORATION NOTES TO FINANCIAL STATEMENTS (INFORMATION AS OF MARCH 31, 1996 AND RELATING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS UNAUDITED) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization Infoseek Corporation (the "Company") was formed in August 1993 to develop and provide branded, comprehensive Web-based navigational services that help users access and personalize the vast resources of the Internet. The Company's primary service offering, Infoseek Guide, is a free service targeted at individual users. Cash, Cash Equivalents and Short-Term Investments Cash and Cash Equivalents -- The Company considers all highly liquid debt instruments which are purchased with a maturity of three months or less to be cash equivalents. Through March 31, 1996, the Company has invested cash in excess of operating requirements in high-quality investments, primarily U.S. treasury securities, at prevailing market interest rates at the time of purchase. Short-Term Investments -- The Company accounts for investments in accordance with Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" (FAS 115). Management determines the appropriate classification of debt securities at the time of purchase and reevaluates such designation as of each balance sheet date. The Company's short-term investments, which consist primarily of U.S. treasury securities with maturities of one year or less, are classified as available-for-sale, and as such, are carried at fair value with the unrealized gains and losses, net of tax, reported in a separate component of shareholders' equity. The amortized cost of debt securities in this category is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization, as well as any interest on the securities, is included in interest income. Realized gains and losses and declines in value judged to be other-than-temporary on available-for-sale securities are included in interest income (expense). The cost of securities sold is based on the specific identification method. The Company had no investments in equity securities at December 31, 1994 and 1995 or March 31, 1996. Property and Equipment Property and equipment are carried at cost less accumulated depreciation. The Company depreciates property and equipment using the straight-line method over the estimated useful lives of three to five years. Leasehold improvements are amortized using the straight-line method over the shorter of the life of the related asset or the term of the lease. Research and Development Research and development expenditures are generally charged to operations as incurred. Statement of Financial Accounting Standards No. 86, "Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed," requires the capitalization of certain software development costs subsequent to the establishment of technological feasibility. In the Company's case, capitalization would begin upon completion of a working model as the Company does not prepare detail program designs as part of the development process. As of December 31, 1995 and March 31, 1996, such capitalizable costs were insignificant. Accordingly, the Company has charged all such costs to research and development expense in the accompanying statements of operations, and such costs have been immaterial to date. F-7 70 INFOSEEK CORPORATION NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) Stock-Based Compensation The Company has chosen not to adopt the accounting provisions under Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (FAS 123), and therefore the effect of adopting the disclosure standards required by FAS 123 has not had any effect on the Company's financial position or results of operations. Long-Lived Assets In 1995, the Financial Accounting Standards Board released the Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of " (FAS 121). FAS 121 requires recognition of impairment of long-lived assets in the event the net book value of such assets exceeds the future undiscounted cash flows attributable to such assets. FAS 121 has not had a material impact on the financial statements of the Company. Revenue Recognition The Company's advertising revenues are derived principally from short-term advertising contracts in which the Company guarantees a minimum number of impressions for a fixed fee. Advertising revenues are recognized ratably over the term of the contract provided that the monthly minimum impressions are met, the Company does not have any remaining significant obligations, and collection of the resulting receivable is probable. Also included in advertising revenues is the exchange by the Company of advertising space on the Company's Web sites for reciprocal advertising space in other media publications or other Web sites or receipt of applicable goods and services. Revenues from these exchange transactions are recorded as advertising revenue at the estimated fair value of the goods and services received and are recognized when both the Company's advertisements and the reciprocal advertisements are run, or goods or services are received. For the three months ended March 31, 1996, advertising revenues recognized under these trading activities amounted to $55,500. The Company has also derived revenues during 1995 and the first quarter of 1996 from fees related to a premium subscription service offered to business and professional users. Revenues from this service are recognized over the period the services are provided. Advertising Costs Advertising costs are recorded as an expense the first time an advertisement appears. Advertising costs amounted to $367,319 for the three months ended March 31, 1996. There were no advertising expenses during the period from August 30, 1993 (inception) to December 31, 1993 and for the years ended December 31, 1994 and 1995. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash equivalents, short-term investments, and trade receivables. The Company places its cash equivalents and short-term investments with high-quality financial institutions. Through March 31, 1996 the Company invested its excess cash in collateralized funds of U.S. government entities. The Company operates in one business segment and sells advertising to various companies across several industries. The Company generally does not require collateral. The Company maintains reserves for credit losses, and such losses have been within management's expectations. For the year ended December 31, 1995, one customer accounted for 13% of revenues. F-8 71 INFOSEEK CORPORATION NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) Net Loss Per Share Net loss per share is computed using the weighted average number of common shares outstanding. Pursuant to the Securities and Exchange Commission Staff Accounting Bulletins, convertible preferred stock, redeemable convertible preferred stock, common stock and common equivalent shares (options and warrants) issued by the Company at prices below the assumed public offering price during the twelve-month period prior to the proposed offering have been included in the calculation as if they were outstanding for all periods presented regardless of whether they are antidilutive (using the treasury stock method at an assumed public offering price of $11.00). Net loss per share calculated on this basis for the period from August 30, 1993 (inception) to December 31, 1993 and for the years ended December 31, 1994 and 1995, and for the three months ended March 31, 1995 and 1996 was ($0.00), ($0.10), ($0.20), ($0.03) and ($0.22), respectively, based upon 12,482,827, 15,791,265, 16,162,515, 16,265,640 and 16,214,000 shares, respectively. Pro Forma Net Loss Per Share and Unaudited Pro Forma Shareholders' Equity Pro forma net loss per share has been computed as described above and also gives effect, even if antidilutive, to common equivalent shares from preferred stock that will automatically convert upon the closing of the Company's initial public offering (using the as-if-converted method). If the offering contemplated by this Prospectus is consummated, all of the convertible preferred stock outstanding as of the closing date will automatically be converted into an aggregate of approximately 16,519,175 shares of common stock based on the shares of convertible preferred stock outstanding at March 31, 1996. Unaudited pro forma shareholders' equity at March 31, 1996, as adjusted for the conversion of preferred stock is disclosed on the balance sheet. Interim Financial Statements In the opinion of management, the unaudited interim financial statements at March 31, 1996 and for the three months ended March 31, 1995 and 1996 include all adjustments, consisting only of normal recurring accruals, necessary to present fairly the Company's financial position at March 31, 1996, and results of operations and cash flows for the three months ended March 31, 1995 and 1996. Results for the three months ended March 31, 1996 are not necessarily indicative of the results to be expected for the entire year. Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenue and expenses during the reporting period. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements. 2. PURCHASED TECHNOLOGY The Company exchanged 559,739 shares of its Series A convertible preferred stock to license certain technology from ACSIOM under an amended July 1994 Software Development and Licensing Master Agreement ("ACSIOM Agreement"). In March 1996, 279,869 shares of the previously issued Series A convertible preferred stock were cancelled under terms contained in the ACSIOM Agreement. The value assigned to the Series A convertible preferred stock of $223,895 is being amortized over 18 months ending June 30, 1996. Amortization expense for the year ended F-9 72 INFOSEEK CORPORATION NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) December 31, 1995 and the three months ended March 31, 1996 was $149,263 and $37,316, respectively. 3. OBLIGATIONS In October 1995 and February 1996, the Company entered into term loan agreements with Venture Lending and Leasing, Inc. ("Venture") under which the Company borrowed approximately $3,500,000 to finance the purchase of equipment. Borrowings made under this agreement are due over 37 months, bear interest which ranges from 15.80% to 16.39%, and are secured by certain assets of the Company. In connection with the October 1995 loan agreement, the Company issued warrants to purchase 100,000 shares of Series C convertible preferred stock (see Note 5). In connection with the February 1996 loan agreement, the Company paid a cash deposit of $668,359 to Venture. Maturities under this agreement as of December 31, 1995 and March 31, 1996 are as follows:
DECEMBER 31, MARCH 31, 1995 1996 ------------ ---------- 1996..................................................... $193,453 $ 913,931 1997..................................................... 280,045 1,033,742 1998..................................................... 407,551 1,388,329 1999..................................................... -- 67,762 -------- ---------- $881,049 $3,403,764 ======== ==========
During 1994, the Company repaid a $657,151 note payable to a founder through the issuance of 6,000,000 shares of Series A preferred stock and the payment of $57,151 in cash. 4. COMMITMENTS The Company leases its facilities under operating lease agreements which expire at various dates through February 2000. Total rent expense for the years ended December 31, 1994 and 1995 and for the three months ended March 31, 1996 was $40,889, $85,682 and $50,165, respectively. There was no rent expense for the period from August 30, 1993 (inception) through December 31, 1993. Minimum future rental commitments under these leases as of December 31, 1995 and March 31, 1996 are as follows:
DECEMBER 31, MARCH 31, 1995 1996 ------------ --------- 1996...................................................... $165,158 $ 147,867 1997...................................................... 114,561 99,049 1998...................................................... 37,156 34,205 1999...................................................... 35,006 32,252 2000...................................................... 5,864 -- -------- -------- $357,745 $ 313,373 ======== ========
In addition, the Company has cancelable support fees and royalty payments due ACSIOM. Future minimum payments under this agreement are approximately $10,000 per quarter and 4% of revenues for so long as the Company continues to utilize the subject technology. During 1994, the Company licensed certain technology to be used in developing the Company's product. Subsequently, it was determined that this technology was not suited to the Company's product. Consequently, in 1994, the Company expensed $280,000 due under the contract through 1999. Of this amount, $195,000 was payable and included in liabilities in the accompanying financial statements at December 31, 1995 and March 31, 1996. F-10 73 INFOSEEK CORPORATION NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) The Company has licensed certain software technologies from XEROX Corporation (XEROX). The Company pays a royalty to XEROX based on the usage of the technology, and such royalty is not to exceed $200,000 per year in 1996 and 1997, and $300,000 in 1998. After payment of such $700,000 in royalties, the Company will have a perpetual license to the technology with no further payments. Historically, a large portion of the Company's traffic was derived through the Web page of Netscape Communications Corporation ("Netscape"). During 1995, the Company paid no fees to appear on Netscape's Web page. The Company recorded $200,000 to sales and marketing expense as the estimated fair value of the services received from Netscape during 1995. From January 1, 1996 to March 31, 1996, the Company was listed as the sole premier "Net Search" service on the Netscape Web page for which the Company paid Netscape 50% of the related net advertising revenue. In March 1996, Infoseek entered into an agreement with Netscape, which provides that Infoseek will be listed as a Premier Provider on Netscape's Web page for the period from April 10, 1996 to March 31, 1997. This agreement with Netscape provides for payments of up to an aggregate of $5 million to Netscape over the course of the term of the agreement. The Company has the right to terminate the agreement at the end of six months, in which case payments to Netscape would be reduced by an aggregate of approximately $2.5 million. Payments to Netscape will be recognized ratably over the term of the agreement. 5. SHAREHOLDERS' EQUITY Convertible Preferred Stock The following is a summary of the authorized and issued shares of convertible preferred stock:
DECEMBER 31, 1994 DECEMBER 31, 1995 MARCH 31, 1996 ------------------------ ------------------------ ------------------------ ISSUED AND ISSUED AND ISSUED AND AUTHORIZED OUTSTANDING AUTHORIZED OUTSTANDING AUTHORIZED OUTSTANDING ---------- ----------- ---------- ----------- ---------- ----------- Series A........... 9,847,816 6,826,125 9,847,816 7,385,864 9,847,816 7,105,995 Series B........... 4,060,000 2,594,416 3,459,220 2,594,416 3,459,220 2,594,416 Series C........... -- -- 7,600,009 5,600,014 7,600,009 5,600,014 Series D........... -- -- 3,650,000 -- 3,650,000 -- Series E........... -- -- -- -- 3,333,333 93,750 ---------- ---------- ---------- ---------- ---------- ---------- Total.... 13,907,816 9,420,541 24,557,045 15,580,294 27,890,378 15,394,175 ========== ========== ========== ========== ========== ==========
The holders of Series A, B, C and E convertible preferred stock are entitled to receive annual, noncumulative dividends, when and if declared by the Board of Directors, of $0.007, $0.227, $0.04, and $0.40 per share, respectively. Through March 31, 1996, no dividends had been declared or paid by the Company. Each share of Series A, B, C and E stock is convertible, at the option of the shareholder, into common stock on a one-for-one basis, subject to adjustment in certain cases. The Series A, B, C, and E convertible preferred stock converts automatically upon the occurrence of certain events, including a sale of common stock in an initial public offering with gross proceeds of at least $15,000,000 or the written consent of the holders of two-thirds of the outstanding shares of preferred stock voting as a single class. The holders of preferred stock are entitled to one vote for each share of common stock into which the preferred stock is convertible. In the event of a liquidation, the Series A, B, C and E shareholders are entitled to receive $0.13, $0.45, $0.80 and $8.00, respectively, per share, plus all declared but unpaid dividends. Thereafter, the remaining assets shall be distributed among the holders of common and preferred shares pro rata with the preferred shares being treated on an as-converted basis. F-11 74 INFOSEEK CORPORATION NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) Through March 31, 1996, no shares of Series D convertible preferred stock had been issued. Founders' Common Stock The Company has the right, at any time within sixty days after termination of a founder's employment or service, to repurchase certain common shares at the price per share paid by the founder. The Company's right to repurchase lapses with respect to 25% of the total number of shares held by the founder, commencing twelve months after purchase, and in monthly increments of 2.08% of the total number of shares thereafter. There were 1,628,906, and 1,234,843 common shares subject to repurchase by the Company at December 31, 1995 and March 31, 1996, respectively. Shareholders' Notes Receivable In December 1995 and during the first quarter of 1996, the Company entered into agreements with certain officers and an employee to sell 371,887 and 337,500 shares, respectively, of the Company's common stock in exchange for full recourse promissory notes. The shares are subject to repurchase by the Company, and such repurchase options lapse in monthly increments of 2.08% of the total number of shares purchased. The Company also entered into an agreement with an officer during the first quarter of 1996 to sell 75,000 shares of the Company's common stock in exchange for a full recourse promissory note. These shares were fully vested at the time of issuance. At December 31, 1995 and March 31, 1996, there were 371,887 and 337,500 common shares, respectively, subject to repurchase by the Company. Warrants During 1995 in connection with an equipment financing transaction, the Company issued warrants to purchase 100,000 shares of Series C convertible preferred stock at an exercise price of $0.80 per share. These warrants are exercisable at any time through October 2000. As of December 31, 1995, no warrants had been exercised. The Company recorded additional interest expense of $21,000 based on using the minimum value method to determine the value of the warrant. Common Stock Reserved For Future Issuance Shares of common stock reserved for future issuance are as follows:
DECEMBER 31, MARCH 31, 1995 1996 ------------ ----------- Convertible preferred stock.............................. 24,557,045 27,890,378 Warrants................................................. 100,000 100,000 Stock option plan........................................ 3,184,688 5,408,284 ---------- ---------- 27,841,733 33,398,662 ========== ==========
6. REDEEMABLE CONVERTIBLE PREFERRED STOCK As part of the Series E convertible preferred stock offering 1,125,000 shares were issued to NYNEX Information Technologies Company ("NYNEX"). As part of this transaction the Company and NYNEX entered into an agreement which provides that the Company will prominently display the BigYellow logo, which represents NYNEX's interactive shopping directory, as the exclusive comprehensive shopping directory within Infoseek Guide, in exchange for a fee paid by NYNEX. In connection with this transaction, the Company has granted to NYNEX the right to redeem the Series E convertible preferred stock, if certain specified events occur, at the fair market value (not F-12 75 INFOSEEK CORPORATION NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) less than $8.00 per share) at the time of redemption. These redemption rights terminate upon the conversion of the Series E convertible preferred stock pursuant to the Company's initial public offering with aggregate proceeds of at least $15,000,000. The Series E redeemable convertible preferred stock have the same dividend, liquidation, voting and conversion rights and preferences as the Series E convertible preferred stock as described in Note 5. 7. STOCK OPTION PLAN The Company's Stock Option Plan (the "Plan") provides for the grant of incentive stock options and nonstatutory stock options to employees and consultants of the Company at prices ranging from 85% to 110% (depending on the type of grant) of the fair market value of the common stock on the date of grant as determined by the Board of Directors. The Company has reserved 5,437,500 shares of common stock for issuance under the Plan. The vesting and exercise provisions of the option grants are determined by the Board of Directors. Options generally vest and become exercisable as to 25% of the shares one year from the date of grant and the balance in monthly increments over the subsequent three years of service. Options expire no later than seven years from the date of grant. Options for the purchase of 155,138 and 211,537 shares were exercisable as of December 31, 1995 and March 31, 1996, respectively. Information with respect to the Plan is summarized as follows:
OPTIONS OUTSTANDING ---------------------------------------- SHARES AGGREGATE AVAILABLE FOR NUMBER OF PRICE PER EXERCISE GRANT SHARES SHARE PRICE ------------- --------- ---------------- ---------- Balance at January 1, 1994....... -- -- $-- $ -- Authorized..................... 3,187,500 -- $-- -- Granted........................ (187,500) 187,500 $0.011 - $0.067 11,660 Exercised...................... -- (2,812) $0.011 (188) Canceled....................... 19,688 (19,688) $0.011 - $0.067 (637) ---------- --------- ---------- Balance at December 31, 1994..... 3,019,688 165,000 $0.067 - $0.067 10,835 Granted........................ (3,438,262) 3,438,262 $0.067 - $0.133 452,185 Canceled....................... 529,387 (529,387) $0.067 - $0.133 (60,508) ---------- --------- ---------- Balance at December 31, 1995..... 110,813 3,073,875 $0.011 - $0.133 402,512 Authorized..................... 2,250,000 -- $-- -- Granted........................ (1,968,249) 1,968,249 $0.80 - $4.00 3,815,834 Exercised...................... -- (26,404) $0.33 - $1.33 (29,241) Canceled....................... 674,844 (674,844) $0.067 - $4.00 (706,189) ---------- --------- ---------- Balance at March 31, 1996........ 1,067,408 4,340,876 $0.011 - $4.00 $3,482,916 ========== ========= ==========
Deferred Compensation The Company recorded aggregate compensation of $5,226,400 during the fourth quarter of 1995 and the first quarter of 1996. The amount recorded represents the difference between the grant price and the deemed fair value of the Company's common stock for shares subject to options granted in 1995 and during the first quarter of 1996. The amortization of deferred compensation is being charged to operations and is being amortized over the vesting period of the options, which is typically four years. For 1995 and the first quarter of 1996, the amortized expenses were $43,900 and $386,650, respectively. F-13 76 INFOSEEK CORPORATION NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) 8. INCOME TAXES Due to the Company's loss position, there was no provision for income taxes for any period presented. The difference between the provision for income taxes and the amount computed by applying the federal statutory tax rate (34%) to income (loss) before provision for income taxes is explained below:
PERIOD FROM AUGUST 30, 1993 YEARS ENDED DECEMBER 31, (INCEPTION) TO ----------------------------- DECEMBER 31, 1993 1994 1995 ----------------- --------- ----------- Income tax (benefit) computed at the federal statutory rate................. $ (9,240) $(528,495) $(1,076,140) Losses for which no tax benefit was recognized............................. 9,240 528,495 1,076,140 ----------------- --------- ----------- Provision for income taxes............... $ -- $ -- $ -- ================== ========== ============
As of December 31, 1995, the Company has federal and state net operating loss carryforwards of approximately $4,000,000 and $600,000, respectively. The federal net operating loss carryforwards will expire in the years 2008 through 2010, and the state net operating loss carryforwards will expire in the years 1998 through 2000. The Company has federal and state research and experimentation credits of approximately $30,000 and $18,000, respectively, that will expire in the years 2008 through 2010. Utilization of the net operating losses and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986 and similar state provisions. The annual limitation may result in the expiration of net operating losses and credits before utilization. Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred taxes consisted of the following at:
DECEMBER 31, ------------------------ 1994 1995 --------- ---------- Deferred tax assets: Net operating losses.................................... $ 473,000 $1,382,000 Research credit carryforwards........................... 45,000 42,000 Accrued royalties....................................... 112,000 83,000 Other individually immaterial items..................... 31,000 184,000 --------- ----------- Total deferred tax assets................................. 661,000 1,691,000 Valuation allowance..................................... (661,000) (1,691,000) --------- ----------- Total net deferred tax assets............................. $ -- $ -- ========= ===========
The change in the valuation allowance was a net increase of approximately $661,000 and $1,030,000 for the years ended December 31, 1994 and 1995, respectively. 9. EMPLOYEE BENEFIT PLAN In January 1996, the Company adopted a plan to provide retirement and incidental benefits for its eligible employees, known as the Infoseek Corporation 401(k) Plan. As allowed under Section 401(k) of the Internal Revenue Code, the plan provides tax-deferred salary deductions for eligible employees. Participants in the Plan may make salary deferrals of up to 20% of their annual F-14 77 INFOSEEK CORPORATION NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) salary, limited by the maximum dollar amount allowed by the Internal Revenue Code. The Company, at its discretion, may elect to make contributions to the Plan on behalf of its eligible participants. The Company has made no such contributions to date. 10. SUBSEQUENT EVENTS In April 1996, the Board of Directors approved the filing of a registration statement by the Company with the SEC covering the proposed sale of shares of its common stock to the public. Effective April 1996, the Board of Directors, subject to shareholders' approval, adopted the 1996 Stock Option/Stock Issuance Plan (the "1996 Plan"). The 1996 Plan is intended to serve as the successor equity incentive stock issuance program to the Company's Stock Option Plan (the "Predecessor Plan"). Under the 1996 Plan 5,625,000 shares of common stock have been authorized for issuance. This share reserve consists of (i) the shares which remained available for issuance under the predecessor plan, including the shares subject to outstanding options thereunder and the shares otherwise available for future grant, plus (ii) an additional increase. The 1996 Plan is divided into three separate components: the Discretionary Option Grant Program under which eligible individuals may be granted options to purchase shares of common stock at an exercise price of not less than 85% of their fair market value on the grant date, the Stock Issuance Program under which eligible individuals may be issued shares of common stock directly through the purchase of such shares at a price of not less than 85% of their fair market value at the time of issuance or as a bonus tied to the performance of services and the Automatic Option Grant Program under which option grants will automatically be made at periodic intervals to eligible nonemployee Board members to purchase shares of common stock at an exercise price equal to 100% of their fair market value on the grant date. Effective April 1996, the Company's Board of Directors, subject to shareholders' approval, adopted the 1996 Employee Stock Purchase Plan (the "Purchase Plan"), which is designed to allow eligible employees of the Company to purchase shares of common stock at semiannual intervals through their periodic payroll deductions. A reserve of 187,500 shares of common stock has been established for the Purchase Plan. The Purchase Plan will be implemented in a series of successive offering periods, each with a maximum duration of 24 months. Eligible employees can have up to 10% of their base salary deducted to be used to purchase shares of the common stock on specific dates determined by the Board of Directors. The price of common stock purchased under the Purchase Plan will be equal to 85% of the lower of the fair market value of the common stock on the commencement date of each offering period or the specified purchase date. In April 1996, the Company sold 1,048,501 shares of Series E convertible preferred stock for gross proceeds of $8,388,000. Issuance costs were approximately $300,000. As part of the offering 375,001 shares of Series E convertible preferred stock were issued to Kanematsu Corporation ("Kanematsu"). Also, as part of this transaction, the Company entered into a memorandum of understanding and a marketing alliance agreement with Kanematsu to create a strategic alliance. Under the terms of this alliance the parties will set up a Japanese Internet search and retrieval service containing listings of Japanese Web sites written in Japanese and a Japanese translation of the Infoseek Guide Directory. The 375,001 shares of Series E convertible preferred stock held by Kanematsu are redeemable at the request of Kanematsu, upon the termination of the Marketing Alliance Agreement as a result of any breach of a material provision by the Company. The Series E convertible preferred stock held by Kanematsu will be redeemed by the Company at the fair market value (but not less than $8.00 per share) at the time of redemption. The redemption terminates upon the conversion of the Series E convertible preferred stock, if the Company has a initial public offering with gross proceeds of at least $15,000,000. F-15 78 INFOSEEK CORPORATION NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) In April 1996, the Company licensed certain software technology from HNC Software Inc. ("HNC"). The Company intends to utilize the software technology to develop an advertising and audience management system to track individual usage behavior in order to optimize the matching of advertisements with the appropriate audience. The software will be modified to the Company's specifications to integrate it into the Company's advertisement placement system. This technology will be licensed to the Company for an initial five year term beginning upon the initial acceptance of the software by the Company. According to the terms of the agreement the Company will be required to pay HNC for customization and installation fees, sub-license start-up fees and monthly license fees. The monthly license fees consist of a fixed fee, which the Company expects will amount to approximately $180,000 in the aggregate through 1997, and a royalty fee based on a percentage of certain future related revenues (in order to maintain the exclusivity of the arrangement, the Company is required to pay certain annual minimum royalties, which the Company expects will amount to approximately $60,000 in the aggregate through 1997). In May 1996, the Company licensed certain additional software technology from HNC that is intended to allow the Company to enhance the Company's Web Directory feature. The Company expects to use this technology to automate the construction of Directory categories, assignment of Web pages to each Directory category and the creation of abstracts for each Web page included in the Directory. This technology will be licensed to the Company for an initial five year term beginning upon the initial acceptance of the software by the Company. According to the terms of the agreement, the Company will be required to pay HNC an installation fee, license fee and a maintenance fee. The installation fee of $150,000 is due in 1996 and license and maintenance fees of approximately $50,000 are due annually for the life of the contract. In May 15, 1996, the Company's Shareholders approved a 3-for-4 reverse stock split of the Company's preferred and common stock. All outstanding preferred, common and common equivalent shares in the accompanying financial statements have been retroactively adjusted to give effect to this reverse stock split. At the same time, the Board of Directors approved the increase of authorized common stock to 60,000,000 shares and authorized 5,000,000 shares of undesignated preferred stock. The Board of Directors has the authority to issue the undesignated preferred stock in one or more series and to fix the rights, preferences, privileges, and restrictions thereof, including dividend rights, conversion, voting rights, terms of redemption, redemption prices, liquidation preferences, and the number of shares constituting any series or the designation of such series without further vote or action by the shareholders. No such shares have been issued to date. F-16 79 - ------------------------------------------------------ - ------------------------------------------------------ NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF. --------------------- TABLE OF CONTENTS
PAGE ---- Prospectus Summary.................... 3 Risk Factors.......................... 5 The Company........................... 17 Use of Proceeds....................... 17 Dividend Policy....................... 17 Capitalization........................ 18 Dilution.............................. 19 Selected Financial Data............... 20 Management's Discussion and Analysis of Financial Condition and Results of Operations....................... 21 Business.............................. 26 Management............................ 41 Certain Transactions.................. 50 Principal Shareholders................ 53 Description of Capital Stock.......... 55 Shares Eligible for Future Sale....... 56 Underwriting.......................... 58 Legal Matters......................... 59 Experts............................... 59 Additional Information................ 59 Index to Financial Statements......... F-1 Report of Independent Accountants..... F-2
--------------------- UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK OFFERED HEREBY, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS. - ------------------------------------------------------ - ------------------------------------------------------ - ------------------------------------------------------ - ------------------------------------------------------ 3,000,000 SHARES LOGO COMMON STOCK --------------------- PROSPECTUS --------------------- ALEX. BROWN & SONS INCORPORATED MERRILL LYNCH & CO. , 1996 - ------------------------------------------------------ - ------------------------------------------------------ 80 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 Company in connection with the sale of Common Stock being registered. All amounts are estimates except the SEC registration fee and the NASD filing fees. SEC Registration fee..................................................... $ 14,276 NASD fee................................................................. 4,640 Nasdaq National Market listing fee....................................... 50,000 Printing and engraving................................................... 150,000 Legal fees and expenses of the Company................................... 250,000 Accounting fees and expenses............................................. 150,000 Blue sky fees and expenses............................................... 10,000 Transfer agent fees...................................................... 5,000 Directors and officers insurance......................................... 150,000 Miscellaneous............................................................ 66,084 -------- Total.......................................................... $850,000 =========
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS The Company has adopted provisions in its Amended and Restated Articles of Incorporation that limit the liability of directors in certain instances. As permitted by the California General Corporation Law, directors will not be liable to the Company for monetary damages arising from a breach of their fiduciary duty as directors in certain circumstances. See Item 17 of this Registration Statement regarding the opinion of the Securities and Exchange Commission as to indemnification for liabilities arising under the Securities Act of 1933, as amended ("the Act"). Such limitation does not affect liability for any breach of a director's duty to the Company or its shareholders (i) with respect to approval by the director of any transaction from which he derives an improper personal benefit, (ii) with respect to acts or omissions involving an absence of good faith, that he believes to be contrary to the best interests of the Company or its shareholders, that involve intentional misconduct or a knowing and culpable violation of law, that constitute an unexcused pattern of inattention that amounts to an abdication of his duty to the Company or its shareholders, or that show a reckless disregard for his duty to the Company or its shareholders in circumstances in which he was, or should have been, aware, in the ordinary course of performing his duties, of a risk of serious injury to the Company or its shareholders, or (iii) based on transactions between the Company and its directors or another corporation with interrelated directors or on improper distributions, loans or guarantees under applicable sections of the California General Corporation Law. Such limitation of liability also does not affect the availability of equitable remedies such as injunctive relief or rescission, although in certain circumstances equitable relief may not be available as a practical matter. The limitation may relieve the directors of monetary liability to the Company for grossly negligent conduct, including conduct in situations involving attempted takeovers of the Company. No claim or litigation is currently pending against the Company's directors that would be affected by the limitation of liability. The Company's Amended and Restated Articles of Incorporation and Bylaws provide that the Company shall indemnify its directors and may indemnify its officers to the full extent permitted by California law, including circumstances in which indemnification is otherwise discretionary under California law. The Company has entered into separate indemnification agreements with its directors and officers, which may require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers (other than II-1 81 liabilities arising from willful misconduct of a culpable nature), and to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified. To the extent the Company may be required to make substantial payments under the indemnification agreements that are not covered by insurance, the Company's available cash and shareholder's equity would be adversely affected. Reference is made to the form of the Underwriting Agreement filed as Exhibit 1.1 to this Registration Statement for certain provisions regarding the indemnification of officers and directors of the Company by the several Underwriters. ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES (a) Since August 30, 1993 (date of inception), the Company has issued and sold the following securities (as adjusted to reflect a 3-for-4 reverse stock split to be effected prior to the effectiveness of this Registration Statement): 1. The Company issued and sold 3,445,624 shares (net of repurchases) of its Common Stock to founders for an aggregate purchase price of $35,206.25 pursuant to the Founders Agreement dated February 1, 1994, as amended on June 30, 1994 (Exhibit 10.13). 2. The Company issued and sold 498,714 shares (net of repurchases) of its Common Stock to employees for an aggregate purchase price of $314,840.95 pursuant to direct issuances and the exercise of options under its Stock Option Plan (Exhibit 10.1). 3. On February 25, 1994, March 18, 1994, and July 22, 1994, the Company issued and sold an aggregate of 7,385,864 shares of Series A Preferred Stock for an aggregate purchase price of $984,781.60. 4. On June 30, 1994 and August 24, 1994, the Company issued and sold an aggregate of 2,594,416 shares of Series B Preferred Stock for an aggregate price of $1,176,134.80. 5. On May 4, 1995 and June 30, 1995, the Company issued and sold 5,600,014 shares of Series C Preferred Stock for an aggregate price of $4,480,005.60 6. The Company has not issued and sold any shares of Series D Preferred Stock. 7. On March 29, 1996, April 12, 1996 and April 19, 1996, the Company issued and sold an aggregate of 2,267,251 shares of Series E Preferred Stock for an aggregate purchase price of $18,137,964 to several investors. The issuances described in Item 15(a)(1) were deemed exempt from registration under the Securities Act in reliance upon Rule 701 promulgated under the Securities Act. The issuances of the securities described in items 15(a)(2) through 15(a)(7) were deemed to be exempt from registration under the Act in reliance on Section 4(2) of the Act as transactions by an issuer not involving any public offering. In addition, 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 Company, to information about the Company. II-2 82 ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
EXHIBIT NO. DESCRIPTION - ----------- --------------------------------------------------------------------------------- 1.1* Form of Underwriting Agreement (preliminary form). 3.1* Articles of Incorporation of the Registrant, as amended to date. 3.2* Form of Amended and Restated Articles of Incorporation of the Registrant to be filed prior to the closing of the Offering made pursuant to this Registration Statement. 3.3* Form of Amended and Restated Articles of Incorporation of the Registrant to be filed after the closing of the Offering made pursuant to this Registration Statement. 3.4* Bylaws of the Registrant, as amended. 3.5* Form of Bylaws of the Registrant to be effective upon the effectiveness of this Registration Statement. 4.1* Reference is made to Exhibits 3.1, 3.2, 3.3, 3.4 and 3.5. 4.2 Specimen Common Stock certificate. 4.3* Third Amended and Restated Investors' Rights Agreement dated April 19, 1996 among the Registrant and the investors and founders named therein. 4.4* Warrant Agreement between the Registrant and Venture Lending and Leasing, Inc. dated as of October 7, 1995. 5.1* Opinion of Brobeck, Phleger & Harrison LLP. 10.1* Infoseek Corporation Stock Option Plan, as amended on March 20, 1996, subject to qualification by the State of California. 10.2* Infoseek Corporation 1996 Stock Option/Stock Issuance Plan. 10.3* Infoseek Corporation Employee Stock Purchase Plan. 10.4* Form of Offer Letter among the Registrant and its officers. 10.5* Form of Indemnification Agreement entered into between the Registrant and its directors and officers. 10.6* Series A Preferred Stock Purchase Agreement dated February 25, 1994 among the Registrant and the investors named therein, as amended March 3, 1994. 10.7* Series A Preferred Stock Supplemental Purchase Agreement dated July 22, 1994 between the Registrant and the Applied Computing Systems Institute of Massachusetts, Inc. 10.8* Series B Preferred Stock Purchase Agreement dated June 30, 1994 among the Registrant and the investors named therein, as amended July 7, 1994. 10.9* Series C Preferred Stock Purchase Agreement dated May 4, 1995 among the Registrant and the investors named therein, as amended June 30, 1995. 10.10* Third Amended and Restated Agreement regarding co-sale dated April 19, 1996 among the Registrant and the investors and founders named therein. 10.11* Third Amended and Restated Co-Sale Agreement dated April 19, 1996 among the founder and the investors named therein. 10.12* Amended and Restated Put Option Agreement dated May 4, 1995 among the Registrant and the investors named therein. 10.13* Founders Agreement dated February 1, 1994 among the Registrant and the founders named therein, as amended June 30, 1994. 10.14+ Series E Preferred Stock Purchase Agreement dated March 29, 1996 among the Registrant and the investors named therein.
10.15* Stock Purchase Agreements dated January 24, 1996 between the Registrant and Robert E.L. Johnson III. 10.16* Employee Stock Purchase Agreement dated January 30, 1996 between the Registrant and Robert E.L. Johnson III. 10.17* Employee Stock Purchase Agreement dated March 28, 1996 between the Registrant and Leonard J. LeBlanc. 10.18* Employee Stock Purchase Agreement dated March 9, 1996 between the Registrant and John Nauman. 10.19* Employee Stock Purchase Agreement dated March 9, 1996 between the Registrant and Craig Forman. 10.20* Lease Agreements dated December 13, 1993, November 7, 1995, January 8, 1996 and January 10, 1996 between the Registrant and Spieker Properties, L.P. 10.21* Standard Office Sublease dated May 30, 1995 between the Registrant and Innovative Information Systems, Inc.
II-3 83 10.22* Standard Form of Office Lease dated April 1996 the Registrant and Richfield Investment Company. 10.23* Software Development and Licensing Master Agreement dated July 8, 1994, as amended on February 13, 1995 and April 24, 1995 between the Registrant and Applied Computing Systems Institute of Massachusetts, Inc. 10.24* Software License Agreement between the Registrant and ADB Inc. dated December 22, 1995, as amended April 19, 1996. 10.25* Internet Services and Products Master Agreement dated May 22, 1995 between the Registrant and BBN Planet Corporation. 10.26+ Internet Search Service Access Agreement dated August 23, 1995 between the Registrant and Microsoft Corporation, as amended on December 18, 1995. 10.27*+ Internet Search Service Access Agreement between the Registrant and NETCOM Online Communication Services, Inc. dated October 13, 1995, as amended on March 20, 1996. 10.28* Net Search Program -- Premier Provider Agreement between the Registrant and Netscape Communications Corporation dated March 22, 1996, as amended on that date. 10.29*+ Agreement between the Registrant and NetManage, Inc. dated November 29, 1995. 10.30*+ Software License and Distribution Agreement between the Registrant and Personal Library Software, Inc. dated June 17, 1994. 10.31+ XSoft/Infoseek Software Distribution and License Agreement -- Lexicons, dated March 31, 1996 between the Registrant and XSoft, a division of XEROX Corporation. 10.32* Customer Support Program Agreement for Infoseek among the Registrant and SunService Corporation dated January 1, 1996. 10.33* Purchase Orders dated March 21, 1996, February 1, 1996, December 1, 1995, October 25, 1995, October 6, 1995 between the Registrant and Sun Microsystems, Inc. 10.34* Form Consulting Services Agreement among the Registrant and its consultants. 10.35+ Letter of Agreement dated April 2, 1996 between the Registrant and HNC Software Inc. 10.36+ Agreement in Principle dated March 21, 1996 between the Registrant and HNC Software Inc. 10.37* Joint Marketing Agreement dated effective April 15, 1996 between the Registrant and Sun Microsystems Inc. 10.38*+ Online Service Agreement dated February 28, 1995 between the Registrant and Reuters NewMedia, Inc., as amended January 4, 1996 and April 19, 1996. 10.39* Redemption Agreement dated March 29, 1996 between the Registrant and NYNEX Information Technologies Company. 10.40* Redemption Agreement dated April 12, 1996 among the Registrant and Kanematsu Corporation, Kanematsu USA, Inc. and Kanematsu Computer Systems, Inc. 10.41*+ Infoseek Corporation Advertising Agreement dated May 7, 1996 to be effective as of January 1, 1996 between the Registrant and Margeotes-Fertitta Partners, Inc. 10.42+ Infoseek/NYNEX Agreement dated March 29, 1996 between the Registrant and NYNEX Information Technologies Company. 10.43+ Software License Agreement dated March 29. 1996 between the Registrant and NYNEX Information Technologies Company. 10.44* Out-of-Area Plan Master Group Policy dated January 1, 1996 between the Registrant and Lifeguard Life Insurance Company. 10.45* Infoseek Impressions Agreement -- Ad Exchange between the Registrant and FreeLoader, Inc. dated March 8, 1996. 10.46+ Agreement between the Registrant and Verity, Inc. dated March 31, 1996. 10.47* Cooperation Agreement between the Registrant and Quarterdeck Corporation dated April 2, 1996. 10.48+ Memorandum of Understanding between the Registrant and Kanematsu Corporation dated March 30, 1996. 10.49+ Marketing Alliance Agreement between the Registrant and Kanematsu Corporation dated April 11, 1996. 10.50+ Relationship Agreement between the Registrant and Reuters NewMedia Inc. dated April 19, 1996. 10.51+ Memorandum of Understanding between the Registrant and IDG Communications Inc. dated April 22, 1996.
II-4 84 10.52* Loan Agreements between the Registrant and Venture Lending & Leasing, Inc. dated October 5, 1995 and February 9, 1996 and related Notes (Note No. 42-002 dated March 28, 1996; Note No. 42-001 dated February 29, 1996; Note No. 27-002 dated November 30, 1995 and Note No. 27-001 dated October 11, 1995) between the Registrant and Venture Lending & Leasing, Inc. 10.53+ License and Software Distribution Agreement between the Registrant and HNC Software Inc. dated April 25, 1996. 10.54*+ Amendment No. 3 to Software Development and Licensing Master Agreement between the Registrant and Applied Computing Systems Institute of Massachusetts, Inc. dated March 18, 1996. 10.55* First Amendment to Series A Preferred Stock Supplemental Purchase Agreement dated March 18, 1996 between the Registrant and the Applied Computing Systems Institute of Massachusetts, Inc. 10.56+ Software License Agreement dated May 8, 1996 between the Registrant and HNC Software Inc. 11.1 * Computation of Earnings/(Loss) Per Share. 23.1 Consent of Ernst & Young LLP, Independent Auditors (see page II-8) 23.2 * Consent of Counsel. Reference is made to Exhibit 5.1. 24.1 * Power of Attorney 99.1 License Agreement A-0402 between the Registrar and Ziff-Davis Publishing Company dated April 30, 1996. 99.2 License Agreement A-0403 between the Registrant and Ziff-Davis Publishing Company dated April 30, 1996. 99.3 Permission Letter to the Registrant from FORTUNE(R) dated April 19, 1996.
- --------------- * Previously filed. + Confidential treatment requested as to certain portions of these exhibits. (B) FINANCIAL STATEMENT SCHEDULES Schedule II Valuation and Qualifying Accounts Schedules not listed above have been omitted because the information required to be set forth therein is not applicable or is shown in the financial statements or notes thereto. ITEM 17. UNDERTAKINGS The Company 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 Company pursuant to the California Corporation Law, the Articles of Incorporation or the Bylaws of the Company, Indemnification Agreements entered into between the Company and its officers and directors, the Underwriting Agreement, or otherwise, the Company 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 Company of expenses incurred or paid by a director, officer, or controlling person of the Company 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 Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-5 85 The Company 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 Company 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-6 86 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this Amendment to Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Palo Alto, State of California, on this 10th day of June, 1996. INFOSEEK CORPORATION By: /s/ ROBERT E. L. JOHNSON, III ------------------------------------ Robert E. L. Johnson, III President and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:
SIGNATURE TITLE DATE - ------------------------------------- ---------------------------------- ----------------- /S/ ROBERT E. L. JOHNSON, III President, Chief Executive June 10, 1996 - ------------------------------------- Officer, and Director (Principal (Robert E. L. Johnson, III) Executive Officer) /S/ LEONARD J. LEBLANC Executive Vice President, Finance, June 10, 1996 - ------------------------------------- Chief Financial Officer and (Leonard J. LeBlanc) Assistant Secretary (Principal Financial and Accounting Officer) STEVEN T. KIRSCH* Director June 10, 1996 - ------------------------------------- (Steven T. Kirsch) H. DUBOSE MONTGOMERY* Director June 10, 1996 - ------------------------------------- (H. DuBose Montgomery) OLIVER D. CURME* Director June 10, 1996 - ------------------------------------- (Oliver D. Curme) JOHN E. ZEISLER* Director June 10, 1996 - ------------------------------------- (John E. Zeisler) MATTHEW J. STOVER* Director June 10, 1996 - ------------------------------------- (Matthew J. Stover) *By: /s/ LEONARD J. LEBLANC - ------------------------------------- Leonard J. LeBlanc Attorney-in-fact
II-7 87 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the reference to our firm under the captions "Selected Financial Data" and "Experts" and to the use of our report dated February 27, 1996 (except as to Note 10, as to which the date is May 15, 1996) in Amendment No. 4 to the Registration Statement (Form S-1 No. 333-4142) and related Prospectus of Infoseek Corporation for the registration of 3,450,000 shares of common stock. Our audits also included the financial statement schedule of Infoseek Corporation listed on Item 16(b). This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. ERNST & YOUNG LLP San Jose, California June 10, 1996 II-8 88 SCHEDULE II INFOSEEK CORPORATION VALUATION AND QUALIFYING ACCOUNTS
ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE -------------------------------------------------- ADDITIONS BALANCE AT CHANGED TO BALANCE AT BEGINNING COSTS AND DEDUCTIONS- END OF OF PERIOD EXPENSES WRITE-OFFS PERIOD ------------------- ---------- ----------- ---------- Period from August 30, 1993 through December 31, 1993....... $ $ $ $ ------- ------- --- ------- Year ended December 31, 1994...... -- -- -- -- Year Ended December 31, 1995...... -- 41,500 -- 41,500 Three months ended March 31, 1996 (unaudited)............. 41,500 7,887 -- 49,387
S-1 89 INDEX TO EXHIBITS
SEQUENTIALLY EXHIBIT NUMBERED NUMBER EXHIBITS PAGE - ------- -------------------------------------------------------------------------- 1.1* Form of Underwriting Agreement (preliminary form)......................... 3.1* Articles of Incorporation of the Registrant, as amended to date........... 3.2* Form of Amended and Restated Articles of Incorporation of the Registrant to be filed prior to the closing of the Offering made pursuant to this Registration Statement.................................................... 3.3* Form of Amended and Restated Articles of Incorporation of the Registrant to be filed after the closing of the Offering made pursuant to this Registration Statement7 3.4* Bylaws of the Registrant, as amended...................................... 3.5* Form of Bylaws of the Registrant to be effective upon the effectiveness of this Registration Statement............................................... 4.1* Reference is made to Exhibits 3.1, 3.2, 3.3, 3.4 and 3.5.................. 4.2 Specimen Common Stock certificate......................................... 4.3* Third Amended and Restated Investors' Rights Agreement dated April 19, 1996 among the Registrant and the investors and founders named therein.... 4.4* Warrant Agreement between the Registrant and Venture Lending and Leasing, Inc. dated as of October 7, 1995.......................................... 5.1* Opinion of Brobeck, Phleger & Harrison LLP................................ 10.1* Infoseek Corporation Stock Option Plan, as amended on March 20, 1996, subject to qualification by the State of California....................... 10.2* Infoseek Corporation 1996 Stock Option/Stock Issuance Plan................ 10.3* Infoseek Corporation Employee Stock Purchase Plan......................... 10.4* Form of Offer Letter among the Registrant and its officers................ 10.5* Form of Indemnification Agreement entered into between the Registrant and its directors and officers................................................ 10.6* Series A Preferred Stock Purchase Agreement dated February 25, 1994 among the Registrant and the investors named therein, as amended March 3, 1994...................................................................... 10.7* Series A Preferred Stock Supplemental Purchase Agreement dated July 22, 1994 between the Registrant and the Applied Computing Systems Institute of Massachusetts, Inc. ...................................................... 10.8* Series B Preferred Stock Purchase Agreement dated June 30, 1994 among the Registrant and the investors named therein, as amended July 7, 1994....... 10.9* Series C Preferred Stock Purchase Agreement dated May 4, 1995 among the Registrant and the investors named therein, as amended June 30, 1995...... 10.10* Third Amended and Restated Agreement regarding co-sale dated April 19, 1996 among the Registrant and the investors and founders named therein.... 10.11* Third Amended and Restated Co-Sale Agreement dated April 19, 1996 among the founder and the investors named therein............................... 10.12* Amended and Restated Put Option Agreement dated May 4, 1995 among the Registrant and the investors named therein................................ 10.13* Founders Agreement dated February 1, 1994 among the Registrant and the founders named therein, as amended June 30, 1994.......................... 10.14+ Series E Preferred Stock Purchase Agreement dated March 29, 1996 among the Registrant and the investors named therein................................
10.15* Stock Purchase Agreements dated January 24, 1996 between the Registrant and Robert E.L. Johnson III............................................... 10.16* Employee Stock Purchase Agreement dated January 30, 1996 between the Registrant and Robert E.L. Johnson III....................................
90
SEQUENTIALLY EXHIBIT NUMBERED NUMBER EXHIBITS PAGE - ------- -------------------------------------------------------------------------- 10.17* Employee Stock Purchase Agreement dated March 28, 1996 between the Registrant and Leonard J. LeBlanc......................................... 10.18* Employee Stock Purchase Agreement dated March 9, 1996 between the Registrant and John Nauman................................................ 10.19* Employee Stock Purchase Agreement dated March 9, 1996 between the Registrant and Craig Forman...............................................
10.20* Lease Agreements dated December 13, 1993, November 7, 1995, January 8, 1996 and January 10, 1996 between the Registrant and Spieker Properties, L.P. ..................................................................... 10.21* Standard Office Sublease dated May 30, 1995 between the Registrant and Innovative Information Systems, Inc. ..................................... 10.22* Standard Form of Office Lease dated April 1996 the Registrant and Richfield Investment Company.............................................. 10.23* Software Development and Licensing Master Agreement dated July 8, 1994, as amended on February 13, 1995 and April 24, 1995 between the Registrant and Applied Computing Systems Institute of Massachusetts, Inc. ............... 10.24* Software License Agreement between the Registrant and ADB Inc. dated December 22, 1995, as amended April 19, 1996.............................. 10.25* Internet Services and Products Master Agreement dated May 22, 1995 between the Registrant and BBN Planet Corporation................................. 10.26+ Internet Search Service Access Agreement dated August 23, 1995 between the Registrant and Microsoft Corporation, as amended on December 18, 1995..... 10.27*+ Internet Search Service Access Agreement between the Registrant and NETCOM Online Communication Services, Inc. dated October 13, 1995, as amended on March 20, 1996............................................................ 10.28* Net Search Program -- Premier Provider Agreement between the Registrant and Netscape Communications Corporation dated March 22, 1996, as amended on that date.............................................................. 10.29*+ Agreement between the Registrant and NetManage, Inc. dated November 29, 1995...................................................................... 10.30*+ Software License and Distribution Agreement between the Registrant and Personal Library Software, Inc. dated June 17, 1994....................... 10.31+ XSoft/Infoseek Software Distribution and License Agreement -- Lexicons, dated March 31, 1996 between the Registrant and XSoft, a division of XEROX Corporation............................................................... 10.32* Customer Support Program Agreement for Infoseek among the Registrant and SunService Corporation dated January 1, 1996.............................. 10.33* Purchase Orders dated March 21, 1996, February 1, 1996, December 1, 1995, October 25, 1995, October 6, 1995 between the Registrant and Sun Microsystems, Inc. ....................................................... 10.34* Form Consulting Services Agreement among the Registrant and its consultants............................................................... 10.35+ Letter of Agreement dated April 2, 1996 between the Registrant and HNC Software Inc. ............................................................ 10.36+ Agreement in Principle dated March 21, 1996 between the Registrant and HNC Software Inc. ............................................................ 10.37* Joint Marketing Agreement dated effective April 15, 1996 between the Registrant and Sun Microsystems Inc. ..................................... 10.38*+ Online Service Agreement dated February 28, 1995 between the Registrant and Reuters NewMedia, Inc., as amended January 4, 1996 and April 19, 1996...................................................................... 10.39* Redemption Agreement dated March 29, 1996 between the Registrant and NYNEX Information Technologies Company..........................................
91 10.40* Redemption Agreement dated April 12, 1996 among the Registrant and Kanematsu Corporation, Kanematsu USA, Inc. and Kanematsu Computer Sys- tems, Inc. ............................................................... 10.41*+ Infoseek Corporation Advertising Agreement dated May 7, 1996 to be effective as of January 1, 1996 between the Registrant and Margeotes-Fertitta Partners, Inc. ........................................ 10.42+ Infoseek/NYNEX Agreement dated March 29, 1996 between the Registrant and NYNEX Information Technologies Company.................................... 10.43+ Software License Agreement dated March 29. 1996 between the Registrant and NYNEX Information Technologies Company.................................... 10.44* Out-of-Area Plan Master Group Policy dated January 1, 1996 between the Registrant and Lifeguard Life Insurance Company........................... 10.45* Infoseek Impressions Agreement -- Ad Exchange between the Registrant and FreeLoader, Inc. dated March 8, 1996...................................... 10.46+ Agreement between the Registrant and Verity, Inc. dated March 31, 1996.... 10.47* Cooperation Agreement between the Registrant and Quarterdeck Corporation dated April 2, 1996....................................................... 10.48+ Memorandum of Understanding between the Registrant and Kanematsu Corpora- tion dated March 30, 1996................................................. 10.49+ Marketing Alliance Agreement between the Registrant and Kanematsu Corpora- tion dated April 11, 1996................................................. 10.50+ Relationship Agreement between the Registrant and Reuters NewMedia Inc. dated April 19, 1996...................................................... 10.51+ Memorandum of Understanding between the Registrant and IDG Communications Inc. dated April 22, 1996................................................. 10.52* Loan Agreements between the Registrant and Venture Lending & Leasing, Inc. dated October 5, 1995 and February 9, 1996 and related Notes (Note No. 42-002 dated March 28, 1996; Note No. 42-001 dated February 29, 1996; Note No. 27-002 dated November 30, 1995 and Note No. 27-001 dated October 11, 1995) between the Registrant and Venture Lending & Leasing, Inc. ......... 10.53+ License and Software Distribution Agreement between the Registrant and HNC Software Inc. dated April 25, 1996........................................ 10.54*+ Amendment No. 3 to Software Development and Licensing Master Agreement between the Registrant and Applied Computing Systems Institute of Massachusetts, Inc. dated March 18, 1996.................................. 10.55* First Amendment to Series A Preferred Stock Supplemental Purchase Agreement dated March 18, 1996 between the Registrant and the Applied Computing Systems Institute of Massachusetts, Inc. ....................... 10.56+ Software License Agreement dated May 8, 1996 between the Registrant and HNC Software Inc. ........................................................ 11.1 * Computation of Earnings/(Loss) Per Share.................................. 23.1 Consent of Ernst & Young LLP, Independent Auditors (see page II-8)........ 23.2 * Consent of Counsel. Reference is made to Exhibit 5.1...................... 24.1 * Power of Attorney......................................................... 99.1 License Agreement A-0402 between the Registrant and Ziff-Davis Publishing Company dated April 30, 1996.............................................. 99.2 License Agreement A-0403 between the Registrant and Ziff-Davis Publishing Company dated April 30, 1996.............................................. 99.3 Permission Letter to the Registrant and Fortune(R) dated April 30, 1996......................................................................
- --------------- * Previously filed. + Confidential treatment requested as to certain portions of these exhibits. EX-4.2 2 SPECIMEN OF COMMON STOCK CERTIFICATE 1 EXHIBIT 4.2 SPECIMEN STOCK CERTIFICATE Standard form stock certificate on cream stock with blue borders, blue shadow in the middle where name of security holder and number of shares are to be filled in. In the top righthand corner, inside righthand border is the stock certificate number panel, shaded in blue. The certificate numbers will start with the letters "SEEK". In the center of the top of the certificate is the logo, black border surrounding the word "infoseek" also in black, initial "i" is lowercase and in italics. In the lefthand corner, inside the lefthand border, is the number of shares panel shaded in blue. Under this number of shares panel are the words "See reverse for certain definitions and a statement as to the rights, preferences, privileges and restrictions on shares." Under this legend is the CUSIP number 45678M 10 7. Under the middle blue shaded panel are the words "Fully paid and non-assessable shares of the common stock of", then double space and centered are the words "INFOSEEK CORPORATION". Following on the bottom are the standard transferability language, place for date of stock certificate, signature of Secretary, corporate seal and signature of President. On the reverse of the stock certificate, on the top is the following legend "A statement of the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights as established, from time to time, by the Articles of Incorporation of the Corporation and by any certificate of designation, the number of shares constituting each class and series, and the designations thereof, may be obtained by the holder hereof upon request and without charge from the office of the Secretary of the Corporation." The remainder of the reverse of the stock certificate is the standard form language to be completed if a transfer or sale of the securities is to take place. EX-10.14 3 SERIES E PREFERRED STOCK PURCHASE AGREEMENT 1 EXHIBIT 10.14 *CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL TREATMENT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. INFOSEEK CORPORATION SERIES E PREFERRED STOCK PURCHASE AGREEMENT MARCH 29, 1996 2 TABLE OF CONTENTS
Page 1. Purchase and Sale of Stock....................................... 1 1.1 Sale and Issuance of Series E Preferred Stock........... 1 1.2 Closing................................................. 1 1.3 Subsequent Closings..................................... 1 2. Representations and Warranties of the Company.................... 2 2.1 Organization, Good Standing and Qualification........... 2 2.2 Capitalization and Voting Rights........................ 2 2.3 Subsidiaries............................................ 3 2.4 Authorization........................................... 3 2.5 Valid Issuance of Preferred and Common Stock............ 4 2.6 Governmental Consents................................... 4 2.7 Litigation.............................................. 4 2.8 Confidentiality and Intellectual Property Agreement..... 5 2.9 Patents and Trademarks.................................. 5 2.10 Compliance with Other Instruments....................... 6 2.11 Agreements; Action...................................... 7 2.12 Related-Party Transactions.............................. 8 2.13 Permits................................................. 8 2.14 Disclosure.............................................. 8 2.15 Registration Rights..................................... 9 2.16 Corporate Documents..................................... 9 2.17 Title to Property and Assets............................ 9 2.18 Financial Statements.................................... 9 2.19 Changes................................................. 9 2.20 Insurance............................................... 10 2.21 Minute Books............................................ 10 2.22 Section 83(b) Elections................................. 10 2.23 Employee Benefit Plans.................................. 11 2.24 Taxes................................................... 12 2.25 Environmental........................................... 13 2.26 The Company's Internet Services......................... 13 2.27 Ultraseek Technology.................................... 13 3. Representations and Warranties of Investor....................... 14 3.1 Authorization........................................... 14 3.2 Purchase Entirely for Own Account....................... 14 3.3 Disclosure of Information............................... 14 3.4 Investment Experience................................... 15 3.5 Accredited Investor..................................... 15
i 3 3.6 Restricted Securities..................................... 15 3.7 Compliance with Foreign Law............................... 15 3.8 Further Limitations on Disposition........................ 15 3.9 Telecommunications Company................................ 16 3.10 Legends................................................... 16 4. California Commissioner of Corporations............................ 16 4.1 Corporate Securities Law.................................. 16 5. Conditions of Investor's Obligations at Closing.................... 17 5.1 Representations and Warranties............................ 17 5.2 Performance............................................... 17 5.3 Restated Articles and Amended Bylaws Effective............ 17 5.4 Compliance Certificate.................................... 17 5.5 Qualifications............................................ 17 5.6 Proceedings and Documents................................. 17 5.7 Investors' Rights Agreement............................... 18 5.8 Opinion of Company Counsel................................ 18 5.9 Directors................................................. 18 5.10 Due Diligence............................................. 18 5.11 Amendment to Co-Sale Agreements........................... 18 6. Conditions of the Company's Obligations at Closing................. 18 6.1 Representations and Warranties............................ 18 6.2 Payment of Purchase Price................................. 18 6.3 Restated Articles and Amended Bylaws Effective............ 18 6.4 Qualifications............................................ 19 6.5 Investors' Rights Agreement............................... 19 7. Indemnification Obligations........................................ 19 7.1 Indemnification........................................... 19 7.2 Indemnified Claims........................................ 20 8. Miscellaneous...................................................... 20 8.1 Amended Bylaws............................................ 20 8.2 Directors and Officers Insurance.......................... 20 8.3 Survival of Warranties.................................... 20 8.4 Successors and Assigns.................................... 21 8.5 Governing Law............................................. 21 8.6 Cumulative................................................ 21 8.7 Counterparts/Facsimile.................................... 21 8.8 Titles and Subtitles...................................... 21 8.9 Notices................................................... 21 8.10 Finder's Fee.............................................. 21 8.11 Expenses.................................................. 22
ii 4 8.12 Amendments and Waivers.................................... 22 8.13 Severability.............................................. 22 8.14 Entire Agreement.......................................... 22 8.15 Termination............................................... 22
SCHEDULE A - Schedule of Investors SCHEDULE B - Schedule of Subsequent Purchasers SCHEDULE C - List of Shareholders SCHEDULE 2.26A - Total Queries and Browses SCHEDULE 2.26B - List of Advertisers EXHIBIT A - Amended and Restated Articles of Incorporation EXHIBIT B - Second Amended and Restated Investors' Rights Agreement EXHIBIT C - Schedule of Exceptions EXHIBIT D - Bylaws, as amended EXHIBIT E - Second Amended and Restated Agreement Regarding Co- Sale EXHIBIT F - Second Amended and Restated Co-Sale Agreement iii 5 SERIES E PREFERRED STOCK PURCHASE AGREEMENT THIS SERIES E PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement") is made as of the 29th day of March, 1996, by and among Infoseek Corporation, a California corporation (the "Company"), the Investors listed on Schedule A hereto and each subsequent purchaser set forth on Schedule B hereto (the Investors on Schedule A and subsequent purchasers on Schedule B each referred to herein as "Investor" and collectively, the "Investors"). THE PARTIES HEREBY AGREE AS FOLLOWS: 1. Purchase and Sale of Stock. 1.1 Sale and Issuance of Series E Preferred Stock. (a) The Company shall adopt and file with the Secretary of State of the State of California before the Closing (as defined below) the Amended and Restated Articles of Incorporation in the form attached hereto as Exhibit A (the "Restated Articles"). (b) Subject to the terms and conditions of this Agreement, the Investors agree to purchase at the Closing, and the Company agrees to sell and issue to the Investors at the Closing, that number of shares of the Company's Series E Preferred Stock at a purchase price equal to $6.00 per share, for an aggregate purchase price as set forth on Schedule A hereto. 1.2 Closing. The purchase and sale of the Series E Preferred Stock shall take place at the offices of Brobeck, Phleger & Harrison LLP, Two Embarcadero Place, 2200 Geng Road, Palo Alto, California, at 1:00 p.m., Pacific Standard Time, on March 29, 1996 or at such other time and place on or before March 31, 1996, as the Company and with respect to each Investor listed on Schedule A hereto, such Investor mutually agree (which time and place with respect to each Investor are designated as the "Closing"). At the Closing the Company shall deliver to each Investor a certificate representing the shares of Series E Preferred Stock that such Investor is purchasing hereunder against payment of the purchase price therefor by check or wire transfer. 1.3 Subsequent Closings. Subject to Section 2.2 of that certain Second Amended and Restated Investors' Rights Agreement of even date herewith, by and among the Company, the Investors, and the other parties listed therein, the form of which is attached hereto as Exhibit B (the "Investors' Rights Agreement"), the Company may sell up to the balance of the authorized number of shares of Series E Preferred Stock not sold at the Closing (a) to such other persons or entities as the Company may 6 determine and (b) to any party who holds a right of participation pursuant to Section 2.2 of the Investors' Rights Agreement. Any such sale shall be at the same price per share and upon the same terms and conditions as those set forth herein and shall be consummated within one (1) year from the date hereof. The initial Closing and any subsequent closings shall hereafter be collectively referred to as the "Closing" pursuant to this Agreement. 2. Representations and Warranties of the Company. The Company hereby represents and warrants to Investor that, except as set forth on a schedule of exceptions dated the date of this Agreement and attached hereto as Exhibit C (the "Schedule of Exceptions"), furnished to each Investor and special counsel for Investor specifically identifying the relevant subparagraph hereof, which disclosure shall be deemed to be representations and warranties as if made hereunder: 2.1 Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of California and has all requisite corporate power and authority to own, lease and operate its properties and assets, and to carry on its business as now and heretofore conducted and as proposed to be conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a material adverse effect on its business, results of operations, financial condition or properties. 2.2 Capitalization and Voting Rights. The authorized capital of the Company consists, or will consist immediately prior to the Closing, of: (i) Preferred Stock. 27,890,378 shares of Preferred Stock (the "Preferred Stock"), of which: (A) 9,847,816 shares have been designated Series A Preferred Stock, all of which are outstanding; (B) 3,459,220 shares have been designated Series B Preferred Stock, all of which are outstanding; (C) 7,600,009 shares have been designated Series C Preferred Stock, 7,466,676 of which are outstanding; (D) 3,650,000 shares have been designated Series D Preferred Stock, none of which are outstanding; and (E) 3,333,333 shares have been designated Series E Preferred Stock, up to all of which may be sold pursuant to this Agreement. The rights, preferences and privileges of the Preferred Stock will be as stated in the Company's Restated Articles. (ii) Common Stock. 45,000,000 shares of common stock ("Common Stock"), of which 5,359,119 shares are issued and outstanding. (iii) All outstanding shares of Series A, B and C Preferred Stock and Common Stock are owned by the shareholders and in the numbers specified on Schedule C hereto, are duly and validly authorized and issued, fully paid and nonassessable, and were issued in accordance with the registration or qualification provisions of the Securities Act of 1933, as amended (the "Act") and any relevant state securities laws or pursuant to valid exemptions therefrom. 2 7 (iv) Except for (A) the conversion privileges of the Preferred Stock, (B) the rights granted pursuant to that certain Amended and Restated Put Option Agreement dated as of May 4, 1995, by and among the Company and the other parties listed therein (the "Put Option Agreement"), (C) the rights provided in Section 2.2 of the Investors' Rights Agreement, (D) 133,333 shares of Series C Preferred Stock reserved for issuance to an equipment lessor of the Company upon exercise of outstanding warrants to purchase such shares and (E) 5,818,203 shares of Common Stock reserved for issuance to employees, directors and officers of, and consultants to, the Company upon exercise of outstanding options, there are no outstanding options, warrants, rights (including conversion or preemptive rights) or agreements for the purchase or acquisition from the Company of any shares of its capital stock. The Company has reserved an additional 1,421,798 shares of its Common Stock for issuance to employees, directors, officers of and consultants to the Company pursuant to the Infoseek Corporation Stock Option Plan (the "Option Plan"). The Company has to date adopted no other employee stock plan. The Company is not a party or subject to any agreement or understanding, and, to the best of the Company's knowledge, there is no agreement or understanding between any other persons or entities that affects or relates to the voting or giving of written consents with respect to any security or the voting by a director of the Company, including, without limitation, any voting trusts or agreements, shareholders' agreements, pledge agreements, or proxies relating to the securities of the Company. The Company has no obligation (contingent or otherwise) to purchase, redeem or otherwise acquire any of its securities or any interest therein or to pay any dividend or make any other distribution, except as provided in the Restated Articles or the Investors' Rights Agreement. 2.3 Subsidiaries. The Company does not presently own or control, directly or indirectly, and has not entered into any agreement to acquire any interest in any other corporation, association, or other business entity. The Company is not a participant in any joint venture, partnership, or similar arrangement. 2.4 Authorization. All corporate action on the part of the Company, its officers, directors and shareholders necessary for the adoption, authorization, execution, filing (where applicable) and delivery of the Restated Articles, this Agreement, the Investors' Rights Agreement, the Second Amended and Restated Agreement Regarding Co-Sale of even date herewith by and among the Company, the Investors and Founders listed on Schedule A and B thereto, respectively, and attached hereto as Exhibit E (the "Amended Agreement Regarding Co-Sale) and the Second Amended and Restated Co- Sale Agreement, dated as of even date herewith by and among the Founder listed therein and the Investors listed on Schedule A thereto and attached hereto as Exhibit F (the "Amended Co-Sale Agreement"), the performance of all obligations of the Company hereunder and thereunder, and the authorization, issuance (or reservation for issuance), sale and delivery of the Series E Preferred Stock being sold hereunder, and the Common Stock issuable upon conversion of the Series E Preferred Stock, has been taken or will be taken prior to the Closing. This Agreement, the Investors' Rights Agreement and the Amended Agreement Regarding Co-Sale constitute valid and legally binding obligations of the Company, enforceable in accordance with their respective terms, except (i) as 3 8 enforceability may be limited by bankruptcy, insolvency and other laws now or hereafter in effect relating to or generally affecting creditors' rights and general principles of equity, (ii) that the remedies of specific performance and injunctive and other forms of equitable relief are subject to certain equitable defenses and to the discretion of the court before which any proceeding therefor may be brought and (iii) as rights to indemnity under the Investors' Rights Agreement, may be limited by federal or state securities laws. 2.5 Valid Issuance of Preferred and Common Stock. The Series E Preferred Stock that is being purchased by the Investors hereunder, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein, will be duly and validly issued, fully paid, and nonassessable and, based in part upon the representations of the Investors in this Agreement, will be issued in compliance with all applicable federal and state securities laws. The Common Stock issuable upon conversion of the Series E Preferred Stock purchased under this Agreement has been duly and validly reserved for issuance and, upon issuance in accordance with the terms of the Restated Articles, will be duly and validly issued, fully paid, and nonassessable and would, if issued as of this date, be in compliance with all applicable federal and state securities laws. The Series E Preferred Stock when issued, sold and delivered in accordance with this Agreement, and the Common Stock issuable upon conversion of the Series E Preferred Stock purchased under this Agreement, will be free and clear of any liens, charges, restrictions, claims and encumbrances except as set forth in this Agreement and the Investors' Rights Agreement, and will not be subject to any preemptive rights or any right of first refusal or other right in favor of any person or entity, which has not been waived or canceled. 2.6 Governmental Consents. No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority on the part of the Company is required in connection with the execution, delivery and performance of this Agreement, the Investors' Rights Agreement, the Amended Agreement Regarding Co-Sale, the offer, sale or issuance of the Series E Preferred Stock (or Common Stock issuable upon conversion thereof) or the consummation of the transactions contemplated by this Agreement, except for (i) any required filing pursuant to Section 25102(f) of the California Corporate Securities Law of 1968, as amended, and the rules thereunder, which filing, if required, will be effected within 15 days of the sale of the Series E Preferred Stock hereunder and (ii) the filing of the Restated Articles in the office of the Secretary of State of the State of California. 2.7 Litigation. There is no action, suit, proceeding or investigation pending or currently threatened against the Company including, but not limited to, those that question the validity of this Agreement, the Investors' Rights Agreement or the right of the Company to enter into any such agreement, or to consummate the transactions contemplated hereby or thereby, or that might result, either individually or in the aggregate, in any material adverse changes in the assets, condition, affairs or prospects of 4 9 the Company, financially or otherwise, or any change in the current equity ownership of the Company. The foregoing includes, without limitation, actions, suits, proceedings or investigations pending or threatened involving the prior employment of any of the Company's employees, their use in connection with the Company's business of any information or techniques allegedly proprietary to any of their former employers, or their obligations under any agreements with prior employers. The Company is not a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality. There is no action, suit, proceeding or investigation by the Company currently pending or that the Company intends to initiate. 2.8 Confidentiality and Intellectual Property Agreement. Each employee, officer and consultant of the Company has executed a Confidentiality and Intellectual Property Agreement in substantially the form provided to special counsel to Investor, and to the best knowledge of the Company, none of its employees, officers or consultants are in violation thereof. To the best of the Company's knowledge, no person employed by the Company has disclosed or may disclose any trade secret or any information or documentation proprietary to any former employer, and no person has violated or may violate any employment contract, non-competition agreement, confidential relationship or any restrictive covenant which such person may have had with any third party, in connection with the development, manufacture or sale of any product or proposed product or the development or sale of any service or proposed service of the Company, and the Company has no reason to believe there will be any such violation. Each holder of Common Stock of the Company has entered into a Stock Purchase Agreement in substantially the form provided to special counsel to Investor. Each holder of options to purchase Common Stock of the Company has entered into an option agreement in the form provided to the Investor. Each of such agreements in this Section 2.8 shall be in full force and effect as of the Closing. 2.9 Patents and Trademarks. Set forth on the Schedule of Exceptions is a list and brief description of all patents, trademarks, service marks, trade names, copyrights, and all applications therefor, that are issued, registered or filed in the name of the Company, and all software developed by or for the Company (the "Company Intellectual Property"). The Company owns all title and interest, free and clear of liens and encumbrances, in and to the Company Intellectual Property and all software and technology used in or necessary for its business as now conducted or heretofore conducted and as proposed to be conducted, including without limitation all software described in the Schedule of Exceptions and all software and technology relating to the provision of services under the brand "Infoseek Netsearch" and "Infoseek Guide" (collectively, the "Company Technology"), except such third party software (other than commercially available shrinkwrap consumer application software) and technology licensed by the Company as set forth in the Schedule of Exceptions (the "Third Party Licenses"). The use of the Company Intellectual Property and Company Technology: (i) does not infringe any copyrights or trade secret rights of any third party; and (ii) to the best of the Company's knowledge after reasonable investigation, does not infringe any patents, patent rights, trademarks, service marks or trade names of any third party. The 5 10 Third Party Licenses are valid and in full force and effect. There are no pending claims, and the Company has not received any communications or information, that: (i) challenges the scope, validity, enforceability, or the Company's ownership of the Company Intellectual Property and/or the Company Technology; or (ii) alleging that the Company has violated or infringed or, by conducting its business as proposed, would violate or infringe any patents, patent rights, trademarks, services marks, trade names, copyrights, trade secrets, or other proprietary right of any third party. The Company is not aware that any of its employees is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would interfere with the use of his or her best efforts to promote the interests of the Company or that would conflict with the Company's business as proposed to be conducted. Neither the carrying on of the Company's business by the employees of the Company, nor the conduct of the Company's business as proposed, will, to the best of the Company's knowledge, conflict with or result in a breach of the terms, conditions, or provisions of, or constitute a default under, any contract, covenant or instrument under which any of such employees is now obligated. The Company does not believe it is or will be necessary to utilize any inventions of any of its employees (or people it currently intends to hire) made prior to their employment by the Company. To the best of the Company's knowledge, no other person or entity has violated or infringed or, by conducting its business as proposed, would violate or infringe any patents, patent rights, trademarks, service marks, trade names, copyrights, trade secrets, technology or other proprietary rights of the Company. 2.10 Compliance with Other Instruments. The Company is not in violation or default of any provision of its Restated Articles or Bylaws, as amended (the "Amended Bylaws"), or in any material respect, of any instrument, judgment, order, writ, decree, mortgage, indenture, agreement or contract to which it is a party or by which it is bound, or, to the best of its knowledge, of any provision of any federal or state statute, rule or regulation applicable to the Company. The execution, delivery and performance of this Agreement, the Investors' Rights Agreement, the Amended Agreement Regarding Co-Sale, the issuance of the Common Stock issuable upon conversion of the Series E Preferred Stock and the consummation of the transactions contemplated hereby and thereby will not result in any such violation or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under any such provision, instrument, judgment, order, writ, decree, mortgage, indenture, agreement or contract or an event that results in the creation of any lien, charge or encumbrance upon any assets of the Company or the suspension, revocation, impairment, forfeiture, or nonrenewal of any material permit, license, authorization, or approval applicable to the Company, its business or operations or any of its assets or properties. 6 11 2.11 Agreements; Action. (a) Except for agreements explicitly contemplated by this Agreement, the Investors' Rights Agreement, the Amended Agreement Regarding Co-Sale and the Amended Co-Sale Agreement, there are no agreements, understandings or proposed transactions between the Company and any of its officers, directors, shareholders, affiliates, or any affiliate thereof. (b) There are no agreements, understandings, instruments, contracts, proposed transactions to which the Company is a party or by which it is bound that may involve (i) obligations (contingent or otherwise) of, or payments to or by the Company in excess of, $25,000, or (ii) the license or transfer of any right relating to any patent, patent rights, trade marks, service marks, trade names, copyright, trade secret, software (excluding commercially available shrink-wrap applications software), technology, information or other proprietary right to or from the Company, or (iii) provisions restricting or affecting the development, manufacture or distribution of the Company's products or services, or (iv) indemnification by the Company with respect to infringements of proprietary rights. There are no judgments, orders, writs or decrees to which the Company is a party or by which it is bound. (c) The Company has not (i) declared or paid any dividends, or authorized or made any distribution upon or with respect to, or purchased or redeemed any class or series of its capital stock, (ii) incurred any indebtedness for money borrowed or any other liabilities individually in excess of $10,000 or, in the case of indebtedness and/or liabilities individually less than $10,000, in excess of $25,000 in the aggregate, (iii) made any loans or advances to any person, other than ordinary advances for travel expenses, or (iv) sold, exchanged or otherwise disposed of any of its assets or rights, other than the sale of its inventory in the ordinary course of business. The Company has not entered into any agreement or commitment to engage in any of the foregoing activities. (d) For the purposes of subsections (b) and (c) above, all indebtedness, liabilities, agreements, understandings, instruments, contracts and proposed transactions involving the same person or entity (including persons or entities the Company has reason to believe are affiliated therewith) shall be aggregated for the purpose of meeting the individual minimum dollar amounts of such subsections. (e) The Company is not a party to and is not bound by any contract, agreement or instrument, or subject to any restriction under its Restated Articles or Amended Bylaws, that adversely affects its business as now conducted or as proposed to be conducted, its properties or its financial condition. All contracts, agreements, and instruments to which the Company is a party are valid, binding, and in full force and effect with respect to the Company; provided, however, that shrink-wrap and electronic forms of such (i) contracts, (ii) agreements and (iii) instruments concerning contractual obligations may be unenforceable. 7 12 (f) The Company has not engaged within the past three (3) months in any discussion (i) with any representative of any corporation or corporations regarding the consolidation or merger of the Company with or into any such corporation or corporations, (ii) with any corporation, partnership, association or other business entity or any individual regarding the sale, conveyance or disposition of all or substantially all of the assets of the Company or a transaction or series of related transactions in which more than fifty (50%) percent of the voting power of the Company is disposed of, or (iii) regarding any other form of acquisition, liquidation, dissolution or winding up of the Company. 2.12 Related-Party Transactions. No employee, officer, director or shareholder (or affiliates thereof) of the Company or member of his or her immediate family is indebted to the Company, nor is the Company indebted (or committed to make loans or extend or guarantee credit) to any of them. To the best of the Company's knowledge, none of such persons has any direct or indirect ownership interest in any firm or corporation with which the Company is affiliated or with which the Company has a business relationship, or any firm or corporation that competes with the Company, except that employees, officers, directors or shareholders (or affiliates thereof) of the Company and members of their immediate families may own nominal amounts of stock in publicly traded companies (as compared to their individual net worth) that may compete with the Company. No member of the immediate family of any officer or director of the Company is directly or indirectly interested in any material contract with the Company. 2.13 Permits. The Company has all franchises, permits, licenses and any similar authority necessary for the conduct of its business as now being conducted by it, the lack of which could materially and adversely affect the business, properties, prospects or financial condition of the Company, and the Company believes it can obtain, without undue burden or expense, any similar authority for the conduct of its business as planned to be conducted. The Company is not in default in any material respect under any of such franchises, permits, licenses or other similar authority. 2.14 Disclosure. The Company has fully provided Investor with all the information that Investor has requested for deciding whether to purchase the Series E Preferred Stock and all information that the Company believes is reasonably necessary to enable Investor to make such decision. Neither this Agreement, the Investors' Rights Agreement, any other information with respect to the Company contained in documents provided by the Company, any statements nor any certificates made or delivered in connection herewith contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements herein or therein not misleading. There is no fact which the Company, to its knowledge, has not disclosed to the Investor which materially and adversely affects or could materially and adversely affect the business, prospects, financial condition, operations, property or affairs of the Company. 8 13 2.15 Registration Rights. Except as provided in the Investors' Rights Agreement, the Company has not granted or agreed to grant any registration rights, including piggyback rights, to any person or entity. 2.16 Corporate Documents. True and complete copies of the Restated Articles and Amended Bylaws of the Company, in effect as of the Closing and as attached hereto as Exhibits A and D, respectively, are in the form previously provided to special counsel for Investor. 2.17 Title to Property and Assets. The Company owns its property and assets free and clear of all mortgages, liens, loans and encumbrances, except such encumbrances and liens that arise in the ordinary course of business, do not materially impair the Company's ownership or use of such property or assets and do not exceed $20,000 individually or $75,000 in the aggregate. True and complete copies of all agreements to lease or rent property to which the Company is a party are set forth on the Schedule of Exceptions and were previously provided to the Investors. The Company does not own any real property. With respect to the property and assets it leases, the Company is in compliance with such leases and, to the best of its knowledge, holds a valid leasehold interest free of any liens, claims or encumbrances. The Company is not in material breach of any said leases, has no knowledge of any breach or anticipated breach by lessors thereto, and has no present knowledge that such lease will not be renewed. 2.18 Financial Statements. The Company has delivered to Investor its audited financial statements for the fiscal year ended December 31, 1994, and its unaudited financial statements for the fiscal year ended December 31, 1995 and the two (2) month period ended February 29, 1996 (the "Financial Statements"). The Financial Statements are complete and correct in all material respects and fairly present the financial condition and operating results of the Company for the periods covered thereby and all in accordance with generally accepted accounting principles ("GAAP") consistently applied. Except as set forth in the Financial Statements, the Company has no material liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent to February 29, 1996, and (ii) obligations under contracts and commitments incurred in the ordinary course of business and not required under GAAP to be reflected in the Financial Statements, which, in both cases, individually or in the aggregate, are not material to the financial condition or operating results of the Company. 2.19 Changes. Since February 29, 1996, there has not been: (a) any change in the assets, liabilities, financial condition or operating results of the Company from that reflected in the Financial Statements, except changes in the ordinary course of business that have not been or are not expected to be, in the aggregate, materially adverse. 9 14 (b) any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting the assets, properties, financial condition, operating results, prospects or business of the Company (as such business is presently conducted and as it is proposed to be conducted); (c) any waiver by the Company of a valuable right or of a material debt owed to it; (d) any satisfaction or discharge of any lien, claim or encumbrance or payment of any obligation by the Company, except in the ordinary course of business and that is not material to the assets, properties, financial condition, operating results or business of the Company (as such business is presently conducted and as it is proposed to be conducted); (e) any change or amendment to a material contract or arrangement by which the Company or any of its assets or properties is bound or subject; (f) any material change in any compensation arrangement or agreement with any employee; or (g) to the Company's knowledge, any other event or condition of any character that might materially and adversely affect the assets, properties, financial condition, operating results or business of the Company (as such business is presently conducted and as it is proposed to be conducted). 2.20 Insurance. The Company has in full force and effect fire and casualty insurance policies, with extended coverage, sufficient in amount (subject to reasonable deductibles) to allow it to replace any of its properties that might be damaged or destroyed. The Company also has in full force and effect general liability insurance with reasonable coverage for its type of business. 2.21 Minute Books. The Company's minute books, stock certificate books, stock register and other corporate records are complete and accurate in all material respects and contain a complete summary of all meetings, and all consents in lieu of meetings, of directors, all committees of directors, and shareholders since the time of incorporation and reflect all transactions referred to in such minutes accurately in all material respects. The signatures appearing in such books and records are the true signatures of the persons purporting to have signed the same. All actions reflected in such books and records were duly and validly taken in compliance with the laws of the applicable jurisdiction. 2.22 Section 83(b) Elections. To the Company's knowledge, all individuals who have purchased shares of the Company's Common Stock have timely filed elections under Section 83(b) of the Internal Revenue Code of 1986, as amended (the "Code"), and any analogous provisions of applicable state tax laws. 10 15 2.23 Employee Benefit Plans. (i) The Schedule of Exceptions lists each "employee benefit plan," as that term is defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), as well as each plan which is intended to meet the requirements for tax-favored treatment under Subchapter B of Chapter 1 of Subtitle A of the Code under which any employee or former employee of the Company ("Employee") has any present or future right to benefits or under which the Company has any present or future liability (such plans being hereinafter referred to collectively as the "Plans"). The Company does not presently, nor has it ever, sponsored or contributed to, and has no present or future liability under a defined benefit pension plan or a plan subject to Title IV of ERISA. Other than the Plans, to the best of the Company's knowledge, there are no other employee benefit plans, programs, agreements or arrangements, including employment severance, termination or similar-type agreements between the Company and any employee, whether or not subject to ERISA, whether oral or written, under which any Employee has any present or future right to benefits or under which the Company has any present or future liability. (ii) With respect to each Plan, the Company has delivered to Investor a current, accurate and complete copy (or to the extent no such copy exists, an accurate description) thereof and, to the extent applicable, any summary plan description and other material written communications (or a descriptions of any material oral communications) provided by the Company to any participant or beneficiary concerning the extent of the benefits provided under such Plan and the most recent Form 5500 and attached schedules. (iii) To the best of the Company's knowledge, neither the Company, any of the Plans, any trust created thereunder, any administrator thereof, or any other party, or any trustee has engaged in any transaction as a result of which the Company or Investor could be subject to any liability pursuant to ERISA Section 409 or to either a civil penalty assessed pursuant to ERISA Section 502(i) or a tax imposed pursuant to Code Section 4975. (iv) The Company is not currently, and never has been, a member of the controlled group of any other entity within the meaning of Code Section 414 and there are no entities that are currently, or have ever been, members of the Company's controlled group within the meaning of Code Section 414. (v) To the best of the Company's knowledge, the Company has never engaged in a transaction which could subject it to liability under ERISA Section 4069. (vi) To the best of the Company's knowledge, no event has occurred and no condition exists that would subject the Company to any tax, fine or penalty imposed by ERISA, the Code or other applicable laws, rules, regulations, 11 16 including, but not limited to, the tax imposed by Code Sections 4971, 4972, 4977, 4980B or 4976(a) or the fine imposed by ERISA Section 502(c). (vii) To the best of the Company's knowledge, each Plan has been established and administered in all material respects in accordance with its provisions, and with all applicable laws. (viii) Except as set forth on the Schedule of Exceptions, there are no pending or threatened claims, actions, suits involving any Plan, by any Employee or beneficiary covered under any such Plan (other than routine claims for benefits and routine expenses), no facts or circumstances exist which could give rise to any such actions suits or claims. 2.24 Taxes. (i) The Company has, within the time and in the manner prescribed by law, filed all material returns, declarations, reports, estimates, information returns and statements ("Returns") required to be filed or sent by or with respect of any Taxes (as hereinafter defined), and the Returns are true and correct; (ii) The Company has, within the time and in the manner prescribed by law, paid (and until the Closing will, within the time and in the manner prescribed by law, pay) all Taxes that are shown to be due and payable on the Returns described in Section 2.24(i) above; (iii) The Company has established (and until the Closing will establish) on its books and records, reserves that are adequate for the payment of all Taxes not yet due and payable; (iv) There are no liens for Taxes upon the assets of the Company except liens for Taxes not yet due; (v) No federal, state, local or foreign audits or other administrative proceedings or court proceedings which are material to the financial condition of the Company are presently pending with regard to any Taxes or Returns of the Company, and no deficiency or assessment has been asserted with respect to any audit or examination; and For purposes of this Agreement, "Taxes" shall mean all taxes, charges, fees, levies or other assessments, including without limitation, all net income, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license, withholding, payroll, employment, excise, estimated, severance, stamp, occupation, property or other taxes, fees, assessments or charges of any kind, together with any interest and penalties, additions to tax or additional amounts imposed by any taxing authority upon the Company. 12 17 2.25 Environmental. The Company is conducting and has conducted its business and operations in compliance with all applicable laws relating to pollution control and environmental contamination including, but not limited to, all laws relating to the generation, use, exposure to, treatment, storage, transportation, generation, discharge or disposal of any Hazardous Materials (as defined below). No operations of the Company presently result in or have at any time resulted in the generation, use or storage of any Hazardous Materials, or in any release to the environment (including releases, directly or indirectly, to the air, ground, body of water or Publicly Owned Treatment Works) other than lawfully discharged liquid waste that is classified as domestic sanitary sewage or solid waste that certain no Hazardous Materials. No Hazardous Materials have, at any time, been stored, handled, used or generated by any party at any of the facilities that are presently, or have in the past, been owned or leased by the Company. "Hazardous Materials included any materials including, but not limited to waste materials, that are or may be toxic or hazardous or contain components that are or may be toxic or hazardous. These materials include, but may not be limited to, petroleum or crude oil or any fraction thereof, as well as any material that is designated as hazardous or toxic under any federal, state or local environmental or health or safety laws. 2.26 The Company's Internet Services. Set forth on Schedule 2.26A attached hereto are the figures for the number of user queries and browses made on the Internet using the Company's search and navigation services known as "Infoseek Netsearch" and Infoseek Guide" for the six month period ended March 7, 1996 (the "Query Statement"). The Query Statement is complete and correct and fairly represents the current usage rate of Infoseek Netsearch and Infoseek Guide. Set forth on Schedule 2.26B attached hereto is a true and complete list of all advertisers that have engaged the Company to provide advertising services on its Internet Services (the "Advertisers"), together with a break-down of all revenues received by the Company to date from such Advertisers recognizable in the month of March 1996. The Company is unaware of any events or conditions that may materially impair the Company's ability to maintain or increase the usage rate of Infoseek Guide or the number of Advertisers or revenues generated therefrom. 2.27 Ultraseek Technology. The Company shall use its reasonable commercial efforts to complete and implement the Ultraseek technology as soon as reasonably practicable with the expectation that it will *occur on or before [ ]. The Company has at all times utilized the [ ] (as *hereinafter defined) for (i) [ ]; (ii) [ ] the [ ] features of the *Company's services; (iii) maintaining for [ ] for use in [ ] if necessary; *and (iv) [ ] on its services. The Company has made [ ] of the [ ] and [ ] - ------------------------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 13 18 *in the future. The Company represents, warrants and covenants that [ ] the *Company [ ] the operation of its [ ] based upon technology licensed from Applied Computing Systems Institute of Massachusetts, Inc. pursuant to the License Agreement dated July 8, 1994, as amended on February 13, 1995 and April *25, 1995, the Company [ ] of the [ ] other than for (a) [ ], (b) [ ] or *(c) [ ] on its services, without the [ ] of NYNEX Information *Technologies Company ("NYNEX"), which [ ] The terms of [ ] shall: (i) [ ] at such time as NYNEX may freely transfer in the public market all of the shares of the Company's capital stock that NYNEX owns, without regard for *restrictions for which NYNEX is responsible and/or due to [ ] of NYNEX; and *(2) not apply with respect to any [ ] that is [ ]. For purposes of this *Agreement, the term [ ] shall mean any and all [ ] of copies of [ ] from *[ ] that the Company [ ] for its services. 3. Representations and Warranties of Investor. Each Investor hereby represents and warrants with respect to such Investor that: 3.1 Authorization. This Agreement and the Investors' Rights Agreement, when executed and delivered by Investor, constitute valid and legally binding obligations of such Investor, enforceable in accordance with their respective terms, except (i) as enforceability may be limited by bankruptcy, insolvency and other laws now or hereafter in effect relating to or generally affecting creditors' rights and general principles of equity, (ii) that the remedies of specific performance and injunctive and other forms of equitable relief are subject to certain equitable defenses and to the discretion of the court before which any proceeding therefor may be brought and (iii) as rights to indemnity under the Investors' Rights Agreement, may be limited by federal or state securities laws. 3.2 Purchase Entirely for Own Account. This Agreement is made with Investor in reliance upon such Investor's representation to the Company, which by such Investor's execution of this Agreement Investor hereby confirms, that the Series E Preferred Stock to be received by such Investor and the Common Stock issuable upon conversion thereof (collectively, the "Securities") will be acquired for investment for Investor's own account, not as a nominee or agent, and not with a view for resale or distribution of any part thereof, and that such Investor has no present intention of selling, granting any participation in, or otherwise distributing the same. 3.3 Disclosure of Information. Investor believes it has received reasonably necessary information for deciding whether to purchase the Series E Preferred Stock. Investor further represents that it has had an opportunity to ask - ---------------------------------------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 14 19 questions and receive answers from the Company regarding the terms and conditions of the offering of the Series E Preferred Stock and the business, properties, prospects and financial condition of the Company. The foregoing, however, does not limit or modify the representations and warranties of the Company in this Agreement or the right of the Investors to rely thereon. 3.4 Investment Experience. Investor is able to bear the economic risk of its investment, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Series E Preferred Stock. If other than an individual, such Investor also represents it has not been organized solely for the purpose of acquiring the Series E Preferred Stock. 3.5 Accredited Investor. Investor is an "accredited investor" within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of Regulation D, as presently in effect. 3.6 Restricted Securities. Investor understands that the Securities it is purchasing are characterized as "restricted securities" under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Act, only in certain limited circumstances. In addition, such Investor represents that it is familiar with SEC Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Act. 3.7 Compliance with Foreign Law. If Investor is not a United States person, Investor hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to acquire the Securities or any use of this Agreement, including (i) the legal requirements within its jurisdiction for the acquisition of the Securities, (ii) any foreign exchange restrictions applicable to such acquisition, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the receipt, holding, redemption, sale or transfer of the Securities. Investor hereby represents that the acquisition and continued beneficial ownership of the Securities will not violate any applicable securities or other laws of its jurisdiction. 3.8 Further Limitations on Disposition. Without in any way limiting the representations set forth in Section 3.6 above, Investor further agrees not to make any disposition of all or any portion of the Securities unless and until the transferee has agreed in writing for the benefit of the Company to be bound by this Section 3 and Section 7 of this Agreement and Section 1.16 of the Investors' Rights Agreement, and: (a) There is then in effect a Registration Statement under the Act covering such proposed disposition and such disposition is made in accordance with such Registration Statement; or 15 20 (b) (i) Investor shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and (ii) if reasonably requested by the Company, Investor shall have furnished the Company with an opinion of counsel, that such disposition will not require registration of such shares under the Act. It is agreed that the Company will not require opinions of counsel for transactions made pursuant to Rule 144 or Rule 144A except in unusual circumstances. (c) Notwithstanding the provisions of paragraphs (a) and (b) above, no such registration statement or opinion of counsel shall be necessary for a transfer by an Investor (i) to an affiliate entity or (ii) that is a partnership to a partner of such partnership or a retired partner of such partnership who retires after the date hereof, or to the estate of any such partner or retired partner or the transfer by gift, will or intestate succession of any partner to his or her spouse or to the siblings, lineal descendants or ancestors of such partner or his or her spouse, if the transferee agrees in writing to be subject to the terms hereof to the same extent as if he or she were an original Investor hereunder. 3.9 Telecommunications Company. If Investor is a corporation and is listed on Schedule B hereto as a subsequent purchaser, Investor is not engaged in local exchange telecommunication services as defined in the Telecommunications Act of 1996. 3.10 Legends. It is understood that the certificates evidencing the Securities may bear one or all of the following legends: (a) "The securities represented by this certificate have not been registered under the Federal Securities Act of 1933 (the "1933 Act") or qualified under the California Corporate Securities Law of 1968 (the "California Law") nor have such securities been registered or qualified under the laws of any other state. No interest in such securities may be sold or transferred without an opinion of counsel that such sale or transfer is registered under the 1933 Act, qualified under the California Law and registered or qualified, as the case may be, under the securities law of any other state which are applicable or is exempt from such registration and qualification." (b) Any legend required by the laws of the State of California, including any legend required by the California Department of Corporations and Sections 417 and 418 of the California Corporations Code. (c) Any legend required by applicable securities laws of any other jurisdiction to which Investor or its Securities are bound. 16 21 4. California Commissioner of Corporations. 4.1 Corporate Securities Law. THE SALE OF THE SECURITIES THAT ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT. 5. Conditions of Investor's Obligations at Closing. The obligations of Investor under Section 1 of this Agreement are subject to the fulfillment on or before the Closing of each of the following conditions, the waiver of which shall not be effective against Investor unless Investor consents in writing thereto: 5.1 Representations and Warranties. The representations and warranties of the Company contained in Section 2 shall be true on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the date of such Closing. 5.2 Performance. All actions necessary to authorize the execution, delivery and performance of this Agreement and the Investors' Rights Agreement by the Company and the consummation of the transactions contemplated hereby and thereby shall have been duly and validly taken by the Company. The Company shall have performed and complied with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing. 5.3 Restated Articles and Amended Bylaws Effective. The Restated Articles and Amended Bylaws shall have been duly adopted by the Company by all necessary corporate action of its Board of Directors and shareholders, and the Restated Articles shall have been duly filed with the Secretary of State of the State of California and become legally effective. 5.4 Compliance Certificate. The President of the Company shall deliver to Investor at the Closing a certificate stating that the conditions specified in Sections 5.1, 5.2 and 5.3 have been fulfilled. 5.5 Qualifications. All authorizations, approvals, or permits, if any, of any governmental authority or regulatory body of the United States or of any state that 17 22 are required in connection with the lawful issuance and sale of the Securities pursuant to this Agreement shall be duly obtained and effective as of the Closing. 5.6 Proceedings and Documents. All corporate and other proceedings in connection with the transactions contemplated at the Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to Investor's special counsel, and it shall have received all such counterpart original and certified or other copies of such documents as it may reasonably request. 5.7 Investors' Rights Agreement. The Company, Investor and those holders of "Registrable Securities," as defined in that certain Amended and Restated Investors' Rights Agreement, dated as of May 4, 1995, by and among the Company and the other parties listed therein, as amended (the "Prior Investors' Rights Agreement"), required to amend the Prior Investors' Rights Agreement shall have entered into the Investors' Rights Agreement; and the Prior Investors' Rights Agreement shall have been terminated and superseded by the Investors' Rights Agreement. 5.8 Opinion of Company Counsel. Investor shall have received from Brobeck, Phleger & Harrison LLP, counsel for the Company, an opinion, dated as of the Closing, in form reasonably acceptable to NYNEX Information Technologies Company. 5.9 Directors. The number of directors constituting the entire Board of Directors shall have been fixed prior to or contemporaneously at the Closing at six and the following persons shall have been elected and shall each hold such position as of the Closing: Steven T. Kirsch, Robert E.L. Johnson, III, H. DuBose Montgomery, Oliver Curme, John Zeisler, and a person to be designated by Nynex Information Technologies Company prior to the Closing. 5.10 Due Diligence. Investor shall have completed its due diligence review and investigation of the Company and its technology to the Investor's reasonable satisfaction. 5.11 Amendment to Co-Sale Agreements. The Amended and Restated Agreement Regarding Co-Sale and Amended and Restated Co-Sale Agreement, each dated as of May 4, 1995, shall have been amended by the parties thereto to include the Investor as a party thereto, which amendment shall be in the form reasonably satisfactory to the Investor. 6. Conditions of the Company's Obligations at Closing. The obligations of the Company to Investor under this Agreement are subject to the fulfillment on or before the Closing of each of the following conditions by Investor: 6.1 Representations and Warranties. The representations and warranties of Investor contained in Section 3 shall be true on and as of the Closing with 18 23 the same effect as though such representations and warranties had been made on and as of the Closing. 6.2 Payment of Purchase Price. Investor shall have delivered the aggregate purchase price for the shares of Series E Preferred Stock that Investor is purchasing hereunder and shall have acquired and paid for such shares. 6.3 Restated Articles and Amended Bylaws Effective. The Restated Articles and Amended Bylaws shall have been duly adopted by the Company by all necessary corporate action of its Board of Directors and shareholders, and the Restated Articles shall have been duly filed with the Secretary of State of the State of California and become legally effective. 6.4 Qualifications. All authorizations, approvals, or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Securities pursuant to this Agreement shall be duly obtained and effective as of the Closing. 6.5 Investors' Rights Agreement. The Company, Investor and those holders of "Registrable Securities," as defined in the Prior Investors' Rights Agreement, required to amend the Prior Investors' Rights Agreement shall have entered into the Investors' Rights Agreement; and the Prior Investors' Rights Agreement shall have been terminated and superseded by the Investors' Rights Agreement. 7. Indemnification Obligations. 7.1 Indemnification. (i) For purposes of this Agreement, the term "Claims" when used with respect to a person or entity shall mean all claims, demands, losses, costs, expenses, obligations, liabilities, actions, suits, damages, diminution in value and deficiencies (net of any insurance proceeds actually received) including, without limitation, interest and penalties, attorneys fees and costs and all amounts paid in settlement of any claim, action or suit. (ii) In connection with this Agreement, as a condition thereto and in addition to the other remedies provided hereunder, under the Investors' Rights Agreement or at law or in equity, the Company agrees for itself, its successors and assigns, to indemnify and hold Investor, its affiliates and their officers, directors, consultants, shareholders, agents, accountants and attorneys, as the case may be, harmless against and in respect of, or that Investor incurs or suffers in connection with, any and all Claims that may be asserted by any third parties against Investor that arise out of, result from or relate to: (a) the nonfulfillment of any agreement, covenant or obligation of the Company to be performed under this Agreement or the Investors' Rights Agreement to which it is a party; and (b) any breach of any representation or 19 24 warranty made by the Company to Investor pursuant to Section 2 hereof or made elsewhere by the Company in this Agreement, the Investors' Rights Agreement or in any certificate delivered pursuant hereto or thereto. (iii) In connection with this Agreement, as a condition thereto and in addition to the other remedies provided hereunder, under the Investors' Rights Agreement or at law or in equity, the Investor agrees for itself, its successors and assigns, to indemnify and hold the Company, its affiliates and their officers, directors, consultants, shareholders, agents, accountants and attorneys, as the case may be, harmless against and in respect of, or that the Company incurs or suffers in connection with, any and all Claims that may be asserted by any third parties against the Company that arise out of, result from or relate to: (a) the nonfulfillment of any agreement, covenant or obligation of the Investor to be performed under this Agreement or the Investors' Rights Agreement to which it is a party; and (b) any breach of any representation or warranty made by the Investor to the Company pursuant to Section 3 hereof or made elsewhere by the Investor in this Agreement, the Investors' Rights Agreement or in any certificate delivered pursuant hereto or thereto. 7.2 Indemnified Claims. If any action or any Claim is brought by a third party: (a) the party or parties against whom the Claim is brought (in each case, the "Indemnified Party") shall provide prompt written notice thereof to the party or parties obligated to indemnify such Claim (in each case, the "Indemnifying Party"); and (b) the Indemnifying Party shall assume the defense thereof (at the expense of the Indemnifying Party) within thirty (30) days or at least ten (10) days prior to the time a response is due in such case, whichever occurs first, or, alternatively upon the demand and at the option of the Indemnified Party, pay to such party or parties all costs and expenses, including attorneys fees, incurred by such party or parties in defending itself or themselves. If the Indemnified Party becomes obligated to assume the defense of any such Claims pursuant to the foregoing sentence, then the Indemnified Party shall be entitled to participate in such defense (at its or their own expense). All parties shall cooperate reasonably with each other in the defense of any Claim brought by a third party, including making available all records reasonably necessary to the defense of such Claim. The Indemnifying Party shall be entitled to reasonable approval of the settlement of any Claim with respect to which such party may be liable hereunder. 8. Miscellaneous. 8.1 Amended Bylaws. The Company shall at all times use its best efforts to cause its Amended Bylaws to provide that unless otherwise required by the laws of the State of California any holder or holders of at least 800,000 outstanding shares of Series E Preferred Stock shall have the right to call a meeting of the Board or shareholders. The Company shall use its best efforts to at all times maintain provisions in its Amended Bylaws and/or Restated Articles indemnifying all directors against 20 25 liability and absolving all directors from liability to the Company and its shareholders to the maximum extent permitted under the laws of the State of California. 8.2 Directors and Officers Insurance. The Company shall as soon as practicable obtain reasonable insurance coverage for its officers and directors as is customary in the industry. 8.3 Survival of Warranties. The warranties, representations and covenants of the Company and Investor contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing and shall in no way be affected by any investigation of the subject matter thereof made by or on behalf of Investor or the Company. 8.4 Successors and Assigns. 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 (including transferees of any Series E Preferred Stock sold hereunder or any Common Stock issued upon conversion thereof). Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. 8.5 Governing Law. This Agreement shall be governed by and construed under the laws of the State of California (other than the law of conflicts) as applied to agreements among California residents entered into and to be performed entirely within California. 8.6 Cumulative. Except as otherwise expressly provided in this Agreement, no remedy made available to either party hereunder by and of the provisions of this Agreement is intended to be exclusive of any other remedy, and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise. 8.7 Counterparts/Facsimile. 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. For purposes hereof, a facsimile copy of this Agreement, including the signature pages hereto, shall be deemed to be an original. 8.8 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. 8.9 Notices. Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively 21 26 given upon personal delivery to the party to be notified by confirmed facsimile transmission or Federal Express or upon the earlier of receipt or twenty (20) days after deposit with the United States Post Office, by registered or certified mail, postage prepaid and addressed to the party to be notified at the address indicated for such party on the signature page hereof, or at such other address as such party may designate by ten (10) days' advance written notice to the other parties. 8.10 Finder's Fee. Except for fees due from the Company to Broadview Associates, L.P. pursuant to that certain Letter Agreement dated February 27, 1996, each party represents that it neither is nor will be obligated for any finders' fee or commission in connection with this transaction. Investor agrees to indemnify and to hold harmless the Company from any liability for any commission or compensation in the nature of a finders' fee (and the costs and expenses of defending against such liability or asserted liability) for which Investor or any of its officers, partners, employees, or representatives is responsible. The Company agrees to indemnify and hold harmless Investor from any liability for any commission or compensation in the nature of a finders' fee (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible. 8.11 Expenses. Each party shall pay its own costs and expenses with respect to the negotiation, execution, delivery and performance of this Agreement. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the Investors' Rights Agreement or the Restated Articles, the prevailing party shall be entitled to reasonable attorney's fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. 8.12 Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the holders of a majority of the Common Stock issued or issuable upon conversion of the Series E Preferred Stock (for purposes of this Section 8.12, holders of Series E Preferred Stock shall be deemed to be holders of the Common Stock issuable upon conversion thereof) which majority must include NYNEX Information Technologies Company. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each holder of any securities purchased under this Agreement at the time outstanding (including securities into which such securities are convertible), each future holder of all such securities, and the Company. 8.13 Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. 8.14 Entire Agreement. This Agreement and the documents referred to herein constitute the entire agreement among the parties and no party shall be liable or 22 27 bound to any other party in any manner by any warranties, representations, or covenants except as specifically set forth herein or therein. 8.15 Termination. (a) Without limiting the rights or remedies that any party may otherwise have, this Agreement may be terminated, and the transactions contemplated hereby abandoned, with respect to an Investor: (i) at any time prior to the Closing, by the mutual written consent of such Investor and the Company; (ii) at any time after March 31, 1996, by such Investor or the Company, by written notice to the other, if the transactions contemplated hereby have not been consummated on or before such date. (b) In the event of the termination of this Agreement as provided in (a) above, this Agreement shall be of no further force or effect, except for Sections 8.3, 8.6, 8.9, 8.10, 8.11 and this Section 8.15, each of which shall survive the termination of this Agreement; provided, however, that the liability of any party for any breach by such party of the representations, warranties, covenants or agreements of such party set forth in this Agreement occurring prior to the termination of this Agreement shall survive the termination of this Agreement. 23 28 IN WITNESS WHEREOF, the parties have executed this Series E Preferred Stock Purchase Agreement as of the date first above written. COMPANY: INFOSEEK CORPORATION By: ----------------------------------- Robert E.L. Johnson, III, President Address: 2620 Augustine Drive, #250 Santa Clara, CA 95054 INVESTOR: Name: ---------------------------------- By: ------------------------------------ Title: --------------------------------- Address: --------------------------------------- --------------------------------------- [SIGNATURE PAGE TO SERIES E STOCK PURCHASE AGREEMENT OF INFOSEEK CORPORATION] 29 SCHEDULE A SCHEDULE OF INVESTORS
Number of Shares Aggregate of Series E Purchase Preferred Stock Price ---------------- --------- NYNEX INFORMATION TECHNOLOGIES COMPANY 1,500,000 $9,000,000 35 Village Road Middleton, MA 01946 Attn: Matthew J. Stover TRANS NATIONAL GROUP 125,000 $750,000 SERVICES INTERNATIONAL, INC. Two Charlesgate West Boston, MA 02215-3553 Attn: Andrew Goldfarb --------- ---------- TOTAL SERIES E 1,625,000 $9,750,000
30 SCHEDULE B SCHEDULE OF SUBSEQUENT PURCHASERS CLOSINGS UP TO APRIL 19, 1996 IDG HOLDINGS, INC 166,667 $1,000,002 One Exeter Plaza Boston, MA 02216 Attn: Jim Ghirardi L. WILLIAM AND L. GAY KRAUSE 14,662 $87,972 as community property 25855 Westwind Way Los Altos Hills, CA 94022 Attn: Mr. and Mrs. Krause KANEMATSU CORPORATION 333,333 $1,999,998 Seavans North Bldg 2-1 Shibaura 1-Chome, Minato-ku Tokyo 105-05 Japan Attn: Masahiro Fujita KANEMATSU USA INC 125,000 $750,000 1090 E. Arques Avenue Sunnyvale, CA 94086 Attn: Isao Kondo KANEMATSU COMPUTER SYSTEMS LTD 41,667 $250,002 Nissay Shiba 1-Chome Bldg 1-12-7 Shiba, Minato-ku Tokyo 105 Japan Attn: Ken P. Yamamoto
31 LIANHE INVESTMENTS PTE. LTD 333,333 $1,999,998 Treasury and Investment 82 Genting Lane, News Centre Singapore 349567 A.H. BELO 33,333 $199,998 400 S. Record St., 17th Floor Dallas, TX 75202 Attn: Michael Perry CENTRAL NEWSPAPERS, INC 33,333 $199,998 135 N. Pennsylvania St. #1200 Indianapolis, IN 46204 Attn: Thomas MacGillivray COWLES MEDIA COMPANY 33,333 $199,998 329 Portland Ave Minneapolis, MN 55415 Attn: Jim Viera FREEDOM COMMUNICATIONS, INC 33,333 $199,998 17666 Fitch Irvine, CA 92714 Attn: David Kuykendall MCCLATCHY NEWSPAPERS, INC 33,333 $199,998 2100 Q Street Sacramento, CA 95816 Attn: Jim Smith PULITZER PUBLISHING COMPANY 33,333 $199,998 900 N. Tucker Blvd St. Louis, MO 63010 Attn: Ron Ridgeway
32 REUTERS NEWMEDIA INC. 166,667 $1,000,002 1700 Broadway, 40th Floor New York, NY 10019 Attn: Devin Wenig MARGEOTES/FERTITTA & PARTNERS INC. 16,667 $100,002 411 Lafayette Street New York, NY 10003 Attn: --------- ---------- TOTAL SERIES E 1,397,994 $8,387,964
33 SCHEDULE C LIST OF SHAREHOLDERS 34 EXHIBIT A AMENDED AND RESTATED ARTICLES OF INCORPORATION 35 EXHIBIT B SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT 36 EXHIBIT C SCHEDULE OF EXCEPTIONS 37 SCHEDULE OF EXCEPTIONS The following are exceptions to the representations and warranties set forth in Section 2 of the Series E Preferred Stock Purchase Agreement among Infoseek Corporation (the "Company") and the Investors listed on Schedule A thereto and each subsequent purchaser set forth on Schedule B thereto (collectively, the "Investors"), dated as of March 29, 1996 (the "Agreement"), and are an integral part of the Agreement. Any terms defined in the Agreement shall have the same meaning when used in this Schedule as when used in the Agreement, unless the context indicates otherwise. The inclusion of any item herein shall not be deemed to be an admission by the Company that such item is material to the business, assets, results of operations, prospects or affairs of the Company, taken as a whole, nor shall it be deemed an admission of any obligation or liability to any third party. 2.2 CAPITALIZATION AND VOTING RIGHTS. (a) There is a possibility that an existing shareholder of the Company may forfeit approximately 373,158 shares of Series A Preferred Stock to the Company pursuant to an amendment to its Series A Preferred Stock Supplemental Purchase Agreement dated July 22, 1994. If any such Series A shares are forfeited, the Company will cancel such shares and will not reissue them. (b) The Founders Agreement dated February 1, 1994, as amended on June 30, 1994 (the "Founders Agreement"), with certain shareholders of the Company, provides the Company with the right to repurchase unvested shares from such shareholders should they leave the Company prior to the completion of four years from the respective vesting date, as defined in the Founders Agreement, of each such shareholder. (c) In February 1996, an employee of the Company terminated his employment with the Company and pursuant to the Founders Agreement, the Company has repurchased 239,583 shares of the Company's Common Stock at a price of $0.0075 per share from him. (d) A second employee of the Company purchased 495,850 shares of the Company's Common Stock pursuant to an Employee Stock Purchase Agreement dated October 31, 1995 and paid for such shares with a Promissory Note. The employee terminated his employment with the Company in February 1996. The Company accelerated vesting on a portion of the shares and, subject to on-going discussions, will repurchase the remaining 340,897 shares. A Promissory Note, totaling $15,498.50, will be used to pay for the vested portion of the shares. (e) The Company is currently negotiating and intends to enter into an agreement of approximately $1 million in value with the advertising agency of Margeotes-Fertitta & Partners Inc. for the 1996 fiscal year. As part of that Agreement, Margeotes-Fertitta & Partners Inc. may acquire up to $500,000 worth of shares of Series E Preferred Stock, under the same terms and conditions as other holders of Series E Preferred Stock, as partial payment for services rendered. 38 (f) Pursuant to a Redemption Agreement, dated March 29, 1996, the Company has agreed to redeem the Series E Preferred Stock held by NYNEX Information Technologies Company ("NYNEX") if certain specified events occur. In addition, the Company has granted NYNEX a Right of First Refusal with respect to future sales by the Company of any shares of any class of its capital stock to any company which engages in local exchange telecommunication services as defined in the Telecommunications Act of 1996. The Redemption Agreement terminates upon the conversion of the Series E Preferred Stock pursuant to the Company's initial public offering with gross proceeds of at least $15,000,000. 2.3 SUBSIDIARIES. The Company is currently negotiating a strategic alliance with Kanematsu Corporation to establish Infoseek Japan. Such an alliance might necessitate the formation of a joint venture. 2.7 LITIGATION. On March 22, 1996, the Company received an electronic mail message from a person alleging to be Mr. Craig David Horton of DBasics Software Company in which such person claims to be suing the Company for copyright infringement and alleges that the Company has failed to respond to three written requests to remove certain material from its database. Such person also alleges that the Company does not, frequently enough, read a certain type of file (a robots.txt) which can be used, among other things, to instruct search engines not to add designated materials to their databases. At present, the Company is under no legal requirement to read robots.txt files, although it is done as a convention in the industry and by the Company. The Company has not received any documentation relating to the alleged legal action described in the electronic message and has no reason to believe that such a suit has actually been filed or will be filed. However, the Company has taken steps to increase the frequency with which its "worm" reads robots.txt in order to further reduce the possibility of copyright infringement. 39 2.8 PROPRIETARY INFORMATION AND STOCK PURCHASE AGREEMENTS. All holders of Common Stock except Lief Hedstrom and De-Hwei O'Shaughnessy are parties to the Company's Founders Agreement or a Stock Purchase Agreement. Mr. Hedstrom and Ms. O'Shaughnessy are each a party to the Company's standard form of Non-Statutory Stock Option Agreement and exercise of option form; both purchased their respective shares of Common Stock through the exercise of stock options. Mr. Robert E.L. Johnson is a party to four (4) Stock Purchase Agreements dated January 24, 1996 pursuant to which he purchased 500,000 shares of Common Stock at $0.60 per share. In January 1996, pursuant to the Company's Stock Option Plan, Mr. Johnson was granted an option to purchase, through a standard exercise of option form, 100,000 shares of Common Stock at $.60 per share. This option may be cancelled and replaced with a purchase of an equal number of shares at the option price, in which case another Stock Purchase Agreement may be made between Mr. Johnson and the Company. Mr. Johnson intends to purchase the shares by one method or the other. Payment for such shares will be made with a Promissory Note. Mr. Edward M. Kessler is a party to an Employee Stock Purchase Agreement dated October 31, 1995 which granted the Company a right of repurchase which the Company intends to exercise in the near future. Other executive officers of the Company may also execute Stock Purchase Agreements in the near future. 2.9 PATENTS AND TRADEMARKS. * (a) The Company applied for [ ] U.S. patents with the United States Patent and Trademark Office (USPTO) on the following dates: on [ * * * * * * * ] A response to a USPTO Action to []. A response to a USPTO Action to Serial *No. [ ]. No further USPTO action has been received in the remaining patent applications since their respective filing dates. The Company has submitted an invention disclosure to its patent counsel which is being used to prepare another U.S. patent application. There can be no assurance that any issued patents will result from these applications. The Company believes that its main intellectual property protection is the trade secret protection of its source code. (b) The Company filed two Intent to Use Applications for Trademark Registration with the USPTO for the Infoseek mark, one for computer programs and one for computer services. The Infoseek computer services service mark was granted on August 8, 1995. A Statement of Use for the computer program trademark is due to be filed on June 27, 1996. The Company filed on May 26, 1995 an Intent to Use Application for Trademark Registration for the Personal Newswire service - -------------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 40 mark. A response to a USPTO Action to that application was filed on February 27, 1996. The Company has filed, or expects to file, a number of foreign service mark applications for the Infoseek service mark. On March 22, 1996, the Company mailed an Intent to Use Application for Trademark Registration with the USPTO for the combined service mark and trademark Ultraseek. A filing date and serial number will be determined by the USPTO in approximately one week from the mailing date. In addition, a future revision is planned to divide the Application into two separate applications, one for the service mark and another for the trademark. The Ultraseek search engine may, among other things, facilitate document parsing and indexing, serve as a query evaluator, and allow faster updating of World Wide Web pages. (c) The following is a list of material technology, developed by or for the Company: Internal Technology: - Infoseek Guide - Advertising tracking code Tracks clicks on ads. Determines which ad is shown in response to a query. - Phttp server enhancements Miscellaneous enhancements and bug fixes to support the PHTTP * [ ] which [ ] and [ ] the [ ] * to the appropriate [ ]. - Interface to Inquery to perform queries * [ ] and [ ] to take a query and transform it into Inquery * syntax, run the search, and look up [ ] in [ ]. - Code to support categorization WWW code to support researchers entering in site descriptions and category topics so that new entries in the catalog can be made. - GUI to support browsing of Guide topics and queries * Code to create [ ] pages which are displayed in response to a user browsing Guide. - Architecture to support large numbers of queries with * [ ] * Underlying system architecture for [ ] * and [ ] servers * - [ ] and [ ] - ------------------------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 41 * [ ] to [ ] and [ ], and provide very fast lookup when users do a query. - WWW worm * [ ] code to collect WWW pages using a [ ] * and [ ] of URLs to visit on each pass. * - [ ] Search Engine - document parsing Code to extract fields of text from a document and issue the appropriate calls to the indexer to index the document. * Each [ ] it is to be indexed. - query evaluator Code to evaluate a query of required, rejected, and optional * terms, as well as [ ] that together [ ] a [ ] - document indexing * Code to create [ ] file from [ ] calls to the [ ] * from the document [ ]. - http server code Code to provide HTTP service, accept queries, and return results pages. * - [ ] WWW worm code using the [ ] * Code to scan the WWW [ ] and detect [ ] and * output [ ] information. * - [ ] index database [ ] * [ ] to [ ] and [ ] records from the [ ] used * to [ ] the [ ] used by the [ ]. Third Party Technology: Note: The Company has obtained third party licenses for the technology listed below, with the exception of the XEROX Corporation ("XEROX") stemming technology for which the Company is currently negotiating a license which is expected to be signed within the month of March 1996. Presently, the Company is using the XEROX stemming technology pursuant to a Software Evaluation Agreement dated January 4, 1996 between the Company and XEROX. *[ ] ------------------------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 42 * used by [ ] WWW worm Umass search engine (Inquery) used by Guide Phttp server used by Guide *Xerox [ ] * used by [ ] and [ ] in Ultraseek (d) The Company is a party to the following agreements with respect to the license, development, purchase, sale or distribution of intellectual property rights: (i) Software Development and Licensing Master Agreement dated July 8, 1994, as amended on February 13, 1995 and April 24, 1995 between the Company and Applied Computing Systems Institute of Massachusetts, Inc (ACSIOM). (ii) Software License Agreement (the "Agreement") between the Company and ADB Inc. dated December 22, 1995 and including Annex C thereto which supplements and amends the terms to the Agreement. (iii) Software License Agreement between the *Company and [ ] dated September 26, 1994. (iv) Internet Services and Products Master Agreement dated May 22, 1995 between the Company and BBN Planet Corporation. (v) License dated January 27, 1994 by Infoseek to Frame Technology of Infoseek intellectual property pursuant to Kirsch/Frame Transition Agreement dated October 1, 1993. (vi) Internet Search Service Access Agreement dated August 23, 1995 between Microsoft Corporation and Infoseek Corporation, as amended on December 18, 1995. (vii) Internet Search Service Access Agreement between the Company and NETCOM On-Line Communication Services, Inc. dated October 13, 1995, as amended on March 20, 1996. (viii) Agreement between the Company and NetManage, Inc. dated November 29, 1995. - ------------------------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 43 (ix) Net Search Program--Premier Provider Agreement between the Company and Netscape Communications Corporation dated March 22, 1996, as amended on that date. (x) Net Search and Net Directory Program--Premier Provider Agreement between the Company and Netscape Communications dated December 22, 1995. (xi) Software License and Distribution Agreement between the Company and Personal Library Software, Inc. dated June 17, 1994. (xii) Software License between the Company and *[ ] for accounting software, valued in excess of $25,000, purchased in approximately June or July 1995. (e) The Company intends to enter into an agreement regarding the license of the representations, names, artistic renderings, and treatments of the Where's Waldo book scenes from certain publications from Where's Waldo, Inc. The Company signed the agreement on March 23, 1996 and is awaiting a response from Where's Waldo, Inc. (f) The Company expects to enter into an agreement with XEROX Corporation pursuant to which the Company will acquire a right and non-exclusive license to certain Lexical Technology, Lexicons and Documentation. The Company will be obligated to pay XEROX a royalty equal to 2% based on advertising revenues, with an annual maximum payment in 1996, 1997 and 1998 of $200,000, $200,000 and $300,000, respectively. (g) The Company intends to enter into an assignment of certain intellectual property whereby Tumbleweed Software Corporation ("Tumbleweed") will transfer all rights, title and interest (including copyright) to Tumbleweed's iSeek technology in binary and source code form to the Company. An addendum will address ad banners that Tumbleweed is contracting to display on the Infoseek Guide Service. The agreement is proposed to be completed within the months of March or April 1996. (h) In the ordinary course of business, the Company has obtained licenses to miscellaneous third party intellectual property in the form of commercially available software. The price per individual unit of such software does not exceed $25,000. (i) From time to time, given the nature of the World Wide Web, users misuse or mislabel the Company's search bar or web page or otherwise corrupt the Company's web presence. In such instances, the Company notifies the offending user. To date, no legal action has been taken and users have generally complied with the Company's request to correct the situation or cease the offending activity. However, because of the transitory and rapidly changing nature of the Internet and World Wide Web, such activities may be difficult to trace and/or correct as users may corrupt sites for fleeting periods of time and may move from one site to another thereby eluding apprehension despite the Company's vigilance. In addition, because third party materials may be downloaded by online or - ------------------------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 44 Internet services, operated or facilitated by the Company, or the Internet or World Wide Web access providers with which it has relationships, as well as other third parties (including users, persons, and entities throughout the world), and subsequently distributed to others, there is a possibility that claims may be made against the Company in the U.S. and foreign countries for defamation, negligence, copyright or trademark infringement and/or misappropriation, or other theories based on the nature and content of such third party materials. Nothing contained herein shall limit the Company's representations, warranties and covenants set forth in Section 2.27 of the Agreement. (j) The Company attempts to protect its proprietary technology but there can be no guarantee that the Company's rights will not be challenged, invalidated or circumvented, or that any rights granted would provide proprietary protection to the Company, under applicable law. In addition, effective copyright, trademark and trade secret protection and other proprietary protections may be unavailable or limited under applicable law in certain foreign jurisdictions and the global nature of the Internet makes it virtually impossible to control the ultimate destination of the Company's products and services or to delimit and circumscribe the Company's exposure for liability as a result of third party's acts to damage the Company's products and services. Nothing contained herein shall be construed to limit in any way the Company's representations and warranties relating to ownership and/or non-infringement in Section 2.9 of the Agreement. In particular and without limiting the generality of the foregoing sentence, nothing contained herein shall be construed to limit the Company's representations and warranties that the Company Technology is protected as a trade secret, or that the Company is unaware of any facts which would tend to limit or invalidate trade secret protection over the Company Technology or trademark protection over the Company's names, marks and logos. 2.11 AGREEMENTS; ACTION. (a) The Company has entered into the following agreements with officers, directors or shareholders: (i) Amended and Restated Put Option Agreement, dated as of May 4, 1995. (ii) Founders Agreement, dated February 1, 1994, as amended on June 30, 1994. (iii) Indemnification Agreement for Officers and Directors dated March 9, 1994. (iv) Series A Preferred Stock Purchase Agreement, dated February 25, 1994, as amended March 3, 1994, and June 30, 1994. (v) Series B Preferred Stock Purchase Agreement, dated June 30, 1994, and the Ancillary Agreements referred to therein. (vi) Series C Preferred Stock Purchase Agreement, dated May 4, 1995, as amended June 30, 1995, and the Ancillary Agreements referred to therein. 45 (vii) Confidentiality and Intellectual Property Rights Agreements of various dates with Officers and Directors who are employees. (viii) Director Confidentiality Agreement for Directors who are not employees has been signed by John E. Zeisler and H. DuBose Montgomery, but not by Oliver D. Curme. A Director Confidentiality Agreement with revisions as per Mr. Curme's request has been forwarded to Mr. Curme for his signature. (b) From time to time, the Company enters into purchase orders which individually are less than $25,000 in value, but which in the aggregate exceed twenty-five thousand dollars ($25,000) with vendors for the purchase of various items, including computer equipment, computer software and office furnishings. In addition, the Company is a party to the following agreements and purchase orders with an individual value of greater than $25,000: Agreements: (i) Reuters New Media, Inc. On-Line Service Agreement, dated February 28, 1995. (ii) Net Search Program--Premier Provider Agreement between the Company and Netscape Communications Corporation dated March 22, 1996, as amended on that date. (iii) Net Search and Net Directory Program--Premier Provider Agreement between the Company and Netscape Communications dated December 22, 1995. (iv) Software Development and Licensing Master Agreement dated July 8, 1994, as amended on February 13, 1995 and April 24, 1995 between the Company and Applied Computing Systems Institute of Massachusetts, Inc (ACSIOM). (v) Software License Agreement (the "Agreement") between the Company and ADB Inc. dated December 22, 1995 and including Annex C thereto which supplements and amends the terms to the Agreement. (vi) Software License and Distribution Agreement between the Company and Personal Library Software, Inc. dated June 17, 1994. (vii) Internet Services and Products Master Agreement dated May 22, 1995 between the Company and BBN Planet Corporation. (viii) SunService, a Division of Sun Microsystems, Inc. ("SunService") Customer Support Program Agreement for Infoseek ("Customer") between the Company and Sun Service Corporation dated January 1, 1996. (ix) Leases and Sublease described herein at 2.17(a) and 2.17(b). 46 (x) Lifeguard Insurance Co. Medical Plan and Prudential Life Insurance Co. Dental Plan disclosed herein at 2.23. (xi) Executive Search Consulting Agreement dated February 9, 1996 between the Company and Howard Karr and Associates. (xii) Executive Search Consulting Agreement dated March 11, 1996 between the Company and Devine and Virnig, Inc. (xiii) Agreement dated March 7, 1996 between the Company and Broadview Associates, L.P. which may exceed $25,000 if certain conditions are met. (xiv) Consulting Services Agreement dated July 31, 1995 between the Company and Janet L. Strauss. (xv) Consulting Services Agreement dated November 15, 1995 between the Company and Maureen Frantovich. (xvi) Consulting Services Agreement dated July 31, 1995, as amended January 29, 1996 between the Company and Doug Yoshinaga. (xvii) Consulting Services Agreement dated March 18, 1996 between the Company and Peter Rip. (xviii) Agreement dated February 9, 1996 between Sky Television, Inc. and the Company. 47 Purchase Orders:
P.O. Vendor Name Date Description Amount ----------- ---- ----------- ------ * [ ] 09/19/95 [ ] $[ ] software/support BBN Planet Corp. 11/28/95 T-3 Service and Support $482.7K 2 yr term installation * [ ] 02/15/96 [ ] $[ ] Sun Service 02/13/96 Sun Spectrum Platinum & $171K 1 yr term Bronze Support * [ ] 02/23/96 [ ] $[ ] Sun Microsystems 03/21/96 Sun Ultra Service (8 ea) $162K Sun Microsystems 03/21/96 SparcServer 1000E (2 ea) $296K * [ ] 03/18/96 [ ] $[ ]
(c) Other than items payable in the ordinary course of business, the Company is indebted to Venture Lending and Leasing, Inc. for approximately three million dollars ($3,000,000) in equipment purchases pursuant to Loan Agreements dated October 5, 1995 and February 9, 1996 which refer to three (3) Promissory Notes dated February 29, 1996 (Note No. 42-001 for $2,029,110.17), November 30, 1995 (Note No. 27-002 for $482,791.83), and October 11, 1995 (Note No. 27-001 for $479,440.28). In addition, the Company intends to enter into a new note for $543,638.42 with Venture Lending and Leasing, Inc. within one week from March 26, 1996. (d) The Company is currently negotiating and intends to enter into an agreement of approximately $1 million in value with the advertising agency of Margeotes-Fertitta & Partners Inc. for the 1996 fiscal year. As part of that Agreement, Margeotes-Fertitta & Partners Inc. may acquire *up to [ ] worth of Series E Preferred Stock, under the same terms and conditions as other holders of Series E Preferred Stock, as partial payment for services rendered. (e) The Company is currently negotiating and intends to enter into an agreement with the public relations firm of Edelman & Associates *which is expected to cost the Company approximately [ ] per month in fiscal year 1996. ------------------------ * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 48 (f) The Company is currently negotiating and intends to enter into two separate Consulting Services Agreements (standard form), one each with Thomas Browne and John Klingel respectively, which will individually be in excess of $25,000 in value. Both of these Agreements may involve an equity component in the form of an option to purchase Common Stock pursuant to the Company's Stock Option Plan. (g) The Company expects to enter into an agreement with XEROX Corporation pursuant to which the Company will acquire a right and non-exclusive license to certain Lexical Technology, Lexicons and Documentation. The Company will be obligated to pay XEROX a royalty equal to 2% based on advertising revenues, with an annual maximum payment in 1996, 1997 and 1998 of $200,000, $200,000 and $300,000, respectively. (h) The Company intends to enter into an assignment of certain intellectual property whereby Tumbleweed Software Corporation ("Tumbleweed") will transfer all rights, title and interest (including copyright) to Tumbleweed's iSeek technology in binary and source code form to the Company. An addendum will address ad banners that Tumbleweed is contracting to display on the Infoseek Guide Service. The agreement is proposed to be completed within the months of March or April 1996. (i) The Company is a party to agreements with respect ot the license, development, purchase, sale or distribution of intellectual property rights listed in 2.9(d) above. In addition, in the ordinary course of business, the Company has obtained licenses to miscellaneous third party intellectual property in the form of commercially available software. The price per individual unit of such software does not exceed $25,000. 2.12 RELATED-PARTY TRANSACTIONS. (a) The Company intends to issue a Promissory Note to Mr. Edward Kessler in the principal amount of $15,498.50 in connection with the purchase of 154,953 vested shares of Common Stock. (b) The Company has committed to issue 200,000 shares of its Common Stock to Mr. Craig Forman at $1.00 per share. Payment will be made with a Promissory Note. (c) The Company has committed to issue Mr. Leonard LeBlanc 400,000 shares of the Company's Common Stock pursuant to an option or a Stock Purchase Agreement at a price to be determined by the Board of Directors. If Mr. LeBlanc decides to purchase these shares, payment will be made with a Promissory Note. (d) In January 1996, pursuant to the Company's Stock Option Plan, Mr. Robert E.L. Johnson, III was granted an option to purchase, through a standard exercise of option form, 100,000 shares of Common Stock at $.60 per share. This option may be 49 cancelled and replaced with a purchase of an equal number of shares at the option price, in which case another Stock Purchase Agreement may be made between Mr. Johnson and the Company. Mr. Johnson intends to purchase the shares by one method or the other. Payment for such shares will be made with a Promissory Note. (e) In March 1996, the Board of Directors of the Company delegated to the president of the Company, the authority to grant Mr. James N. Desrosier an option, pursuant to the Company's Stock Option Plan, to purchase 500,000 shares of Common Stock at $1.00 per share upon his hiring date. Mr. Desrosier may purchase vested shares from the grant of 500,000 shares using one of the methods described in section 2.12(d) of this Schedule of Exceptions. 2.15 REGISTRATION RIGHTS. The Company has granted registration rights to Venture Lending & Leasing, Inc. in connection with its Warrant, dated October 7, 1995, to purchase a maximum of 133,333 shares of Series C Preferred Stock. Such registration rights are only with respect to the piggyback registration rights under Section 1.3 of the Amended and Restated Investors' Rights Agreement dated May 4, 1995, as may be amended from time to time. 2.17 TITLE TO PROPERTY AND ASSETS. The Company has the following agreement to lease or rent property: (a) Lease of Augustine Drive premises in Santa Clara, California, dated December 13, 1993, between the Company and Spieker Properties, L.P., including an Extension Agreement dated June 19, 1995 as well as leases between the same parties for additional space at the same location dated November 7, 1995, January 8, 1996, and January 10, 1996. (b) Sub-Lease, with the approval of landlord Spieker Properties, L.P., of Augustine Drive Premises in Santa Clara, CA dated May 30, 1995 between the Company and Innovative Information Systems (IIS) of property previously leased to IIS by Spieker Properties, L.P. (c) A total of three million dollars ($3,000,000)in Equipment Loans with Venture Lending & Leasing, Inc. UCC-1 Forms have been filed for the security of such equipment for the benefit of Venture Lending & Leasing, Inc. 50 2.23 EMPLOYEE BENEFIT PLANS.
EFFECTIVE COMPANY TYPE OF PLAN DATE NOTES ------- ------------ --------- ----- Lifeguard Insurance Co. Medical Plan 1/1/96 Previous plan through Aetna. Prudential Life Insurance Co. Dental Plan 1/1/94 None Vision Service Plan Vision Plan 1/1/96 No previous plan. UNUM Life, short & 1/1/96 No previous short or long term disa- long term bility plans. Previous life insurance disability through Aetna (tied with medical plans. coverage at $20K per employee). Current life is $50K per employee. Infoseek Corporation Sec. 125 1/1/94 Plan name: "Infoseek Corporation IRC Section 125 Flexible Benefit Plan" Infoseek Corporation 401(K) 1/1/96 No previous plan. 401(K) Plan (Pension Specialists, Inc. Non-Standardized Plan) Infoseek Corporation 401(K) 1/1/96 No previous plan.
2.26 THE COMPANY'S INTERNET SERVICES. At present, users who access the Company's search engine through Netscape Communications are given two methods of access: Net Search and Net Directory. One- half of the Net Search access area is reserved for Infoseek while the remaining area is shared by other companies. Similarly, for the Net Directory, one-half of the access area is reserved for Excite's search engine and the remainder is shared space. In April, Netscape will combine these services into one access area which will be shared by five companies. This combined access area will probably be called Net Search, but there can be no assurance that this will be the case. These changes make it difficult to predict what traffic will be, and this, in turn, may have an impact on the Company's ability to sell advertising and possibly reduce revenue. Moreover, the Company's payment arrangements with Netscape will soon be changing. Whereas the Company presently pays Netscape a percentage of revenues from ads sold, the Company will soon begin making a fixed fee payment of $5,000,000 per year. This change may impact the Company's financial position adversely. 51 SUPPLEMENT TO SERIES E SCHEDULE OF EXCEPTIONS The following are supplemental exceptions to the representations and warranties set forth in Section 2 of the Series E Preferred Stock Purchase Agreement among Infoseek Corporation (the "Company") and the Investors listed on Schedule A thereto and each subsequent purchaser set forth on Schedule B thereto (collectively, the "Investors"), dated as of March 29, 1996 (the "Agreement"), and along with the Schedule of Exceptions thereto are an integral part of the Agreement with respect to the subsequent purchasers set forth on Schedule B. Any terms defined in the Agreement shall have the same meaning when used in this Schedule as when used in the Agreement, unless the context indicates otherwise. The inclusion of any item herein shall not be deemed to be an admission by the Company that such item is material to the business, assets, results of operations, prospects or affairs of the Company, taken as a whole, nor shall it be deemed on admission of any obligation or liability to any third party. 2.2 CAPITALIZATION AND VOTING RIGHTS. The capitalization in the Stock Purchase Agreement did not include: a. 834 shares of Common Stock purchased by Leif Hedstrom on February 26, 1996; b. 25,000 shares of Common Stock purchased by William Peck on March 10, 1996; c. 3,125 shares of Common Stock purchased by William Yee on March 12, 1996; d. 2,500 shares of Common Stock purchased by Judith Popowski on April 1, 1996. The shares mentioned above were purchased pursuant to exercises under the Non-Statutory Stock Option Agreements between the Company and the respective individual. e. 100,000 shares of Common Stock purchased by Robin Johnson pursuant to an Employee Stock Purchase Agreement dated January 30, 1996. 2.8 PROPRIETARY INFORMATION AND STOCK PURCHASE AGREEMENTS. References in this section are to Section 2.8 of the Schedule of Exceptions. William Peck, Judith Popowski, and William Yee should be added to the first two sentences so that they read, "All holders of Common Stock except Lief 52 Hedstrom, De-Hwei O'Shaughnessy, William Peck, Judith Popowski, and William Yee are parties to the Company's Founders Agreement or a Stock Purchase Agreement. Messrs. Hedstrom, Peck and Yee and Ms. O'Shaughnessy and Ms. Popowski are each a party to the Company's standard form of Non-Statutory Stock Option Agreement and exercise of option form; all purchased their respective shares of Common Stock through the exercise of stock options. The fifth line should now read, "This option was cancelled and replaced with an Employee Stock Purchase Agreement effective January 30, 1996 of an equal number of shares at the option price. The sixth line should be deleted. The seventh line should read, "Payment for such shares was made with a Promissory Note." The last line of the paragraph should now read, "Other executive officers of the Company may also execute Stock Purchase Agreements in the near future, including but not limited to: Leonard LeBlanc who will cancel a portion of his option grant for shares that vested on his first day of employment and John Nauman and Craig Forman who will cancel their respective total option grants and execute Stock Purchase Agreements for such shares as well as Promissory Notes in payment." 2.9 PATENTS AND TRADEMARKS. THIRD PARTY TECHNOLOGY. a. XSoft/Infoseek Software Distribution and License Agreement-Lexicons dated March 31, 1996 for use of XSoft's (a Division of XEROX Corporation) stemming software; LICENSES. a. Promotional License Agreement dated March 20, 1996 between the Company and Where's Waldo?, Inc.; b. Agreement by and between Infoseek Corporation and Tumbleweed Software Corp. effective February 15, 1996. c. Software License Agreement between the Company and NYNEX Information Technologies Company ("NYNEX") dated March 29, 1996. d. Memorandum of Understanding between Company and HNC Software, Inc. ("HNC") dated April 11, 1996. e. Agreement in Principle dated March 21, 1996 between the Company and HNC (not previously included because received after the first Series E Closing Date). 48 53 f. ShareData, Inc. Software License Agreement and Software Support and Update Services for commercially available software purchase made in March 1996. g. XSoft/Infoseek Software Distribution and License Agreement Lexicons dated March 31, 1996. h. The Company is currently negotiating an amendment to its current agreement with ADB, Inc. for a site license worth $250,000. 2.11 AGREEMENTS. a. Joint Marketing Agreement between the Company and Sun Microsystems, Inc. (a division of Sun Microsystems Computer Company) dated April 15, 1996. b. Note No. 42-002 dated March 28, 1996 for $543,638.42 between the Company and Venture Lending & Leasing, Inc. c. Memorandum of Understanding between Company and HNC Software, Inc. ("HNC") dated April 11, 1996. d. Agreement in Principle dated March 21, 1996 between the Company and HNC (not previously included because received after the first Series E Closing Date). e. XSoft/Infoseek Software Distribution and License Agreement Lexicons dated March 31, 1996 f. Agreement by and between Infoseek Corporation and Tumbleweed Software Corp. effective February 15, 1996. g. Software License Agreement between the Company and NYNEX Information Technologies Company ("NYNEX") dated March 29, 1996. h. ShareData, Inc. Software License Agreement and Software Support and Update Services for commercially available software purchase made in December, 1995 (not previously included because received after the first Series E Closing Date). i. Infoseek/NYNEX Agreement dated March 29, 1996 between the Company and NYNEX Information Technologies Company. j. Infoseek Impressions Agreement-Ad Exchange dated March 8, 1996 between the Company and FreeLoader, Inc. 49 54 k. Thomas Browne became an employee of the Company and no Consulting Services Agreement currently exists. John Klingel never executed a Consulting Services Agreement and is not engaged in a consulting capacity with the Company. l. The Company is currently negotiating an amendment to its currently agreement with ADB, Inc. for a site license worth $250,000. m. The Company has executed a lease for office space in New York for a five-year period the cost of which is not expected to exceed $100,000. n. The Company is currently negotiating Linking Insertion Order with AT&T WorldNet(service mark) Service for $30,000 for display between April 15, 1996 and July 14, 1996. o. Agreement between the Company and Verity, Inc. dated March 31, 1996. p. The Company intends to execute a Cooperation Agreement between the Company and Quarterdeck Corporation in the very near future. q. Memorandum of Understanding between the Company and Kanematsu Corporation dated March 30, 1996. r. The Marketing Alliance Agreement between the Company and Kanematsu Corporation has been executed. s. Memorandum of Understanding between the Company and International Data Group dated April 11, 1996. t. The Company is currently negotiating Memoranda of Understanding with Reuters, MCI, Electronic Newstand, Singapore Press Holdings. 2.12 RELATED PARTY TRANSACTIONS. a. Leonard LeBlanc will cancel 50,000 options from his offer letter grant and will use a stock purchase agreement (SPA) to buy 50,000 shares of Common Stock with a Promissory Note. b. John Nauman will cancel his total option grant and execute an SPA and Promissory Note for shares of Common Stock. c. Craig Forman will also cancel his total option grant and execute an SPA and Promissory Note for shares of Common Stock. 50 55 2.17 TITLE TO PROPERTY AND ASSETS. The Company has executed a lease for office space in New York for a five-year period the cost of which is not expected to exceed $100,000. 51 56 EXHIBIT D BYLAWS, AS AMENDED 52 57 EXHIBIT E SECOND AMENDED AND RESTATED AGREEMENT REGARDING CO-SALE 53 58 EXHIBIT F SECOND AMENDED AND RESTATED CO-SALE AGREEMENT 54 59 SCHEDULE 2.26A Total Queries and Browses by Month and Service * [ ] [ ] [ ] [ ] [ ] [ ] ------------------- ----------- ---------- -------- -------- -------- ------ *[ ] * [ ] * Query [ ] [ ] [ ] [ ] [ ] * Browse [ ] [ ] [ ] [ ] [ ] [ ] * [ ] * Query [ ] [ ] [ ] [ ] [ ] [ ] * Browse [ ] [ ] [ ] [ ] [ ] [ ] * [ ] * Query [ ] [ ] [ ] [ ] [ ] [ ] * Browse [ ] [ ] [ ] [ ] [ ] [ ] * [ ] * Query [ ] [ ] [ ] [ ] [ ] [ ] * Browse [ ] [ ] [ ] [ ] [ ] [ ] Guide * [ ] * Query [ ] [ ] [ ] [ ] [ ] [ ] * Browse [ ] [ ] [ ] [ ] [ ] [ ] * [ ] * Query [ ] [ ] [ ] [ ] [ ] [ ] * Browse [ ] [ ] [ ] [ ] [ ] [ ] * [ ] (thru 3/7) * Query [ ] [ ] [ ] [ ] [ ] [ ] * Browse [ ] [ ] [ ] [ ] [ ] [ ] * [ ]
- ------------------------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 55 60 SCHEDULE 2.26B LIST OF ADVERTISERS
=================================================================================================== ADVERTISER AGENCY DATE SIGNED CONTRACT PERIOD NET CONTRACT 1996 REVENUE: AMOUNT MAR. --------------------------------------------------------------------------------------------------- * Accent Software 3/3/96 02/29-03/29 [ ] [ ] --------------------------------------------------------------------------------------------------- * Access Zone 3/8/96 3/8-4/8 [ ] [ ] --------------------------------------------------------------------------------------------------- * Adaptec [ ] 1/5/96 1/01-03/31 [ ] [ ] --------------------------------------------------------------------------------------------------- * Adaptec 1/19/96 2/01-03/31 [ ] [ ] --------------------------------------------------------------------------------------------------- * Adaptec 1/24/96 2/01-03/31 [ ] [ ] --------------------------------------------------------------------------------------------------- * Adaptec 1/19/96 2/01-03/31 [ ] [ ] --------------------------------------------------------------------------------------------------- * Adobe [ ] 3/11-4/8 [ ] [ ] --------------------------------------------------------------------------------------------------- * Adobe [ ] 3/12-6/11 [ ] [ ] --------------------------------------------------------------------------------------------------- * Aleph 2/29/96 2/29-4/1 [ ] [ ] --------------------------------------------------------------------------------------------------- * Amazon 2/26/96 3/1-3/31/97 [ ] [ ] --------------------------------------------------------------------------------------------------- * Apple Computer 3/14/96 3/15-4/15 [ ] [ ] --------------------------------------------------------------------------------------------------- * Apple West Week [ ] 3/8-3/21 [ ] [ ] --------------------------------------------------------------------------------------------------- * Art Exposure 2/26/96 2/29-3/29 [ ] [ ] --------------------------------------------------------------------------------------------------- * Aspect Software 2/29/96 3/14-4/15 [ ] [ ] --------------------------------------------------------------------------------------------------- * Asymetrix 3/12/96 3/15-4/15 [ ] [ ] --------------------------------------------------------------------------------------------------- * AT&T [ ] 3/1-3/31 [ ] [ ] --------------------------------------------------------------------------------------------------- * ATI [ ] 2/20-7/20 [ ] [ ] --------------------------------------------------------------------------------------------------- * Best Quote 2/28/96 3/4-4/3 [ ] [ ] --------------------------------------------------------------------------------------------------- * Career Mosaic [ ] 3/4/96 2/29-3/31 [ ] [ ] --------------------------------------------------------------------------------------------------- * Cathay Pacific 2/28/96 2/29-4/1 [ ] [ ] --------------------------------------------------------------------------------------------------- * Chem Connect 2/26/96 3/1-3/31 [ ] [ ] --------------------------------------------------------------------------------------------------- * Cnet 3/12/96 3/13-6/12 [ ] [ ] --------------------------------------------------------------------------------------------------- * DealerNet 2/2/96 2/5-3/31 [ ] [ ] --------------------------------------------------------------------------------------------------- * Dentist Info Com [ ] 12/15/95 1/1-12/31 [ ] [ ] --------------------------------------------------------------------------------------------------- * Destination Florida [ ] 3/1/96 3/1/-3/31 [ ] [ ] --------------------------------------------------------------------------------------------------- * Discovery Channel [ ] 3/5/96 3/1-3/31 [ ] [ ] ---------------------------------------------------------------------------------------------------
- ------------------------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 56 61 ------------------------------------------------------------------------------------------------------------- * Florida Super Site [ ] 3/14-4/13 [ ] [ ] ------------------------------------------------------------------------------------------------------------- * Four 11 [ ] 3/13-4/1 [ ] [ ] ------------------------------------------------------------------------------------------------------------- * Fox Industries/Sporting 2/21/96 2/23-3/22 [ ] [ ] ------------------------------------------------------------------------------------------------------------- * Freeride [ ] 2/27/96 2/29-3/31 [ ] [ ] ------------------------------------------------------------------------------------------------------------- * FTD [ ] 11/15/95 1/13-05/11 [ ] [ ] ------------------------------------------------------------------------------------------------------------- * Galacticomm 2/13/96 2/19-3/18 [ ] [ ] ------------------------------------------------------------------------------------------------------------- * Genius T-Shirts 2/23/96 2/22-3/21 [ ] [ ] ------------------------------------------------------------------------------------------------------------- * George Thompson 2/19/96 3/1-4/1 [ ] [ ] Diamond ------------------------------------------------------------------------------------------------------------- * GlaxowsIcom [ ] 3/12/96 3/12-6/11 [ ] [ ] ------------------------------------------------------------------------------------------------------------- * Globetrotter Software 2/6/96 2/7-4/6 [ ] [ ] ------------------------------------------------------------------------------------------------------------- * GLPD, Limited 12/19/95 1/17-3/16 [ ] [ ] ------------------------------------------------------------------------------------------------------------- * GTE [ ] 3/5/96 3/15-4/14 [ ] [ ] ------------------------------------------------------------------------------------------------------------- * Highglow Jewlers [ ] 3/12/96 3/8-4/7 [ ] [ ] ------------------------------------------------------------------------------------------------------------- * Hilton Hotels [ ] 1/31/96 2/29-3/28 [ ] [ ] ------------------------------------------------------------------------------------------------------------- * Honda [ ] 2/2/96 2/10-3/31 [ ] [ ] ------------------------------------------------------------------------------------------------------------- * Horizons Tech 2/20/96 3/1-4/1 [ ] [ ] ------------------------------------------------------------------------------------------------------------- * Hotel Discounts [ ] 9/22/95 10/16-4/1596 [ ] [ ] ------------------------------------------------------------------------------------------------------------- * IBM [ ] 2/20-5/19 [ ] [ ] 6/10-7/9 8/12-9/1 ------------------------------------------------------------------------------------------------------------- * ICentral 2/29/96 2/29-3/15 [ ] [ ] ------------------------------------------------------------------------------------------------------------- * Iconix 2/29/96 3/1-4/1 [ ] [ ] ------------------------------------------------------------------------------------------------------------- * MGS 2/22/96 2/29-4/01 [ ] [ ] ------------------------------------------------------------------------------------------------------------- * Intel [ ] 3/12/96 3/14-5/15 [ ] [ ] ------------------------------------------------------------------------------------------------------------- * Intellimatch 2/23/96 2/21-3/20 [ ] [ ] ------------------------------------------------------------------------------------------------------------- * Interactive Computer 2/21/96 2/21-3/22 [ ] [ ] ------------------------------------------------------------------------------------------------------------- * InterArt 2/14/96 2/1-4/14 [ ] [ ] ------------------------------------------------------------------------------------------------------------- * Internet 2/14/96 2/1-4/14 [ ] [ ] ------------------------------------------------------------------------------------------------------------- * Internet Shopping 2/29/96 3/04-4/03 [ ] [ ] Network ------------------------------------------------------------------------------------------------------------- * Internet Shopping Ntwk [ ] 7/24/95 7/24 to 3/31/97 [ ] [ ] ------------------------------------------------------------------------------------------------------------- * InterZine 3/5/96 3/1-3/31 [ ] [ ] -------------------------------------------------------------------------------------------------------------
------------------------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 57 62 - ---------------------------------------------------------------------------------------------------- *Loop Ventures 2/26/96 2/23-2/26 [ ] [ ] - ---------------------------------------------------------------------------------------------------- *Market Place MCI [ ] 2/27/96 3/1-3/31 [ ] [ ] - ---------------------------------------------------------------------------------------------------- *Mellen Medical 3/6/96 2/24-3/1 [ ] [ ] - ---------------------------------------------------------------------------------------------------- *Mellen Medical 3/8/96 3/1-5/31 [ ] [ ] - ---------------------------------------------------------------------------------------------------- *Mercury Center 2/16/96 3/18-3/25 [ ] [ ] - ---------------------------------------------------------------------------------------------------- *Met Life [ ] 3/11/96 5/11-5/10 [ ] [ ] - ---------------------------------------------------------------------------------------------------- *Microsoft [ ] 3/4-4/15 [ ] [ ] - ---------------------------------------------------------------------------------------------------- *Microsoft Developer [ ] 2/16/96 2/15-3/29 [ ] [ ] - ---------------------------------------------------------------------------------------------------- *Microsoft Int/Exp [ ] 2/13/96 2/19-3/4 [ ] [ ] - ---------------------------------------------------------------------------------------------------- *Microsoft Internet [ ] 3/14-3/15 [ ] [ ] Explorer - ---------------------------------------------------------------------------------------------------- *Microsoft MSN [ ] 2/20/96 2/20-3/19 [ ] [ ] - ---------------------------------------------------------------------------------------------------- *Microsoft MSN [ ] 2/20/96 2/21-3/19 [ ] [ ] - ---------------------------------------------------------------------------------------------------- *Microsoft/Backoffice [ ] 2/26-3/25 [ ] [ ] - ---------------------------------------------------------------------------------------------------- *Milestone 3/15/96 3/13-4/12 [ ] [ ] - ---------------------------------------------------------------------------------------------------- *Milestone 2/16/96 [ ] [ ] - ---------------------------------------------------------------------------------------------------- *Millipore [ ] 3/6/96 3/2-4/1 [ ] [ ] - ---------------------------------------------------------------------------------------------------- *Modern Media 12/02-12/31/95 [ ] [ ] (VJB approved) - ---------------------------------------------------------------------------------------------------- *Multiactive Technology 2/14/96 3/1-4/1 [ ] [ ] - ---------------------------------------------------------------------------------------------------- *Nationwide Wholesale 3/6/96 3/11-3/25 [ ] [ ] - ---------------------------------------------------------------------------------------------------- *NECX Direct [ ] 11/17/95 1/1-6/30/96 [ ] [ ] - ---------------------------------------------------------------------------------------------------- *Net Profit 3/12/96 3/13-4/12 [ ] [ ] - ---------------------------------------------------------------------------------------------------- *Netline 3/7/96 3/7-4/1 [ ] [ ] - ---------------------------------------------------------------------------------------------------- *Netscape [ ] 1/3/96 1/03-7/02/96 [ ] [ ] - ---------------------------------------------------------------------------------------------------- *Network Appliance 1/18/96 3/1-4/30 [ ] [ ] - ---------------------------------------------------------------------------------------------------- *Nissan [ ] 3/4/96 2/26-3/31 [ ] [ ] - ---------------------------------------------------------------------------------------------------- *Nynex Information [ ] 1/12/96 1/15-01/15/976 [ ] [ ] - ---------------------------------------------------------------------------------------------------- *Onsale 3/15/96 3/14-4/16 [ ] [ ] - ---------------------------------------------------------------------------------------------------- *Open Communication 3/13/96 3/6-4/5 [ ] [ ] Ntwk - ---------------------------------------------------------------------------------------------------- *Original Services 3/1/96 3/11-4/1 [ ] [ ] - ---------------------------------------------------------------------------------------------------- *Paragraph Intl 2/20/96 2/15-3/15 [ ] [ ] - ----------------------------------------------------------------------------------------------------
- ------------------------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 58 63 ------------------------------------------------------------------------------------------ * Process Software 3/4/96 2/29-3/31 [ ] [ ] ------------------------------------------------------------------------------------------ * Remax 3/1/96 2/29-3/29 [ ] [ ] ------------------------------------------------------------------------------------------ * Rent Net [ ] 11/3/95 11/3-11/2/96 [ ] [ ] ------------------------------------------------------------------------------------------ * Rogue Wave Software 2/9/96 2/26-3/25 [ ] [ ] ------------------------------------------------------------------------------------------ * Rogue Wave Software 2/21/96 2/26-3/25 [ ] [ ] ------------------------------------------------------------------------------------------ * Roxanne Labs 3/11/96 3/13-4/12 [ ] [ ] ------------------------------------------------------------------------------------------ * Salon Internet 2/21/96 3/1-3/15 [ ] [ ] ------------------------------------------------------------------------------------------ * Schine Online 3/5/96 3/25-4/24 [ ] [ ] ------------------------------------------------------------------------------------------ * Schwabb [ ] 1/20/96 2/16-3/31 [ ] [ ] ------------------------------------------------------------------------------------------ * SportsLine 3/12/96 3/1-3/31 [ ] [ ] ------------------------------------------------------------------------------------------ * Starwave [ ] 2/8/96 2/14-3/26 [ ] [ ] ------------------------------------------------------------------------------------------ * Starwave 3/1/96 3/1-4/1 [ ] [ ] ------------------------------------------------------------------------------------------ * Starwave 3/4/96 3/4-4/4 [ ] [ ] ------------------------------------------------------------------------------------------ * Swatch [ ] 2/28/96 3/1-4/2 [ ] [ ] ------------------------------------------------------------------------------------------ * Telebase 3/1/96 2/17-3/16 [ ] [ ] ------------------------------------------------------------------------------------------ * Times Mirror 2/26/96 2/22-3/21 [ ] [ ] ------------------------------------------------------------------------------------------ * TSDX 2/16/96 2/20-4/20 [ ] [ ] ------------------------------------------------------------------------------------------ * Unlocked 3/10/96 2/25-3/25 [ ] [ ] ------------------------------------------------------------------------------------------ * US Web [ ] 3/14-4/1 [ ] [ ] ------------------------------------------------------------------------------------------ * Virtual Vineyards 3/4/96 3/1-4/1 [ ] [ ] ------------------------------------------------------------------------------------------ * Visible Light 3/12/96 3/1-3/31 [ ] [ ] ------------------------------------------------------------------------------------------ * Voice Recognition 3/12/96 3/6-4/7 [ ] [ ] ------------------------------------------------------------------------------------------ * Wall Data [ ] 3/9/96 3/1-4/1 [ ] [ ] ------------------------------------------------------------------------------------------ * White Pine [ ] 1/26/96 [ ] [ ] ------------------------------------------------------------------------------------------ * Zurich Direct 12/19/96 1/16-4/15 [ ] [ ] ------------------------------------------------------------------------------------------ * On Technology 3/10/96 3/8-6/8 [ ] [ ] ------------------------------------------------------------------------------------------ * Paragraph 3/15-4/1 [ ] [ ] ------------------------------------------------------------------------------------------ * [ ] [ ] ==========================================================================================
- ------------------------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 59 EX-10.26 4 INTERNET SEARCH ACCESS AGREEMENT AUGUST 23, 1995 1 EXHIBIT 10.26 * CONFIDENTIAL TREATMENT REQUESTED CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION INTERNET SEARCH SERVICE ACCESS AGREEMENT THIS AGREEMENT ("Agreement") is made as of August 23, 1995 ("Effective Date") between Microsoft Corporation, a Washington corporation ("MS"), with offices at and a mailing address of One Microsoft Way, Redmond, WA 98052-6399, and InfoSeek Corporation, a California corporation ("LICENSOR"), with offices at and a mailing address of 2620 Augustine Dr., Suite 250, Santa Clara, CA 95054. RECITALS This Agreement is entered into with reference to the following facts: A. LICENSOR maintains and makes available to Internet users a search service enabling users to search the Internet (such service is identified in Exhibit A and are referred to herein as the "Service"). B. LICENSOR has agreed to grant certain rights and licenses with respect to the Service as set forth in this Agreement. NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, the parties agree as follows: AGREEMENT 1. RIGHTS GRANTED. 1.1 SCOPE. Upon MS's payment of the remuneration described in Section 3 and set forth in Exhibits C and D, LICENSOR hereby grants to MS and each MS Affiliate, to exercise during the Term (as defined in Section 5.1), a worldwide, non-exclusive and fully paid-up license under all of LICENSOR's patents, copyrights, trademarks, trade secrets and other proprietary and intellectual property rights in and to the Service, and to provide means and rights of access to the Service to MS Customers on such terms and conditions as MS or such MS Affiliates determine in their sole discretion. 1.2 ENUMERATED RIGHTS AND OBLIGATIONS. Without limiting the generality of Section 1.1, LICENSOR expressly acknowledges and agrees that included in the rights granted to MS and MS Affiliates and the obligations of LICENSOR hereunder with respect to the Service are not less than the following rights and obligations: (a) the right to offer MS Customers a hypertext link which enables "point and click" access to computer servers (each such server is referred to herein as a "Mirrored Site") which comprise or are part of a computer network which is accessible to MS Customers (subject only to Section 9.2, such network will be operated on behalf of MS by LICENSOR); (b) the right to authorize access, display, performance, transmission, search, reproduction and other useful rights in connection with each Mirrored Site at MS's (or an MS Affiliate's) sole discretion; and (c) the right to allow an MS Customer the right to publish a "shortcut" (point & click access) to the Mirrored Site. MS acknowledges and agrees that if at any time LICENSOR no longer operates the Mirrored Sites as provided in part (a) of this Section 1.2, and MS assumes operation of the Mirrored Sites pursuant to Section 9.2, MS will be required to obtain a license to a separate search engine from the University of Massachusetts in order to assist MS in providing the Service that would otherwise be provided by LICENSOR pursuant to this Agreement. 2 CERTAIN DEFINITIONS. As used herein, the following terms have the following defined meanings: (d) "MS Affiliate" means any person or entity which, directly or indirectly, is controlled by or is under common control with MS, including without limitation The Microsoft Network, L.L.C. (e) "control" means, as to any person or entity, the power to direct or cause the direction of the management and policies of such person or entity, whether through the ownership of voting securities, by contract or otherwise. (f) "MS Customer" means any person or entity which is authorized by MS or an MS Affiliate, either directly or indirectly, to utilize the Service, including without limitation (i) "end user" purchasers of MS (or MS Affiliate) software products, (ii) independent content providers for The Microsoft Network ("MSN"), (iii) original equipment manufacturers ("OEMs") which pre-install MS (or MS Affiliate) software on their machines or peripheral devices), and (iv) customers of OEMS. 2. OPERATION OF MIRRORED SITES; ADVERTISING; USER LOGS; MSN DISCOUNT. 2.1 OPERATION OF MIRRORED SITES. LICENSOR will maintain and operate such number of Mirrored Sites as are reasonably required by MS to meet the demand of MS Customers for the Service. LICENSOR will deliver and/or make available on the Mirrored Site all updates and enhancements released on the Original Site. Original Site as used herein refers to computer servers run by LICENSOR as part of its publicly available Net Search Service. Following the Effective Date, and throughout the Term, at either party's request, LICENSOR and MS agree to discuss with each other potential cross-marketing and promotional activities intended to increase use of the Mirrored Site(s) and the Original Site. LICENSOR agrees to incorporate page layout templates, including but not limited to graphics, backgrounds and hypertext links, as provided by MS, in order to ensure that the Mirrored Site display output that conforms to the "look and feel" of MS or any MS Affiliate. 2.2 ADVERTISING. With respect to paid advertising incorporated into the Mirrored Site by LICENSOR or MS, the revenues derived from such advertising will be divided between LICENSOR and MS as described in Exhibit D. 2.3 USER LOGS. During the Term, LICENSOR will provide MS, on a weekly basis, remotely and in electronic form, with complete log information relating to accesses on the Mirrored Site (the "Logs"), such that MS will have all of the same information that LICENSOR has regarding accesses on the Mirrored Site. MS will have full rights to use the Logs for any external or internal purpose. 2.4 MSN DISCOUNT. MSN members will be offered a discount in LICENSOR's subscription-only service which is hyperlinked from the Mirrored Site, in an amount to be agreed upon within 60 days following the Effective Date (that is, such plan will be offered to MSN members within such 60-day period). Within 60 days after the parties agree to a discount plan for LICENSOR's subscription-only service, MS will propose a discount plan for customers who wish to subscribe to both LICENSOR's subscription-only service and to become members of MSN. 3. REMUNERATION. In consideration of the rights granted, MS agrees to provide LICENSOR with remuneration as described in Exhibits C and D. If taxes are lawfully imposed and required to be withheld on any remuneration made to LICENSOR by any government authority, MS may deduct such taxes from the amount owed LICENSOR and pay them to the appropriate taxing authority. 4. WARRANTIES, INDEMNIFICATION AND LIMITATION OF DIRECT LIABILITY. 4.1 WARRANTIES. (a) BY LICENSOR. LICENSOR represents and warrants for the benefit of MS as follows: -2- 3 (i) LICENSOR has full power and authority to enter into this Agreement; (ii) the Service will perform and operate substantially in accordance with the specifications and quality parameters set forth in Exhibit A; (iii) LICENSOR has the power to convey to MS, without any limitation whatsoever, the rights granted in Section 1; (iv) the Service does not infringe any intellectual property, publicity or privacy rights of any third party and is not defamatory; (v) all obligations owed to third parties with respect to MS's exercise of the rights granted, including royalties, license fees, residuals, deferments, service charges, laboratory charges, fees for artwork and other creative materials, and other similar payments, have either been fully disclosed to MS (as listed in a duly countersigned rider to this Agreement) or are fully paid up by LICENSOR, so that MS will not have any obligations with respect thereto; and (vi) LICENSOR will perform all of its obligations under this Agreement (b) BY MS. MS represents and warrants for the benefit of LICENSOR as follows: (i) MS has full power and authority to enter into this Agreement; and (ii) MS will perform all of its obligations under this Agreement. 4.2 INDEMNIFICATION. (a) Each party agrees to indemnify, defend, and hold harmless the other party, and its successors, officers, directors, employees and assigns, from and against any and all actions, causes of action, claims, demands, costs, liabilities, expenses and damages arising out of or in connection with any claim which, if true, would be a breach of the warranties and representations set forth herein. (b) If either party requests indemnification pursuant to Section 4.2(a) ("requesting party"), it will give notice to the party from which indemnification is requested ("requested party") promptly after the receipt of any claim that may be indemnifiable hereunder and afford the requested party the opportunity to control the defense and approve any compromise, settlement, litigation or other resolution or other disposition of such claim except that the requested party will have reasonable approval as to any settlement, and if the requested party unreasonably fails to approve any settlement, it will be responsible for any and all losses, liabilities, damages, costs and expenses (including without limitation reasonable outside attorneys' fees and expenses) in excess of and after the time of the proposed settlement. If the requested party assumes control over an indemnified claim, the requesting party may participate in such defense at its sole cost and expense. 4.3 LIMITATION OF DIRECT LIABILITY. THIS SECTION 4 CONTAINS THE ONLY WARRANTIES MADE BY LICENSOR AND MS. ANY AND ALL OTHER WARRANTIES OF ANY KIND WHATSOEVER ARE EXPRESSLY EXCLUDED AND DISCLAIMED. WITHOUT LIMITING THE GENERALITY OF THE IMMEDIATELY PRECEDING SENTENCE, EACH PARTY DISCLAIMS ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WHETHER AS TO THE ORIGINAL SITE OR THE MIRRORED SITE, AND THE TECHNOLOGY DEPLOYED IN CONNECTION THEREWITH. TO THE EXTENT PERMITTED BY LAW, NEITHER PARTY IS LIABLE FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, ECONOMIC OR PUNITIVE DAMAGES INCURRED BY THE OTHER PARTY (EXCLUDING THIRD PARTY CLAIMS IN RESPECT OF WHICH SUCH PARTY IS ENTITLED TO INDEMNIFICATION) EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THE MAXIMUM LIABILITY OF ONE PARTY TO THE OTHER WILL NOT EXCEED THE AMOUNT OF REVENUES DIRECTLY ACCRUING TO SUCH PARTY AS A RESULT OF THE OPERATION OF -3- 4 THIS AGREEMENT, SO THAT MS'S MAXIMUM LIABILITY WILL BE LIMITED TO ADVERTISING REVENUES ATTRIBUTABLE TO THE OPERATION OF MIRRORED SITES AND LICENSOR'S MAXIMUM LIABILITY WILL BE LIMITED TO ADVERTISING REVENUES ATTRIBUTABLE TO THE OPERATION OF THE MIRRORED SITE AND THE REMUNERATION PAID TO LICENSOR PURSUANT TO SECTION 3. 5. TERM AND TERMINATION. 5.1 DURATION OF TERM. This Agreement will be in effect from the Effective Date to the last day of the sixth month following LICENSOR's initial delivery of the Service ("Initial Term"). Following the Initial Term, the Agreement will be considered extended for up to two additional six-month periods by mutual consent unless either party elects to terminate the Agreement by giving not less than 60 days prior written notice to the other party. Such termination after completion of the Initial Term may be for any reason, with or without cause. As used herein, the "Term" means the Initial Term and any such extensions. Notwithstanding the end of the Term, updates and enhancements to the Service due pursuant to Section 2.1 will continue to be delivered by LICENSOR until termination of this Agreement is deemed effective. 5.2 TERMINATION PRIOR TO EXPIRATION OF INITIAL TERM. During the Initial Term, this Agreement may only be terminated only if there is a Transfer (as defined in Section 9.1) or an event of default occurs, consisting of only the following: (a) either party's failure to perform or comply with any material provision hereof, (b) either party's admission in writing of its inability to pay its debts as they mature, or making of an assignment for the benefit of creditors; or (c) the filing by or against either party of any bankruptcy petition, application under receivership statute, or the like, where such petition or application is not resolved favorably to such party within 60 days. Termination in the event of a Transfer will be subject to Section 9.1. Termination in the event of the occurrence of an event of default will be effective only upon breach, which will be deemed to have occurred immediately upon the failure of the defaulting party to cure its default within a 30 day period commencing upon the defaulting party's receipt of a notice of default given by the non-defaulting party. Notwithstanding anything to the contrary contained herein, LICENSOR's sole remedy in the event of a default by MS under this Agreement will be a claim for damages against MS, as limited pursuant to Section 4.3. 5.3 RIGHTS AND OBLIGATIONS FOLLOWING TERMINATION. Upon completion of the Term, MS will cease providing access to the Service. 6. CONFIDENTIALITY. Each party undertakes to retain in confidence the non-public terms of this Agreement and all other non-public information and know-how disclosed pursuant to this Agreement which is either designated as proprietary and/or confidential or by the nature of the circumstances surrounding disclosure, ought in good faith to be treated as proprietary and/or confidential ("Confidential Information"); provided that each party may disclose the terms and conditions of this Agreement to its immediate legal and financial consultants in the ordinary course of its business. Each party agrees to use best efforts to protect Confidential Information, which precautions at least as great as those taken to protect its own confidential information. A party's disclosure of Confidential Information as required by government or judicial order is not prohibited by this Agreement, provided that the disclosing party gives the other party prompt notice of such order and assists in the procurement of appropriate protective order (or equivalent) imposed on such disclosure. Nothing contained herein limits either party's right to develop products independently without the use of the other party's Confidential Information. Except as may otherwise be specified in a duly countersigned rider hereto, to the extent not inconsistent with this Section 6, the terms of any non-disclosure agreement(s) entered into between the parties prior to this Agreement expressly survive the execution of this Agreement and are deemed incorporated herein by this reference. -4- 5 7. CERTAIN NOTICE RIGHTS. If, at any time during the Term, LICENSOR desires to sell outright all of its rights, title and interest in and to the Service, LICENSOR will provide MS with 15 business days' prior notice of such transaction, and LICENSOR will not close such transaction (or enter into a non-cancelable agreement to close such transaction) prior to the end of such 15 business day period. In addition, if LICENSOR solicits proposals from two or more third parties for any such transaction, LICENSOR will concurrently notify MS of such solicitation and the general nature of the proposal (without any requirement to notify MS of the identity of such third parties). Notices under this Section 11 will be deemed Confidential Information of LICENSOR subject to Section 6 of this Agreement. 8. INTELLECTUAL PROPERTY. 8.1 OWNERSHIP. As between the parties, LICENSOR owns or is the authorized licensor of all patents, copyrights, trademarks, trade secrets and other proprietary and intellectual property rights in the Service ("IP Rights"). 8.2 COPYRIGHT NOTICES. If MS assumes operation of the Mirrored Sites, MS will include an appropriate copyright notice for the Service. LICENSOR acknowledges that a Mirrored Site may also contain copyright and patent notices of copyrightable works, including those of MS, provided that no such notices will be featured more prominently than those afforded to LICENSOR. 8.3 TRADEMARK LICENSE. LICENSOR hereby grants MS the right to use and publish in connection with the distribution, promotion, and licensing of each Mirrored Site all trademarks and tradenames associated with the Service. MS will add the appropriate trademark or tradename symbol or designation (i.e., (TM) or (R)), as indicated by LICENSOR, and will footnote LICENSOR's ownership of such trademark or tradename wherever it is first mentioned in any printed materials relating to a Mirrored Site. MS agree to maintain the quality of each Mirrored Site using LICENSOR's trademarks at a level commensurate with the quality of products previously distributed by MS. The rights granted to MS to use trademarks and tradenames associated with the Service will not preclude MS from creating, developing, applying for and obtaining and otherwise using and enjoying any logos, trademarks and tradenames of its own with respect to its products or a Mirrored Site, nor from applying for and obtaining copyright and/or trademark protection therefor. 9. ASSIGNMENT AND TRANSFER OF CONTROL. 9.1 ASSIGNMENT. (a) BY LICENSOR. LICENSOR may assign this Agreement, upon notice to MS, to its parent corporation, or to any wholly-owned domestic subsidiary thereof, without MS's prior written consent, provided that the assignee assumes and agrees in writing to perform all of LICENSOR's executory obligations and LICENSOR guarantees performance by the assignee throughout the Term. In addition, LICENSOR may assign its rights under this Agreement to any person or entity acquiring all or substantially all of the assets of the Service, provided that such assignment will be subject to MS' prior approval, not to be unreasonably withheld. LICENSOR acknowledges and agrees that MS' withholding of consent to an assignment will not be considered unreasonable if the proposed assignment is to a person or entity engaged which is primarily engaged in a business which is directly competitive with either MS Party. Except as expressly provided the immediately preceding sentences, LICENSOR will not assign, sublicense, pledge, hypothecate, transfer or otherwise convey rights under this Agreement, by operation of law or otherwise, or in whole or in part, without MS' prior written consent, which may be withheld for any reason. 9.2 TRANSFER OF CONTROL. (A) GENERALLY. If any sale or transfer of management or control of or a significant ownership interest in LICENSOR ("Transfer") is anticipated by LICENSOR, LICENSOR will given notice to MS of such Transfer (including the proposed transferee) not less than 30 days prior to the effective date of such Transfer if such transfer is voluntary, or as soon as possible after the Transfer, if such Transfer is involuntary. If such Transfer results in management or control of or a significant ownership interest in LICENSOR or the Service by (A) any software distributor having gross revenue in excess of $100 million or more calculated over its three previous fiscal years, or -5- 6 (B) any company engaged in the operation of a commercial online service having gross revenue in excess of $20 million or more calculated over the immediately preceding fiscal year or (C) any entity having management or control or a significant ownership interest in an equity included in categories (A) or (B) (any such entity is referred to herein as a "Restricted Transferee"), then MS will have the right to terminate this Agreement on the terms contained in Section 9.2(b). MS will give notice to LICENSOR of any such termination within 15 days after MS has been advised by LICENSOR of such Transfer or a material change in a proposed Transfer in respect of which LICENSOR has previously given notice to MS. If LICENSOR fails to give notice to MS of a Transfer within the time limits set forth above, to any assignee included in the categories described in (A), (B) or (C) above, then MS, at any time within 30 days after MS actually learns of such Transfer or within 30 days after the effective date of such Transfer, whichever is later, will have the right at its option to terminate this Agreement effective upon the effective date of any such Transfer. (b) MS RIGHTS UPON TERMINATION. If MS elects to terminate this Agreement pursuant to Section 9.2(a), MS will have the right, but not the obligation, upon making payment of the remuneration specified in Section 3 and Exhibits C and D for the balance of the then-current sixth-month period during the Term, by notice to LICENSOR, to procure for MS Customers the ongoing right to access the Service as follows: (i) all updates and enhancements which would otherwise be required to be made available during the then-current sixth-month period of the Term will be made available on the Mirrored Site as provided herein; and (ii) (c) SIGNIFICANT OWNERSHIP INTEREST. Solely for purposes of this Section 9.2, MS and LICENSOR acknowledge and agree that a "significant ownership interest" in an entity means a direct or indirect ownership interest in excess of 25% of the equity of such entity; excluding, however, new equity offerings or venture capital financing rounds. 10. OTHER PROVISIONS. 10.1 NO INADVERTENT WAIVER. No waiver of any breach of any provision of this Agreement constitutes a waiver of any prior, concurrent or subsequent breach of the same or any other provisions, and will not be effective unless made in writing and signed by an authorized representative of the waiving party. 10.2 FORCE MAJEURE. Subject only to the immediately following sentence, neither party is liable for, and will not be considered in default or breach of this Agreement on account of, any delay or failure to perform as required by this Agreement as a result of any causes or conditions that are beyond such party's reasonable control and which such party is unable to overcome by the exercise of reasonable diligence, provided that the affected party will use best efforts to resume normal performance. Notwithstanding the immediately preceding sentence, if at any time during the Term, LICENSOR becomes unable to operate the Mirrored Site in accordance with MS' requirements, MS may elect, upon notice to LICENSOR, to terminate this Agreement. 10.3 SURVIVAL. Sections 1, 3, 4, 6, 8, 9 and 10 survive any termination or expiration of this Agreement. 10.4 GOVERNING LAW. This Agreement is governed by the laws of the State of Washington, and LICENSOR consents to jurisdiction and venue in the state and federal courts sitting in King County, State of Washington. Process may be served on either party in the manner set forth in Section 11(c) for the delivery of notices or by such other method as is authorized by applicable law or court rule. 10.5 NOTICES. All notices, authorizations, and requests in connection with this Agreement will be deemed given on the day (i) deposited in the U.S. mails, postage prepaid, certified or registered, return receipt requested; or (ii) sent by air express courier, charges prepaid and addressed as follows (or to such other address as the party to receive the notice or request so designates by written notice to the other): -6- 7 LICENSOR: InfoSeek Corporation Suite 250 2620 Augustine Drive Santa Clara, CA 95054 Attention: Steve Kirsch copy to: Legal Department MS: Microsoft Corporation One Microsoft Way Redmond, WA 98052-6399 Attention: General Manager, MSN Systems copy to: Law and Corporate Affairs 10.6 PUBLIC ANNOUNCEMENTS. Neither party will issue any press release, advertising or other public announcement concerning its relationship with the other party without the written approval of the other party. Personal email messages (electronic mail from an individual to less than five individuals outside his or her company) are not considered public announcements, but postings in a newsgroup, postings to a mail distribution list, and postings on the World Wide Web are all considered public announcements. 10.7 RELATIONSHIP OF PARTIES. Neither this Agreement, nor any terms and conditions contained herein may be construed as creating or constituting a partnership, joint venture or agency relationship or as granting a franchise as defined in the Washington Franchise Investment Protection Act, RCW 19.100, as amended, or 16 CFR Section 436.2. 10.8 REFERENCES TO MS. With respect to all references in this Agreement to MS other than references in Sections 1 through 3, LICENSOR acknowledges and agrees that wherever appropriate, MS's rights will extend equally to MS Affiliates and MS Customers and MS acknowledges and agrees that MS's obligations will extend equally to MS Affiliates and MS Customers. With respect to the rights granted in Section 1 and the delivery requirements set forth in Section 2, such sections state with specificity the rights and obligations of MS Affiliates and MS Customers. With respect to the remuneration payable to LICENSOR pursuant to Section 3, LICENSOR acknowledges and agrees that LICENSOR will look solely to MS for the payment thereof. 10.9 DISPLAY. At all times during the Term, MS will prominently list the Mirrored Site on MSN. [This space left blank] -7- 8 11. ENTIRE AGREEMENT. This Agreement, together with each exhibit hereto, which is incorporated herein by this reference, embodies the entire agreement between the parties and supersedes all previous contemporaneous agreements, understandings and arrangements with respect to the subject matter hereof, whether oral or written, and may be amended only by a written instrument duly signed by authorized representatives of MS and LICENSOR. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth above. All signed copies of this Agreement will be deemed originals. MICROSOFT CORPORATION("MS") INFOSEEK CORPORATION --------------------------------- ("LICENSOR") By (signature) By (signature) --------------- ---------------------- Name /s/ ANTHONY BAY Name /s/ STEVEN KIRSCH ---------------------- ---------------------- Title OM, MSW SYSTEMS Title PRESIDENT ---------------------- ---------------------- Date 8/23/95 Date 8/23/95 ---------------------- ---------------------- LICENSOR's Federal Employer ID Number or Social Security Number 77-019870 --------- -8- 9 EXHIBIT A OPERATIONAL DESCRIPTIONS (Describe with specificity each function that the Service will perform, including management and operations tools to allow us to maintain the database.) LICENSOR performs full-text search of LICENSOR's web page database based on requests from MS Customers via http protocol over the Internet. LICENSOR returns list of web page addresses and descriptions of such sites that match user request as determined by LICENSOR search engine. -9- 10 EXHIBIT B DELIVERY SCHEDULE InfoSeek will make the Mirror site available for use by MS customers by end of calendar day August 23, 1995, incorporating MS look and feel template. -10- 11 EXHIBIT C REMUNERATION No payment is expected or planned for this contract. -11- 12 EXHIBIT D ADVERTISING The parties will both sell advertising on the Mirrored Site. Advertising prices may be set by each party independently, subject to a minimum price established by LICENSOR, and adhered to by both parties. The initial value of * the minimum price is [ ] per impression ([ ] for 1000 impressions). LICENSOR may change this minimum at any time, with a two week notification period prior to it taking effect. As used in the preceding paragraph, an "impression" means each time an individual user accesses a page containing an advertisement on the Mirrored Site. If a page has more than one advertisement, the number of impressions resulting from accessing that page will equal the number of advertisements on the page. The parties agree to share available advertising revenue generated by advertisements on the Mirrored Site as described below. Each month, an accounting and distribution of advertising revenues will be done according to the following schedule: 1. All fees payable to third parties resulting from the sale of the advertisement will be deducted prior to the accounting. This would include fees payable to advertising agencies and taxing authorities. 2. For each advertisement sold during that next month, the party that * sold the ad receives [ ] of the net sale (after all fees, including agency fees and taxes). 3. The net amount remaining is placed in a pool, which is divided on a monthly basis as follows: * a) The first [ ] is allocated to LICENSOR, as payment for running the service. * b) The remainder is split evenly on a [ ] basis between LICENSOR and MS. The parties will establish reconciliation processes to ensure that their respective proceeds from the sale of advertising are placed in the pool and distributed in accordance with the foregoing. Placement of advertising will be done equitably and will be reviewed on a monthly basis. Insertion points for advertising will be mutually agreed and each party will equal access to sell all insertion points on a "first-come" basis. The parties will consult with each other and act in good faith with respect to the amount of advertising available on a page (e.g., to avoid "clutter") and the equitable sharing of agreed-upon advertising insertion points. If the parties disagree with respect to whether available advertising space has been or is being shared equitably, they will discuss their differences in good faith and will take reasonable positions with respect thereto. Unless otherwise agreed to by both parties, there will be only one advertisement per page, and all advertisements will be the same size. - -------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION -12- 13 EXHIBIT E DISALLOWED ADVERTISERS Both parties have the right to disallow advertisements on the Mirrored Site from direct competitors. Each party must provide to the other a list of companies considered direct competitors. This list may be updated at any time, with a 2 week notification period prior to it taking effect (i.e., cessation of such advertisements being displayed on the Mirrored Site). The initial lists of disallowed advertisers are given below. MS List: *1. [ ] *2. [ ] *3. [ ] *4. [ ] *5. [ ] *6. [ ] *7. [ ] *8. [ ] *9. [ ] *10. [ ] *11. [ ] *12. [ ] *13. [ ] *14. [ ] LICENSOR list: 1. Architext 2. Yahoo 3. Lycos *4. [ ] *5. [ ] *6. [ ] *7. [ ] *8. [ ] 9. Open Text *10. [ ] 11. DejaNews - -------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION -13- 14 AMENDMENT NO. 1 TO INTERNET SEARCH SERVICE ACCESS AGREEMENT The Internet Search Service Access Agreement ("Agreement) by and between Microsoft Corporation, a Washington corporation ("MS"), with offices at and a mailing address of One Microsoft Way, Redmond, WA 98052-6399, and InfoSeek Corporation, a California corporation ("LICENSOR"), with offices and a mailing address at 2620 Augustine Dr., Suite 250, Santa Clara, CA 95054, executed by MS and Infoseek on August 23, 1995 is hereby amended by this Amendment No. 1 as follows: 1. The following sentence is added to Section 1.1: "The license set forth in this paragraph is non-transferable by MS, except, upon notice to LICENSOR, MS may transfer the license to an MS Affiliate." 2. The last sentence of Section 2.1 is changed to read as follows: "LICENSOR agrees to incorporate page layout templates, including but not limited to graphics, backgrounds and hypertext links, as provided by MS, in order to ensure that the Mirrored Site display output from the Service conforms to the "look and feel" of MS or any MS Affiliate." 3. Section 2.2 is changed to read as follows: "ADVERTISING. With respect to paid advertising incorporated into the Service on the Mirrored Site by LICENSOR or MS, the revenues derived from such advertising will be divided between LICENSOR and MS as described in Exhibit D." 4. Section 2.3 is changed to read as follows: "USER LOGS. During the Term, LICENSOR will provide MS, on a weekly basis, remotely and in electronic form, with complete log information relating to accesses to the Service on the Mirrored Site (the "Logs"), such that MS will have all of the same information of the type shown on Exhibit F that LICENSOR has regarding accesses to the Service on the Mirrored Site. MS will have full rights to use the Logs for any external or internal purpose. The type of information required by this paragraph is shown in Exhibit F." 5. The last sentence of Section 3 is changed to read as follows: "If taxes are lawfully imposed and required to be withheld on any remuneration made to either party to the other by any government authority, the paying party may deduct such taxes from the amount owed the other party and pay them to the appropriate taxing authority." 6. The last sentence of Section 4.3 is changed to read as follows: "THE MAXIMUM LIABILITY OF ONE PARTY TO THE OTHER WILL NOT EXCEED THE AMOUNT OF REVENUES DIRECTLY ACCRUING TO SUCH PARTY AS A RESULT OF THE OPERATION OF THIS AGREEMENT, SO THAT MS'S MAXIMUM LIABILITY WILL BE LIMITED TO MS'S ADVERTISING REVENUES ATTRIBUTABLE TO THE OPERATION OF THE SERVICE ON THE MIRRORED SITES AND LICENSOR'S MAXIMUM LIABILITY WILL BE LIMITED TO LICENSOR'S ADVERTISING REVENUES ATTRIBUTABLE TO THE OPERATION OF THE SERVICE ON THE MIRRORED SITES." 7. The last sentence of Section 5.2 is changed to read as follows: 1 of 5 15 "Notwithstanding anything to the contrary contained herein, either party's sole remedy in the event of a default by the other party under this Agreement will be a claim for damages against the defaulting party, as limited pursuant to Section 4.3." 8. Section 5.3 is changed to read as follows: "RIGHTS AND OBLIGATIONS FOLLOWING TERMINATION. Upon completion of the Term, LICENSOR will no longer be obligated to provide access to the Service pursuant to this Agreement." 9. The following words are added after the word "Transfer" in the second line of Section 9.2(a): ", or as soon thereafter as practicable,": 10. The following sentence is added to Section 10.6: "Press releases, advertising or other public announcements submitted for approval and not rejected within two business days shall be deemed approved." 11. Exhibit D is changed to read as shown in Exhibit Dl, attached to this Amendment No. 1. 12. The first sentence of Exhibit E is changed to read as follows: "Both parties have the right to disallow advertisements on the Service on the Mirrored Site from direct competitors." 13. The third sentence of Exhibit E is changed to read as follows: "This list may be updated at any time, with a 1 week notification period prior to it taking effect (i.e. cessation of such advertisements being displayed on the Service on the Mirrored Site)." 14. The following two companies are hereby added to the LICENSOR list of disallowed advertisers set forth in Exhibit E, as items 12 and 13 thereon, respectively. * 12. [ ] * 13. [ ] 15. Exhibit F, as attached to this Amendment No. 1 is added to the Agreement as Exhibit F. The parties hereto agree that the terms and provisions of the Agreement as amended hereby shall remain in full force and effect. The effective date of this Amendment No. 1 shall be the date this Amendment No. 1 becomes fully executed by both parties. ACCEPTED FOR INFOSEEK CORPORATION ACCEPTED FOR MICROSOFT CORPORATION By: By: ----------------------------- ------------------------------- Authorized Signature Authorized Signature Print Name: STEVEN T. KIRSCH Print Name: DANIEL ROSEN ---------------------- ----------------------- Title: CHAIRMAN Title: SR. DIRECTOR --------------------------- ---------------------------- Date: 12/12/95 Date: 12/18/95 --------------------------- ---------------------------- - -------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 2 of 5 16 EXHIBIT D1 ADVERTISING The parties will both sell advertising for the Service on the Mirrored Site. Advertising prices may be set by each party independently, subject to a minimum price established by LICENSOR, and adhered to by both parties. The * initial value of the minimum price is [ ] per impression ([ ] for 1000 impressions) after the amounts specified in items 1 and 2 below shall have been deducted from the corresponding advertising revenues. LICENSOR may change this minimum at any time, with a two week notification period prior to it taking effect. The party selling the advertising shall be responsible for billing and collecting therefor. As used in the preceding paragraph, an "impression" means each time an individual user accesses a page containing an advertisement on Service on the Mirrored Site. If a page has more than one advertisement, the number of impressions resulting from accessing that page will equal the number of advertisements on the page. The parties agree to share available revenue generated by advertisements on the Service on the Mirrored Site as described below. Each month, an accounting and distribution of advertising revenues will be done according to following schedule: 1. All fees payable to third parties resulting from the sale of the advertisement will be deducted prior to the accounting. This would include fees payable to advertising agencies and taxing authorities, excluding taxes based on net income or state corporate franchise taxes. 2. For each advertisement sold during that month, the party that sold * the ad receives [ ] of the net proceeds (after the deductions specified in item 1 above). 3. Any royalties, if any, payable to third party information providers by LICENSOR attributable to the Service on the Mirrored Site shall be deducted from the net proceeds (after the deductions specified in items 1 and 2 above). 4. The net amount (after the deductions specified in items 1, 2, and 3 above) remaining is placed in a pool, which is divided on a monthly basis as follows: * a) The first [ ] is allocated to LICENSOR, as payment for running the service. To the extent in any month the advertising revenues balance is insufficient to cover such allocation, such allocation shall be paid out of the subsequent month(s) * advertising revenues. The first [ ] is allocated to LICENSOR, as payment for running the service. To the extent in any month the advertising revenues balance is insufficient to cover such allocation, such allocation shall be paid out of advertising revenues for the subsequent month(s) until covered in full. * b) The remainder is split [ ] on a [ ] basis between LICENSOR and MS. The parties will establish reconciliation to ensure that their respective proceeds from the sale of advertising are placed in the pool and distributed in accordance with the foregoing. Placement of advertising will be done equitably and will be reviewed on a monthly basis. Insertion points for advertising will be mutually agreed and each party will equal access to sell all insertion points on a "first-come" basis. The parties will consult with each other and act in good faith with respect to the amount of advertising - ---------------------------------------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 3 of 5 17 available on a page (e.g., to avoid "clutter") and the equitable sharing of agreed-upon advertising insertion points. If the parties disagree with respect to whether available advertising space has been or is being shared equitably, they will discuss their differences in good faith and will take reasonable positions with respect thereto. Unless otherwise agreed to by both parties, there will be only one advertisement per page, and all advertisements will be the same size. 4 of 5 18 EXHIBIT F SAMPLE LOG REPORT 20/Aug/1995:20:19:50+1700 - 204.157.128.46[Q][Hotel] http://www2.infoseek.com/Titles?qt=Denmark+International+Studies 20/Aug/1995:20:19:51+1700 - 129.78.89.162[Q][Cathay] http://www2.infoseek.com/Titles?qt=Chris+Liu 20/Aug/1995:20:19:52+1700 - 128.125.222.190[Q][ISN] http://www.lib.udel.edu/search/ 20/Aug/1995:20:19:50+1700 - 159.212.128.89[c][WDFM] http://www2.infoseek.com/Query 20/Aug/1995:20:19:51+1700 - 204.215.131.193[c][Winkler] http://www2.infoseek.com/Query 20/Aug/1995:20:19:52+1700 - 204.31.249.40[c][InfoSeek]http://www2.infoseek.com/ 20/Aug/1995:20:19:50+1700 - 199.107.22.60[P][Intel]/Titles?qt=Tax+Lein 20/Aug/1995:20:19:51+1700 - 204.95.60.93[P][Winkler]/Titles?qt=Amateur+Art 20/Aug/1995:20:19:50+1700 - 204.29.16.77[P][Cathay] /Titles?qt=washington+steelhead+fishing 20/Aug/1995:20:19:50+1700 - 199.35.223.171[C][Cathay]/Titles?qt=movies 20/Aug/1995:20:19:51+1700 - 204.31.231.40[C][WDFM]/Titles?qt=williamsburg 20/Aug/1995:20:19:50+1700 - 128.236.118.55[C][MCI]/Titles?qt=Montel+Jordan 20/Aug/1995:20:19:50+1700 - 153.36.182.61[R][Riddler]- 20/Aug/1995:20:19:51+1700 - 150.203.168.2[R][Apple]- - --------------- Key: date originating IP address [ QQuery Page delivered cInfoseek 'cool sites' page hit PQuery run on search server CQuery out of Cache Rredirect for clicks on ad rQuery referral URL (every 100th query) EError during job BBusy page return (no available search server) ] [sponsor] requested URL (usually the query text) or referrer URL (for Q and c) 5 of 5 EX-10.31 5 XSOFT/INFOSEEK DISTRIBUTION & LICENSE AGREEMENT 1 EXHIBIT 10.31 *CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. XSOFT / INFOSEEK SOFTWARE DISTRIBUTION AND LICENSE AGREEMENT Lexicons This Agreement is made between Infoseek Corporation ("INFOSEEK"), with offices at 2620 Augustine Drive, Suite 250, Santa Clara, California 95054 and XSoft, a Division of XEROX CORPORATION ("XEROX"), with offices at 3400 Hillview Avenue, Palo Alto, California 94306 and shall be effective as of March 31,1996. RECITALS XEROX has created, or has the rights to certain Lexical Technology, Lexicons and Documentation (hereinafter "Lexicons") and INFOSEEK desires to acquire a right and license to use Lexicons to provide services to INFOSEEK customers, or to incorporate Lexicons in certain INFOSEEK Software for sublicense to customers, under the terms and conditions set forth in this Agreement; and XEROX is willing to grant such rights and licenses and provide Technical Support as required herein; and: In consideration of the mutual Agreements contained in this Agreement, XEROX and INFOSEEK hereby agree as follows: I. DEFINITIONS 1.01 "Lexicons" means all software, in object format, and documentation identified in Attachment I hereof, and shall include all ports, modifications, improvements, enhancements, additions, derivative works, updates, releases and versions thereof, all of which have been explicitly identified in Attachment I hereof. 1.02 "LICENSED SOFTWARE" means any work derived from the combination of the Lexicons and INFOSEEK Internet Search Software identified in Attachment I hereof, and for which a royalty schedule has been defined and agreed by the parties. LICENSED SOFTWARE shall include all modifications, improvements, enhancements, additions, derivative works, updates, releases and versions thereof, of which derivation was created or developed by or on behalf of INFOSEEK. 1.03 "Documentation" is identified in Attachment I and means written text including but not limited to manuals, brochures, specifications and software descriptions, in electronic, printed and/or camera ready form, and related materials customarily needed for use with Lexicons. 1.04 A "BUG" is defined as any: (a) typographical error, including efforts in the documentation, (b) entry with a wrong lexical marking, (c) functional or operational error or fault that is not caused by (i) missing words or names, (ii) inaccurate input of data by Licensee or end-user, or (iii) unauthorized alteration or modifications of the Licensed Software, or (d) incorrect or incomplete statement or diagram in the Documentation. II. TITLE TO LICENSED SOFTWARE, DERIVATIVE WORKS & MARKETING RIGHTS 2.01 Title to and ownership of the Lexicons resides in XEROX. Title to the LICENSED SOFTWARE created or developed using Lexicons by or on behalf of INFOSEEK shall reside in INFOSEEK. INFOSEEK acknowledges that title to and ownership of Lexicons incorporated in the LICENSED SOFTWARE shall at all times remain with XEROX. 2.02 Any reproduction of any portion of the Lexicons by INFOSEEK will include any proprietary and statutory copyright notices present in the originals received from XEROX unless otherwise stated in Attachment I. 2.03 When INFOSEEK uses the Lexicons for research purposes, including, but not limited to processing text corpora for linguistic analysis or using the Lexicons as a part of a larger computer system, INFOSEEK shall include a proper reference to the Xerox Lexicons and their documentation in INFOSEEK's published or unpublished reports, research articles or other written works. 2 XSOFT / INFOSEEK SOFTWARE DISTRIBUTION AND LICENSE AGREEMENT Lexicons 2.04 INFOSEEK is granted the right to use XEROX's name, copyright, logos, trade names and trademarks for the purposes of identification of the LICENSED SOFTWARE or Lexicons under this Agreement. Further, XEROX's name will be used only in an ethical and commercially reasonable manner, for the products developed under this Agreement. All other applicable rights to patents, copyrights, trademarks, and trade secrets in Lexicons remain with XEROX. 2.05 For all distribution, INFOSEEK will require that any use of the LICENSED SOFTWARE will include all copyright notices sufficient in form and substance to adequately protect and preserve XEROX's copyright therein, including but not limited to, any manuals and an appropriate screen of a product using the LICENSED SOFTWARE. III. LICENSE GRANT 3.01 XEROX grants and conveys to INFOSEEK a non-exclusive (except as noted elsewhere in this Agreement), world-wide right and license to market, use, maintain, reproduce, distribute, display, and/or sub-license Lexicons, in object code format, as incorporated in the LICENSED SOFTWARE and for which software a royalty schedule or a periodic license payment is defined in Attachment II. 3.02 INFOSEEK acknowledges that it has no rights to XEROX's Finite State development tools which are used to produce Lexical Products and Lexicons. 3.03 XEROX will provide INFOSEEK with written notification of pending new updates, releases and versions and availability thereof, sufficiently in advance of publication in order for INFOSEEK to react in a timely manner. IV. ROYALTY 4.01 INFOSEEK will pay XEROX a royalty based on advertising revenue received by INFOSEEK which is related to LICENSED SOFTWARE, and/or a Periodic License Fee, as defined in Attachment II entitled "ROYALTY/PERIODIC FEES." V. MARKETING OF LICENSED SOFTWARE 5.01 XEROX will provide to INFOSEEK all relevant marketing information in its possession, technical specifications, and update descriptions related to Lexicons for the primary purpose of promotion thereof as incorporated in the LICENSED SOFTWARE, so that INFOSEEK can, on a periodic basis and as new changes or additions occur, distribute the same to its sales force and customers. During the term of this Agreement, INFOSEEK may also include Lexicons product description and information in any INFOSEEK literature. The distribution of such literature by INFOSEEK will be at the expense of INFOSEEK. INFOSEEK may, at their option and expense, prepare its own promotional literature relating to Xerox Lexicons and the LICENSED SOFTWARE, and distribute the same to its sales force and customers. VI. ENHANCEMENTS TO Lexicons 6.01 During the term of this Agreement, XEROX will provide INFOSEEK with bug fixes to all BUGs reported by INFOSEEK, according to the procedure, outlined in Attachment III. Xerox may, at its discretion, provide INFOSEEK with periodic updates of or revisions to Lexicons, including, but not limited to, re-implementation for different computer processors or programming languages. Xerox will provide INFOSEEK with any updates or revisions made generally available to other customers. Any update, revision or modification of the Lexicons so provided shall be covered by the provisions of this Agreement as identified in Attachment I "Specifications." XEROX' sole obligations regarding support, enhancements and maintenance of the Lexicons are limited to the descriptions in Attachment III "Technical Support". 2. 3/28/96 3 XSOFT / INFOSEEK SOFTWARE DISTRIBUTION AND LICENSE AGREEMENT Lexicons 6.02 INFOSEEK may, at its discretion, provide XEROX with feedback relative to its use of Lexicons, including but not limited to errors and other corrective information, modifications, extensions and suggested changes relative to supporting documentation. 6.03 INFOSEEK grants to XEROX an irrevocable, non-exclusive, royalty-free world-wide license covering any and all rights owned, controlled or licensable by INFOSEEK relating to such corrections, modifications, extensions and supporting documentation of Lexicons pursuant to this agreement. XEROX shall have the right under this license to make, have made, use, sell, lease, reproduce, prepare derivative works, including the right to any modifications or improvements and the like made at the suggestion of INFOSEEK or based on the aforesaid feedback and to distribute, sublicense and otherwise dispose of any of the foregoing rights in connection with the licensed subject matter, and to sub-license others to perform any of these acts. VII. SPECIFICATIONS, DELIVERY AND ACCEPTANCE 7.01 XEROX will deliver the Lexicons and test suite in accordance with the Specification defined in Attachment I and any technical appendices that later will be mutually agreed in writing. 7.02 Acceptance Procedure Upon delivery of each of the Lexicons to INFOSEEK, INFOSEEK will: (a) Test and evaluate Lexicons for a period of up to 30 (thirty) days, and (b) Produce a list of changes and modifications needed to bring the Lexicons to conformance with the Specification in Attachment I. Upon receipt of the required changes, XEROX will: (c) Correct BUGs at no charge and (d) deliver to INFOSEEK a final version of the Lexicons. 7.03 INFOSEEK may request changes to the Lexicons which include enhancements to the product beyond those included in the Specification. XEROX will discuss such enhancements with INFOSEEK but will be under no obligation to implement any such enhancements, unless agreed by the parties in writing as to content, schedule and fees for changes to the Specification. 7.04 INFOSEEK and XEROX will each designate individuals who will serve as liaisons for the term of the agreement. These liaisons will be identified in Attachment I. 7.05 XEROX shall provide to INFOSEEK a master set of the Lexicons suitable for reproduction. INFOSEEK may use the master set solely to copy and develop products and services to be distributed to third parties in accordance with this Agreement. VIII. WARRANTY 8.01 XEROX represents and warrants that Lexicons is substantially free from program errors or other problems and fully meets the Specifications recited in Attachment I. 8.02 If any BUGs are discovered by INFOSEEK, XEROX shall correct such BUGs at no charge to INFOSEEK within a correction period of thirty (30) days following receipt of written notice from INFOSEEK of such BUG. Product enhancements and other program errors will be corrected according to acceptance procedure outlined in clause VII. 3. 3/28/96 4 XSOFT / INFOSEEK SOFTWARE DISTRIBUTION AND LICENSE AGREEMENT Lexicons 8.03 XEROX warrants that the master of the media on which the Lexicons are contained shall be free of physical defects. If at any time defects are discovered, INFOSEEK shall notify XEROX immediately and XEROX shall correct the defects by providing a new master on a new media immediately. 8.04 EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH HEREIN, XEROX HEREBY DISCLAIMS AND INFOSEEK HEREBY EXPRESSLY WAIVES ANY AND ALL OTHER EXPRESS WARRANTIES OR REPRESENTATIONS OF ANY KIND OR NATURE, AND ANY AND ALL IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. IX. TECHNICAL SUPPORT 9.01 XEROX shall provide technical support and maintenance of Lexicons to INFOSEEK in conformity with the terms and conditions defined in Attachment III, entitled "Technical Support." X. TERMINATION 10.01 This Agreement shall be effective from the date hereof and shall remain in effect for an initial three year period thereafter. It will automatically renew for additional one year periods of time unless either party, in writing and with 90 day notice, objects to such renewal. 10.02 Either XEROX or INFOSEEK may terminate this Agreement by written notice of termination to the other party upon a material breach by XEROX or INFOSEEK which has not been cured within thirty (30) days of written notice of such breach. Termination for material breach shall take effect 90 days after written notice of such breach has been provided, if said breach has not been cured. The Confidential Obligations (the obligations as to CONFIDENTIAL INFORMATION) herein and any other remedies available, such as return of fees, shall not be waived and shall survive termination. 10.03 Upon termination of this Agreement the license shall immediately cease and INFOSEEK shall: (a) promptly cease the distribution of and/or the provision of services based on LICENSED SOFTWARE to any new sub-license partners, OEMs or end-users; (b) promptly cease use of the LICENSED SOFTWARE incorporating the Lexicons, including its use on any processor, except as is required for providing maintenance to its existing customers; (c) promptly cease provision of services based in whole or in part on the Lexicons; (d) return the master copies of Lexicons and return or destroy all copies of Lexicons and supporting documentation; INFOSEEK may, however, retain one (1) copy of the Lexicons and Documentation to be used solely for support purposes. (e) remove Lexicons from LICENSED SOFTWARE not returned or destroyed; (f) certify in writing to XEROX that it has performed these acts, and the obligations under clauses 2 and 15 shall remain in force until INFOSEEK has performed these acts. 10.04 Upon completion of the third year payments, the royalty and/or fees paid by INFOSEEK to XEROX for the licenses of the Lexicons constitutes a "fully paid-up" license to use such Lexicons in LICENSED SOFTWARE. Thereafter, termination of this Agreement shall not act to terminate such fully paid-up licenses granted by XEROX pursuant to this Agreement. 10.05 All valid INFOSEEK sub-licenses, in effect on the date of termination, shall survive the termination of this Agreement. 4. 3/28/96 5 XSOFT / INFOSEEK SOFTWARE DISTRIBUTION AND LICENSE AGREEMENT Lexicons XI. INDEMNIFICATION 11.01 XEROX represents and warrants that it has sufficient right, title and interest in and to the Lexicons to enter into this Agreement and further warrants that the Lexicons do not infringe any patent, copyright or other proprietary right of a third party and that it has not been notified by a third party of a possibility that the Lexicons might infringe any patent, copyright or other proprietary right of a third party. 11.02 XEROX shall defend INFOSEEK from, and pay any judgment for, any claim, action or other proceeding brought against INFOSEEK or INFOSEEK licensee of the Lexicons arising from the use of the Lexicons, providing that INFOSEEK promptly notifies XEROX in writing of any action or claim, allows XEROX, at XEROX expense, to direct the defense, gives XEROX full information and reasonable assistance required to defend such suit, claim or proceeding, at no out-of-pocket expense to INFOSEEK, and allows XEROX to pay any judgment, provided further that XEROX shall have no liability for any claim, action or other proceeding based upon acts or omissions by INFOSEEK or for settlements or costs incurred without the knowledge of XEROX. This indemnity shall not apply to any alleged infringement caused by combination with other software or products when the alleged infringement would not have occurred but for said combination. To avoid infringement, XEROX may, at its option, and at no charge to INFOSEEK, obtain a license or right to continue the use of the Lexicons, or modify the Lexicons so it no longer infringes, but is still an equivalent of the Lexicons, or substitute an equivalent of the Lexicons. INFOSEEK as used in this paragraph shall include any * [ ]. XII. DISCLAIMER 12.01 IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR LOST CONTRACTS OR LOST PROFITS OR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES IN ANY WAY ARISING OUT OF THE USE OF THE Lexicons OR LICENSED SOFTWARE OR RELATING TO THIS AGREEMENT HOWEVER CAUSED UNDER A CLAIM OF ANY TYPE OR NATURE BASED ON ANY THEORY OF LIABILITY (INCLUDING CONTRACT, TORT OR WARRANTY) EVEN IF THE POSSIBILITY OF SUCH DAMAGES HAS BEEN COMMUNICATED. THIS DISCLAIMER DOES NOT APPLY TO THE INDEMNIFICATION OF SECTION XI. XIII. FORCE MAJEURE 13.01 Neither party shall be liable to the other for its failure to perform any of its obligations hereunder during any period in which such performance is delayed by circumstances beyond its reasonable control, provided that the party experiencing such delay promptly notifies the other party of the delay. XIV. ETHICAL STANDARDS 14.01 XEROX agrees that with respect to its role as supplier to INFOSEEK including any interaction with any employee of INFOSEEK, it shall not: (1) give or offer to give any gift or benefit to said employee, (2) solicit or accept any information, data, services, equipment, or commitment from said employee unless same is (i) required under a contract between INFOSEEK and XEROX, or (ii) made pursuant to a written disclosure Agreement between INFOSEEK and XEROX, or (iii) specifically authorized in writing by INFOSEEK management, (3) solicit or accept favoritism from said employee, and (4) enter into any outside business relationship with said employee without full disclosure to, and prior approval of, INFOSEEK management. As used herein: "employee" includes members of the employee's immediate family and household, plus any other person who - ------------------------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 5. 3/28/96 6 XSOFT / INFOSEEK SOFTWARE DISTRIBUTION AND LICENSE AGREEMENT Lexicons is attempting to benefit from his or her relationship to the employee. 6. 3/28/96 7 XSOFT / INFOSEEK SOFTWARE DISTRIBUTION AND LICENSE AGREEMENT Lexicons "XEROX" includes all employees and agents of XEROX. "Gift or benefit" includes money, goods, services, discounts, favors and the like in any form but excluding low value advertising items such as pens, pencils and calendars. "Supplier" includes prospective, current and past suppliers, and "favoritism" means partiality in promoting the interest of XEROX over that of other suppliers. Such activity by XEROX shall constitute breach of contract by XEROX and may further result in XEROX' debarment. XV. CONFIDENTIAL INFORMATION 15.01 INFOSEEK agrees not to intentionally disclose or intentionally make available to any third party information received from XEROX (hereinafter referred to as "CONFIDENTIAL INFORMATION") in any form without the express written approval of the other party. 15.02 INFOSEEK shall not use such CONFIDENTIAL INFORMATION except to the extent necessary to perform under this Agreement and shall not intentionally circulate the CONFIDENTIAL INFORMATION within its own organization except to those with a specific need to know such CONFIDENTIAL INFORMATION. If written approval by XEROX is given to INFOSEEK to disclose CONFIDENTIAL INFORMATION to a third party, INFOSEEK shall impose similar confidential restrictions on such third party to whom it discloses such CONFIDENTIAL INFORMATION. 15.03 The obligations on INFOSEEK recited herein shall terminate with respect to any particular portion of such CONFIDENTIAL INFORMATION when and to the extent that it is or becomes: (a) part of the public domain through no fault of either party, (b) communicated by the party who owns the CONFIDENTIAL INFORMATION to a third party free of any obligation of confidence; (c) independently developed by the other party without any reference to the CONFIDENTIAL INFORMATION; (d) known to the other party free of any obligation of confidence. 15.04 In no event shall the obligation of either party as recited in 10.02 with respect to the CONFIDENTIAL INFORMATION extend beyond three (3) years from the date of termination of this Agreement, except for XEROX source code. 15.05 Upon request by XEROX after termination of this Agreement, INFOSEEK agrees to promptly return the CONFIDENTIAL INFORMATION. 15.06 INFOSEEK agrees that: (a) it will use its best efforts to ensure that Lexicons are distributed to third parties only according to procedures which do not compromise the security and copyrights of Lexicons; (b) it will not knowingly permit anyone to use Lexicons including portions thereof for the purpose of reverse-engineering; (c) it will instruct its employees of the foregoing obligations and prohibitions. 15.07 INFOSEEK shall cause each unit of the LICENSED SOFTWARE incorporating Lexicons distributed by it or its OEMs or sub-licensors pursuant to this Agreement to be subject to a standard limited use software agreement. 15.08 INFOSEEK will use a reasonable and expected degree of care in safeguarding the LICENSED SOFTWARE as is expected and customary for those possessing information of like importance in safeguard and security thereof. 15.09 Upon discovery of unauthorized transfers or misappropriation, INFOSEEK will: (a) inform XEROX of known details thereof, (b) give reasonable effort and assistance to XEROX in the recovery and return of such unauthorized transfer or misappropriation; (c) provide all reasonably necessary assistance in the enforcement of XEROX' rights against any third party involved in such unauthorized transfer or misappropriation, and (d) use its best endeavors to prevent further 7. 3/28/96 8 XSOFT / INFOSEEK SOFTWARE DISTRIBUTION AND LICENSE AGREEMENT Lexicons unauthorized transfer or misappropriation. XVI. ASSIGNMENT 16.01 This Agreement may not be assigned or transferred by either party without the prior written approval of the other party; provided that XEROX may assign its rights to its affiliates or to any purchaser of all or substantially all of its Lexicons business, and INFOSEEK may assign its rights hereunder, or any portion thereof, to any subsidiary or affiliate of INFOSEEK or to any purchaser of all or substantially all of its business for which the LICENSED SOFTWARE or Lexicons are then licensed. Further, INFOSEEK's rights and obligations under this Agreement may be exercised and performed in whole or in part by any subsidiary or affiliate of INFOSEEK, provided that INFOSEEK shall continue to be responsible to XEROX for the performance of its obligations under this Agreement. Subject to the limitations heretofore expressed, this Agreement shall inure to the benefit of and be binding upon the parties, their successors, administrators, heirs and assigns. In the event that Infoseek files for bankruptcy protection within the three year term of this Agreement, the assignment of rights to LICENSED SOFTWARE by Infoseek to any third party shall require the approval, in writing, of Xerox. XVII. MODIFICATION 17.01 This Agreement constitutes the entire Agreement of the parties as to the subject matter hereof and supersedes all prior and contemporaneous communications. This Agreement shall not be modified, except by a written Agreement signed by duly authorized representatives of XEROX and INFOSEEK. XVIII. BANKRUPTCY 18.01 To the extent permitted by applicable law (including II. U.S.C. Section 365) the non-defaulting party may terminate this Agreement immediately by written notice to the other in the event the other party makes an assignment for the benefit of its creditors, admits in writing an inability to pay debts as they mature, a trustee or receiver is appointed respecting all or a substantial part of the other party's assets, or a proceeding is instituted by or against the other party under any provision of the Federal Bankruptcy Act and is acquiesced in or is not dismissed within sixty (60) days, or results in an adjudication of bankruptcy. To the extent applicable law prevents the non-defaulting party from terminating this Agreement, if it should wish to do so as described above, then the parties shall have only those rights and remedies permitted by applicable law, including the United States Bankruptcy Act, including but not limited to II U.S.C. Section 365. However the non-defaulting party, has the unrestricted right, at its option, not to terminate this Agreement and to continue as the non-exclusive distributor of the LICENSED SOFTWARE. XIX. NON-PUBLICITY 19.01 Without prior written consent of the other party, neither INFOSEEK, nor XEROX shall (a) make any news release, public announcement, public denial or confirmation of this Agreement or its subject matter, or (b) advertise or publish any facts relating to this Agreement. Such consent will not be unreasonably withheld. This requirement will expire upon the execution of this Agreement. 8. 3/28/96 9 XSOFT / INFOSEEK SOFTWARE DISTRIBUTION AND LICENSE AGREEMENT Lexicons INFOSEEK and XEROX agree to make a joint press release to announce this partnership relationship as soon as feasible after the execution of this Agreement. XX. JOINT MARKETING INFOSEEK and XEROX agree to cooperate in and pursue future product development and marketing arrangements with regard to products and services relevant to their respective business plans. Each such cooperative arrangement will be the subject of a separate agreement between the parties. XXI. CONTROLLING LAW 21.01 This Agreement shall be governed and construed in accordance with the laws of the United States and the State of California. XXII. GENERAL PROVISIONS 22.01 WAIVER Failure of either party to require strict performance by the other party of any provision shall not affect the first party's right to require strict performance thereafter. Waiver by either party of a breach of any provision shall not waive either the provision itself or any subsequent breach. 22.02 NO AGENCY It is agreed and understood that neither INFOSEEK nor XEROX has any authority to bind the other with respect to any matter hereunder. Under no circumstances shall either INFOSEEK or XEROX have the right to act or make any commitment of any kind to any third party on behalf of the other or to represent the other in any way as an agent. 22.03 SURVIVAL The provisions of this Agreement shall, to the extent applicable, survive the expiration or any termination hereof. 22.04 HEADINGS The headings and titles of the Sections of the Agreement are inserted for convenience only, and shall not affect the construction or interpretation of any provision. 22.05 SEVERABILITY If any provision of the Agreement is held invalid by any law, rule, order or regulation of any government, or by the final determination of any state or federal court, such invalidity shall not affect the enforceability of any other provisions not held to be invalid. 22.06 ENTIRE AGREEMENT This Agreement constitutes the entire Agreement of the parties as to the subject matter hereof and supersedes any and all prior oral or written memoranda, understandings and Agreements as to such subject matter. XXIII. ATTACHMENTS 23.01 THE TERMS AND CONDITIONS ON ATTACHMENTS ["I," "II," "III"] ARE ATTACHED HERETO AND MADE A PART HEREOF. IN WITNESS WHEREOF, the parties have hereunto set their hands. INFOSEEK CORPORATION XEROX By: Andrew E. Newton By: Mohan Trikha -------------------------------- --------------------------------- Sig: Sig: ------------------------------- -------------------------------- Title: Vice President Title: Vice President & GM ----------------------------- ------------------------------ Date: March 29, 1996 Date: March 29, 1996 ------------------------------ ------------------------------- 9. 3/28/96 10 XSOFT / INFOSEEK SOFTWARE DISTRIBUTION AND LICENSE AGREEMENT LEXICONS ATTACHMENT I - SPECIFICATIONS DEFINITIONS "Lexicons" refers to a state-of-the art engine for lexical processing which serves the increasingly sophisticated needs of the market. The salient characteristics of this technology are its abilities to map, or linguistically connect, any surface form of a word to its canonical base form, and return relevant information about a surface form, including category (part of speech), tense, aspect, mood, person, or number. The Lexicons technology itself is language independent and enables the same run-time software to be used with many different language modules. The Japanese Lexicon is based on the same technology but requires different run-time software than the European languages. The Lexicons technology is the basic building block for complex tasks such as Tokenization (Word Breaking), Morphological Analysis (Stemming), Morphological Generation (returning surface forms from a base form), and Part-of-Speech Tagging and Identification. Lexicons is based on Xerox morphological tools, an API, and at least one Lexicon. A Lexicon is developed in the Xerox Transducer Lexicon Format, as produced with the Xerox Lexical Tools, and the Licensed Utility (the run-time library for accessing lexical transducers developed with the Lexical Tools). It is a linguistic product which performs stemming, inflection and derivation (English only) as illustrated in the following paragraphs: Stemming: input "swam", outputs "swim" Inflection: input "swim", outputs "swim", "swims", "swam", "swum", "swimming" Derivation: input "computer", outputs "computes", "computation", "computational" Lexicons with respect to this Agreement and License Grant refers only * to the XEROX software for stemming and inflection of [ ] operating on one of the following platforms: Win16 and Win 32, Sun OS 4.1.X or Solaris 2.X, to be specified by INFOSEEK. Lexicons will be provided in run-time object code format. "Documentation" MEANS: - Any and all text, whether in written or electronic form, describing the Lexicons, including but not limited to user manuals, brochures, specifications, software descriptions, and related materials normally needed for use with the Lexicons. - Marketing literature describing the product and its features. - Technical written information provided by Xerox for INFOSEEK internal use in developing LICENSED SOFTWARE which includes Design Documentation and Installation Documentation. - Other written material describing Lexicons, as may have been developed by XEROX for their end-users. "LICENSED SOFTWARE" means any work derived from the combination of the Xerox Lexicons and INFOSEEK Internet Search Software (code name "Moby") including: 1) INFOSEEK products incorporating Lexicons in whole or in part, or other work derived from Lexicons. 2) All modifications, improvements, enhancements, additions, derivative works, updates, releases and versions of the foregoing products, including ports, of which derivation was created or developed by or on behalf of INFOSEEK. - --------------------------------------------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 10. 3/28/96 11 12 XSOFT / INFOSEEK SOFTWARE DISTRIBUTION AND LICENSE AGREEMENT LEXICONS 3) LICENSED SOFTWARE does not include other INFOSEEK products or services which may become available henceforth and expand INFOSEEK's market presence, open new markets, or replace LICENSED SOFTWARE. SPECIFICATIONS Lexicons includes the definition stated above and Lexicons provided in the XEROX Transducer Lexicon Format, as produced with the XEROX Lexical tools, and as defined in the description of the c-fsm format in the publication "Finite State Lexicon Compiler" by Lauri Karttunen {ISTL- NLTT-1933-04-02} and as may be defined in later technical appendices attached to this Agreement. ACCEPTANCE CRITERIA Acceptance of the LICENSED SOFTWARE is contingent on completion of the Acceptance Procedure described in 7.02 of this Agreement. PLATFORM AVAILABILITY English Lexicons for the Windows 16 bit and Sun OS 4.1.X client platform environments are available within one week of executing this Agreement. Windows 95 32 bit and Solaris 2.X platform environments in beta form can also be made available immediately. Formal product for these beta forms can be available within 30 days of delivery of beta. The Japanese Lexicon is outlooked for availability in late third quarter 1996. TECHNICAL CONTACTS For all technical matters, the point of contact will be: XEROX CORPORATION INFOSEEK CORPORATION Andrew Gelman John Nauman ------------------------------------ XSoft, A Division of Xerox Corporation Infoseek Corporation ------------------------------------ 3400 Hillview Avenue 2620 Augustine Drive Suite 250 ------------------------------------ Palo Alto, California 94304 Santa Clara, CA 95054 ------------------------------------ (415) 813-7194 408-567-2773 ------------------------------------ COPYRIGHT NOTICE Copyright (c) 1996, Xerox, Inc. All Rights Reserved. 11. 3/28/96 13 XSOFT / INFOSEEK SOFTWARE DISTRIBUTION AND LICENSE AGREEMENT LEXICONS ATTACHMENT II - ROYALTY/PERIODIC FEES In consideration of the rights granted INFOSEEK by XEROX in the Software Distribution & License Agreement to which this Attachment II is a part, INFOSEEK shall pay to XEROX the Royalties and Periodic Fees listed herein. TERM OF AGREEMENT: This Agreement is for three years, effective on the execution date, and shall be non-cancelable without cause. At the conclusion of the three year term and upon payment of all moneys due, INFOSEEK will be granted a fully paid up license to use Lexicons, "as is" on that date, in LICENSED SOFTWARE, in perpetuity. Xerox will not be liable to provide any further maintenance or updates once the perpetual license has been granted. At least 90 days prior to the expiration of this Agreement, INFOSEEK and XEROX shall open discussion and agree on terms for product updates and maintenance beyond the period of this Agreement. It is expected that such terms will be based in part on the financial condition of INFOSEEK at that time. ADVANCE PAYMENTS: INFOSEEK shall make Advance license payments to XEROX in the amounts shown below on the indicated dates. Such payments are for the English Lexicons, and for platforms on which Lexicons is licensed and shall be non-refundable. Annual Advance: * A. Upon execution of this Agreement (March 31, 1996): [ ] B. On each 12th month anniversary of the Execution of this Agreement: * [ ] ROYALTY: INFOSEEK shall pay to XEROX the following royalty based on Gross Advertising revenues billed by INFOSEEK for the LICENSED SOFTWARE. * - Royalty Rate: [ ] Royalties due to XEROX in a given Agreement year shall be credited against the Advance Payment for that year at a 100% rate until the Advance has been depleted. ANNUAL MAXIMUM PAYMENT: In consideration of the fact that INFOSEEK is a relatively new, emerging company, XEROX agrees that the amount of royalties due to XEROX in each year of this Agreement will be limited to the amounts shown, exclusive of the one time fees for additional languages, lexical enhancements, technology fees, sub-licensing fees, maintenance fees or consulting services, if applicable, which are denoted in the sections following. - Maximum Royalty in 1996: $200,000 - Maximum Royalty in 1997: $200,000 - Maximum Royalty in 1998: $200,000 ($300,000 if Infoseek's revenues * exceed [ ]. *ADDITIONAL [ ]: INFOSEEK may license [ ] Lexicons * from XEROX by paying a one-time fee for each [ ] licensed. This fee is in addition to the Royalty and Annual Maximum Payment described above. * - [ ] * - [ ] * - [ ] * Payment of the fee for additional [ ] will be due when INFOSEEK * places an order and the [ ] is delivered by XEROX to INFOSEEK. * The [ ] Lexicon is expected to become available in [ ]. * The [ ] Lexicons are available now. - ------------------------------------------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 12. 3/28/96 14 XSOFT / INFOSEEK SOFTWARE DISTRIBUTION AND LICENSE AGREEMENT LEXICONS DEFAULT PRODUCT: INFOSEEK agrees that LICENSED SOFTWARE shall become the INFOSEEK Internet search default product as soon as practicable after the execution of this Agreement. It is expected that this will occur in * [ ]. TECHNOLOGY FEE: XEROX' normal technology fee associated with the licensing of * XEROX Lexical Technology is [ ] plus [ ] maintenance of [ ] of the Technology fee. In consideration of the banner advertising to be * provided by INFOSEEK to XEROX, as described below, XEROX [ ] for the licensing of the Executables Library and the API. MAINTENANCE: Annual maintenance charges with respect to the Executables * Library and the API are [ ] *ADVERTISING: [ ] of the Technology Fee noted above, INFOSEEK will provide * to XEROX Headline Banner advertising equal in value to [ ]. The content and term of this Advertising program will be agreed by representatives of both parties after the execution of this Agreement. Said advertising value must be used by XEROX prior to the end of the third year of this Agreement. INFOSEEK will provide XEROX with monthly reports on the number of hits and queries on which the XEROX banner appeared, plus the demographics of the hits as can be recorded by INFOSEEK systems. HYPERTEXT LINK: A Hypertext link and a XEROX technology statement shall appear on every Search Results page supplied by the LICENSED SOFTWARE, at no charge to XEROX. Said statement and link shall appear near the bottom of the page. The appearance, wording and size of the XEROX technology statement shall be agreed by parties after execution of this Agreement and shall appear on the INFOSEEK Results pages concurrent with the LICENSED SOFTWARE. INFOSEEK will provide to XEROX monthly reports on the search activity, including but not limited to the number of results pages and the number of hits on the XEROX link. XEROX and INFOSEEK agree to discuss future placement of the Hypertext link in any extension of this Agreement. The parties agree that the value of the Hypertext link may be as much as several hundred thousand dollars of business to XEROX. *SUB-LICENSING: INFOSEEK may sublicense LICENSED SOFTWARE to a maximum of [ ] financial supporters (investors) in INFOSEEK during the term of this Agreement. For each investor so licensed, INFOSEEK agrees to pay * XEROX [ ]. Once the [ ] has been * granted, the [ ] charges shall no longer be payable. Said payments will be due to XEROX upon execution of the Investor Agreement and on succeeding anniversaries of such agreements. * One permitted sublicensee shall be [ ] * and any Affiliate or Successor of [ ] and such Affiliates and Successors collectively referred to herein as * [ ]. "Affiliate" shall mean any entity of which * [ ] owns at least [ ] of the equity, or any entity that owns * at least [ ] of the equity of [ ] "Successor" means any * entity that has a right to provide the [ ] * or successor service. [ ] * The [ ] charge shall apply to such [ ]. - ------------------------------------------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 13. 3/28/96 15 XSOFT / INFOSEEK SOFTWARE DISTRIBUTION AND LICENSE AGREEMENT LEXICONS Should INFOSEEK desire to enter into any other sublicensing arrangements concerning LICENSED SOFTWARE, whether with Investors or with commercial customers or OEMs, will require the written approval of XEROX and an agreed royalty schedule. SUMMARIZATION: Should INFOSEEK desire to license Xerox's summarization technology, XEROX and INFOSEEK will agree on terms and conditions as an amendment to this Agreement. INTERNAL USE: No royalties shall be due from INFOSEEK for units of LICENSED SOFTWARE which are used internally specifically for testing, evaluation, support, marketing, demonstration or training purposes. *EXCLUSIVITY: For a period of [ ], effective upon execution of this * Agreement, and subject to INFOSEEK [ ], * XEROX shall not [ ] Lexicons * to [ ]. Should INFOSEEK fail to introduce a service using LICENSED SOFTWARE on the * Internet by [ ], this exclusivity provision will * [ ]. PAYMENT AND REPORTING: Within thirty (30) days after the end of each calendar quarter during the term hereof, INFOSEEK shall provide XEROX with a written report setting forth the amount of billed advertising revenue related to LICENSED SOFTWARE and the royalties due to XEROX for that quarterly period. A check or wire transfer of funds shall accompany the report. AUDIT: INFOSEEK shall, for a period of two (2) years following the date of each report issued, keep records adequate to verify the substance of the report and any accompanying payment. XEROX shall have the right, no more than once each calendar year, to select a mutually acceptable independent Certified Public Accountant to inspect the records of INFOSEEK at a single location on reasonable notice and during regular business hours to verify the reports and payments made hereunder. The entire cost of such inspection shall be borne by XEROX, and such Certified Public Accountant shall not disclose to XEROX any information other than information relating to the computation and accuracy of such reports and payments. Any information as to INFOSEEK's customers will be treated as INFOSEEK CONFIDENTIAL INFORMATION and shall not be disclosed. If the audit reveals that INFOSEEK has under-reported revenues of LICENSED SOFTWARE by more five percent (5%) in any calendar year, INFOSEEK shall reimburse XEROX for the audit fees. In any event, INFOSEEK shall promptly repay, or apply against any outstanding prepaid Annual Fees, the underpayment. CUSTOM EFFORT: Requests for custom effort with regard to Lexicons, if agreed * by the parties, will be charged at a rate of [ ] per day. - ------------------------------------------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 14. 3/28/96 16 XSOFT / INFOSEEK SOFTWARE DISTRIBUTION AND LICENSE AGREEMENT LEXICONS ATTACHMENT III - TECHNICAL SUPPORT DEFINITIONS CUSTOMER means the end-user or OEM using the LICENSED SOFTWARE. BUG FIXING means modifications to source code or Documentation, or revisions, including both the source code and object code thereto, which correct BUGs or provide other updates and corrections. BUG FIXING will consist of XEROX using reasonable efforts to design, code, and implement programming changes to Lexicons and modifications to the documentation in order to correct BUGs such that Lexicons are brought into conformance with the Specifications listed in Attachment I. BUG FIXING will also consist of XEROX advising INFOSEEK with regard to Lexicons in order to create the LICENSED SOFTWARE. UNILATERALENHANCEMENTS are changes to Lexicons, which XEROX do as a consequence of their normal business operations and ensuing BUG FIXING for others than INFOSEEK, with the aim to keep the Lexicons up-to-date and according to the Specification. ENHANCEMENT REQUESTS will be considered and enhancements delivered by XEROX at its own discretion. In cases where INFOSEEK is willing to provide compensation for certain enhancements, and the parties agree on content and schedule, INFOSEEK and XEROX will enter into a separate licensing agreement. ENHANCEMENT REQUESTS are such enhancements to the Lexicons, which extend or modify the Specifications. LIAISONS XEROX and INFOSEEK are represented by their respective Technical Contacts (listed in Attachment I) or by certain designated individuals (limited in number). MAINTENANCE FEE XEROX shall provide BUG FIXING and UNILATERAL ENHANCEMENTS at the fees set forth in Appendix II. MAINTENANCE LOCATION All BUG FIXING provided under this Agreement shall be provided at XEROX' facilities, unless XEROX and INFOSEEK mutually agree that it is necessary to provide such services at INFOSEEK's facilities. TERM BUG FIXING is effective on the date of execution of this Agreement and will be in effect, until the Agreement is terminated, for the then current version of the Lexicons shipping to customers, unless otherwise agreed by the parties. RESPONSIBILITY XEROX will provide BUG FIXING to INFOSEEK as INFOSEEK's CUSTOMERs may require from INFOSEEK in order for INFOSEEK to fulfill its maintenance obligations to its CUSTOMERs. XEROX will not be expected to provide BUG FIXING directly to any CUSTOMERs, unless XEROX enter into a separate maintenance agreement with such CUSTOMERs. Should XEROX discontinue all maintenance and distribution of the Lexicons, a copy of the source code and BUG FIXING and product modification records will be made available to INFOSEEK as CONFIDENTIAL INFORMATION in order for INFOSEEK to fulfill its maintenance obligations to its CUSTOMERs. RESPONSE TIME 15. 3/28/96 17 XSOFT / INFOSEEK SOFTWARE DISTRIBUTION AND LICENSE AGREEMENT LEXICONS Email support will be the primary support provided by XEROX. XEROX provides telephone support during XEROX' normal days of business operation (9 AM - 5 PM (PST)). For each BUG FIXING, INFOSEEK and XEROX will follow the procedure outlined below: Day 0 INFOSEEK's CUSTOMER logs a BUG; INFOSEEK determines that BUG is related to Lexicons. Day 0-1 Request is sent to XEROX via e-mail or telephone; Day 1-2 XEROX acknowledges receipt of request and classifies the BUG according to the BUG Classification table following. Day 2-6 XEROX responds, as per the BUG Classification table, identifying the nature and the cause of the problem and (a) an estimated BUG FIXING date; or (b) a workaround or patch, if such is available. Day 3-7 INFOSEEK communicates the response to the customer. BUG Classification Table
================================================================================================================ PROBLEM DESCRIPTION XSOFT RESPONSE TIME - ---------------------------------------------------------------------------------------------------------------- 1. PROBLEM SOLVED; CASE CLOSED - ---------------------------------------------------------------------------------------------------------------- 2. Minor Problem. Customer is having a problem with a particular feature or 4 working days, Solution function related to Lexicons or requests a product improvement or or Action plan enhancement. Other aspects of Lexicons are functioning normally. The LICENSED SOFTWARE is up, with no significant impact to production. - ---------------------------------------------------------------------------------------------------------------- 3. Moderate Problem. Customer is having a Lexicons problem on his 40 hours, Solution or workstation that is preventing the use of LICENSED SOFTWARE. The Action plan system is up but production capability is reduced. All system functions seem to be operating normally. There is no data loss. Indicators are inability of a non-critical application to run, continuing but infrequent failure requiring operational intervention, or non-critical product feature or function does not work. - ---------------------------------------------------------------------------------------------------------------- 4. Severe Problem. Lexicons crash caused the workstation to go down. 20 hours, Solution or User cannot run any software on workstation. Problem is characterized by Action plan, Status update the inability of some critical application to run, the failure requires frequent every two (2) days. operational intervention, and/or there is a recoverable data loss. - ---------------------------------------------------------------------------------------------------------------- 5. Catastrophic Problem. Lexicons has caused LICENSED SOFTWARE to Immediate action, Daily go down at the server level. Users cannot access LICENSED SOFTWARE status reports. and have no production capability on that server. The problem is characterized by inability to run critical applications and/or unrecoverable data loss. ================================================================================================================
With respect to ENHANCEMENT REQUESTS, XEROX makes no commitments as to response time, but will endeavor, to the extent resources are available, to evaluate the requested enhancement and to provide estimates of the time and cost to accomplish same. If applicable, INFOSEEK initiates discussions with XEROX on the fee for the proposed enhancement. SERVICE OBLIGATION The services set forth herein shall be expressly contingent upon (1) INFOSEEK promptly reporting any errors in the Lexicons or related documentation to XEROX in writing; (2) Not modifying the Lexicons without written consent of XEROX; and (3) INFOSEEK utilizing the Lexicons only as intended. 16. 3/28/96 EX-10.35 6 LETTER OF AGREEMENT W/ HNC SOFTWARE 4/2/96 1 EXHIBIT 10.35 * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. April 1, 1996 HNC Software Inc. 5930 Cornerstone Court West San Diego, CA 92121-3728 Tel: 619.546.8877 Fax: 619.452.6524 Robin Johnson Infoseek Corporation 2620 Augustine Drive, Suite 250 Santa Clara CA 95054 Dear Robin: The purpose of this letter is to set forth the terms and conditions whereby HNC will provide Infoseek with a copy of HNC's CONVECTIS(TM) software (the "HNC Software") prior to the execution of a definitive software license agreement between the parties (the "Definitive Agreement"), which the parties acknowledge is currently under negotiation between them. As such, it is agreed that: 1. HNC's provision of the HNC Software to Infoseek shall be subject to the terms and conditions of the Definitive Agreement as well as the Mutual Confidentiality and Non-Disclosure Agreement executed by the parties as of April 2, 1996 (the "Non-Disclosure Agreement"). It is acknowledged that the HNC Software shall be considered "Confidential Information" for purposes of the Non-Disclosure Agreement. 2. In the event the Definitive Agreement is not executed by both parties on or before June 30, 1996, Infoseek shall immediately discontinue all use of the HNC Software and, within ten (10) days thereof, return the original and all copies of the HNC Software (as well as any and all HNC Confidential Information in Infoseek's possession) to HNC. Such shipment shall be accompanied by a written statement signed by an officer of Infoseek certifying that all HNC Software and HNC Confidential Information provided to Infoseek in connection with the HNC Software (as well as any copies thereof) has been either returned to HNC or destroyed by Infoseek. 3. In the event of any return of the HNC Software as described in Section 2 above, HNC shall refund to Infoseek all amounts actually paid to HNC by Infoseek in accordance with a quotation from HNC dated March 26, 1996, less *[ ], which represents [ ] of the Installation Fee described in said quotation. Please acknowledge your agreement to the above-referenced terms by signing this letter in the space below and returning one copy of this letter to my attention by return fax and U.S. Mail. Sincerely, AGREED: HNC SOFTWARE INC. INFOSEEK CORPORATION Michael A. Thiemann By:________________________________ Executive Vice President Robin Johnson, President and CEO Date signed:_______________________ - ---------------------------------------- *CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 2 March 26, 1996 HNC Software Inc. 5930 Cornerstone Court West San Diego, CA 92121-3728 Tel: 619.546.8877 Fax: 619.452.6524 Infoseek Corporation 2620 Augustine Drive, Suite 250 Santa Clara CA 95054 Re: QUOTATION The purpose of this letter is to provide Infoseek with a quotation with respect to Infoseek's licensing of HNC's CONVECTIS(TM) product ("CONVECTIS"). This quotation shall not be construed as a license to Infoseek with respect to CONVECTIS; such a license shall only be extended to Infoseek in accordance with a software license agreement executed by both HNC and Infoseek. This quotation assumes that HNC and Infoseek will enter into such a software license agreement with respect to CONVECTIS as soon as reasonably practicable. However, this quotation does not include all of the terms and conditions to be contained in any such software license agreement. As such, HNC provides the following quotation to Infoseek with respect to CONVECTIS: =============================================================================== Item Amount(3) - ------------------------------------------------------------------------------- *Installation Fee(1) [ ] - ------------------------------------------------------------------------------- *Annual Convectis License(2) [ ] (includes one Convectis tuning workstation) - ------------------------------------------------------------------------------- *Additional Convectis tuning workstation license(2) [ ] - ------------------------------------------------------------------------------- *Annual Convectis Maintenance (includes one Convectis tuning [ ] workstation license)(2) - ------------------------------------------------------------------------------- *Additional Convectis tuning workstation maintenance(2) [ ] =============================================================================== (1) A portion of this fee may be refundable in accordance with the terms and conditions to be contained in the software license agreement. (2) Quote is limited to first year fees only; fees for any subsequent year(s) shall be paid in accordance with the terms and conditions to be contained in the software license agreement. (3) Fees shall be due and payable in accordance with the mutually agreed upon terms of the Definitive Agreement. Travel-related Expenses. The Installation, License, and Maintenance fees set forth above and in any software license agreement are exclusive of any travel-related expenses incurred by HNC with respect to the subject matter of this quotation. Accordingly, any travel related expenses HNC incurs with respect to the subject matter of this quotation are to be reimbursed to HNC as provided herein in addition to the payment of any other fees payable to HNC hereunder. Actual expenses will be invoiced monthly and full reimbursement for such expenses will be due and payable to HNC from Infoseek within thirty (30) days of Infoseek's receipt of HNC's invoice therefor at the following rates, subject to increase as provided in the section entitled "Consumer Price Index Adjustments" below: Hotel (per day maximum) $ 160.00 per person Meals (per day maximum) $ 40.00 per person Automobile (full or luxury size) HNC's Actual Cost Business Airfare HNC's Actual Cost Courier Costs HNC's Actual Cost Out-of-Pocket Expenses HNC's Actual Cost Automobile mileage (if personal car) IRS Allowed Standard - -------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION Page 1 of 2 3 Infoseek Corporation March 26, 1996 _______________ CONSUMER PRICE INDEX ADJUSTMENTS. - -------------------------------- All fees, prices, labor rates and expense reimbursement rates set forth in this quotation and in any software license agreement will be reviewed at the end of each anniversary of the software license agreement's effective date, including each year during any renewal of the software license agreement. This review will commence on the first day of the anniversary month of the software license agreement effective date and adjustments will be made to all such prices, labor rates and expense reimbursement rates with reference to the percentage increase (if any) of the Consumer Price Index (CPI), for the San Diego, California area, but such increases will not be made at an annual rate in excess of CPI increase plus four percent (4%). No decrease in any fee, price, labor rate or expense reimbursement rate will be made. This quotation shall be effective until April 2, 1996. Sincerely, HNC SOFTWARE INC. Raymond V. Thomas Vice President, Finance and Administration Chief Financial Officer cc: Michael Thiemann John Gaffney Page 2 of 2 4 HNC/Infoseek Mutual Confidentiality and Non-Disclosure Agreement MUTUAL CONFIDENTIALITY AND NON-DISCLOSURE AGREEMENT This Mutual Confidentiality and Non-Disclosure Agreement is entered into as of April 2, 1996 (the "Effective Date") by and between HNC Software Inc., a Delaware corporation, and Infoseek, a California corporation (hereinafter collectively referred to as "the parties"). WHEREAS, the parties recognize that each other's business involves specialized and proprietary knowledge, information, methods, processes, techniques, and skills peculiar to their security and growth. The parties acknowledge that any disclosure of such methods, processes, skills, financial data, or other confidential or proprietary information would substantially injure the party's business, impair the party's investments and goodwill, and jeopardize the party's relationship with the party's clients and customers; WHEREAS, the parties presently desire to consult with each other with respect to certain matters; WHEREAS, in the course of such consultation the parties anticipate disclosing to each other certain information of a novel, proprietary, or confidential nature, and desire that such information be subject to all of the terms and conditions set forth below. NOW, THEREFORE, the parties hereto, in consideration of the premises and other good and valuable consideration, agree as follows: 1. Confidential Information. "Confidential Information" shall mean and include any information which relates to the financial and/or business operations of each party, including, but not limited to, information relating to each party's customers, products, processes, financial condition, employees, manufacturing techniques, experimental work and/or trade secrets. Said Confidential Information is deemed proprietary by the parties hereto. The Subject Matter of this Agreement, as well as any additional information disclosed hereunder that is deemed Confidential Information by the parties is described in Exhibit A attached hereto and incorporated herein by this reference. 2. Use of Confidential Information. Each party agrees not to use the other's Confidential Information for any purpose other than for the specific consultation regarding the subject matter of this Agreement. Any other use of such Confidential Information shall be made only upon the prior written consent from an authorized representative of the party which disclosed such information (hereinafter the "Disclosing Party") or pursuant to subsequent agreement between the parties. 3. Non-Disclosure of Proprietary Information. The parties agree that from the date of receipt, the party receiving the Confidential Information (hereinafter the "Receiving Party") shall not disclose Confidential Information to any other person, firm, corporation or other entity or use it for its own benefit except as provided in this Agreement. The Receiving Party shall not publish, divulge, communicate, or reveal any Confidential Information to any person, corporation, or other third party or to any of Receiving Party's employees who do not have a need to know such Confidential Information with respect to their job duties. The Receiving Party shall use the same degree of care to avoid publication or dissemination of the Confidential Information as it would with respect to its own confidential information. These efforts shall specifically include document control measures, such as numbered copies and sign out logs, and imposing on all employees, agents and other representatives of Receiving Party restrictions at least as strict as required by this Agreement. "Confidential Information" shall not include information, technical data or know-how which: (a) is already known to the Receiving Party at the time of disclosure and is not otherwise subject to restriction; (b) is or becomes publicly known through no wrongful act of the Receiving Party; (c) rightfully disclosed to Receiving Party by a third party who has no obligation of confidentiality to the Disclosing Party; (d) is independently developed by the Receiving Party; or (e) is approved for release by written authorization of the Disclosing Party. 4. Marking. Confidential Information may be disclosed either visually, orally or in writing. Written material shall be identified and labeled "Confidential" or "Proprietary" to discloser. Verbal or visual information should be identified as "Confidential Information" when disclosed. Confidential and Proprietary Information 1 5 HNC/Infoseek Mutual Confidentiality and Non-Disclosure Agreement 5. Return of Confidential Information. All Confidential Information and copies and extracts thereof shall be promptly returned to Disclosing Party three years from the effective date of this Agreement, or at any time within thirty (30) days of receipt of a written request by the Disclosing Party for the return of such Confidential Information. 6. Ownership of Information. The parties agree that any Confidential Information revealed to the other by the Disclosing Party remains the exclusive property of the Disclosing Party and its successors and assigns, unless otherwise expressly provided in writing signed by an authorized representative of the Disclosing Party. 7. No License Granted. Nothing contained in this Agreement shall be construed as granting or conferring any rights to the Receiving Party by license or otherwise, expressly, impliedly or otherwise, for any information, discovery or improvement made, conceived, or acquired after the date of this Agreement, or for any invention, discovery, or improvement made, conceived or acquired prior to the date of this Agreement. 8. Arbitration and Equitable Relief. (a) Arbitration. Except as provided in Section 8(b) below, the parties agree that any dispute or controversy arising out of or relating to any interpretation, construction, performance or breach of this Agreement shall be settled by arbitration to be held in San Diego County, California in accordance with the Commercial Arbitration Rules then in effect of the American Arbitration Association. The arbitrator may grant injunctions or other relief in such dispute or controversy. In the event of arbitration, a reasonable amount of discovery may be undertaken by the parties. The decision of the arbitrator shall be final, conclusive and binding on the parties to the arbitration. Judgment may be entered on the arbitrator's decision in any court having jurisdiction. (b) Equitable Remedies. The parties agree that it would be impossible or inadequate to measure and calculate the Disclosing Party's damages from any breach of the covenants set forth herein. Accordingly, the parties agree that if in the event of a breach of any of the covenants contained in this Agreement, the affected party will have available, in addition to any other right or remedy available, the right to obtain an injunction from a court of competent jurisdiction restraining such breach or threatened breach and to specific performance of any such provision of this Agreement. The parties further agree that no bond or other security shall be required in obtaining such equitable relief and the parties hereby consent to the issuance of such injunction and to the ordering of specific performance. (c) Legal Expenses. If any action or proceeding is brought for the enforcement of this Agreement, or because of an alleged or actual dispute, breach, default, or misrepresentation in connection with any of the provisions of this Agreement, the successful or prevailing party shall be entitled to recover reasonable attorneys' fees and other costs incurred in such action or proceeding in addition to any other relief to which it may be entitled. 9. Term. This Agreement shall expire two (2) years from the Effective Date, but may be terminated prior to expiration by either party giving thirty (30) days' prior written notice to the other party; provided, however, the obligations to protect the Confidential Information in accordance with this Agreement shall survive for a period of five (5) years from the date of the last disclosure of Confidential Information is made under this Agreement. 10. No Formal Business Obligations. This Agreement shall not constitute, create, give effect to, or otherwise imply a joint venture, pooling arrangement, partnership, or formal business organization of any kind, nor shall it constitute, create, give effect to, or otherwise imply an obligation or commitment on the part of either party to submit a proposal to or perform a contract with the other party. Nothing herein shall be construed as providing for the sharing of profits or loss arising out of the efforts of either or both parties. Neither party will be liable to the other for any of the costs associated with the other's efforts in connection with this Agreement. 11. General Provisions. (a) Governing Law. This Agreement will be governed by the laws of the State of California. (b) Severability. If one or more of the provisions in this Agreement are deemed void by law, then the remaining provisions will continue in full force and effect. (c) Successors and Assigns. This Agreement will be binding upon the successors and/or assigns of the parties. (d) Headings. All headings used herein are intended for reference purposes only and shall not affect the interpretation, or validity of this Agreement. Confidential and Proprietary Information 2 6 HNC/Infoseek Mutual Confidentiality and Non-Disclosure Agreement (e) Entire Agreement. This Agreement constitutes the entire agreement and understanding of the parties with respect to the subject matter of this Agreement. Any amendment or modification of this Agreement shall be in writing and executed by a duly authorized representative of the parties. The parties, by the signatures of their authorized representatives appearing below, acknowledge that they have read and understand each and every term of this Agreement and agree to be bound by its terms and conditions. HNC Software Inc. Infoseek Corporation 5930 Cornerstone Court West 2620 Augustine Drive, Suite 250 San Diego, CA 92121-3728 Santa Clara, CA 95054 By: By: ----------------------------- ----------------------------- Michael A. Thiemann Robin Johnson Executive Vice President CEO Confidential and Proprietary Information 3 7 HNC/Infoseek Mutual Confidentiality and Non-Disclosure Agreement EXHIBIT A SUBJECT MATTER; ADDITIONAL CONFIDENTIAL INFORMATION HNC (which shall be considered the Disclosing Party for purposes of this Exhibit A) may disclose information with respect to the following in connection with this Agreement. The parties agree that any such information disclosed shall be considered Confidential Information for purposes of this Agreement: Any and all information from any and all verbal, electronic, and/or written communications (whether in the form of slides, handouts, letters, memoranda, agreements, facsimile transmissions, meetings, conference and other telephone calls, diskettes, files, tapes, and/or any other mode) with respect to the HNC products known as SelectCast(TM), Convectis(TM), related products, and/or related concepts, proposals, data sources, plans, markets, customers, pricing, schedules, development efforts (including future product functionality and release plans), decision technology and/or models, software (including source code, object code and/or documentation), numerical data processing algorithms, product and software design specifications and/or functionality, and/or ideas. Confidential and Proprietary Information 4 EX-10.36 7 AGREEMENT IN PRINCIPLE W/ HNC 3/21/96 1 EXHIBIT 10.36 *CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION March 19, 1996 Mr. Robin Johnson, CEO Infoseek Corporation 2620 Augustine Drive, Suite 250 Santa Clara, CA 95054 Dear Mr. Johnson: This shall serve as a letter of intent ("Agreement in Principle") by and between Infoseek Corporation ("Infoseek") and HNC Software Inc. ("HNC") wherein the parties wish to set forth the terms and conditions whereby they propose to establish a cooperation agreement with respect to the use of HNC's proprietary SelectCast(TM) intelligent advertising server product in the Infoseek environment. The parties acknowledge their agreement and understanding that this Agreement in Principle has been prepared to set forth the basic terms and conditions under which the parties propose to enter into a definitive written agreement (the "Definitive Agreement") providing for the parties to jointly cooperate with respect to the development and marketing of a version of SelectCast to be used in the Infoseek environment. In connection therewith, both parties will cooperate with each other and use their respective reasonable best efforts to negotiate, prepare, and execute a Definitive Agreement as soon as reasonably practicable, but no later than April 30, 1996. As such, the parties agree as follows: 1. Development. The parties shall, in good faith, develop an outline of the project to be undertaken hereunder within five (5) days of the Effective Date. 2. Exclusivity. During the term of this Agreement in Principle, Infoseek shall not contract, engage, or otherwise work with, any other parties with respect to the development, use, and/or operation of a system similar and/or competitive with SelectCast. Similarly, HNC shall not, during the term of this Agreement in Principle, contract, engage, or otherwise work with, any other parties with respect to the development, use, and/or operation of a system [ ] SelectCast *[ ]. -------- Page 1 of 5 * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 2 3. Compensation. Infoseek shall compensate HNC with respect to HNC's *performance hereunder, at a rate of [ ] of HNC's standard time and materials rates, which are detailed in Exhibit 1 hereto, up to a maximum cumulative *amount of [ ]. A preliminary analysis of the scope of phase 1 of the deliverables indicates that this amount should be sufficient to deliver the phase 1 version of the system. Said maximum cumulative amount may only be increased upon the prior written agreement of Infoseek. HNC shall invoice Infoseek in the manner and at the address indicated in Exhibit 2 hereto. Each party shall be responsible for payment of its own travel expenses with respect to its respective performance hereunder. 4. Public Disclosure; Confidential Information. The parties acknowledge that concurrently with the execution of this Agreement in Principle, they have executed a Mutual Confidentiality and Non-Disclosure Agreement (the "Non-Disclosure Agreement") with respect to the exchange of confidential information pursuant to the undertaking described in this Agreement in Principle. Neither party shall make any public disclosure with respect to the subject matter of this Agreement in Principle without the prior written consent of the other party, such consent shall not be unreasonably withheld. 5. Term and Termination. This Agreement in Principle shall remain in effect until the Definitive Agreement is executed or May 31, 1996, whichever comes first. In any event, this Agreement in Principle may be earlier terminated by either party for any reason upon at least thirty (30) days prior written notice to the other party. In the event of any termination of this Agreement in Principle, Infoseek shall pay HNC for any time and materials expenses accrued and payable to HNC up through the effective date of termination. It is understood that this Agreement in Principle does not contain all matters to be contained in the Definitive Agreement, which the parties shall undertake to negotiate in accordance with this Agreement in Principle. As such, the parties acknowledge that the terms of the Definitive Agreement are not yet agreed, and there are no contractual and/or enforceable terms with respect thereof in existence at the present. Notwithstanding the two preceding sentences of this paragraph, the provisions of sections 2, 3, 4, and 5 of this Agreement in Principle and the provisions of the Non-Disclosure Agreement shall constitute a binding agreement of the parties unless and until such are superseded by the Definitive Agreement. -------- Confidential and Proprietary Information Page 2 of 5 * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 3 If the foregoing accurately summarizes our understanding, we request that Infoseek approve this Agreement in Principle and evidence such approval by causing the enclosed copy of this Agreement in Principle to be signed on its behalf, dated and returned to HNC whereupon this Agreement in Principle shall become effective. This Agreement in Principle may be executed in counterparts, all of which together shall constitute one and the same agreement. Sincerely, AGREED: HNC SOFTWARE INC. INFOSEEK By: ------------------------ Michael A. Thiemann Robin Johnson Executive Vice President Chief Executive Officer Date Signed: --------------- "Effective Date" Confidential and Proprietary Information Page 3 of 5 4 EXHIBIT 1 TIME AND MATERIALS RATES The following table reflects HNC standard time and materials hourly rates as well as the time and materials hourly rates to be paid to HNC by Infoseek in accordance with this Agreement in Principle. ------------------------------------------------------------------------------- JOB TITLE HNC STANDARD HOURLY DISCOUNTED HOURLY LABOR LABOR RATE RATE IN ACCORDANCE WITH SECTION 3 OF THIS AGREEMENT IN PRINCIPLE ------------------------------------------------------------------------------- *Corporate Officer [ ] [ ] ------------------------------------------------------------------------------- *Director [ ] [ ] ------------------------------------------------------------------------------- *Manager [ ] [ ] ------------------------------------------------------------------------------- *Senior Staff Scientist [ ] [ ] ------------------------------------------------------------------------------- *Staff Scientist [ ] [ ] ------------------------------------------------------------------------------- *Software Engineer [ ] [ ] ------------------------------------------------------------------------------- *Administrative Support [ ] [ ] ------------------------------------------------------------------------------- TRAVEL-RELATED EXPENSES As indicated in Section 3 of the Agreement in Principle, each party shall be responsible for bearing its own travel-related expenses with respect to its respective performance hereunder. - -------- Confidential and Proprietary Information * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION Page 4 of 5 5 EXHIBIT 2 PAYMENT TERMS 1. Monthly Invoicing. HNC shall invoice Infoseek on a monthly basis with respect to time and materials charges incurred by HNC during the previous calendar month. Said billings shall be in accordance with the rates set forth in Exhibit 1. Such invoices shall be due and payable net thirty (30) days from date of receipt by Infoseek. Unless otherwise advised in writing by Infoseek, HNC shall direct all such invoices to Infoseek at the following address: Infoseek Attention: ________________________________ Street Address: ___________________________ City/State/Zip: ___________________________ Telephone: (___) __________________________ Fax: (___) ________________________________ 2. Taxes. All payments by Infoseek to HNC under this Agreement in Principle for any fees will be exclusive of any sales, use, service, value added or withholding taxes, or any other levy, tariff, duty or tax of any kind whatsoever imposed by any governmental authority with respect to the services rendered or expenses incurred by HNC hereunder (other than a tax imposed upon HNC's income). Infoseek agrees to pay, within thirty (30) days of receipt of the applicable HNC invoices, any such tax whenever such tax is imposed by a governmental authority. 3. Late Fees. Any payment due to HNC hereunder that remains unpaid for more than thirty (30) days after the date such payment is due to HNC hereunder is subject to a one and one-half (1-1/2%) percent per month late fee. Confidential and Proprietary Information Page 5 of 5 EX-10.42 8 INFOSEEK/NYNEX AGREEMENT 3/29/96 1 EXHIBIT 10.42 * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. INFOSEEK/NYNEX AGREEMENT NYNEX Information Technologies Company ("NYNEX") 35 Village Road, Middleton, MA 01949 TERMS AND CONDITIONS 1. NYNEX is contracting with Infoseek Corporation ("Infoseek") for the display of the NYNEX Big Yellow icon ("Icon") on the command bar of the Infoseek Guide Service or successor service ("Service"), and for the display of an Infoseek Guide icon ("Guide Icon") on the "Explore the Net" page of the NYNEX Interactive Yellow Pages WWW site or successor service ("Big Yellow") for the duration indicated below. 2. For the term of this Agreement Infoseek will: Display the Icon on the command bar of the Infoseek search and results pages of the Service with a link directly to the applicable HTML page located at the applicable Universal Resource Locator ("URLs") for such page on NYNEX's site containing the free Internet service known as Big Yellow. The Icon shall be *displayed on the command bar of the Infoseek search and results pages [] [] on the command bar of the Infoseek search and results pages; Supply NYNEX with an HTML or GIF file of the Guide Icon meeting the specifications set forth in Attachment I. Infoseek grants to NYNEX a worldwide license to use, display, perform, reproduce and distribute the Guide Icon, and such other licenses with respect to the Guide Icon necessary to fulfill the intention of this Agreement for the duration of this Agreement. Infoseek shall retain all right, title and interest in and to the Guide Icon; Track the redirected traffic ("Traffic") to Big Yellow from the Service caused by users "clicking" on the Icon; Provide usage reports to NYNEX as then generally provided by Infoseek to other entities having similar icon display arrangements with Infoseek; Provide the Service to users who "click" on the Guide Icon; and *Not provide any other [] on the Service. An [] means a [] that provides [], *such as Big Yellow or an on-line version of the []. Infoseek may provide on *its Service [] that are [] the same product or service or groups of products *and services that have [], for example, without limitation, [], an on-line *version of the current [] or [], a [] site, or a [] site. *Not provide an [] or [] as defined above, on the command bar of its [] on the Service. In the event of any dispute or controversy over whether a service constituted an Aggregate Shopping Service pursuant to the preceding two paragraphs only, the parties shall first attempt to resolve such dispute by escalating the matter to their respective Presidents. If the Presidents are unable to resolve the dispute within fifteen (15) days of the notice of the dispute by either party, then either party may submit the dispute to binding and final arbitration in accordance with the then current rules of the American Arbitration Association. The arbitral tribunal shall consist of one arbitrator. The placement of arbitration shall be Chicago, Illinois. NYNEX(03/27/96) 1 of 7 - ---------------------------------------- *CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 2 The parties acknowledge that the provision of information or content in or of *itself shall not constitute an [] or a []. 3. For the term of this Agreement NYNEX will: Display the Guide Icon on the Explore the Net page of Big Yellow with a link directly to the applicable HTML page located at the applicable Universal Resource Locator ("Infoseek URLS") for such page on Infoseek's site containing the Service; Supply Infoseek with an HTML or GIF file of the Icon meeting the specifications set forth in Attachment I. NYNEX grants to Infoseek a worldwide license to use, display, perform, reproduce and distribute the Icon, and such other licenses with respect to the Icon necessary to fulfill the intention of this Agreement for the duration of this Agreement. NYNEX shall retain all right, title and Interest in and to the Icon; Track the redirected traffic ("Guide Traffic") to the Service from Big Yellow caused by users "clicking" on the Guide Icon; Provide usage reports to Infoseek as then generally provided by NYNEX to other entities having similar icon display arrangements with NYNEX; Provide the Big Yellow service to users who "click" on the Icon; and Not provide a link on the Explore the Net page of Big Yellow that is more prominent than the Guide Icon to any service which provides a general search of Web pages or is directly competitive to a then-current significant component of the Service. 4. NYNEX and Infoseek will use reasonable commercial efforts to promptly remedy any misplacement of the Guide Icon or the Icon, respectively, or any malfunctioning of the Links or Guide Links under Its control, and the other party shall fully cooperate with such party to remedy any such placement or malfunctioning. 5. COMPENSATION In consideration of the services provided under this Agreement, NYNEX agrees to pay to Infoseek the following charges: Q2/96 Charge - $600,000 Q3/96 Charge - $800,000 Q4/96 Charge - $1,600,000 Q1/97 Charge - $1,600,000 The payment of such charges will be made to Infoseek on a monthly basis in accordance with the following schedule (payments are made 15 days following the end of each month of the Service): Payment #1 - May 15, 1996 $200,000. Payment #2 - June 14, 1996 $200,000. Payment #3 - July 15, 1996 $200,000. Payment #4 - August 15, 1996 $266,666. Payment #5 - September 16, 1996 $266,666. Payment #6 - October 15, 1996 $266,666. Payment #7 - November 15, 1996 $533,333. Payment #8 - December 16, 1996 $533,333. Payment #9 - January 15, 1997 $533,333. Payment #10 - February 14, 1997 $533,333.
NYNEX(03/27/96) 2 of 7 - ---------------------------------------- *CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 3 Payment #11 - March 14, 1997 $533,333. Payment #12 - April 15, 1997 $533,333.
Total of above payments for the period from May 1, 1996 though April 30, 1997 equal to $4,600,000. If during any quarter of this Agreement, the traffic level of the Service falls *below a total of [ ] information requests (i.e. search results pages and browse pages delivered) resulting in the display of the Icon ("Information Requests"), then Infoseek will reimburse NYNEX a percentage of the payments made by NYNEX to Infoseek for such quarter equivalent to the *percentage decrease in the traffic level of the Service from [] Information Requests during such quarter (to be measured within 30 days following the end of each quarter). For example, if within 30 days following the end of calendar Q2/96 the Information Requests are measured *at [] for Q2/96 (i.e. a [] from the *[] benchmark), then Infoseek will reimburse to NYNEX *[] of the payments received from NYNEX attributable to Q2/96 [] reimbursement). If during any quarter of this Agreement, the number of displays of the "Explore the Net" page containing the Guide Icon on Big Yellow is equal to or greater *than [] of the number of Information Requests ("Trigger Ratio"), then NYNEX shall have a right to renegotiate the price terms for the duration of this Agreement that the Trigger Ratio continues. If the parties cannot agree on price terms within the thirty day period after the request to renegotiate, NYNEX shall have the right to terminate this Agreement upon immediate written notice. In the event of such termination NYNEX shall pay Infoseek for placement of the Icon for the period through the termination date at the then-current applicable rate under this Section 5. 6. TERM AND TERMINATION. This Agreement shall be effective on the date this Agreement becomes fully executed by the parties ("Effective Date") and shall continue in force for an initial term ending April 30, 1997. This Agreement may be renewed for three (3) consecutive annual renewal terms as follows: at least sixty (60) days prior to the end of the then-current term of this Agreement, Infoseek will offer to NYNEX an option to renew for a subsequent annual renewal *term at a mutually agreed upon, not-to-exceed price of [], respectively, off of Infoseek's then-current retail price for *[]. Thereafter, during the term of this Agreement, Infoseek shall offer NYNEX an option to renew for contiguous annual renewal terms at an agreed upon, not-to-exceed price of Infoseek's then current retail price for the same or similar placement. Payments during any renewal terms shall continue to be payable on a monthly basis. This Agreement will expire unless NYNEX gives Infoseek written notice of its decision to renew at least thirty (30) days prior to the end of the then-current term. Either party may terminate this Agreement if the other party materially breaches its obligations hereunder and such breach remains uncured for thirty (30) days following notice to the breaching party. 7. RESPONSIBILITY FOR ICON AND GUIDE ICON a. NYNEX is solely responsible for any legal liability arising out of or relating to (i) the Icon, and/or (ii) the material served to end users immediately following the end users' "clicking" on the Icon. NYNEX represents and warrants that it holds the necessary rights to permit the use of the Icon, the URLs and the Links by NYNEX for the purpose of this Agreement; and that the permitted use, reproduction, distribution, or transmission of the Icon and the material served to end users immediately following the end users' "clicking" on the Icon or the Links will not violate any criminal or common law, any statutory rights or any rights of any third parties, including, but not limited to, such violations as infringement or misappropriation of any copyright, patent, trademark, trade secret, music, image, or other proprietary or property right, false advertising, unfair competition, defamation, invasion of privacy or rights of celebrity, violation of any antidiscrimination law or regulation, or any other right of any person or entity. NYNEX agrees to indemnify Infoseek and to hold Infoseek harmless from and against any and all liability, loss, damages, claims, or causes of action, including reasonable legal fees and expenses that may be incurred by Infoseek, arising out of or related to NYNEX's breach of any of the foregoing representations and warranties. b. Infoseek is solely responsible for any legal liability arising out of or relating to (i) the Guide Icon, and/or NYNEX(03/27/96) 3 of 7 - -------- - ---------------------------------------- *CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 4 (ii) the material served to end users immediately following the end users' "clicking" on the Guide Icon. Infoseek represents and warrants that it holds the necessary rights to permit the use of the Guide Icon, the Infoseek URLs and the Guide Links by Infoseek for the purpose of this Agreement; and that the permitted use, reproduction, distribution, or transmission of the Guide Icon and the material served to end users immediately following the end users' "clicking" on the Guide Icon or the Guide Links will not violate any criminal or common law, any statutory rights or any rights of any third parties, including, but not limited to, such violations as infringement or misappropriation of any copyright, patent, trademark, trade secret, music, image, or other proprietary or property right, false advertising, unfair competition, defamation, invasion of privacy or rights of celebrity, violation of any antidiscrimination law or regulation, or any other right of any person or entity. Infoseek agrees to indemnify NYNEX and to hold NYNEX harmless from and against any and all liability, loss, damages, claims, or causes of action, including reasonable legal fees and expenses that may be incurred by NYNEX, arising out of or related to Infoseek's breach of any of the foregoing representations and warranties. c. The commencement dates of the Icon and Guide Icon placements, the URL and Infoseek URL addresses, billing information, and the Icon and Guide Icon specifications are specified in Attachment I. 8. LIMITATION OF LIABILITY. IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES, WHETHER BASED ON BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE), OR OTHERWISE, AND WHETHER OR NOT THAT PARTY SHALL HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THE LIABILITY OF EITHER PARTY FOR DAMAGES OR ALLEGED DAMAGES HEREUNDER (EXCEPT FOR ANY COMPENSATION PAYABLE UNDER SECTION 5 AND DAMAGES OR ALLEGED DAMAGES UNDER SECTION 7) WHETHER IN CONTRACT OR TORT OR ANY OTHER LEGAL THEORY IS LIMITED TO AND SHALL NOT EXCEED THE TOTAL AMOUNTS PAID UNDER SECTION 5 OF THIS AGREEMENT. 9. FORCE MAJEURE. Neither party will be liable for delay or default in the performance of its obligations under this Agreement (other than for non-payment of royalties) if such delay or default is caused by conditions beyond its reasonable control, including, but not limited to, fire, flood, accident, earthquakes, telecommunications line failures, storm, acts of war, riot, government interference, strikes and/or walk-outs, except that the adjustment of NYNEX's payment obligations as provided in the penultimate paragraph of Section 5 shall not be affected by such a force majeure event. 10. CONFIDENTIALITY. All disclosures of proprietary and/or confidential information in connection with this Agreement shall be governed by the terms of the Mutual Confidential Disclosure Agreement entered into by the parties concurrently with this Agreement, a copy of which is attached hereto as Exhibit II. The information contained in reports pursuant to Sections 1 and 5 above and any documentation regarding the calculation of reimbursements shall be deemed Proprietary Information of Infoseek. 11. NO AGENCY. The parties to this Agreement are independent contractors. Neither party is an agent, representative or partner of the other party. Neither party shall have any right, power or authority to enter into any agreement for or on behalf of, or to incur any obligation or liability of, or to otherwise bind, the other party. This Agreement shall not be interpreted or construed to create an association, joint venture or partnership between the parties or to impose any partnership obligation or liability upon either party. 12. GOVERNING LAW. This Agreement shall be interpreted, construed and enforced in all respects in accordance with the laws of the State of California without regard to its conflicts of law principles. 13. ASSIGNMENT. Neither party may assign this Agreement by operation of law or otherwise, in whole or in part, other than pursuant to a merger or a transfer of a majority of its assets, without the other party's written consent, which consent shall not be unreasonably withheld or delayed; provided, however, either party may assign this Agreement to an Affiliate or successor without the prior written consent of the other party. "Affiliate" shall mean any entity of which a party owns at least one-third of the equity, or any entity that owns at least one-third of the equity of either party. "Successor" means any entity that has a right to pro- NYNEX(03/27/96) 4 of 7 5 vide Big Yellow or the Service. Any attempt to assign this Agreement in derogation hereof shall be null and void. 14. NOTICES. Any notices required or permitted to be given pursuant to this Agreement shall be in writing, sent via confirmed fax or certified mail, returned receipt requested, or delivered by hand, addressed as hereinabove first set forth or to such other address as may be amended or modified only in writing to the other party, and shall be deemed to have been given when received. 15. AUDIT. a. NYNEX shall have the right to retain a U.S. nationally prominent or other mutually agreeable independent auditor to whom Infoseek shall allow reasonable access to Infoseek's books of account and other records relating to the calculation of the number of Information Requests as provided in Section 5 for the purpose of verifying the amounts due and payable to NYNEX under this Agreement. The information disclosed by Infoseek to such auditors in the course of performing such audit will be kept confidential by the auditor. Access to Infoseek's documentation shall be during Infoseek's regular business hours upon at least fifteen (15) days prior written notice and may be conditioned upon the auditor executing a confidentiality agreement in a form reasonably acceptable to Infoseek relating to the auditor's performance of an audit hereunder. b. Infoseek shall have the right to retain a U.S. nationally prominent or other mutually agreeable independent auditor to whom NYNEX shall allow reasonable access to NYNEX's books of account and other records relating to the calculation of the number of displays of the "Explore the Net" page containing the Guide Icon on Big Yellow as provided in Section 5 for the purpose of verifying the amounts due and payable to Infoseek under this Agreement. The information disclosed by NYNEX to such auditors in the course of performing such audit will be kept confidential by the auditor. Access to NYNEX's documentation shall be during NYNEX's regular business hours upon at least fifteen (15) days prior written notice and may be conditioned upon the auditor executing a confidentiality agreement in a form reasonably acceptable to NYNEX relating to the auditor's performance of an audit hereunder. 16. PUBLICITY. Neither party shall issue a press release regarding this Agreement without the prior approval of the other party. If a party does not give notice of the disapproval of the press release within three (3) business days of its receipt of a proposed press release, such failure to respond shall be deemed approval of said press release. 17. ENTIRE AGREEMENT. This Agreement and any and all exhibits and attachments are the complete and exclusive agreement between the parties with respect to the subject matter hereof, superseding and replacing any and all prior agreements, communications and understandings (both written and oral) regarding such subject matter. This Agreement may be modified, or any rights under it waived, only by a written document executed by both parties. The parties have duly executed this Agreement as of the later of the two (2) dates set forth below. ACCEPTED FOR INFOSEEK CORPORATION ACCEPTED FOR NYNEX INFORMATION TECHNOLOGIES COMPANY By: By: --------------------------- ---------------------------- Authorized Signature Authorized Signature Print Name: Print Name: --------------------- -------------------- Title: Title: --------------------------- ---------------------------- Date: Date: --------------------------- ---------------------------- NYNEX(03/27/96) 5 of 7 6 ATTACHMENT I A. COMMENCEMENT DATES OF ICON AND GUIDE ICON PLACEMENT Commencement Date of Icon Placement: May 1, 1996 unless otherwise agreed upon Commencement Date of Guide Icon Placement: May 1, 1996 unless otherwise agreed upon B. URLS AND GUIDE URLS HTTP/URL Address connected to the Icon (URLs): - -------------------------------------------------------------------------------- HTTP/URL Address connected to the Guide Icon (Guide URLS): http://guide.infoseek.com/NX C. BILLING INFORMATION NYNEX Accounts Payable Contact: -------------------------------------------- NYNEX Accounts Payable Contact Telephone Number: ------------------------- D. SPECIFICATIONS OF ICON AND GUIDE ICON ICON SPECIFICATIONS in gif format on a white or transparent background 30-50 pixels wide 33 pixels high use as few colors as possible (64 or fewer) Icon Specifications may be changed by Infoseek upon reasonable notice from time to time. GUIDE ICON SPECIFICATIONS Guide Icon Specifications may be changed by Infoseek upon reasonable notice from time to time. NYNEX(03/27/96) 6 of 7 7 ATTACHMENT II Mutual Confidential Disclosure Agreement (See attached) NYNEX(03/27/96) 7 of 7 8 MUTUAL CONFIDENTIAL DISCLOSURE AGREEMENT This Mutual Confidential Disclosure Agreement ("Confidentiality Agreement") governs the disclosure of information by and between NYNEX INFORMATION TECHNOLOGIES COMPANY ("NYNEX") having a principal place of business at 35 VILLAGE ROAD, MIDDLETON, MASSACHUSETTS 01949 and INFOSEEK CORPORATION ("Infoseek") having a place of business at 2620 AUGUSTINE DRIVE, SANTA CLARA, CALIFORNIA 95054. 1. NYNEX or Infoseek (the "Discloser") may disclose to the other party (the "Recipient") from time to time, ideas, concepts, specifications, research, business, financial, technical, engineering, manufacturing, marketing, sales, customer and other information, either orally, electronically or in physical form. All such above-described information which is provided to the Recipient and is designated as confidential shall be deemed for purposes of this Confidentiality Agreement to be "Confidential Information", unless it: (a) is or becomes publicly known, other than through violation by the Recipient of this Confidentiality Agreement; (b) is already known to the Recipient at the time of the disclosure thereof free of any obligation to keep it confidential; (c) is independently developed by the Recipient; (d) subsequent to disclosure to the Recipient is rightfully made available without restriction to the Recipient by a third party or other source having lawful right to do so; or (e) is approved for release by the Discloser's written authorization; in any of which cases such ideas, concepts, specifications, research, business, financial, technical, engineering, manufacturing, marketing, sales, customer and other information shall not be considered, or shall cease to be considered, Confidential Information, and shall not be, or shall cease to be, subject to the restrictions on use or disclosure contained in this Confidentiality Agreement. (The term NYNEX shall include Affiliates of NYNEX where applicable. "Affiliate" in this context means NYNEX Corporation and any corporation or other business entity which from time to time directly or indirectly controls, is controlled by or is under common control with NYNEX or NYNEX Corporation. The term Infoseek shall include Affiliates of Infoseek where applicable. "Affiliate" in this context means any corporation or other business entity which from time to time directly or indirectly controls, is controlled by or is under common control with Infoseek.) 2. Any Confidential Information shall remain the property of the Discloser, and the Recipient hereby agrees: (i) to hold any Confidential Information in confidence in accordance with the same degree of care as the Recipient normally takes to preserve its own confidential information of a similar nature; (ii) not to use any Confidential Information for any purpose other than in furtherance of the business relationship between NYNEX and Infoseek; and (iii) to disclose Confidential Information to only those agents and employees of the Recipient with a need to know such Confidential Information in connection with the evaluations of such transactions. 3. Notwithstanding the foregoing, it shall not constitute a violation of this Confidentiality Agreement if the Recipient discloses any Confidential Information pursuant to the requirement of any statute, rule, regulation, judgment, order, or other requirement of any government, court administrative department, commission, or other instrumentality (collectively referred to herein as "Governmental Authorities"). The Recipient agrees to request confidential treatment for any Confidential Information so disclosed to any Governmental Authority and to notify the Discloser prior to any such disclosure. 4. Upon the Discloser's written request, the Recipient agrees to return to the Discloser all documents containing Confidential Information furnished by the Discloser, and to destroy all copies hereof in written, graphic or other tangible form (or the portions of such copies containing Confidential Information), except to the extent that retention thereof is required by any Governmental Authority. 1 of 2 9 5. This Confidentiality Agreement does not represent a commitment by either party to enter into or form any future business relationship, nor does it preclude either party from engaging at any time in the same or any business similar to the business in which the other is now engaged, or to refrain from consulting with any third party concerning the subject matter of the Confidentiality Agreement. 6. Neither NYNEX nor Infoseek shall use or disclose this Agreement and will not issue or release for publication any articles or advertising or publicity matter relating to the work performed under this Confidentiality Agreement or mentioning or implying the name of the other, without prior written consent from the other party in each instance. IN WITNESS WHEREOF, the parties have executed this Confidentiality Agreement in duplicate as of the date set forth below. NYNEX INFORMATION TECHNOLOGIES COMPANY INFOSEEK CORPORATION By: By: ---------------------------- ------------------------- Authorized Signature Authorized Signature Name: Matthew J. Stover Name: Robert E. L. Johnson -------------------------- ------------------------- Print Print Title: Chairman of the Board Title: CEO & President -------------------------- ------------------------- Date: March 29, 1996 Date: March 29, 1996 -------------------------- ------------------------- 2 of 2 EX-10.43 9 SOFTWARE LICENSE AGREEMENT W/ NYNEX 3/29/96 1 EXHIBIT 10.43 * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. SOFTWARE LICENSE AGREEMENT This Agreement is made and entered into by and between Infoseek Corporation ("Infoseek"), a corporation organized under the laws of the State of California, with its principal place of business at 2620 Augustine Drive, Santa Clara, CA 95054 and NYNEX Information Technologies Company ("Licensee"), a corporation organized under the laws of the State of Delaware with its principal place of business at 35 Village Road, Middleton, MA 01949 and is effective the date it is executed by Infoseek ("Effective Date"). DEFINITIONS *A. [ ] B. "Derivative Work(s)" means a work which has been created based upon Licensed Software, or documentation related to the Licensed Software, such as a portation, localization, enhancement, improvement, revision, modification, translation, abridgment, condensation, expansion, or any other form, including a new work in which the Licensed Software or such documentation may be recast, transformed or adapted, which, if prepared, used and/or distributed in the absence of appropriate authorization, would constitute an infringement of the owner's intellectual property rights. C. "Documentation" means the documentation described in Exhibit A. D. "Licensed Software" means the software in binary code form specified in Exhibit A and any Revisions of the Licensed Software (as hereinafter defined), received by Licensee from Infoseek pursuant to this Agreement. Licensee understands and acknowledges that portions of the Licensed Software may be licensed by Infoseek from third parties ("Third Party Portions") and that Infoseek's performance hereunder is subject thereto. Infoseek agrees to use reasonable best efforts to enter into applicable third party licenses consistent with this Agreement, and to obtain an indemnification by the applicable Third Party of Licensee and Sublicensees against infringement by the Third Party Portions substantially consistent with the indemnification provision provided by Infoseek in Sections 7.1 (other than the last sentence) and 7.2 hereof. E. "Revisions of the Licensed Software" means modifications to or revisions of the Licensed Software, in binary code form, that incorporate changes, enhancements, and upgrades to the functions and capabilities of the Licensed Software made by Infoseek, if any, as may be provided to Licensee pursuant to this Agreement. Licensee shall have the option to license from Infoseek Revisions of the Licensed Software, subject to the terms specified in Exhibit B. All Revisions of the Licensed Software provided to Licensee shall be considered to be Licensed Software and shall be subject to all terms and conditions of this Agreement. In consideration of the mutual covenants contained in this Agreement, Infoseek and Licensee agree as follows: 1. LICENSE GRANT TO LICENSEE 1.1 Subject to the provisions of this Agreement, including all Exhibits, Infoseek grants to Licensee a personal, worldwide, non-exclusive, non-transferable (except as specified in Section 1.1 c below), non-assignable (except as specified in Section 15 below) right to: - ------------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 1 of 25 2 a. use and reproduce the Licensed Software solely for the purpose specified in Paragraph 1.2 below, in any medium. The license granted hereunder is solely for Licensee's internal use; and b. use the Documentation related to the Licensed Software solely in conjunction with the permitted use of the Licensed Software; and c. Licensee may sublicense the Licensed Software, to any Affiliate as defined in Section 15 below ("Sublicensee") provided that (i) Licensee gives Infoseek at least thirty (30) days prior written notice of such sublicense, (ii) the Sublicensee agrees to be bound by, and Licensee shall ensure that Sublicensee shall perform, all the provisions of this Agreement applicable to Licensee, provided, however, that such Sublicensees shall have no right to further sublicense the Licensed Software, and Sublicensee shall be subject to all restrictions and limitations as apply to Licensee; and (iii) the Sublicensee prominently displays the Guide Icon as a link to * the Service on a significant page of [ ] Such link will be no less prominent than any other link to a general Internet or Intranet search service or any service which is directly competitive to a then-current significant component of the Service. * 1.2 Licensee may use the Licensed Software [ ] including a [ ] * in conjunction with an Internet-based [ ], including "Big * Yellow". Big Yellow as used herein means the [ ] owned and operated by Licensee or a Sublicensee pursuant to Section 1.1 c. above. Nothing in this Agreement shall be construed as granting license rights to Licensee to the Licensed Software * for [ ], including, without limitation, a [ ] or [ ], without the prior written permission of Infoseek. 1.3 Licensee shall have the right to make as many copies of the Licensed Software as are necessary or appropriate for purposes of exercising its license rights under this Agreement, but agrees that all such copies will contain the copyright notices and any other reasonable and appropriate propriety markings or confidential legends that appear in the Licensed Software. 1.4 Licensee agrees pursuant to this Agreement not to decompile, reverse engineer, disassemble, or otherwise determine or attempt to determine source code for the executable code of the Licensed Software or to create any Derivative Works based upon the Licensed Software or Documentation, except to the extent as may occur as part of the joint development described in Section 8.2 below, and agrees not to allow anyone else to do so. 1.5 Licensee acknowledges that Infoseek and its suppliers have a proprietary interest in the Licensed Software. Licensee agrees to use the same efforts to prevent unauthorized licensing, copying and/or use of the Licensed Software as Licensee uses for its own most rigorously protected software. If Licensee becomes aware of any unauthorized licensing, copying, or use of the Licensed Software, Licensee shall promptly notify Infoseek in writing. 2. TITLE - ------------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 2 of 25 3 Title to and ownership of the Licensed Software and the Documentation, all Derivative Works based upon the Licensed Software or Documentation and all works jointly developed by Infoseek and Licensee (whether in machine-readable or printed form, in whole or in part, and including without limitation all related technical know-how and all rights therein (including patents, copyrights, and trade secrets applicable thereto) are and shall remain the exclusive property of Infoseek and its suppliers. Licensee shall not jeopardize, limit or interfere with the such rights in the Licensed Software and related Documentation. 3 of 25 4 3. DELIVERY OF LICENSED SOFTWARE 3.1 Infoseek shall deliver to Licensee the deliverables for Licensed Software as set forth in Exhibit A. 3.2 Revisions of the Licensed Software are included during the Initial Term of this Agreement and any renewal terms under Section 9.1.a. below; provided, however, Revisions of the Licensed Software are not included, during the fully-paid up license period described in Paragraph 9.1.b. below. 4. PAYMENTS, TAXES 4.1 Payments by Licensee under this Agreement shall be made to Infoseek in United States dollars to Infoseek's address first specified above or to such other address as may be indicated by Infoseek in writing from time to time. Fees and payment schedules are specified in Exhibit B. 4.2 All fees and charges payable by Licensee under this Agreement are exclusive of shipping, handling, and any federal, state, municipal or other governmental taxes, duties, licenses, fees, excises or tariffs now or hereinafter Imposed on the use of the Licensed Software. Licensee shall pay all taxes, whether currently or hereafter applicable, assessed or arising out of this transaction, including, without limitation, excise, withholding, sales or use taxes imposed upon the Licensee, or Infoseek, but not including any taxes based upon Infoseek's net income. 5. CONFIDENTIAL INFORMATION 5.1 Either Infoseek or Licensee may disclose to the other certain information that the disclosing party deems to be confidential and proprietary ("Proprietary Information"). Such Proprietary Information will be clearly and conspicuously marked at the time of its first disclosure to the receiving party. Such Proprietary Information includes, but is not limited to, the terms of this Agreement, and technical and other business information of Infoseek and Licensee that is not generally available to the public. 5.2 Except as provided therein, the party receiving Proprietary Information shall use the confidential information disclosed pursuant to this Section 5 only to carry out the purposes specified in this Agreement, all other uses thereof being prohibited. The receiving party, however, will not be required to keep confidential such Proprietary Information that becomes generally available without fault on its part; is already rightfully in the receiving party's possession without restriction prior to its receipt from the disclosing party; is independently developed by the receiving party, is disclosed by third parties without similar restrictions; is rightfully obtained by the receiving party from third parties without restriction; or is otherwise required by law or judicial process. 6. MUTUAL REPRESENTATIONS AND WARRANTIES 6.1 Representations, Warranties, and Limitation of Liability Limited Warranty: Infoseek represents and warrants to Licensee that: (i) Infoseek is the sole and exclusive owner of all intellectual property rights in and to Infoseek's proprietary portion of Licensed Software. 4 of 25 5 (ii) Infoseek has all legal right and authority to grant and convey to Licensee the rights and licenses contained in this Agreement without violation or conflict with any law. (iii) There is no action, suit, claim, arbitration, or other proceeding pending or threatened which questions this Agreement or Infoseek's ownership of the Licensed Software or any intellectual property rights therein. (iv) To the best of Infoseek's knowledge and belief, the Licensed Software does not infringe upon any proprietary right or intellectual property rights of any third party. (v) The Licensed Software will have, at least, substantially the functionality and performance of the software currently used by Infoseek for the Infoseek Guide. 6.2 Each party represents and warrants to the other party only that the performance of any of the terms and conditions of this Agreement on its part to be performed does not and will not constitute a breach or violation of any other agreement or understanding, written or oral, to which it is party. 7. INDEMNIFICATION; DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITY 7.1 Infoseek shall defend Licensee in any action brought against Licensee to the extent such action is based on a claim that the Licensed Software infringes any patent, copyright, trademark or trade secret. Infoseek will pay resulting costs, damages, and legal fees finally awarded against Licensee in such action and any related settlement amount, which are attributable to such claim, provided that Licensee (i) promptly (within twenty (20) days) notifies Infoseek in writing of any such claim and Infoseek has sole control of the defense and all related settlement negotiations, and (ii) cooperates with Infoseek, at Infoseek's expense, in defending or settling such claim. "Licensed Software" as used in this Paragraph 7.1 and Paragraph 7.2 below shall not apply to any Third Party Portions. 7.2 Should the Licensed Software become, or be likely to become in Infoseek's opinion, the subject of infringement of such copyright, patent, trademark or trade secret, Infoseek may procure for Licensee the right to continue using the same or replace or modify it to make it non-infringing. Infoseek shall have no liability for any claim to the extent based upon the use, operation or combination of the Licensed Software with non-Infoseek programs, data or equipment, if such infringement would have been avoided but for such use, operation or combination. If Infoseek elects to replace or modify the infringing item(s), such replacement or modification shall substantially meet the functional and performance specifications of Licensed Software. The foregoing states the entire liability of Infoseek with respect to infringement of copyrights, patents, trademarks or trade secrets. 7.3 Licensee shall defend Infoseek in any action brought against Licensee to the extent such action is based on a claim arising out of (i) any injury to person or property caused by any products or services sold or otherwise distributed in connection with any Licensee Aggregate Shopping Service, including Big Yellow or (ii) any material in the Aggregate Shopping Service infringing or allegedly infringing any copyright, patent, trade secret, trademark or other proprietary right of any third party. Licensee will pay resulting costs, damages, and legal fees finally awarded against Infoseek in such action and any related settlement amount, which are attributable to such claim, provided that Infoseek (i) promptly (within twenty (20) days) Infoseek notifies Licensee in writing of any such claim and Licensee has sole control of the defense and all related settlement negotiations, and (ii) cooperates with Licensee, at Licensee's expense, in defending or settling 5 of 25 6 such claim. 6 of 25 7 7.4 EXCEPT AS SPECIFIED IN SECTION 6 ABOVE, INFOSEEK SPECIFICALLY DISCLAIMS ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. INFOSEEK DOES NOT REPRESENT OR WARRANT THAT ANY LICENSED SOFTWARE, OR DOCUMENTATION IS ERROR FREE, OR THAT ITS USE WILL BE UNINTERRUPTED. EXCEPT AS SPECIFIED IN SECTION 6 INFOSEEK DOES NOT WARRANT, GUARANTEE, OR MAKE ANY REPRESENTATIONS REGARDING THE USE, OR THE RESULTS OF THE USE, OF THE LICENSED SOFTWARE, OR THE DOCUMENTATION OR WRITTEN MATERIALS IN TERMS OF CORRECTNESS, ACCURACY, RELIABILITY, CURRENTNESS, OR OTHERWISE. NO WARRANTIES ARE MADE TO LICENSEE BY ANY SUPPLIERS WHICH MAY HAVE DIRECTLY OR INDIRECTLY SUPPLIED ALL OR PART OF THE LICENSED SOFTWARE TO INFOSEEK, EXCEPT AS THOSE WARRANTIES, IF ANY, WHICH BY CONTRACT FLOW TO LICENSEE. THE ENTIRE RISK AS TO THE PERFORMANCE (EXCEPT AS SPECIFIED IN SECTION 6 ABOVE) OR RESULTS OF THE LICENSED SOFTWARE IS ASSUMED BY LICENSEE. INFOSEEK MAKES NO WARRANTY THAT ALL ERRORS WILL BE CORRECTED. 7.5 IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY LOSS OF PROFITS, LOSS OF BUSINESS, LOSS OF USE OR DATA, INTERRUPTION OF BUSINESS, OR FOR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, EVEN IF THE PARTY SHALL HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, OR FOR ANY CLAIM AGAINST THE OTHER BY ANY THIRD PARTY. 8. SUPPORT SERVICES 8.1 Infoseek shall, on a fully-burdened labor materials and expenses basis, (i) perform maintenance, support, and implementation ("Support Services"); and (ii) upon request by Licensee, and subject to the approval of Infoseek, which approval shall not be unreasonably withheld, work with third party developers who may be developing software to be used in conjunction with the Licensed Software. "Maintenance" consists of Infoseek's reasonable best efforts to make bug fixes and error corrections with respect to replicable errors and documented error and bug reports submitted by Licensee. Support Services and the process for communicating error and bug reports shall be as mutually agreed to by the parties and reviewed on a quarterly basis. Infoseek agrees to use reasonable best efforts to accomplish Support Services within the agreed upon timeframes. The parties agree to utilize the Software Support and Program Error Corrections process set forth in Exhibit C-1 hereto. Support Services are provided by Infoseek to Licensee only. Licensee shall provide Support Services to Sublicensees. 8.2 Infoseek shall not, during the term of the separate Infoseek/NYNEX Agreement between the parties of even date ("Infoseek/NYNEX Icon Agreement") license to third parties for use in an Aggregate Shopping Service any works jointly developed by Licensee and Infoseek provided that (i) Infoseek and Licensee shall have specifically agreed in writing in advance that such jointly developed works shall be subject to this provision, (which approval by Infoseek shall not be unreasonably withheld) and (ii) to the extent such jointly developed works contain pre-existing or separately developed works of Infoseek, or are not works jointly developed by Licensee and Infoseek this provision shall not apply to such portion. 9. TERM OF AGREEMENT; PAYMENTS DURING RENEWAL TERMS; AUDIT 9.1 a. The initial term ("Initial Term") of this Agreement shall commence on the Effective Date 7 of 25 8 and shall terminate two (2) years following the termination date ("Infoseek/NYNEX Icon Agreement Termination Date") of the Infoseek/NYNEX Icon Agreement. After the Initial Term, unless Licensee shall have then-previously elected its option under Paragraph 9.1.b. below, this Agreement may be renewed for consecutive annual renewal terms as follows: Licensee shall have an option to renew for subsequent annual renewal terms at a Licensed Software License * Fee [ ] of the collected revenues attributable to the Aggregate Shopping Services of Licensee and Sublicensees utilizing the Licensed Software, subject * to an annual minimum of [ ]. Payments during any renewal terms shall be payable on a monthly basis, within fifteen (15) days after the end of each month during the applicable renewal term based on the * percentage of [ ] as specified, and, if the cumulative monthly payments for any renewal term fail * to meet or exceed the minimum annual amount of [ ] Licensee shall pay to Infoseek the difference between * such cumulative payments and [ ] no later than thirty (30) days after the end of such renewal term. This Agreement will expire unless Licensee gives Infoseek written notice of its decision to renew at least thirty (30) days prior to the end of the then-current term. Either party may terminate this Agreement if the other party materially breaches its obligations hereunder and such breach remains uncured for thirty (30) days following notice to the breaching party. b. Licensee shall have the option by written notice to Infoseek prior to the first anniversary date of the Infoseek/NYNEX Icon Agreement Termination Date to * acquire a [ ] to the Licensed Software for the * period ending [ ] after the Infoseek/NYNEX Agreement Termination Date. The price for such option * shall be [ ] and payment therefor shall accompany * such notice. For the duration of such [ ] period, Infoseek agrees to provide maintenance of the Licensed Software at a price payable on a quarterly * basis equal to the greater of [ ] of Infoseek's fully burdened labor, materials, costs and expenses; provided, however, Licensee may terminate Infoseek's maintenance obligations upon at least thirty (30) days prior written notice. "Maintenance" consists of Infoseek's reasonable best efforts to make bug fixes and error corrections with respect to replicable errors and documented error and bug reports submitted by Licensee. 9.2 a. Infoseek shall have the right to retain a U.S. nationally prominent or other mutually agreeable independent auditor to whom Licensee shall allow reasonable access to Licensee's books of account and other records relating to the calculation of the amounts payable as provided in this Section 9 for the purpose of verifying the amounts due and payable to Infoseek under this Agreement. The information disclosed by Licensee to such auditors in the course of performing such audit will be kept confidential by the auditor. Access to Licensee's documentation shall be during Licensee's regular business hours upon at least fifteen (15) days prior written notice and may be conditioned upon the auditor executing a confidentiality agreement in a form reasonably, acceptable to Licensee relating to the auditors performance of an audit hereunder. b. Licensee shall have the right to retain a U.S. nationally prominent or other mutually agreeable independent auditor to whom Infoseek shall allow reasonable access to Infoseek's books of account and other records relating to the calculation of the amounts payable as provided in this Section 9 and Section 8.1 for the purpose of verifying the amounts due and payable to Licensee under this Agreement. The information disclosed by Infoseek to such auditors in the course of performing such audit will be kept 8 of 25 - ------------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 9 confidential by the auditor. Access to Infoseek's documentation shall be during Infoseek's regular business hours upon at least fifteen (15) days prior written notice and may be conditioned upon the auditor executing a confidentiality agreement in a form reasonably acceptable to Infoseek relating to the auditor's performance of an audit hereunder. 10. DEFAULT; DISPUTES 10.1 Either party may terminate this Agreement by giving written notice to the other party, specifying the reasons therefor: a. if the other party fails to perform or comply with a material provision of this Agreement, including Licensee's failure to promptly pay any material amount(s) due under the provisions of Exhibit B, and such party fails to cure alleged default within sixty (60) days following its receipt of a written notice of such default, or b. if the other party becomes insolvent, admits in writing its inability to pay its debts as they mature, makes an assignment for the benefit of creditors, files or has filed against it by a third party any petition under any Bankruptcy Act, or any application for a receiver of the other party is made by anyone and such petition or application is not resolved favorably to the other party within sixty (60) days. 10.2 Termination shall be effective sixty (60) days following one party giving notice to the other party, if the occurrence giving rise to the right of termination has not been cured. The parties shall endeavor to effect a smooth transition in the event of such a termination, and specifically shall use their reasonable best efforts to avoid interruption of any Aggregate Shopping Service utilizing the Licensed Software upon such termination. 10.3 The right to terminate this Agreement under this Section 10 shall not preclude any other rights and remedies provided by law or equity or this Agreement. 10.4 In the event of any disputes other than whether payments are due under this Agreement, authorized representatives of Infoseek and Licensee shall meet no later than ten (10) working days after receipt of notice by either party of request for dispute resolution and shall enter into good faith negotiations aimed at resolving the dispute. If the representatives are unable to reach mutually satisfactory resolution of the dispute within the next five (5) working days, each party shall, within five (5) working days, designate a top management executive who will attempt, over the next thirty (30) days, to resolve the dispute. No party shall bring legal action for breach of this Agreement until the thirty (30) days have elapsed. This Section 10.4 shall not limit either party's ability to seek an injunction or other equitable relief for breach of confidentiality as set forth in Section 5 of this Agreement, breach of Sections 1.4 or 8.1 of this Agreement, or as may be necessary to protect either party's intellectual property, name or resources. 11. TERMINATION 11.1 Termination of this Agreement by either party shall not act as a waiver of any breach of this Agreement and shall not release or limit liability for breach of a party's obligations hereunder at law or in equity. Upon termination or expiration of this Agreement, Licensee's licenses, including licenses granted for Licensed Software, and documentation therefor, granted under this Agreement shall terminate. 9 of 25 10 11.2 Immediately upon termination of this Agreement, Licensee shall deliver to Infoseek all copies of the Licensed Software, Documentation, and any other materials provided by Infoseek to Licensee hereunder or in its possession or under its control, and shall furnish to Infoseek a written acknowledgment that such delivery has been fully effected. Within thirty (30) days after termination of this Agreement, Licensee shall pay to Infoseek all sums then due and owing. 11.3 The respective rights and obligations of Infoseek and Licensee under the provisions of Paragraphs 1.4, 1.5, 2, 4, 5, 7, 9, 11, 12, 15 and all other provisions of this Agreement which may be reasonably interpreted or construed as surviving the termination or expiration of this Agreement, shall survive the termination or expiration of this Agreement. 12. GOVERNING LAW This Agreement shall be interpreted, construed and enforced in all respects in accordance with the laws of the State of California. The parties agree that the United Nations Convention on Contracts for the International Sale of Goods is specifically excluded from application to this Agreement. Each party irrevocably consents to the exclusive jurisdiction of any state or federal court for or within Santa Clara County, California over any action or proceeding arising out of or related to this Agreement, and waives any objection to venue or inconvenience of the forum in any such court. 13. SOLE AGREEMENT This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter hereof and merges all prior and contemporaneous discussions, communications, writings or agreements between them. This Agreement shall not be modified except by a written agreement dated on or subsequent to the date of this Agreement and signed on behalf of Licensee and Infoseek by their respective duly authorized representatives. 14. SEVERABILITY If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Parties will seek in good faith to agree on replacing an invalid, illegal, or unenforceable provision with a valid, legal, and enforceable provision which, in effect, will form an economic viewpoint, most nearly and fairly approach the effect of the invalid, illegal, or unenforceable provision. 15. ASSIGNMENT Neither party may assign this Agreement by operation of law or otherwise, in whole or in part, other than pursuant to a merger or a transfer of a majority of its assets, without the other party's written consent, which consent shall not be unreasonably withheld or delayed; provided, however, either party may assign this Agreement to an Affiliate or Successor without the prior written consent of the other party and further provided that Licensee may not assign this Agreement to any entity which provides a general Internet or Intranet search service directly or indirectly competitive to Infoseek. "Affiliate" shall mean any entity of which a party owns at least one-third of the equity, or any entity that owns at least one-third of the equity of either party. "Successor" means any entity that has a right to provide Big Yellow or the Service. Any attempt to assign this Agreement in derogation hereof shall be null and void. 10 of 25 11 16. THE PARTIES AS INDEPENDENT CONTRACTORS The parties to this Agreement are independent contractors. Neither party is an agent, representative or partner of the other party. Neither party shall have any right, power or authority to enter into any agreement for or on behalf of, or to incur any obligation or liability of, or to otherwise bind, the other party. This Agreement shall not be interpreted or construed to create an association, joint venture or partnership between the parties or to impose any partnership obligation or liability upon either party, and only for so long as such minimal ownership exists. 17. WAIVER The waiver by either party of a breach of or a default under any provision of this Agreement by the other party shall not be construed as a waiver of any subsequent breach of the same or any other provision of the Agreement, nor shall any delay or omission on the part of either party to exercise or avail itself of any right or remedy that it has or may have hereunder operate as a waiver of agreement or remedy by such party. 18. FURTHER ASSURANCES Each party shall take such action (including, but not limited to, the execution, acknowledgment and delivery of documents) as may reasonably be requested by the other party for the implementation or continuing performance of this Agreement. 19. FORCE MAJEURE Except for Licensee's payment obligations to Infoseek under this Agreement, neither party shall be liable to the other for any failure or delay in complying with the provisions, terms and conditions of this Agreement, nor shall any such failure or delay constitute an event of default, if such failure or delay shall be due to causes beyond either of the party's reasonable control. This provision shall not, however, release a party from using its reasonable best efforts to avoid or remove all such causes and both parties shall continue performance hereunder with reasonable dispatch whenever such causes are removed. A party claiming such non-liability shall give prompt notice thereof to the other party. 20. NOTICES Any notice, approval, request, authorization, direction or other communication under this Agreement shall be given in writing, will reference this Agreement, and shall be deemed to have been delivered and given when (a) delivered personally or upon receipt of confirmed fax; (b) three (3) business days after having been sent by registered or certified first class mail, return receipt requested, postage and charges prepaid, whether or not actually received; or (c) one (1) business day after deposit with a commercial overnight carrier, with written verification of receipt. All communications will be sent to the addresses set forth below or to such other address as may be designated by a party by giving written notice to the other party pursuant to this Section 20. If to Licensee: With a copy to: President General Counsel NYNEX Information Technologies Company NYNEX Information Resources Company 35 Village Road 35 Village Road Middleton, MA 01949 Middleton, MA 01949 Fax (508) 762-1066 FAX (508) 762-1071 11 of 25 12 If to Infoseek: With a copy to: President Infoseek Corporation Infoseek Corporation Attn.: Legal Department 2620 Augustine Drive, Suite 250 2620 Augustine Drive, Suite 250 Santa Clara, CA 95054 Santa Clara, CA 95054 FAX: (408) 986-1889 FAX: (408) 986-1889 21. PUBLICITY Nothing contained in this Agreement shall be construed as conferring any right to use in advertising, publicity or other promotional activities any name, trade name, trademark or other designation of either party (including any contraction, abbreviation or simulation of the foregoing): and each party agrees not to use or refer to this Agreement or any provision thereof in any promotional activity without the express written approval of the other party, however, either party may issue a press release regarding this Agreement solely upon the prior approval of the other party. If a party does not give notice of its disapproval of the press release within three (3) business days of its receipt of a proposed press release, such failure to respond shall be deemed approval of said press release. Unless required by law, and except for disclosure on a "need to know basis" to its own employees, and its legal, investment, financial and other professional advisers, each party agrees not to disclose the terms of this Agreement or matters related thereto without the prior written consent of the other party. 22. TERMS CONTROL The terms of this Agreement shall control any conflicting or inconsistent standard terms or conditions on any purchase order or invoice of either party, notwithstanding any provision to the contrary in any such purchase order or invoice. 23. HEADINGS The headings used in this document are for convenience only and are not to be construed to have legal significance. 24. ESCROW FOR SOURCE CODE * 24.1 Within [ ] of the Effective Date, Infoseek shall provide to Escrow Agent identified in Exhibit C the available buildable Source Code of the Licensed Software for deposit with Data Securities International. Infoseek shall keep the Source Code in escrow current by providing to Escrow Agent, a new deposit of the available Source Code for * applicable updates not less than [ ] while this Agreement is in effect. This Section 24 shall apply to Licensee only and not to any Affiliate or Sublicensee, or to any Third Party Portions. 24.2 Licensee shall have access to the Source Code upon the occurrence of any of the events and subject to the provisions set forth in Exhibit C. 24.3 During the term of this Agreement, the Source Code shall remain in escrow and may not be *CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 12 of 25 13 delivered to or used by Licensee except as provided in Exhibit C. 13 of 25 14 IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the later of the two (2) dates set forth below.
ACCEPTED FOR INFOSEEK CORPORATION ACCEPTED FOR NYNEX INFORMATION TECHNOLOGIES COMPANY By: By: ---------------------------------- --------------------------------- Authorized Signature Authorized Signature Print Name: ROBERT E.L. JOHNSON III Print Name: Matthew J. Stover -------------------------- ------------------------- Title: CEO & PRESIDENT Title: Chairman of the Board ------------------------------ ------------------------------- Date: MARCH 29, 1996 Date: March 29, 1996 -------------------------------- ------------------------------
14 of 25 15 EXHIBIT A I. LICENSED SOFTWARE: Infoseek software currently code-named: "Ultraseek" (including search, retrieval, indexing and network spider technology) II. LICENSED SOFTWARE DOCUMENTATION: III. INFOSEEK DELIVERABLES: Master of the Licensed Software in binary form: Related documentation IV. ANTICIPATED DELIVERY DATE: TBD 15 of 25 16 EXHIBIT B FEE SCHEDULE LICENSED SOFTWARE LICENSE FEES: The following non-refundable fees shall apply for the Licensed Software: * Licensed Software [ ] *See Section 9 of the Agreement for Licensed Software License Fees applicable to Renewal Terms Except as provided in Section 9 of the Agreement, all applicable fees and payments under this Agreement shall be due and payable Net thirty (30) days from the date of Infoseek's applicable invoice(s). Licensee shall pay to Infoseek the royalties payable by Infoseek applicable to the Third Party Portions licensed hereunder. ADDITIONAL CONSIDERATIONS: Licensee agrees to conspicuously display on the appropriate page of Big Yellow a mutually agreed upon notice indicating that the search and retrieval technology utilized by the Big Yellow service is technology licensed from Infoseek Corporation. *CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 16 of 25 17 EXHIBIT C ESCROW AGREEMENT EFFECTIVE this ____ day of _____________ ("Effective Date"), this Escrow Agreement ("Escrow Agreement") is entered into by NYNEX INFORMATION TECHNOLOGIES COMPANY, with its principal place of business at 35 Village Road, Middleton, Massachusetts 01949 ("NYNEX") and Infoseek Corporation, with its principal place of business at 2620 Augustine Drive, Suite 250, Santa Clara, CA 95054 ("Infoseek"), and Data Securities International, __________________________________ ("Escrow Agent"). RECITALS WHEREAS, Infoseek will provide NYNEX with Infoseek Licensed Software ("Licensed Software") in executable form, and Infoseek documentation (collectively "Infoseek Products") pursuant to the certain Software License Agreement dated _________________, 1996 between NYNEX and Infoseek ("Underlying Agreement"). Except as otherwise indicated, all capitalized terms in this Agreement have the same meaning as defined in the Underlying Agreement. WHEREAS, This Escrow Agreement provides to NYNEX only and not to any Sublicensee or Affiliate, the availability to access Source Code for the Licensed Software ("Source Code") upon the occurrence of the events described in and subject to Sections 4 and 5 of this Escrow Agreement. NOW THEREFORE, in consideration of the mutual covenants set forth in this Escrow Agreement, NYNEX, Infoseek and Escrow Agent agree as follows: 1. Deposit of Source Code. (a) No later than one hundred twenty (120) days following the Effective Date of this Escrow Agreement, Infoseek shall deposit and Escrow Agent shall accept, for storage purposes only, the buildable available Source Code of each Licensed Software and any additional Licensed Software covered by the Underlying Agreement as at any time amended. Deposit shall be made at Data Securities International, __________________________________. (b) Source Code shall include for Licensed Software copies of all current source code lines and any associated support documentation, excluding those portions of the Source Code which belong to third parties and are unavailable to Infoseek or which Infoseek has licensed from third parties which Infoseek does not have the right to sublicense or disclose to NYNEX. 2. Title to Source Code. Infoseek will retain ownership of all intellectual property contained in the deposited Source Code including all copyright, trade secret, patent or other intellectual property rights subsisting in such Source Code. 3. Release of Source Code to NYNEX. The copy of the Source Code on deposit in escrow pursuant to those Agreement shall be released to NYNEX only in accordance with the terms of this Agreement. 4. Release Event; Escrow as Supplementary. (a) In the event Infoseek voluntarily commences a Chapter 7 proceeding under the Federal Bankruptcy Act and the proceeding remains undismissed for a period of one hundred twenty (120) days, then 17 of 25 18 NYNEX shall so notify Escrow Agent in writing, providing evidence of the filing and the duration of such proceedings and make a formal demand that the Escrow Agent release the Source Code to NYNEX. Following expiration of such one hundred twenty (120) day period, the provisions of Section 5 shall not be applicable and Escrow Agent shall promptly release the Source Code to NYNEX. (b) Infoseek and NYNEX acknowledge that this Escrow Agreement is an "agreement supplementary to" the Underlying Agreement as provided in Section 365 (n) of Title 11, United states Code ("the Bankruptcy Code"). Infoseek acknowledges that if Infoseek as a debtor-in-possession or if a trustee in bankruptcy in a case under the Bankruptcy Code rejects the Underlying Agreement or this Escrow Agreement, NYNEX may elect to retain its rights under the Underlying Agreement and this Escrow Agreement as provided in Section 365 (n) of the Bankruptcy Code. Upon written request of NYNEX to Infoseek or the bankruptcy trustee, Infoseek or such bankruptcy trustee will not interfere with the rights of NYNEX as provided in the Underlying Agreement and this Escrow Agreement to obtain the Source Code from the bankruptcy trustee or from the Escrow Agent, and will, if requested, cause a copy of the Source Code to be available to NYNEX. 5. Failure of Infoseek to Perform Support Services. (a) (i) If Infoseek or Infoseek's successor in interest is unable to provide Support Services as required by the Underlying Agreement (and in breach of its obligation under that Underlying Agreement) because of the insolvency of Infoseek as defined in Article 1-201 (23) of the Uniform Commercial Code, NYNEX shall so notify Infoseek in writing ("Deficiency Notice"), specifying in reasonable detail the basis for Infoseek's failure or inability to provide Support Services. NYNEX shall serve a copy of the Deficiency Notice simultaneously upon the Escrow Agent. (ii) If Infoseek or Infoseek's successor in interest is unable to discharge any of its Support Services obligations as required by Section 8 of the Underlying Agreement (and in breach of its obligations under that Underlying Agreement), NYNEX shall so notify Infoseek in writing ("Deficiency Notice"), specified in reasonable detail the basis for such failure. NYNEX shall serve a copy of the Deficiency Notice simultaneously upon the Escrow Agent. (b) For a period of sixty (60) days after service of the Deficiency Notice ("Cure Period"), Infoseek shall have the right to cure the alleged deficiencies and shall correspond with and deal directly with NYNEX; provided, however, Infoseek and NYNEX shall promptly effect the Software support and Program error corrections process described In Exhibit C-1 hereto and NYNEX shall be entitled to seek the injunctive relief described therein, without recourse to Section 6 below. (c) If at the end of the Cure Period the alleged support deficiencies have not been cured NYNEX shall notify Infoseek and the Escrow Agent in writing, specifying in reasonable detail the deficiency with respect to the Support Services and make a Demand Notice. (d) If Infoseek disagrees with the Demand Notice specified in Paragraph 5 (c) above, Infoseek shall so notify the Escrow Agent and NYNEX in writing (Objection Notice) within thirty (30) calendar days after receipt of the Demand Notice and Escrow Agent shall not release the Source Code unless otherwise directed by Infoseek and NYNEX jointly. Failure of Infoseek to give timely Objection Notice shall conclusively establish its consent to the immediate release of the Source Code to NYNEX under the terms of this Agreement. 18 of 25 19 6. Dispute Resolution. 6.1 In the event of any dispute involving the release of the Source Code under Section 5, authorized representatives of Infoseek and NYNEX shall meet pursuant to Section 10.4 of the Underlying Agreement ("Dispute Resolution") and the parties shall attempt to expeditiously resolve such disputes in accordance thereunder. 6.2 In the event of a Deficiency Notice given pursuant to Paragraph 5 (a) (ii) above which leads to a dispute pursuant to Paragraph 6.1 and the dispute fails to get resolved pursuant to the timeframes specified in Section 10.4 of the Underlying Agreement, then either party may seek binding arbitration in accordance with the commercial rules of the American Arbitration Association then in effect to resolve the dispute. Such arbitration shall take place in Santa Clara, California and shall be conducted by three (3) arbitrators, one (1) which shall be selected by each party and the third which shall be selected by the other two arbitrators within the time limits established by the existing rules of the American Arbitration Association. The chairman of such panel of arbitrators shall be an attorney at law, and the other arbitrators shall have a background or training in either computer law, computer science or marketing or computer industry products. Each arbitrator shall be knowledgeable in business information and data processing systems. The arbitrators shall have the authority to permit discovery, the extent deemed appropriate by the arbitrators, upon request of a party. The arbitrators shall have no power or authority to add to or detract from the agreements of the parties, and the cost of the arbitration shall be borne equally. The arbitrators shall have the authority to grant injunctive relief in a form substantially similar to that which would otherwise be granted by a court of law. The arbitrators shall have no authority to award punitive or consequential damages. The resulting arbitration award may be enforced, or injunctive relief may be sought, in any court of competent jurisdiction. The parties stipulate that the Superior Court of the County of Santa Clara, California or the United States District Court for the Northern District of California are courts of competent jurisdiction for this purpose. 7. License of Source Code. 7.1 If the Source Code is delivered out of escrow to NYNEX pursuant to Section 4 (Bankruptcy/Insolvency) of this Escrow Agreement, NYNEX shall be licensed by Infoseek subject to the conditions of this Escrow Agreement and the Underlying Agreement pursuant to a non-transferable, non-exclusive, fully-paid, license to the Source Code for a term of the lesser of the remaining duration of the term of the Underlying Agreement or until Infoseek shall have or Infoseek's successor-in-interest shall have a reasonably demonstrable capability of meeting the Support Services obligations under the Underlying Agreement. The license entitles NYNEX solely to use, copy, modify, maintain and update the Source Code in all such respects as may be necessary for NYNEX to maintain and update Licensed Software. Infoseek also grants NYNEX the rights specified in Section 8 below. 7.2 If the Source Code is delivered out of escrow to NYNEX pursuant to Section 5 (Failure to Perform Support Services) of this Escrow Agreement, NYNEX shall be licensed by Infoseek subject to the conditions of this Escrow Agreement and the Underlying Agreement, pursuant to a non-exclusive, non-transferable license solely to use, copy, modify, maintain and update the Source Code in all such respects as may be necessary for NYNEX to maintain and update the existing licenses received and sublicenses granted by or through NYNEX under the Underlying Agreement for the Licensed Software. NYNEX shall have no license to grant new sublicenses. Infoseek also grants NYNEX the rights specified in Section 8 below. 19 of 25 20 7.3 NYNEX shall indemnify Infoseek against any losses actually incurred by Infoseek as a result of NYNEX wrongfully gaining access to the Source Code and/or failing to observe the restrictions and conditions as to its use as set forth herein. 8. Confidentiality and Use of Source Code. (a) Upon release of the Source Code to NYNEX pursuant to this Escrow Agreement, NYNEX shall preserve the Source Code in confidence in accordance with the same degree of care practiced by it, but not less than reasonable care, to safeguard its proprietary source code against unauthorized use and disclosure, and shall use the Source Code only as authorized under this Escrow Agreement and the Underlying Agreement. (b) This Section 8 shall survive the termination of this Escrow Agreement for a period of twenty-five (25) years. 9. Fees. NYNEX shall pay to Escrow Agent, in advance, fees at the standard rate prescribed from time to time by Escrow Agent for performance of services under this Escrow Agreement. 10. No Duty to Inquire into Truth, Authenticity of Authority/Right to Require Additional Documents, Escrow Agent shall not be required to inquire into the truth of any statements or representations contained in any notices, certificates or other documents required or otherwise provided hereunder, and shall be entitled to assume that the signatures on such documents are genuine, that the persons signing on behalf of any party thereto are duly authorized to execute the same, and that all actions necessary to render any such documents binding on the party purportedly executing the same have been duly undertaken. Without in any way limiting the foregoing, Escrow Agent may in it's discretion require from Infoseek or NYNEX additional documents which it deems to be necessary or desirable in the course of performing its obligations hereunder. 11. No Liability. Both Infoseek and NYNEX agree to and hereby do release Escrow Agent from and against any and all liability to them for losses, damages, and expenses (including attorneys' fees) that may be incurred by them on account of Escrow Agent's compliance in good faith with the terms of this Escrow Agreement. 12. Notices. Notices, demands and other communications under this Agreement shall be delivered by registered or certified mail, return receipt requested, to the intended recipient at the address set forth below, or to such other address as such recipient shall have designated by notice to the sending party. Notices shall be deemed to have been given and received when signed for on the return receipt. 20 of 25 21 If to Infoseek: If to NYNEX: Attn: General Counsel Attn: _______________________ Infoseek Corporation NYNEX Information Technologies Company 2620 Augustine Drive, Suite 250 35 Village Road Santa Clara, CA 95054 Middleton, MA 01949 Telephone: (408) 567-2700 Telephone: (508) ________ FAX: (408) 986-1889 FAX: (508) 762-1066 If to Escrow Agent: Attn: Escrow Officer Data Securities International - ----------------------------- - ----------------------------- Telephone -------------------- Fax: ------------------------- 13. Termination. This Escrow Agreement shall remain in full force and effect until the expiation or termination of the Underlying Agreement, unless terminated earlier in accordance with the provisions of this Escrow Agreement. This Escrow Agreement may not be terminated or modified except in writing signed by Escrow Agent, Infoseek and NYNEX. Upon termination of this Escrow Agreement Escrow Agent shall return Source Code to Infoseek. 14. Entire Agreement. This Escrow Agreement and the Underlying Agreement set forth and the entire agreement and understanding between the parties relating to the subject matter hereof, superseding and merging all prior and contemporaneous discussions, proposals, and agreements, oral or written, and all other communications between the parties relating to this Escrow Agreement. IN WITNESS WHEREOF, the parties have caused this Agreement by their duly authorized representatives as of the date or dates set forth below.
NYNEX INFORMATION TECHNOLOGIES INFOSEEK CORPORATION COMPANY By: ----------------------------------- By: ---------------------------- Print Name --------------------------- Print Name --------------------- Title --------------------------------- Title ------------------------- Date ---------------------------------- Date --------------------------
21 of 25 22 DATA SECURITIES INTERNATIONAL By: -------------------------------------- Print Name ------------------------------- Title ----------------------------------- Date ------------------------------------- 22 of 25 23 EXHIBIT C-1 SOFTWARE SUPPORT AND PROGRAM ERROR CORRECTIONS Support to NYNEX for Program Error diagnosis and primary responsibility for correcting Licensed Software Errors or Documentation errors will be in the Infoseek organization. NYNEX will attempt to diagnose all incoming problem reports; however, it may be necessary to send problems and problem files to Infoseek for final diagnosis. Infoseek shall have the capability to receive files electronically by modem from NYNEX. The severity of a Program Error will determine the response and correction time requirements. A "critical" Program Error is one that makes the product substantially non-functional, without an available workaround, and is a Severity level 1 in the classification outlined below. A "non-critical" Program Error is Severity levels 2, 3 or 4 in the classification. Infoseek shall use its reasonable best efforts to report known bugs and their workarounds to NYNEX in written or electronic form as soon as such workarounds are made generally available to Infoseek's customers. Infoseek shall use its reasonable best efforts to address all "critical" or "non-critical" Program Errors or bugs as described below: SEVERITY OF PROGRAM ERRORS RESPONSE REQUIREMENTS - -------------------------- --------------------- "Critical" NYNEX Severity level 1 1. Acknowledge within four (4) working hours. 2. Provide a workaround upon acknowledgment, if available. 3. If the Program Error can be corrected without a binary change, Infoseek will provide a workaround or fix to NYNEX within one (1) week of Infoseek's acknowledgment, or NYNEX will provide a reasonable explanation why the Program Error requires a longer interval to correct. 4. If the Program Error must be corrected by a binary change, Infoseek will provide a workaround or fix, at the earliest, approximately two (2) weeks after acknowledgment, or Infoseek will provide a reasonable explanation why the Program Error requires a longer interval to correct. If Infoseek fails to perform its obligations under Items 3 or 4 above, NYNEX shall be entitled to seek injunctive relief demanding specific performance, or, if appropriate, access to the relevant available Source Code for the affected portion of the Licensed Software. In the event NYNEX is granted access to such Source Code such access shall be subject to the restrictions, limitations and obligations applicable to NYNEX set forth in the Source Code Escrow Agreement attached as Exhibit C to the Agreement, and shall be deemed as received pursuant to Section 5(a)(i) of such Escrow Agreement, regardless of whether Section 4 (a) of such Escrow Agreement would have been 23 of 25 24 otherwise applicable or not; provided, however, NYNEX shall have access to the Source Code solely for the purpose of effecting the applicable Program Error Correction and solely for the period of time, not to exceed sixty (60) days, necessary to effect the Program Error Correction; NYNEX shall promptly thereafter return to the Escrow Agent the Source Code and all copies thereof, and shall provide to Infoseek all modifications and additions made to the Source Code to effect the Program Error Correction well as a copy of any revised binary code created thereby. Access to Source Code for Third Party Portions under this Exhibit C-1 and Exhibit C shall occur solely to the extent, if any, Infoseek shall have been granted rights from the applicable Third Party consistent therewith to provide such Source Code to Licensee. "Non-critical" 1. Acknowledge within four (4) working NYNEX Severity levels 2, 3 or 4 hours. 2. Workaround/fix provided if and when available. Provide a workaround upon acknowledgment, if available. 3. Provide NYNEX with a fix, if and when available in a subsequently released product. 24 of 25 25 The severity level of a Program Error will be jointly determined by Infoseek and NYNEX pursuant to the following definitions: Program Error Severity Levels 1. Major impact* and no workaround** exists 2. Major impact, but a workaround exists 3. Significant deviation from Documentation 4. Minor deviation from Documentation, inconsistent or inconvenient to use. 5. No bug, determined to be operator error or a third party error 6. Enhancement - ---------------- * Major impact- directly attributable to Licensed Software and not attributable to any hardware, server, operating system or window manager and causes the workstation, network or software to crash under normal operating conditions, severely impacts production or results in corruption of datafile. ** Workaround- an alternative that can be used to obtain the same functionality. 25 of 25 EX-10.46 10 AGREEMENT W/ VERITY DATED MARCH 31, 1996 1 EXHIBIT 10.46 * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. AGREEMENT AGREEMENT by and between Infoseek Corporation, a corporation duly organized under the laws of California, with its principal place of business at 2620 Augustine Drive, #250, Santa Clara, California 95054, hereinafter referred to as "Infoseek", and Verity, Inc., a corporation organized under the laws of the State of Delaware with its principal place of business at 1550 Plymouth Street, Mountain View, California 94043, hereinafter referred to as "Verity". WHEREAS, Verity and Infoseek desire to provide users of the Verity "Topic Search for Exchange" product (such product, and the other Verity products as may be added from time to time pursuant to Section 1 below, hereinafter referred to as the "Products") access to the Infoseek Guide service (such service, and the service(s) designated by Infoseek as successor and/or alternative services thereto, hereinafter referred to as the "Service") in conjunction with use of the Product. NOW, THEREFORE, for good and valuable consideration, and in consideration of the mutual covenants and conditions herein set forth, and with the intent to be legally bound thereby, Infoseek and Verity hereby agree as follows: 1. Infoseek grants to Verity a worldwide, nonexclusive license to use, reproduce, publicly display and distribute the Infoseek Guide icon for the purpose of including the icon as a branded button ("Infoseek Button") in a mutually agreeable location on the client interface of the Products. The Infoseek Button will, when "clicked" by the user, launch a browser which will automatically display the Infoseek Guide Home Page. Verity agrees to place the Infoseek Button on Version 1 and all intermediate versions of the Topic Search for Exchange product leading up to and including Version 2.0. Infoseek and Verity will mutually agree to any additional Verity products to be considered "Products" under this Agreement, if at all. The process for adding other Verity products will be as follows: (i) Infoseek and Verity contacts will discuss the appropriate product and the location of the Infoseek Button and the graphic/look-and-feel of the Infoseek Button; (ii) upon such agreement, a mutually agreed upon amendment to Appendix A shall be executed by the parties and the new agreed upon Verity product will be added as a "Product" under this Agreement. Nothing in this Agreement shall limit Verity's right to include other branded or unbranded icons on Products so that users of Verity products may have access to services similar to the Service. 2. On or before April 15, 1996, Infoseek shall provide to Verity a graphic for the Infoseek Button on the Product and a URL address used to account for traffic from the "Topic Search for Exchange" product. Infoseek may make changes from time to time that may affect the content, features, performance, and appearance of the Service; provided, that Verity may, upon (30) days prior written notice to Infoseek, cease distributing the Product with the Infoseek Button if any such changes, in Verity's reasonable opinion, renders the Product inappropriate for or less desirable to Verity's customers. 2 3. NEITHER PARTY MAKES ANY, AND EACH PARTY ACKNOWLEDGES THAT THE OTHER PARTY HAS NOT MADE ANY, AND HEREBY SPECIFICALLY DISCLAIMS ANY, REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. 4. a. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR EXEMPLARY DAMAGES OF ANY NATURE, EVEN IF SUCH PARTY SHALL HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, EXCEPT AS SET FORTH IN SECTION 4(b) BELOW. FURTHER IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY THIRD PARTY CLAIMS BASED ON ALLEGED OR ACTUAL INACCURACIES, MISREPRESENTATIONS OR MISSTATEMENTS CONTAINED IN OR IMPLIED BY THE SERVICE, NOR WILL EITHER PARTY HAVE ANY LIABILITY TO THE OTHER PARTY BASED ON ANY THIRD PARTY CLAIMS OF LIBEL, SLANDER, OBSCENITY, INVASION OF PRIVACY, RIGHT OF PUBLICITY OR ANY OTHER DEFAMATION WHICH MAY ARISE OR BE RELATED TO THE CONTENTS CONTAINED IN OR INFORMATION PROVIDED BY THE SERVICE, EXCEPT AS SET FORTH IN SECTION 4(b) BELOW. b. Infoseek agrees to defend, indemnify and hold Verity, and its officers, directors, employees and agents, harmless from all costs and damages (including attorneys' fees and costs) finally awarded to a third party arising out of any legal action to the extent based on a claim that (i) the Infoseek Button infringes a trademark or service mark of a third party; (ii) the portion of the Service controlled by Infoseek or any information contained in or distributed by Infoseek through the Service contains alleged or actual inaccuracies, *misrepresentations or misstatements; or (iii) [ ] (a) Verity shall promptly notify Infoseek in writing when Verity first becomes aware of a claim or the possibility thereof, (b) Infoseek is provided all reasonable information available to Verity and, at Infoseek's expense, Verity's assistance in settling or defending the action, and (c) Infoseek will have sole control of the settlement, compromise, negotiation, and defense of any such action. Verity may participate in such action at Verity's own expense. 6. Infoseek will pay to Verity royalties as specified in Appendix A within forty-five (45) days following the end of each calendar quarter in which such royalties accrue. Each royalty payment will be accompanied by a royalty report in Infoseek's then-current standard form which details the royalties due for the preceding calendar quarter, as more particularly set forth in Appendix A. Past due payments will accrue interest at the rate of 1% per month or the maximum allowed by law, whichever is greater, until paid. - ------------------------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 2 3 7. Each party shall hold in confidence all materials or information disclosed to it in confidence hereunder ("Confidential Information") which are marked as confidential or proprietary, or if disclosed verbally, reduced to writing and marked confidential within thirty (30) days after the date of disclosure. Confidential Information shall also include any new product information or the results of any bench mark or similar tests on the Products conducted by Verity. Each party agrees to take precautions to prevent any unauthorized disclosure or use of Confidential Information consistent with precautions used to protect such party's own confidential information, but in no event less than reasonable care. The obligations of the parties hereunder shall not apply to any materials or information that is or becomes a part of the public domain through no act or omission of the receiving party or which is independently developed by the receiving party without the use of Confidential Information. In the event of a breach of this section, the parties agree that the non-breaching party will suffer irreparable harm and injury for which money damages would be an inadequate remedy. Accordingly, the non-breaching party may seek injunctive relief, in addition to any and all other remedies at law, for any threatened or actual breach of this section. 8. Verity shall have the right to retain a U.S. nationally prominent or other mutually agreeable independent auditor to whom Infoseek shall allow reasonable access to Infoseek's books of account and other relevant records relating to the Service accessed through the Product for the purpose of verifying the amounts due and payable to Verity under this Agreement. The information disclosed by Infoseek to such auditors in the course of performing such audit will be kept confidential by the auditor. Verity may request such audits no more frequently than once in a consecutive six (6) month period and may not review records more than twelve (12) months old. Access to Infoseek's documentation shall be during Infoseek's regular business hours upon at least fifteen (15) days prior written notice and may be conditioned upon the auditor executing a confidentiality agreement in a form reasonably acceptable to Infoseek relating to the auditor's performance of an audit hereunder. In the event that an audit discloses an underpayment for any six (6) consecutive month period of more than five percent (5%) of the aggregate amount due to Verity, Infoseek shall pay the reasonable costs of such audit and the amount of such underpayment (with accrued interest) within thirty (30) days after completion of such audit. 9. This Agreement shall be effective on the last date executed by Infoseek and Verity ("Effective Date") and, unless earlier terminated in accordance herewith, shall continue in force for an initial term ending three (3) years from the Effective Date; provided, however, that either party may terminate this Agreement as of the date of the second and third anniversaries of this Agreement by providing written notice of its election to terminate the Agreement at least thirty (30) days prior to such second anniversary and third anniversary, respectively. Thereafter, this Agreement will renew only upon the mutual written agreement of the parties. 3 4 Either party will have the right to terminate this Agreement upon thirty (30) days notice if the other party is in default of any material obligation herein, which default is not cured within thirty (30) days after receipt of written notice of such default from the non-defaulting party, or within such additional cure period as the non-defaulting party may authorize in writing. Upon the termination or expiration of this Agreement, (i) each party shall promptly return all Confidential Information, and other information, documents, manuals, equipment and other materials belonging to the other party; (ii) Verity and its third party distributors and resellers may distribute all Products in inventory as of the effective termination or expiration date which contain the Infoseek Button (but no more than the number of Product which represents Verity's average monthly inventory of Product for the twelve (12) months preceding the date of such termination); and (iii) all third party users shall have the continued right to use the Products with the Infoseek Button. With the exception of Sections 1 and 2, all sections of this Agreement will survive termination or expiration. No royalty shall be due and payable hereunder by Infoseek for any period after the term of this Agreement except as set forth in Appendix A and above in this Section 9. 10. The parties to this Agreement are independent contractors. There is no relationship of agency, partnership, joint venture, employment or franchise between the parties in any way. Neither party nor its employees has the authority to bind or commit the other party in any way, or to incur any obligation on its behalf. 11. Neither party shall assign, sublicense or otherwise transfer (voluntarily, by operation of law or otherwise) this Agreement or any right, interest or benefit under this Agreement, without the prior written consent of the other party. Notwithstanding the foregoing, Verity may assign the right to receive royalties and either party may assign this Agreement without the prior written consent of the other party in connection with a sale of fifty percent (50%) or more of the assignor's stock, a sale of all or substantially all of the assignor's assets, a reorganization, consolidation or merger. Any attempted assignment, sublicense or transfer in derogation hereof shall be null and void. Subject to the foregoing, this Agreement shall be fully binding upon, inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns. 12. If any part of this Agreement is found invalid or unenforceable, that part will be amended to achieve as nearly as possible the same economic effect as the original provision and the remainder of the Agreement will remain in full force and effect. 13. Any notice, approval, request, authorization, direction or other communication under this Agreement shall be given in writing, will reference this Agreement, and shall be deemed to have been delivered and given (a) when delivered personally; (b) three (3) business days after having been sent by registered or certified U.S. mail, return receipt requested, 4 5 postage and charges prepaid; or (c) one (1) business day after deposit with a commercial overnight carrier, with written verification of receipt. All communications will be sent to the addresses set forth below or to such other address as may be designated by a party by giving written notice to the other party pursuant to this Paragraph 13. If to Verity: With a copy to: Verity, Inc. Verity, Inc. Attention: President Attention: General Counsel 1550 Plymouth Street 1550 Plymouth Street Mountain View, California 94043 Mountain View, California 94043 If to Infoseek: With a copy to: Steven T. Kirsch Infoseek Corporation Infoseek Corporation Attn.: Legal Department 2620 Augustine Drive, Suite 250 2620 Augustine Drive, Suite 250 Santa Clara, CA 95054 Santa Clara, CA 95054 14. In the event of any dispute relating to or arising out of this Agreement, the prevailing party in such dispute will be entitled to recover its reasonable attorneys' fees and costs. 15. This Agreement shall be governed by and construed in accordance with the law of the State of California without regard to its rules on conflicts of laws. This Agreement sets forth the complete and exclusive agreement between the parties with respect to the subject matter hereof, and supersedes all prior oral and written understandings, communications or agreements not specifically incorporated herein. This Agreement may not be modified except in a writing duly signed by authorized representatives of Verity and Infoseek. ACCEPTED FOR INFOSEEK CORPORATION ACCEPTED FOR VERITY, INC. By: By: ------------------------------------- ------------------------------ Authorized Signature Authorized Signature Print Name: Andrew E. Newton Print Name: TIMOTHY J. MOORE ----------------------------- ---------------------- Title: Vice President & General Counsel Title: Vice President ---------------------------------- --------------------------- Date: March 31, 1996 Date: 3/31/96 ----------------------------------- ---------------------------- 5 6 APPENDIX A Except as otherwise specified in this Agreement, Infoseek shall pay to Verity a *royalty equal to [ ] of Net Fees (as described below) for advertisement impressions ("Impressions") appearing on Service Results Pages ("Qualified Pages") accessed by users of the Service who "click" Infoseek Button on the Product pursuant to this Agreement. Such amounts shall be payable with respect to all Net Fees recognized, in the period commencing on the effective date of this Agreement and ending on the date one year after the earlier of (i) the date of the termination of this Agreement and (ii) the date Verity ceases distributing Product with the Infoseek Button pursuant to Section 2, through the use of the Infoseek Button on Product distributed during the term of the Agreement and Product distributed thereafter pursuant to Section 9 of the Agreement. Infoseek makes no guaranty or warranty (i) that all Qualified Pages shall contain an Impression, (ii) that all Impressions shall be chargeable, or, if chargeable, (iii) regarding the amount of any charges therefor. Infoseek does agree that it will not direct disproportionately to Verity customers advertisements on the Service for which Infoseek receives Barter Revenue (as defined below) in lieu of other revenue. "Net Fees" shall mean all amounts recognized as revenue by Infoseek, other than advertisement for advertisement barter revenue ("Barter Revenue"), from advertisers on the Service attributable to Impressions appearing on Qualified Pages less, with respect to such amounts, (1) any amounts for refunds or other credits, including, but not limited to, amounts credited for bad debt or fraud; (2) any amounts payable by Infoseek applicable to internal and/or external sales commissions, advertising agency fees, or fees or royalties payable or creditable to third parties; and (3) any applicable sales, use, value-added or withholding taxes, or export duties or similar charges required to be paid or withheld by Infoseek. *[ ] attributable to [ ] shall be [ ] in the [ ] advertisement banner, impressions placed in the general rotation on the Service at Infoseek's *then-current advertising rate card pricing and terms and conditions for [ ]. *Any such advertisement banner will be in form and content reasonably satisfactory to [ ]. Each royalty report will specify the total applicable Net Fees recognized and the computation of Net Fees and royalties. -------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 6 7 Royalty payments to be mailed to: Verity, Inc. 1550 Plymouth Street Mountain View, California 94043 Phone: 408/567-2724 Fax: 408/986-1889 PRODUCTS Topic Search for Exchange 7 EX-10.48 11 MEMORANDUM OF UNDERSTANDING W/ KANEMATSU 3/10/96 1 EXHIBIT 10.48 *CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION MEMORANDUM OF UNDERSTANDING Infoseek Corporation ("Infoseek") is considering a two-phase strategic alliance with Kanematsu Corporation ("Kanematsu") to establish Infoseek Japan ("Infoseek Japan"). In the first phase of the alliance, Infoseek would enter into a Marketing Alliance Agreement with Kanematsu Corporation to develop, deploy and operate the initial Infoseek Japan service described below. In the second phase of the alliance, Infoseek and Kanematsu would enter into a Joint Venture Agreement, and collateral agreement(s) relative to technology licensing, and the provision of other services, as applicable, to create a joint venture corporation in Japan to develop, deploy and operate a second generation Infoseek Japan service described below based on Infoseek search technology. Based on preliminary discussions, it has been decided that detailed negotiations are appropriate regarding the possible agreements between Infoseek and Kanematsu. This Memorandum of Understanding ("MOU") covers the draft proposal of the terms and conditions of the strategic alliance, exchange of information and conduct of such negotiations. The parties wish to avoid any misunderstandings and disputes which might otherwise occur in the event that comprehensive agreements in this subject are not fully negotiated and fully executed. The parties acknowledge and agree that the subject matter of the negotiations will involve numerous interrelated business and technical factors, and that, except as set forth in this MOU, neither party shall be bound to the other for any performance, payment license, right, or reliance with respect to the subject matter, unless and until all material terms have been set forth in the respective separate and binding agreements, the Marketing Alliance Agreement and the Joint Venture Agreement, for Phase One and Phase Two of the Infoseek and Kanematsu Strategic Alliance (as described below), respectively, signed by both parties ("Comprehensive Agreement"). Unless otherwise specifically indicated herein, where used herein "Comprehensive Agreement" shall refer to either the Marketing Alliance Agreement or the Joint Venture Agreement. All proposals, letters, agreements, points of proposed or actual agreements, "Term Sheets", memos and charts used or exchanged in the negotiations either shall be reflected in the applicable Comprehensive Agreement or shall be deemed rejected, rescinded and void upon the end of negotiations. Nothing contained in this MOU shall be deemed to limit the scope of the negotiations or the content of any Comprehensive Agreement. The parties acknowledge that Kanematsu is contemplating participating in the Infoseek Series E Preferred Stock financing which both parties anticipate will close on or about the time of execution of the Marketing Alliance Agreement. I. PHASE ONE OF THE INFOSEEK AND KANEMATSU STRATEGIC ALLIANCE ---------------------------------------------------------- A. ALLIANCE STRUCTURE: Joint marketing alliance. B. PRODUCT/SERVICE: The initial Infoseek Japan service ("Phase One Service") will consist of three major components: i. A command bar with Japanese relevant content ii. An indexing and search capability which will index and search Japanese documents iii. A directory which will contain listings of Japanese sites with reviews written in the Japanese language and a translation of the Infoseek Guide directory (existing English language based directory) into the Japanese 1 of 8 2 language. 1. Kanematsu will be responsible for acquiring third-party content to be placed on the command bar of the Phase One Service and all costs associated with such acquisition. 2. Kanematsu will be responsible for acquiring or licensing an indexing and searching capability which will index and search for Japanese documents, and all costs associated with such acquisition. This indexing and searching capability will be deployed on the Phase One Service. 3. Kanematsu will be responsible for acquiring or licensing a directory which will contain listings of Japanese sites with reviews written in the Japanese language, and all costs associated with such acquisition. 4. Kanematsu will translate the existing Infoseek Guide directory (including site label/URL and site description/review). 5. Infoseek will assist Kanematsu in adding third-party content to the Infoseek Japan command bar. 6. Infoseek will assist Kanematsu in adding translation changes to the Infoseek Japan directory, including assistance in adding listings of Japanese sites with reviews written in the Japanese language. 7. Infoseek will be responsible for and perform the design and implementation of the Phase One Service. 8. Kanematsu will provide the necessary level of business and engineering resources required during Phase One to: i. license or acquire Japanese relevant third-party content ii. license or acquire an indexing and search capability to be deployed on the Phase One Service iii. license or acquire directory listings of Japanese sites iv. translate existing Infoseek Guide Directory listing All other aspects pertaining to the design, development and implementation of the Phase One Service shall be the responsibility of Infoseek. 9. The Phase One Service will be operated by infoseek at the Infoseek facility in the United States. C. FINANCIAL: * 1. Kanematsu will pay Infoseek [ ] prior to the commencement of Phase One for the design, implementation and operation of the Phase One Service; * [ ] of which is associated with the purchase of dedicated equipment for the Phase One Service (such equipment may be purchased directly or leased by Infoseek, purchased directly or leased by Kanematsu). Any purchased equipment will be owned by Kanematsu. 2. Both Infoseek and Kanematsu will sell advertising on the Phase One * Service. If Infoseek sells advertising, Infoseek will receive [ ] of net advertising revenues (net advertising revenues will be defined as gross advertising revenues less applicable ad frequency discounts, - -------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 2 of 8 3 agency discounts, and ad sales commissions). If Kanematsu sells advertising, Kanematsu will receive 25% of net advertising revenues. * 3. Kanematsu will receive [ ] of the net advertising revenues of the Phase One Service as consideration for acquiring the content, licensing or acquiring an indexing and search capability, licensing or acquiring the directory listings, and translation of the Infoseek Guide Directory listing. 4. It is Infoseek's assumption that a potential flat fee payment arrangement between Infoseek and Infoseek's major distribution entity will secure a position on the Phase Two Service (as defined below) search page for Infoseek. 5. Both parties acknowledge that royalties and third party payments to entities including, without limitation, distribution entities, may be attributable to the Phase One Service and may be apportioned against the remaining balance prior to the distribution to the parties. Both parties will mutually agree to any such royalties and third party payments attributable to the Phase One Service. * 6. Any remaining balance of the net advertising revenues shall be [ ] Infoseek and Kanematsu. 7. In the event any internationalization engineering is performed, with * Kanematsu's prior express [ ], during Phase One to prepare the [ ] indexing and searching technology to be localized for the Phase Two * Service, [ ] applicable costs for such engineering. Costs associated * with this engineering effort [ ] and shall be limited to direct costs. D. TRADEMARKS: All applicable Infoseek trademarks will be licensed to Kanematsu solely for use in conjunction with the Phase One Service. Infoseek retains ownership of all Infoseek trademarks. E. ALLIANCES: 1. Kanematsu will establish the necessary alliances to acquire third-party content for the Phase One Service. * 2. Kanematsu will pursue an alliance with [ ] (which may include regional and local advertising). * 3. Infoseek will pursue an alliance with [ ] of the Phase One Service on * the [ ] page for the Japanese version of the [ ]. F. TECHNOLOGY OWNERSHIP: 1. Ownership of any Infoseek technology, including but not limited to its indexing and search capability, and any technology licensed or acquired by Infoseek, and all applicable interfaces developed by Infoseek to enable the translation efforts, will remain with Infoseek and its licensors. 2. Ownership of any Kanematsu technology, including but not limited to its index and search capability, and any technology licensed or acquired - -------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 3 of 8 4 by Kanematsu, will remain with Kanematsu and its licensors. G. MANAGEMENT: 1. Infoseek shall be responsible for the program management of the design, implementation and operation of the Phase One Service which may include management of Kanematsu personnel on loan to Infoseek. 2. During the Phase One period and in anticipation of Phase Two, Infoseek and Kanematsu will cooperate to appoint the management personnel specified in the Phase Two portion of this MOU. 3. During the Phase One period and in anticipation of Phase Two Kanematsu shall organize and staff a working committee within Kanematsu to promote Infoseek Japan, sell advertising, and prepare for the Phase Two Service. 4. Kanematsu and any members of its working committee, may assist Infoseek in the operation of Phase One Services on an interim basis. H. TERM OF PHASE ONE: The term of Phase One shall be for a period ending upon the completion of * the development of Infoseek's [ ] indexing and search technology which is * anticipated to be the [ ]. At the end of such Phase One term both parties anticipate transitioning to Phase Two as described below. In the event Infoseek and Kanematsu agree that Phase One Service should be extended for an additional period of time, such extension shall be subject to terms for such extension, as may be mutually agreed upon in writing, including without limitation additional financing for such extended Phase One period. II. PHASE TWO OF THE INFOSEEK AND KANEMATSU STRATEGIC ALLIANCE ---------------------------------------------------------- A. ALLIANCE STRUCTURE: A joint venture arrangement between Infoseek and Kanematsu to establish Infoseek Japan ("Infoseek Japan"). The ownership ratio in Infoseek Japan * would be [ ] Kanematsu and [ ] Infoseek Corporation. Such joint venture arrangement (including, without limitation, the structure thereof will be subject to further approval by Infoseek and Kanematsu and the Joint Venture Agreement. Capitalization of such joint venture will be negotiated by Infoseek and Kanematsu. For such equity interest, it is anticipated that * Kanematsu's [ ] that Infoseek's capital contribution for Infoseek Japan * will be in the [ ]. The parties agree to explore this possibility in light of U.S. and Japanese legal requirements. B. PRODUCT/SERVICE: 1. In the second-phase Infoseek Japan Service ("Phase Two Service") the Japanese language indexing and search technology acquired or licensed - -------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 4 of 8 5 * by Kanematsu during Phase One [ ] indexing and search technology for indexing and searching for Japanese language documents. 2. Initially, the Phase Two Service may be operated by Infoseek at the Infoseek facility in the United States. Within a schedule to be determined, the Phase Two Service will be deployed in Japan. C. TECHNOLOGY OWNERSHIP: 1. Ownership of the Infoseek technology, including without limitation, intellectual property (trademarks and look and feel), the indexing and searching capabilities, all applicable interfaces developed by Infoseek to enable the translation efforts, and derivative works based thereon, will remain with Infoseek and Infoseek's licensors. 2. Ownership of any Kanematsu technology, and derivative works based thereon, included in the Phase Two localized product shall remain in Kanematsu. 3. Ownership of the User Interface of the Phase Two localized product shall remain with Infoseek Japan. 4. The Infoseek technology will be licensed to Infoseek Japan under a collateral technology licensing agreement. The parties anticipate that * such license arrangement will grant to Infoseek Japan an [ ], as mutually agreed upon by Infoseek and Kanematsu, with respect to the Infoseek technology for use on an Internet search service in Japan. It is anticipated that such licensing arrangement will be long term. * 5. [ ] 6. The parties acknowledge that it is their intent to keep each party's technology separate and to preserve the identification of the respective technologies. 7. In the event third party technology is licensed for Phase Two Services, any costs, including but not limited to any royalties or fees, shall be borne by Infoseek Japan. D. FINANCIAL: * 1. [ ] finance the internationalization engineering required to prepare * the [ ] indexing and searching technology to be localized for the Phase Two Service. Costs associated with this engineering effort will be determined by Infoseek and Kanematsu and shall be limited to direct costs. * 2. Infoseek Japan will pay [ ] of net advertising revenues (net advertising revenues will be defined as gross advertising revenues less applicable ad frequency discounts, agency discounts, and ad sales commissions) during Phase Two. Infoseek Japan will also pay Kanematsu * [ ] of net advertising revenue during Phase Two. 3. While the Phase Two Service is operated by Infoseek in the United * States, Infoseek Japan will provide Infoseek with an [ ] of net advertising revenue from the Phase Two Service. Infoseek Japan will also fund the incremental equipment necessary to operate the Phase Two Service in the United States. - -------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 5 of 8 6 * 4. Upgrades to the [ ]-based, translated indexing and search technology * shall be provided to Infoseek Japan [ ]. * Such charges shall be applicable to [ ] to the Japanese version of the * [ ] technology and based on direct costs associated therewith. * 5. During Phase Two, a portion of the Infoseek [ ]. Such portion to be reasonably determined by Infoseek and Kanematsu on a pro-rata apportionment. 6. Both parties acknowledge that royalties and third party payments to entities including, without limitation, distribution entities, may be attributable to the Phase Two Service and may be apportioned against the remaining balance prior to the distribution to the parties. 7. Any remaining balance of the net advertising revenues shall remain with Infoseek Japan. E. MANAGEMENT: 1. Infoseek Japan manages relationships with strategic partners and alliances in Japan (i.e. content providers, service providers), promotes distribution and supports the translation efforts, offers ongoing local technical support, and oversees the ongoing Phase Two Service. 2. Infoseek manages technology direction, provides assistance in on-going design matters and U.S. technical support. 3. Infoseek Japan manages general day-to-day operation of Infoseek Japan. 4. Kanematsu will appoint Infoseek Japan operations and finance personnel and will secure and/or provide all financial support of the ongoing operating costs of Infoseek Japan. 5. At a minimum, Infoseek retains the right to appoint the lead management positions of Corporate Marketing, Advertising, Direct Marketing, and Editorial. Infoseek shall also participate in the selection of Engineering management personnel. 6. Infoseek retains the right to a) appoint a U.S. representative director(s) on the Infoseek Japan board to work in conjunction with a Japanese counterpart(s) and b) appoint the appropriate number of directors for the Infoseek Japan Board of Directors according to its ownership equity ratio of Infoseek Japan. 7. Appropriate mutually agreeable provisions regarding protection of the parties' interests in the joint venture will be added. F. TRADEMARKS: All applicable Infoseek trademarks will be licensed to Infoseek Japan solely for use in conjunction with the Phase Two Service. Infoseek retains ownership of all Infoseek trademarks. G. SCHEDULE: To be determined. III. GENERAL ------- -------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 6 of 8 7 A. Each party shall bear its own expenses and costs with regard to all negotiations and activities relating to this MOU. B. Notwithstanding any other provision of this MOU, to the extent the provisions of the Infoseek Mutual Confidential Disclosure Agreement dated January 20, 1996 ("CDA") conflict with the terms of this MOU, the CDA shall control. C. Unless either party sooner terminates this MOU, with or without cause, or * unless the Marketing Alliance Agreement is not entered into on or before March 29, 1996, this MOU will continue in effect until August 31, 1996. Continuation of negotiations beyond these respective dates shall be formally agreed upon in writing by the parties to extend the term for the duration of negotiations. D. Upon expiration or termination of this MOU, in the absence of a subsequent Comprehensive Agreement, only Section III B of this MOU and Section III E shall survive and continue. E. Neither party shall make a claim against, nor be liable to, the other for actual or consequential damages, including but not limited to lost profits, suffered by it because of any performance or failure to perform any obligations hereunder, or for termination of negotiations without a Comprehensive Agreement. The foregoing limitation shall not be construed to apply to claims arising separately from this MOU and negotiations hereunder or actions under or with respect to unrelated or superseding contracts or agreements. Nothing in this MOU obligates either party to sell or purchase any item from the other party, nor to enter into any Comprehensive Agreement. F. No obligation, covenant, or agreement relating to this MOU shall be binding until any of the Comprehensive Agreements are approved and signed by Kanematsu and Infoseek. G. Both parties agree that this MOU is the complete and exclusive statement of understanding between the parties and supersedes all prior agreements, whether oral or written, with respect to the subject matter hereof. 7 of 8 8 ACCEPTED AND AGREED TO: ACCEPTED AND AGREED TO: INFOSEEK CORPORATION KANEMATSU CORPORATION IN SANTA CLARA, CALIFORNIA USA IN TOKYO, JAPAN By: By: ----------------------------------- ----------------------------- Authorized Signature Authorized Signature Name: ROBERT JOHNSON Name: MASAAKI TAKEUCHI --------------------------------- --------------------------- Print Print Title: CEO Title: General Manager ------------------------------- Computer Communication & Aircraft Div. ------------------------- Date: March 30, 1996 Date: March 11, 1996 -------------------------------- -------------------------- 8 of 8 EX-10.49 12 MARKETING ALLIANCE AGREEMENT W/ KANEMATSU 4/11/96 1 EXHIBIT 10.49 *CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. MARKETING ALLIANCE AGREEMENT This Marketing Alliance Agreement ("Agreement") is entered as of April 11, 1996 by and between Infoseek Corporation ("Infoseek"), a California corporation with its principal place of business at 2620 Augustine Drive, Suite 250, Santa Clara, California 95054 (facsimile number: 408-986-1889), and Kanematsu Corporation ("Kanematsu"), a Japanese corporation with its principal place of business at 2-1, Shibaura 1-Chome, Minato-ku, Tokyo 105-05 (facsimile number: 011-81-3-5440-6524). I. BACKGROUND Infoseek and Kanematsu intend to pursue a two-phase strategic alliance. This Marketing Alliance Agreement comprises the first phase of the alliance whereby Infoseek and Kanematsu Corporation agree to jointly develop, deploy and operate the Japanese-language Infoseek service described below ("Phase One Service"). In the second phase of the alliance ("Phase Two Service"), Infoseek and Kanematsu intend to enter into a Joint Venture Agreement to create "Infoseek Japan JV," a joint venture corporation in Japan, which will deploy and operate a second generation Infoseek Japan search service utilizing an internationalized indexing and searching technology ("Moby Technology") intended to be developed and financed during the Phase One Service. This Agreement sets forth the terms and conditions of the first phase of the strategic alliance and the exchange of information and conduct of the parties for the Phase One Service. Furthermore, the parties acknowledge that Kanematsu will be participating, on the same terms as the other investors, in the Infoseek Series E Preferred Stock financing, which the parties anticipate will close on or about the time of execution of this Agreement. This Agreement does not create any obligations, other than those created in the MOU, of either party with respect to Phase Two Service or the Joint Venture Agreement; Phase Two Service and the Joint Venture Agreement are subject to negotiation under the terms of the March 11, 1996 Memorandum of Understanding ("MOU") between the parties which, notwithstanding Section M(1) hereof, remains in effect and in existence in accordance with its terms insofar as it relates to the Phase Two Service and the Joint Venture Agreement. II. PHASE ONE SERVICE OF THE INFOSEEK AND KANEMATSU STRATEGIC ALLIANCE A. PRODUCT/SERVICE: The Phase One Service will consist of three major components: i. a command bar with Japanese relevant content, ii. an indexing and search capability which will index and search Japanese documents and iii. a directory which will contain listings of Japanese sites with reviews written in the Japanese language and a translation of the Infoseek Guide Directory into the Japanese language ("Infoseek Guide Directory" is defined as Infoseek's current English language based directory). 1. Kanematsu will be responsible for acquiring, on a continuing basis, third-party content to be placed on the command bar of the Phase One Service and all costs associated with such acquisition. 2. Kanematsu will be responsible for acquiring or licensing a third party indexing and searching capability which will index and search for Japanese documents, 2 and all costs associated with such acquisition. This indexing and searching capability will be deployed on the Phase One Service. 3. Kanematsu will be responsible for acquiring or licensing, on a continuing basis, third party directories for use in the Phase One Service which will contain listings of Japanese sites with reviews written in the Japanese language, and all costs associated with such acquisition. 4. Kanematsu will be responsible for translating the existing Infoseek Guide Directory for use in the Phase One Service (including site label/title and site descriptions/reviews). 5. Infoseek will assist Kanematsu in adding third-party content to the Infoseek Japan command bar. 6. Infoseek will assist Kanematsu in adding translation changes to the Infoseek Japan directory, including assistance in adding listings of Japanese sites with reviews written in the Japanese language. 7. Infoseek will have the overall responsibility for the design, implementation and operation of the Phase One Service, including the incorporation of the Kanematsu acquired or licensed third-party content and technology into the Phase One Service; accordingly, Kanematsu's activities under Sections A(1), A(2), A(3) and A(4) will be subject to the reasonable approval of Infoseek. 8. Kanematsu agrees to (i) assist Infoseek in understanding the Japanese market and the Kanematsu acquired or licensed third-party content and technology and (ii) provide the necessary level of business and engineering resources required during the Phase One Service to implement Sections A(1), A(2), A(3) and A(4), namely to, without limitations: i. license or acquire Japanese relevant third-party content, ii. license or acquire third-party directory listings of Japanese sites, iii. license or acquire third-party indexing and search capability to be deployed on the Phase One Service and iv. translate the existing Infoseek Guide Directory listings. Any payments to third parties in connection with anything acquired or licensed from a third-party, as contemplated above, whether in connection with up-front fees, royalties or otherwise will be borne by Kanematsu and Kanematsu will indemnify Infoseek from any damages, liabilities, costs, expenses and attorneys fees in connection with any claim of infringement, misappropriation or otherwise in connection therewith or with anything else provided by Kanematsu. Infoseek will similarly indemnify Kanematsu from third party claims of infringement or misappropriation by anything provided by Infoseek to Kanematsu. 9. The Phase One Service shall be operated by Infoseek at an Infoseek facility in the United States. B. FINANCIAL: 1. Within five (5) days after the date this Agreement is signed by the * parties, Kanematsu will make a non-refundable payment to Infoseek of [ ], which is intended to fund the direct costs of the design, implementation and operation - --------------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 2 3 * of the Phase One Service; up to [ ] of which is associated with the purchase of dedicated equipment for the Phase One Service. This equipment may be purchased directly or leased by Infoseek as determined by Infoseek or purchased directly or leased by Kanematsu, whichever is more cost effective for the parties. Any purchased equipment will be owned by Kanematsu. Infoseek has provided Kanematsu with a rough breakdown of currently anticipated cost categories. 2. Both Infoseek and Kanematsu will sell advertising on the Phase One Service pursuant to standard mutually agreed upon terms, conditions and policies; provided that neither party may make any commitment on the other party's behalf. Kanematsu shall forward any advertising order to Infoseek for acceptance and implementation. Each party will be responsible for collecting on advertising it sells. If * Infoseek sells advertising, Infoseek will receive [ ] of the Net Advertising Revenues from advertising which Infoseek sells ("Net Advertising Revenues" is defined as the gross advertising revenues actually received less any applicable advertising frequency discounts, advertising agency discounts, advertising sales commissions, refund, rebates and other standard deductions). If * Kanematsu sells advertising, Kanematsu will receive [ ] of Net Advertising Revenues from advertising for which Kanematsu forwarded firm orders. However, neither party will be entitled under this * Section B(2) to [ ] of Net Advertising Revenue from advertising [ ] * those specified in the [ ] applicable [ ] for the Phase One Service. * (Until a separate suggested [ ] is mutually agreed, Infoseek's * current [ ] will be used.) * 3. Notwithstanding the [ ] Kanematsu may receive pursuant to Section * B(2), Kanematsu will receive [ ] of the Net Advertising Revenues of the Phase One Service as consideration for acquiring the content, licensing or acquiring an indexing and search capability, licensing or acquiring the directory listings, and translation of the Infoseek Guide Directory listings. 4. It is Infoseek's assumption under this Agreement and the MOU that a * [ ] arrangement between Infoseek and Infoseek's major distribution * entity will [ ] for the Phase One Service and Phase Two Service on such distributor's search page. If this flat fee payment arrangement is made, then any expenses associated with this arrangement will not be deducted from the Net Advertising Revenue during the Phase One Service. If a flat fee payment arrangement is not made, the above percentages, as well as the MOU's allocations, to which Kanematsu is entitled may have to be adjusted downward. Such adjustment shall be mutually agreed upon by both parties. Such agreement shall not be unreasonably withheld or delayed. 5. Both parties acknowledge that royalties and third party payments paid by Infoseek to entities including, without limitation, distribution entities (other than the major distribution entity referred to in Section B(4) above), may be attributable to the Phase One Service and may be apportioned against the remaining balance of the Net Advertising Revenues prior to the distribution to the parties. (However, any payments Kanematsu is required to bear under Section A hereof, except for mutually agreed payments to content providers based on Net Advertising Revenues, will not be so apportioned.) Both parties will mutually agree in writing and in advance to any such royalties and third party payments attributable to the Phase One Service. - ---------------------------------------- *CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 3 4 6. Any remaining balance of the Net Advertising Revenues shall be shared on an equal basis by Infoseek and Kanematsu. 7. Any internationalization engineering performed by Infoseek during the * Phase One Service term, with [ ] as to cost to prepare and develop * the Moby Technology to be localized for the Phase Two Service, [ ]. Costs associated with this engineering effort will be determined by Infoseek and shall be limited to direct costs. If the Phase Two Service is implemented, Infoseek shall grant a royalty-free (except as provided in Section II.C.7 of the MOU) license to the relevant Infoseek technology to Infoseek Japan JV for the Phase Two Service, in accordance with Section II.C.4 of the MOU. If the Phase Two Service is not implemented and the parties cannot agree on a * mutually satisfactory licensing arrangement, [ * ]. 8. Within thirty (30) days after the end of each calendar quarter, each party will provide the other with its calculation of Net Advertising Revenues and apportionment with respect thereto in detail. Within an additional thirty (30) days thereafter, the parties will reconcile their accounts and make payments (i) to effect the foregoing allocation of Net Advertising Revenues and (ii) to ensure that each party is reimbursed for the portion borne by it of amounts deducted in determining Net Advertising Revenues or apportioned against Net Advertising Revenues. All payments between the parties will be made in U.S. dollars and all conversions from yen will be calculated based on the mean of the exchange rates quoted in the New York Wall Street Journal for the first day of the applicable quarter and the last day of the applicable quarter. Each party shall have the right, at its own expense, during the term of this Agreement and for one (1) year thereafter, to hire an independent public accountant, reasonably acceptable to the other, to examine the relevant financial books and records of the other at normal business hours, upon reasonable notice to determine or verify the calculation and apportionment of Net * Advertising Revenues. If errors of [ ] percent [ ] or more in the other party's favor are discovered as a result of such examination, the other party shall bear the expense of such examination and pay the deficiency immediately. As a condition to such examination, the independent public accountant shall execute a written agreement, reasonably satisfactory in form and substance, to maintain in confidence all information obtained during the course of any such examination, except for disclosure to the hiring party as necessary to evidence improper calculation or apportionment of Net Advertising Revenues. 9. It is currently anticipated that if the Phase Two Service is * implemented, Kanematsu shall [ ] incurred pursuant to Sections [ ] * and [ ] of this Agreement from Infoseek Japan JV, subject to * financing for such [ ] being made available to Infoseek Japan JV * from Kanematsu over [ ] period beginning on the [ ] of the Joint * Venture Agreement at a [ ] rate and on [ ] to be [ ] between Kanematsu and Infoseek Japan JV. C. TRADEMARKS: All applicable Infoseek trademarks and service marks will be licensed to Kanematsu solely for use in advertising brochures and other promotional material in conjunction with the Phase One Service, all subject to the reasonable approval of Infoseek. Infoseek retains ownership of all Infoseek trademarks and service marks. Kanematsu agrees to - ------------------------ --------------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 4 5 utilize the Infoseek trademarks and service marks according to Infoseek's current guidelines. D. ALLIANCES: 1. Kanematsu will pursue the necessary alliances to acquire third-party content for the Phase One Service. 2. Kanematsu will pursue an alliance with Dentsu for advertising sales and NTT for business listings (which may include regional and local advertising). * 3. Infoseek will [ ] for premier listing of the Phase One Service on * the [ ] page for the Japanese version of the [ ]. E. TECHNOLOGY OWNERSHIP: 1. Ownership of any Infoseek technology, including but not limited to its indexing and search capability, and any technology licensed or acquired by Infoseek, and all applicable interfaces developed by Infoseek to enable the translation efforts, will remain with Infoseek and its licensors. Furthermore, Infoseek shall exclusively own all right, title and interest (including patent rights, copyrights, trade secret rights, and other rights throughout the world) in any inventions, works of authorship, ideas or information made or conceived or reduced to practice, during the term of this Agreement, by Kanematsu personnel that are loaned to Infoseek as contemplated by Section H(1) or that otherwise assist Infoseek in connection with the subject matter of this Agreement or the Moby Technology. i. Kanematsu hereby makes and will provide all assignments necessary to accomplish the foregoing ownership provision and agrees to assist Infoseek, at Infoseek's expense, in every proper way to evidence, record and perfect the assignment and to apply for and obtain recordation of and from time to time enforce, maintain, and defend such proprietary right. ii. Any assignment of copyright hereunder includes all rights of paternity, integrity, disclosure and withdrawal and any other rights that may be known as or referred to as "moral rights" (collectively "Moral Rights"). To the extent such Moral Rights cannot be assigned under the applicable law, the assigning party hereby waives such Moral Rights and consents to any action consistent with the terms of this Agreement that would violate such Moral Rights in the absence of such consent. The assigning party will obtain and confirm any such waivers and consents from time to time as requested by the other party. 2. Except as provided in Section E(1), ownership of any Kanematsu technology, including but not limited to its index and search capability, and any technology licensed or acquired by Kanematsu, will remain with Kanematsu and its licensors. However, if any developments or ideas assigned to Infoseek under Section E(1) cannot be reasonably made, used, reproduced or distributed without using or violating the intellectual property rights in the technology owned by Kanematsu and not assigned hereunder, Kanematsu hereby grants the Infoseek a perpetual, worldwide, royalty-free, non-exclusive, sublicensable right and license to exploit and exercise all such technology rights, except those technology rights related to indexing and searching technology acquired by Kanematsu pursuant to fulfilling its obligation in Section A(2). - --------------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 5 6 F. CONFIDENTIALITY: 1. Kanematsu agrees that all code, inventions, algorithms, know-how and ideas and, if in (or, within 30 days of disclosure, reduced to) tangible form and marked as "Confidential" or "Proprietary," all other business, technical and financial information it obtains from Infoseek, shall be the Proprietary Information of Infoseek. Infoseek agrees that any marketing techniques or information it obtains from Kanematsu that are in (or, within 30 days of disclosure are reduced to) tangible form and marked "Confidential" or "Proprietary" shall be the Proprietary Information of Kanematsu. Except as expressly and unambiguously allowed herein, each party will hold in confidence and not use or disclose any of the other party's Proprietary Information and shall similarly bind its employees in writing. Neither party shall be obligated under this Section F with respect to information it can document: i. is or has become readily publicly available without restriction through no fault of the receiving party or its employees or agents; or ii. is received by it without restriction from a third party lawfully in possession of such information and lawfully empowered to disclose such information; or iii. was rightfully in the possession of the receiving party without restriction prior to its disclosure by the disclosing party; or iv. was independently developed by employees or consultants of the receiving party without access to the disclosing party's Proprietary Information. Notwithstanding the foregoing, anything assigned by Kanematsu to Infoseek in connection with this Agreement shall be deemed the Proprietary Information of Infoseek disclosed by Infoseek to Kanematsu and exceptions (iii) and (iv) above will not be applicable thereto. 2. Each party acknowledges that any disclosure or unauthorized use of the other party's Proprietary Information will constitute a material breach of this Agreement and cause substantial harm to such other party for which damages would not be a fully adequate remedy, and, therefore, in the event of any such breach, in addition to other available remedies, such other party shall have the right to obtain injunctive relief. G. LIMITED LIABILITY: 1. NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT OR OTHERWISE, EXCEPT UNDER SECTION F, NEITHER PARTY SHALL BE LIABLE OR OBLIGATED UNDER ANY SECTION OF THIS AGREEMENT OR UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES SUFFERED BY THE OTHER. H. MANAGEMENT: 1. Infoseek shall be responsible for the program management of the design, development and operation of the Phase One Service, which may include management of Kanematsu personnel loaned to Infoseek at Infoseek's request (such personnel will remain employees of Kanematsu and Kanematsu will be 6 7 responsible for compensation, insurance, tax withholding and all other matters with respect to such employees); Infoseek may terminate the loan of any Kanematsu personnel at any time at its will. Employees of Kanematsu who are on loan to Infoseek do not have any power or authority whatsoever to enter into any contract or agreements with, or make any commitment to, Infoseek on Kanematsu's behalf, unless expressly authorized to do so by Kanematsu. 2. During the Phase One Service period and in anticipation of the Phase Two Service, Infoseek and Kanematsu will cooperate to appoint the management personnel for the Phase Two Service. 3. During the Phase One Service period, Kanematsu shall organize and staff a working committee ("Working Committee") within Kanematsu to promote Infoseek Japan, sell advertising, and prepare for the Phase Two Service. 4. Kanematsu and any members of its Working Committee, may assist Infoseek, at Infoseek's request, in the operation of the Phase One Service on an interim basis. I. TERM AND TERMINATION: 1. The term of the Phase One Service shall be for a period ending upon the completion of the development of Infoseek's Moby Technology which is anticipated to be the end of July 1996. At the end of the Phase One Service term both parties anticipate transitioning to the Phase Two Service. In the event Infoseek and Kanematsu agree that the Phase One Service should be extended beyond July 1996, such extension shall be subject to terms for such extension as may be mutually agreed upon in writing, including without limitation, additional financing for such extended Phase One Service period. 2. Either party may terminate this Agreement upon 30 days written notice if the assumption made in Section B(4) does not materialize or any financial arrangement or adjustment referred to in Section B is materially wrong or cannot be agreed upon or if such party is otherwise materially losing money on the Phase One Service. 3. If either party should materially breach a material provision of this Agreement, the other may terminate this Agreement upon 60 days written notice unless the breach is cured within the notice period. 4. Responsibilities for payments to third parties, indemnities and accrued payments, as well as Sections E, F, G and J through M will survive any expiration or termination of this Agreement. J. RELATIONSHIP OF THE PARTIES: Notwithstanding any provision hereof, for all purposes of this Agreement each party shall be and act as an independent contractor and not as partner, joint venturer, or agent of the other and shall not bind nor attempt to bind the other to any contract or obligation. K. ASSIGNMENT: Neither party shall have any right or ability to assign, transfer, or sublicense any obligations or benefits under this Agreement without the written consent of the other 7 8 except that a party may assign and transfer this Agreement and its rights and obligations hereunder to any third party who succeeds to substantially all its business or assets. L. NOTICE: Notices under this Agreement shall be sufficient only if personally delivered, sent by confirmed facsimile, delivered by a major commercial rapid delivery courier service or mailed by certified or registered mail, return receipt requested to a party at its addresses set forth herein or as amended by notice pursuant to this subsection. If not received sooner, notice by mail shall be deemed received 5 days after deposit in the U.S. mails. M. MISCELLANEOUS: 1. This Agreement supersedes all proposals, oral or written, all negotiations, conversations, or discussions between or among parties relating to the subject matter of this Agreement and all past dealing or industry custom. The failure of either party to enforce its rights under this Agreement at any time for any period shall not be construed as a waiver of such rights. No changes or modifications or waivers are to be made to this Agreement unless evidenced in writing and signed for and on behalf of both parties. 2. During the term of this Agreement and for eighteen months thereafter, neither party will encourage or solicit any employee or consultant to leave the employ of the other party; the foregoing does not prohibit mass media advertising not specifically directed towards the other party's employees or consultants. * 3. Both parties agree that [ ] of this Agreement or, [ ] the MOU is [ ], neither party nor any affiliate thereof, will engage in any * Internet [ ] or Internet [ ] business or activity (or preparation * therefor) specifically directed to [ ] or [ ] markets other than pursuant to this Agreement, or assist or encourage any other person * or organization in doing so. This will not prevent [ ] from accepting * [ ] in connection with an [ ] service not specifically [ ] on [ ]. 4. In the event that any provision of this Agreement shall be determined to be illegal or unenforceable, that provision will be limited or eliminated to the minimum extent necessary so that this Agreement shall otherwise remain in full force and effect and enforceable. 5. Both parties agree that no press releases or other publicity relating to the existence or substance of the matters contained herein will be made without the joint approval of the parties. 6. This Agreement shall be governed by and construed under the laws of the State of California and the United States without regard to conflicts of laws provisions thereof and without regard to the United Nations Convention on Contracts for the International Sale of Goods. Any disputes will be settled by arbitration in Santa Clara, California (which arbitration shall be binding and enforceable in any court of competent jurisdiction) in accordance with the rules of the American Arbitration Association (AAA). In any action or proceeding to enforce rights under this Agreement, the prevailing party shall be entitled to recover costs and attorneys' fees. --------------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 8 9 7. The rights and remedies of a party set forth herein with respect to failure of the other to comply with the terms of this Agreement (including, without limitation, rights of full termination of this Agreement) are not exclusive, the exercise thereof shall not constitute an election of remedies and the aggrieved party shall in all events be entitled to seek whatever additional remedies may be available in law or in equity. 8. No liability or loss of rights hereunder shall result to either party from delay or failure in performance (other than payment) caused by force majeure, that is, circumstances beyond the reasonable control of such party. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth above. INFOSEEK CORPORATION in Santa Clara, California, USA By ------------------------------- Name ROBERT E. L. JOHNSON ----------------------------- Title April 11, 1996 ---------------------------- KANEMATSU CORPORATION in Tokyo, Japan By ------------------------------- Name MASAAKI TAKEUCHI ----------------------------- Title General Manager Computer Communication & Aircraft Div. ------------------------------------- 9 EX-10.50 13 RELATIONSHIP AGREEMENT W/ REUTERS NEWMEDIA 4/19/96 1 EXHIBIT 10.50 *CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. RELATIONSHIP AGREEMENT Agreement dated April 19, 1996 by and between REUTERS NEWMEDIA INC., with its principal office located at 1700 Broadway, New York, New York 10019 ("Reuters"), and INFOSEEK CORPORATION, with its principal office located at 2620 Augustine Drive, Suite 250, Santa Clara, California 95054 (the "Company"). 1. DEFINITIONS 1.1 "Affiliate" means, with respect to any given Person, any other Person directly or indirectly Controlling, Controlled by, or under common Control with, such Person. 1.2 "Agreement" means this agreement, as it may be amended from time to time in accordance with Section 11.8. 1.3 "Business Day" means a day that banks are open for business in New York City. 1.4 "Company Site" shall mean the Company's search and retrieval site on the Internet located at http:\\www.infoseek.com (and any Mirror Sites thereto). 1.5 "Content" means text, information, data, images and sound recordings. 1.6 "Control" over a Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other equity interest, representation on its board of directors or body performing similar functions, by contract or otherwise. The terms "Controlling" or "Controlled" will have corollary meanings. 1.7 "Damages" means liabilities, damages, awards, settlements, losses, claims and expenses, including reasonable attorney's fees and expenses and costs of investigation. 1.8 "Foreign Service" means (a) any Internet service, including a site on the World Wide Web (other than the Internet services currently provided by the Company), or (b) any proprietary on-line service, in each case only to the extent that such service is a general Internet search service and provides information targeted at, and is primarily marketed and sold to persons located in a specific country or region outside the United States. 2 1.9 "Including" means including but not limited to. 1.10 "Intellectual Property Rights" means any patent, design right, copyright, trademark, service mark (and any application or registration respecting the foregoing), database right, trade secret, know-how and/or other present or future intellectual property right of any type, wherever in the world enjoyable. 1.11 "Laws" means applicable laws, regulations, rules or orders of any government, administrative authority or court. 1.12 "Mirror Site" shall mean an Internet site which contains substantially similar form and Content (including similar pages) of a parent Internet site which (i) is located at a geographic location distinct from such parent Internet site and (ii) is created for the purpose of improving performance and accessibility to such parent Internet site. 1.13 "On-Line Service Agreement" means the On-Line Service Agreement dated February 28, 1995 between Reuters and the Company, as amended by Amendment No. 1 dated January 4, 1996. 1.14 "Person" means any individual, corporation, limited-liability company, partnership, firm, joint venture, association, joint-stock company, trust, or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. 1.15 "Reuters Product" means any Reuters product or service marketed or sold from time to time by Reuters or its Affiliates, including the Reuters RT and Reuters Business Briefing. 1.16 "Reuters Subscriber" means any Person that receives any Reuters Product. 1.17 "Search Technology" means the Company's proprietary natural language free-text centralized indexing and search technology, presently marketed under the brand name "UltraSeek." 1.18 "Third Party Technology" means technology or software included in the Search Technology which is licensed by the Company from third parties. 2. TERM 2.1 This Agreement will take effect on April 19, 1996, and, unless terminated earlier pursuant to Section 14, will terminate on April 19, 2001 (the "Term"). 2. 3 3. LICENSE * 3.1 At any time within [ ] following the first commercial availability of the Search Technology, at the request of Reuters and upon the execution by Reuters of a customary Confidential Disclosure Agreement, the Company will provide Reuters with two complete copies of the Search Technology in object code form, along with all supporting documentation, written specifications * and user guides in connection therewith. Reuters shall have a period of [ ] from the delivery of such materials to evaluate the same, and may, at any time during such period, license the Search Technology pursuant to a mutually agreed upon license agreement (the "License") for use on a non- * exclusive basis with any Reuters Product for the license fee of [ ] provided, that it is understood that the License shall not extend to any use by Reuters (i) in violation of the Company's agreements with third parties in connection with the Third Party Technology, or (ii) in connection with a general Internet search and retrieval service competitive with the Company. * The License shall be for a term of up [ ]. "CPU" means a single processing unit or a server containing multiple linked processors. The parties will discuss the support and maintenance of the Search Technology following the execution of the agreement pertaining to the License. 4. FOREIGN SERVICE * 4.1 For [ ] that [ ] is [ ] in [ ] during * the Term, it shall discuss with [ ] (a) the provision of [ ] and [ ] to * be included in such a [ ], (b) the [ ] of such [ ], and (c) [ ] in such * [ ]. Nothing contained in the Section [ ] to offer [ ]. 5. ADVALUE MEDIA TECHNOLOGIES, INC. 5.1 The Company shall negotiate in good faith with Advalue Media Technologies, Inc. ("Advalue") and Reuters in connection with * [ ] provided that nothing contained herein shall obligate the Company, Advalue or Reuters to enter into any agreement in connection therewith. - ------------------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 3. 4 6. AMENDMENT TO ON-LINE SERVICES AGREEMENT 6.1 On the date hereof, the parties will enter into Amendment No. 2 to the Online Service Agreement, attached hereto as Exhibit A. 7. LIMITATION OF LIABILITY 7.1 Neither party will be liable for any failure to perform any obligation hereunder, or from any delay in the performance thereof, due to causes beyond its control, including industrial disputes of whatever nature, acts of God, public enemy, acts of government, failure of telecommunications, fire or other casualty. 7.2 EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, THERE ARE NO WARRANTIES, CONDITIONS, GUARANTIES OR REPRESENTATIONS AS TO MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHER WARRANTIES, CONDITIONS, GUARANTIES OR REPRESENTATIONS, WHETHER EXPRESS OR IMPLIED, IN LAW OR IN FACT, ORAL OR IN WRITING. EACH PARTY HEREBY ACKNOWLEDGES THAT IT HAS NOT RELIED UPON ANY WARRANTY, CONDITION, GUARANTY OR REPRESENTATION MADE BY THE OTHER. 7.3 Under no circumstances will either party, its Affiliates or their respective officers, directors, employees be liable for any indirect, incidental, special or consequential damages with respect to each party's obligations under this Agreement, regardless of whether such damages could have been foreseen or prevented. 8. REPRESENTATIONS AND WARRANTIES 8.1 The Company represents and warrants to Reuters as of the date hereof that: (a) The execution, delivery and performance by the Company of this Agreement do not and will not (i) violate the organizational documents of the Company, (ii) violate any applicable law, rule, regulation, judgment, injunction, order or decree, or (iii) require any notice or consent or other action by any Person under, constitute a default under, or give rise to any right of termination, cancellation or acceleration of any right or obligation of the Company or to a loss of any benefit to which the Company is entitled under, any agreement or other instrument binding upon the Company or any license, franchise, permit or other similar authorization held by the Company. (b) To the best of its knowledge, the Search Technology to be provided to Reuters hereunder does not violate the Intellectual Property Rights of any third Person. 4. 5 8.2 Reuters hereby represents and warrants to the Company as of the date hereof that: (a) the execution, delivery and performance by Reuters of this Agreement does not and will not (i) violate the organizational documents of Reuters, (ii) violate any applicable law, rule, regulation, judgment, injunction, order or decree, or (iii) require any notice or consent or other action by any Person under, constitute a default under, or give rise to any right of termination, cancellation or acceleration of any right or obligation of Reuters or to a loss of any benefit to which Reuters is entitled under, any agreement or other instrument binding upon Reuters or any license, franchise, permit or other similar authorization held by Reuters. 9. INDEMNIFICATION 9.1 The Company will indemnify and hold Reuters and its Affiliates and their respective officers, directors and employees harmless from and against any and all Damages resulting from or arising out of any misrepresentation or breach of representation or warranty of the Company contained herein or any breach of any covenant or agreement to be performed by the Company hereunder. 9.2 Reuters will indemnify and hold the Company and its Affiliates and their respective officers, directors and employees harmless from and against any and all Damages resulting from or arising out of (a) any misrepresentation or breach of representation or warranty of Reuters contained herein; or (b) any breach of any covenant or agreement to be performed by Reuters hereunder. 9.3 A party seeking indemnification pursuant to this Section 9 (an "Indemnified Party") from or against the assertion of any claim by a third Person (a "Third Person Assertion") shall give prompt notice to the party from whom indemnification is sought (the "Indemnifying Party"), provided, however, that failure to give such notice shall not relieve the Indemnifying Party of any liability hereunder (except to the extent the Indemnifying Party has suffered actual material prejudice by such failure). No Indemnified Party shall settle any Third Person Assertion without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed. 9.4 Within ten days of receipt of notice from the Indemnified Party pursuant to Section 9.3, the Indemnifying Party shall have the right, exercisable by written notice to the Indemnified Party, to assume the defense of a Third Party Assertion. If the Indemnifying Party assumes such defense, the Indemnifying Party (a) may select counsel, which counsel shall be reasonably acceptable to the Indemnified Party, and (b) shall be obligated to pay the costs (including reasonable attorney's fees and expenses and costs of investigation) incurred by the Indemnified Party in defending such Third Person Assertion between the date of the commencement of such Third Person Assertion and the date of the Indemnifying Party's assumption of such defense. 5. 6 9.5 If the Indemnifying Party (i) does not assume the defense of any Third Person Assertion in accordance with section 9.4; (ii) having so assumed such defense, unreasonably fails to defend against such Third Person Assertion; or (iii) has been advised by the written opinion of counsel to the Indemnified Party that the use of the same counsel to represent both the Indemnifying Party and the Indemnified Party would present a conflict of interest, then, upon five days' written notice to the Indemnifying Party, the Indemnified Party may assume the defense of such Third Person Assertion. In such event, the Indemnified Party shall be entitled under this Section 9 as part of its Damages to indemnification for the costs of such defense. 9.6 The Indemnifying Party, if it shall have assumed the defense of any Third Person Assertion, shall have the right to consent to the entry of judgment with respect to, or otherwise settle, such Third Person Assertion with the consent of the Indemnified Party, which consent shall not be unreasonably withheld, provided, however, that the Indemnified Party may withhold its consent if any such judgment imposes a monetary or continuing non-monetary obligation to the Indemnified Party or does not include an unconditional release of the Indemnified Party and its Affiliates from all liability in respect of claims that are the subject matter of such Third Person Assertion. The Indemnifying Party and the Indemnified Party shall cooperate, and cause their respective Affiliates to cooperate, in the defense or prosecution of any Third Person Assertion and shall furnish or cause to be furnished such records, information and testimony, and attend such conferences, discovery proceedings, hearings, trials or appeals, as may be requested in connection therewith. The Indemnifying Party or the Indemnified Party, as the case may be, shall have the right to participate, at its own expense, in the defense or settlement of any Third Person Assertion which the other is defending. 10. TERMINATION 10.1 In addition to any other remedy available at law or in equity, either party may terminate this Agreement immediately, in whole or in part, without further obligation to the other party in the event of: (a) any breach of this Agreement by the other party that is not remedied within 60 days notice of such breach in writing; or (b) the other party's making an assignment for the benefit of its creditors, the filing of a voluntary of involuntary petition under any bankruptcy or insolvency law, under the reorganization or arrangement provisions of the United States Bankruptcy Code, or under the provisions of any law of like import in connection with the other party, or the appointment of a trustee or receiver for the other party or its property. 6. 7 10.2 Reuters may terminate this Agreement at any time following (i) any merger or consolidation of the Company, or any sale, lease or transfer of all or substantially all of the assets of the Company (to a non-Affiliate), or (ii) any change of Control of the Company (whether through merger, stock transfer, or otherwise) in either case ((i) or (ii) above) to a Person who is competitive with Reuters in a financially or strategically significant line of business in Reuters reasonable determination. 10.3 The Company may terminate this Agreement at any time following (i) any merger or consolidation of Reuters Holdings PLC ("RH"), or any sale, lease or transfer of all or substantially all of the assets of RH (to a non-Affiliate), or (ii) any change of Control of RH (whether through merger, stock transfer, or otherwise) in either case ((i) or (ii) above) to a Person who is competitive with the Company in a financially or strategically significant line of business in the Company's reasonable determination. 11. GENERAL 11.1 Nothing will be deemed to limit or restrict either party from entering into agreements with any other Person covering services similar to that provided by the other party or the subject matter hereunder. 11.2 Neither party will make or issue any external press statement regarding the terms of this Agreement unless (a) it has received the express written consent of the other party, which will not be unreasonably withheld or (b) it is required to do so by Law or regulation. Press statements not rejected within 3 business days following receipt shall be deemed approved. 11.3 This Agreement and any and all addenda, schedules or exhibits attached hereto represent the entire agreement of the parties regarding the subject matter hereof. There are no other oral or written collateral representations, agreements, or understandings regarding the subject matter hereof. 11.4 This Agreement will be deemed to have been executed and delivered in the State of New York and will be governed by and construed in accordance with the laws of New York. 11.5 All notices, requests and other communications to any party hereunder will be in writing (including facsimile transmission or similar writing) and will be given to such party at its address or telecopy number set forth below or at such other address or telecopy number as such party may hereafter specify for such purposes. Each such notice, request or other communication will be effective (i) if given by telecopy, when such telecopy is transmitted to the telecopy number specified in this Section and confirmation of receipt is obtained or (ii) if given by any other means, when received at the address specified below: 7. 8 To Reuters: Reuters NewMedia Inc. 1700 Broadway New York, New York 10019 Attn: Senior Vice President With a copy to: Reuters America Inc. 1700 Broadway New York, New York 10019 (212) 307-9178 (Facsimile) Attn: General Counsel To The Company: Infoseek Corporation 2620 Augustine Drive Suite 250 Santa Clara, California 95054 Attn: President With a copy to: Infoseek Corporation 2620 Augustine Drive Suite 250 Santa Clara, California 95054 Attn: General Counsel 11.6 This Agreement will be binding upon and inure to the benefit of the parties, their respective heirs, personal representatives, successors and assigns. Neither party may assign any of its rights or delegate any of its duties under this Agreement without the prior written consent of the other, provided that either party may assign this Agreement to any affiliate without the necessity of obtaining consent from the other party. 11.7 There is no joint venture, partnership, agency or fiduciary relationship existing between the parties and the parties do not intend to create any such relationship by this Agreement. 11.8 This Agreement may not be amended, modified or superseded, nor may any of its terms or conditions be waived unless expressly agreed to in writing by both parties. The failure of either party at any time or times to require full performance of any provision hereof will in no manner affect the right of such party at a later time to enforce the same. 8. 9 11.9 If any provision or term of this Agreement, not being of a fundamental nature, is held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remainder of this Agreement will not be affected. 11.10 The provisions of Section 9 and any and all disclaimers and indemnities contained herein will survive the termination of this Agreement. REUTERS NEWMEDIA, INC. INFOSEEK CORPORATION By: By: -- ----------------------------- ------------------------------- Title: Senior VP Title: VP & General Counsel ---------------------------- ---------------------------- Date: Date: 4/19/96 --------------- -------------- 9. 10 EXHIBIT A AMENDMENT NO. 2 TO ON-LINE SERVICE AGREEMENT The On-Line Agreement ("Agreement") by and between InfoSeek Corporation, a corporation duly organized under the laws of California, with its principal place of business at 2620 Augustine Drive, #250, Santa Clara, California 95054, hereinafter referred to as "InfoSeek", and Reuters NewMedia Inc., with its principal place of business at 1700 Broadway, New York, New York 10019, hereinafter referred to as "Reuters", dated February 29, 1995, as amended by Amendment No. 1, dated January 4, 1996 is hereby amended by this Amendment No. 2. 1. PARAGRAPH 2.1 of the Agreement is hereby amended to read in its entirety: "2.1 This Agreement will take effect on the date it is signed by both parties and will terminate on its fifth anniversary unless terminated earlier pursuant to Section 14 hereto." 2. PARAGRAPH 2 OF AMENDMENT NO. 1 to the Agreement is hereby amended to read in its entirety: "The Basic License Fee ("Original Rates") set forth in Item A of Schedule 4, as amended by Amendment No. 1 ("Revised Rates") is further changed to the following rates ("Further Revised Rates"), such change to be effective on May 1, 1996. Further Revised Rates and Revised Rates for any partial months shall be computed on pro-rata basis: Subject to the minimum monthly fees specified below ("Minimum Monthly Fees"), InfoSeek shall pay to Reuters a royalty equal * to [ ] of Net Fees (as described below) for advertisement impressions ("Impressions") appearing on pages ("Qualified Pages") accessed by Users containing (a) any Article or Articles, or (b) Headlines or Summaries, where such Headlines or Summaries comprise a substantial majority of the Content on such page, but excluding pages containing Headlines or Summaries which result from a search query on a specific subject or topic: - ---------------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 11 Minimum Monthly Fees: * [ ] * [ ] * [ ] "Net Fees" shall mean amounts received and recognized as revenue by InfoSeek from advertisers attributable to Impressions appearing on Qualified Pages less, with respect to such amounts, (1) any amounts for refunds on other credits, including, but not limited to amounts credited for bad debt or fraud or advertisement barter (provided, (i) any such bartered * advertisements do not exceed [ ] of the ad "inventory" on the Qualified Pages in any given month during the Term and (ii) the Distributor treats the Qualified Pages substantially similar as all other pages on its Site containing Content in terms of the amount of bartered ads appearing on any such pages); (2) any amounts payable by InfoSeek applicable to internal and/or external sales commissions, advertising agency fees, or fees or royalties payable or creditable to third parties and (3) any applicable sales, use, value-added or withholding taxes, or export duties or similar changes required to be paid or withheld by InfoSeek. "Articles" shall mean full stories of approximately 300 words in length covering news, sports, business or entertainment events. "Headlines" shall mean headlines of approximately 1-2 sentences covering news, sports, business or entertainment events. "Summaries" shall mean summaries of approximately 50 words in length covering news, sports, business or entertainment events. Each royalty report will specify the total applicable fees received and the computation of "Net Fees." 3. PARAGRAPH 6.7 of the Agreement is hereby amended to read in its entirety: "6.7 Distributor will not remove, conceal or obliterate any copyright or other proprietary notice or any credit-line or date-line included in the Reuters Services. Distributor will insert on each screen that contains any Content, and in close proximity to the Content, the following notice: "Copyright [insert current year] Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited - ---------------------------------------- *CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 2. 12 without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon," or such other notice as may be agreed by the parties in writing." 4. Paragraph 13.2 of the Agreement is hereby deleted and replaced in its entirety by the following: "13.2 Reuters may terminate this Agreement following (i) any merger or consolidation of Distributor, or any sale, lease or transfer of all or substantially all of the assets of Distributor (to a non-Affiliate), or (ii) any change of Control of Distributor (whether through merger, stock transfer, or otherwise) in either case ((i) or (ii) above) to a Person who is competitive with Reuters in a financially or strategically significant line of business, or is an existing or potential purchaser of similar Content from Reuters, any of which is in Reuters reasonable determination. Distributor may terminate this Agreement following (i) any merger or consolidation of Reuters Holding PLC ("RH"), or any sale, lease or transfer of all or substantially all of the assets of RH (to a non-Affiliate), or (ii) any change of Control of RH (whether through merger, stock transfer, or otherwise) in either case ((i) or (ii) above) to a Person who is competitive with Distributor in a financially or strategically significant line of business, in Distributor's reasonable determination." 5. PARAGRAPH 3 OF AMENDMENT NO. 1 TO THE AGREEMENT is hereby deleted in its entirety. All other provisions of the Agreement shall reamin in full force and effect following the date hereof. This Amendment may be executed in counterparts. REUTERS NEWMEDIA INC. INFOSEEK CORPORATION By: By: ------------------------ --------------------------- Title: Senior VP Title: VP & General Counsel --------------------- ----------------------- Date: 4/19/1996 Date: 4/19/96 ---------------------- ----------------------- 3. EX-10.51 14 MEMORANDUM OF UNDERSTANDING W/ IDG COMMUNICATIONS 1 EXHIBIT 10.51 * CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. MEMORANDUM OF UNDERSTANDING Based on preliminary discussions, Infoseek Corporation ("Infoseek") with principal offices at 2620 Augustine Drive, Suite 250, Santa Clara, CA 95054 and IDG COMMUNICATIONS INC. ("IDG") with principal offices at ONE EXETER PLAZA, BOSTON, MA 02116 have decided that detailed negotiations are appropriate regarding the possible agreement between Infoseek and IDG for (a) placement of IDG editorial content and IDG Icons within (i) certain iZones ("IDG iZones") and certain Topics ("Topics") of the Directory ("IDG Topics") of the Infoseek Guide Service, (ii) on certain intermediate pages ("Interim Pages") linked from the iZones and Topics; and (b) the placement of Infoseek Guide Icons on IDG Websites. This Memorandum of Understanding ("MOU") covers the draft proposal of the terms and conditions of the placement agreement, exchange of information and conduct of such negotiations. The parties wish to avoid any misunderstandings and disputes which might otherwise occur in the event that a comprehensive agreement in this subject is not fully negotiated and fully executed. The parties acknowledge that and agree that the subject matter of these negotiation will involve numerous interrelated business and technical factors and that, except as set forth in this MOU, neither party shall be bound to the other for any performance, payment, license, right, or reliance with respect to the subject matter, unless and until all material terms have been set forth in the separate and binding agreement signed by both parties ("Comprehensive Agreement"). All proposals, letters, agreement drafts, points of proposed or actual agreements, "Term Sheets", memos, charts used or exchanged in the negotiations either shall be reflected in the Comprehensive Agreement or shall be deemed rejected, rescinded and void upon the end of negotiations. Nothing contained in this MOU shall be deemed to limit the scope of the negotiations or the content of the Comprehensive Agreement. For purposes of this MOU the term "IDG Publications" means MacWorld and PCWorld, and such other publications of IDG as mutually agreed to by the parties, each of which shall be the basis of an iZone pursuant to the Comprehensive Agreement. I A. IDG iZone Placement Terms 1. Infoseek will create an IDG iZone for the Macintosh and an IDG iZone for PCWorld in collaboration with IDG's editorial personnel. The IDG iZone specific to * the [] shall be on [] for the term of the * Comprehensive Agreement. Such [ ] IDG iZone shall be * positioned among the [ ] iZone listings. The IDG * iZone specific to [] shall be on [] basis for the term of the Comprehensive Agreement. During the * [] term of the Comprehensive Agreement, Infoseek will * [] iZones for the following []: [] and []. 2. Infoseek will place up to five (5) links, on a non-exclusive basis, from such IDG iZones to Interim Pages hosted by IDG on MacWorld and PCWorld WWW sites, as applicable. Interim Pages shall contain articles or features either extracted from the applicable IDG Publications or written specifically by IDG for such pages. Advertising banners sold by IDG will also be displayed on Interim Pages. 3. IDG will provide to Infoseek mutually agreed upon graphic files for the logos and editorial content which meet Infoseek's iZones standards. Infoseek and IDG anticipate that such editorial content will be * updated by IDG every [ ]. 4. IDG will create up to five (5) Interim Pages. Creation of IDG iZones for additional IDG-based publications and related Interim Pages shall be subject to prior mutual agreement. 5. IDG will place the Infoseek Directory logo and search entry box (HTML) in a prominent position on the applicable IDG Publications' Websites and track the number of displays of such Infoseek logo. The frequency of such tracking report will be mutually agreed upon by both parties. - -------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION Page 1 of 4 2 B. IDG iZone Placement Financials 1. During the initial six (6) month period of the Comprehensive Agreement, for each IDG iZone, IDG * will receive [ ] of the Net Advertising Revenues received and recognized by Infoseek from advertisers for ad impressions sold specifically for such applicable IDG iZones. "Net Advertising Revenues" as used herein means such gross advertising revenues for such ad impressions sold specifically for such IDG iZones less (a) any amounts for refunds or other credits, including, but not limited to, amounts credited for bad debt or fraud, or for advertisement for advertisement barter or other barter revenue; (b) any sales-related expenses payable by Infoseek, including, without limitation, internal and/or external sales commissions, advertising agency fees, or royalties payable to third parties; and (c) any applicable sales, use, value-added or withholding taxes, or export duties or similar charges required to be paid or withheld by Infoseek. 2. The method of payment (either cash or advertising * credit or a combination thereof) of the [ ] Net Advertising Revenues attributable to the remaining six (6) month period of the Comprehensive Agreement payable by Infoseek to IDG shall be mutually agreed upon prior to the commencement of such six (6) month period. 3. Within the IDG iZones, Infoseek will provide up to five (5) links to the Interim Pages pursuant to Section I.A.2. above. Infoseek and IDG will share advertising revenues ("IDG Revenues") for ad banners sold and delivered by IDG and displayed on such * Interim Pages. Infoseek will receive [ ] of the IDG * Net Advertising Revenues and IDG will retain [ ] of the IDG Net Advertising Revenues. "IDG Net Advertising Revenues" as used herein means gross IDG Revenues less (a) any amounts for refunds or other credits, including, but not limited to, amounts credited for bad debt or fraud, or for advertisement for advertisement barter or other barter revenue; (b) any sales-related expenses payable by IDG, including, without limitation, internal and/or external sales commissions, advertising agency fees, or royalties payable to third parties; and (c) any applicable sales, use, value-added or withholding taxes, or export duties or similar charges required to be paid or withheld by IDG. II. A. IDG Topics Sponsorship Terms * 1. Infoseek will provide IDG with [ ], and additional exclusive or non-exclusive IDG Topics related to IDG Publications as may be mutually agreed upon by both parties (collectively "IDG Topics"), within the Topics during the one (1) year term of the * Comprehensive Agreement. Such [ ], [ ], and [ ] shall be positioned one (1) level below the "Computers and Internet" Topic position. 2. Infoseek will place applicable IDG logos within the IDG Topics pages and track the number of displays of such logos. The frequency of such tracking report will be mutually agreed upon by both parties. Such logos will meet Infoseek's standard specifications for height, width and file size. 3. Infoseek will place up to five (5) links, on a non-exclusive basis, from each of the IDG Topics to Interim Pages hosted by IDG. 4. IDG will provide to Infoseek mutually agreed upon graphic files which meet Infoseek's standards for the Topics sponsorship. 5. IDG will provide to Infoseek the IDG reviews of sites which meet Infoseek's standards for reviews which include number of reviews per topic, frequency of updates, and style guidelines. 6. IDG will create up to five (5) additional Interim Pages, or have the option to use the same five (5) Interim Pages as described in Section I.A2. above. Additional IDG Topics and related Interim Pages shall be as mutually agreed upon in writing in advance by both parties. - ---------------------------------------- *CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION Page 2 of 4 3 7. IDG will place the Infoseek Directory logo and search entry box (HTML) in a prominent position on the applicable IDG Publications' Websites and track the number of displays of such Infoseek logo. The frequency of such tracking report will be mutually agreed upon by both parties. B. IDG Topics Sponsorship Financials 1. During the initial six (6) month period of the Comprehensive Agreement, for each IDG Topic, IDG * will receive [ ], of the Net Advertising Revenues received and recognized by Infoseek from advertisers for ad impressions sold specifically for the applicable IDG Topic. "Net Advertising Revenues" as used herein means such gross ad revenues for such ad impressions sold specifically for the IDG Topic less (a) any amounts for refunds or other credits, including, but not limited to, amounts credited for bad debt or fraud, or for advertisement for advertisement barter or other barter revenue; (b) any sales-related expenses payable by Infoseek, including, without limitation, internal and/or external sales commissions, advertising agency fees, or royalties payable to third parties; and (c) any applicable sales, use, value-added or withholding taxes, or export duties or similar charges required to be paid or withheld by Infoseek. 2. The method of payment (either cash or advertising * credit or combination thereof) of the [ ] Net Advertising Revenues attributable to the remaining six (6) month period of the Comprehensive Agreement payable by Infoseek to IDG shall be mutually agreed upon prior to the commencement of such six (6) month period. 3. Within the IDG Topics, Infoseek will provide up to five (5) links to the Interim Pages pursuant to Section II A. 3. Infoseek and IDG will share advertising revenues ("IDG Revenues") for ad banners sold and delivered by IDG and displayed on such Interim Pages. Infoseek will receive * [ ] of the IDG Net Advertising * Revenues and IDG will retain [ ] of the IDG Net Advertising Revenues. "IDG Net Advertising Revenues" as used herein means gross IDG Revenues less (a) any amounts for refunds or other credits, including, but not limited to, amounts credited for bad debt or fraud, or for advertisement for advertisement barter or other barter revenue; (b) any sales-related expenses payable by IDG, including, without limitation, internal and/or external sales commissions, advertising agency fees, or royalties payable to third parties; and (c) any applicable sales, use, value-added or withholding taxes, or export duties or similar charges required to be paid or withheld by IDG. III. Logo Display Balancing for IDG iZone and IDG Topics On a quarterly basis, Infoseek and IDG will account for the total quantity of their respective logos which have been displayed on their respective sites for both IDG iZones and IDG Topics and Infoseek Directory logos on IDG Publications' Websites during the previous quarter. The difference in the quantity of Infoseek logo displays and IDG logo displays will be paid to either Infoseek or IDG, as applicable, in the form of advertising credits which credit shall be applied as follows: (i) In the event Infoseek owes IDG additional logo displays Infoseek will display the quantity owed as ad banners; (ii) in the event IDG owes Infoseek additional logo displays, IDG will display either the quantity owed as ad banners or an equivalent value in print advertisements. Rate cards for such logo displays will be based upon mutually agreed upon pricing, terms and conditions as set forth in the Comprehensive Agreement. - ---------------------------------------- *CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION Page 3 of 4 4 Any such ad banner credits shall be applied during the then current quarter or the quarter immediately following. IV. Term The term of the Comprehensive Agreement shall be One (1) year from the effective date of such Comprehensive Agreement. V. General 1. The overall performance of both parties under the Comprehensive Agreement shall be reviewed by both parties approximately six (6) months from the effective date of such Comprehensive Agreement. 2. Each party shall bear its own expenses and costs with regard to all negotiations and activities relating to this MOU. 3. Notwithstanding any other provision of this MOU, to the extent the provisions of the Infoseek Mutual Confidential Disclosure Agreement dated April 22, 1996 ("CDA"), conflict with the terms of this MOU, the CDA shall control. Neither party shall disclose the subject matter, the purpose, or the existence of this MOU without the prior written consent of the other party, except as required by law and government regulations, and except for disclosure on a need to know basis to its own employees, and its legal, investment, financial and other professional advisors. 4. Neither party shall make a claim against, nor be liable to, the other for consequential damages, including but not limited to lost profits, suffered by it because of any performance or failure to perform any obligations hereunder, or for termination of negotiations without a Comprehensive Agreement. Nothing in this MOU obligates either party to sell or purchase any item from the other party, nor to enter into any Comprehensive Agreement. 5. No obligation, covenant, or agreement relating to this MOU shall be binding until the Comprehensive Agreement is approved and signed by Infoseek and IDG. 6. Both parties agree that this MOU is the complete and exclusive statement of understanding between the parties and supersedes all prior agreements, whether oral or written, with respect to the subject matter hereof. ACCEPTED AND AGREED TO: ACCEPTED AND AGREED TO: IDG COMMUNICATIONS INC. INFOSEEK CORPORATION By: By: --------------------------- ----------------------------- Authorized Signature Authorized Signature Name: KELLY CONLIN Name: Andrew E. Newton --------------------------- ----------------------------- Print Print Title: PRESIDENT Title: Vice President & General Counsel --------------------------- --------------------------------- Date: 4/18/96 Date: April 22, 1996 --------------------------- ----------------------------- Page 4 of 4 EX-10.53 15 LICENSE & SOFTWARE DISTRIBUTION AGREEMENT W/ HNC 1 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT EXHIBIT 10.53 LICENSE AND SOFTWARE DISTRIBUTION AGREEMENT This License and Software Distribution Agreement is made and entered into effective as of April 25, 1996 (the "EFFECTIVE DATE") by and between HNC Software Inc., a Delaware corporation ("HNC"), and Infoseek Corporation, a California corporation ("INFOSEEK"). RECITALS A. HNC develops and distributes proprietary software for use in analyzing, modeling, and making predictions from information content. B. The parties desire to enter into this Agreement in order to allow INFOSEEK and its customers to use the HNC software known commercially as SelectCast(TM) (as customized by HNC for the INFOSEEK System) pursuant to a license granted by HNC. NOW, THEREFORE, in consideration of the mutual agreements and obligations contained herein, the parties agree as follows: ARTICLE I CERTAIN DEFINITIONS For purposes of this Agreement, the following terms shall have the meanings set forth herein: 1.1 "ACCEPTANCE CERTIFICATE" means a certificate substantially in the form of Exhibit B. 1.2 "ACCEPTANCE CRITERIA" means the criteria mutually determined and agreed upon by HNC and INFOSEEK which describe the level and standards of functionality and performance of the HNC Software that the parties agree shall establish prima facie that the HNC Software is performing in accordance with its Documentation and Specifications. INFOSEEK and HNC shall document the Acceptance Criteria in writing prior to HNC's Delivery of the HNC Software to INFOSEEK. 1.3 "ACCEPTANCE DATE" means the date defined as the "Acceptance Date" in Section 3.3. 1.4 This "AGREEMENT" means this License and Software Distribution Agreement between INFOSEEK and HNC, as it may be amended from time to time by a writing signed by authorized representatives of both HNC and INFOSEEK. 1.5 "BUSINESS DAY" means any calendar day other than a Saturday or Sunday and those national holidays then recognized by INFOSEEK which, as of the Effective Date of this Agreement are: New Year's Day, Memorial Day, July 4, Labor Day, Thanksgiving Day and Christmas Day. All times referenced in this Agreement will be Pacific Time. 1.6 "CONFIDENTIAL INFORMATION" has the meaning set forth in Section 11.1. 1.7 "DELIVERY" means that date upon which HNC provides a copy of a Version of the HNC Software (as tested by HNC as provided in Section 3.3) to a representative of INFOSEEK. - ---------------------------------------- CONFIDENTIAL AND PROPRIETARY INFORMATION PAGE 1 2 1.8 "DESIGNATED SYSTEM" means a computer system (including a system that utilizes client servers or a distributed network environment) located in the Territory that is (i) compatible with a system described in the Documentation or the Specifications and (ii) owned or controlled by INFOSEEK or an INFOSEEK Client (as defined below). 1.9 "DOCUMENTATION" means the human readable user manuals, and related written materials provided by HNC that describe the use, functionality, output and/or other characteristics of the HNC Software or guidance regarding proper Use of the HNC Software, which shall conform to industry end user documentation standards. 1.10 "FULL SUBLICENSEE" means an INFOSEEK Client who receives a sublicense of all of INFOSEEK's rights under this Agreement through an INFOSEEK Client Contract which includes significant additional services and/or software provided by INFOSEEK. 1.11 "INFOSEEK CLIENT" means an entity which has entered into a contractual relationship, with INFOSEEK or a Full Sublicensee, for the purpose of securing a sublicense of all or some of the HNC Software. 1.12 "INFOSEEK CLIENT CONTRACT" means a set of contractual terms and conditions which maintain the substance of those set forth in Exhibit C. 1.13 "INFOSEEK SOFTWARE AND DATA" means the source code, object code, microcode, data and documentation licensed, owned and/or developed by INFOSEEK and executing on INFOSEEK computer systems which is used by INFOSEEK in conjunction with the HNC Software provided that (i) the "INFOSEEK Software" includes only the portion of the foregoing that is the process, source and *object code and all documentation [ ] by INFOSEEK and [ ] for [ ] and [ ] *an Advertising Server System [ ] data processing system and (ii) the "INFOSEEK Data" includes only the portion of the foregoing that is information provided *to HNC for the purpose of [ ] to [ ] in [ ]. * 1.14 "HNC SOFTWARE" means the [ ] of HNC's proprietary SelectCast *System to be [ ] to this Agreement as more fully described in Exhibit A. *The term "HNC Software" includes the [ ] for the HNC Software, [ ] *of the HNC Software that INFOSEEK [ ] to License from HNC pursuant to *[ ] of this Agreement. HNC agrees that HNC Software will [ ] the *SelectCast System (which will be [ ] of the HNC Software) and will be *HNC's [ ] Advertising Server System. 1.15 "INTELLECTUAL PROPERTY" means, collectively, patents, copyrights, trademarks, trade names, trade secrets, and other proprietary and intellectual property rights. 1.16 "LICENSE" means the license rights granted by HNC to INFOSEEK in Article 2 of this Agreement with respect to the HNC Software. 1.17 "NEW VERSION" means any version of the HNC Software subsequent to the version initially licensed to INFOSEEK hereunder, including any replacements, enhancements, updates, fixes, or other changes made by or for HNC *to the HNC Software during the Term (as defined below). [ ]. - ------------------------- *Confidential Treatment Requested For Redacted Portion PAGE 2 3 * 1.18 [ ] means a software based system for *[ ] content on Internet as directed by [ ] *that [ ] to on-line advertising. 1.19 "SELECTCAST SYSTEM" means the commercial HNC software products currently known by the SelectCast name, as more fully described in Exhibit A. 1.20 "SPECIFICATIONS" means the functional and operational *descriptions and performance standards applicable to the [ ]. 1.21 "TERM" has the meaning set forth in Section 16.1. 1.22 "TERRITORY" means the geographic area comprised of the *countries of the [ ]. Within the one-year period from initial System Acceptance, HNC and INFOSEEK agree to extend the Territory through an INFOSEEK-provided attachment to this Agreement which documents a) a significant INFOSEEK or Full Sublicensee presence in the new geographic area; and b) the availability, or INFOSEEK's agreement to support the development (under Section 10.1), of a local language version of the HNC Software. After the one-year period, the parties agree to meet every six months to discuss plans for Territory expansion. 1.23 "TERRITORY PATENT" means a patent issued by the applicable patent authorities of a country in the Territory. * 1.24 [ ] means [ ] content in a [ ] location on the Internet. * 1.25 [ ] means a client which has contracted with a *[ ] of advertising (such as INFOSEEK) to [ ] *content on the [ ] Internet site. 1.26. "TRIGGERING EVENT" has the meaning set forth in Section 17.2. 1.27 "USE" means to load, execute, employ, utilize, store, display, distribute or copy any machine readable portion of software or data or to make use of any documentation or related materials in connection with the execution of any machine readable portion of software or data. 1.28 "VERSION" refers, as applicable, to the initial version of the HNC Software delivered hereunder and to each New Version that INFOSEEK elects to have installed on the Designated System as provided in Section 4.1 and that does not become a Rejected New Version. * 1.29 [ ] refers to a [ ] representation of the *Infoseek [ ] which is not capable of being [ ] into such [ ]. ARTICLE 2 HNC SOFTWARE LICENSE; EXCLUSIVELY PERIOD; TERM; DISTRIBUTION BY INFOSEEK; INTELLECTUAL PROPERTY RIGHTS 2.1 Grant of License. Subject to the terms and conditions of this Agreement, HNC hereby grants to INFOSEEK, effective during the Term (as defined *in Section 16.1), [ ] (except as - ------------------------- *Confidential Treatment Requested For Redacted Portion PAGE 3 4 *provided in Section [ ]), [ ] (except as permitted by Section [ ]) *license to: (a) Use the HNC Software only in [ ], only in the [ ], *only on [ ] defined in this Agreement, solely [ ] of INFOSEEK and *INFOSEEK Clients and solely for the purpose of [ ] of the HNC Software *in connection with [ ] of INFOSEEK, INFOSEEK Clients or INFOSEEK [ ] *on the Internet; (b) use the [ ]; and (c) to [ ] Licensed INFOSEEK *Clients to (i) do [ ] of the same, and (ii) Use HNC Software for [ ] *both in and outside of the [ ], provided that an INFOSEEK [ ] may not *create a [ ]. [ ] has [ ] any license to Use, utilize or *sublicense the [ ] in any manner that would apply any function of the [ ] *for [ ], and [ ] agrees with [ ] not to Use, utilize *or apply the [ ] in any manner that would apply any function of the [ ] *for [ ] in support of the [ ]. As used herein, a [ ] means an *[ ] who executes either an [ ] Contract or another written agreement with *[ ] that binds such [ ] to observe terms and conditions which maintain the *substance of those set forth in [ ]. Except for agents or contractors of *[ ] and [ ] who Use the [ ] in accordance with this Agreement solely *for the purpose of [ ] in [ ] its License under this Agreement in the *performance of their duties for [ ] or [ ], [ ] will not *permit any other person or entity to [ ]. HNC shall deliver to INFOSEEK *[ ] of the HNC Software, and INFOSEEK may make a [ ] of [ ] of the HNC Software to the extent reasonably needed to enable INFOSEEK to exercise its rights under this Agreement and to follow normal backup and disaster recovery procedures. * 2.2 [ ]. Provided that INFOSEEK makes the [ ] required *under Article [ ], including [ ], then HNC agrees with INFOSEEK *that, during the term of this Agreement, HNC will not: (a) [ ] to Use or *distribute the HNC Software for the purpose of processing [ ] in Internet *applications; (b) license any of the [ ] Parties (as defined below) to *Use or distribute the HNC Software or any [ ]; (c) conduct [ ] of *the HNC Software or any [ ] similar to that provided for by the terms of *this Agreement, with any of the [ ] Parties, or (d) license to a [ ] *Party for the benefit of a [ ] Party. As used herein, the term [ ] means (i) companies which maintain sites on the World Wide Web which provide *general purpose [ ], [ ], [ ], or other collections and which provide [ ] *to more than [ ] to such companies' Internet domains. The parties hereto intend that this definition of Prohibited Parties applies to companies such as *[ ], Inc., [ ] Inc., [ ] Inc., and [ ], Inc. as of the Effective Date. 2.3 Transfers. INFOSEEK may transfer the HNC Software on any Designated System to another Designated System without additional charge upon reasonable advance written notice to HNC; however if any installation work is required to be performed by HNC to effect such transfer, then INFOSEEK will pay HNC for such work on a time and materials basis at HNC's then-effective commercial labor rates. 2.4 Protection of HNC Intellectual Property. HNC represents that the HNC Software and all associated Intellectual Property Rights arising under laws of jurisdictions in the Territory are owned by and/or licensed to HNC. INFOSEEK shall reproduce on each copy of the HNC Software the HNC copyright notice and other customary proprietary legends that were in the original copy of the HNC Software or New Version thereof supplied by HNC. INFOSEEK shall not remove or destroy any such copyright notice or other proprietary legends or markings placed upon or contained in the HNC - ------------------------- *Confidential Treatment Requested For Redacted Portion PAGE 4 5 Software and INFOSEEK shall include such legends or markings whenever referencing the HNC Software other than casual references. INFOSEEK agrees not to decompile, reverse engineer, disassemble, or otherwise reduce the HNC Software to a human perceivable form. Except as may be otherwise provided in this Agreement, INFOSEEK may not copy, modify, adapt, translate, rent, lease, loan, resell for profit, or create derivative works based upon, the HNC Software. No right, title, or interest in or to the HNC Software or any Intellectual Property in or related thereto is conveyed or assigned by HNC by virtue of this Agreement, except as may be expressly licensed under the terms and conditions set forth herein, except as provided for under Article 17. HNC retains and reserves all rights not expressly granted to INFOSEEK hereunder. 2.5 Trademark Usage. During the Term, INFOSEEK and INFOSEEK Clients are licensed by HNC to use the HNC trademark "SelectCast" on a non-exclusive basis and only as is reasonably necessary or useful in connection with INFOSEEK's provision of services to INFOSEEK Clients related to the HNC Software in accordance with this Agreement and reasonable HNC trademark usage guidelines. On all marketing and external documents of INFOSEEK in which any HNC trademark appears, INFOSEEK shall insert a statement acknowledging HNC's ownership of the trademark. Nothing contained herein shall give INFOSEEK any right, title or interest whatsoever in any HNC trade name or trademark. * 2.6 Protection of INFOSEEK Intellectual Property. INFOSEEK [ ] *that the INFOSEEK Software and Data provided by INFOSEEK for [ ] and/or *[ ] by INFOSEEK. HNC shall not remove or destroy any copyright notice or other proprietary legends or markings placed upon or contained in the INFOSEEK Software or Data. HNC agrees not to decompile, reverse engineer, disassemble, or otherwise reduce the INFOSEEK Software to a human perceivable form. HNC may not copy, modify, adapt, translate, rent, lease, loan, resell for profit, distribute, network, or create derivative works based upon the INFOSEEK Software, and no title or interest in the INFOSEEK Software or Data is conveyed or assigned by INFOSEEK by virtue of this Agreement. Infoseek shall have all right, title and ownership in all the intellectual property rights in the data and HNC will not use them in any way which violates the scope of the license granted below. INFOSEEK grants to HNC a *non-exclusive, non-transferable, non-sublicensable license to use the [ ] *as [ ] the HNC Software to INFOSEEK's internal system and to [ ] as provided elsewhere in this Agreement. Unless expressly permitted by Infoseek, *HNC may [ ] provided that such [ ] will not be provided or used *directly or indirectly (i) for the [ ] or other information on the *Internet or (ii) to any [ ] Party for any purpose. ARTICLE 3 CUSTOMIZATION, INSTALLATION, TESTING AND ACCEPTANCE 3.1 Customization and Installation. HNC agrees to perform for INFOSEEK (with INFOSEEK's reasonably required services and cooperation) the customization and installation of the initial Version of the HNC Software according to the estimated schedule in Part 2 of Exhibit A ("INSTALLATION SCHEDULE") at a location designated by INFOSEEK. The Installation Schedule will consist of specific customization and installation milestones as described in more detail in Part 2 of Exhibit A ("INSTALLATION MILESTONES") and provides that modules of the initial Version of the HNC Software described in Exhibit A will be delivered and installed in three separate phases (each, an "INSTALLATION PHASE") as more fully described in Exhibit A hereto. To the extent not already specified in - ------------------------- *Confidential Treatment Requested For Redacted Portion PAGE 5 6 Exhibit A, between the time of the implementation kickoff meeting and the release of the implementation plan for such Installation Phase, the parties will agree in writing on the identity and description of each deliverable to be delivered by HNC to INFOSEEK as part of such Installation Phase, the estimated delivery date of each such deliverable. The parties must act reasonably and in good faith in coming to any of the mutual decisions or agreements to be made. With respect to each New Version of the HNC Software that INFOSEEK elects to have installed on the Designated System as provided in Section 4. 1, the parties shall agree in writing on a customization and installation schedule for such New Version (each a "NEW SCHEDULE") and the terms of this Section 3.1 shall apply to the customization and installation of each such New Version, except that the New Schedule for such New Version shall apply in lieu of the original Installation Schedule in Exhibit A. HNC agrees that it will commit and utilize sufficient personnel and resources to timely complete the customization and installation services called for by this Section (with INFOSEEK's reasonably required services and cooperation). INFOSEEK agrees that it will provide HNC with the services and cooperation reasonably required on the part of INFOSEEK to enable HNC to complete customization and installation of (a) the initial Version of the HNC Software in accordance with the Installation Schedule and (b) each New Version in accordance with its New Schedule. INFOSEEK *shall pay [ ] provided by HNC under this Section and [ ] *in providing such services as provided in Section 10.1. HNC [ ] *by HNC of the HNC Software and [ ] therein. If INFOSEEK determines that HNC Software is more than sixty (60) days behind its Attachment A schedule for delivery of the Initial Version, then it shall give HNC written notice of such schedule delays, specifying such delivery failures in reasonable detail. Upon receipt of such schedule delay notice from INFOSEEK, HNC will use diligent efforts to meet the agreed-upon schedule for the Initial Version. Should HNC be unable to deliver the Initial Version of the HNC Software within sixty (60) days after INFOSEEK gives HNC schedule delay notice, then INFOSEEK shall be entitled to treat such failure as a material breach and shall, as its sole and exclusive remedy for such breach, be entitled to terminate this Agreement. * 3.2 Progress Meetings. On a [ ] basis during the period of the initial installation of the initial Version of the HNC Software delivered to INFOSEEK hereunder, INFOSEEK and HNC will meet via conference call (or in person as may be mutually agreed by the parties) to discuss the progress of the installation and achievement of Installation Milestones, a summary of *accomplishments and difficulties experienced during the [ ], and the *anticipated results during the [ ]. 3.3 Testing. Prior to Delivery to INFOSEEK of each Version of the HNC Software, HNC agrees to perform all reasonably necessary tests of such Version of the HNC Software to assure material compliance with the Specifications of such Version. INFOSEEK shall have the right, at its sole expense, to perform any additional tests of the Version of the HNC Software on the Designated *System within [ ] after HNC's Delivery and installation of that Version *of the HNC Software to INFOSEEK. INFOSEEK shall notify HNC within such [ ] period of either (a) INFOSEEK's acceptance of such Version of the HNC Software (the date of such acceptance by INFOSEEK being hereinafter called the *"ACCEPTANCE DATE"), or (b) if INFOSEEK determines within such [ ] period that such Version of the HNC Software does not meet its Specifications in all material respects, then it shall give HNC written notice of such material performance failures, specifying such performance failures in reasonable *detail ("FAILURE NOTICE") within such [ ] period. Upon receipt of such Failure Notice from INFOSEEK, HNC will use diligent efforts to make such modifications as are reasonably required to bring such Version of the HNC Software into conformity with its Specifications in all material respects. Following such corrective action by HNC, the modified HNC Software shall again be submitted for retesting by INFOSEEK. Should HNC be unable to bring the initial Version of the HNC Software into material conformity with its *Specifications within [ ] after INFOSEEK - ------------------------- *Confidential Treatment Requested For Redacted Portion PAGE 6 7 gives HNC the Failure Notice with respect to such initial Version, then INFOSEEK shall be entitled to treat such failure to respond as a material breach and shall, as its sole and exclusive remedy for such breach, be entitled to terminate this Agreement. If INFOSEEK (i) employs the HNC Software in a production system for the benefit of INFOSEEK Clients (except when the HNC Software is employed on a non-revenue-generating testing or evaluation basis), or (ii) does not affirmatively accept or reject any Version of the HNC Software *delivered hereunder within [ ] days of the initial Delivery date of such version of the HNC Software, or, if INFOSEEK gives Failure Notice, then *[ ] days of the initial Delivery date of such Version of the HNC Software, then INFOSEEK will conclusively be deemed to have accepted such Version of the HNC Software. INFOSEEK agrees to work closely in good faith cooperation with HNC to correct any performance failures in any Version of the HNC Software. 3.4 Performance. INFOSEEK and HNC agree that, in the event that INFOSEEK provides documentary evidence which (a) demonstrates that the performance of *the HNC Software does not meet competitive performance standards [ ] and (b) outlines the performance improvements necessary for the HNC Software *to meet competitive performance standards [ ], the parties shall cooperate to improve the performance of the HNC Software under the terms of Section 10.1. Should HNC in good faith be unable to (1) deliver a development plan within thirty (30) days and (2) a New Version of the HNC Software which *meets [ ] after INFOSEEK gives HNC the competitive performance documentary evidence, at INFOSEEK's option the parties may be (i) relieved of their respective obligations under Sections 2.2, 9.2, and 9.3.9 and, if INFOSEEK does not continue using the HNC Software, 10.3 and/or (ii) INFOSEEK shall be relieved of any further obligation of payments under Section 10.1. ARTICLE 4 NEW VERSIONS 4.1 Election to Install New Versions; Effect on HNC Support Obligations. HNC will notify INFOSEEK of the future availability of a New *Version of the HNC Software at least [ ] days prior to HNC's anticipated release of such New Version, and in such notice to INFOSEEK will, to the extent then reasonably practicable, provide a summary of then-anticipated specifications for such New Version. This summary shall be *updated periodically within the [ ] day period. INFOSEEK must, within [ ] days after HNC notifies INFOSEEK of the availability of a New Version, notify HNC whether it wishes to have installed on the Designated System such New Version. During the Term, HNC shall provide INFOSEEK with Specifications, Documentation, and installation support for such New Version, unless and until it becomes a Rejected New Version (as defined below). INFOSEEK's acceptance of *any New Version will be subject to Acceptance Criteria. If, within [ ] *days after HNC gives INFOSEEK notice of the availability of a [ ], INFOSEEK does not notify HNC as to whether or not INFOSEEK desires to install a New Version that includes the functional equivalent of the replacements, enhancement, updates, fixes or other changes that HNC incorporates into such *new [ ], or if INFOSEEK chooses not to install such New Version, then INFOSEEK shall immediately return the Specifications and Documentation for such New Version ("REJECTED NEW VERSION") to HNC and shall be entitled to continue to Use the Version of the HNC Software then used by INFOSEEK hereunder (the "PRIOR VERSION") as permitted by this Agreement. HNC will continue to support the Prior Version of the HNC Software (and only that Version) for a *period of time at least equal to the longer of (a) [ ] months after the date such Prior Version was first commercially released by HNC, or (b) *[ ] months after the successor New Version satisfies the - ------------------------- *Confidential Treatment Requested For Redacted Portion PAGE 7 8 Acceptance Criteria, and thereafter, notwithstanding anything to the contrary in this Agreement, HNC shall have no obligation to continue to support such Prior Version, unless INFOSEEK agrees to, and does pay HNC its then-current charges for support of the HNC Software in addition to the Monthly License Fees payable by INFOSEEK to HNC hereunder. Any New Version of the HNC Software shall operate in a manner that is reasonably transparent to the INFOSEEK Client, enabling such INFOSEEK Client to continue to Use the HNC Software as readily as if such New Version had not been installed. 4.2 Return of Prior Version. If a New Version has been delivered to and accepted by INFOSEEK, then INFOSEEK shall be entitled to retain copies of the Prior Version provided that it will attempt to implement the New Version *within [ ] after the Acceptance Date of such New Version. At INFOSEEK's request and if HNC is supporting beta site testing at such time, HNC shall allow INFOSEEK to serve as a beta or test site for any New Versions. ARTICLE 5 TRAINING; CUSTOMER SERVICE; SALES SUPPORT 5.1 Initial On-Site Training. In consideration of INFOSEEK's payment to HNC of the Client Start-Up Fee (as defined in Section 10.2) due in respect of each INFOSEEK Client who uses the HNC Software, HNC shall provide each such *INFOSEEK Client with [ ], on-site training session with respect to the HNC Software which shall include, but not be limited to, system design, installation elements, benefits, operation and strategies applicable to the use of specific HNC Software. HNC will also provide INFOSEEK personnel with necessary training and instruction in the use and benefits of the HNC Software. 5.2 Group Training. In addition to the on-site INFOSEEK Client *training described in Section 5. 1, at least once during the [ ] that the HNC Software is available for Use by INFOSEEK Clients and at least once *during [ ] period during the Term thereafter, INFOSEEK and HNC will hold group training sessions to train INFOSEEK Clients on the Use of the HNC Software. Each party shall pay its own expenses incurred in connection with such training sessions. Training sessions shall be held on dates and at places mutually agreeable to INFOSEEK and HNC. 5.3 Account Manager. HNC shall assign an appropriately trained Account Manager who will serve as the primary contact for INFOSEEK and INFOSEEK Clients for questions and issues related to the HNC Software as it functions at INFOSEEK. This HNC Account Manager will visit on-site at INFOSEEK for no less *than [ ]. 5.4 Sales Support. HNC agrees to assist INFOSEEK, upon INFOSEEK's reasonable request, by providing sales support activities including sales calls, telephone conferences, benefit analyses, reference site services, site visits, and presentation development. ARTICLE 6 TECHNICAL SUPPORT AND MAINTENANCE 6.1 Documentation. HNC shall provide INFOSEEK with a reasonably adequate number of copies of Documentation for the HNC Software. - ------------------------- *Confidential Treatment Requested For Redacted Portion PAGE 8 9 6.2 Maintenance and Support Services to be Provided. As used herein, the "SERVICE PERIOD" means that period of time commencing on the Effective Date and ending on the earlier to occur of (i) expiration of the Term, or (ii) the date of termination of this Agreement in accordance with Sections 16.2 or 16.3. During the Service Period, HNC agrees to provide INFOSEEK the following maintenance services for the HNC Software to support INFOSEEK's licensed Use of the HNC Software hereunder: 6.2.1 HNC will provide INFOSEEK with any known problem solutions relating to HNC Software as such solutions become known to HNC. 6.2.2 HNC will provide INFOSEEK with any commercially released modifications, improvements, and refinements to existing Versions and New Versions of HNC Software then used by INFOSEEK or INFOSEEK Clients that HNC may develop as soon as they are commercially available. 6.2.3 Subject to the provisions of Section 4.1, HNC will provide the services described in Section 6.3 for the then most current Version of the HNC Software consistent with the latest published Documentation for such Version. 6.2.4 HNC will provide INFOSEEK with reasonable access to HNC technical support personnel to address production software problems 365 days per year, seven (7) days per week, twenty four (24) hours per day via hotline telephone support and paging capability. 6.3 Problem Corrections. If during the Service Period, INFOSEEK notifies HNC of any problem that it is experiencing with a Version of the HNC Software then supported by HNC under Section 6.2.3, or any material deviation from the Documentation of such Version, then HNC shall use its good faith efforts to promptly correct the problem or provide an adequate workaround solution for the problem in accordance with the terms of this Section 6.3. Subsections 6.3.1 through 6.3.4 below set forth the required standards for HNC's performance of its obligations under Section 6.2.3 and this Section 6.3 in response to the respective levels of outages of the HNC Software described in this Section 6.3 that are caused by the HNC Software: 6.3.1 A "SEVERITY 1 OUTAGE" is critical and either (a) stops operations of the HNC Software with no reasonable bypass or recovery procedures, or (b) consists of a system failure and crash of operations caused by the HNC Software. For a Severity 1 Outage, HNC will use its best efforts to *restore operations within [ ] hours after HNC is notified by INFOSEEK of such Severity 1 Outage. Recovery status will be *reported to INFOSEEK [ ]. INFOSEEK will participate round-the-clock in HNC's recovery effort. 6.3.2 A "SEVERITY 2 OUTAGE" does not stop operations of the HNC Software but severely impedes effective operations. For a Severity 2 Outage, *HNC will use its best efforts to restore operations within [ ] after HNC is notified by INFOSEEK of such Severity 2 Outage. Recovery status *will be reported to INFOSEEK [ ]. 6.3.3 A "SEVERITY 3 OUTAGE" occurs when HNC Software operates effectively but does not provide all defined functions. For a Severity 3 Outage, HNC will use its best efforts to restore the impaired functionality *within [ ] after HNC is notified by INFOSEEK of such Severity 3 Outage. Recovery status will be reported to INFOSEEK *on a [ ]. - ------------------------- *Confidential Treatment Requested For Redacted Portion PAGE 9 10 6.3.4 A "SEVERITY 4 OUTAGE" occurs when HNC Software provides all functions defined in the Documentation, but performance of a function is reasonably deemed by INFOSEEK to be unsatisfactory. For a Severity 4 Outage, resolution will be provided within a mutually agreed upon time frame, but in any event such time frame will be within a reasonable time. Recovery status *will be reported to INFOSEEK [ ]. In the event that any outage as defined in any of the above subsections of this Section 6.3 is found not to have been caused by the HNC Software, then INFOSEEK shall reimburse HNC for all costs and expenses (including but not limited to travel, accommodation, meal and overtime expenses) that HNC reasonably incurred in responding to such outage situation. ARTICLE 7 * [ ]; CONSULTING; ANALYSIS * 7.1 Contracts for [ ]. INFOSEEK or INFOSEEK Clients choosing *to have [ ] based on INFOSEEK or INFOSEEK *Client [ * ]. 7.2 Installation and Training. HNC will assist with installation of custom models for INFOSEEK Clients or INFOSEEK at INFOSEEK and will provide support and training on the use of those models to INFOSEEK or the INFOSEEK Client. Specific support and maintenance requirements and the fees payable to *HNC for such support and maintenance will be outlined in a [ ] agreement between HNC and INFOSEEK or the INFOSEEK Client. 7.3 Consulting and Analysis. HNC will provide ongoing consulting and *analysis to INFOSEEK Clients to optimize performance of the [ ] in the client environment. This consulting will include telephone support and on-site meetings. * 7.4 Rates and Ownership. All foregoing will be provided on [ ] *rates and terms that are [ ] rates and terms for similar services and *INFOSEEK or the INFOSEEK Client will have [ * ] therein. HNC will [ * ] only as expressly authorized herein. ARTICLE 8 ADDITIONAL PRODUCTS AND SERVICES * 8.1 HNC Sales of [ ]. HNC may market [ ] directly *[ ], regardless of whether such [ ] are INFOSEEK [ ], *subject to the limitations of Section [ ], provided that HNC [ ] to INFOSEEK *[ ] as indicated in Article [ ]. 8.2 Additional Services by HNC. INFOSEEK acknowledges that, upon request by INFOSEEK or an INFOSEEK Client, HNC will agree, subject to availability, to provide additional services to either or both, including but *not limited to, [ ] in consideration for the payment of fees to HNC such fees to be calculated on a reasonable time and, materials basis. If applicable, INFOSEEK Clients will contract directly with HNC for these services. Except as provided in Section 10.1, all support, maintenance and consulting services performed by HNC for InfoSeek under this Agreement shall be *provided at a [ ] HNC's - ------------------------- *Confidential Treatment Requested For Redacted Portion PAGE 10 11 *[ ] time and materials basis or [ ] rates, whichever applicable. * 8.3 [ ]. INFOSEEK and HNC agree to develop [ ] in order *to provide [ ] to HNC for the sole purpose of enabling HNC to improve and enhance the HNC Software. INFOSEEK will cooperate with HNC in developing and *operating [ ]. All [ ] provided to HNC for use in [ ] will be considered Confidential Information of INFOSEEK Clients and, subject only to the restrictions contained in Article 11, and subject to the agreement of Infoseek clients, may be used by HNC to improve and enhance the HNC Software *and HNC will [ ] and to any such improved and enhanced HNC Software; *provided however [ ] or to any HNC Software or any improvement or *enhancement thereof that results from use of the [ ] provided to HNC *through any [ ]. ARTICLE 9 INFOSEEK RESPONSIBILITIES 9.1 INFOSEEK Client Agreements. Agreements for the use of the HNC Software on Designated Systems may be made between INFOSEEK and INFOSEEK *Clients, provided that: (a) the terms of such agreements [ ] of this *Agreement and [ ] hereunder; and (b) such agreements [ ] (by *addendum or otherwise) [ ] attached as Exhibit C hereto that are *binding on each INFOSEEK Client. INFOSEEK Clients may also [ ], in all cases subject to the [ ] restrictions in Article 2 of this Agreement. 9.2 Restrictions on INFOSEEK. INFOSEEK agrees that, so long as during the term of this Agreement as HNC is obligated under Section 2.2, *INFOSEEK [ * ], similar to that *provided by the terms of this Agreement, of any [ ] or *other product or service similar to the HNC Software or the [ ]. 9.3 INFOSEEK Responsibilities. Subject to the license provision in 2.6, INFOSEEK will use diligent efforts to provide the following (which HNC shall have no responsibility to provide): * 9.3.1 INFOSEEK [ ] for use with the HNC Software, to HNC; as outlined in Exhibit A. * 9.3.2 [ * ] to HNC; * 9.3.3 [ ] specifications for the [ ], *including, but not limited to, [ ] specifications; * 9.3.4 Computer [ ] of INFOSEEK Clients; - ------------------------- * Confidential Treatment Requested For Redacted Portion PAGE 11 12 9.3.5 On-line telecommunications link (with minimum speed as mutually agreed) into the Designated System for the purpose of troubleshooting and maintenance of the HNC Software; and * 9.3.6 [ ] appropriate under the circumstances for INFOSEEK Clients on the Use and operation of the HNC Software. * 9.3.7 Appropriate [ ] to assist HNC in the *[ ] of HNC Software. * 9.3.9 [ ] of the HNC Software [ ] *INFOSEEK [ ] INFOSEEK Clients (subject to the provisions of Section 5.4). ARTICLE 10 FEES; PAYMENT TERMS 10.1 Customization and Installation Fees. INFOSEEK will pay and reimburse HNC for its fees and expenses for the customization and installation services regarding the HNC Software that are be provided by HNC pursuant to *Section 3.1 (the "INSTALLATION/CUSTOMIZATION CHARGES") [ ] (approved *in advance by INFOSEEK) basis at [ ] of HNC's [ ] labor rates then in effect. HNC will invoice INFOSEEK monthly for its Installation/Customization Charges, which will be payable by INFOSEEK to HNC in *full within [ ] days of HNC's invoice. * 10.2 [ ] Start-Up Fee. For [ ] INFOSEEK *[ ] for INFOSEEK and who purchases or subscribes to any service provided by INFOSEEK involving use of the HNC Software and for which INFOSEEK *requests support, [ ]. Both parties *recognize that it is in their best interests [ ] and will *cooperate with each other to find [ ]. Therefore, the *[ ] including without limitation those resulting from [ ]. * 10.3 [ ] License Fees. For each calendar [ ] (or *partial calendar [ ]) during the Term, [ * ] license fee. This fee will cover [ ]. *The [ ] license fee ("[ ] LICENSE FEE") shall be calculated as follows: * (a) A [ ] fee equal to [ ] *per [ ] for the [ ] following the initial Acceptance Date, *[ ] per [ ] for the [ ] *following the initial Acceptance Date, and an amount equal to the [ ] *plus the [ ] *since the initial Acceptance Date for all remaining [ ]; plus * (b) A [ ] fee based on revenue generated *through the HNC Software equal to [ ] of the [ * ] *accrued by INFOSEEK for [ ] provided which employ the HNC *Software. INFOSEEK shall [ ] the HNC Software to all Placement Accounts. ------------------------- *Confidential Treatment Requested For Redacted Portion PAGE 12 13 * (c) A [ ] fee based on [ ] through the HNC Software *equal to the [ ] or a [ ] received by HNC [ ] *for the HNC Software or [ ] the Full Sublicensee executes the INFOSEEK Client Agreement, such percentage to be provided by HNC to INFOSEEK upon *request by INFOSEEK) of any Full Sublicensee's [ ] *Full Licensee for [ ] provided which employ the HNC Software. * 10.4 Royalty Payments to [ ]. During the Term of this *Agreement, [ ] shall pay to [ ] percent [ ] of *[ ] [ ] (net of any [ ] pays to a [ ]) *derived from [ ] built from [ ] or other [ ] *provided by INFOSEEK. During the initial Term of this Agreement, [ ] *shall pay to [ ] [ ] percent [ ] of HNC [ ] *(net of any [ ] pays to a third-party) derived from [ ] *(other than fees paid by [ ]). * 10.5 Payment Reports. Concurrent with each [ ] payment of *[ ] License Fees to HNC as provided in Sections 10.2 and 10.3. [ ], in *a format mutually agreed to by HNC and INFOSEEK, setting forth [ ] *License Fee [ ] for such calendar [ ] under this Agreement *and, if applicable, the amount of any [ ] in respect of such calendar [ ]. *[ ] records in accordance with Section 18.13 to validate the appropriate *computation of any [ ] License Fee payment and/or [ ] *Start-Up Fee payment [ ] hereunder. * Concurrent with each payment of Royalty Fees [ ] as provided *in Section 10.4, [ ] will send [ ] a written report, in a format *mutually agreed to by HNC and INFOSEEK, setting forth [ ] of the amount *of the Royalty Fees [ ] for such calendar [ ] under this *Agreement. [ ] records in accordance with Section 18.13 to validate *the appropriate computation of any [ ] Royalty Fee payment. * 10.6 Payment Schedule. [ ] shall compute amounts payable *hereunder for each calendar [ ] (or partial calendar [ ]) *during the Term, and shall remit payment in full of such [ ] License *Fees and [ ] Start-Up Fees to [ ] by no later than the [ ] *of the calendar [ ] immediately following the calendar [ ] *with respect to which such fees were computed. [ ] shall remit each payment via electronic funds transfer into an account designated by *the [ ]. * 10.7 Fees [ ]. The amount of payments payable to *[ ] by the [ ] hereunder are [ ] or any other *[ ] of any kind imposed by any governmental authority (other than a *[ ] imposed upon the [ ] of the [ ]), all of which *[ ]. 10.8. Cooperation. HNC and INFOSEEK agree to use their mutual good *faith efforts to vigorously [ ] (as *[ ] into an [ ] product offering) through INFOSEEK to *[ ]. * 10.9 [ ]. In order to *maintain the [ ] provided under Section 2.2, the *[ ] amounts paid [ ] under Section ------------------------- *Confidential Treatment Requested For Redacted Portion PAGE 13 14 10.3(b) must be greater than or equal to the following amounts; if at the end *of [ ] this is not true, within [ ]: * (a) For a period of [ ] after initial System *Acceptance, [ ]; * (b) For the [ ] period beginning [ ] after *initial System Acceptance and [ ] after initial System Acceptance, [ ]; * (c) For the [ ] period beginning [ ] after initial *System Acceptance and [ ] after initial System Acceptance, [ ]; * (d) For the [ ], beginning *[ ] after initial System Acceptance, [ ]. * If the payments made [ ], pursuant to Section 10.3(b) are *greater than the [ ] set forth above, then the [ ]. * 10.10 [ ] Customer. If HNC provides [ ] with *[ ] or [ ] with respect to the subject matter of this Agreement, INFOSEEK will be entitled to the benefit of any such provision. ARTICLE 11 CONFIDENTIALITY 11.1 Confidential Information. HNC and INFOSEEK each agree to hold in strictest confidence any information and material that is related to the other party's business or that is designated by the other party as its proprietary and confidential information, ("CONFIDENTIAL INFORMATION") unless such information or material is disclosed other than due to a breach of the confidentiality obligations of the parties hereunder. Confidential Information includes information related to research, development, pricing, trade secrets *[ ], customer lists, salaries, business affairs, or any other similar information regarding the other party to this Agreement. Notwithstanding the foregoing, as used in this Agreement, "Confidential Information" of a party shall not include any information that (a) the other party rightfully possessed before it received such information, as evidenced by written documentation; (b) subsequently becomes publicly available through no fault of the other party; (c) is furnished rightfully to the other party by a third party without restriction on use or disclosure; (d) is required to be disclosed by law, provided that the disclosing party will exercise reasonable efforts to notify the other party prior to disclosure; or (e) information that is independently developed by a party without use of or reference to any of the other party's Confidential Information. 11.2 Restrictions on Use and Disclosure. Each party agrees not to make any use of Confidential Information of the other party other than for the specific purposes of using such Confidential Information as contemplated by this Agreement. Each party's obligations of confidentiality under this Article 11 shall survive the termination of this Agreement. Without limiting the generality of the foregoing, each party agrees: 11.2.1 Not to disclose, or permit access to, any Confidential Information of the other party to any other person or entity, except that such disclosure or access shall be permitted to any ------------------------- *Confidential Treatment Requested For Redacted Portion PAGE 14 15 employee, agent, representative or independent contractor of such party who requires access to such Confidential Information in the course of his or her employment or services to the extent reasonably required to carry out the purposes of this Agreement; 11.2.2 To ensure that its employees, agents, representatives, and independent contractors who are given access to any Confidential Information of the other party are advised of the confidential nature of such information and agree (and in the case of independent contractors, such agreement is in writing) not to take any action prohibited under this Article 11; 11.2.3 Not to alter or remove any identification, copyright or proprietary rights notice which indicates the ownership of any part of the Confidential Information of the other party; and 11.2.4 To notify the other party promptly and in writing of the circumstances surrounding any possession, use or knowledge of any Confidential Information of the other party by any person or entity other than those authorized by this Agreement. * 11.3 [ ] Data. [ * ] (subject to the exceptions to the definition of Confidential Information in Section 11.1 hereof) and shall use such data only in performing services in accordance with this Agreement or as may be permitted by *[ ]. Such data shall only be made available to those [ ] who need such information in order to perform their responsibilities hereunder. * 11.4 [ ] Agreements. In all instances where [ * ] which includes the terms set forth in Exhibit C. 11.5 Confidentiality of Agreement. The terms and conditions of this Agreement are and shall remain and be kept completely confidential by the parties and their employees and agents and shall not be disclosed to any third party without the prior written consent of the other party; provided, however, that either party may disclose the terms and conditions of this Agreement to (i) potential acquirers or financial investors or (ii) to their legal counsel and accountants, and to governmental agencies or authorities (including but not limited to the Securities and Exchange Commission) or otherwise if such party believes such disclosure is legally required. If a party needs to disclose the terms of this Agreement for financial investment purposes or is legally required to disclose the terms of this Agreement to any governmental agency or authority it will promptly so advise the other party and attempt to limit disclosure and seek confidential treatment of such disclosed information. 11.6 Remedies; Survival. HNC and INFOSEEK agree that in the event that either party breaches any of the provisions contained in this Article 11, then, notwithstanding the provisions of Article 19, the nonbreaching party shall be authorized and entitled to seek from any court of competent jurisdiction (i) a temporary restraining order, (ii) preliminary and permanent injunctive relief, and (iii) an equitable accounting for all profits or benefits arising out of such breach. Such rights or remedies shall be cumulative and in addition to any other rights or remedies to which the non-breaching party may be entitled. The provisions of this Article 11 shall continue in effect following termination of this Agreement and expiration or termination of the Term. ARTICLE 12 REPRESENTATIONS OF THE PARTIES 12.1 HNC. HNC represents and warrants to INFOSEEK that: (i) it is a corporation duly organized, - ------------------------- * Confidential Treatment Requested For Redacted Portion PAGE 15 16 validly existing and in good standing under the laws of the State of Delaware; (ii) it has the corporate power and authority to enter into this Agreement and perform all of its obligations hereunder, (iii) it has the right to grant all licenses granted by HNC to INFOSEEK herein; (iv) HNC is the owner of and/or has all necessary rights in all the HNC Software necessary to grant INFOSEEK the rights and licenses relating to the HNC Software granted by HNC to INFOSEEK under this Agreement; and (v) during the Term neither the HNC Software nor any portion thereof, nor the Documentation, will (a) infringe any copyright, Territory Patent, trade secret, or other non-patent Intellectual Property rights of any third party that arise under the laws of any country within the Territory or (b) misappropriate any trade secret of a third party that is protected under the laws of any country within the Territory; (vi) to the best of HNC's knowledge, no party (other than HNC) has the legal right to interrupt or otherwise disturb INFOSEEK's licensed Use and possession of the HNC Software in accordance with this Agreement; provided INFOSEEK is in compliance with this Agreement in all material respects and all amounts due HNC under this Agreement have been timely paid in full; (vii) any maintenance or other services to be provided by HNC hereunder will be performed by HNC personnel in accordance with reasonable industry standards; and (viii) HNC is at the time of its execution of this Agreement financially solvent. There is no action, suit, claim, arbitration, or other proceeding pending or threatened which questions this Agreement or HNC's ownership of the HNC Software or any intellectual property rights therein or otherwise relating to the HNC Software. HNC makes the same representations with respect to the SelectCast System. 12.2 INFOSEEK. INFOSEEK represents and warrants to HNC that: (i) it is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware; (ii) it has the corporate power and authority to enter into this Agreement and perform all of its obligations hereunder; (iii) any services to be provided by INFOSEEK shall be performed in accordance with reasonable industry standards; (iv) to the best of INFOSEEK's *knowledge, no party (other than INFOSEEK, its successors and assigns) [ ] *with this Agreement; (v) that [ ] and has the [ ]; (vi) INFOSEEK *will not authorize any [ ] in Exhibit C; and (vii) INFOSEEK is at the time of its execution of this Agreement financially solvent. ARTICLE 13 LIMITED WARRANTY; CONFORMITY TO SPECIFICATIONS; INSURANCE 13.1 Limited Warranty. HNC hereby warrants to INFOSEEK that, during the Service Period, the HNC Software, as delivered by HNC and accepted by INFOSEEK, will conform in all material respects to its Documentation and Specifications. This warranty remains valid except to the extent affected by INFOSEEK making material changes to the HNC Software, other than those changes made at the direction of HNC or with HNC's approval. 13.2 Warranty Disclaimer. TO THE FULLEST EXTENT PERMITTED BY LAW, EXCEPT FOR THE REPRESENTATIONS IN SECTION 12.1 HEREOF AND THE LIMITED WARRANTY ------------------------- *Confidential Treatment Requested For Redacted Portion PAGE 16 17 PROVIDED IN SECTION 13.1 HEREOF, HNC HEREBY DISCLAIMS ALL WARRANTIES, REPRESENTATIONS, LIABILITIES AND OBLIGATIONS WITH RESPECT TO THE HNC SOFTWARE, WHETHER EXPRESS OR IMPLIED, WHETHER ARISING FROM CONTRACT OR TORT, IMPOSED BY STATUTE OR OTHERWISE, INCLUDING (BUT NOT LIMITED TO) ANY IMPLIED WARRANTIES AS TO MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. THE REPRESENTATIONS AND WARRANTIES SET FORTH IN ARTICLES 12 AND 13 OF THIS AGREEMENT ARE IN LIEU OF ALL OTHER WARRANTIES AND HNC HEREBY SPECIFICALLY DISCLAIMS AND EXCLUDES ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO HNC-S SOFTWARE AND SERVICES. PAGE 17 18 ARTICLE 14 INDEMNIFICATION 14.1 Loss Defined. As used in this Article 14, the term "LOSS" means, collectively, loss, liability, damages, judgments, awards of settlement, cost or expense (including court costs and reasonable attorneys' fees) paid to a third party. 14.2 HNC Infringement. Subject to the terms and conditions of this Article 14, HNC shall indemnify, hold harmless and defend INFOSEEK, its affiliates and their respective employees, officers and directors (collectively, "INFOSEEK INDEMNITEES") from and against any and all Loss with respect to any suit or proceeding brought against INFOSEEK arising out of or based on any claim, demand, or action alleging that the HNC Software or any portion thereof as furnished under this Agreement and used within the scope of the License granted to INFOSEEK hereunder misappropriates a trade secret protected under the laws of any country within the Territory (or political subdivision thereof) or infringes any copyright, Territory Patent, or other non-patent Intellectual Property rights of any third party that are protectable under the laws of any country within the Territory (or political subdivision thereof); provided however, that in order to receive such indemnification INFOSEEK must comply with all INFOSEEK's obligations under Section 14.6. Notwithstanding the foregoing, HNC shall not be required to indemnify, hold harmless or defend INFOSEEK: (a) to the extent such infringement is caused by the combination, operation or use of the HNC Software with: (i) any INFOSEEK Software, except as such combination, operation or use is contemplated by this Agreement; or (ii) any other equipment, software, data or programming not supplied by HNC; (b) to the extent such infringement arises from any alteration or modification of the HNC Software not authorized by HNC; or (c) for any settlement or compromise of a suit, proceeding, claim, demand or action unless HNC has consented in advance to such settlement or compromise in writing (with HNC's consent thereto not to be unreasonably withheld). In the event that the HNC Software or any portion thereof, as furnished by HNC under this Agreement and used within the scope of the License granted to INFOSEEK hereunder, is held in such a suit or proceeding to misappropriate a trade secret protected under the laws of any country within the Territory (or any political subdivision thereof) or to infringe a copyright, Territory Patent, or any other non-patent Intellectual Property rights of a third party that arise, and are enforceable, under the laws of a country within the Territory (or any political subdivision thereof), and as a result of such misappropriation or infringement, the use of the HNC Software or portion thereof by INFOSEEK or Licensed INFOSEEK Clients as licensed by HNC hereunder is enjoined, then HNC shall use its best efforts to, at HNC's sole option and expense: (1) procure for INFOSEEK the right to continue using the HNC Software or portion thereof; or (2) replace the same with noninfringing software of equivalent functions and efficiency as described in the Specifications for the then-current Version of the HNC Software that is then being used by INFOSEEK on the Designated System. 14.3 INFOSEEK Infringement. Subject to the terms and conditions of this Article 14, INFOSEEK shall indemnify, hold harmless and defend HNC, its affiliates and their respective employees, officers and directors (collectively, "HNC INDEMNITEES") from and against any and all Loss with respect to any suit or proceeding brought against HNC arising out of or based *on any claim, demand, or action alleging that the [ ] as furnished under this Agreement and used within the scope of this Agreement misappropriates a trade secret protected under the laws of any country within the Territory (or political subdivision thereof) or infringes any copyright, Territory Patent, or other non-patent Intellectual Property rights of any third party that are protectable under the laws of any country within the Territory (or political subdivision thereof); provided, however, that in order to receive such indemnification HNC must comply with all HNC's obligations under Section 14.6. Notwithstanding the foregoing, INFOSEEK shall not be required to indemnify, hold - ------------------------- *Confidential Treatment Requested For Redacted Portion PAGE 18 19 harmless or defend HNC: (a) to the extent such infringement is caused by the *combination, operation or use of the [ ] with: (i) any HNC Software, except as such combination, operation or use is contemplated by this Agreement; or (ii) any other equipment, software, data or programming not supplied by INFOSEEK; (b) to the extent such infringement arises from any *alteration or modification of the [ ] not authorized by INFOSEEK; or (c) for any settlement or compromise of a suit, proceeding, claim, demand or action unless INFOSEEK has consented in advance to such settlement or compromise in writing (with INFOSEEK's consent thereto not to be unreasonably *withheld). In the event that the [ ], as furnished by INFOSEEK under this Agreement and used within the scope of this Agreement, is held in such a suit or proceeding to misappropriate a trade secret protected under the laws of any country within the Territory (or any political subdivision thereof) or to infringe a copyright, Territory Patent, or any other non-patent Intellectual Property rights of a third party that arise, and are enforceable, under the laws of a country within the Territory (or any political subdivision thereof), and as a result of such misappropriation or infringement, the use of the INFOSEEK Software, Data or portion thereof by HNC hereunder is enjoined, then INFOSEEK shall use its best efforts to, at INFOSEEK's sole option and expense: (1) procure for HNC the right to continue using the INFOSEEK Software, Data or portion thereof, or (2) replace the same with noninfringing software or data. 14.4 HNC Gross Negligence or Willful Misconduct. Subject to the terms and conditions of this Article 14 and the limitations on HNC's liability under Article 15, HNC shall indemnify and hold harmless INFOSEEK Indemnitees and Licensed INFOSEEK Clients against any and all direct pecuniary Loss actually suffered or incurred by any INFOSEEK Indemnitee or any Licensed INFOSEEK Client as a result of claims or demands for recovery for personal injury or damage to tangible property brought by a third party or parties against any INFOSEEK Indemnitee or any Licensed INFOSEEK Client that arise out of HNC's gross negligence or willful misconduct in performing any of the services to be performed by HNC pursuant to this Agreement; provided, however, that HNC shall not be obligated to so indemnify INFOSEEK or any Licensed INFOSEEK Client for any such claim or demand unless INFOSEEK has complied with all INFOSEEK's obligations under Section 14.6 with respect to such claim or demand. 14.5 INFOSEEK Gross Negligence or Willful Misconduct. Subject to the terms and conditions of this Article 14 and the limitations on INFOSEEK's liability under Article 15, INFOSEEK shall indemnify and hold harmless HNC and its employees, officers and directors (collectively, "HNC INDEMNITEES") against any and all direct pecuniary Loss actually suffered or incurred by any HNC Indemnitee as a result of claims or demands for recovery for personal injury or damage to tangible property brought by a third party or parties against HNC Indemnitees that arise out of INFOSEEK's gross negligence or willful misconduct in performing any of the services to be performed by INFOSEEK pursuant to this Agreement; provided, however, that INFOSEEK shall not be obligated to so indemnify HNC or any HNC Client for any such claim or demand unless HNC has complied with all HNC's obligations under Section 14.6 with respect to such claim or demand. 14.6 Conditions to Indemnification. In the event that a claim, demand, suit or proceeding for which indemnification or defense may be available under the foregoing provisions of this Article 14 (a "CLAIM") is brought, made or filed, then as a condition to receiving indemnification for, or defense of, such Claim, the party to this Agreement against whom (or against whose eligible client or customer) the Claim is brought, made or filed (the "INDEMNIFIED PARTY") shall: (i) promptly notify the other party (the "INDEMNIFYING PARTY") in writing of such Claim; provided, however, that any delay in providing notice of a Claim shall not relieve the indemnifying party from its obligation hereunder to provide indemnity for such Claim unless such delay is materially prejudicial to the indemnifying party's ability to defend such Claim; (ii) allow the indemnifying party to control and direct the defense and settlement of such ------------------------- *Confidential Treatment Requested For Redacted Portion PAGE 19 20 Claim; and (iii) provide the indemnifying party with information and assistance as reasonably required by the indemnifying party for the defense and settlement of the Claim. The indemnified party may at all times participate in the defense or settlement of the Claim at its own expense, subject to the indemnifying party's right to direct and control such defense and settlement; provided, however, that, notwithstanding the foregoing, if the indemnifying party does not assume the defense of any such Claim, then, without forfeiting its rights to indemnification hereunder, the indemnified party may assume, direct and control the defense of the Claim. Subject to the immediately preceding sentence, the indemnifying party shall have the right, at its cost and expense, to direct and control the defense of any Claim for which it must provide indemnification or defense hereunder with counsel selected by the indemnifying party unless the indemnified party reasonably objects to use of such counsel on the basis that: (i) such counsel has a conflict of interest in representing both of the parties or (ii) the indemnified party determines in good faith that such counsel does not have the required expertise to adequately represent the indemnified party in connection with such type of Claim. In such case the indemnifying party will promptly select new counsel to defend the Claim. Without giving up the right to indemnity, the indemnified party shall not compromise or settle any such Claim without the prior written consent of the indemnifying party, which consent shall not be unreasonably withheld. Any claim for indemnification under this Agreement must be made prior to two (2) years after the party claiming indemnification becomes aware of the Claim with respect to which indemnification is claimed. 14.7 Exclusive Remedy. The rights of a party hereto to indemnification under the provisions of this Article 14, as limited by the provisions of Article 15, are intended by the parties to be the sole and exclusive rights and remedies of the party entitled to indemnification with respect to the matters with respect to which such party has is entitled to indemnification under this Article 14. ARTICLE 15 LIMITATION OF LIABILITY 15.1 HNC. Except for HNC's obligations to indemnify under Section 14.2 and Section 14.4, notwithstanding any contrary provision of this Agreement, in no event shall the total lifetime cumulative liability of HNC to INFOSEEK, any INFOSEEK Client or any INFOSEEK Indemnitee for any claims or Loss arising in any manner whatsoever and related to the HNC Software, this Agreement or any Placements or services contemplated by this Agreement (including, but not limited to, any liability of HNC to indemnify and/or defend INFOSEEK Indemnitees under the provisions of Section 14.4) exceed a total amount equal to the aggregate Monthly License Fees actually paid to HNC by INFOSEEK during the first twelve (12) months following the Effective Date. Notwithstanding any contrary provision of this Agreement, in no event shall HNC be liable to INFOSEEK or any INFOSEEK Client for any indirect, special, consequential, punitive or exemplary damages of any kind whatsoever, regardless of whether such damages were foreseeable or whether HNC had been advised of the possibility of such damages. In addition, HNC shall not be liable to INFOSEEK, any INFOSEEK Client or any INFOSEEK Indemnitee for any claims or Loss to the extent such claims or Loss relate to or arise from a defect or other inherent failure of INFOSEEK Software used in connection with the HNC Software or are due to other causes that are beyond the reasonable control of HNC. 15.2 INFOSEEK. Except for INFOSEEK's obligations to indemnify under Section 14.3 and Section 14.5, notwithstanding any contrary provision of this Agreement, in no event shall the total lifetime cumulative liability of INFOSEEK to HNC or any HNC Client for any claims or Loss arising in any manner whatsoever and related to the HNC Software, this Agreement or any Placements or services contemplated by this Agreement (including, but not limited to, any liability of INFOSEEK to indemnify PAGE 20 21 and/or defend HNC under the provisions of Section 14.5) exceed a total amount equal to the aggregate Quarterly License Fees actually paid to HNC by INFOSEEK during the first twelve (12) months following the Effective Date. Notwithstanding any contrary provision of this Agreement, in no event shall INFOSEEK be liable to HNC or any HNC Client for any indirect, special, consequential, punitive or exemplary damages of any kind whatsoever, regardless of whether such damages were foreseeable or whether INFOSEEK had been advised of the possibility of such damages. In addition, INFOSEEK shall not be liable to HNC or any HNC Indemnitee for any claims or Loss to the extent such claims or Loss relate to a defect or other inherent failure of HNC Software or are due to other causes that are beyond the reasonable control of INFOSEEK. ARTICLE 16 TERM; MATERIAL BREACH; TERMINATION 16.1 Term; Potential for Extension. The "TERM" of this Agreement means that period of time commencing on the Effective Date of this Agreement and ending on the earlier to occur of: (a) the Expiration Date (as defined below); or (b) if this Agreement is terminated prior to the Expiration Date in accordance with the provisions of this Agreement. As used herein, the term *"EXPIRATION DATE" shall initially mean that date which is the [ ] *Acceptance Date (the [ ]); provided, however, if this Agreement has not *been terminated prior to the [ ], then, commencing on the [ ], *the Expiration Date shall be extended for a period of [ ] Acceptance Date , this Agreement has been terminated in accordance with the terms of this Agreement. 16.2 Termination for Material Breach. If a party to this Agreement commits a material breach of any of its material obligations or covenants under this Agreement (the "BREACHING PARTY"), then the other party to this Agreement (the "TERMINATING PARTY") may terminate this Agreement if such material breach *remains uncured for [ ] days after the date the Terminating Party has given written notice of such material breach to the Breaching Party; provided, *however, that in the event of [ ], and if the material breach remains uncured after such applicable cure period, then (provided that the Terminating Party is not itself then in material breach of this Agreement) the Terminating Party may terminate this Agreement immediately by giving written notice of its termination of this Agreement to the Breaching party. 16.3 Other Grounds for Termination. To the extent permitted by applicable law (including 11 U.S.C. Section 365) a party (the "NON-DEFAULTING PARTY") may terminate this Agreement immediately by written notice to the other in the event the other party makes an assignment for the benefit of its creditors, admits in writing an inability to pay debts as they mature, a trustee or receiver is appointed respecting all or a substantial part of the other party's assets, or a proceeding is instituted by or against the other party under any provision of the Federal Bankruptcy Act and is acquiesced in or is not dismissed within sixty (60) days, or results in an adjudication of bankruptcy. To the extent applicable law prevents the non-defaulting party from terminating this Agreement, if it should wish to do so as described above, then the parties shall have only those rights and remedies permitted by applicable law, including the United States Bankruptcy Act including but not limited to 11 U.S.C. Section 365. However the non-defaulting party has the unrestricted right at its option not to terminate this Agreement and, to continue to exercise its rights under this Agreement. 6.4 Effect of Termination. Upon termination of this Agreement, (a) *all rights of INFOSEEK and [ ] to Use the HNC Software hereunder will cease; (b) INFOSEEK shall cease - ------------------------- *Confidential Treatment Requested For Redacted Portion PAGE 21 22 all use of the HNC Software and Documentation and shall take reasonably *diligent steps to ensure that [ ] all use of the HNC Software and Documentation; (c) INFOSEEK shall, as soon as practicable, return all copies of the HNC Software in its possession or control to HNC, together with any back-up copies; (d) INFOSEEK shall use its reasonably diligent efforts *to obtain any copies of the HNC Software in the [ ] and to *promptly return all such copies to HNC, unless such [ ] has a [ ] *with HNC [ ] the HNC Software; (e) INFOSEEK shall purge all copies of the HNC *Software from the [ ]; (f) upon HNC's request, INFOSEEK shall certify to HNC in a writing signed by an officer of INFOSEEK that all copies of the HNC Software have been returned to HNC or destroyed and that no copy of such HNC Software remains in the possession or control of INFOSEEK or any *INFOSEEK affiliate; (g) all [ ] to [ ] the [ ] and *[ ] hereunder will cease; (h) [ ] shall cease all use of the *[ ] and [ ]; (i) [ ] shall, as soon as practicable, *return all copies of the [ ] and [ ] in its possession *or control to [ ], together with any back-up copies; and (j) upon *[ ] request, [ ] shall certify to [ ] in a writing signed by an *officer of [ ] that all copies of the [ ] and [ ] have *been returned to [ ] or destroyed and that no copy of such [ ] or *[ ] remains in the possession or control of [ ]. The foregoing does not *apply to [ ] who continue to comply with the license and royalty provisions of this Agreement. 16.5 Survival. The following provisions will survive termination of this Agreement: Sections 2.4, 2.6 (except the license granted therein), 7.4, 10.4, 10.5 (second paragraph only), 10.6, 10.7, and Articles 11, 12, 13, 14, 15, 18, and 19. ARTICLE 17 TECHNOLOGY SOURCE CODE ESCROW 17.1 Development License. HNC hereby grants INFOSEEK a non-exclusive license to maintain, support and enhance HNC Software. INFOSEEK agrees that until a Triggering Event it will exercise such license only by having Licensor perform its obligations under this Agreement. INFOSEEK will own any modifications it makes under this license, as well as the Intellectual Property rights therein. 17.2 Escrow Agreement. HNC, Data Securities International, Inc. ("DSI") (or another escrow agent mutually agreeable to INFOSEEK and HNC) and INFOSEEK shall enter into a Technology Escrow Agreement in substantially the form attached hereto as Exhibit D (the "ESCROW AGREEMENT") which sets forth the conditions under which Source Code (as defined below) for the applicable HNC Software will be released to INFOSEEK in the event of a Triggering Event as defined below. If the Source Code is released to INFOSEEK in accordance with the terms of this Section 17 and the terms of the Escrow Agreement, INFOSEEK agrees that it may use the Source Code solely for the purpose of enabling INFOSEEK to exercise its Section 17.1 license rights. As used in this Section 17, the term "SOURCE CODE" means, collectively, source code deposited on computer magnetic media, test programs and program specifications, compiler and assembler descriptions, descriptions and locations of third party computer programs required to use or support the HNC Software, and technical documentation that HNC uses to maintain or support the HNC Software, to the extent such exists at the time of the deposit of the Source Code into the deposit account pursuant to the Escrow Agreement or in the month prior to such *deposit. Within [ ] days after the Acceptance Date of each Version of the HNC Software that INFOSEEK elects to install on the Designated System, HNC shall deposit one (1) copy of the Source ------------------------- *Confidential Treatment Requested For Redacted Portion PAGE 22 23 Code for such Version of the HNC Software into a deposit account with DSI pursuant to the Escrow Agreement. Receipt of the Source Code by INFOSEEK under the terms of the Escrow Agreement shall not by itself terminate this Agreement. If INFOSEEK receives the Source Code for HNC Software under the terms of the Escrow Agreement, such Source Code shall be subject to all terms of ownership, use, access, disclosure, payment to HNC and termination specified in this Agreement. HNC agrees to update escrow deposits from time to time by promptly placing all upgrades, enhancements, and New Versions of the HNC Software in escrow with DSI. INFOSEEK shall pay all expenses charged by DSI to establish and maintain the escrow arrangement. In the event of any conflict between this Agreement and the Escrow Agreement, this Agreement shall control. 17.3 Triggering Event Defined. As used herein, "TRIGGERING EVENT" means and includes the following: 17.3.1 Action by HNC under any state corporation or similar law for the purposes of dissolution; 17.3.2 Action by HNC under any state insolvency or similar law for the purpose of its bankruptcy or liquidation; 17.3.3 A voluntary filing by HNC of a petition for relief under Chapter 7 or Chapter 11 of the United States Bankruptcy Code. 17.3.4 The filing of an involuntary petition in bankruptcy against HNC that is not dismissed within sixty (60) calendar days after its filing; 17.3.5 The occurrence of a material breach by HNC of its obligations under Article 6 hereof to provide support and maintenance of the applicable HNC Software, which material breach is not cured by HNC within * [ ] after HNC's actual receipt of notice of such material breach from INFOSEEK. ARTICLE 18 GENERAL 18.1 Sections; Exhibits. All references in this Agreement to "Sections" or "Exhibits" refer to Sections of this Agreement or Exhibits attached to this Agreement, respectively. 18.2 Parties are Not Partners or Agents. INFOSEEK and HNC are independent contractors and neither shall have any power, nor will either of the parties represent that it has any power, to bind the other party or to assume or to create any obligation or responsibility, express or implied, on behalf of any other party or in any other party's name. This Agreement shall not be construed as constituting HNC and INFOSEEK as partners, joint venturers or agents of each other or to create any other form of legal association which would impose liability upon one party for the act or failure to act of the other. 18.3 Use of Non-HNC Employees. HNC has the sole right and obligation to supervise, manage, contract, direct, procure, perform or cause to be performed all work to be performed by HNC hereunder. HNC shall require all non-HNC employees as well as employees of HNC to sign HNC's standard confidentiality agreements which require those individuals to keep confidential and not use third-party information such as that of INFOSEEK and INFOSEEK Clients. - ------------------------- * Confidential Treatment Requested For Redacted Portion PAGE 23 24 18.4 Independence of Agreement. This Agreement is separate from and independent of all other agreements between the parties. 18.5 Headings. The article, section, and subsection headings and captions used herein are for reference and convenience only, and shall not enter into the interpretation hereof. The Exhibits referred to herein and attached hereto, (and to be attached hereto), are incorporated herein to the same extent as if set forth in full herein. 18.6 Waiver; Remedies. No delay or omission by any party hereto to exercise any right or power occurring upon any non-compliance or default by the other party with respect to any of the terms of this Agreement shall impair any such right or power or be construed to be a waiver thereof. A waiver by either of the parties hereto of any of the covenants, conditions, or agreements to be performed by the other shall not be construed to be a waiver of any subsequent breach thereof or of any covenant, condition, or agreement herein contained. Unless otherwise stated herein, all remedies provided for in this Agreement shall be cumulative and in addition to and not in lieu of any other remedies available to either party at law, in equity, or otherwise. 18.7 Governing Law; Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 18.8 Entire Agreement; Amendment. This Agreement and the Exhibits annexed hereto constitute the entire agreement and understanding between the parties with respect to the subject matter of this Agreement, and there are no understandings or agreements relative hereto other than those which are expressed herein, and no waiver of any rights hereunder shall be valid or effective unless such waiver is set forth in a writing executed by the party against whom such waiver is sought to be enforced. This Agreement may be *amended or modified only by a writing executed by both parties hereto. [ ]. 18.9 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither party shall, without the prior written consent of the other party (which consent shall not be unreasonably withheld) assign or transfer this Agreement, and any attempt to do so shall be void and of no force and effect, except that a party hereto may, without the other party's consent, assign this Agreement to a parent, subsidiary, or purchaser of substantially all the assets or stock, or to a third party with whom such party is directly or indirectly merged or consolidated. In the case of any permitted assignment set forth above, the assigning party will provide reasonable advance notice of the assignment to the other party. 18.10 Notice. If a party is required to give notice to another under this Agreement, such notices shall be deemed to have been given (i) when delivered by a commercial overnight delivery service or (ii) three (3) days after such notice has been deposited in the U.S. mail, first class, postage prepaid, via certified mail or registered mail, return receipt requested, and addressed as follows (or to such other address for notice as may be subsequently designated by the addressee by notice given to the other party in accordance with this Section): If to HNC: HNC Software Inc. 5930 Cornerstone Court West San Diego, CA 92121-3728 Attention: Mr. Michael A. Thiemann, ------------------------- * Confidential Treatment Requested For Redacted Portion PAGE 24 25 Executive Vice President PAGE 25 26 If to Infoseek: Infoseek Corporation 2620 Augustine Drive, Suite 250 Santa Clara, CA 95054 Attention: Mr. Robin Johnson, Chief Executive Officer 18.11 Force Majeure. No party shall be liable for any failure to perform its obligations under this Agreement if it is prevented from doing so by a cause or causes beyond its reasonable control. Without limiting the generality of the foregoing, such causes shall include acts of God or the public enemy, fires, floods, storms, tornadoes, earthquakes, riots, strikes, blackouts, wars or war operations, restraints of government, or other causes which could not with reasonable diligence be controlled or prevented by the parties. 18.12 Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, then such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. 18.13 Audits. Either party shall be entitled, upon five (5) business days notice and only using independent external auditors reasonably acceptable to the other party, to examine the other party's records pertaining to the information necessary for enforcement of the rights and obligations under this Agreement, but only to the extent the requesting party specifically identifies the right or obligation it seeks to enforce and only twice each calendar year. Any information received as a result of an audit shall be considered Confidential Information and the auditor must be bound in confidence to only disclose evidence of non-compliance. If such audit reveals that there was an underpayment of more than 5%, then the audited party shall pay reasonable expenses associated with such audit. 18.14 Press Release. HNC and INFOSEEK shall be allowed to issue press releases stating factual information regarding the relationship between HNC and INFOSEEK upon execution of this Agreement, provided such press releases have been reviewed and approved by each party prior to release. Each party agrees that it will work promptly to review and approve (such approval not to be unreasonably withheld) press releases. Neither party shall release or publish any other news releases, public announcements, advertising or other publicity relating to this Agreement without the prior review and written approval of the other party (which review and approval shall not be unreasonably withheld or delayed), provided, however, that either party may make such disclosures as are required by legal, accounting or regulatory requirements after making reasonable efforts in the circumstances to consult in advance with the other party. ARTICLE 19 DISPUTE RESOLUTION 19.1 Informal Dispute Resolution. Any controversy or claim between INFOSEEK and HNC, arising from or in connection with this Agreement or the relationship of the parties under this Agreement, whether based on contract, tort, common law, equity, statute, regulation, order or otherwise, other than a dispute regarding ownership of software, documentation or Intellectual Property rights (a "DISPUTE"), shall be resolved as follows: PAGE 26 27 19.1.1 First, upon written request of either INFOSEEK or HNC, the parties will each appoint a designated representative whose task it will be to meet for the purpose of endeavoring to resolve such Dispute. The designated representatives shall be senior level managers of each party with the authority to make decisions and/or commitments on behalf of the respective party to resolve the Dispute. 19.1.2 The designated representatives shall meet as often as the parties reasonably deem necessary to discuss the problem in an effort to resolve the Dispute without the necessity of any formal proceeding. 19.1.3 Unless delay would impair a party's rights under applicable statutes of limitations, formal proceedings for the resolution of a Dispute may not be commenced until the earlier of: 19.1.3.1 the designated representatives concluding in good faith that amicable resolution through continued negotiation of the matter does not appear likely; or 19.1.3.2 the expiration of the thirty (30) day period immediately following the initial request to negotiate the Dispute; provided, however, that this Section 19.1 will not be construed to prevent a party from instituting formal proceedings earlier to avoid the expiration of any applicable limitations period, to preserve a superior position with respect to other creditors, or to seek temporary or preliminary injunctive relief from a court pursuant to Article 11. 19.2 Temporary Restraining Order. Nothing in Section 19.1 shall be construed to prevent any party from seeking from a court a temporary restraining order or other temporary or preliminary relief pending final resolution of a Dispute pursuant to Section 19.1. 19.3 Other Dispute Resolution. If the parties fail to resolve any dispute under Section 19.1 then they pursue any other available remedies. IN WITNESS WHEREOF, HNC and INFOSEEK have caused this Agreement to be signed and delivered by their duly authorized officers, as of the Effective Date. HNC SOFTWARE INC., INFOSEEK CORPORATION, a Delaware corporation a California corporation By: By: -------------------------------- --------------------------------- Title: Executive Vice President Title: CEO ----------------------------- ------------------------------ PAGE 27 28 LIST OF EXHIBITS TO LICENSE AND SOFTWARE DISTRIBUTION AGREEMENT Exhibit A - Specifications and Description of HNC Software; Installation Schedule Exhibit B - Form of Acceptance Certificate *Exhibit C - [ ] Exhibit D - Technology Escrow Agreement - ------------------------- *Confidential Treatment Requested For Redacted Portion PAGE 28 29 EXHIBIT A PART 1: SPECIFICATION AND DESCRIPTION OF HNC SOFTWARE 1. HNC Software As used in the Agreement of which this Exhibit is a part, the HNC Software consists of a HNC-developed, proprietary software-based advertising dissemination system known commercially as the SelectCast(TM) system, and specifically defined as the following: 1. SelectCast Context Vector Learning Service (a service provided to INFOSEEK). 2. SelectCast Analysis and Characterization Module, Versions 1.0, 2.0 and 3.0 *supplied as object code [ ] performed as a service to INFOSEEK. *3. SelectCast Real-Time [ ] Module, Versions 1.0, 2.0 and 3.0 supplied as object code. The sections below describe these software components. The development and *installation of these components will be performed in [ ]. The schedule *of implementation of the [ ] is shown in Section 2. The summary of *functionality, by component, by [ ] is shown below in Figure 1. *1.1 HNC SelectCast [ ] Learning Service Functional Description *SelectCast [ ] Learning Service is a set of tasks and services provided by HNC to INFOSEEK in support of the INFOSEEK operation of the SelectCast system and is common to all implementation phases. This service will learn a *set of [ ] given a [ ] provided by INFOSEEK to HNC. The Teaming operation will be performed at HNC's facilities in San Diego, CA. The results of the teaming process will be delivered to INFOSEEK in an electronic format compatible with the balance of the SelectCast system as outlined in Section 1 above. The specific tasks and actions associated with this service are as follows: *1. HNC will accept [ ] from INFOSEEK to be used as *part of the [ ] learning process. This data will be provided as a *UNIX tar tape of flat ASCII files. This electronic [ ] may consist of *[ ], and [ ] and/or *[ ]. 2. If the volume of data is insufficient, HNC may, at its option, elect to augment this data set with "general knowledge" corpora to meet training volume requirements. *3. HNC will apply its patented [ ] learning algorithm to learn *[ ] relationships based on the information provided by INFOSEEK for training purposes. HNC will perform testing to insure the quality of the *resulting [ ]. - ------------------------- * Confidential Treatment Requested For Redacted Portion PAGE 29 30 *4. The resulting trained and tested [ ] set will be provided to INFOSEEK to provide the basis for operation of the balance of the SelectCast system as described in Section 1. This data will be provided to INFOSEEK as a UNIX tar tape.
----------------------------------------------------------------------------------------------------------------------------- *COMPONENT [ ] [ ] [ ] ----------------------------------------------------------------------------------------------------------------------------- *[ ] -Learns [ -Learns [ -Learns [ *Learning ] based on ] based on ] based on Service information contained in information contained in information contained in * [ ] [ ] [ ] ----------------------------------------------------------------------------------------------------------------------------- *Analysis and -Transforms [ -Transforms [ -Transforms [ *Characterization ] of [ ] ] of [ ] ] of [ ] *Module into a [ ] into a [ ] into a [ ] -Creates and maintains -Creates and maintains -Creates and maintains * [ ] database [ ] database [ ] database -Correlates information -Correlates information * across [ ] across [ ] * and develops [ and develops [ * ] ] -Generates effectiveness -HNC acts as a service metrics based on bureau to build [ * analysis of [ ] * ] and produces management reports -----------------------------------------------------------------------------------------------------------------------------
------------------------- * Confidential Treatment Requested For Redacted Portion PAGE 30 31
----------------------------------------------------------------------------------------------------------------------------- *[ ] -[ ] selection of -[ ] selection of -[ ] selection of *Module best ad based on [ best ad based on [ best ad based on [ * ] compared ] ] * to [ * ] -Develops and tracks -Develops and tracks user behavior profile user behavior profile * across [ ] across [ ] * -Exploits [ -Exploits [ * ] in serving process ] in serving process * -Produces [ ] for -Produces log file for off-line analysis off-line analysis * -Incorporates [ * ] into user profile and serving process -Utilizes results from [ * ](s) in serving * process -----------------------------------------------------------------------------------------------------------------------------
* FIGURE 1. [ ] BY [ ] BY [ ]. ------------------------- * Confidential Treatment Requested For Redacted Portion PAGE 31 32 1.2 HNC SelectCast Analysis and Characterization Module Functional Description. 1.2.1 SelectCast Analysis and Characterization Module Version 1.0 Functional Description. *The SelectCast Analysis and Characterization Module V1.0 transforms [ ], *[ ] and [ ] as [ ], into a context vector *representation usable by the SelectCast Real-Time system. These [ ] *are stored in a [ ] file that will provide the basis for real-time processing of the SelectCast system. The Version 1 system will be delivered as object code compatible with a mutually-agreeable version of the *[ ] system. This module will provide the following functionality: 1. Provides a Graphical User Interface (GUI) that allows system operator to *enter [ ] of [ ] and [ ]. *2. Allows importing files of [ ] of [ ] and *[ ] into the system. *3. Allows the association of [ ] with the [ * ] and associated [ ]. This [ ] will be used by INFOSEEK to generate dynamic advertising during real-time operation. *4. Stores [ ], [ ] and *HNC-internal support information in a [ ] file for subsequent use by the real-time portion of the SelectCast system. 5. Documentation to allow operation of this module by INFOSEEK personnel and describe the theory/concept of operations. 1.2.2. SelectCast Analysis and Characterization Module Version 2.0 Functional Description The Version 2 SelectCast Analysis and Characterization Module will provide all the features contained in Version 1 plus a set of enhancements. Specific enhancements to be provided include: *1. [ ] of [ ]. *2. [ ] of [ ] of [ ] across *[ ]. *3. [ ] and [ ] provided as a service by HNC. - ------------------------- *Confidential Treatment Requested For Redacted Portion PAGE 32 33 4. System performance calculations and management reports. 5. Updated documentation to reflect enhanced functionality. *As part of Phase 2, HNC will provide to INFOSEEK SelectCast [ ] and *[ ] to be included as part of the Version 2 functionality. The results of this analysis will be provided to INFOSEEK in electronic format compatible with the Version 2 SelectCast system. Additionally, a report *documenting [ ] will be provided. The operating environment for Version 2 will be identical to Version 1 (i.e. *[ ]). 1.2.3 SelectCast Analysis and Characterization Module Version 3.0 Functional Description The Version 3 SelectCast Analysis and Characterization Module will provide all the features contained in Version 1 and Version 2 plus a set of enhancements. Specific enhancements to be provided include: *1. [ ] of [ ] based on [ ] and *[ ]. 2. Enhanced system performance calculations and management reports. 3. Updated documentation to reflect all enhanced functionality. *As part of Phase 3, HNC will build INFOSEEK SelectCast [ ] to be included as part of the Version 3 functionality. The process of building a *SelectCast [ ] is called training because a [ ] training process is used to determine the numerical parameters used in a SelectCast *[ ]. As part of this process, INFOSEEK will supply to HNC the source *data required to build these [ ]. The exact content and format of this data will be defined as part of the Version 3) project definition process. *The results of the [ ] operation will be provided to INFOSEEK in electronic format for incorporation as part of SelectCast realtime operation. *New [ ] will be constructed from time to time as mutually agreed upon and determined by measured system performance. It is expected the model development services will conform to schedule shown in *Figure 4, subject to delivery of a mutually agreed upon complete [ ] *development dataset by INFOSEEK. The [ ] development dataset will *comprise no less than [ ] of [ ] and [ ] plus other information to be identified during the development of the Version 3 *system requirements. This data will be augmented with [ ] data and *[ ] information. [ ] developed by HNC will be delivered in an electronic format compatible with the SelectCast real-time system. Unless mutually agreed otherwise, the operating environment for Version 3 will *be identical to Version 2 (i.e. [ ]. - ------------------------- *Confidential Treatment Requested For Redacted Portion PAGE 33 34 *1.3 SelectCast Real-Time [ ] Module Functional Description. *The SelectCast Manage Real-Time [ ] Module provides the [ ] to *[ ] the [ ] by the [ ] as [ ] of [ ] of *[ ]. This module will be provided as a [ ] task that will act as a server to the INFOSEEK system acting as a client. Communication between client *and server will be via an API [ ] (or other mutually agreed upon method). *1.3.1 SelectCast Real-Time [ ] Module Version l.0 Functional Description *The SelectCast Real-Time [ ] Module Version 1.0 server will provide *capability to perform [ ] of [ ] to be offered to the user based *on [ ] of [ ] to a dataset of advertising represented as *[ ]. In this role, the server will be presented with the [ ] and *the will respond to the client with the INFOSEEK [ ] to be presented to the user. Mechanism to invoke, control and terminate this server shall be provided. Additionally, documentation of the operation, controls and features of this module will be provided. This server will be provided as object code *compatible with a mutually agreeable version of the [ ] operating system *to execute on an INFOSEEK-provided [ ] workstation with a minimum of *[ ] of [ ] and [ ] of [ ]. *1.3.2 SelectCast Real-Time [ ] Module Version 2.0 Functional Description *The Version 2 SelectCast Real-Time [ ] Module will provide all the features contained in Version 1 plus a set of enhancements. Specific enhancements to be provided include: *1. Develop and track of [ ] of [ ] across *[ ] and providing a [ ] for improving *selectivity and precision of [ ] served. *2. Utilize relationships derived from analysis of [ ] performed by the *Version 2 Analysis and Characterization Module. These user [ ] will be incorporated in the serving process to improve selectivity and precision of *[ ] served. *3. Produce [ ] of [ ] to be used as *[ ]. This information will provide the basis for *[ ] to be provided by the Version 2 Analysis and *Characterization Module. [ ] shall not be disclosed. 4. Updated documentation to reflect enhanced functionality. *1.3.3 SelectCast Real-Time [ ] Module Version 3.0 Functional Description *The Version 3 SelectCast Real-Time [ ] Module will provide all the features contained in Version 1 and Version 2 plus a set of enhancements. Specific enhancements to be provided include: *1. Incorporate [ ] of served material into the *[ ]. *2. Utilize [ ] parameters derived by the Version 3 Analysis and Characterization Module. *3. Produce enhanced [ ] to be used as input *to [ ] and [ * ]. This information will provide the basis for server *effectiveness metrics and improved [ ]. - ------------------------- * Confidential Treatment Requested For Redacted Portion PAGE 34 35 to be provided by the Version 3 Analysis and Characterization Module 4. Updated documentation to reflect enhanced functionality. 2. Customization and Installation Schedule INFOSEEK and HNC agree that the HNC software will be customized for INFOSEEK *and installed in [ ] implemented as software versions *implemented [ ]. Prior to the start of software development of each version, HNC shall provide to INFOSEEK a time and materials cost estimate for that phase of the development. The parties agree to cooperate to meet mutually-agreeable cost goals. In addition, the parties agree that in some cases development will require modification or enhancements to existing *INFOSEEK software. The parties will work together on each of the [ ], generally described below. The version descriptions and functionality may require amendments after the execution of this Agreement. The parties will *jointly describe any changes to the [ ] and [ ] as well as *determine when to begin development on [ ]. *2.1 SelectCast Version [ ]-Estimated Schedule and Milestones Note: The Target Dates below are estimates and are linked to the signing of the contractual agreement. The schedule for customization and installation is provided below in Figure 2.
======================================================================================================================== *[ ] [ ] [ ] [ ] [ ] [ ] [ ] =================================================================================================== * [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] ========================================================================================================================
* FIGURE 2. VERSION [ ] SCHEDULE AND MILESTONES. *2.2 SELECTCAST VERSION [ ] - ESTIMATED SCHEDULE AND MILESTONES Note: The Target Dates below are estimates and are linked to the start of the *Version [ ] effort. The schedule for customization and installation is provided below in Figure 3. - -------------------- *Confidential Treatment Requested For Redacted Portion PAGE 35 36
======================================================================================================================== *[ ] [ ] [ ] [ ] [ ] [ ] [ ] =================================================================================================== * [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] ========================================================================================================================
* FIGURE 3. VERSION [ ] SCHEDULE AND MILESTONES. *2.3 SelectCast Version [ ] - Estimated Schedule and Milestones Note: The Target Dates below are estimates and are linked to the start of the *Version [ ] effort. The schedule for customization and installation is provided below in Figure 4.
========================================================================================================================= *[ ] [ ] [ ] [ ] [ ] [ ] [ ] =================================================================================================== * [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] ------------------------------------------------------------------------------------------------------------------------ *[ ] [ ] =========================================================================================================================
------------------------- *Confidential Treatment Requested For Redacted Portion PAGE 36 37 - -------------------------------------------------------------------------------- * [ ] [ ] - -------------------------------------------------------------------------------- * [ ] [ ] - -------------------------------------------------------------------------------- * [ ] [ ] - -------------------------------------------------------------------------------- * [ ] [ ] - -------------------------------------------------------------------------------- * [ ] [ ] ================================================================================
* FIGURE 4. VERSION [ ] SCHEDULE AND MILESTONES. 3. Software Acceptance Criteria and Testing 3.1 Criteria HNC agrees to test the HNC Software as installed on the INFOSEEK system to detect and remedy material malfunctions. Such testing shall be designed to discover material defects that might prevent proper operation of the HNC Software in the INFOSEEK system environment. This testing will be performed as part of mutually agreed upon software acceptance test criteria. The criteria will be defined by version by module with the definition of the criteria to occur during the requirements definition portion of each phase. It is expected that the software acceptance test will contain, as a minimum, the following criteria: 1. Throughput rate in terms of transactions per second. *2. Method for establishment of a performance baseline for [ ] precision. - ------------------------- *Confidential Treatment Requested For Redacted Portion PAGE 37 38 *3. SelectCast precision of [ ] over baseline performance in terms of false positive selections. Other criteria, as appropriate, may be defined as part of the requirements analysis process for each phase. 3.2 Testing Testing will be conducted in three steps: 1. A factory test shall be performed to establish the correct operation of the specific version of the SelectCast system relative to the agreed upon requirements for that version. This test will verify correct API behavior between the client and server and will verify the responses for a fixed set of *test data consisting of a sample of [ ]. 2. An installation test shall be performed to establish the correct operation of the SelectCast system in the INFOSEEK environment. In this test, the test data set utilized for the factory test will be submitted to the SelectCast system. The results will be logged and compared to the results of the factory test. The SelectCast system shall be deemed operational if the results are identical. 3. A performance test suite shall be developed to assess the precision and throughput of the SelectCast system in the INFOSEEK environment. This set of tests and the data to be used for the test will be mutually agreed upon. INFOSEEK should be aware that a set of relevance judgments, provided by INFOSEEK, will be required to test precision of the SelectCast system. These judgments necessarily will be produced as a result of human intellectual effort and, ad such, will require expenditure of labor hours. These relevance judgments can be captured in a database for re-use, thus minimizing recurring costs. However, the setup costs will remain. It is anticipated that the planning for the development of this testing data set will be performed during the requirements and planning portion of each phase. The actual testing will be performed first at HNC as part of the software customization process, then again at INFOSEEK to complete the testing process. - ------------------------- *Confidential Treatment Requested For Redacted Portion PAGE 38 39 EXHIBIT B FORM OF ACCEPTANCE CERTIFICATE This Acceptance Certificate has been executed this day of , 19 , by authorized representatives of HNC Software Inc., a Delaware corporation ("HNC") and Infoseek Corporation, a Delaware corporation ("INFOSEEK") under a certain License and Software Distribution Agreement dated , 1996, between HNC and INFOSEEK. RNC Software: Date of INFOSEEK's Acceptance: Conditional Acceptance by INFOSEEK (if applicable): Requirements for Final Acceptance by INFOSEEK: ---------------------------------- INFOSEEK hereby accepts [OR (IF SO INDICATED ABOVE) CONDITIONALLY ACCEPTS] the HNC Software described above effective as of the day and date first written above. INFOSEEK CORPORATION HNC SOFTWARE INC. By: By: -------------------------------- --------------------------------- Title: Title: ----------------------------- ------------------------------ PAGE 39 40 EXHIBIT C * INFOSEEK [ ] CONTRACT *1. INFOSEEK [ ] to INFOSEEK [ ]. *INFOSEEK [ ], whether by operation of law or otherwise, except as specifically set forth in *this Contract and except that it [ ]. *INFOSEEK [ ]. The terms *must inform the INFOSEEK [ ]. *2. INFOSEEK [ ] acknowledges that the HNC Software is copyrighted and is the sole and exclusive property of HNC Software Inc. No right, title, or interest in or to the HNC Software (including any right, title or interest in or to any patent, copyright, trademark, or other Intellectual Property or *proprietary rights in or related to the HNC Software), [ ], is *transferred from INFOSEEK [ ]. Title to and ownership of the HNC Software shall remain exclusively with HNC and its licensors (if any). INFOSEEK *[ ] appearing on the HNC Software. *3. The HNC Software [ ], and to protect them, *INFOSEEK Client agrees not to [ ]. Except as otherwise *provided in this Contract, INFOSEEK [ ]. *4. The INFOSEEK [ ] only. *INFOSEEK [ ]. INFOSEEK Client shall reproduce all copyright and proprietary notices on the *HNC Software in their exact form [ ]. Upon INFOSEEK's request, *INFOSEEK [ ] shall inform INFOSEEK of the [ ]. *5. HNC and its licensors (if any) [ * ], whether or not HNC or anyone else has been advised of the possibility of such damages. *6. INFOSEEK [ ] Contract if: (a) INFOSEEK *[ ] and *does not cure [ ] after notice thereof by INFOSEEK or HNC; or (b) INFOSEEK *[ ] contained in this Contract and [ ] after notice *thereof by INFOSEEK or HNC. If INFOSEEK [ ], INFOSEEK may terminate *INFOSEEK [ ] Contract and require INFOSEEK [ ]. - ------------------------- * Confidential Treatment Requested For Redacted Portion PAGE 40 41 TECHNOLOGY ESCROW AGREEMENT This Technology Escrow Agreement, including any exhibits (this "AGREEMENT"), is effective this _________ day of ____________________, 1996 by and between Data Securities International, Inc., a Delaware corporation ("DSI"), HNC Software Inc., a Delaware corporation ("DEPOSITOR") and Infoseek Corporation, a Delaware corporation ("USER"). WHEREAS, Depositor has deposited or will deposit with DST, for the benefit of User, the related proprietary data to provide for retention and controlled access under the conditions specified; NOW THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows: 1. DEPOSIT ACCOUNT. Following the execution and delivery of this Agreement and the payment of the first-year escrow fee to DST, DST shall open a SAFE deposit account (the "DEPOSIT ACCOUNT") for Depositor and User. The opening of the account means that DST shall establish an account ledger in the name of Depositor and User, calendar renewal notices to be sent to Depositor and User as provided in Section 6, and request the deposit materials (the "DEPOSIT") from Depositor until a Deposit is received. Unless and until Depositor makes the Deposit with DST, DST shall have no further obligation to Depositor and User except as defined by this Section. Depositor and User agree to designate one individual at each organization to receive notices from DST and to act on behalf of Depositor and User in relation to the performance of their obligations as set forth in this Agreement and to notify DST immediately in the event of any change from one designated representative to another in the manner stipulated in Exhibit A. 2. EXHIBIT B. Depositor must submit material to DST for retention and administration in the Deposit Account, together with a completed document describing the Deposit called a "Description of Deposit Materials," hereinafter referred to as an Exhibit B. Each Exhibit B should be signed by Depositor prior to submittal to DST and will be signed by DST upon completion of the Deposit inspection. 3. DEPOSIT INSPECTION. Upon receipt of an Exhibit B and the Deposit, DST will visually match the listed items on the Exhibit B to the labeling of the material (the "DEPOSIT INSPECTION"). DST will not be responsible for the contents or for validating the accuracy of Depositor's labeling. Acceptance will occur when DST concludes that the Deposit Inspection is complete. Upon acceptance, DST will sign the Exhibit B, assign the next sequential number to the Exhibit B and provide a copy of Exhibit B to Depositor and User. 4. DEPOSIT OBLIGATIONS OF CONFIDENTIALITY. DST agrees to establish a locked receptacle in which it shall place the Deposit and shall put the receptacle under the administration of one or more of its officers, selected by DST, whose identity shall be available to Depositor and User at all times. DST shall exercise a professional level of care in carrying out the terms of this Agreement. DST acknowledges Depositor's assertion that the Deposit shall contain proprietary data and that DST has an obligation to preserve and protect the confidentiality of the Deposit Except as provided for in this Agreement, DST agrees that DST shall not divulge, disclose, make available to third parties or make any use whatsoever of the Deposit. 5. DEPOSIT DEPOSITION AFTER EXPIRY. Upon nonrenewal or termination of this Agreement by HNC pursuant to Section 16.2, 16.3 or 14.2, if Depositor requests the return of the Deposit, DST shall return the Deposit to Depositor only after receiving from User an affidavit ("USER'S AFFIDAVIT") authorizing such return and all outstanding invoices and the Deposit return fees are paid. If the fee(s) are not received by the anniversary date of this Agreement, DST may destroy the Deposit, provided that Depositor has given User notice and an opportunity to pay the fees. PAGE 41 42 6. TERM OF AGREEMENT. This Agreement will have an initial term of one (1) year, commencing on the effective date. This Agreement may be renewed for additional one (1) year periods upon receipt by DSI of the specified renewal fees prior to the last day of the term (the "EXPIRATION DATE"). DSI will give notices of the need to renew the term of this Agreement to Depositor and User at least sixty (60) days prior to the scheduled Expiration Date of the then-current term. In the event that renewal fees are not received thirty (30) days prior to the Expiration Date, DSI shall so notify Depositor and User. If the renewal fees are not received from either party by the Expiration Date, DSI may terminate this Agreement without further notice and without liability of DSI to Depositor or User. 7. RELEASE OF DEPOSIT COPY TO USER. Upon the occurrence of a "TRIGGERING EVENT" as defined in Section 17.2 of that certain License and Software Distribution Agreement regarding Depositor's "SelectCast(TM)" software entered into between Depositor and User on ___________________, 1996, (the "LICENSE AGREEMENT"). User shall provide DSI with a User's Affidavit setting forth the facts associated with the occurrence of such Triggering Event, as defined in the License Agreement, entitling User to receive a copy of the Deposit. DSI shall notify Depositor by certified mail or commercial express mail service of its receipt of such User's Affidavit and shall concurrently provide Depositor with a copy of the User's Affidavit. If DSI does not receive a letter from Depositor contesting release of the Deposit to User within ten (10) days after the mailing of the User's Affidavit to Depositor, then DSI shall furnish one copy of the Deposit to User, who may use such Deposit only as permitted by the provisions of Section 17 of the License Agreement. If Depositor does contest the release leading to a dispute between the parties, the Dispute provision set forth in Section 11 shall be carried out. 8. OTHER THIRD PARTIES. DSI shall have no obligation to any other third party. 9. VERIFICATION RIGHTS. If requested by this User, Depositor grants to DSI the right to verify the Deposit for accuracy, completeness and sufficiency. Depositor hereby also permits DSI to verify, audit, and inspect the proprietary materials to be held or held in deposit to confirm the quality of the proprietary materials for the benefit of the User. Upon request by Depositor, DSI will issue a copy of the verification results to Depositor. In the event that the User has separately retained DSI to perform verification of the Deposit, Depositor agrees to cooperate with DSI and make reasonably available any technical and support personnel necessary for DSI to perform verification of the Deposit. Depositor hereby grants DSI the permission to release to User information pertaining to directory lists and/or table of contents of computer media, manuals, schematics, and manufacturing documents. Depositor grants to DSI the permission to release to User copies of any executables or object code modules prepared by DSI during its "Load and Compile" validation level solely for the purposes of determining the content and quality of the Deposit. If requested by User, Depositor agrees to permit one employee of User to be present at Depositor's facility and to observe the compilation or verification of the material to be deposited by Depositor. 10. INDEMNIFICATION. Depositor and User agree to defend and indemnify DSI and hold DSI harmless from and against any and all claims, actions and suits, whether in contract or in tort, and from and against any and all liabilities, losses, damages, costs, charges, penalties, counsel fees and other expenses of any nature (including, without limitation, settlement costs) incurred by DSI as a result of performance of this Agreement except in the event of a judgment which specifies that DSI acted with gross negligence or willful misconduct. PAGE 42 43 11. DISPUTES. In the event of a dispute as to which this section applies, DSI shall so notify Depositor and User in writing. Such dispute will be settled by arbitration (which arbitration shall be binding for purposes of this Agreement only) as follows: (a) the parties shall each select one independent arbitrator within ten (10) days, (b) such arbitrators shall select in good faith a third arbitrator within five (5) days, (c) each party will have one (1) day to present its case (presentation shall be made on a date selected by the arbitrators which shall be at least five (5) and no more than fifteen (15) days after selection of the third arbitrator), (d) the arbitrators shall have ten (10) days from completion of such presentation to render their decision (the decision of a majority of the arbitrators will be deemed the decision of the arbitrators), (e) if one party fails to timely appoint an arbitrator, the arbitration shall be conducted solely by the other party's arbitrator, and (f) such arbitration shall be informal and need not conform to AAA or other established procedures. Unless otherwise agreed to by Depositor and User, arbitration will take place at a site selected by the arbitrators. 12. GENERAL. (a) Reliance on Instructions. DSI may act in reliance upon any written instruction, instruments, or signature believed to be genuine and may assume that any person giving any written notice, request, advice or instruction in connection with or relating to this Agreement has been duly authorized to do so. DSI is not responsible for failure to fulfill its obligations under this Agreement due to causes beyond DSI's control. (b) Governing Law. This Agreement is to be governed by and construed in accordance with the laws of the State of California. (c) Notices. Notices to Depositor, User and DSI should be sent to the parties at the addresses identified in the attached Exhibit A. (d) Entire Agreement. This Agreement constitutes the entire agreement between the parties concerning the subject matter hereof and supersedes all previous communications, representations, understandings and agreements, either oral or written, between the parties. (e) Severability. If any provision of this Agreement is held by any court to be invalid or unenforceable, that provision will be severed from this Agreement and any remaining provisions will continue in full force. 13. FEES. All Fees hereunder shall be the sole responsibility and obligation of User. Fees are due upon receipt of signed contracts, receipt of Deposit materials or when service is requested, whichever is earliest. All service fees will be due in full at the time of the request for service. Renewal fees will be due in full upon the receipt of invoice unless otherwise specified by the invoice. If invoiced fees are not paid within sixty (60) days of receipt of invoice, DSI may terminate this Agreement. If the payment is not timely received by DSI, DSI shall have the right to accrue and collect interest at the rate of 1/2% per month (18% per annum) from the date of the invoice for all late payments. All service fees and renewal fees will be those specified in DSI's Standard Fee and Services Schedule in effect at the time of renewal or request for service, except as otherwise agreed. For any increase in DSI's standard fees, DSI shall notify User at least ninety (90) days prior to the renewal of this Agreement. For any services not listed on the Fee and Services Schedule, DSI shall provide a quote prior to rendering such service. PAGE 43 44 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on their behalf as of the day and year first above written. DATA SECURITIES INTERNATIONAL, INC. HNC SOFTWARE INC. ("DEPOSITOR") ("DSI") By: --------------------------------- By: -------------------------------- ------------------------------------ (Print Name) - ----------------------------------- (Print Name) Title: ------------------------------ Title: ----------------------------- INFOSEEK CORPORATION ("USER") By: -------------------------------- - ----------------------------------- (Print Name) Title: ----------------------------- PAGE 44 45 EXHIBIT A SAFE TECHNOLOGY ESCROW AGREEMENT ACCOUNT NUMBER ---------------- DESIGNATED REPRESENTATIVES AND LOCATIONS Notices to Depositor and User regarding Agreement terms and conditions should be addressed to: Depositor: HNC Software Inc. Address: 5930 Cornerstone Court West San Diego, CA 92121-3728 Depositor's Designated representative: ----------------------------------------------------------------- Telephone: ---------------------------------------------------------------------- Facsimile: ---------------------------------------------------------------------- User: Infoseek Corporation 2620 Augustine Drive, Suite 250 Santa Clara, CA 95054 User's Designated representative: ----------------------------------------------------------------- Telephone: ---------------------------------------------------------------------- Facsimile: ---------------------------------------------------------------------- All requests from Depositor to User to change the designated representative must be given in writing an signed by the designated representative or an authorized member of Depositor or User, as the case may be. Contracts, Deposits and official notifications to DSI should be addressed to: Data Securities International, Inc. Suite 220 6165 Greenwich Drive San Diego, CA 92122 Attention: Contract Administration Telephone: (619) 457-5199 Facsimile: (619) 457-4252 Invoice inquiries and remittance of fees to DSI should be addressed to: Data Securities International, Inc. Suite 550 49 Stevenson Street San Francisco, CA 94105 Attention: Accounts Receivable Telephone: (415) 541-9013 Facsimile: (415) 541-9424 PAGE 45 46 OBLIGATIONS Depositor, pursuant to a Technology Escrow Agreement (the "Agreement"), hereby deposits the Deposit Material into the Deposit Account by transferring it to Data Securities International, Inc. ("DSI"). DSI is PAGE 46 47 obligated to hold the Deposit Material as called for in this Agreement between the parties and, among other things, not to disclose, divulge or otherwise make the Deposit Material available, except as permitted by the Agreement. DEFINITIONS The Initial Deposit will consist of all material initially supplied by Depositor to DSI. The Supplemental Deposit is Deposit Material which is to be added to the Deposit Account. The Replacement Deposit is Deposit Material which is to replace existing Deposit Material as identified by any one or more Exhibit B(s) in the Deposit Account. DEPOSIT INSPECTION Upon receipt of an Exhibit B and Deposit Material, DSI will be responsible only for reasonably matching the labeling of the materials to the item descriptions listed on the Exhibit B and validating the count of the materials to the quantity listed on the Exhibit B. DSI will not be responsible for any other claims made by the Depositor on the Exhibit B. DEPOSIT ACCEPTANCE Deposit Acceptance will occur when DSI concludes that the Deposit Material Inspection is complete. Upon Deposit Acceptance, DSI will sign the Exhibit B and assign it the next Exhibit B number and issue a copy of the Exhibit B to Depositor and User within 10 days. If no Deposit Type is checked on the reverse by Depositor, the Deposit Material will be deemed to be an Initial or Supplemental Deposit. WARRANTY BY DEPOSITOR Deposit Material will be proprietary data, typically deposited on computer magnetic media and other related materials of Depositor. Depositor represents and warrants that it lawfully possesses all Deposit Material, can transfer Deposit Material to DSI and has the authority to store Deposit Material in accordance with the terms of this Agreement. AMENDMENT This Document acts as an Amendment if one is called for. PAGE 47 48 EXHIBIT B DESCRIPTION OF DEPOSIT MATERIAL Deposit Account Number ---------------------------------------------------------- Depositor Company Name ---------------------------------------------------------- DEPOSIT TYPE: Initial Supplemental Replacement If ------- ---------- ------- Replacement: Destroy Deposit Return Deposit ----- ------- ENVIRONMENT Host System CPU/OS Version Backup ------------------------ --------------------- Source System CPU/OS Version Compiler ---------------------- -------------------- Special Instructions: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- DEPOSIT MATERIAL: Exhibit B Name: Version -------------------- --------------------- Item Label Description Media Quantity - ---------------------- ----- -------- For Depositor, I certify that the above- described Deposit Material was sent to DSI: By: ---------------------------------------- Print Name --------------------------------- Date --------------------------------------- For DSI, I received the above-described Deposit Material subject to the terms on the reverse side of this Exhibit. By: ------------------------------------------ Print Name ----------------------------------- Date of Accepance ---------------------------- PAGE 48 EX-10.56 16 SOFTWARE LICENSE AGREEMENT W/HNC DATED MAY 8, 1996 1 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT EXHIBIT 10.56 *CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATE WITH THE SECURITIES AND EXCHANGE COMMISSION. SOFTWARE LICENSE AGREEMENT This Agreement, dated as of May 8, 1996 (the "EFFECTIVE DATE") is entered into by and between HNC SOFTWARE INC. ("HNC'), a corporation organized under the laws of the state of Delaware, and INFOSEEK CORPORATION ("LICENSEE"), a corporation organized under the laws of California. WHEREAS; HNC is the developer and owner of a proprietary software system known as CONVECTIS(TM); WHEREAS, Licensee wishes to obtain the right to license use the HNC Software with respect to categorizing documents in conjunction with Licensee's Internet products; and WHEREAS, HNC is willing to grant such rights to Licensee on the terms and conditions set forth in this Agreement; AGREEMENT In consideration of the mutual agreements contained herein, the parties hereby agree as follows: 1. DEFINITIONS. For purposes of this Agreement, the following terms shall have the meanings indicated below: (a) "HNC DOCUMENTATION" shall mean the user's guides or manuals, published by HNC and supplied with the HNC Software and which are generally supplied by HNC to licensed end users and shall also include documentation for customized options delivered to Licensee. (b) "END-USER" shall mean any subscriber and/or licensee of Licensee's Internet products, which shall include Licensee. (c) "HNC SOFTWARE" shall mean the CONVECTIS server application and the CONVECTIS tuning application, and any licensed options, modifications, or enhancements thereto, as supplied to Licensee by HNC pursuant to licenses granted under this Agreement. (d) "ERROR" shall mean any failure of the HNC Software to substantially conform to the specifications set forth in Exhibit G. (e) "LICENSED APPLICATION" shall mean the automatic categorization of Internet information into groups. - -------------- CONFIDENTIAL AND PROPRIETARY INFORMATION 2 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT (f) "CONTEXT VECTORS" shall mean the HNC Software-generated *mathematical representation of Licensee [] which does not include the [] *or cannot be [] to [] the []. 2. LICENSE. (a) Subject to the terms and conditions of this Agreement, during the term of this Agreement, HNC grants to Licensee a, nonexclusive, nontransferable right and license to: (i) use, maintain, display, and reproduce (in object code form only), for the Licensed Application the HNC Software in accordance with Exhibit A. * (ii) market, promote and provide [] produced by the HNC Software to End Users as a part of Licensee's Internet products. * (iii) provide first-line support for the [] produced by the HNC Software to End Users. (iv) Nothing herein entitles Licensee to use, market or provide any of the HNC Software to any third party except in accordance with the terms and conditions of this Agreement. (b) HNC reserves all rights not expressly granted hereunder. * (c) HNC agrees not to [] the [] to [] Inc. [], Inc., *[], Inc., and [], Inc. for the [] for a term of [] from the Effective Date. * (d) HNC agrees not to provide the benefit of the [], for a *period of [] after such [] are created, to any of the [] listed in Exhibit J. *The parties agree that the list in Exhibit J shall be limited to []. HNC agrees *that Licensee may, at [] intervals, beginning on the Effective Date, amend *Exhibit J to add and delete [], except that if HNC is already in bona fide [] *with any such added [], then HNC may provide the benefit of the then-current [] *to such [] by providing written documentation of such [] to Licensee and by *completing a [] with such [] within [] days of such amendment. 3. MARKETING RESPONSIBILITIES. CONFIDENTIAL AND PROPRIETARY INFORMATION - ----------------- *CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 2 3 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT (a) Licensee shall be solely responsible for the marketing, promotion, and/or distribution of Licensee's products. (b) Licensee shall indicate use of the HNC Software in those Licensee marketing materials and product documentation described in Exhibit K. (c) During the term of this Agreement, Licensee shall include a graphic with linked URL supplied by HNC in a location mutually agreed upon by the parties. 4. ACCEPTANCE OF THE HNC SOFTWARE; MODIFICATIONS TO THE HNC SOFTWARE BY HNC. (a) HNC shall participate jointly with Licensee in the testing of the HNC Software in accordance with the installation and testing procedures set forth in Exhibit D (the "Acceptance Test Procedures"). The Acceptance Test Procedures shall be designed to determine whether the HNC Software substantially conforms to the HNC and Licensee mutually agreed upon Requirement Analysis. Each party will inform the other of each Error as it is discovered by such party, and HNC will correct each Error as soon as reasonably possible after it is reported. The process of testing the Error reporting and correction will continue and be repeated until the HNC Software successfully completes the Acceptance Test Procedures or until the "Test Completion Deadline" set forth in Exhibit D is reached, whichever occurs first. Both parties shall act promptly in testing the HNC Software and in reporting Errors pursuant to this Section 4. *HNC shall have [ ] days following the Test Completion Deadline to correct any remaining Errors reported by Licensee on or before such date. (b) In the event that HNC fails to correct such Errors within *the [ ] period described in section (a) immediately above, Licensee may, at its option and as its exclusive remedy, (i) agree in writing with HNC to extend the time period in which HNC is required to correct such Errors, (ii) agree in writing with HNC to modify applicable Specifications or Acceptance Test Procedures, or (iii) terminate this Agreement by giving HNC written notice of termination within thirty (30) days after the date on which HNC is required to correct such Errors (as such date may be extended under subparagraph (i) above). In the event that Licensee elects to terminate this Agreement pursuant *to subparagraph (iii) immediately above, HNC shall refund to Licensee [ ] the one-time installation fee referred to in Exhibit A of this Agreement and any other amounts which shall have been paid by Licensee under this Agreement. Additionally, all licenses granted to Licensee under this Agreement shall immediately terminate, and Licensee shall promptly return to HNC all copies in its possession of the HNC Software, Documentation and other materials received from HNC under this Agreement, and neither party shall have any further obligations to the other party except for the confidentiality obligations under Section 7. CONFIDENTIAL AND PROPRIETARY INFORMATION ----------------- *CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 3 4 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT (c) Unless rejection of the HNC Software by Infoseek occurs prior thereto, the HNC Software shall be deemed to have been accepted by Licensee upon the earlier to occur of (i) the successful completion of the Acceptance Test Procedures, or (ii) the first date on which Licensee makes the information provided by the HNC Software available to End Users, excepting in conjunction with Licensee's use of the HNC Software for testing and acceptance *purposes, including external beta testing; or (iii) [ ]. At HNC's request at such time, Licensee shall furnish HNC with a certificate confirming Licensee's acceptance of the HNC Software. (d) If Licensee and HNC jointly agree to use HNC resources for any additional consultation services, then such additional services will be charged either on a negotiated and mutually agreed upon fixed price basis or on a time and materials basis according to HNC's then current published rate schedule. 5. PAYMENTS TO HNC. (a) Except as otherwise provided in Exhibit A of this Agreement, all payments due to HNC hereunder shall be due and payable in full within thirty (30) days of receipt by Licensee of a proper invoice therefor. All past due payments will accrue interest at a rate of one and one-half percent (1.5%) per month on the unpaid balance from the due date until paid in full. (b) Except as otherwise specified herein, all obligations with respect to the amounts due either party shall survive any expiration or termination of this Agreement. (c) All payments by Licensee to HNC under this Agreement for any fees due hereunder will be exclusive of any sales, use, service, value added or withholding taxes, or any other levy, tariff, duty or tax of any kind whatsoever imposed by any governmental authority with respect to the services rendered or expenses incurred by HNC hereunder (other than a tax imposed upon HNC's income). Licensee agrees to pay, within thirty (30) days of receipt of the applicable HNC invoices, any such tax whenever such tax is imposed by a governmental authority. 6. SUPPORT AND MAINTENANCE. HNC's responsibility to provide support or maintenance for the HNC Software is set forth in Exhibit B to this Agreement. 7. PROPRIETARY RIGHTS; CONFIDENTIALITY. (a) Ownership. Licensee acknowledges and agrees that HNC will own the sole and exclusive worldwide right, title and interest in and to the *HNC Software, [ ], Enhancements to the HNC Software, the Documentation and all CONFIDENTIAL AND PROPRIETARY INFORMATION - ----------------- *CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 4 5 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT worldwide intellectual property rights therein and all copies thereof, in whole and in part, subject only to Licensee's limited license rights to use such HNC Software and Documentation as permitted by this Agreement. (b) Notwithstanding any rights granted in Section 2 above, HNC reserves the right to restrict Licensee's use of HNC's trademarks and/or tradenames, including, but not limited to, HNC, HNC Software, Content Mining and/or Convectis, except as expressly permitted in writing by HNC. Notwithstanding the foregoing, Licensee shall: (i) reference its use of HNC technology and the HNC Software in copyright and/or other proprietary rights notices required under this Agreement; and (ii) place HNC's logo with URL link at a location mutually agreed to by the parties. (c) The HNC Software contains trade secrets of HNC and to protect them Licensee agrees that Licensee will not decompile, reverse engineer, disassemble or otherwise reduce the HNC Software to a human perceivable form or permit any other party to do so. Licensee may not modify, adapt, translate, rent, lease, sell, sublicense, loan, resell for profit, distribute, time-share or create any derivative works based upon, the HNC Software or any portion thereof or permit any other party to do so. HNC agrees that HNC will not decompile, reverse engineer, disassemble or otherwise reduce the Context Vectors to a form permitting access to the underlying text or permit any other party to do so. (d) Confidentiality. Licensee and HNC each agree that neither will, at any time during or after the tenn of this Agreement, disclose or disseminate to any other person or entity, or use except as permitted by this Agreement, any information regarding the business, data, processes, technology, software or products of the other party obtained during the course of performance under this Agreement (the "CONFIDENTIAL INFORMATION"). The Confidential Information of HNC will include, but not be limited to, the HNC Software, the Documentation and any related materials. The Confidential Information for Licensee will include, but not be limited to information about its business plans, its directory data, its Internet business, and any other non-public data provided by Licensee to HNC. Each party will use its best efforts to ensure that any Confidential Information obtained from the other party will be disclosed only to the receiving party's employees and agents and only on a "need-to-know" basis, and that such employees and agents will be bound by an obligation to maintain the confidentiality of the Confidential Information similar to the obligations of HNC and Licensee under this Section. Nothing contained herein will be construed to restrict or impair in any way the right of the parties to disclose or communicate any information which (i) is at the time of its disclosure hereunder generally available to the public; (ii) becomes generally available to the public through no fault of the receiving party; (iii) is, prior to its initial disclosure hereunder, in the possession of the receiving party as evidenced in a documentary form; (iv) is independently developed by a party without use of or reference to any of the other party's Confidential Information; or (v) is acquired by the receiving party from any third party having a right to disclose it to the receiving party; provided however, that either party may disclose the terms and conditions of this Agreement - -------------- CONFIDENTIAL AND PROPRIETARY INFORMATION 5 6 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT to supervisory or regulatory authorities, their counsel and accountants or otherwise, if legally required. (e) Remedies: Survival. HNC and INFOSEEK agree that in the event that either party breaches any of the provisions contained in this Section 7, then, notwithstanding the provisions of Section l3(k), the nonbreaching party shall be authorized and entitled to seek from any court of competent jurisdiction (i) a temporary restraining order, (ii) preliminary and permanent injunctive relief; and (iii) an equitable accounting for all profits or benefits arising out of such breach. Such rights or remedies shall be cumulative and in addition to any other rights or remedies to which the non-breaching party may be entitled. The provisions of this Section 7 shall continue in effect following termination of this Agreement and expiration or termination of the Term. (f) Public Disclosure. HNC and Licensee shall cooperate in the preparation of one or more joint press releases with respect to the subject matter of this Agreement. However, no such release shall be issued without the written consent of both parties. Such consents shall not be unreasonably withheld or delayed. (g) Confidentiality of Agreement. The terms and conditions of this Agreement are and shall remain and be kept completely confidential by the parties and their employees and agents and shall not be disclosed to any third party without the prior written consent of the other party; provided however, that either party may disclose the terms and conditions of this Agreement to (i) potential acquirers or financial investors, or (ii) to their legal counsel and accountants, and to governmental agencies or authorities (including but not limited to the Securities and Exchange Commission) or otherwise if such party believes such disclosure is legally required. If a party needs to disclose the terms of this Agreement for financial investment purposes or is legally required to disclose the terms of this Agreement to any governmental agency or authority, it will promptly advise the other party and attempt to limit disclosure and seek confidential treatment of such disclosed information. 8. LIMITED WARRANTIES OF HNC. (a) HNC represents and warrants to Licensee that: (i) HNC is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware; (ii) HNC has the corporate power and authority to enter into this Agreement and perform all of its obligations hereunder; and (iii) HNC is the sole and exclusive owner of and/or has all necessary rights to all intellectual property rights in and to the HNC Software; HNC has all legal right and authority to grant and convey to Licensee the rights and licenses contained in this Agreement without violation or conflict with any law; there is no action, suit, claim, arbitration, or other proceeding pending or threatened which questions this Agreement or HNC's ownership of the HNC Software or any intellectual property rights therein; the HNC Software does not infringe upon any proprietary right or intellectual property rights of any third party. - -------------- CONFIDENTIAL AND PROPRIETARY INFORMATION 6 7 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT (b) Conformity to Specifications. HNC hereby warrants that the HNC Software will conform in all material respects to the specifications described in Exhibit G hereto and will function in accordance with such specifications in all material respects during the term of this Agreement. In the event that Licensee discovers a material malfunction in the HNC Software (a "Program Error"), HNC agrees to use its best efforts to correct, cure, replace or otherwise remedy, at HNC's option, such Program Error at HNC's sole expense in accordance with the procedures specified in Exhibit L. Licensee agrees to cooperate and work closely with HNC in a prompt and reasonable manner in connection with HNC's correction efforts. Licensee's sole remedy for any breach of warranty under this Section will be to have HNC use its reasonable best efforts to cure such breach as provided herein. (c) WARRANTY DISCLAIMER. EXCEPT FOR THE FOREGOING EXPRESS WARRANTIES SET FORTH IN THIS SECTION, HNC MAKES NO OTHER WARRANTIES, EITHER EXPRESS OR IMPLIED, UNDER THIS AGREEMENT AND HEREBY DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING ANY WARRANTIES REGARDING MERCHANTABILITY, FITNESS FOR PURPOSE OR CORRESPONDENCE WITH DESCRIPTION. 9. INFRINGEMENT OF THIRD PARTY RIGHTS. (a) Indemnification. HNC will indemnify Licensee against, and hold Licensee harmless from, any liability, cost, loss, or expense arising out of any claim, demand, or action alleging that the HNC Software or any portion thereof as furnished under this Agreement and used within the scope of the licenses granted to Licensee hereunder infringes any third-party rights in a trade secret, a copyright, patent, or trademark; provided that: (i) Licensee promptly gives written notice of the claim, demand, or action to HNC; (ii) Licensee gives prompt, reasonable assistance to HNC at HNC's expense in connection with the defense and/or settlement of such claim, demand or action; and (iii) HNC directs, controls, and fully participates in the defense of or any settlement of such claims, demand or action. (b) Exceptions. Notwithstanding the foregoing, HNC's indemnity obligations under Section 9(a) above will not apply, when the alleged infringement would not have occurred but for said modifications or combinations to any claim, demand or action to the extent arising from: (i) modifications made to the HNC Software that were not authorized by HNC; or (ii) the combination of the HNC Software with any products not provided by HNC. (c) Injunctions. In the event that Licensee's use of the HNC Software or portion thereof in accordance with this Agreement is enjoined in an action as described in Section 9(a) above, or HNC reasonably believes that it will be so enjoined, then HNC will use its best efforts to promptly, at its sole option and expense: (i) procure for Licensee the right to continue using the HNC Software or portion thereof; (ii) replace the same with non- infringing software of equivalent functions and efficiency. - -------------- CONFIDENTIAL AND PROPRIETARY INFORMATION 7 8 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT (d) Sole and Exclusive Remedy. The remedies specified in this Section 9 will be Licensee's sole and exclusive remedies in connection with any alleged or actual infringement or misappropriation of any intellectual property rights by the HNC Software or the Documentation. "HNC" Software as used in this Section 9 shall include the Documentation. 10. LIMITS ON LIABILITY. (a) Limited Liability. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY LOST PROFITS, LOSS OF BUSINESS OR FOR INDIRECT, INCIDENTAL, EXEMPLARY, CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES SUFFERED BY LICENSEE, IT'S CUSTOMERS OR OTHERS ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE HNC SOFTWARE, THE DOCUMENTATION OR ANY OTHER HNC PRODUCTS OR SERVICES, FOR ALL CAUSES OF ACTION OF ANY KIND (INCLUDING BUT NOT LIMITED TO TORT, CONTRACT, NEGLIGENCE, STRICT PRODUCT LIABILITY AND BREACH OF WARRANTY) EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. (b) Limit on Maximum Liability. EXCEPT FOR HNC'S OBLIGATIONS PURSUANT TO SECTION 9, EACH PARTY'S TOTAL LIABILITY UNDER THIS AGREEMENT WILL IN NO EVENT EXCEED THE TOTAL DOLLARS PAID BY LICENSEE TO HNC UNDER THIS AGREEMENT (EXCLUSIVE OF INSTALLATION FEES AND REIMBURSED EXPENSES) FOR THE FIRST TWELVE (12) MONTHS DURING WHICH ANNUAL LICENSE FEES ARE DUE AND PAYABLE TO HNC HEREUNDER. 11. SOURCE CODE ESCROW. 11.1 Escrow Agreement. HNC, Data Securities International, Inc. ("DSI") (or another escrow agent mutually agreeable to INFOSEEK and HNC) and INFOSEEK shall enter into a Technology Escrow Agreement in substantially the form attached hereto as Exhibit D (the "ESCROW AGREEMENTS") which sets forth the conditions under which Source Code (as defined below) for the applicable HNC Software will be released to INFOSEEK in the event of a Triggering Event as defined below. If the Source Code is released to INFOSEEK in accordance with the terms of this Section 11 and the terms of the Escrow Agreement, INFOSEEK agrees that it may use the Source Code solely for the purpose of enabling INFOSEEK to itself internally support and maintain its Licensed Use of the HNC Software during the Term in accordance with the terms and conditions of this Agreement. As used in this Section 11, the term "SOURCE CODE" means, collectively, source code deposited on computer magnetic media, test programs and program specifications, compiler and assembler descriptions, descriptions and locations of third-party computer programs required to use or support the HNC Software, and technical documentation that HNC uses to maintain or support the HNC Software, to the extent such exists at the time of the deposit - -------------- CONFIDENTIAL AND PROPRIETARY INFORMATION 8 9 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT of the Source Code into the deposit account pursuant to the Escrow Agreement or in the month prior to such deposit. Within thirty-five (35) days after the Acceptance Date of each Version of the HNC Software that INFOSEEK elects to install on the Designated System, HNC shall deposit one (1) copy of the Source Code for such Version of the HNC Software into a deposit account with DSI pursuant to the Escrow Agreement. Receipt of the Source Code by INFOSEEK under the terms of the Escrow Agreement shall not by itself terminate this Agreement. If INFOSEEK receives the Source Code for HNC Software under the terms of the Escrow Agreement, such Source Code shall be subject to all terms of ownership, use, access, disclosure, payment to HNC and termination specified in this Agreement. HNC agrees to update escrow deposits from time to time by promptly placing all upgrades, enhancements, and New Versions of the HNC Software in escrow with DSI. INFOSEEK shall pay all expenses charged by DSI to establish and maintain the escrow arrangement. In the event of any conflict between this Agreement and the Escrow Agreement, this Agreement shall control. 11.2 Triggering Event Defined. As used herein, "TRIGGERING EVENT" means and includes the following: 11.2.1 Action by HNC under any state corporation or similar law for the purposes of dissolution; 11.2.2 Action by HNC under any state insolvency or similar law for the purpose of its bankruptcy or liquidation; 11.2.3 A voluntary filing by HNC of a petition for relief under Chapter 7 or Chapter 11 of the United States Bankruptcy Code. 11.2.4 The filing of an involuntary petition in bankruptcy against HNC that is not dismissed within sixty (60) calendar days after its filing; 11.2.5 The occurrence of a material breach by HNC of its obligations under Section 6 hereof to provide support and maintenance of *the applicable HNC Software, which material breach is not cured by HNC within [ ] after HNC's actual receipt of notice of such material breach from INFOSEEK. 12. TERM AND TERMINATION. CONFIDENTIAL AND PROPRIETARY INFORMATION - -------------- *CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 9 10 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT (a) The Initial Term of this Agreement shall commence on the Effective Date and shall continue for a period ending five (5) years after the date of acceptance of the HNC Software unless earlier terminated in accordance with this Agreement. At the completion of the Initial Term, this Agreement will *automatically be renewed for one or more subsequent Renewal Terms of [] unless *and until either party, upon at [] prior to the end of the Initial Term or any Renewal Term, notifies the other party in writing of its intent, to allow this Agreement to expire at the end of such Initial Term or Renewal Term (as applicable). (b) Either party to this Agreement may, upon written notice to the other, terminate this Agreement if the other party materially defaults in the performance of any of its duties or obligations hereunder, provided that such default is not curable or, if curable, shall not have been substantially cured within ninety (90) days after written notice is given of such default. (c) To the extent permitted by applicable law (including II U.S.C. Section 365) the non-defaulting party may terminate this Agreement immediately by written notice to the other in the event the other party makes an assignment for the benefit of its creditors, admits in writing an inability to pay debts as they mature, a trustee or receiver is appointed respecting all or a substantial part of the other party's assets, or a proceeding is instituted by or against the other party under any provision of the Federal Bankruptcy Act and is acquiesced in or is not dismissed within sixty (60) days or results in an adjudication of bankruptcy. To the extent applicable law prevents the non-defaulting party from terminating this Agreement, if it should wish to do so as described above, then the parties shall have only those rights and remedies permitted by applicable law, including the United States Bankruptcy Act, including but not limited to II U.S.C. Section 365. However, the non-defaulting party has the unrestricted right, at its option, not to terminate this Agreement and to continue to exercise its rights under this Agreement. (d) In the event of the expiration or termination of this Agreement, Licensee shall certify to HNC that it has ceased use of the HNC Software, shall return to HNC all online copies of the HNC Software and copies of HNC User Documentation, and all proprietary and confidential information relating to the HNC Software, in Licensee's possession, and shall erase or destroy as soon as is commercially reasonable and practicable all other copies of the HNC Software and other proprietary and confidential information relating to HNC Software previously stored offline by Licensee. The obligation of each party pursuant to Sections 5, 7, 8, 9, 10, and 13 shall survive expiration or termination of this Agreement for any reason. 13. MISCELLANEOUS. CONFIDENTIAL AND PROPRIETARY INFORMATION - -------------- *CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 10 11 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT (a) Disclaimer of Partnership and Agency. HNC and Licensee are independent contractors and will have no power, nor will either of the parties represent that it is has any power, to bind the other party or to assume or to create any obligation or responsibility, express or implied, on behalf of the other party or in the other party's name. This Agreement will not be construed as constituting HNC and Licensee partners, joint venturers or agents or to create any other form of legal association that would impose liability upon one party for the act or failure to act of the other party. (b) Counterparts. This Agreement may be executed in counterparts, which taken together shall constitute one single Agreement between the parties. (c) Section Headings: Exhibits. The section and subsection headings used herein are for reference and convenience only, and will not enter into the interpretation hereof. The Exhibits referred to herein and attached, and to be attached hereto, are incorporated in this Agreement to the same extent as if set forth in full herein. (d) No Waiver. No delay or omission by either party hereto to exercise any right or power occurring upon any non-compliance or default by the other party with respect to any of the terms of this Agreement will impair any such right or power or be construed to be a waiver thereof. A waiver by either of the parties hereto of any of the covenants, conditions, or agreements to be performed by the other will not be construed to be a waiver of any succeeding breach thereof or of any covenant, condition, or agreement herein contained. No waiver of any rights of a party under this Agreement will be effective unless such waiver is set forth in a writing signed by such party. (e) Severability. Whenever possible, each provision of this Agreement will be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be unlawful, prohibited by or invalid under applicable law, then such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or any of the remaining provisions of this Agreement. (f) Governing Law. This Agreement will be governed by and construed in accordance with the internal laws of the State of California applicable to agreements made in California by California residents. (g) Entire Agreement. This Agreement and the Exhibits hereto constitute the entire agreement and understanding between the parties regarding the subject matter hereof, and supersede all prior agreements, understandings, documents and statements regarding such subject matter, and there are no understandings or agreements relative hereto other than those which are expressed herein. No amendment or modification of this Agreement will be effective unless it is in writing and is executed by both HNC and Licensee. This Agreement is separate from and independent of all other agreements between the parties. - -------------- CONFIDENTIAL AND PROPRIETARY INFORMATION 11 12 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT (h) Notices. Under this Agreement, if one party is required to give notice to the other, such notices shall be deemed given when personally delivered or three (3) business days after being mailed by U.S. certified mail, first class, postage prepaid, and addressed as follows (or to such other address for notice as a party may subsequently notify the other in accordance with the provisions of this Section): IF TO HNC: IF TO LICENSEE: HNC Software Inc. Infoseek Corporation 5930 Cornerstone Court West 2620 Augustine Dr. #250 San Diego CA 92121-3728 Santa Clara, CA 95054 Attention: Executive Vice President Attention: CEO (i) No Assignment. Neither party shall, without the prior written consent of the other party, assign or transfer this Agreement, and any attempt to do so without first obtaining such written consent will be void and of no force and effect. Notwithstanding the foregoing, (i) either party may assign this Agreement by merger, reorganization, consolidation, formation of a subsidiary, or sale of all or substantially all its assets, provided however that neither party may assign or transfer this Agreement to any direct or indirect competitor of the other party. (j) Excused Performance. Notwithstanding anything to the contrary herein, neither party shall be deemed to be in default of any provision of this Agreement or be liable to the other party or to any third party for any delay, error, failure in performance or interruption of performance due to any act of God, war, insurrection, riot, boycott, strikes, interruption of power service, interruption of communications service, labor or civil disturbance, acts of any other person not under the control of either party or other similar causes, the occurrence of which are (i) not reasonably foreseeable by a party other than by virtue of the fact that similar things have happened in the past from time to time, and (ii) beyond the reasonable control of that party. Licensee and HNC shall each use its best efforts to remedy its delay, error, failure to perform, or incomplete performance in a manner which is fair and equitable to both parties. The delayed party shall give the other party reasonable written notification of any material or indefinite delay due to such causes. This Agreement shall be deemed to have been amended to extend the term of this Agreement by the period of time attributable to the excusable delay. (k) Informal Dispute Resolution. Any controversy or claim between INFOSEEK and HNC, arising from or in connection with this Agreement or the relationship of the parties under this Agreement, whether based on contract, tort, common law, equity, statute, regulation, order or otherwise, other than a dispute regarding ownership of software, documentation or Intellectual Property rights (a "DISPUTE"), shall be resolved as follows: (i) First, upon written request of either INFOSEEK or HNC, the parties will each appoint a designated representative whose task it will be to meet for the purpose of endeavoring to resolve such Dispute. The designated representatives shall be - -------------- CONFIDENTIAL AND PROPRIETARY INFORMATION 12 13 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT senior level managers of each party with the authority to make decisions and/or commitments on behalf of the respective party to resolve the Dispute. (ii) The designated representatives shall meet as often as the parties reasonably deem necessary to discuss the problem in an effort to resolve the Dispute without the necessity of any formal proceeding. (iii) Unless delay would impair a party's rights under applicable statutes of limitations, formal proceedings for the resolution of a Dispute may not be commenced until the earlier of: (a) the designated representatives concluding in good faith that amicable resolution through continued negotiation of the matter does not appear likely; or (b) the expiration of the thirty (30) day period immediately following the initial request to negotiate the Dispute; provided, however, that this Section 19.1 will not be construed to prevent a party from instituting formal proceedings earlier to avoid the expiration of any applicable limitations period, to preserve a superior position with respect to other creditors, or to seek temporary or preliminary injunctive relief from a court pursuant to Article 11. (iv) Temporary Restraining Order. Nothing in Section 13(k) shall be construed to prevent any party from seeking from a court a temporary restraining order or other temporary or preliminary relief pending final resolution of a Dispute pursuant to Section 13(k). (v) Other Dispute Resolution. If the parties fail to resolve any dispute under Section 13(k), then they may pursue any other available remedies. - -------------- CONFIDENTIAL AND PROPRIETARY INFORMATION 13 14 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT IN WITNESS WHEREOF, HNC and Licensee have caused this Agreement to be signed in duplicate and delivered by their duly authorized officers as of the Effective Date. HNC SOFTWARE INC. a Delaware corporation By: --------------------------------- Michael A. Thiemann Executive Vice President INFOSEEK CORPORATION a California corporation By: --------------------------------- Andrew Newton Vice President and General Counsel LIST OF EXHIBITS Exhibit A Fees and Expenses Exhibit B Support and Maintenance Terms Exhibit C Delivery Schedule Exhibit D Acceptance Test Procedures Exhibit E Standard Hardware and Software Configuration Exhibit F Installation Services Exhibit G Product Deliverables *Exhibit H HNC Software [] Exhibit I Escrow Agreement *Exhibit J Licensee [] Exhibit K Licensee Materials *Exhibit L [] Malfunction Correction Procedures CONFIDENTIAL AND PROPRIETARY INFORMATION - -------------- *CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 14 15 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT EXHIBIT A FEES AND EXPENSES 1. Installation Fee. Upon execution of this Agreement, Licensee shall remit to HNC a non-refundable (except as provided in Section 4(b)(iii) of the Agreement) *Installation Fee in the fixed sum of []. 2. License Fee. Licensee agrees to pay license fees to HNC as described in the table below:
---------------------------------------------------------------------------------------------------- DESCRIPTION OF LICENSE FEE LICENSE FEE AMOUNT DUE AND PAYABLE ---------------------------------------------------------------------------------------------------- *Annual CONVECTIS license [] First year upon acceptance of the HNC software; subsequent years due in accordance with Section 5 of the Agreement. ---------------------------------------------------------------------------------------------------- *Additional CONVECTIS tuning [] First year due acceptance of the HNC workstation license software; subsequent years due in accordance with Section 5 of the Agreement. - ---------------------------------------------------------------------------------------------------- includes [] CONVECTIS tuning []
The license fees set forth above are not refundable, except as set forth in Section 4(b)(iii) of this Agreement. 3. Maintenance Fee. Licensee agrees to pay maintenance fees to HNC as described in the table below:
-------------------------------------------------------------------------------------------------------------------------- DESCRIPTION OF LICENSE FEE LICENSE FEE AMOUNT DUE AND PAYABLE -------------------------------------------------------------------------------------------------------------------------- *Annual CONVECTIS maintenance [] First year due acceptance of the HNC software; subsequent years due in accordance with Section 5 of the Agreement. -------------------------------------------------------------------------------------------------------------------------- *Additional CONVECTIS tuning [] First year due upon acceptance of the workstation maintenance HNC software; subsequent years due in accordance with Section 5 of the Agreement. -------------------------------------------------------------------------------------------------------------------------- *includes [] CONVECTIS tuning []
The maintenance fees as set forth above are not refundable except as set forth in Section 9(c) of this Agreement. CONFIDENTIAL AND PROPRIETARY INFORMATION - -------------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 15 16 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT 4. Travel-related Expenses. The Installation, License, and Maintenance fees set forth above are exclusive of any travel-related expenses incurred by HNC with respect to this Agreement. Accordingly, any travel related expenses HNC incurs hereunder are to be reimbursed to HNC as provided herein in addition to the payment of any other fees payable to HNC hereunder. Actual expenses will be invoiced monthly and full reimbursement for such expenses will be due and payable to HNC from Licensee within thirty (30) days of Licensee's receipt of HNC's invoice therefor at the following rates, subject to increase as provided in Section 5 of this Exhibit A: Hotel (per day maximum) Infoseek's then current employee per diem rates Meals (per day maximum) Infoseek's then current employee per diem rates Automobile (full or Infoseek's then current employee per diem rates luxury size) Business Airfare HNC's Actual Cost Courier Costs HNC's Actual Cost Out-of-Pocket Expenses Infoseek's then current employee per diem rates Automobile mileage Infoseek's then current employee per diem rates (if personal car) 5. Consumer Price Index Adjustments. All fees, prices, labor rates and expense *reimbursement rates set forth in [] will be reviewed upon each anniversary of the Effective Date, including each year during any renewal of this Agreement. This review will commence on the first day of the anniversary month of the contract Effective Date and adjustments will be made to all such prices, labor rates and expense reimbursement rates with reference to the percentage increase (if any) of the Consumer Price Index (CPI), for the San Diego, California area, *but such increases will not be made []. No decrease in any fee, price, labor rate or expense reimbursement rate will be made under this Section 5. 6. HNC agrees to perform the HNC Software Enhancements, as described in Exhibit K, at HNC's then current published standard commercial rates or other rates as mutually agreed upon. CONFIDENTIAL AND PROPRIETARY INFORMATION - -------------- *CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 16 17 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT *7. For the purposes of this Agreement, [] may include []. CONFIDENTIAL AND PROPRIETARY INFORMATION - -------------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 17 18 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT EXHIBIT B SUPPORT AND MAINTENANCE TERMS HNC shall provide the following support and maintenance activities to Licensee during the period in which Licensee has paid HNC the Annual CONVECTIS License and Maintenance Fees as specified in Exhibit A. All travel-related expenses calculated pursuant to Exhibit A associated with performance of these maintenance activities shall be in addition to the Annual CONVECTIS License and Maintenance Fee as specified in Exhibit A. Integration Support *Beginning on April 2, HNC shall provide Licensee with up to [ ] of Integration Support HNC Software Upgrades and Corrections HNC shall provide the following to Licensee with respect to HNC Software upgrades and corrections: *- At least [ ] of CONVECTIS per year. *- At least [ ] of the CONVECTIS tuning workstation per year. *- At least [ ] for [ ] per year. For purposes of this section, the first "year" of this Agreement shall be defined as beginning on the acceptance date of the HNC Software and ending twelve (12) months therefrom. Subsequent years shall begin on the anniversary of such acceptance date and extend twelve (12) months therefrom. First-line Technical Support HNC shall provide first-line technical support to Licensee only (not End Users) with respect to the HNC Software and related deliverables. On-Site Consulting If required, HNC shall provide Licensee with on-site consulting in accordance with the terms of Section 4(d) of the Agreement. The support shall include telephone and bug fixes as outlined in Exhibit L. CONFIDENTIAL AND PROPRIETARY INFORMATION ------------------------------ *CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 18 19 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT EXHIBIT C DELIVERY SCHEDULE Deliverables from HNC HNC shall deliver to Licensee one (1) copy of the HNC Software specifications upon execution of this Agreement. HNC shall deliver one (1) copy of the HNC Software (in object code form) and *the Documentation within [ ] of execution of this Agreement. HNC shall further deliver one (1) copy of the HNC Software Enhancements described in Exhibit K, according to the Enhancement Schedule described in such Exhibit. Deliverables from Licensee Licensee shall deliver the following to HNC: 1. Within five (5) days of the Effective Date, Licensee shall deliver sufficient data for adequate training of stem context vectors. The sufficiency of such data shall be jointly discussed and determined by the parties prior to delivery. 2. Within thirty (30) of the Effective Date, and at quarterly intervals thereafter during the term of this Agreement, Licensee shall deliver to HNC the *[ ] as developed by the HNC Software. Licensee and its suppliers shall retain ownership and marketing rights to all Licensee-owned software and source information (the "Licensee Data") provided *to HNC for [ ]. All Licensee Data delivered hereunder shall be deemed Confidential Information of Licensee. HNC's use of such Licensee Data shall be limited to internal use by HNC in support of HNC's performance hereunder. HNC shall return to Licensee any Confidential Information of Licensee immediately upon request by Licensee. Joint Deliverables The parties shall jointly undertake, within thirty (30) days of the execution of this Agreement, to develop a mutually agreeable list detailing an initial set of operational modifications to be delivered to Licensee in accordance with this Agreement. CONFIDENTIAL AND PROPRIETARY INFORMATION ------------------------------ *CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 19 20 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT EXHIBIT D ACCEPTANCE TEST PROCEDURES This exhibit defines the testing approach to be used for each acceptance test. For convenience, each acceptance test is repeated. Acceptance tests shall be performed with Standard Hardware and Software Configuration (the "System") specified in Exhibit E, or better. SOFTWARE INSTALLATION TEST PROCEDURES 1. Connectivity. The HNC Software shall allow automated data processing hardware. This requirement will allow for the passing of electronic information from existing equipment to the HNC Software. Connectivity Test Approach. This requirement shall be demonstrated and tested by inspection. For the throughput requirement to be demonstrated, this requirement, by definition, will be satisfied. *2. Throughput. The HNC Software shall support a throughput of no less than [ ] *being indexed in [ ] elapsed time. This throughput requirement translates *into [ ] or approximately [ ] and is expected to be sustained *for at least [ ]. Throughput Test Approach. This requirement shall be demonstrated in an operation environment at the Licensee's facility. Time shall be measured by modification to the HNC Software to make calls to the UNIX system clock. This clock has precision at the millisecond level. The code modifications are open for inspection by Licensee's technical personnel and shall be made in such a way that the timer is started when a document is presented to the HNC Software and shall be stopped when the document and index term(s) are returned to the Licensee's equipment. Communication time between the Licensee's equipment at the HNC Software shall not be included in this measurement. Modification to the HNC Software shall accumulate total times for sets of documents processed and *shall also compute mean document processing time. A [ ] of [ ] equates to [ ] *or [ ] or [ ] of System and user time per document. So, if the mean System *time to process a document, as measured by no less than [ ] is [ ] or less, *this requirement shall be deemed satisfied. Test shall include no more than [ ] *and no more than [ ]. CONFIDENTIAL AND PROPRIETARY INFORMATION ------------------------------ *CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 20 21 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT *per [ ]. Average [ ] shall not exceed [ ] of the [ ] training set [ ] size. SOFTWARE VALIDATION TEST PROCEDURES 1. Tunability. The HNC Software system shall allow incorporation of human judgment into the indexing process. This judgment shall be incorporated by allowing the human to select documents that the HNC Software indexed incorrectly and to use these documents as the basis of a modified set of decision criteria. This tunability shall be provided through the use of a GUI-based tool. Tunability Test Approach. To accomplish this test, a performance baseline derived from the index term initial conditions shall be established on the training set described in Section 4. The training set of documents shall be indexed by the HNC and indexing results shall be reviewed by the human using the tuning tool. Errors in assignment of indexing terms shall be noted with the tool and the adjustment of the indexing concepts shall be performed. When the adjustment process is complete, the same set of documents shall be re-indexed by the HNC Software and indexing correctness established. If the indexing *performance of the HNC Software subsequent to the tuning is improved by [ ] over the pre-tuning performance, this requirement shall be deemed satisfied. *2. Accuracy. The HNC Software shall provide an [ ] of [ ] or better based upon *[ ] examples provided to the system. This [ ] shall be calculated by *determining the [ ] for each [ ] (as defined below), [ ] each [ ] by the [ ] of *Infoseek Guide documents with that [ ] (and its [ ]) to the [ ] of Infoseek *Guide documents with the [ ] (and their [ ]), and [ ] the resulting [ ] to [ ] *the [ ]. Accuracy Test Approach. To perform this testing, a training set and a test set of example indexing behavior shall be assembled by Licensee. This data shall consist of two (2) sets of documents and their associated index terms as *assigned by a human indexer. At least [ ] shall be identified by [ ] from *the Infoseek Guide and choosing the [ ] associated with that document until at *least [ ] are selected from each Infoseek Guide [ ]. Infoseek and HNC shall *make a good-faith effort to [ ] with at least [ ] well-chosen [ ] and [ ] *well-chosen [ ] examples. The training set shall consist of sufficient documents to provide the needed number of judgments. The testing set shall *consist of at least [ ] judged documents [ ]. The exact number of documents to *be used will be determined by [ ] and will be based upon the specific [ ] and corpus chosen by Licensee. The test set may, at Licensee's option, be kept CONFIDENTIAL AND PROPRIETARY INFORMATION -------------------------------- *CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 21 22 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT secret from HNC until testing. To perform the test, the test set of documents shall be indexed by the HNC Software in its operational mode and index term assignments shall be compared to those assigned by the human and the weighted *precision shall be computed. If the precision is equal to or greater than [ ], this requirement shall be deemed satisfied. Completion Deadline The parties shall schedule acceptance test procedures such that all such *procedures are completed not later than [ ], 1996 (the "Test Completion Deadline"). CONFIDENTIAL AND PROPRIETARY INFORMATION - -------------- *CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION. 22 23 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT EXHIBIT E STANDARD HARDWARE AND SOFTWARE CONFIGURATION This exhibit defines HNC's standard minimum hardware and software configuration for the HNC Software. All installation pricing provided in Exhibit A of this Agreement is based on the use of the standard hardware and software configuration given below. Deviation from the standard configuration will be priced by HNC on a per installation basis. 1. Hardware Configuration for CONVECTIS Tuning Tool *- [ ] with [ ] *- [ ] of [ ] *- [ ] or more [ ] of [ ] *- Access (local or via network) to a 4mm or 8mm magnetic tape drive 2. Software Configuration for CONVECTIS Tuning Tool *- [ ] or later or [ ] or later - X-11R5 or later - Motif 1.2.4 or later 3. Hardware Configuration for All Other Supplied Sofware Components *- [ ] with [ ] *- [ ] of [ ] *- [ ] or more [ ] of [ ] - Access (local or via network) to a 4mm or 8mm magnetic tape drive 4. Software Configuration for All other HNC Software Components *- [ ] or later or [ ] or later CONFIDENTIAL AND PROPRIETARY INFORMATION - ------------- *CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 23 24 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT EXHIBIT F INSTALLATION SERVICES This Exhibit defines the installation services to be provided to Licensee by HNC. The fee for these services is described in Exhibit A of this Agreement. The services described in this Exhibit constitute the total set of services provided for each installation regardless of the number of HNC Software Components installed. HNC shall provide at least one individual to participate in an installation requirements meeting. The purpose of this meeting is to discuss and agree on the requirements (hardware, software, and processing throughput) needed for the installation. Should the agreed upon installation requirements not conform to HNC's standard configuration as stated in Exhibit E, then HNC will generate a price for the installation following this meeting. This meeting will also discuss the need for training of word context vectors and the associated training corpus. Participation in this meeting may be either in person or telephonic at the Licensee's request. All travel expenses incurred by HNC in association with this meeting will be paid by Licensee. 1. HNC shall modify, if necessary, the HNC Software Components to be installed so as to conform with the agreed upon installation requirements. 2. HNC shall deliver one copy of the HNC Software Components to be installed on either 4mm or 8mm magnetic tape. HNC shall provide telephone support as needed by the Licensee to aid in the completion of the acceptance test procedures. - -------------- CONFIDENTIAL AND PROPRIETARY INFORMATION 24 25 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT EXHIBIT G PRODUCT DELIVERABLES The items below enumerate the HNC Software deliverables. This tool set consists of two main components: - CONVECTIS ONLINE SERVER AND DOCUMENTATION. The server will be delivered * as a [ ] - CONVECTIS TUNING TOOL AND DOCUMENTATION. The tuning tool will be * delivered as [ ]. The specific set of deliverables for this effort are the following items: 1. CONVECTIS SYSTEM SOFTWARE AND SUPPORT FILES. All binary executable images and support files required for the operation of the CONVECTIS system shall be supplied. This set of software will be capable of *performing the indexing operation and index concept tuning given a [ ] supplied by HNC. The CONVECTIS system will be installed at the License site and integrated with Licensee information processing resources. *2. [ ] TRAINING *For the CONVECTIS system to operate, it requires a set of trained [ ]. The *training, [ ] and quality assurance will be performed at HNC facility in San *Diego. The training data will be a [ ] that span the information space of interest to Licensee. HNC personnel will assist Licensee in selection of this data set if desired. This data is deliverable to HNC as specified below in Licensee deliverables. At the specific request of Licensee, development of deformatting filters and scripts will be done jointly by HNC and Licensee personnel. This effort will be conducted via the internet. 3. TUNING *Operational tuning of the CONVECTIS [ ] in the deliverable list. [ ] of [ ] will be performed by Licensee personnel at the Licensee facility. Licenseee *personnel are responsible for [ ] the [ ]. 4. DOCUMENTATION CONFIDENTIAL AND PROPRIETARY INFORMATION - ------------------------------ *CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 25 26 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT Standard commercial CONVECTIS documentation will be supplied with updates to reflect software enhancements. This documentation will provide sufficient instruction to allow a user to configure, operate and tune the CONVECTIS system *based on [ ]. 5. INSTALLATION If desired, HNC personnel will assist Licensee in the installation of the CONVECTIS system on Licensee hardware. 6. USER TRAINING HNC personnel will conduct training sessions on the use of the CONVECTIS *system. The training sessions will detail the [ ] approach, operation of the *system and provide instruction on the tuning and maintenance of the [ ] used for document indexing. This training will be up to two sessions of *approximately [ ] in duration. Additional sessions will be added based upon user interest and the level of personnel skill and will be performed at HNC's customary commercial rates. 7. PHONE SUPPORT AND SOFTWARE UPGRADES HNC shall provide to Licensee technical personnel phone support for the CONVECTIS system for a period of one (1) year from date of installation of the system. This support will assist the Licensee technical staff in becoming proficient in operating and tuning the CONVECTIS system. This phone support *shall be available from [ ] Software upgrades shall be supplied should errors in the operation of the CONVECTIS system be discovered. These upgrades, should they be required, shall be available for a period of one (1) year from the date of installation of the system. LICENSEE DELIVERABLES *As part of this effort, Licensee will provide to HNC a set of [ ] to be used *for the development of a [ ]. The training data should be a set of [ ] that span the information space of interest to Licensee. HNC personnel will assist Licensee in selection of this data set if desired. This data is to be delivered to HNC as ASCII text in tar format on a 4mm or 8mm DAT tape. CONFIDENTIAL AND PROPRIETARY INFORMATION - ----------------- *CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 26 27 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT EXHIBIT H HNC SOFTWARE ENHANCEMENTS HNC agrees to enhance the HNC Software as described below: 1. TUNING APPLICATION
ITEM HNC SOFTWARE ENHANCEMENT ENHANCEMENT SCHEDULE - ---- ------------------------ --------------------- * 1. During [ ], NEED [ ] FROM INFOSEEK * [ ] documents from database containing other documents ([ ] basis, with follow on * previously [ ] and [ ] Infoseek conformance to formal input specs) * 2. Accept [ ] documents NEED [ ] FROM INFOSEEK * 3. Port tuning application to [ ] NEED [ ] FROM INFOSEEK operating system * ([ ] provided; [ ] requires significant effort) * 4. Split judgment data into [ ] and IN PROGRESS; HNC ENGINEERING * [ ] sets within same database and WILL PROVIDE DATE [ ] FROM INFOSEEK manage same * 5. Add [ ] during long-running IN PROGRESS; HNC ENGINEERING * processes WILL PROVIDE DATE [ ] FROM INFOSEEK * 6. Add [ ] for long-running IN PROGRESS; HNC ENGINEERING * processes WILL PROVIDE DATE [ ] FROM INFOSEEK * 7. Analyze [ ] and Complete * suggest entirely new [ ] and (already part of the "[ ]" * [ ] component of Convectis)
CONFIDENTIAL AND PROPRIETARY INFORMATION - ----------------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 27 28 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT
* 8. Apply [ ] on a Complete * [ ] basis * 9. Display, set, and modify [ Complete * ] from GUI * 10. Allow [ ] access to document Complete * [ ] and [ ] dialogs * 11. Allow [ ] of document [ ] Complete * and [ ] initializers (vs. Entering all via GUI) ([ ] basis, with follow on InfoSeek conformance to formal input specs) * 12. [ ] by loading ([ ], with follow on * [ ] documents, [ ], and [ ] InfoSeek conformance to the documents as formal input specs) * [ ] for the [ ] * 13. Increased [ ] speed by a [ ] of Complete * [ ] * 14. Add [ ] (vs. Screen output) Complete for performance data 15. Change time scales for progress Complete indicators 16. Add new combined "save and exit" Complete option 17. add confirmation before certain long Complete operations 18. Allow random access to documents by Workaround provided ID to view index terms 19. Document override procedure
CONFIDENTIAL AND PROPRIETARY INFORMATION - ------------- *CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 28 29 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT
2. SERVER APPLICATION ITEM HNC SOFTWARE ENHANCEMENT ENHANCEMENT SCHEDULE *1. Port application to [ ] operating NEED [ ] FROM INFOSEEK system *2. Accept [ ] documents NEED [ ] FROM INFOSEEK *3. Return [ ] from server and NEED [ ] FROM INFOSEEK * store in [ ] to support * [ ] * ([ ]) *4. Return only [ ] Complete * via the server [ ] 5. Improved data from Performance Assessment, to determine which topics * are getting too many [ ] *6. Document [ ], per agreed user requirements *7. Use [ ] to achieve system performance requirements established by Infoseek
CONFIDENTIAL AND PROPRIETARY INFORMATION ----------------- *CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 29 30 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT EXHIBIT I ESCROW AGREEMENT The parties hereto agree to negotiate in good faith to deliver a revised Escrow Agreement within ten (10) days of the Effective Date. Such revised Escrow Agreement shall be attached to this Agreement and incorporated herein as Exhibit I, and shall replace this Exhibit I in its entirety. - -------------- CONFIDENTIAL AND PROPRIETARY INFORMATION 30 31 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT EXHIBIT J * LICENSEE [ ] *Licensee agrees to [ ], as contemplated by [ ] of this Agreement, within *[ ] of the Effective Date. [ ] shall replace this Exhibit J in its entirety. CONFIDENTIAL AND PROPRIETARY INFORMATION - ----------------- *CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 31 32 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT EXHIBIT K LICENSEE MATERIALS The parties hereto agree to negotiate in good faith to deliver a list of Licensee Materials, as contemplated by Section 3(b) of this Agreement, within ten (10) days of the Effective Date. Such list shall replace this Exhibit K in its entirety. - -------------- CONFIDENTIAL AND PROPRIETARY INFORMATION 32 33 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT EXHIBIT L MATERIAL MALFUNCTION CORRECTION PROCEDURES In accordance with HNC's responsibilities in Section 8(b) of this Agreement, the parties agree to the following definitions and procedures for the resolution of Program Errors. 1. DEFINITIONS OF PROGRAM ERROR SEVERITY LEVEL (a) "LEVEL 1" shall mean a Program Error which has a material and adverse impact on Licensee's ability to use the HNC Software for the Licensed Application, and for which Licensee has not discovered a workaround; (b) "LEVEL 2" shall mean a Program Error which has a material and adverse impact on Licensee's ability to use the HNC Software for the Licensed Application, and for which Licensee has discovered a workaround; (c) "LEVEL 3" shall mean a Program Error which represents a significant deviation from conformance to the specifications in Exhibit G and Exhibit H, but does not have a material or adverse impact on Licensee's ability to use the HNC Software for the Licensed Application; (d) "LEVEL 4" shall mean a Program Error which represents a minor deviation from conformance to the specifications in Exhibit G and Exhibit H, and does not have a material or adverse impact on Licensee's ability to use the HNC Software for the Licensed Application; (e) "LEVEL 5" shall mean a problem which has been reported to HNC as a Program Error but has been determined by HNC to be an operator error, a third-party error, or a normal aspect of the functioning of the HNC Software; (f) "LEVEL 6" shall mean a request for additional features or functionality or other non-Program Error-related modifications to the HNC Software; 2. PROGRAM ERROR RESOLUTION (a) Upon encountering a suspected Program Error, Licensee shall communicate a written description (a "Bug Report") of such Program Error to HNC. Bug Reports shall include the following information: (i) Licensee's initial determination of the severity level of such Program Error, (ii) a detailed description of the steps required to duplicate the error, (iii) a description of the HNC Software component(s) affected, (iv) a description of any workarounds discovered by Licensee, and (v) a description of the hardware and software environment in which the HNC Software was operating at the time the Program Error was encountered. Bug Reports may be accompanied by such electronic files as Licensee believes - -------------- CONFIDENTIAL AND PROPRIETARY INFORMATION 33 34 HNC/INFOSEEK SOFTWARE LICENSE AGREEMENT are appropriate for the full description and reproduction of such Program Error by HNC. Licensee may transmit Bug Reports and associated files to HNC electronically addressed associated files to HNC electronically addressed to: *[ ]. *(b) Upon receipt of a [ ] Bug Report from Licensee, HNC shall (i) *electronically acknowledge receipt of such Bug Report within [ ] from the time of such receipt, (ii) provide an immediate workaround(s), if any, for the Program Error(s) associated with such Bug Report, and (iii) provide a long-term *workaround or correction to Licensee within [ ] of such receipt. *(c) Upon receipt of a [ ] Bug Report from Licensee, HNC shall (i) *electronically acknowledge receipt of such Bug Report within [ ] from the time of such receipt, and (ii) provide corrections to the Program Errors reported in *such Bug Reports within [ ], except for those Program Errors which HNC and *Infoseek jointly determines to be [ ] Program Errors, in subsequently released versions of the HNC Software. *(d) HNC shall use its [ ] to report to Licensee, in written or electronic form, *those [ ] bugs for which workarounds are made generally available to HNC's customers. In the event that any outage as defined in any of the above subsections of this Exhibit L is found not to have been caused by the HNC Software, then INFOSEEK *[ ] HNC for all costs and expenses (including but not limited to travel, accommodation, meal and overtime expenses subject to the provisions of Exhibit A) that HNC reasonably incurred in responding to such outage situation. CONFIDENTIAL AND PROPRIETARY INFORMATION - ----------------- * CONFIDENTIAL TREATMENT REQUESTED FOR REDACTED PORTION 34 EX-99.1 17 LICENSE AGREEMENT A-0402 DATED APRIL 30, 1996 1 EXHIBIT 99.1 A-0402 April 30, 1996 COMPANY: INFOSEEK CORP. 2620 AUGUSTINE DR. #250 SANTA CLARA, CA 95054 ATTN: JULIAN STEWART DESIGNATED PRODUCT: "INFOSEEK" LICENSED MATERIAL: Quotations from the September 1995 issue of PC Computing, review on Internet Search Engines found on pages 166 & 167. Underlined text only as outlined in Exhibit A. Ziff-Davis Publishing Company ("Ziff") grants Company, the non-exclusive, non-transferable permission to reprint the Licensed Material as follows: The Licensed Material may be used only in publicity materials relating to the referenced product. The Licensed Material is attached to this letter as Exhibit A. Exhibit A is incorporated herein and made a part hereof. This Permission shall commence on the date of this contract and shall terminate on APRIL 30, 1997 unless sooner terminated as provided below. PERMISSIONS FEE: $100.00 The Permission fee is payable in full within thirty (30) days of invoice date. Company is not permitted to make any changes, insertions, or deletions to the Licensed Material without Ziff's prior written consent. Any use by Company of the Licensed Material not in accordance with the terms of this Permission or any other breach of this Permission shall give Ziff the right, in addition to any and all rights provided by law or in equity, to terminate this Permission upon written notice to Company. Company shall deliver to the undersigned one copy of each proposed use of the Licensed Material for Ziff's approval prior to publication or distribution. 2 Ziff reserves the right to revoke Company's right to use the Licensed Material in the event of editorial decisions based on subsequent developments relating to the licensing of the Licensed Material and the Designated Product. Except for purposes of Company's S-1, credit must be prominently displayed in the following form whenever the Licensed Material is used: Reprinted from PC Computing September 1995 Copyright (c) 1995 Ziff-Davis Publishing Company Ziff makes no representations or warranties of any kind with respect to the Licensed Material and/or the Company's use of the Licensed Material and Ziff shall bear no liability during or after the term of this Permission with respect thereto. Upon expiration or termination of this Permission, Company shall cease all use of the Material including, without limitation, the publication and distribution of advertising, promotional and publicity materials bearing the Licensed Material; provided, however, that for a period of not more than three (3) months following the date of expiration or termination of this Permission, Company may distribute in accordance with this Permission any such advertising, promotional and publicity materials which are in Company's inventory on the date of expiration or termination of the Permission. ZIFF-DAVIS PUBLISHING COMPANY By: ----------------------------- Janet Flood Asst. Manager Rights & Permissions 2 3 EXHIBIT A This exhibit contains two excerpts from "The Search Engine that Could" by Neil Randall which appeared in the September 1995 issue of PC Computing Magazine (the "Article"). Portions of those excerpts are underscored to indicate the subject matter of the license: "For pinpoint search precision, only one engine--InfoSeek--performed well on virtually all searches." (page 166 of Article). "The best of the bunch..." (page 167 of Article). 3 EX-99.2 18 LICENSE AGREEMENT A-0403 DATED APRIL 30, 1996 1 EXHIBIT 99.2 A-0403 April 30, 1996 COMPANY: INFOSEEK CORP. 2620 AUGUSTINE DR. #250 SANTA CLARA, CA 95054 ATTN: JULIAN STEWART DESIGNATED PRODUCT: "INFOSEEK" LICENSED MATERIAL: Quotations from the December 1995 issue of PC Computing, review on Internet Tools found on page 196. Underlined text only as outlined in Exhibit A. Ziff-Davis Publishing Company ("Ziff") grants Company, the non-exclusive, non-transferable permission to reprint the Licensed Material as follows: The Licensed Material may be used only in publicity materials relating to the referenced product. The Licensed Material is attached to this letter as Exhibit A. Exhibit A is incorporated herein and made a part hereof. This Permission shall commence on the date of this contract and shall terminate on APRIL 30, 1997 unless sooner terminated as provided below. PERMISSIONS FEE: $100.00 The Permission fee is payable in full within thirty (30) days of invoice date. Company is not permitted to make any changes, insertions, or deletions to the Licensed Material without Ziff's prior written consent. Any use by Company of the Licensed Material not in accordance with the terms of this Permission or any other breach of this Permission shall give Ziff the right, in addition to any and all rights provide by law or in equity, to terminate this Permission upon written notice to Company. Company shall deliver to the undersigned one copy of each proposed use of the Licensed Material for Ziff's approval prior to publication or distribution. 2 Zipp reserves the right to revoke Company's right to use the Licensed Material in the event of editorial decisions based on subsequent developments relating to the licensing of the Licensed Material and the Designated Product. Except for purposes of InfoSeek's S-1, credit must be prominently displayed in the following form whenever the Licensed Material is used: Reprinted from PC Computing December 1995 Copyright (c) 1995 Ziff-Davis Publishing Company Ziff makes no representations or warranties of any kind with respect to the Licensed Material and/or the Company's use of the Licensed Material and Ziff shall bear no liability during or after the term of this Permission with respect thereto. Upon expiration or termination of this Permission, Company shall cease all use of the Material including, without limitation, the publication and distribution of advertising, promotional and publicity materials bearing the Licensed Material; provided, however, that for a period of not more than three (3) months following the date of expiration or termination of this Permission, Company may distribute in accordance with this Permission any such advertising, promotional and publicity materials which are in Company's inventory on the date of expiration or termination of the Permission. ZIFF-DAVIS PUBLISHING COMPANY By: ------------------------------- Janet Flood Asst. Manager Rights & Permissions 2 3 EXHIBIT A This exhibit contains an excerpt from a rating of Most Valuable Products that appeared in the December 1995 issue of PC Computing Magazine (the "Article"). Portions of the excerpt are underscored to indicate the subject matter of the license: "The Web can be a forbidding wilderness without the right search tool. You need one that's comprehensive without being too broad...The winner is InfoSeek...InfoSeek understands natural-language queries and lets you save them, making it easy to update your searches." (page 196 of Article). 3 EX-99.3 19 PERMISSION LETTER TO THE REGISTRANT AND FORTUNE 1 EXHIBIT 99.3 [FORTUNE LETTERHEAD] April 19, 1996 Ms. Beth Lanahan Infoseek 2620 Augustine Drive Suite 250 Santa Clara, CA 95054 Dear Beth: We are glad to extend permission for you to include the FORTUNE logo and quote (April 1, 1996 issue) in the S-1 filing for Infoseek. The logo should be formatted in the same size as the other logos on the page. Please note that the logo does not have a stripe on top -- only the bottom stripe is part of the design. The registered trademark sign (R) should follow FORTUNE. This permission applies only to the S-1 filing. Our name or logo cannot be used in any other promotion or advertising for Infoseek. Thank you for your interest. Sincerely, Jo Mattern (Ms.) Copyright & Permissions Fax: 212 522 6412 Tel: 212 522 2582 2 EXHIBIT A This exhibit contains a picture of the FORTUNE (R) logo and the following quotation from "Digging Data out of Cyberspace," by Michael H. Martin which appeared in FORTUNE Magazine on April 1, 1996: "This search engine does the best job of ranking results, so the info you care about is easy to reach." -----END PRIVACY-ENHANCED MESSAGE-----