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EXHIBIT 10.1
AMENDMENT #2
to
TECHNOLOGY COOPERATION AGREEMENT, INCLUDING AMENDMENT
OF
OEM/SOURCE LICENSE AGREEMENT
This Amendment #2 is made as of January 21, 1997 between Microsoft
Corporation, a Washington corporation having its principal place of business at
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ("Microsoft") and Spyglass, Inc., an
Illinois corporation located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ("Spyglass").
Recitals
A. WHEREAS, Microsoft and Spyglass have entered into an OEM/Source
License Agreement effective December 9, 1994, as amended by the parties
in Amendment #1 effective September 26, 1995, and as further amended by the
Technology Cooperation Agreement, Including Amendment of OEM/Source License
Agreement effective December 6, 1995, amended by the parties in Amendment #1
effective September 30, 1996, regarding the license to and distribution by
Microsoft of Spyglass' and NCSA's Mosaic browser software and related
technology (collectively, the "Contract").
B. WHEREAS, Microsoft and Spyglass wish to clarify the amount of
royalties owed to date by Microsoft to Spyglass for distribution of Licensed
Product (including that form of Licensed Product distributed as Standalone
Product) licensed to Microsoft by Spyglass under the Contract.
C. WHEREAS, Microsoft and Spyglass wish to convert all payments made
and/or otherwise to be made by Microsoft to Spyglass (whether per unit
royalties, prepaid royalties, minimum commitments or otherwise) to the
consideration specified herein, in exchange for a fully paid up license for
Licensed Software (including Standalone Product) as specified herein.
Agreement
NOW THEREFORE, the parties agree as follows:
1. Microsoft shall pay to Spyglass the additional sum of Seven Million,
Five Hundred Thousand Dollars ($7,500,000) (the "BuyOut Amount") on or before
seven business (7) days after the date of this Amendment.
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2. Microsoft shall provide Spyglass with up to Five Hundred Thousand
Dollars ($500,000) of software (a) commercially released and/or distributed by
Microsoft and (b) and/or product maintenance, valued at estimated street price,
provided that Spyglass places its order or orders for such software no later
than the second anniversary of this Amendment.
3. Spyglass shall issue two press releases no later than January 23,
1997, substantially in the form as attached hereto as Exhibits A and B,
respectively, and, if changed from such form, Microsoft shall approve in
writing such changes to the final form and text of both releases prior to their
release. In the event that Microsoft does not approve such changes, and such
changed releases are made available to any third party, this Amendment shall be
automatically rescinded, and shall be of no legal force or effect.
4. In consideration of and upon full payment by Microsoft to Spyglass of
the sum of Ten Million, Six Hundred Thousand Dollars ($10,600,000)
(composed of the BuyOut Amount, Two Million, Seven Hundred Thousand Dollars
($2,700,000) which has been paid by Microsoft to Spyglass, and Four Hundred
Thousand Dollars ($400,000) which will be paid on or before February 15) and
other consideration as specified in paragraphs 2 and 3 above, Spyglass shall be
deemed to have granted to Microsoft a fully paid up, perpetual, irrevocable
license to the Licensed Product (including the Standalone Product), and
associated trademark, for use by Microsoft pursuant to the terms of Section 2
of the Contract. Consequently, Section 1.3 (Royalties for Standalone Product)
of that portion of the Contract known as the Technology Cooperation Agreement,
Including Amendment of OEM/Source License Agreement, is deleted in its
entirety, however Microsoft shall have a license for the Standalone Product as
specified by the definition of the term in Section 1.1(a) of such Agreement and
pursuant to Section 2 of the December 9, 1994 Agreement as subsequently amended
by other Contracts.
5. Spyglass, on behalf of itself and each of its current or former
subsidiaries, affiliates, legal representatives, agents, shareholders,
directors, officers, employees, predecessors, successors and assignees
(collectively the "Spyglass Releasors"), hereby releases and forever discharges
Microsoft and each of its current of former subsidiaries, affiliates, legal
representatives, agents, insurers, shareholders, directors, officers,
employees, predecessors, successors and assignees (collectively the "Microsoft
Releasees") from any, every and all claims, actions, causes of action, suits,
liabilities, or demands, of any kind, character or nature whatsoever, known or
unknown, fixed or contingent, which the Spyglass Releasors may have against any
or all of the Microsoft Releasees arising in whole or in part out of any of all
prior dealings between the parties including without limitation those related
in any way to the Contract and/or those dealings described in Recital B above.
6. Microsoft, on behalf of itself and each of its current or former
subsidiaries, affiliates, legal representatives, agents, shareholders,
directors, officers, employees, predecessors, successors and assignees
(collectively the "Microsoft Releasors", hereby releases and forever discharges
Spyglass and each of its current or former subsidiaries, affiliates, legal
representatives, agents, insurers, shareholders, directors, officers,
employees, predecessors, successors and assignees (collectively the "Spyglass
Releasees") from any, every and all claims,
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actions, causes of action, suits, liabilities, or demands, of any kind,
character or nature whatsoever, known or unknown, fixed or contingent, which
the Microsoft Releasors may have against any or all of the Spyglass Releasees
arising in whole or in part out of any or all prior dealings between the parties
including without limitation those related to Spyglass public statements
regarding Microsoft's performance pursuant to the Contract.
7. The Spyglass Releasors, and each of them, agree that they will not
▇▇▇, or otherwise prosecute the Microsoft Releasees with respect to the claims
released in paragraph 5 of this Amendment. The Microsoft Releasors, and each
of them, agree that they will not ▇▇▇, or otherwise prosecute the Spyglass
Releasees with respect to the claims released in paragraph 6 of this Amendment.
8. Microsoft and Spyglass each hereby represent and warrant that:
(a) the person or persons executing this Amendment has full power and
authority to bind the person signing or on whose behalf he or she signs this
Amendment, and each is duly authorized to execute and deliver this Amendment;
(b) upon execution and delivery of this Amendment, this Amendment will
have been duly entered into by each Releasor, will constitute as against all
and each Releasee a valid, legal and binding obligation of each Releasor
enforceable against him, her or it in accordance with the terms herein;
(c ) it has not heretofore assigned, transferred or subrogated or
purported to assign, transfer, or subrogate, to any person or entity any of the
claims released in paragraphs 5 and 6, respectively.
9. Except for press releases as approved as specified in paragraph 3, the
parties shall maintain the confidentiality of the terms of this Amendment,
including without limitation the fact that financial consideration is being
paid or the amount or magnitude thereof, until such time as disclosure is
required by compulsion of legal process or an order of a court of competent
jurisdiction or to the extent that disclosure is necessary to report financial
information to Federal and/or State taxing or securities regulatory
authorities. Except for press releases approved as specified in paragraph 3,
neither party shall issue a press release or otherwise solicit or initiate
media coverage related to the negotiation and/or terms of this Amendment, and
neither party shall disparage the name of the other related to matters arising
out of the Contract.
10. The parties hereby agree to perform all further acts and to execute
all documents necessary or desirable to effect the terms of this Amendment.
11. This Amendment shall be interpreted under the laws of the State of
Illinois, without regard to conflict of law principles.
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12. This Amendment and the Contract constitute the entire agreement
among the parties hereto related to the subject matter hereof. All other prior
agreements, representations, correspondence, discussions and understandings of
the parties are merged herein and made a part hereof. Except as otherwise
provided herein, all terms and conditions of the Contract shall remain in full
force and effect. This Amendment shall not be amended or modified in any way
except in writing signed by the parties hereto. Each of the parties understands
that if any fact with respect to any matter covered by this Amendment is found
to be other than, or different from, the facts now believed by them to be true,
each of the parties expressly accepts and assumes the risk of some possible
difference in fact and agrees that this Amendment shall be and remain in effect
as between the parties, notwithstanding such differences in fact.
13. Each of the parties agrees to pay its own attorneys' fees arising
out of this Amendment.
14. Unless otherwise defined, all capitalized terms used herein shall
have the same meaning as in the Contract.
15. This Amendment shall be binding upon, and inure to the benefit of,
the parties hereto and their respective successors and assigns.
16. This Agreement my be executed in counterparts and such counterparts
shall be deemed to constitute a single agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized officers as of the day and year first above
written.
MICROSOFT CORPORATION SPYGLASS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------- -----------------------------------
Print Name: ▇▇▇▇ ▇▇▇▇▇▇ Print Name: ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------- -----------------------------------
Title: Group VP Title: President
------------------------------ -----------------------------------
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EXHIBIT A
to
Amendment #2
to
Technology Cooperation Agreement, Including Amendment
of
OEM/Source License Agreement
FOR IMMEDIATE RELEASE CONTACT: ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------
630.245.6500
▇▇▇▇▇▇ ▇▇▇▇▇▇
630.245.6512
Spyglass, Inc.
SPYGLASS(R) ANNOUNCES EXTENSION OF STRATEGIC RELATIONSHIP WITH
MICROSOFT(R) FOR THE BURGEONING DEVICE MARKETPLACE
Naperville, Ill. -- Wednesday, January 22, 1997 - Spyglass Inc. announced today
that it and Microsoft Corp. are extending the Internet technology relationship
they formed over two years ago to now focus on open standards for the embedded
systems marketplace.
The companies intend to work together on open standards for such
important issues as HTML for TVs and other devices. In addition, both
companies intend to evaluate each other's technology for potential
cross-licensing and distribution purposes. Spyglass also announced that its
Professional Services group will perform integration services for the Microsoft
Windows(R) CE operating system.
Additionally, Spyglass announced that its entire line of Infrastructure Server
products, introduced several weeks ago as part of its new product strategy for
the device market, will be offered for use on Windows NT(R), including Spyglass'
revolutionary content conversion technology for devices. Spyglass also
announced that the Spyglass MicroServer, an embeddable device Web server, will
run on Windows CE.
"We are pleased to extend our relationship with Spyglass," said ▇▇▇▇ ▇▇▇▇▇▇,
Microsoft's Group VP. "Our relationship was important to both companies'
initial success in the Internet market
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and we expect this extension to be just as successful as we begin to
realize the great potential of the embedded systems market."
"The market opportunity for devices that need to connect to the Web for both
viewing and serving up content is tremendous," said ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Spyglass
president and CEO. "This market not only requires Spyglass to develop core
technologies but to work with leading technology companies like Microsoft
because the device manufacturers need a wide array of technology and
integration services to create solutions."
SPYGLASS INC.
Spyglass Inc. (NASDAQ: SPYG) provides software and services to make devices
work with the World Wide Web. Among Spyglass' OS device customers are
Integrated Systems, Inc., Lynx Real-Time Systems, Inc., Microware Systems Corp.
and QNX Software Systems, Ltd. Other customers include BellSouth, Computer
Associates, Inc., Digital Equipment Corp., IBM Corp., Microsoft Corp., Oracle
Corp. and WebTV. Spyglass headquarters are located at ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇. ▇▇▇▇▇; telephone: ▇▇▇.▇▇▇.▇▇▇▇; fax: ▇▇▇.▇▇▇.▇▇▇▇; press email
inquiries: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇; Web server: ▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇.
(January 1997)
Spyglass is a registered trademark of Spyglass, Inc. The Spyglass logo and
"Make the Net Work" are trademarks of Spyglass, Inc. in the United States and
other countries. Mosaic is a trademark of the University of Illinois.
Microsoft, Windows and Windows NT are registered trademarks of Microsoft Corp.
(Other products and brand names are trademarks of registered trademarks of
their respective companies.) This release contains information about
management's future expectations, plans and prospects which constitute
forward-looking statements for purposes of the safe harbor provisions under The
Private Securities Litigation Reform Act of 1995. Actual results may differ
materially from those indicated by these forward-looking statements as a result
of various important factors which are discussed in the company's annual
report on Form 10-K for the year ended September 30, 1996, which is on file
with the SEC.
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EXHIBIT B
to
Amendment #2
to
Technology cooperation Agreement, Including Amendment
of
OEM/Source License Agreement
FOR IMMEDIATE RELEASE CONTACT: ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------
630.245.6500
▇▇▇▇▇▇ ▇▇▇▇▇▇
630.245.6512
Spyglass, Inc.
SPYGLASS(R) REPORTS FIRST QUARTER 1997 FINANCIAL RESULTS; ANNOUNCES
RE-STRUCTURING OF MICROSOFT(R) LICENSING AGREEMENT
PROVIDES UPDATE ON PROGRESS IN INTERNET-DEVICE MARKET
Naperville, Ill. -- Wednesday, January 22, 1997 - Spyglass Inc. (NASDAQ: SPYG)
today reported financial results for the first quarter of fiscal 1997. The
company reported revenues of $3.9 million for the three months ended December
31, 1996, as compared to revenues of $4.8 million for the same period last
year. The company also reported a net loss of $1.5 million, or 12 cents per
share, versus net income of $842,000, or 7 cents per share, for the same period
a year ago.
Spyglass also stated that it did not recognize any revenue in the
quarter from Microsoft in excess of the minimum quarterly payment due under the
license agreement with Microsoft with respect to the licensed Spyglass software
used in the Microsoft Internet Explorer product for the Apple Macintosh(R) and
Microsoft Windows(R) 3.1. However, Microsoft and Spyglass said today that the
two companies had reached agreement for a full buyout of all current and
future royalties with a one-time payment of $8 million consisting of $7.5
million in cash and $500,000 in software and maintenance to Spyglass in
exchange for the fully paid up license under the terms of the existing license
agreement for use by Microsoft of Spyglass Mosaic browser
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technology in Internet Explorer. Spyglass said it would recognize the
revenue from this payment in the second quarter of fiscal year 1997 ending on
March 31, 1997.
In a related announcement today, Microsoft and Spyglass said the two companies
intended to extend their strategic relationship in the future to develop new
technologies, expand distribution of their technologies and work cooperatively
on open standards in the embedded systems market.
In October 1996, Spyglass outlined plans for its strategy to establish a
leadership position in the Internet-device market, but cautioned that the rapid
transition from the desktop to the device market would put pressure on
short-term financial results.
During the quarter, Spyglass continued to solidify its leadership position in
providing World Wide Web technology to the Real Time Operating System (RTOS)
marketplace. In addition, Spyglass began licensing products and services
directly to office equipment and consumer electronics companies.
"Events in the quarter indicate our comprehensive strategy to assume a
leadership position in the market is working," said ▇▇▇▇ ▇▇▇▇▇▇▇, Spyglass
president and CEO. "In fact, more than half of new revenues booked in the
quarter were device- and infrastructure-related. We also stepped up
investments in research and development to accelerate the strategy."
FIRST QUARTER EVENTS SPUR STRATEGY TO FOCUS ON INTERNET-DEVICE MARKET
▇▇▇▇▇▇▇ explained that first quarter 1997 "marked a critical transition period
for Spyglass." The company outlined plans to become the premier provider of
technology and professional services within the industry. Several events in
the quarter supported this effort:
o ROLLED OUT INTERNET-DEVICE STRATEGY - On December 2, 1996, the company
announced the details of a new device strategy designed to provide the
connectivity, infrastructure and applications necessary to support
multiple devices on-line. Industry analysts have praised it as "cutting
edge" and the most comprehensive offering they've seen.
o ADDED NEW RTOS AND DEVICE CUSTOMERS - Several new real-time operating
system vendors licensed Spyglass technology including Lynx Real-Time
Systems and PowerTV. In addition, the company signed key deals with
ViewCall America and WorldGate Communications, both major players in the
Web television market.
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o BUILT EXPERIENCED PROFESSIONAL SERVICES TEAM - The company invested
heavily in developing a strong professional services group with core
competencies in Java, RTOS development and software development
management. The company also announced the addition of ▇▇▇▇ ▇▇▇▇▇, former
Sun Microsystems executive, to head up the research and development
organization.
o DELIVERED SURFWATCH PROSERVER - During the quarter, Spyglass delivered the
first new product in its strategy, the SurfWatch ProServer. Labeled as a
"killer app" by the Meta Group, the product is the world's first proxy
server with filtering capabilities.
o EXPANDED GLOBAL PRESENCE AND DISTRIBUTION - Spyglass announced Spyglass
Direct, a partnership with Unidirect, a major re-seller of computer
products, to handle channel sales of Spyglass SurfWatch products,
expanding opportunities for the company to concentrate on its
device OEM business. Also, Spyglass established European operations and
signed a joint-venture with Intercom Inc., Tokyo, to market and sell
products in Japan.
▇▇▇▇▇▇▇ said that the overall growth in the market is validating the Spyglass'
vision. In fact, Jupiter Communications predicts that the Internet device and
infrastructure marketplace will triple by the year 2000. Others estimate the
embedded software market to be a $5.2 billion industry by the year 2001.
COMPANY TO BUILD ON LEADERSHIP POSITION IN DEVICE MARKET
According to ▇▇▇▇▇▇▇, the company will move forward on building its leadership
position in a number of ways:
o Focus on three key market segments - consumer, industrial and commercial
device manufacturers.
o Continue to deliver new products.
o Aggressively invest in product development, and in Professional Services,
by building further expertise in embedded operating systems and Java.
o Market infrastructure/performance products to on-line device content
service providers like Web TV, WorldGate, PowerTV, cable companies, RBOCs,
cellular and satellite providers.
"We confirmed a great deal during the quarter that validated our strategy,
particularly that this market is very real and holds great potential." ▇▇▇▇▇▇▇
said. "We are ideally positioned as the premier provider of technology and
services to the device marketplace because we are the only vendor that offers
comprehensive and OS independent solutions. We are encouraged about
opportunities for growth."
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SPYGLASS INC.
Spyglass Inc. (NASDAQ: SPYG) provides software and services to make devices
work with the World Wide Web. Among Spyglass' OS device customers are
Integrated Systems, Inc., Lynx Real-Time Systems, Inc., Microware Systems Corp.
and QNX Software Systems, Ltd. Other customers include BellSouth, Computer
Associates, Inc., Digital Equipment Corp., IBM Corp., Microsoft Corp., Oracle
Corp. and WebTV Networks. Spyglass headquarters are located at ▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇. ▇▇▇▇▇; telephone: ▇▇▇.▇▇▇.▇▇▇▇; fax: ▇▇▇.▇▇▇.▇▇▇▇; press
email inquiries: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇; Web server: ▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇.
-30-
(January 1997)
Spyglass is a registered trademark of Spyglass, Inc. The spyglass logo and
"Make the Net Work" are trademarks of Spyglass, Inc. in the United States and
other countries. Mosaic is a trademark of the University of Illinois.
Microsoft, ActiveX and Windows are either registered trademarks or trademarks
of Microsoft Corp. in the United States and/or other countries. (Other products
and brand names are trademarks of registered trademarks of their respective
companies.) This release contains information about management's future
expectations, plans and prospects which constitute forward-looking statements
for purposes of the safe harbor provisions under The Private Securities
Litigation Reform Act of 1995. Actual results may differ materially from those
indicated by these forward-looking statements as a result of various important
factors which are discussed in the company's annual report on Form 10-K for
the year ended September 30, 1996, which is on file with the SEC.
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