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EXHIBIT 10.43
SECOND AMENDMENT TO
MASTER AFFILIATION AGREEMENT
This amendment (the "Second Amendment") to the Master Affiliation Agreement
dated December 22, 1998, as amended in the First Amendment dated March 8, 1999
(as so amended, the "Master Agreement"), by and between Wink Communications,
Inc., a California corporation ("Wink"), whose address is 0000 Xxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxx, XX 00000 and DIRECTV, Inc., a California Corporation, whose
address is 0000 Xxxx Xxxxxxxx Xxxxxxx, Xx Xxxxxxx, XX 00000, is dated June 28,
1999.
The parties agree to amend the Master Agreement as follows:
1. DIRECTV's obligation, as set forth in the seventh sentence of Section 3.1
of the Master Agreement, to pay Wink 50% of the non-recurring engineering
fees detailed in the Engine Statement of Work (up to a maximum [*]) is
hereby waived.
2. DIRECTV's obligation to pay Wink an aggregate [*] and Wink's obligation to
reimburse DIRECTV such funds, both as set forth in Section 5.4 of the
Master Agreement, are both hereby waived.
3. The current Section 3.2, repeated for convenience below:
3.2. The parties agree that the active participation and support of DIRECTV
System Manufacturers is essential to the parties ability to deploy
Interactive Wink Programs to Wink-enabled DIRECTV System Receivers. Wink
agrees to license the Wink Engine to any DIRECTV System Manufacturer on
the terms defined in Exhibit I. DIRECTV agrees to use commercially
reasonable efforts to encourage both Thomson Consumer Electronics and
Xxxxxx Network Systems to enter into such license agreements with Wink
under terms substantially similar to those defined in Exhibit I for the
product which each manufacturer reasonably anticipates as its highest
volume DIRECTV System Receiver offered in 1999 and covering all shipments
after January 1, 1999 of such DIRECTV System Receivers to DIRECTV
subscribers located in the United States; provided, however, that in no
event shall DIRECTV have any obligation to encourage the inclusion of any
Wink technology into (i) Thomson Consumer Electronics' DIRECTV System
Receiver other than Thomson's 4.5 Version of the DIRECTV System Receiver,
or (ii) any Xxxxxx Network Systems DIRECTV System Receiver introduced to
market after January 1, 2000. Notwithstanding anything herein to the
contrary, either party, upon written notice to the other party, may
terminate this Master Agreement, without any liability to the other party
in the event that Thomson Consumer Electronics has not entered into a
licensing agreement with Wink, as is contemplated above, within thirty
(30) days of the Effective Date.
Is hereby replaced with the following new Section 3.2:
3.2. Wink agrees to license the Wink Engine to any DIRECTV System Manufacturer
on the terms defined in Exhibit I. For purposes of the Master Agreement
and the Second Amendment, the following definitions shall apply:
o "Baseline" shall mean the lowest priced model(s) offered at retail
by each DIRECTV System Manufacturer (and "step-up" models based on
the same hardware design) and the models purchased by DIRECTV for
the PRIMESTAR swap out program.
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[*] Confidential treatment has been requested with respect to certain portions
of this exhibit pursuant to a request for confidential treatment filed with
the Securities and Exchange Commission. Omitted portions have been filed
with the Commission.
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o "TCE" shall mean Thomson Consumer Electronics
o "Philips" shall mean Philips Electronics B.V.
o "HNS" shall mean Xxxxxx Network Systems
o "Sony" shall mean Sony Electronics
o the TCE 4.5 DIRECTV System Receivers, the first generation Baseline
DIRECTV System Receiver models from Philips and the first generation
Baseline DIRECTV System Receiver models from HNS based on the
"Everest" processor shall collectively be referred as "Guaranteed
Wink Models"
o DIRECTV System Receivers which meet the Wink Engine hardware
requirements, per the specification in Exhibit P, as amended by
mutual agreement, shall be referred to as "Wink-capable DIRECTV
System Receivers."
(a) WINK-CAPABLE HARDWARE
DIRECTV shall use its best commercial efforts to establish a contractual
agreement with each applicable manufacturer to provide that each
Guaranteed Wink Model will be a Wink-capable DIRECTV System Receiver on
first shipment to both retailers and to DIRECTV (for the PRIMESTAR swap
out program use)(each such agreement, an "OEM Agreement"). DIRECTV further
agrees to use commercially reasonable efforts to encourage all DIRECTV
System Receiver manufacturers to ensure that new Baseline models launched
by such manufacturers after March 31, 2000 but prior to January 1, 2002
meet the Wink Engine Requirements.
(b) WINK ENGINE RELEASE SCHEDULE
DIRECTV shall use commercially reasonable efforts to provide that
Wink-capable DIRECTV System Receivers, excluding those models listed in
Exhibit O, be scheduled (as approved by DIRECTV in cooperation with the
participating DIRECTV System Manufacturer and Wink) to include a Wink
Engine as soon as practicable, as determined by DIRECTV in its reasonable
discretion, after such model is released commercially. Notwithstanding the
above and subject to completion and the terms of the applicable OEM
Agreement, DIRECTV shall provide that DIRECTV System Receivers which are
Guaranteed Wink Models and are produced prior to January 1, 2002, include
a Wink Engine (whether enabled via satellite download or installation at
the factory in accordance with Section 3.2(d)). DIRECTV agrees to use
commercially reasonable efforts to secure a commitment and schedule for
the earliest possible release date for the Wink Engine for both the TCE
4.5 platform and the first generation Philips platform for both retail
sales and PRIMESTAR swap out program use. DIRECTV also agrees to require
HNS to provide a Wink Engine (subject to HNS execution of a license
agreement with Wink, as described below) with the new Everest-based
Baseline models at the time of commercial launch of such Guaranteed Wink
Model (provided that DIRECTV shall retain the right, in its sole
discretion, to postpone the launch of the Wink Engine, if the simultaneous
launch of such Guaranteed Wink Model and the associated Wink Engine is
delaying the commercial introduction of such Guaranteed Wink Model. The
parties agree that the mutual objective of the parties is to launch the
Wink Engine on the TCE 4.5 platform before April 1, 2000 and on the
Philips platforms before July 1, 2000, and Wink acknowledges and accepts
that the attainment of those target dates is dependent on active
participation and support by the applicable manufacturer. DIRECTV
understands and accepts that in order to utilize the Wink Engine, DIRECTV
System Manufacturers must execute a license agreement with Wink on terms
substantially identical to those defined in Exhibit I.
(c) PRODUCT LINE TRANSITIONS
DIRECTV shall encourage TCE to discontinue its earlier Baseline model (TCE
4.0) after December 31, 1999, and encourage HNS to discontinue its earlier
Baseline models three (3)
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months following commercial launch of the "Everest" Baseline model.
Notwithstanding the above, Wink acknowledges that manufacturing and/or
supply constraints may prevent a timely transition to Wink-capable
platforms for TCE and HNS. The parties agree that DIRECTV shall notify
Wink of delays in such transitions as soon as possible, and that DIRECTV
shall utilize commercially reasonable efforts to assist the applicable
manufacturer in the resolution of such problems as quickly as possible.
Wink further acknowledges and agrees that in the event of any such
manufacturing and/or supply constraints, as determined by DIRECTV in its
sole discretion, DIRECTV shall have the right to allow the continuation of
the manufacturing of any model of DIRECTV System Receiver by any
manufacturer.
(d) DOWNLOADING AND FACTORY INSTALLING THE WINK ENGINE
During the term, DIRECTV shall use commercially reasonable efforts to
download the Wink Engine to all Wink-capable DIRECTV System Receivers as
soon as practicable, as determined by DIRECTV in its reasonable
discretion, after acceptance of the Wink Engine by DIRECTV and the
applicable manufacturer in accordance with DIRECTV's standard practices
("the Acceptance Date"), and in any event no more than sixty (60) days
after the Acceptance Date, and to require DIRECTV System Manufacturers to
install the Wink Engine in new units manufactured at their factories
(rather than downloaded via satellite) as soon as practicable, as
determined by DIRECTV in its reasonable discretion.
(e) DE-INSTALLING THE WINK ENGINE
DIRECTV shall take no specific actions to (i) de-install or disable a
previously downloaded or installed Wink Engine in a Wink-enabled DIRECTV
System Receiver, unless the installation or download of the Wink Engine
has had a material adverse effect on the performance of such Wink-enabled
DIRECTV System Receiver as determined by DIRECTV in its sole discretion,
or such Wink-enabled DIRECTV System Receiver is used in a SMATV system,
hotel or other commercial establishment, or (ii) disable the collection of
Wink Responses from Interactive Wink Programs in any Wink-enabled DIRECTV
System Receivers, through the Term of the Master Agreement. The foregoing
limitations in this Subsection 3.2(e) shall not apply to the extent
compliance will, or could reasonably be expected to, subject DIRECTV to a
lawsuit or other legal action, provided that DIRECTV has (a) given Wink
thirty days prior notice and time to respond to such concerns and (b)
demonstrated to Wink's reasonable satisfaction that such concerns are not
adequately addressed by the indemnity provided to DIRECTV by Wink under
the Agreement.
(f) UNIT VOLUMES, PRESS RELEASE
The parties acknowledge that, based on mutual good faith estimates, the
foregoing commitments are expected to provide that at least four million
(4,000,000) DIRECTV System Receivers will be Wink-enabled prior to January
1, 2002, provided, however, DIRECTV makes no guarantee regarding the
actual number of DIRECTV System Receivers that will be Wink-enabled. The
parties further agree to prepare a joint press release which will include
the parties intent to deploy at least four million (4,000,000)
Wink-enabled DIRECTV System Receivers by December 31, 2001. This release
shall be issued as soon as is practicable once Wink has executed license
agreements with Philips and HNS and shall incorporate the announcement of
Philips and/or HNS as Wink licensees. DIRECTV agrees to use commercially
reasonable efforts to encourage those manufacturers to enter into such
agreements (in a form substantially similar to Exhibit I in the Master
Agreement) with Wink by June 30, 1999. The parties further agree that if
Wink has executed agreements with Philips and HNS by July 10, 1999, the
parties shall collaborate to issue such press release prior to or during
the Satellite Broadcasters Convention in July 1999.
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(g) WINK PREMIUM SUBSIDY
In return for these commitments by DIRECTV and the purchase by DIRECTV (or
an affiliate of DIRECTV) of one million two hundred and forty nine
thousand nine hundred and ninety nine shares (1,249,999) shares of Wink's
Series D Preferred Stock at twelve dollars ($12.00) dollars per share
pursuant to the Stock Purchase Agreement referenced below, Wink agrees to
pay DIRECTV an amount per Wink-enabled DIRECTV System Receiver equal to
the lesser of
(i) [*]
(r) [*] of the incremental cost per unit quoted by the applicable
DIRECTV System Manufacturer to include the Wink Engine (including
the minimum amount of hardware as defined in Exhibit P) for the Wink
Engine in each Wink-enabled DIRECTV System Receiver, over the amount
such manufacturer has quoted to DIRECTV, on the assumption that the
Wink Engine was not a requirement (the "Wink Premium").
DIRECTV agrees to use reasonable efforts to provide that the Wink Premium
quoted by a DIRECTV System Manufacturer reflects the lowest incremental
cost attributable to the Wink feature, compared to the features required
by DIRECTV and those otherwise planned by such manufacturer, and agrees to
provide Wink with written notification of the Wink Premium quoted by
manufacturers and the hardware components attributed to Wink. The parties
agree that if a manufacturer quotes DIRECTV a Wink Premium in excess of
[*] for a specific model other than the Guaranteed Wink Models, DIRECTV
shall not be obligated to require the manufacturer to make such model meet
the Wink Engine Requirements.
Such payments shall not be considered Incremental Wink Revenues for
DIRECTV under the Master Agreement. The payments shall be made by Wink to
DIRECTV quarterly for all Wink-enabled DIRECTV System Receivers through
the Term on:
(x) the later of the date of shipment by the applicable manufacturer if
the Wink Engine is installed at the factory;
(y) the date of the Wink Engine download to such DIRECTV System Receiver
if the Wink Engine is downloaded.
DIRECTV shall submit a quarterly report to Wink containing a good faith
estimate of the total number of Wink-enabled DIRECTV System Receivers (by
manufacturer and model) for which Wink must make payments to DIRECTV, and
Wink shall pay DIRECTV promptly upon receipt of such report. Such reports
from DIRECTV shall be subject to the audit rights per Section 14.12 of the
Master Agreement. The parties agree that Wink's cumulative payments to
DIRECTV under the Second Amendment shall not exceed the total price of the
Wink Series D Preferred Stock purchased by DIRECTV (or an affiliate of
DIRECTV) (e.g. $15,000,000).
(h) Notwithstanding anything to the contrary set forth in this section
3.2, the parties agree and understand that DIRECTV's efforts to download
the Wink Engine to Wink -- capable DIRECTV System Receivers may be
unsuccessful for reasons beyond the control of DIRECTV such as, for
example, end user's failure to properly set up or maintain such equipment,
and DIRECTV shall not be deemed to have breached any of its obligations
hereunder if a certain number of Wink -- capable DIRECTV System Receivers
have not been Wink enabled by the applicable date, provided DIRECTV has
made commercially reasonable efforts to achieve such result.
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3. The current Section 3.3, repeated for convenience below:
3.3. Wink shall, at Wink's sole cost and expense (including taxes and freight),
purchase for and on behalf of DIRECTV and deliver to DIRECTV at such
location as DIRECTV shall designate, all equipment (including total
system-redundant equipment for back-up use) necessary to run the Wink
Software and to enable DIRECTV's insertion of Interactive Wink Programs,
including Wink Virtual Channels pursuant to Section 3.9, into DIRECTV's
signals (the "Equipment"), with the exception that any personal computers
utilizing or running Microsoft Windows 95 or Windows NT required to
operate the Wink Software will be provided by DIRECTV, at DIRECTV's sole
cost and expense, and such computers shall not be deemed Equipment
hereunder. The parties agree that Wink shall have no obligation to provide
any additional equipment that may be required to enable storage or
insertion of Interactive Wink Programs not provided by Wink or by a
Programmer (as defined below) as part of such Programmer's video signal.
All Equipment provided by Wink to DIRECTV hereunder shall become the sole
property of DIRECTV upon installation at DIRECTV's Facilities, as defined
below.
Is hereby replaced with the following new Section 3.3:
3. Wink shall reimburse DIRECTV [*] (the "Equipment Cap") for all equipment
(including total system-redundant equipment for back-up use) necessary to
run the Wink Software, download the Wink Engine and to enable DIRECTV's
insertion and/or transmission of Interactive Wink Programs, including Wink
Virtual Channels pursuant to Section 3.9, into DIRECTV's signals (the
"Equipment"). Payments for Equipment against the Equipment Cap shall be
subject to presentation to Wink of a detailed invoice and schedule from
DIRECTV, and made by Wink on the earlier of thirty days following an
initial public offering of Wink stock (if any) and December 31, 1999. The
parties agree that DIRECTV shall provide all other equipment necessary to
run the Wink Software, download the Wink Engine, and enable DIRECTV's
insertion and/or transmission of Interactive Wink Programs, including Wink
Virtual Channels, into DIRECTV's signal, with the exception that the
purchase by DIRECTV of equipment specifically required for the
transmission of Interactive Wink Programs with DIRECTV's planned
"local-into-local" broadcasts shall be optional. Wink shall have no
obligation to reimburse DIRECTV for equipment costs or provide any
equipment to DIRECTV under the Master Agreement or this Second Amendment,
except as provided in this Section 3.3. The parties agree that if DIRECTV
elects to terminate the Master Agreement prior to the expiration of the
fifth year of the Term and Wink has not breached the Master Agreement,
DIRECTV shall reimburse Wink [*] of the actual amount reimbursed by Wink
under this section 3.3. The parties also agree that all equipment solely
related to the transmission of the Interactive Wink Programs (as opposed
to networking equipment and equipment used to download the Wink Engine and
other software) shall be dedicated by DIRECTV to such services during the
Term. The parties have prepared the attached Exhibit Q to identify the
equipment which shall be dedicated to the transmission of the Interactive
Wink Programs. Such Exhibit may be amended during the Term by mutual
agreement of the parties.
4. Contemporaneously with the execution of the Second Amendment, Wink and
DIRECTV (or an affiliate of DIRECTV) shall enter into a Series D Preferred
Stock Purchase Agreement that sets forth the terms and conditions under
which DIRECTV shall invest approximately $14,999,988 in Wink. The Second
Amendment shall have no effect until such time as the Preferred Stock
Purchase Agreement has been executed and the stock purchase is effective.
The parties agree that unless DIRECTV (or an affiliate of DIRECTV)
executes the Preferred Stock Purchase Agreement and provides the required
funds to Wink on or before July 1, 1999, the Second Amendment shall be
void.
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5. In the event of any inconsistency between the Second Amendment and the
Master Agreement or any other agreement between the parties, the Second
Amendment shall be deemed to be controlling. In all other respects, the
Master Agreement shall continue in full force and effect.
WINK COMMUNICATIONS, INC. DIRECTV, Inc.
By: /s/ XXXX XXXXX XXXXXXXXXXX By: /s/ XXXXXXX XXXXX
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Name: Xxxx Xxxxx Xxxxxxxxxxx Name: Xxxxxxx Xxxxx
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Title: President/CEO Title: Vice President
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EXHIBIT O.: MODELS WHICH ARE NOT REQUIRED TO INCLUDE A WINK ENGINE
[*]
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[*] Confidential treatment has been requested with respect to certain portions
of this exhibit pursuant to a request for confidential treatment filed with
the Securities and Exchange Commission. Omitted portions have been filed
with the Commission.
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EXHIBIT P.: MINIMUM HARDWARE REQUIREMENTS FOR THE WINK ENGINE
o 28 CISC MIPS available for Wink processing while the DIRECTV System
Receiver is decoding MPEG video, DIRECTV guide data
o Ability to receive single SCID data streams of at least than 400 kbits/sec
while also receiving the Wink Service Map, DIRECTV guide data, etc.
o 704x480x256 color graphics, no video or other memory limitations on
drawing the entire screen in all colors with or without video display (the
parties agree and accept that the HNS Everest Baseline models may not
completely meet this requirement, and agree that in no event shall the
resolution and color depth with or without video display be inferior to
that provided on the TCE 4.5 platform)
o Translucency and/or alpha blending
o MPEG Decoder capable of continuously displaying a static I-Frame
o 2400 baud modem
o 4kB NVRAM
o 512kB Flash
o 512kB RAM (for applications and Wink Engine data structures; does not
include drawing buffers, downstream data buffers, etc.)
o support for downloading of Wink Engine, upgrades to same
Optional, but recommended:
o Hardware flicker filter
o BitBLTs
[*]
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[*] Confidential treatment has been requested with respect to certain portions
of this exhibit pursuant to a request for confidential treatment filed with
the Securities and Exchange Commission. Omitted portions have been filed
with the Commission.
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EXHIBIT Q: EQUIPMENT DEDICATED TO TRANSMISSION OF INTERACTIVE WINK PROGRAMS
CRBC
A180C (2 tickers) (4 SUN)
Bridge Workstations (4 B1000)
Sun Ultra 5 (2 Ethernet cards)
Studio computer
Terminal Server
TTX 742 (Norpak)
LABC
A180C (2 tickers, 1 spare)
Bridge Workstations (4 B1000)
Sun Ultra 5 (Ethernet cards)
Studio computer
Terminal Server
TTX742 (Norpak)
NEL
A180C (2 tickers)
Sun Ultra 5 (2 Ethernet cards)
Studio Computer
Xxxxxxxx Xxxxxx
XXX000 (Norpak)
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[DIRECTV LETTERHEAD]
June 28, 1999
Xxxxx Xxxxxxxx
Senior Vice President
Programming and Advertising
Wink Communications
0000 Xxxxxx Xxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Dear Xxxxx:
The purpose of this letter is to conform the conversations that we have had
regarding the collection and use of DIRECTV subscriber information obtained
from Wink-enabled DIRECTV System receivers. As I mentioned, DIRECTV is in the
process of formulating a subscriber privacy policy to address this and similar
issues that will arise as the capabilities and functions of DIRECTV System
receivers continue to develop. We recognize that Wink has spent a significant
amount of time thinking about these types of issues for its own business, and
we welcome your offer to provide input as DIRECTV develops this policy. We will
allow you to review the proposed policy as it relates to the Wink services
during our internal preparation with the understanding that DIRECTV will retain
the sole right to decide on the final version.
At the time that the DIRECTV policy is finalized, we would expect that Wink and
DIRECTV will discuss together the implementation of such privacy policy with
respect to the Wink services. It is both parties understanding and expectation
that Wink and DIRECTV will work together in good faith to implement such policy,
with the understanding that Wink's pre-existing agreements with other
constituents will be acknowledged and considered in preparation of a mutually
acceptable implementation with respect to the Wink services on the DIRECTV
platforms.
Xxxxx, if this letter accurately summarizes the understanding of Wink and
DIRECTV on this matter, kindly confirm by signing below and returning a copy to
my attention.
Respectfully yours,
/s/ XXXXXXXX XXXXXXX
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Xxxxxxxx Xxxxxxx
Executive Vice President
DIRECTV
Acknowledged and Agreed:
Wink Communications
By: /s/ XXXXX XXXXXXXX Date: 6/28/99
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