Fifth Amendment to Master Affiliation Agreement between Wink Communications, Inc. and DIRECTV, Inc.

Summary

This amendment updates the Master Affiliation Agreement between Wink Communications, Inc. and DIRECTV, Inc. It revises marketing fund provisions, requiring Wink to provide specific marketing funds for each Wink-enabled DIRECTV receiver and additional funds upon reaching certain milestones. The amendment also sets out how these funds are to be used and reimbursed, and introduces new requirements for bandwidth allocation and technical cooperation to support interactive programming. Both parties agree to collaborate on marketing plans and technical specifications, with defined invoicing and payment procedures.

EX-10.53 11 c61163ex10-53.txt 5TH AMENDMENT TO THE MASTER AFFILIATION AGREEMENT 1 EXHIBIT 10.53 NOTE: INFORMATION IN THIS DOCUMENT MARKED WITH AN "[*]" HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS. FIFTH AMENDMENT TO MASTER AFFILIATION AGREEMENT This Fifth Amendment (the "Fifth Amendment") to the Master Affiliation Agreement dated as of December 22, 1998, as amended in the First Amendment dated March 8 1999, the Second Amendment dated June 28, 1999, the Third Amendment dated July 24, 2000 and the Fourth Amendment dated September 7, 2000 (the "Master Agreement"), by and between Wink Communications, Inc., a Delaware corporation ("Wink"), whose address is 1001 Marina Village Parkway, Alameda, California 94501 and DIRECTV, Inc., a California corporation, whose address is 2230 East Imperial Highway, El Segundo, California 90245 ("DIRECTV") is made as of this 22nd day of December, 2000. 1. Pursuant to section 14.11 of the Master Agreement, and considering recent public announcements by DIRECTV regarding the higher number of projected Wink-enabled DIRECTV Subscribers, Wink hereby provides notice to DIRECTV that Wink's agreement with EchoStar Communications Corporation includes commercial terms related to marketing support that may be deemed more favorable to Echostar than those currently provided to DIRECTV by Wink under the Master Agreement. While the exact terms of the agreement between Wink and Echostar must remain confidential under the terms of that agreement, Wink represents and warrants that the following changes to section 6.7 of the Master Agreement will restore the Master Agreement to compliance with section 14.11 for the number of Wink-enabled DIRECTV System Receivers currently projected to be deployed by DIRECTV (taking into account the payments made by Wink under section 3.4 and other commercial terms of the Master Agreement). As a result, the parties have agreed to replace the existing section 6.7 with the following new section 6.7: "6.7. Starting with the first Wink-enabled DIRECTV System Receiver, Wink agrees to fund a marketing pool with funds in the amount of [*] per Wink-enabled DIRECTV System Receiver activated through December 31, 2000, plus [*] per Wink-enabled DIRECTV System Receiver activated on or after January 1, 2001 (together, the "Wink MDF Funds"). In addition, Wink agrees to provide an additional [*] in Wink MDF Funds once DIRECTV has reached 1,000,000 Wink-enabled DIRECTV System Receivers. The parties acknowledge and agree that as of the date of this Fifth Amendment, said 1,000,000 Wink-enabled DIRECTV System Receiver milestone has been met. The Wink MDF Funds shall be allocated to support mutually agreed marketing and promotional tactics by the parties that directly relate to the promotion of the Wink platform to potential customers and/or existing Wink-enabled customers. In addition to using the Wink MDF Funds to reimburse out of pocket costs incurred under mutually agreed programs, the parties agree that each party may, upon approval of the other, contribute "in-kind" products and services in place of cash outlays, the value of which shall be reimbursed from the Wink MDF Funds. "In-kind" products and services may include, but are not limited to, local advertising avails and templates for various forms of advertising and promotion that can be tailored for DIRECTV's use. Upon mutual execution of the Fifth Amendment, DIRECTV shall invoice Wink for the Wink MDF Funds associated with DIRECTV System Receivers which are Wink-enabled as of the date of the Fifth Amendment. Then, as soon as reasonably practicable subsequent to the execution of the Fifth Amendment, and each year thereafter for the term of the Master Agreement (which may be extended pursuant to the terms thereof) commencing with 2001, DIRECTV and Wink shall mutually agree in writing upon a marketing plan and budget (the "Marketing Plan") for the expenditure of the Wink MDF Funds projected to be earned by DIRECTV for the following calendar year, commencing with 2001. Either Wink or DIRECTV may incur expenses to be paid from the Wink MDF Funds, consistent with the Marketing Plan. In the event either party incurs expenses consistent with the Marketing Plan, such party shall submit receipts to the other [*] Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. 2 evidencing such payment. Wink shall reimburse DIRECTV for those expenses submitted by DIRECTV which are consistent with the Marketing Plan within forty five (45) days of Wink's receipt of evidence of such payment by DIRECTV. In addition to and not in lieu of the Wink MDF Funds, Wink agrees to pay DIRECTV marketing funds to be used by DIRECTV in its sole discretion in promoting the DIRECTV System network, which may include the promotion of the Wink platform to potential and/or existing Wink-enabled customers (the "System Funds"). The amount of the System Funds shall be [*] for each Wink-enabled DIRECTV System Receiver that is activated on or after January 1, 2001. On each March 31st, June 30th, September 30th and December 31st commencing with the year 2001 and continuing for the duration of the term of the Master Agreement, DIRECTV shall invoice Wink in an amount equal to any and all System Funds earned by DIRECTV for the three month period ending with the month indicated above. Subject to Wink's audit rights contained in this Master Agreement and based upon the subscriber reports defined in Section 6.6, Wink shall pay the invoice amount within thirty (30) days of receipt of such invoice." 2. The parties hereby agree to amend Section 3.5 of the Master Agreement to include the following: "Notwithstanding the foregoing, DIRECTV hereby agrees to allocate 480 kbits/sec. of bandwidth (the "Incremental Bandwidth") in the calendar year 2001 as follows: (a) in the first half of the year, 240 kbits/sec. shall be allocated to introduce Interactive Wink Programming on the transmission of the affiliates of the four major broadcast networks (i.e., ABC, CBS, NBC and Fox) in two markets identified by DIRECTV where DIRECTV does not currently transmit Interactive Wink Programs (such markets to be selected by DIRECTV with the goal of maximizing the distribution and availability of Interactive Wink Programming); and (b) in the second half of the year, 240 kbits/sec. shall be allocated to introduce Interactive Wink Programming with either (i) new Programmers, (ii) additional markets for the four major broadcast networks, and/or (iii) Virtual Channels, whereby the determination shall be made by DIRECTV, in DIRECTV's reasonable discretion, based upon a determination of that which is in the financial best interest of DIRECTV and Wink with respect to Wink Revenue Transactions. All of the Incremental Bandwidth shall continue to be allocated to transmission of Interactive Wink Programs throughout the Term, once allocated during 2001." 3. The parties hereby agree to amend Section 7.2 of the Master Agreement by adding the following: "(vii) DIRECTV will dedicate the necessary resources and make a good faith effort to complete the definition and requirement specifications for inserting Interactive Wink Programs synchronized with the "local avails" provided DIRECTV by many cable networks at DIRECTV's broadcast facilities by no later than January 31, 2001, which specifications shall be mutually agreed upon between DIRECTV and Wink. Consistent with the results of such specifications, DIRECTV and Wink will work together in good faith to undertake the implementation of the specifications for inserting Wink-enhanced advertisements locally at DIRECTV's broadcast facilities, provided that any and all business issues related thereto (including allocation of applicable costs) are resolved and mutually agreed upon. Consistent with the foregoing, the parties acknowledge that currently both parties desire to complete such implementation by the end of June, 2001." 4. DIRECTV hereby acknowledges and agrees that the launch of its spot-beam technology shall not result in the loss of any previously dedicated bandwidth for the broadcast of Interactive Wink Programming in the local markets of the national networks. [*] Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. 2 3 5. The last two complete paragraph of Section 3.2(g), repeated for convenience below: "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) [*]." Is hereby replaced by the following: "Such payments shall not be considered Incremental Wink Revenues for DIRECTV under the Master Agreement. DIRECTV shall invoice Wink for all Wink-capable DIRECTV System Receivers upon DIRECTV's receipt of an invoice (or portion thereof) not in controversy (as determined by DIRECTV in its reasonable discretion) between DIRECTV and the manufacturer for subsidy of the Wink-capable DIRECTV System Receivers. Such invoice shall indicate the manufacturer and model of the DIRECTV System Receivers included in the invoice. The total amount due and owing to DIRECTV pursuant to this Section 3.2(g) shall be paid by Wink in equal quarterly installments on or before March 31, 2001, June 30, 2001, September 30, 2001 and December 31, 2001 (e.g., if DIRECTV invoices Wink for $[*] on December 29, 2000 and $[*] on February 15, 2001, Wink shall remit to DIRECTV four equal quarterly payments in 2001 in the amount of $[*] each). 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 this Section 3.2(g) shall not exceed the total price of the Wink Series D Preferred Stock purchased by DIRECTV (or an affiliate of DIRECTV) (i.e., $[*])." In the event of any inconsistency between the Fifth Amendment and the Master Agreement or any other agreement between the parties, the Fifth Amendment shall be deemed controlling. In all other respects, the Master Agreement shall continue in full force and effect. [*] Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. 3 4 IN WITNESS WHEREOF, the parties have caused this Fifth Amendment to be executed by their duly authorized officers and representatives as of the day and year first written above. WINK COMMUNICATIONS, INC. DIRECTV, INC. By: _______________________________ By: ________________________________ Name: ____________________________ Name: ______________________________ Title:_____________________________ Title:______________________________ 4