Document:

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EXHIBIT 10.3

                                JOINT VENTURE AND
                            STOCK PURCHASE AGREEMENT

         This Joint Venture and Stock Purchase Agreement (this "AGREEMENT") is
entered into as of December 6, 1999 (the "EFFECTIVE DATE") between Interactive
Network Inc, a California corporation ("IN") and Two Way TV Ltd., a corporation
organized under the laws of England and Wales ("TW") (IN and TW are hereinafter
collectively referred to as "PURCHASERS" and each individually as a
"PURCHASER").

                                    RECITALS

         A. IN has been, among other things, in the business of developing,
marketing and selling certain software and hardware products for interactive
television systems and other telecommunications uses, and has developed valuable
intellectual property related to such products and services.

         B. TW is, among other things, in the business of designing, developing
and licensing certain technology useful for interactive television and other
telecommunications applications, and has developed valuable intellectual
property related to such technology.

         C. Subject to the conditions set forth herein, IN and TW have agreed to
establish a Delaware corporation (the "COMPANY") to develop, market and supply
digital (as well as analog) interactive and related services, products and
technology in the Territory (as defined in the Joint Venture License Agreement
in the form attached hereto as Exhibit A among the Company, IN and TW (the
"JOINT VENTURE LICENSE AGREEMENT")).

         D. Subject to the conditions set forth herein, IN and TW have agreed to
enter into a Stockholders Agreement with the Company in the form attached hereto
as Exhibit B (the "STOCKHOLDERS AGREEMENT"), an Investor Rights Agreement with
the Company in the form attached hereto as Exhibit C (the "INVESTOR RIGHTS
AGREEMENT" and, together with this Agreement and the Stockholders Agreement, the
"CORPORATE DOCUMENTS"), and the Joint Venture License Agreement to establish and
govern the operations of the Company. Subject to the conditions set forth
herein, IN and TW also have agreed to enter into a Termination and License
Agreement in the form attached hereto as Exhibit D (the "TERMINATION AND LICENSE
AGREEMENT") with respect to the license of certain of IN's patents directly to
TW for use outside of the Territory described above.

         Now, therefore, the parties hereto agree to the following:

         1. PURCHASE OF SHARES. On the Closing Date (as defined in Section 6)
and subject to the terms and conditions of this Agreement, each Purchaser shall
purchase from the Company, and the Purchasers shall cause the Company to sell to
each Purchaser, 2,500,000 shares of the Company's common stock (the "SHARES") at
a purchase price of $500,000 (the "PURCHASE PRICE") or $0.20 per Share. Upon its
receipt of the entire Purchase Price, the Purchasers shall cause the Company to
issue a duly executed stock certificate evidencing the Shares registered in each
Purchaser's name in accordance with Section 14.

<PAGE>

         2. REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER. Each Purchaser
represents and warrants that:

              (a) ORGANIZATION. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, it has the corporate power and is authorized under its charter
documents to carry on its business as now conducted, and it is qualified to
transact business and is in good standing in its jurisdiction of incorporation.

              (b) AUTHORIZATIONS. Purchaser has performed all corporate actions
and received all corporate authorizations necessary to execute and deliver each
of the Corporate Documents and (subject to Section 6(i)) to perform its
obligations thereunder and each of the Corporate Documents is, or when executed
and delivered shall be, valid, binding and enforceable against it (subject to
applicable principles of equity and bankruptcy and insolvency laws).

              (c) GOVERNMENTAL LICENSES. Purchaser has the power and authority
and all material governmental licenses, authorizations, consents and approvals
to be obtained within that jurisdiction of incorporation to own its assets,
carry on its business and to execute, deliver, and perform its obligations under
the Corporate Documents (but only to the extent that failure to do so would not
have a material adverse effect on the Company's business).

              (d) THIRD PARTIES. Except as described in Section 6(i) or as may
be required (with respect to notices required to be made after the Effective
Date, which notices shall be filed in a timely manner) by the Securities and
Exchange Commission, the National Association of Securities Dealers or NASDAQ,
there are no (A) non-governmental third parties or (B) governmental or
regulatory entities in the United States who are entitled to any notice of the
transaction, licenses and services contemplated hereunder or whose consent is
required to be obtained by Purchaser for the consummation of the transaction
contemplated hereunder.

              (e) NO CLAIMS. To the best of Purchaser's knowledge, (a) no claims
have been made in respect of the Corporate Documents and no demands of any third
party have been made pertaining to them, and (b) no proceedings have been
instituted or are pending or threatened that challenge the rights of Purchaser
in respect thereof.

         3. INDEMNIFICATION.

              (a) TW OBLIGATION. TW shall defend, indemnify and hold harmless
the Company, IN and their officers, shareholders, and employees from and against
all costs, expenses and losses (including reasonable attorneys' fees and costs)
incurred through claims of any third parties against the Company or IN based on
a breach by TW of any representation or warranty made in the Corporate
Documents.

              (b) IN OBLIGATION. IN shall defend, indemnify and hold harmless
the Company and TW and their officers, shareholders, and employees from and
against all costs, expenses and losses (including reasonable attorneys' fees and
costs) incurred through claims of third parties against the Company or TW based
on a breach by IN of any representation or warranty made in the Corporate
Documents.

                                       2
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              (c) CONDITION TO OBLIGATIONS. The indemnification obligations
herein are contingent upon (i) the indemnified Party ("INDEMNIFIED PARTY")
giving prompt written notice to the Indemnifying Party(s) ("INDEMNIFYING PARTY")
of any such claim, (ii) the Indemnified Party allowing the Indemnifying Party(s)
to control the defense and settlement of any such claim, and (iii) the
Indemnified Party fully assisting, at the Indemnifying Party's (or Parties')
expense, in the defense; PROVIDED, HOWEVER, that without relieving the
Indemnifying Party of its obligations hereunder or impairing the Indemnifying
Party's right to control the defense or settlement thereof, the Indemnified
Party may elect to participate through separate counsel in the defense of any
such claim, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (a) the employment of counsel by such Indemnified
Party has been authorized in writing by the Indemnifying Party, (b) the
Indemnified Party shall have reasonably concluded that there exists a material
conflict of interest between the Indemnifying Party and such Indemnified Party
in the conduct of the defense of such claim (in which case the Indemnifying
Party shall not have the right to control the defense or settlement of such
claim on behalf of such Indemnified Party) or (c) the Indemnifying Party shall
not have employed counsel to assume the defense of such claim within a
reasonable time after notice of the commencement thereof. In each of such cases
the reasonable fees and expenses of counsel shall be at the expense of the
Indemnifying Party.

              (d) SURVIVAL. Notwithstanding any other provision of this
Agreement, the provisions of this Section 3 are intended to and shall survive
termination of this Agreement so as to cover all claims instituted within the
period set forth in the applicable statute of limitations.

         4. RESTRICTIVE LEGENDS. Purchaser understands and agrees that the
Company will place the legends set forth in the Stockholders Agreement, or
similar legends on any stock certificate(s) evidencing the Shares, together with
any other legends that may be required by state or federal securities laws, the
Company's Certificate of Incorporation or Bylaws, any other agreement between
Purchaser and the Company or any agreement between Purchaser and any third
party.

         5. IN SHAREHOLDER APPROVAL COVENANTS. Each of TW and IN acknowledge and
agree that the non-exclusive licenses to be granted by each of TW and IN
pursuant to the Joint Venture License Agreement shall each become an exclusive
license, pursuant to Section 2 of the Joint Venture License Agreement, upon the
approval by the shareholders of IN of such exclusivity (the "SHAREHOLDER
APPROVAL"). In connection therewith, IN agrees and covenants that:

              (a) IN, its affiliates and their respective officers, directors,
employees, representatives and agents shall immediately cease any discussions or
negotiations with any parties with respect to any Third Party Action (defined
below). Neither IN nor any of its affiliates shall, nor shall IN authorize or
permit any of its or their respective officers, directors, employees,
representatives or agents to, directly or indirectly, encourage, solicit,
participate in or initiate discussions or negotiations with or provide any
non-public information to any person or group (other than TW or any designees of
TW) concerning any Third Party Action; PROVIDED, HOWEVER, that nothing herein
will prevent the IN board of directors (the "IN BOARD") from taking and
disclosing to IN's shareholders a position contemplated by Rules 14d-9 and 14e-2
promulgated under the Securities Exchange Act of 1934, as amended (the "EXCHANGE

                                       3
<PAGE>

ACT"), with regard to any tender or exchange offer. IN shall promptly notify TW
in the event it receives any proposal or inquiry concerning a Third Party
Action, including the terms and conditions thereof and the identity of the party
submitting such proposal; and shall advise TW from time to time of the status
and any material developments concerning the same.

              (b) The IN Board shall recommend the Shareholder Approval to the
IN shareholders. Except as set forth in this Section 5(b), the IN Board shall
not withdraw its recommendation of the Shareholder Approval or approve or
recommend, or cause IN to enter into any agreement with respect to, any Third
Party Action. Notwithstanding anything else herein, if the IN Board by a
majority vote determines in its good faith judgment, after consultation with and
based upon the advice of counsel reasonably acceptable to TW, that it is
required to do so in order to comply with its fiduciary duties, the IN Board may
withdraw its recommendation of the Shareholder Approval or approve or recommend
a Superior Proposal (defined below), but in each case only (i) after providing
reasonable written notice to TW (a "NOTICE OF SUPERIOR PROPOSAL"), advising TW
that the IN Board has received a Superior Proposal, specifying the material
terms and conditions of such Superior Proposal and identifying the person making
such Superior Proposal; and (ii) if TW does not, within five (5) business days
of TW's receipt of the Notice of Superior Proposal, make an offer that the IN
Board by a majority vote determines in its good faith judgment to be at least as
favorable to IN's shareholders as such Superior Proposal; provided, however,
that IN shall not be entitled to consummate any agreement with respect to a
Superior Proposal unless and until the payments required pursuant to Section
5(d) are made. Any disclosure that the IN Board may be compelled to make with
respect to the receipt of a proposal for a Third Party Action or otherwise in
order to comply with its fiduciary duties or Rule 14d-9 or 14e-2 will not
constitute a violation of this Agreement provided that such disclosure states
that no action will be taken by the IN Board in violation of this Section 5(b).

              (c) For the purposes of this Agreement, "THIRD PARTY ACTION" means
the occurrence of any of the following events: (i) the acquisition of IN by
merger or otherwise by any person (which includes a "person" as such term is
defined in Section 13(d)(3) of the Exchange Act) other than TW or any affiliate
thereof (a "THIRD PARTY"); (ii) the acquisition by a Third Party of any material
portion of the assets or equity interests of IN, except to the extent such
acquisition would not affect the terms of the Corporate Documents, the Joint
Venture License Agreement or the Termination and License Agreement; (iii) the
adoption by IN of a plan of liquidation or the declaration or payment of an
extraordinary dividend; or (iv) any other action of IN that would prevent the
licenses described in the first paragraph of this Section 5 from becoming
exclusive. For purposes of this Agreement, a "SUPERIOR PROPOSAL" means any bona
fide proposal that, if consummated, would prevent the licenses described in the
first paragraph of this Section 5 from becoming exclusive and otherwise on terms
that the IN Board by a majority vote determines in its good faith judgment to be
more favorable to IN's shareholders than such licenses becoming exclusive.

              (d) Without limiting any of the restrictions set forth in this
Section 5, in the event that IN consummates any agreement with respect to a
Third Party Action, then IN shall pay to TW a fee of $150,000, plus the
reasonable out-of-pocket expenses incurred by TW in connection with this
transaction (which expenses shall not exceed $100,000), within one (1) business
day of such consummation.

                                       4
<PAGE>

              (e) IN shall prepare and distribute, as promptly as practicable, a
proxy statement in connection with the Shareholder Approval described in this
Section 5. IN shall consult with TW in connection with such proxy statement and
Shareholder Approval process, and shall allow TW to review drafts of such proxy
statement and reasonably participate in IN shareholder presentations. IN shall
consider in good faith any comments made by TW with respect to proxy statement
drafts. TW shall provide all information reasonably requested by IN in
connection with the preparation of any such proxy statement.

         6. CONDITIONS TO CLOSING. The obligations of each Purchaser to purchase
the Shares at the closing (the initial purchase of the Shares which shall take
place at the offices of Orrick, Herrington & Sutcliffe LLP, counsel to TW, 400
Sansome Street, San Francisco, California 94111, at 9:00 a.m. on such date
occurring within three (3) business days of the satisfaction of the condition
set forth in Section 6(i) below or as otherwise mutually agreed upon by the
parties (the "CLOSING" or "CLOSING DATE")) are subject to the fulfillment to its
satisfaction, on or prior to the Closing Date, of the following conditions:

              (a) COMPANY NAME. The Purchasers shall in good faith have agreed
upon a name for the Company.

              (b) FILING OF THE CERTIFICATE. The Company's Certificate of
Incorporation in the form attached hereto as Exhibit E shall have been filed
with the Secretary of State of Delaware.

              (c) ORGANIZATIONAL MINUTES. The Board of Directors of the Company
shall have adopted its organizational minutes in a form satisfactory to the
Purchasers.

              (d) BYLAWS. The Board of Directors of the Company shall have
adopted the Company's Bylaws in the form attached hereto as Exhibit F.

              (e) JOINT VENTURE LICENSE AGREEMENT. The Company and the
Purchasers shall have executed and delivered the Joint Venture License Agreement
in the form attached hereto as Exhibit A.

              (f) STOCKHOLDERS AGREEMENT. The Company and the Purchasers shall
have executed and delivered the Stockholders Agreement in the form attached
hereto as Exhibit B.

              (g) INVESTOR RIGHTS AGREEMENT. The Company and the Purchasers
shall have executed and delivered the Investor Rights Agreement in the form
attached hereto as Exhibit C.

              (h) TERMINATION AND LICENSE AGREEMENT. The Purchasers shall have
executed and delivered the Termination and License Agreement in the form
attached hereto as Exhibit D.

              (i) BANKRUPTCY COURT APPROVAL. IN shall have received bankruptcy
court approval of a joint stipulation with regard to the Termination and License
Agreement in a form satisfactory to the Purchasers.

                                       5
<PAGE>

              (j) REPRESENTATIONS AND WARRANTIES. Each Purchaser shall have
delivered a certificate stating that (i) the representations and warranties made
by such Purchaser in Section 3 hereof are true and correct on the Closing Date
with the same force and effect as if they had been made on and as of that date
and (ii) the representations and warranties set forth on Exhibit G are true and
correct on the Closing Date.

IN and TW shall use their best efforts to effect the Closing, subject to the
conditions set forth herein, promptly upon the satisfaction of the condition set
forth in Section 6(i) above.

         7. COMPLIANCE WITH LAWS AND REGULATIONS. The issuance and the transfer
of the Shares will be subject to and conditioned upon compliance by the Company
and Purchaser with all applicable state and federal laws and regulations and
with all applicable requirements of any stock exchange or automated quotation
system on which the Company's common stock may be listed or quoted at the time
of such issuance or transfer.

         8. SUCCESSORS AND ASSIGNS. This Agreement will be binding upon and
inure to the benefit of the successors and assigns of the Company and the
Purchaser's heirs, executors, administrators, successors and assigns.

         9. GOVERNING LAW; SEVERABILITY. This Agreement will be governed by and
construed in accordance with the laws of the State of Delaware, excluding that
body of laws pertaining to conflict of laws. If any provision of this Agreement
is determined by a court of law to be illegal or unenforceable, then such
provision will be enforced to the maximum extent possible and the other
provisions will remain fully effective and enforceable.

         10. NOTICES. Any notice required or permitted hereunder will be given
in writing and will be deemed effectively given upon personal delivery, six (6)
days after deposit in the United States mail by certified or registered mail
(return receipt requested), one (1) business day after its deposit with any
return receipt express courier (prepaid), or one (1) business day after
transmission by telecopier, addressed to the other party at its address (or
facsimile number, in the case of transmission by telecopier) as shown below its
signature to this Agreement, or to such other address as such party may
designate in writing from time to time to the other party.

         11. FURTHER INSTRUMENTS. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.

         12. HEADINGS. The captions and headings of this Agreement are included
for ease of reference only and will be disregarded in interpreting or construing
this Agreement. All references herein to Sections will refer to Sections of this
Agreement.

         13. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
and understanding of the parties with respect to the subject matter of this
Agreement, and supersedes all prior understandings and agreements, whether oral
or written, between the parties hereto with respect to the specific subject
matter hereof.

                                       6
<PAGE>

         14. TITLE TO SHARES. The exact spelling of the name under which each
Purchaser will take title to the Shares is that name listed on the signature
page hereto. Each Purchaser desires to take title to the Shares as a
corporation.

         15. PUBLIC ANNOUNCEMENT. The Purchasers may announce the existence of
the Purchasers' relationship and this Agreement only at a time and in a form to
be mutually determined, except for any such disclosure required by law,
governmental authorities or stock exchanges.

                                       7
<PAGE>

         IN WITNESS WHEREOF, each Purchaser has caused this Agreement to be
executed in duplicate, by its duly authorized representative, as of the
Effective Date.

                                 TWO WAY TV LTD.

                                 By:
                                     -------------------------------------------

                                 Name:
                                       -----------------------------------------

                                 Title:
                                        ----------------------------------------

                                 INTERACTIVE NETWORK, INC.

                                 By:
                                     -------------------------------------------

                                 Name:
                                       -----------------------------------------

                                 Title:
                                        ----------------------------------------

                                       8
<PAGE>

                                    EXHIBIT A

                         JOINT VENTURE LICENSE AGREEMENT

                                       A-1
<PAGE>

                                    EXHIBIT B

                             STOCKHOLDERS AGREEMENT

                                      B-1
<PAGE>

                                    EXHIBIT C

                            INVESTOR RIGHTS AGREEMENT

                                       C-1
<PAGE>

                                    EXHIBIT D

                        TERMINATION AND LICENSE AGREEMENT

                                      D-1
<PAGE>

                                    EXHIBIT E

                          CERTIFICATE OF INCORPORATION

                                      E-1
<PAGE>

                                    EXHIBIT F

                                     BYLAWS

                                      F-1
<PAGE>

                                    EXHIBIT G

                    PURCHASER REPRESENTATIONS AND WARRANTIES

              (a) PURCHASE FOR OWN ACCOUNT FOR INVESTMENT. Purchaser is
purchasing the Shares for Purchaser's own account for investment purposes only
and not with a view to, or for sale in connection with, a distribution of the
Shares within the meaning of the Securities Act of 1933, as amended (the "1933
ACT"). Purchaser has no present intention of selling or otherwise disposing of
all or any portion of the Shares and no one other than Purchaser has any
beneficial ownership of any of the Shares.

              (b) ACCESS TO INFORMATION. Purchaser has had access to all
information regarding the Company and its present and prospective business,
assets, liabilities and financial condition that Purchaser reasonably considers
important in making the decision to purchase the Shares, and Purchaser has had
ample opportunity to ask questions of the Company's representatives concerning
such matters and this investment.

              (c) UNDERSTANDING OF RISKS. Purchaser is a founder of the Company
and is fully aware of: (i) the highly speculative nature of the investment in
the Shares; (ii) the financial hazards involved; (iii) the lack of liquidity of
the Shares and the restrictions on transferability of the Shares (E.G., that
Purchaser may not be able to sell or dispose of the Shares or use them as
collateral for loans); (iv) the qualification and backgrounds of the management
of the Company; and (v) the tax consequences of investment in the Shares.

              (d) PURCHASER'S QUALIFICATIONS. Purchaser has a preexisting
personal or business relationship with the Company and/or certain of its
officers and/or directors of a nature and duration sufficient to make Purchaser
aware of the character, business acumen and general business and financial
circumstances of the Company and/or such officers and directors. By reason of
Purchaser's business or financial experience, Purchaser is capable of evaluating
the merits and risks of this investment, has the ability to protect Purchaser's
own interests in this transaction and is financially capable of bearing a total
loss of this investment.

              (e) NO GENERAL SOLICITATION. At no time was Purchaser presented
with or solicited by any publicly issued or circulated newspaper, mail, radio,
television or other form of general advertising or solicitation in connection
with the offer, sale and purchase of the Shares.

              (f) COMPLIANCE WITH SECURITIES LAWS. Purchaser understands and
acknowledges that, in reliance upon the representations and warranties made by
Purchaser herein, the Shares are not being registered with the Securities and
Exchange Commission ("SEC") under the 1933 Act or being qualified under the
California Corporate Securities Law of 1968, as amended (the "LAW"), but instead
are being issued under an exemption or exemptions from the registration and
qualification requirements of the 1933 Act and the Law or other applicable state
securities laws which impose certain restrictions on Purchaser's ability to
transfer the Shares.

              (g) RESTRICTIONS ON TRANSFER. Purchaser understands that, except
as set forth in the Investor Rights Agreement, Purchaser may not transfer any
Shares unless such Shares are registered under the 1933 Act or qualified under

                                      G-1
<PAGE>

the Law or unless, in the opinion of counsel to the Company, exemptions from
such registration and qualification requirements are available. Purchaser
understands that only the Company may file a registration statement with the SEC
or the California Commissioner of Corporations and that, except as set forth in
the Investor Rights Agreement, the Company is under no obligation to do so with
respect to the Shares. Purchaser has also been advised that exemptions from
registration and qualification may not be available or may not permit Purchaser
to transfer all or any of the Shares in the amounts or at the time proposed by
Purchaser.

              (h) RULE 144. In addition, Purchaser has been advised that SEC
Rule 144 promulgated under the 1933 Act, which permits certain limited sales of
unregistered securities, is not presently available with respect to the Shares
and, in any event, currently requires that the Shares be held for a minimum of
one year, and in certain cases two years, after they have been purchased and
paid for (within the meaning of Rule 144), before they may be resold under Rule
144. Purchaser understands that Rule 144 may indefinitely restrict transfer of
the Shares so long as Purchaser remains an "affiliate" of the Company and
"current public information" about the Company (as defined in Rule 144) is not
publicly available.

                                      G-2<PAGE>
EXHIBIT 10.4

                        TERMINATION AND LICENSE AGREEMENT

<PAGE>

                                TABLE OF CONTENTS
                                                                            PAGE

1.       DEFINITIONS..........................................................2

2.       TERMINATION OF KNOW-HOW AGREEMENT....................................5

3.       WAIVER AND RELEASE...................................................5

4.       LICENSE GRANT........................................................6

5.       PAYMENTS.............................................................8

6.       TAXATION.............................................................9

7.       INTELLECTUAL PROPERTY RIGHTS........................................10

8.       CONFIDENTIALITY.....................................................13

9.       INDEMNIFICATION.....................................................14

10.      DISCLAIMER..........................................................14

11.      LIMITATION OF LIABILITY.............................................15

12.      TERM AND TERMINATION................................................15

13.      GENERAL PROVISIONS..................................................17

EXHIBIT A  INTERACTIVE FIELD OF USE...........................................1

EXHIBIT B  LICENSED PATENTS...................................................1

EXHIBIT C  THIRD PARTY LICENSES...............................................1

EXHIBIT D  LITIGATION.........................................................1

                                      -I-

<PAGE>

                        TERMINATION AND LICENSE AGREEMENT

         This Termination and License Agreement ("Agreement"), dated as of
January 31, 2000 ("Effective Date"), is between Two Way TV Limited ("TW"), a
corporation organized under the laws of England and Wales, having its principal
office at Beaumont House, Kensington Village, Avonmore Road, London, England W14
8TS, and Interactive Network, Inc. ("IN"), a California corporation having its
principal office at 1161 Old County Road, Belmont, California 94002, U.S.A.
(hereinafter collectively referred to as the "Parties" and individually as a
"Party").

                                    RECITALS

         A. The Parties desire to resolve all issues between them with respect
to the Know-How License Agreement dated September 29, 1992 between the Parties
("Know-How License Agreement").

         B. In connection therewith, each Party desires to terminate, and
release all claims it may have against the other Party under, the Know-How
License Agreement.

         C. IN and TW have entered into a Joint Venture and Stock Purchase
Agreement dated as of December 6, 1999 to establish a joint venture company,
TWIN Entertainment Inc. ("TWIN") to develop, market and supply digital (as well
as analog) interactive and related services, products and technology in the
United States and Canada.

         D. Contemporaneously with the execution of this Agreement, the Parties
are entering into certain other Joint Venture Agreements (as defined below) in
connection with the formation of TWIN.

         E. TW desires IN to grant to TW, and IN is willing to grant to TW, a
license under certain of IN's patents to make, use and sell interactive
television services and products in the Territory (as defined below) and subject
to the terms and conditions as hereinafter set forth.

         ACCORDINGLY, in consideration of the mutual covenants and promises
contained herein, the Parties agree as follows:

1.       DEFINITIONS.
         -----------

         1.1 "Applicable Law" shall mean, as to any Person, any statute, law,
rule, regulation, directive, treaty, judgment, order, decree or injunction of
any Governmental Authority that is applicable to or binding upon such Person or
any of its properties.

         1.2 "Confidential Information" shall mean information or materials
disclosed to a Party by another Party that are marked as "Confidential" or
"Proprietary" or, if disclosed orally, identified as such at the time of
disclosure and reduced by the disclosing Party to written form marked
"Confidential" or "Proprietary" within twenty (20) days after oral disclosure.

         1.3 "Costs" shall mean, subject to Section 5.5 ("Gross Profits
Calculation"), the direct variable costs incurred by TW and TW's Subsidiaries in
connection with their commercial manufacture, sale and promotion of the Two Way
System and related products and services in the Interactive Field of Use

<PAGE>

excluding any amount attributable to TW's or TW's Subsidiaries' overhead
expenses and, for the avoidance of doubt, such direct variable costs (a) shall
include (i) personnel salaries for sales department employees (excluding
executives), sales commissions paid to such employees, costs incurred by such
employees in their sales efforts (including telephone, travel and entertainment
costs), (ii) advertising and promotion costs for the Two Way System, (iii)
royalties paid to third parties where necessary to exploit the Two Way System
(which, for the avoidance of doubt, may include royalties payable for
programming content used but shall not include royalties payable under this
Agreement), and (iv) product packaging, insurance and shipping costs for the Two
Way System products; but (b) shall exclude (i) all other salaries, benefits, and
costs associated with other personnel (including, without limitation,
executives, directors, and personnel engaged in development and support), (ii)
all costs associated with the personnel, administration, customer service,
operations and all other departments, (iii) all general and administrative
costs, including without limitation, rent, utilities, legal fees, business
insurance, the costs of maintaining financial reporting systems and preparing
financial accounts, (iv) costs associated with the technical development of the
Two Way System and related programs, content and services, and (v) income tax
and any other tax or duty (including, without limitation, income tax credits
carried over from prior periods). Notwithstanding the foregoing, "Costs" shall
exclude all costs of any nature incurred by or on behalf of TW and TW's
Subsidiaries in connection with TWIN or in connection with performing its or
their obligations under the Joint Venture License Agreement among the Parties
and TWIN of even date herewith.

         1.4 "Governmental Authority" shall mean any domestic or foreign
government, governmental authority, court, tribunal, agency or other regulatory,
administrative or judicial agency, commission or organization, and any
subdivision, branch or department of any of the foregoing.

         1.5 "Gross Profits" shall mean, subject to Section 5.5 ("Gross Profits
Calculation"), the total Revenues accrued during that period less Costs incurred
during that period.

         1.6 "Interactive Field of Use" shall mean the interactive television
products and services market as further described in EXHIBIT A hereto.

         1.7 "Joint Venture Agreements" shall mean the Joint Venture and Stock
Purchase Agreement dated as of December 6, 1999, and the Stockholders Agreement,
Investors Rights Agreement, and Joint Venture License Agreement among the
Parties and TWIN of even date herewith.

         1.8 "Know-How License" shall mean the Know-How License between the
Parties dated September 29, 1992.

         1.9 "Licensed Patents" shall mean the specific patents set forth in
EXHIBIT B and any continuations, divisionals, continued prosecution
applications, reissues, and reexaminations thereof (but excluding any
continuations in part and new inventions).

         1.10 "Person" shall mean a natural individual, Governmental Authority,
legal entity, partnership, firm, corporation or other association.

         1.11 "Proprietary Rights" shall mean, collectively, Patents, Trade
Secrets, Copyrights, moral rights, rights in trade dress, and all other

                                       3
<PAGE>

intellectual property rights and proprietary rights, excluding trademarks,
whether arising under the laws of the United States or any other state, country
or jurisdiction in each case now existing or hereafter developed during the term
of this Agreement. For purposes of this Agreement: (a) "Patents" shall mean all
patent rights and all right, title and interest in all letters patent or
equivalent rights throughout the world; (b) "Trade Secrets" shall mean all
right, title and interest in all trade secrets and trade secret rights arising
under common law, state law, federal law or laws of foreign countries; and (c)
"Copyrights" shall mean all copyrights, and all right, title and interest in all
copyrights, copyright registrations and applications for copyright registration,
certificates of copyright and copyrighted interests throughout the world, and
all right, title and interest in related applications and registrations
throughout the world.

         1.12 "Revenue" shall mean, subject to Section 5.5 ("Gross Profits
Calculation"), all the revenue (excluding all taxes or duties in the nature of
purchase, service, sales, excise or value added taxes but not excluding income
tax payable on such revenue) accrued by TW and TW's Subsidiaries arising from
the establishment, operation, development, commercial exploitation, promotion
and sale of the Two Way System and associated products and services and from any
other business activity conducted by or for TW and/or its Subsidiaries in the
Interactive Field of Use (including without limitation such activities as
entering licensing arrangements with third parties), including without
limitation:

              (a) any royalties or other fees TW and its Subsidiaries receive
from any joint venturer or sublicensee (other than TWIN) which is responsible
for the establishment, operation, development, commercial exploitation,
promotion and/or sale of the Two Way System and related products and services;
and

              (b) revenue received by TW and its Subsidiaries arising from the
sale of hardware relating to the Two Way System or the provision of services in
connection with the Two Way System but EXCLUDING interest received on
investments and dividends issued on shares held in Subsidiaries (whether paid in
the form of shares or cash). Notwithstanding the foregoing, "Revenues" shall
EXCLUDE all revenues accrued by TW and TW's Subsidiaries directly from TWIN or
in connection with performing its or their obligations under the Joint Venture
License Agreement among the Parties and TWIN of even date herewith.

         1.13 "Subsidiary," with respect to a Party, shall mean any corporation,
partnership or other entity, ten percent (10%) or more of whose shares or
ownership interests entitled to vote for the election of directors (other than
any shares whose voting rights are subject to restriction) or, in the case of a
noncorporate entity, the equivalent interests, are owned or controlled by such
party, directly or indirectly, now or hereafter, but such corporation,
partnership or other entity shall be deemed to be a Subsidiary only for so long
as such ownership or control exists. Notwithstanding the foregoing, for purposes
of this Agreement, "Subsidiary" shall not include TWIN.

         1.14 "Territory" shall mean all countries and jurisdictions of the
world excluding the United States of America and all its territories and Canada,
subject to the provisions of Section 7.8 ("Additional Patent Filings").

                                       4
<PAGE>

         1.15 "Two Way System" shall mean TW's interactive television system
that operates on digitally based platforms and/or devices and is capable of
delivering simultaneous services across multiple networks.

2.       TERMINATION OF KNOW-HOW AGREEMENT.
         ---------------------------------

         TW and IN hereby agree to terminate the Know-How License, effective as
of the Effective Date, subject to the following terms and conditions:

         2.1 SURVIVING OBLIGATIONS.
             ---------------------

              (a) Neither Party will have any further obligation to the other
Party except that the definitions and the following provisions of the Know-How
License shall survive: (i) Section 7 ("Confidentiality") shall remain in effect
with respect to disclosures made in connection with the Know-How License prior
to the Effective Date hereof; (ii) Section 3 ("Royalty") shall remain in effect
with respect to any royalties owed to IN through the Effective Date hereof; and
(iii) Section 4 ("Records and Reports"), excluding Section 4.2, shall remain in
effect for three (3) years following the Effective Date hereof.

              (b) Notwithstanding the foregoing, as soon as reasonably
practicable following the Effective Date hereof, TW shall deliver to IN a
financial statement and report setting forth in detail the calculation of TW's
Gross Profits (as defined in the Know-How License) in each relevant country and
the royalties owed (or not owed, as the case may be) to IN under the Know-How
License through the date of such report, accompanied, if applicable, by a check
in U.S. dollars drawn on a U.S. bank for royalties owed. IN shall, within one
hundred twenty (120) days of receipt of such report (and check, if applicable),
notify TW in writing that it accepts and approves such report or, in the
alternative, wishes to exercise its audit rights under surviving Section 4.3 of
the Know-How License. If IN so approves such report, Sections 3 ("Royalty") and
4 ("Records and Reports") of the Know-How License shall terminate and have no
further force and effect.

         2.2 NO LICENSE. Without limiting the generality of the foregoing, but
subject to the terms and conditions of this Agreement, effective as of the
Effective Date neither Party shall have any license under or other rights to use
any of the other Party's Know-How, Patents, Copyrights (as such terms are
defined under the Know-How License) or any other technology or proprietary
rights under the Know-How License.

         2.3 COSTS OF TERMINATION. Each Party is responsible for its own
expenses incurred in connection with termination of the Know-How License.

         2.4 PUBLIC ANNOUNCEMENT. Neither Party shall make a public announcement
with respect to termination of the Know-How License or the terms and conditions
of this termination provision, except as required by law or to fulfill
government filing or regulatory body or stock exchange requirements and except
as set forth in Section 13.9 ("Announcement").

3.       WAIVER AND RELEASE.
         ------------------

         3.1 RELEASE. Effective as of the Effective Date, each Party, on behalf
of itself and its parents, subsidiaries, affiliates, agents, representatives,
directors, employees, attorneys, advisors, insurers, licensees, sublicensees,

                                       5
<PAGE>

successors and assigns, hereby irrevocably releases and forever discharges the
other Party and its parents, subsidiaries, affiliates, agents, representatives,
directors, employees, attorneys, advisors, insurers, licensees, sublicensees,
successors and assigns of and from any and all claims, counterclaims, demands,
actions, causes of action, damages, liabilities, losses, payments, obligations,
costs and expenses (including, without limitation, attorneys' fees and costs) of
any kind or nature, past, present or future, fixed or contingent, direct or
indirect, in law or equity, several or otherwise, known or unknown, suspected or
unsuspected, that arise from or relate in any way to any act prior to the
Effective Date with respect to the Know-How License. The foregoing release is
expressly intended to cover and include, without limitation, all claims, past,
present or future, known or unknown, suspected or unsuspected, which can or may
ever be asserted by successors or otherwise, as the result of the matters herein
released, or the effects or consequences thereof. The foregoing release shall
not apply to the Parties' obligations required to be performed under this
Agreement, including without limitation the Parties' continuing obligations set
forth in Section 2.1 ("Surviving Obligations").

         3.2 WAIVER. Effective as of the Effective Date, each Party, on behalf
of itself and its parents, subsidiaries, affiliates, agents, representatives,
directors, employees, attorneys, advisors, insurers, licensees, sublicensees,
successors and assigns, hereby irrevocably and forever waives all rights such
Party may have arising under California Civil Code Section 1542 (or any
analogous requirement of law), with respect to the foregoing release. Each Party
understands that Section 1542 provides that:

                  A general release does not extend to claims which the creditor
                  does not know or suspect to exist in his favor at the time of
                  executing the release which, if known by him, must have
                  materially affected his settlement with the debtor.

         Each Party acknowledges that it has been fully informed by its counsel
concerning the effect and import of this Agreement under California Civil Code
Section 1542 and other requirements of law.

         3.3 NO ADMISSION. This Agreement is entered into in order to compromise
and settle disputed claims, without any concession or admission by any Party,
and without any acquiescence on the part of either IN or Licensee as to the
merit of any claim, defense, affirmative defense, counterclaim, liabilities or
damages related to the Know-How License. Neither this Agreement nor any part
thereof shall be, or be used as, an admission of infringement or liability by
anyone, at any time for any purpose.

         3.4 FURTHER ASSURANCES. Each Party shall take all such actions and
steps as are necessary to complete the transactions contemplated by this Section
3 ("Resolution of Outstanding Issues").

4.       LICENSE GRANT.
         -------------

         4.1 PATENT LICENSE. Subject to all the terms and conditions of this
Agreement, IN hereby grants to TW a royalty-bearing, non-transferable (except as
provided in Section 13.2 ("Assignment") license, under the Licensed Patents,
until the date of expiration of the last claim of the last unexpired patent
among the Licensed Patents, (subject to termination under Section 12 ("Term and
Termination")), in the Territory, to:

                                       6
<PAGE>

              (a) Make, have made for TW (which terms shall include the acts of
assembling and/or testing), use, sell, offer for sale, operate, lease or
otherwise dispose of products and services embodying the inventions described in
the Licensed Patents as part of the Two Way System in the Interactive Field of
Use; and

              (b) Sublicense any of the foregoing rights in subsection (a) on a
non-exclusive or (subject to the third-party rights and licenses under the
Licensed Patents existing as of the Effective Date as set forth in EXHIBIT C)
exclusive basis to TW's Subsidiaries and other third parties in the Territory,
provided that the other terms and conditions of such sublicense are consistent
with and no less restrictive than the terms and conditions of this Agreement
(including, without limitation, consistent with the territorial limitations and
the prohibition on further sublicensing), provided further than any such
sublicense (or amendment or extension thereof) shall be subject to the prior
written approval of IN, which approval shall not be unreasonably withheld, and
provided further that this right to sublicense shall terminate immediately and
automatically upon any conversion of the license grant in this Section 4.1
("Patent License") from exclusive to non-exclusive in accordance with the terms
hereof. This right to sublicense shall not include the right of any sublicensee
to grant further sublicenses. By way of example but not limitation, IN may
reasonably withhold approval of any sublicense if the sublicense is unlikely to
generate any significant income for IN.

The foregoing license shall be EXCLUSIVE, subject to Section 7.8 ("Additional
Patent Filings") and to the third-party licenses under the Licensed Patents
existing as of the Effective Date as set forth in EXHIBIT C. Notwithstanding the
foregoing, TW acknowledges that the licenses granted under the Joint Venture
License Agreement may extend incidentally outside of the Territory as described
in Section 2.3 ("Territorial Considerations") of the Joint Venture License
Agreement, which shall not be deemed an infringement of TW's rights or a breach
of IN's representations and warranties hereunder. No other rights (including
without limitation any implied rights or licenses) to the Licensed Patents or
any other Proprietary Rights of IN are granted to TW by IN. IN shall have no
obligation to license to TW any of its future technology or (except as
specifically provided in Section 7.8 ("Additional Patent Filings")) Proprietary
Rights developed or coming into existence after the Effective Date.

         4.2 MINIMUM PAYMENT OBLIGATION. For the effective term of this
Agreement, TW agrees to pay to IN minimum annual royalties pursuant to Section
5.1 ("Royalties") of no less than (a) $250,000 ("Initial Threshold Amount") for
the one (1) year period commencing on the Effective Date and ending on the first
anniversary thereof; (b) the Initial Threshold Amount plus eight percent (8%) of
the Initial Threshold Amount (i.e. $250,000 + [$250,000 X 8%] = $270,000) for
the subsequent one (1) year period (such resulting minimum payment amount
referred to as the "Threshold Amount"); and (c) for each one (1) year period
thereafter, 108% of the Threshold Amount of the immediately preceding one (1)
year period . By way of example but not limitation, in the event that the annual
royalties paid to IN pursuant to Section 5.1 ("Royalties") do not equal or
exceed $314,928 for the fourth one (1) year period of this Agreement, TW shall
"gross up" the royalties paid (i.e. pay to IN the difference between $314,928
and the royalties paid pursuant to Section 5.1) such that IN receives no less
than $314,928 for such measuring year. Payment by TW of royalties pursuant to
Section 5.1 ("Royalties") in excess of the minimum annual royalty amounts
required by this Section 4.2 shall not reduce or increase any future minimum
payment owed to IN under this provision. On TW's material breach of this Section
4.2 ("Minimum Payment Obligation"), IN shall have the right to (x) exercisable
on delivery of written notice thereof to TW, convert to nonexclusive the
licenses granted under Section 4.1 ("Patent License") or (y) exercise its right
to terminate this Agreement in accordance with Section 12.2 ("Termination on
Material Breach by TW").

                                       7
<PAGE>

         4.3 SUBLICENSES. TW shall monitor the operations of its sublicensees in
connection with the obligations of TW and each sublicensee pursuant to this
Agreement. TW shall take all reasonable steps to ensure that its sublicensees
comply fully with such their obligations under their sublicense agreements. TW
shall promptly inform IN of the name and address of each of its sublicensees
sublicensed under this Agreement. Upon termination of this Agreement or
conversion of the license grants in Section 4.1 ("IN License") from exclusive to
nonexclusive in accordance with the terms hereof, any sublicenses granted by TW
hereunder shall also terminate in accordance with Section 12.4(b)(i).

         4.4 DELIVERY. IN shall deliver to TW, as soon as reasonably practicable
after the Effective Date, a photocopy of each Licensed Patent and, if TW
initially brings suit for patent infringement or informs IN in good faith that
it intends to bring suit against a suspected third-party infringer in accordance
with Section 7.5 ("Enforcement in the Territory"), such records related to
filings and approvals thereof and related relevant documents as may be necessary
to assist TW in its legal proceedings, unless IN is under legal or contractual
obligation not to disclose any such records, to be delivered at TW's expense.

         4.5 SUPPORT. IN shall have no training, maintenance or support
obligations under this Agreement.

5.       PAYMENTS.
         --------

         5.1 ROYALTIES. In consideration for the licenses granted hereunder and
for the convenience of the Parties and to avoid administrative costs and
inconvenience, TW agrees to pay to IN a royalty of (a) three percent (3%) of all
worldwide Gross Profits of TW and TW's Subsidiaries (subject to Section 5.5
("Gross Profits Calculation")) through the fifth (5th) anniversary of the
Effective Date and (b) two and a half percent (2.5%) of all worldwide Gross
Profits of TW and TW's Subsidiaries (subject to Section 5.5 ("Gross Profits
Calculation")) thereafter. The obligation to pay royalties under this Agreement
shall terminate on the sooner of (i) December 31, 2015 or (ii) the date of
expiration of the last claim of the last unexpired patent among the Licensed
Patents filed in the Territory.

         5.2 PAYMENT AND REPORTS. All royalties payable under Section 5.1
("Royalties") shall be payable quarterly within thirty (30) days after the end
of each calendar quarter. On or before the date of such payment TW shall send to
IN a report describing in detail the basis for its payment calculation. Late
payments shall incur interest at the rate of one and a half percent (1.5%) per
month from the date such payments were originally due, or the maximum amount
permitted under Applicable Law, whichever is less.Currency. All payments made
hereunder shall be free and clear of all deductions, withholding taxes or other
charges, except as provided in Section 6 ("Taxation"), and shall be made by TW
in U.S. dollars by wire transfer to a bank account(s) designated by IN, unless
otherwise mutually agreed upon. Any currency conversion required in connection
with payment to IN shall be at the rate received by TW at the time of such
payment from the bank it utilizes to make such payment.

                                       8
<PAGE>

         5.3 AUDIT. IN shall have the right, at its own expense, upon reasonable
notice and at reasonable times, but not more than once each calendar year, to
inspect, through an independent auditor TW's records for the purpose of
verifying the accuracy of TW's calculations of fees payable hereunder. Should
TW's calculations be more than five percent (5%) less than such auditor's
calculations, TW shall be responsible for the reasonable expenses of such audit.
TW shall keep correct and complete records showing TW's and TW's Subsidiaries'
products, services and technology sold, distributed, licensed or otherwise
disposed of in connection with the licenses and sublicenses granted herein and
the calculation of Gross Profits in sufficient detail to enable the fees payable
to IN to be determined. TW shall not include in its calculations of Gross
Profits any revenues received from TWIN or any costs incurred by or on behalf of
TW or TW's Subsidiaries related to TWIN (including, without limitation, any
costs incurred by or on behalf of TW and TW's Subsidiaries in connection with
providing support services to TWIN or any costs associated with negotiating the
Joint Venture Agreements). Such records shall be maintained for a period of at
least five (5) years after the date when payment is due by TW.

         5.4 GROSS PROFITS CALCULATION. The following rules shall apply to the
calculation of Gross Profits under this Agreement:

              (a) Gross Profits shall be calculated on an entity-by-entity basis
(i.e., Gross Profits shall be calculated separately for TW and for each TW
Subsidiary).

              (b) A loss (i.e. a negative number resulting from the calculation
of Gross Profits) for one entity may not be offset against or deducted from
profits (i.e. a positive number resulting from the calculation of Gross Profits)
for any other entity.

              (c) In calculating the Gross Profits for each TW Subsidiary, the
Costs incurred and Revenues accrued by a Subsidiary shall be calculated on a
pro-rata basis taking into consideration the ownership or equivalent economic
interest of TW. By way of example but not limitation, if TW owns sixty percent
(60%) of a TW Subsidiary, the Costs and Revenues of such Subsidiary shall be
multiplied by sixty percent (60%) to determine the amount of Gross Profits of
such Subsidiary on which the royalty payable to IN hereunder shall be based.

              (d) In calculating the Gross Profits for TW, the Costs incurred
and Revenues accrued by TW in connection with transactions with a TW Subsidiary
shall be counted in full.

6.       TAXATION.
         --------

         6.1 WITHHOLDING TAX. If required by Applicable Law, TW may withhold
income tax from any payment to IN. In the case of such withholding, TW shall:
(i) without delay, pay the withheld tax to the appropriate tax office and
furnish IN with appropriate evidence of the tax payment and (ii) increase the
amount payable by TW to IN hereunder to such amount which, after making all
required withholdings or deductions of withholding taxes therefrom, will equal
the amount payable hereunder had no such withholdings or deductions been
required. TW shall indicate on each statement the amount of payment thereunder
which represents TW's gross-up to cover required withholding taxes, if any.
Should IN be able, within the maximum period allowable by law, to utilize as a
tax credit an amount which has been paid by TW for such withholding taxes, IN
will notify TW of the amount which it is able to utilize as a tax credit and TW
may deduct such amount from future payments owed to IN.

                                       9
<PAGE>

         6.2 OTHER TAXES. TW shall bear all sales, use and other governmental
taxes or transaction charges imposed in any jurisdiction which arise in
connection with the delivery or use of the Licensed Patents, or the use,
manufacture or sale of products and services under its licenses (and
sublicenses) hereunder. The Parties will make reasonable commercial efforts to
cooperate as necessary to take advantage of such double taxation treaties as may
be available and to minimize the amount of taxes (including without limitation
withholding taxes) owed by either Party in connection with this Agreement.

7.       INTELLECTUAL PROPERTY RIGHTS.
         ----------------------------

         7.1 IN RIGHTS. As between the Parties, except for and to the extent of
the express licenses granted herein, IN and its licensors shall retain and own
all right, title and interest in and to the Licensed Patents and all Proprietary
Rights thereto.

         7.2 MARKING REQUIREMENT. TW shall, and agrees to require its
sublicensees to, mark all products made, used or sold under the terms of this
Agreement, or their containers, in full compliance with the patent marking
provisions of the intellectual property laws of the applicable countries in the
Territory.

         7.3 NOTICE OF THIRD PARTY INFRINGEMENT. If either Party becomes aware
of any product, service or activity of any third party that involves actual or
suspected infringement or violation of any Licensed Patent(s) in the Territory,
whether or not subject to an exclusive license grant hereunder, such Party shall
promptly notify the other Party in writing of such infringement or violation.
Each Party shall keep the other Party apprised of the actions such Party takes
in accordance with Section 7.5 ("Enforcement in the Territory").

         7.4 MAINTENANCE IN THE TERRITORY. IN shall have the responsibility for
maintaining the Licensed Patents licensed hereunder in the jurisdictions within
the Territory where such patents have issued. All future costs and government
charges incurred by IN in connection with the maintaining of the Licensed
Patents in the Territory (including without limitation the costs of all
interferences and opposition) shall be borne by TW, so long as the licenses
granted to TW herein are exclusive.

         7.5 ENFORCEMENT IN THE TERRITORY. In the event that TW provides notice
to IN in accordance with Section 7.3 ("Notice of Third Party Infringement"), the
Parties agree that during the period and in a jurisdiction where TW has
exclusive rights under this Agreement, neither will notify the suspected
infringer of the alleged infringement without first obtaining the consent of the
other Party, which consent shall not be unreasonably denied, and that IN will
take appropriate action with respect to the suspected infringer, including
sending a demand letter, if necessary, within thirty (30) days of the date it
receives notice from TW. Both Parties shall use their reasonable efforts in
cooperation with each other to terminate any such suspected or actual
infringement without litigation. If such efforts fail, TW may request in writing
that IN take legal action against the infringement, and if the infringing
activity has not ceased within ninety (90) days following the effective date of
such request, IN shall have the right to either commence suit or refuse to
participate in such suit; and IN shall give notice of its election in writing to
TW within one hundred (100) days of receipt of TW's written request. TW may
thereafter bring suit for patent infringement at its own expense if and only if
IN elects not to commence suit and if the infringement occurred during the
period and in a jurisdiction where TW has exclusive rights under this Agreement

                                       10
<PAGE>

under the Licensed Patent at issue. In such event, TW shall have the sole
control and decision-making authority with respect to defending and enforcing
the Licensed Patent solely in connection with such suit and further provided
that IN does not thereafter join such suit. If TW elects to bring suit in
accordance with this Section 7.5 ("Enforcement in the Territory"), IN may
thereafter join such suit at its own expense. Any such legal action as is
decided upon shall be at the expense of the Party on account of whom suit is
brought and all recoveries recovered thereby shall belong to such Party,
provided, however, that any legal action decided upon by TW and IN and fully
participated in by both shall be at the joint expense of both Parties and all
recoveries shall be allocated in the following order: (i) to each Party,
reimbursement of costs and fees of outside attorneys and other related expenses
to the extent each Party paid for such costs, fees, and expenses; and (ii) any
remaining amount shall be allocated as follows: to IN, all settlement amounts,
licenses, damages, and other recoveries based on infringement through the
Effective Date, if any; and to TW, all settlement amounts, licenses, damages,
and other recoveries based on infringement after the Effective Date, if any; or,
if the remaining amount is insufficient to cover both, the Parties will share
jointly in proportion to the amount of such recoveries such Party would
otherwise be entitled to receive. Each Party agrees to cooperate with the other
in legal proceedings instituted hereunder but at the expense of the Party on
account of whom suit is brought. Such legal proceedings shall be controlled by
the Party bringing the action, except that IN may be represented by counsel of
its choice in any action brought by TW. TW shall have no right to bring suit
against any suspected or alleged infringer during the period and in a
jurisdiction where TW does not have exclusive rights under this Agreement under
the Licensed Patent at issue, unless the Parties agree otherwise. IN shall not
grant any licenses to any Licensed Patent as part of any settlement under this
Section 7.5 without obtaining TW's prior written consent, which consent shall
not be unreasonably withheld.

         7.6 IN Warranty. IN represents and warrants that, as of the Effective
Date:

              (a) other than the third-party licenses set forth in EXHIBIT C and
the rights granted therein, it and its licensors are the sole and rightful
owners of all right, title and interest in and to the Licensed Patents and it
has the unrestricted right to license the Licensed Patents in the jurisdictions
of the Territory where the Licensed Patents have issued, including the right to
grant the licenses granted to TW hereunder in such jurisdictions;

              (b) it has performed all corporate actions and received all
corporate authorizations necessary to execute and deliver this Agreement and to
perform its obligations hereunder and this Agreement is valid, binding and
enforceable against it (subject to applicable principles of equity and
bankruptcy and insolvency laws);

              (c) to the best of its knowledge, other than as set forth in
EXHIBIT D attached hereto, (a) no unresolved claims have been made in respect of
the Licensed Patents and no demands of any third party have been made pertaining
to them, and (b) no proceedings have been instituted or are pending or
threatened that challenge the rights of IN in respect thereof;

              (d) the patents set forth in EXHIBIT B comprise all of IN's
patents in the Interactive Field of Use issued in the Territory as of the
Effective Date;

              (e) it has and shall maintain the power and authority and all
material governmental licenses, authorizations, consents and approvals to be
obtained within the United States to own its assets, carry on its business and
to execute, deliver, and perform its obligations under this Agreement; and

                                       11
<PAGE>

              (f) there are no (A) non-governmental third parties or (B)
governmental or regulatory entities in the United States who are entitled to any
notice of the transaction, licenses and services contemplated hereunder or whose
consent is required to be obtained by IN for the consummation of the transaction
contemplated hereunder.

         7.7 NO WARRANTY OF VALIDITY. Nothing in this Agreement shall be
construed as (a) a warranty or representation by IN as to the validity of any
Licensed Patent or (b) a warranty or representation that anything made, used,
sold or otherwise disposed of under any license to the Licensed Patents is or
will be free from infringement of patents of third parties.

         7.8 ADDITIONAL PATENT FILINGS. TW understands and acknowledges that,
notwithstanding the geographical scope of the definition of "Territory" and the
license granted by IN in Section 4.1 ("Patent License"), as of the Effective
Date IN has not filed for patent protection of the inventions claimed in the
Licensed Patents in jurisdictions in the Territory other than as listed in
EXHIBIT B (such jurisdictions where patents on the same inventions claimed in
the Licensed Patents have not issued are referred to hereinafter as "New
Jurisdictions").

              (a) TW Filing Request. In the event that, after the Effective
Date, TW wishes to obtain patent protection in a New Jurisdiction where TW plans
to practice an invention covered by a Licensed Patent and delivers written
notice thereof to IN, including the specific Licensed Patent(s) describing the
invention for which TW requests protection, then IN shall, at TW's expense,
apply for patent registration of such Licensed Patent(s) in the New
Jurisdiction. If a patent issues on such patent filing in the New Jurisdiction,
and provided TW has reimbursed IN in full for all the expenses of such patent
prosecution process, such patent shall be deemed included in the definition of
"Licensed Patents" and incorporated in this Agreement effective as of the date
such patent issues in the New Jurisdiction, subject to all the terms and
conditions hereof.

              (b) IN Filing Notification. In the event that, after the Effective
Date, IN wishes to apply for patent registration of any Licensed Patent in a New
Jurisdiction, IN shall deliver written notice thereof to TW and TW shall have
thirty (30) days after receipt of such notice to notify IN that (i) TW will bear
all costs of such patent prosecution effort (i.e. all patent filing and related
expenses) or (ii) TW is not interested in paying for such costs. If TW elects
the former option (i.e. to bear all costs), IN shall, at TW's expense, apply for
patent registration of such Licensed Patent in the New Jurisdiction. If a patent
issues on such patent filing in the New Jurisdiction, and provided TW has
reimbursed IN in full for all the expenses of such patent prosecution process,
such patent shall be deemed included in the definition of "Licensed Patents" and
incorporated in this Agreement effective as of the date such patent issues in
the New Jurisdiction, subject to all the terms and conditions hereof. If TW
elects not to pay the costs of patent prosecution or fails to elect either
option within the time allotted, then (i) IN shall have the right to, at IN's
expense, apply for patent registration of such Licensed Patent in the New
Jurisdiction, (ii) TW shall have no license or other rights to any resulting
issued patent in the New Jurisdiction, (iii) such New Jurisdiction shall be
removed from the definition of "Territory" hereunder, and (iv) IN shall have the
exclusive right to exploit, license and otherwise dispose of such patent in the
New Jurisdiction.

                                       12
<PAGE>

8.       CONFIDENTIALITY.
         ---------------

         8.1 NON-DISCLOSURE; NON-USE. Except as expressly authorized among the
Parties, (including, without limitation, the exercise of the rights granted to a
Party under this Agreement), each Party agrees not to disclose, use or permit
the disclosure or use by others of any other Party's Confidential Information,
unless and to the extent such Confidential Information (i) becomes a matter of
public knowledge through no action or inaction of the Party receiving the
Confidential Information, (ii) was in the receiving Party's possession before
receipt from the Party providing such Confidential Information under no duty of
Confidentiality, (iii) is rightfully received by the receiving Party from a
third party without any duty of confidentiality, (iv) is disclosed to a third
party by the Party providing the Confidential Information without a duty of
confidentiality on the third party, (v) is disclosed with the prior written
approval of the Party providing such Confidential Information, or (vi) is
independently developed by employees, agents or subcontractors of the receiving
Party who had no access to and without any use of the other Party's Confidential
Information. Information shall not be deemed to be available to the general
public for the purpose of exclusion (ii) above with respect to each Party (x)
merely because it is embraced by more general information in the prior
possession of recipient or others, or (y) merely because it is expressed in
public literature in general terms not specifically in accordance with the
Confidential Information.

         8.2 CARE OF CONFIDENTIAL INFORMATION. In furtherance, and not in
limitation of the foregoing Section 8.1 ("Non-disclosure; Non-use"), each Party
agrees to do the following with respect to any such other Party's Confidential
Information: (i) exercise the same degree of care to safeguard the
confidentiality of, and prevent the unauthorized use of, such information as
that Party exercises to safeguard the confidentiality of its own similar
information, (ii) restrict disclosure of such information to those of its
employees, agents and Subsidiaries who have a "need to know", and (iii) instruct
and require such employees, agents and Subsidiaries to maintain the
confidentiality of such information and not to use such information except as
expressly permitted herein. Each Party further agrees not to remove or destroy
any proprietary or confidential legends or markings placed upon any
documentation or other materials of any other Party.

         8.3 TERMS OF AGREEMENT. The foregoing confidentiality obligations shall
also apply to the terms and conditions of this Agreement.

         8.4 REQUIRED DISCLOSURE. The obligations under this Section 8
("Confidentiality") shall not prevent the Parties from disclosing the
Confidential Information or the terms of this Agreement to its legal and
financial advisors, subject to confidentiality provisions no less restrictive
than those contained herein, or to any government agency, regulatory body or
stock exchange authorities as required by law (provided that the Party intending
to make such disclosure in such circumstances has given prompt notice to the
Party providing such Confidential Information prior to making such disclosure so
that such Party may seek a protective order or other appropriate remedy prior to
such disclosure and cooperates fully with such other Party in seeking such order
or remedy) or as required to fulfill government filing or regulatory body or
stock exchange requirements.

         8.5 TERM OF CONFIDENTIALITY. The obligations under this Section 8
("Confidentiality") shall apply with respect to any Confidential Information for
a period of ten (10) years from the date of disclosure of such Confidential
Information to the receiving Party, unless, with respect to any particular
Confidential Information, the providing Party in good faith notifies the
receiving Party that a longer period shall apply, in which case the obligations
under this Section 8 ("Confidentiality") with respect to such Confidential

                                       13
<PAGE>

Information shall apply for such longer period. Notwithstanding the foregoing,
the obligations under this Section 8 ("Confidentiality") with respect to
information that constitutes a Trade Secret will continue until the information
no longer constitutes a Trade Secret.

9.       INDEMNIFICATION.
         ---------------

         9.1 TW INDEMNIFICATION. TW shall defend, indemnify and hold harmless IN
and its officers, shareholders, and employees from and against all costs,
expenses and losses (including reasonable attorneys' fees and costs) incurred
through claims of third parties against IN based on the manufacture or sale of
products or services by TW or TW's sublicensees including, but not limited to,
actions founded on product liability. The indemnification obligation herein is
contingent upon (i) IN giving prompt written notice to TW of any such claim,
(ii) IN allowing TW to control the defense and settlement of any such claim, and
(iii) IN fully assisting, at TW's expense, in the defense; provided, however,
that without relieving TW of its obligations hereunder or impairing TW's right
to control the defense of settlement thereof, IN may elect to participate
through separate counsel in the defense of any such claim, but the fees and
expenses of such counsel shall be at the expense of IN unless (a) the employment
of counsel by IN has been authorized in writing by TW, (b) IN shall have
reasonably concluded that there exists a material conflict of interest between
IN and TW in the conduct of the defense of such claim (in which case TW shall
not have the right to control the defense or settlement of such claim on behalf
of IN) or (c) TW shall not have employed counsel to assume the defense of such
claim within a reasonable time after notice of the commencement thereof. In each
of such cases the reasonable fees and expenses of counsel shall be at the
expense of TW.

         9.2 IN INDEMNIFICATION. IN shall defend, indemnify and hold harmless TW
and its officers, shareholders, and employees from and against all costs,
expenses and losses (including reasonable attorneys' fees and costs) incurred
through claims of third parties against TW based on a breach by IN of its
representations or warranties in Section 7.6 ("IN Warranty"). The
indemnification obligation herein is contingent upon (i) TW giving prompt
written notice to IN of any such claim, (ii) TW allowing IN to control the
defense and settlement of any such claim, and (iii) TW fully assisting, at IN's
expense, in the defense; provided, however, that without relieving IN of its
obligations hereunder or impairing IN's right to control the defense or
settlement thereof, TW may elect to participate through separate counsel in the
defense of any such claim, but the fees and expenses of such counsel shall be at
the expense of TW unless (a) the employment of counsel by TW has been authorized
in writing by IN, (b) TW shall have reasonably concluded that there exists a
material conflict of interest between IN and TW in the conduct of the defense of
such claim (in which case IN shall not have the right to control the defense or
settlement of such claim on behalf of TW) or (c) IN shall not have employed
counsel to assume the defense of such claim within a reasonable time after
notice of the commencement thereof. In each of such cases the reasonable fees
and expenses of counsel shall be at the expense of IN.

10.      DISCLAIMER.
         ----------

         EXCEPT AS EXPRESSLY WARRANTED IN SECTION 7.6 ("IN WARRANTY"), IN MAKES
NO WARRANTIES, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, CONCERNING ANY
PROPRIETARY RIGHTS, LICENSED PATENTS, PRODUCTS, PROCESSES, DESIGNS, DOCUMENTS OR

                                       14
<PAGE>

INFORMATION LICENSED OR OTHERWISE PROVIDED PURSUANT TO THIS AGREEMENT OR AS TO
ANY OTHER MATTER, IN FACT OR BY OPERATION OF LAW, AND IN HEREBY EXPRESSLY
DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NONINFRINGEMENT OF THIRD
PARTY RIGHTS. Each Party acknowledges that its willingness to grant such rights
as it grants to the other Party hereunder is expressly conditioned on its
ability to disclaim and exclude such warranties and to limit its liabilities as
set forth below.

11.      LIMITATION OF LIABILITY.
         -----------------------

         11.1 CONSEQUENTIAL DAMAGES LIMITATION. EXCEPT FOR LIABILITY ARISING
UNDER SECTION 9 ("TW INDEMNIFICATION"), NEITHER OF THE PARTIES HERETO SHALL BE
RESPONSIBLE FOR ANY INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES IN ANY WAY
ARISING OUT OF OR RELATED TO THIS AGREEMENT, HOWEVER CAUSED, ON ANY THEORY OF
LIABILITY AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES.

         11.2 MAXIMUM LIABILITY. IN NO EVENT WILL EITHER PARTY'S LIABILITY
ARISING OUT OF OR RELATED TO THIS AGREEMENT EXCEED THE AMOUNT OF TWO MILLION
U.S. DOLLARS (US$2,000,000), EXCEPT FOR LIABILITY ARISING OUT OF OR RELATED TO
SECTION 9.2 ("IN INDEMNIFICATION") WHICH SHALL IN NO EVENT EXCEED THE AMOUNT OF
FOUR MILLION U.S. DOLLARS (US$4,000,000).

12.      TERM AND TERMINATION.
         --------------------

         12.1 TERM. This Agreement shall become effective as of the Effective
Date and continue in effect until the date of expiration of the last claim of
the last unexpired patent among the Licensed Patents filed in the Territory,
unless terminated earlier in accordance with the provisions hereof.

         12.2 TERMINATION ON MATERIAL BREACH BY TW. IN may, at its sole option,
(a) convert its licenses granted to TW hereunder from exclusive to nonexclusive
or (b) terminate this Agreement, upon written notice to TW, if TW materially
breaches Section 4.1 ("Patent License"), 4.2 ("Minimum Payment Obligation"), 4.3
("Sublicenses"), 5.1 ("Royalties") or 8 ("Confidentiality") of this Agreement or
any material provision of any Joint Venture Agreement and fails to cure such
breach within thirty (30) days of written notice to TW describing the breach in
reasonable detail. IN may, at its sole option, (a) convert its licenses granted
to TW hereunder from exclusive to nonexclusive or (b) terminate this Agreement
immediately upon written notice to TW, if such material breach is not capable of
cure. For purposes solely of this Section 12.2 ("Termination on Material Breach
by TW"), the following provisions shall be deemed material provisions of the
Joint Venture Agreements: Sections 4.1 ("TW Delivery"), 6.1 ("Support"), 7.1
("Non-compete Obligations"), 7.3 ("Handset Technology"), 11 ("Confidentiality"),
13.1(ii), 13.1(viii), and 13.1(x) of the Joint Venture License Agreement;
Sections 2.9(b) (Holder's indemnification) and 3.3 ("Confidentiality of
Records") of the Investor Rights Agreement; Section 2 ("Representations and
Warranties of Each Purchaser") and 3(a) ("TW Obligation") (subject to the terms
and conditions of those indemnification obligations as set forth in such
agreement) of the Joint Venture and Stock Purchase Agreement; and Sections 2
("Transfers by a Stockholder") and 4 ("Voting") of the Stockholders Agreement.
In addition, TW's unreasonably preventing TWIN from meeting its Performance

                                       15
<PAGE>

Criteria as further described in Section 2.4 ("Performance Criteria") of the
Joint Venture License Agreement shall be deemed a material breach of a material
provision of a Joint Venture Agreement for purposes of this Section 12.2
("Termination on Material Breach by TW"). Notwithstanding the foregoing, IN's
rights to convert its licenses or terminate this Agreement on TW's material
breach of a material provision of a Joint Venture Agreement, as described in
this Section 12.2, may be exercised only if (i) TWIN's Board of Directors
determines that TW has materially breached such a provision and (ii) such
material breach has caused or resulted in, or is highly likely to cause or
result in, material harm to TWIN.

         12.3 TERMINATION ON MATERIAL BREACH OF IN. TW may terminate this
Agreement, upon written notice to IN, if IN materially breaches any material
provision of this Agreement and fails to cure such breach within thirty (30)
days of written notice describing the breach in reasonable detail. TW may
terminate this Agreement immediately upon notice to IN, if such material breach
is not capable of cure.

         12.4 EFFECT OF TERMINATION.

              (a) Except as otherwise provided in this Section 12.4 ("Effect of
Termination"), all rights and obligations of the Parties hereunder shall cease
upon termination or expiration of this Agreement. The definitions and the
following sections and subsections shall survive any termination or expiration
of this Agreement: Sections 2 ("Termination of Know-How Agreement"), 3
("Resolution of Outstanding Issues"), 5 ("Payments") (to the extent any payments
have accrued prior to termination to IN), 6 ("Taxation"), 7.6 ("No Warranty of
Validity"), 8 ("Confidentiality"), 9 ("TW Indemnification"), 10 ("Disclaimer"),
11 ("Limitation of Liability"), 12 ("Term and Termination"), and 13 ("General
Provisions") and, for five (5) years following the last due date for any payment
owed to IN, Section 5.4 ("Audit").

              (b) Upon termination or expiration of this Agreement for whatever
reason, (i) all licenses granted by IN to TW and sublicenses granted pursuant to
this Agreement prior to its termination shall terminate, provided that any
sublicensee may elect to continue its sublicense by advising IN in writing,
within sixty (60) days of the sublicensee's receipt of written notice of such
termination, of its election, and of its agreement to assume in respect to IN
all the obligations (including obligations for payment) contained in its
sublicensing agreement with TW. Any sublicense granted by TW shall contain
provisions corresponding to those of this paragraph respecting termination and
the conditions of continuance of sublicenses, (ii) TW shall cooperate with IN in
transitioning back to IN any maintenance and enforcement activities (and
associated records and documentation) undertaken by TW in connection with the
Licensed Patents in the Territory, and (iii) each Party shall return or destroy
all Confidential Information of the other Party in its possession or control,
including all copies thereof, whether tangible or in electronic form or
otherwise.

              (c) Neither Party shall incur any liability whatsoever for any
damage, loss or expenses of any kind suffered or incurred by the other (or for
any compensation to the other) arising from or incident to any termination of
this Agreement by such Party in accordance with the terms of this Agreement
whether or not such Party is aware of any such damage, loss or expenses.

                                       16
<PAGE>

13.      GENERAL PROVISIONS.
         ------------------

         13.1 FORCE MAJEURE. Neither Party shall be liable for failure to
perform, in whole or in material part, its obligations under this Agreement
(other than payment obligations) if such failure is caused by any event or
condition not existing as of the date of this Agreement and not reasonably
within the control of such Party, including, without limitation, by fire, flood,
typhoon, earthquake, explosion, strikes, labor troubles or other industrial
disturbances, unavoidable accidents, war (declared or undeclared), acts of
terrorism, sabotage, embargoes, blockage, acts of Governmental Authorities,
riots, insurrections, or any other cause beyond the control of such; provided
that the affected Party promptly notifies the other Party of the occurrence of
the event of force majeure and takes all reasonable steps necessary to resume
performance of its obligations so interfered with.

         13.2 ASSIGNMENT. Neither this Agreement nor any of the rights and
obligations created hereunder may be assigned, transferred, pledged, or
otherwise encumbered or disposed of, in whole or in part, whether voluntarily,
or by operation of law, or otherwise, by either Party without the prior written
consent of the other Party; provided, however, that either Party may assign or
otherwise transfer this Agreement without the other Party's consent in
connection with the acquisition of all or substantially all of its assets or its
merger with or into another entity ("Merger Assignment"), and provided further
that, in the event of such a Merger Assignment by TW, TW shall be required to
obtain the consent of IN, which consent shall not be unreasonably withheld.

         13.3 NOTICES. All notices and communications required, permitted or
made hereunder or in connection herewith shall be in writing and shall be mailed
by first class, registered or certified mail (and if overseas, by airmail),
postage prepaid, or otherwise delivered by hand or by messenger, or by
recognized courier service (with written receipt confirming delivery),
addressed:

              (a) If to IN, to the address shown in the introduction to this
                  Agreement

                  with a copy to:   Morrison & Foerster LLP
                                    425 Market Street
                                    San Francisco, California 94105-2482, U.S.A.
                                    Attn: Robert Townsend

              (b) If to TW, to:     Two Way TV Ltd.
                                    Beaumont House
                                    Kensington Village
                                    Avonmore Road
                                    London, England W148TS

                  with a copy to:   Orrick, Herrington & Sutcliffe LLP
                                    400 Sansome Street
                                    San Francisco, California 94111-3143, U.S.A.
                                    Attn: Greg Bibbes

              (c) If to TWIN:       TWIN Entertainment Inc.
                                    50 Francisco Street, Suite 490
                                    San Francisco, CA 94111, U.S.A.

                                       17
<PAGE>

                  with a copy to:   Morrison & Foerster LLP
                                    425 Market Street
                                    San Francisco, California 94105-2482, U.S.A.
                                    Attn: Robert Townsend

         Each such notice or other communication shall for all purposes
hereunder be treated as effective or as having been given as follows: (i) if
delivered in person, when delivered; (ii) if sent by mail or airmail, at the
earlier of its receipt or at 5 p.m., local time of the recipient, on the seventh
day after deposit in a regularly maintained receptacle for the deposition of
mail or airmail, as the case may be; and (iii) if sent by recognized courier
service, on the date shown in the written confirmation of delivery issued by
such delivery service. Any Party may change the address and/or addressee(s) to
whom notice must be given by giving appropriate written notice at least seven
(7) days prior to the date the change becomes effective.

         13.4 EXPORT CONTROL. Without in any way limiting the provisions of this
Agreement, each Party hereto agrees that no products, items, commodities or
technical data or information obtained from the other Party nor any direct
product of such technical data or information is intended to or shall be
exported or reexported, directly or indirectly, to any destination restricted or
prohibited by Applicable Law without necessary authorization by the Governmental
Authorities, including (without limitation) the United States Bureau of Export
Administration (the "BEA") or other Governmental Authorities of the United
States, England, the European Community or any other country in the Territory
with jurisdiction with respect to export matters.

         13.5 ARBITRATION.

              (a) Except as set forth in this Section 13.5 ("Arbitration") and
Section 13.6 ("Injunctive Relief"), any disputes arising between the Parties in
connection with this Agreement shall be settled by the Parties amicably through
good faith discussions upon the written request of either Party. In the event
that any such dispute cannot be resolved through such discussions within a
period of sixty (60) days after delivery of such notice, the dispute shall be
finally resolved exclusively by confidential arbitration pursuant to the rules
of the American Arbitration Association in San Francisco, California, U.S.A., or
such other location agreed between the Parties; provided, however, that the
arbitrators shall be empowered to hold hearings at other locations within or
without the United States. Each Party shall nominate one arbitrator and those
two arbitrators shall nominate the third arbitrator. The arbitrators shall not
have the power to impose any obligation on the Parties, or take any other
action, which could not be imposed or taken by a federal or state court sitting
in the State of California. The judgment upon award of the arbitrators shall be
final and binding and may be enforced in any court of competent jurisdiction in
the United States or England and Wales or in any other jurisdiction, and each
Party unconditionally submits to the jurisdiction of such court for the purpose
of any proceeding seeking such enforcement. The fees and expenses of the
arbitrators shall be paid by the Parties in equal shares, unless the arbitrators
determine that the conduct of either Party (with regard to the subject matter of
the dispute and/or the arbitration proceedings) warrants divergence from this
rule, in which event an appropriate costs order may be made. Subject only to the
provision of Applicable Law and Section 13.6 ("Injunctive Relief"), the
procedure described in this Section 13.5 ("Arbitration") shall be the exclusive
means of resolving disputes arising under this Agreement.

                                       18
<PAGE>

              (b) CONFIDENTIAL RESOLUTION. All papers, documents or evidence,
whether written or oral, filed with or presented to the panel of arbitrators
shall be deemed by the Parties and by the arbitrators to be Confidential
Information. Neither Party nor any arbitrator shall disclose in whole or in part
to any other Person any Confidential Information submitted in connection with
the arbitration proceedings, except to the extent reasonably necessary to assist
counsel in the arbitration or preparation for arbitration of the dispute.
Confidential Information may be disclosed (i) to either Party's attorneys, (ii)
to the Parties, and (iii) to outside experts requested by either Party's counsel
to furnish technical or expert services or to give testimony at the arbitration
proceedings, subject, in the case of such experts, to execution of a legally
binding written statement that such expert is fully familiar with the terms of
this section, that such expert agrees to comply with the confidentiality terms
of this section, and that such expert will not use any Confidential Information
disclosed to such expert for personal or business advantage.

         13.6 INJUNCTIVE RELIEF. Notwithstanding Section 13.5 ("Arbitration"),
the Parties agree that any material breach of Section 4.1 ("Patent License") or
Section 8 ("Confidentiality") of this Agreement would cause irreparable injury
for which no adequate remedy at law exists; therefore, the parties agree that
equitable remedies, including without limitation injunctive relief and specific
performance, are appropriate remedies to redress any such breach or threatened
breach of this Agreement, in addition to other remedies available to the
Parties. If any legal action is brought under this Section 13.6 ("Injunctive
Relief") to enforce Section 4.1 ("Patent License"), the prevailing Party shall
be entitled to receive its attorneys' fees, court costs and other collection
expenses, in addition to any other relief it may receive. Each Party expressly
waives the defense that a remedy in damages will be adequate and any requirement
in an action for specific performance or injunction for the posting of a bond by
the Party seeking relief.

         13.7 ENTIRE AGREEMENT. This Agreement and the Joint Venture Agreements,
and the attachments and exhibits hereto and thereto, embody the entire agreement
and understanding between the Parties with respect to the subject matter hereof,
superseding all previous and contemporaneous communications, representations,
agreements and understandings, whether written or oral, including without
limitation that certain Heads of Terms between IN and TW to Form a Joint
Venture. Neither Party has relied upon any representation or warranty of any
other party except as expressly set forth herein and in the Joint Venture
Agreements.

         13.8 MODIFICATION. This Agreement may not be modified or amended, in
whole or part, except by a writing executed by duty authorized representatives
of both Parties.

         13.9 ANNOUNCEMENT. The Parties may announce the existence of the
Parties' relationship and this Agreement only at a time and in a form to be
mutually determined, except for any such disclosure required by law,
governmental authorities or stock exchanges.

         13.10 SEVERABILITY. If any term or provision of this Agreement shall be
determined to be invalid or unenforceable under Applicable Law, such provision
shall be deemed severed from this Agreement, and a reasonable valid provision to
be mutually agreed upon shall be substituted. In the event that no reasonable
valid provision can be so substituted, the remaining provisions of this
Agreement shall remain in full force and effect, and shall be construed and
interpreted in a manner that corresponds as far as possible with the intentions
of the Parties as expressed in this Agreement.

                                       19
<PAGE>

         13.11 NO WAIVER. Except to the extent that either Party hereto may have
otherwise agreed in writing, no waiver by such Party of any condition of this
Agreement or breach by the other Party of any of its obligations or
representations hereunder shall be deemed to be a waiver of any other condition
or subsequent or prior breach of the same or any other obligation or
representation by the other Party, nor shall any forbearance by the first Party
to seek a remedy for any noncompliance or breach by the other Party be deemed to
be a waiver by the first Party of its rights and remedies with respect to such
noncompliance or breach.

         13.12 NATURE OF RIGHTS. All rights and licenses granted under or
pursuant to this Agreement by IN to TW are, for purposes of Section 365(n) of
the U.S. Bankruptcy Code (the "Bankruptcy Code"), licenses of "Intellectual
property" within the scope of Section 101 of the Bankruptcy Code.

         13.13 GOVERNING LAW. The validity, construction, performance and
enforceability of this Agreement shall be governed in all respects by the laws
of the State of California, U.S.A., without regard to its conflicts of laws
principles. The Parties expressly exclude the application of the United Nations
Convention on Contracts for the International Sale of Goods.

         13.14 NO AGENCY OR PARTNERSHIP. This Agreement shall not constitute an
appointment of either Party as the legal representative or agent of the other
Party, nor shall the Party have any right or authority to assume, create or
incur in any manner any obligation or other liability of any kind, express or
implied, against, in the name or on behalf of, the other Party. Nothing herein
or in the transactions contemplated by this Agreement shall be construed as, or
deemed to be, the formation of a partnership, association, joint venture, or
similar entity by or between the Parties hereto.

         13.15 NO THIRD PARTY BENEFICIARIES. The Parties intend and agree that
no other Person, entity or other party shall be considered a third-party
beneficiary of this Agreement. Nothing contained in this Agreement shall be
construed to create rights for any third party beneficiary.

         13.16 HEADING. The section and other headings contained in this
Agreement are for convenience of reference only and shall not be deemed to be a
part of this Agreement or to affect the meaning or interpretation of this
Agreement.

         13.17 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, and all of which shall be deemed to
constitute one and the same instrument.

                                       20
<PAGE>

         IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their duly authorized representatives on the date set forth above.

INTERACTIVE NETWORK, INC.                        TWO WAY TV LTD.

----------------------------------------------   -------------------------------
By:      Bruce W. Bauer                          By:      Piers Wilson
Title:   President and Chief Executive Officer   Title:   Finance Director

                                       21
<PAGE>

                                    EXHIBIT A

                            INTERACTIVE FIELD OF USE
                            ------------------------

         "Interactive Field of Use" shall include developing, marketing,
supplying, operating and licensing certain digital (and analog) interactive and
other related services, products and technology in the Territory.

                                       A-1
<PAGE>

                                    EXHIBIT B

                                LICENSED PATENTS
                                ----------------

                                      JAPAN
                                      -----

     Patent No.                Filed                 Granted
---------------------    ----------------    ---------------------

      2093252              June 11, 1990         Sept. 18, 1996
Game of skill or chance playable by several participants remote from each other
in conjunction with a common event.

                  GERMANY, SPAIN, FRANCE, UNITED KINGDOM, ITALY
                  ---------------------------------------------

     Patent No.                Filed                 Granted
---------------------    ----------------    ---------------------

      0405776              June 8, 1990          March 26, 1997
Game of skill or chance playable by several participants remote from each other
in conjunction with a common event.

             AUSTRIA, BELGIUM, SWITZERLAND, GERMANY, DENMARK, SPAIN,
             -------------------------------------------------------
               FRANCE, UNITED KINGDOM, ITALY, NETHERLANDS, SWEDEN
               --------------------------------------------------

     Patent No.                Filed                 Granted
---------------------    ----------------    ---------------------

      504267               Dec. 10, 1990         July 27, 1994
Method of evaluating data relating to a common subject.

                                       B-1
<PAGE>

                                    EXHIBIT C

                              THIRD PARTY LICENSES
                              --------------------

         Patent License Agreement between Interactive Games Patent, Inc. (now
Interactive Network, Inc.) and NTN Communications, Inc. dated as of April 24,
1987, as amended by Amendment to Patent License Agreement between NTN
Communications, Inc. and Interactive Game Patent, Inc. (now Interactive Network,
Inc.) dated June 1, 1990.

                                      C-1
<PAGE>

                                    EXHIBIT D

                                   LITIGATION
                                   ----------

         INTERACTIVE NETWORK INC. v. NTN COMMUNICATIONS INC. ET AL., Federal
Court of Canada File No. T-1471-92.

         LOCKTON v. INTERACTIVE NETWORK, INC., ("dismissed without prejudice")
U.S. Bankruptcy Court Northern District of California Case No. 98-34055-DM-11,
Adversary No. 99-3301-DM.

                                       D-1

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