<PAGE>
As filed with the Securities and Exchange Commission on February 24, 1999
Registration No. 333-71499
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
AMENDMENT NO. 1
FORM S-1
REGISTRATION STATEMENT
Under
The Securities Act of 1933
----------------
CRITICAL PATH, INC.
(Exact name of registrant as specified in its charter)
California 7389 91-1788300
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification No.)
organization)
320 1st Street
San Francisco, California 94105
(415) 808-8800
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
----------------
DOUGLAS T. HICKEY
President and Chief Executive Officer
CRITICAL PATH, INC.
320 1st Street
San Francisco, California 94105
(415) 808-8800
(Name, address, including zip code, and telephone number, including area code,
of agent for service of process)
----------------
Copies to:
Jorge del Calvo, Esq. Alan K. Austin, Esq.
Stanley F. Pierson, Esq. Mark L. Reinstra, Esq.
Davina K. Kaile, Esq. Clay B. Simpson, Esq.
James J. Masetti, Esq. Wilson Sonsini Goodrich & Rosati
Pillsbury Madison & Sutro LLP 650 Page Mill Road
2550 Hanover Street Palo Alto, CA 94304
Palo Alto, CA 94304
----------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement numbers of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to 462(c) under the
Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE>
Explanatory Note
This Amendment #1 is being filed solely for the purpose of filing exhibits.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the various expenses expected to be incurred
by the Registrant in connection with the sale and distribution of the
securities being registered hereby, other than underwriting discounts and
commissions. All amounts are estimated except the Securities and Exchange
Commission registration fee and the National Association of Securities Dealers,
Inc. filing fee.
<TABLE>
<CAPTION>
Payable by
Registrant
----------
<S> <C>
SEC registration fee.............................................. $14,387
National Association of Securities Dealers, Inc. filing fee....... 5,675
Accounting fees and expenses...................................... *
Legal fees and expenses........................................... *
Printing and engraving expenses................................... *
Blue Sky fees and expenses........................................ *
Registrar and Transfer Agent's fees............................... *
Miscellaneous fees and expenses................................... *
-------
Total............................................................. $ *
=======
</TABLE>
--------
* To be filed by amendment.
Item 14. Indemnification of Directors and Officers
Section 317 of the California Corporations Code provides for the
indemnification of officers, directors and other corporate agents in terms
sufficiently broad to indemnify such persons under certain circumstances for
liabilities (including reimbursement for expenses incurred) arising under the
Securities Act of 1933, as amended (the "Act"). Article V, Section B of our
articles of incorporation (Exhibit 3.1 hereto) provides for indemnification of
our directors, officers, employees and other agents to the extent and under the
circumstances permitted by the California Corporations Code. We have also
entered into agreements with our directors and officers that will require us,
among other things, to indemnify them against certain liabilities that may
arise by reason of their status or service as directors or officers to the
fullest extent permitted by law.
The Underwriting Agreement (Exhibit 1.1) provides for indemnification by
ourself, our underwriters and our directors and officers of the underwriters,
for certain liabilities, including liabilities arising under the Act, and
affords certain rights of contribution with respect thereto.
Item 15. Recent Sales of Unregistered Securities
1. From February 1997 to January 15, 1999, the Registrant issued and sold
14,162,257 shares of common stock to employees, directors and consultants at
prices ranging from $0.01 to $1.00 per share.
2. On April 1, 1998, the Registrant issued and sold 27,957,317 shares of Series
A Preferred Stock to a total of 29 investors for an aggregate purchase price
of $9,170,001.99.
II-1
<PAGE>
3. On September 11, 1998 and January 13, 1999, the Registrant issued and sold
15,100,782 shares of Series B Preferred Stock to a total of 19 investors for
an aggregate purchase price of $29,061,014.44.
4. On January 13, 1999, the Registrant issued and sold 2,400,000 shares of
common stock to one investor for an aggregate purchase price of
$2,400,000.00.
5. From February 1997 to January 15, 1999, the Registrant issued and sold
13,763,158 shares of common stock to 5 investors at a purchase price of
$0.01 per share.
The sales of the above securities were deemed to be exempt from registration
under the Securities Act in reliance on Section 4(2) of the Securities Act, or
Regulation D promulgated thereunder, or Rule 701 promulgated under Section 3(b)
of the Securities Act, as transactions by an issuer not involving a public
offering or transactions pursuant to compensatory benefit plans and contracts
relating to compensation as provided under Rule 701. The recipients of
securities in each of these transactions represented their intention to acquire
the securities for investment only and not with view to or for sale in
connection with any distribution thereof and appropriate legends were affixed
to the share certificates and instruments issued in such transactions. All
recipients had adequate access, through their relationship with the Registrant,
to information about the Registrant.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
See exhibits listed on the Exhibit Index following the signature page of the
Form S-1, which is incorporated herein by reference.
(b) Financial Statement Schedules
Schedules other than those referred to above have been omitted because they
are not applicable or not required or because the information is included
elsewhere in the Financial Statements or the notes thereto.
Item 17. Undertakings
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Act"), may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of 1933,
as amended, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to
II-2
<PAGE>
Rule 424(b)(1) or (4) or 497(h) under the Act shall be deemed to be part of
this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of
1933, as amended, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) The Registrant will provide to the underwriters at the closing(s) specified
in the underwriting agreement certificates in such denominations and registered
in such names as required by the underwriters to permit prompt delivery to each
purchaser.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of San Francisco, State of
California, on the 23rd day of February, 1999.
Critical Path, Inc.
/s/ Douglas T. Hickey
By: _________________________________
Douglas T. Hickey
President, Chief Executive
Officer and Director
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
/s/ Douglas T. Hickey President, Chief Executive February 23, 1999
____________________________________ Officer and Director
Douglas T. Hickey
/s/ David A. Thatcher Executive Vice President, February 23, 1999
____________________________________ Chief Financial Officer
David A. Thatcher (Principal Financial Officer)
and Accounting Officer
/s/ David C. Hayden Chairman of the Board February 23, 1999
____________________________________
David C. Hayden
* Director February 23, 1999
____________________________________
Christos M. Cotsakos
* Director February 23, 1999
____________________________________
Lisa Gansky
* Director February 23, 1999
____________________________________
Kevin R. Harvey
* Director February 23, 1999
____________________________________
James A. Smith
* Director February 23, 1999
____________________________________
George Zachary
</TABLE>
*By: /s/ David A. Thatcher
----------------------------
David A. Thatcher
(Attorney-in-Fact)
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------- -----------------------
<C> <S>
1.1* Form of Underwriting Agreement.
3(i)(a)** Amended and Restated Articles of Incorporation and amendments
thereto.
3(i)(b)** Form of Amended and Restated Articles of Incorporation to be
filed prior to completion of this offering.
3(ii)(a)** Bylaws of the Registrant, as amended.
3(ii)(b)** Form of Amended and Restated Bylaws.
4.1 Form of Common Stock Certificate.
4.2 Warrant to Purchase Preferred Stock dated September 11, 1998
issued by the Registrant to Hambrecht & Quist LLC.
4.3 Warrant to Purchase Preferred Stock dated January 13, 1999 issued
by the Registrant to Hambrecht & Quist LLC.
4.4 Warrant to Purchase Series B Preferred Stock dated January 29,
1999 issued by the Registrant to ICQ, Inc.
5.1* Opinion of Pillsbury Madison & Sutro LLP.
10.1** Form of Indemnification Agreement between the Registrant and each
of its directors and officers.
10.2** Employee Stock Purchase Plan.
10.3** 1998 Stock Plan and forms of stock option agreements thereunder.
10.4** Series B Preferred Stock Purchase Agreement dated September 11,
1998.
10.5** Amendment to Series B Preferred Stock Purchase Agreement dated
January 13, 1999.
10.6** Amended and Restated Investors' Rights Agreement dated September
11, 1998.
10.7** Amendment to the Amended and Restated Investors' Rights Agreement
dated January 13, 1999.
10.8** Master Equipment Lease Agreement dated April 28, 1998, and Lease
Line Schedule thereto, by and between the Registrant and
Lighthouse Capital Partners II, L.P.
10.9** Master Lease Agreement dated May 1, 1998, and addendum thereto,
by and between the Registrant and Comdisco, Inc.
10.10** Standard Industrial/Multitenant Lease-Gross dated June 20, 1997
by and between the Registrant and 501 Folsom Street Building.
10.11** Letter Agreement dated October 1, 1998 by and between the
Registrant and Douglas Hickey.
10.12** Promissory Note and Security Agreement dated November 6, 1998 by
and between the Registrant and Doug Hickey.
10.13** Warrant Agreement dated April 28, 1998 by and between the
Registrant and Lighthouse Capital Partners II, L.P.
10.14** Warrant Agreement dated May 1, 1998 by and between the Registrant
and Comdisco, Inc.
10.15+** Master Services Agreement dated December 10, 1998 by and between
the Registrant and US West Communications Services, Inc.
10.16+** Email Services Agreement dated May 27, 1998 by and between the
Registrant and Network Solutions, Inc.
10.17+** Email Services Agreement dated July 6, 1998 by and between the
Registrant and StarMedia Network, Inc.
10.18+** Amendment to Email Services Agreement September 30, 1998 by and
between the Registrant and E*TRADE Group, Inc.
10.19+** Email Services Agreement dated September 14, 1998 by and between
the Registrant and Sprint Communications Company L.P.
10.20+** Email Services Agreement dated March 19, 1998 by and between the
Registrant and NTX, Inc. dba TABNet, Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------- -----------------------
<C> <S>
10.21** QuickStart Loan and Security Agreement dated May 12, 1998 by and
between the Registrant and Silicon Valley Bank.
10.22+ Email Services Agreement dated January 29, 1999 by and between the
Registrant and ICQ, Inc.
23.1** Consent of PricewaterhouseCoopers LLP.
23.2* Consent of Pillsbury Madison & Sutro LLP (included in Exhibit 5.1).
24.1** Power of Attorney.
27.1** Financial Data Schedule.
</TABLE>
- --------
*To be filed by amendment.
**Previously Filed.
+ Confidential treatment has been requested with respect to certain portions of
these agreements.
<PAGE>
EXHIBIT 4.1
FACE
COMMON STOCK COMMON STOCK
CPI
INCORPORATED UNDER THE LAWS OF
THE STATE OF CALIFORNIA
SEE REVERSE FOR STATEMENTS RELATING TO RIGHTS, PREFERENCES,
PRIVILEGES AND RESTRICTIONS, IF ANY
CUSIP 22674V10 0
THIS CERTIFIES THAT is the record holder of
FULLY PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK, $.001 PAR VALUE, OF
CRITICAL PATH, INC.
transferable only on the books of the Corporation by the holder hereof in person
or by duly authorized attorney upon surrender of this Certificate properly
endorsed. This Certificate is not valid unless countersigned and registered by
the Transfer Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.
Dated:
CHIEF FINANCIAL OFFICER CHIEF EXECUTIVE OFFICER AND PRESIDENT
COUNTERSIGNED AND REGISTERED:
AMERICAN SECURITIES TRANSFER & TRUST, INC.
P.O. Box 1596, Denver, Colorado 80201
BY
TRANSFER AGENT AND REGISTRAR AUTHORIZED SIGNATURE
<PAGE>
BACK
CRITICAL PATH, INC.
A statement of the rights, preferences, privileges and restrictions granted to
or imposed upon the respective classes or series of shares and upon the holders
thereof as established, from time to time, by the Articles of Incorporation of
the Corporation and by any certificate of determination, and the number of
shares constituting each class and series and the designations thereof, may be
obtained by the holder hereof upon written request and without charge from the
Secretary of the Corporation at its corporate headquarters.
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT - ...........Custodian.........................
(Cust) (Minor)
under Uniform Gifts to Minors
Act ...............................................
(State)
UNIF TRF MIN ACT - ..........Custodian (until age ................)
(Cust)
............................ under Uniform Transfers
(Minor)
to Minors Act ..............................................
(State)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, hereby sell, assign
and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
Shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated
X
X
NOTICE:
THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER.
Signature(s) Guaranteed
By
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN
AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE
17Ad-15.
<PAGE>
EXHIBIT 4.2
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. SUCH SECURITIES AND ANY SECURITIES OR SHARES ISSUED
HEREUNDER MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
OR AN EXEMPTION THEREFROM UNDER SAID ACT. COPIES OF THE AGREEMENT COVERING THE
PURCHASE OF THESE SECURITIES AND RESTRICTING THEIR TRANSFER OR SALE MAY BE
OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD HEREOF TO
THE SECRETARY OF THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES.
No. WA-__
WARRANT TO PURCHASE PREFERRED STOCK
OF
CRITICAL PATH, INC.
This certifies that, for value received, Hambrecht & Quist LLC or its
registered assigns ("Holder") is entitled, subject to the terms and conditions
set forth below, to purchase from Critical Path, Inc. (the "Company"), in whole
or in part 154,639 fully paid and nonassessable shares (the "Warrant Shares") of
Series B Preferred Stock of the Company (the "Preferred Stock") at a purchase
price of $1.9373 per share (the "Exercise Price"). The number, character and
Exercise Price of such shares of Preferred Stock are subject to adjustment as
provided below and all references to "Warrant Shares" and "Exercise Price"
herein shall be deemed to include any such adjustment or series of adjustments.
The term "Warrant" as used herein shall mean this Warrant, and any warrants
delivered in substitution or exchange therefor as provided herein.
1. Term of Warrant. Subject to the terms and conditions set forth
---------------
herein, this Warrant shall be exercisable, in whole or in part, during the term
commencing on the date hereof and ending at 5:00 p.m., Pacific standard time, on
the earliest of the following: (a) the closing of a firmly underwritten public
offering of the Company's Common Stock pursuant to a registration statement
under the Securities Act of 1933, as amended; (b) the closing of a merger or
consolidation of the Company pursuant to which the stockholders of the Company
hold less than fifty percent (50%) of the voting securities of the surviving
entity, or a sale of all or substantially all of the assets of the Company; or
(c) September 11, 2003, and shall be void thereafter (the "Exercise Period").
2. Exercise of Warrant.
-------------------
(a) Cash Exercise. This Warrant may be exercised by the Holder by (i) the
-------------
surrender of this Warrant to the Company, with the Notice of Exercise annexed
hereto duly completed and executed on behalf of the Holder, at the office of the
Company (or such other office or agency of the Company as it may designate by
notice in writing to the Holder at the address of the Holder appearing on the
books of the Company) during the Exercise Period and (ii) the delivery of
payment to the Company, for the account of the Company, by cash, wire transfer
of immediately available funds to a bank account specified by the Company, or by
certified or bank cashier's
-1-
<PAGE>
check, of the Exercise Price for the number of Warrant Shares specified in the
Exercise Form in lawful money of the United States of America. The Company
agrees that such Warrant Shares shall be deemed to be issued to the Holder as
the record holder of such Warrant Shares as of the close of business on the date
on which this Warrant shall have been surrendered and payment made for the
Warrant Shares as aforesaid. A stock certificate or certificates for the Warrant
Shares specified in the Exercise Form shall be delivered to the Holder as
promptly as practicable, and in any event within ten (10) days, thereafter. If
this Warrant shall have been exercised only in part, the Company shall, at the
time of delivery of the stock certificate or certificates, deliver to the Holder
a new Warrant evidencing the rights to purchase the remaining Warrant Shares,
which new Warrant shall in all other respects be identical with this Warrant. No
adjustments shall be made on Warrant Shares issuable on the exercise of this
Warrant for any cash dividends paid or payable to holders of record of Common
Stock prior to the date as of which the Holder shall be deemed to be the record
holder of such Warrant Shares.
(b) Net Issue Exercise. In lieu of exercising this Warrant pursuant to
------------------
Section 2(a), this Warrant may be exercised by the Holder by the surrender of
this Warrant to the Company, with a duly executed Exercise Form marked to
reflect Net Issue Exercise and specifying the number of shares of Preferred
Stock to be purchased, during normal business hours on any Business Day during
the Exercise Period. The Company agrees that such shares of Preferred Stock
shall be deemed to be issued to the Holder as the record holder of such shares
of Preferred Stock as of the close of business on the date on which this Warrant
shall have been surrendered as aforesaid. Upon such exercise, the Holder shall
be entitled to receive shares equal to the value of this Warrant (or the portion
thereof being canceled) by surrender of this Warrant to the Company together
with notice of such election in which event the Company shall issue to Holder a
number of shares of Preferred Stock computed as of the date of surrender of this
Warrant to the Company using the following formula:
X = Y(A-B)
------
A
Where X = the number of shares of Preferred Stock to be issued to Holder under
this Section 2(b);
Y = the number of shares of Preferred Stock otherwise purchasable under
this Warrant (as adjusted to the date of such calculation);
A = the fair market value of one share of the Preferred Stock (Series B
or Series A Preferred) at the date of such calculation;
B = the Exercise Price (as adjusted to the date of such calculation).
(c) Fair Market Value. For purposes of Section 2(b) fair market value of
-----------------
one share of the Company's Preferred Stock shall mean, as of any date:
(i) the fair market value of the shares of Common Stock into
which such share of Preferred Stock is convertible as of such date, as
determined from the last
-2-
<PAGE>
closing price per share of the Company's Common Stock on the principal
national securities exchange on which the Common Stock is listed or
admitted to trading, or
(ii) the fair market value of the shares of Common Stock into which
such share of Preferred Stock is convertible as of such date, as determined
from the last reported sales price per share of the Company's Common Stock
on the Nasdaq National Market or the Nasdaq Small-Cap Market (collectively,
"Nasdaq") if the Company's Common Stock is not listed or traded on any such
exchange, or
(iii) the fair market value of the shares of Common Stock into which
such share of Preferred Stock is convertible as of such date, as determined
from the average of the bid and asked price per share as reported in the
"pink sheets" published by the National Quotation Bureau, Inc. (the "pink
sheets") if the Company's Common Stock is not listed or traded on any
exchange or Nasdaq, or
(iv) if such quotations are not available, the fair market value per
share of the Company's Preferred Stock on the date such notice was received
by the Company as reasonably determined in good faith by the Board of
Directors of the Company.
(d) This Warrant shall be deemed to have been exercised immediately prior
to the close of business on the date of its surrender for exercise as provided
above, and the person entitled to receive the shares of Preferred Stock issuable
upon such exercise shall be treated for all purposes as the holder of record of
such shares as of the close of business on such date. As promptly as
practicable on or after such date and in any event within ten (10) days
thereafter, the Company at its expense shall issue and deliver to the person or
persons entitled to receive the same a certificate or certificates for the
number of shares issuable upon such exercise. In the event that this Warrant is
exercised in part, the Company at its expense will execute and deliver a new
Warrant of like tenor exercisable for the number of shares for which this
Warrant may then be exercised.
3. No Fractional Shares or Scrip. No fractional shares or scrip
-----------------------------
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which the Holder would otherwise be
entitled, the Company shall make a cash payment equal to the Exercise Price
multiplied by such fraction.
4. Replacement of Warrant. On receipt of evidence reasonably
----------------------
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and substance to the Company
or, in the case of mutilation, on surrender and cancellation of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this Warrant, a
new warrant of like tenor and amount.
5. Rights of Stockholders. Subject to Sections 8 and 10 of this Warrant,
----------------------
the Holder shall not be entitled to vote or receive dividends or be deemed the
holder of Preferred Stock or any other securities of the Company that may at any
time be issuable on the exercise hereof for any
-3-
<PAGE>
purpose, nor shall anything contained herein be construed to confer upon the
Holder, as such, any of the rights of a stockholder of the Company or any right
to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon any recapitalization, issuance of stock,
reclassification of stock, change of par value, or change of stock to no par
value, consolidation, merger, conveyance, or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until the
Warrant shall have been exercised as provided herein.
6. Transfer of Warrant.
-------------------
(a) Warrant Register. The Company will maintain a register (the "Warrant
----------------
Register") containing the names and addresses of the Holder or Holders. Any
Holder of this Warrant or any portion thereof may change his address as shown on
the Warrant Register by written notice to the Company requesting such change.
Any notice or written communication required or permitted to be given to the
Holder may be delivered or given by mail to such Holder as shown on the Warrant
Register and at the address shown on the Warrant Register. Until this Warrant
is transferred on the Warrant Register of the Company, the Company may treat the
Holder as shown on the Warrant Register as the absolute owner of this Warrant
for all purposes, notwithstanding any notice to the contrary.
(b) Warrant Agent. The Company may, by written notice to the Holder,
-------------
appoint an agent for the purpose of maintaining the Warrant Register referred to
in Section 6(a) above, issuing the Warrant Shares or other securities then
issuable upon the exercise of this Warrant, exchanging this Warrant, replacing
this Warrant, or any or all of the foregoing. Thereafter, any such
registration, issuance, exchange, or replacement, as the case may be, shall be
made at the office of such agent.
(c) Transferability and Nonnegotiability of Warrant. This Warrant may not
-----------------------------------------------
be transferred or assigned in whole or in part without compliance with all
applicable federal and state securities laws by the transferor and the
transferee (including the delivery of investment representation letters and
legal opinions reasonably satisfactory to the Company, if such are requested by
the Company). Notwithstanding the foregoing, no investment representation
letter or opinion of counsel shall be required for any transfer of this Warrant
(or any portion thereof) or any shares of Preferred Stock or Common Stock issued
upon exercise hereof or conversion thereof (i) in compliance with Rule 144 or
Rule 144A of the Act, or (ii) by gift, will or intestate succession by the
Holder to his or her spouse or lineal descendants or ancestors or any trust for
any of the foregoing; provided that in each of the foregoing cases the
transferee agrees in writing to be subject to the terms of this Section 6(c).
Subject to the provisions of this Warrant with respect to compliance with the
Securities Act of 1933, as amended (the "Act"), title to this Warrant may be
transferred by endorsement (by the Holder executing the Assignment Form annexed
hereto) and delivery in the same manner as a negotiable instrument transferable
by endorsement and delivery.
(d) Exchange of Warrant Upon a Transfer. On surrender of this Warrant for
-----------------------------------
exchange, properly endorsed on the Assignment Form and subject to the provisions
of this Warrant with respect to compliance with the Act and with the limitations
on assignments and transfers and contained in this Section 6, the Company at its
expense shall issue to or on the order of the
-4-
<PAGE>
Holder a new warrant or warrants of like tenor, in the name of the Holder or as
the Holder (on payment by the Holder of any applicable transfer taxes) may
direct, for the number of shares issuable upon exercise hereof.
(e) Compliance with Securities Laws.
-------------------------------
(i) The Holder of this Warrant, by acceptance hereof, acknowledges that
this Warrant and the shares of Preferred Stock or Common Stock to be issued upon
exercise hereof or conversion thereof are being acquired solely for the Holder's
own account and not as a nominee for any other party, and for investment, and
that the Holder will not offer, sell or otherwise dispose of this Warrant or any
shares of Preferred Stock or Common Stock to be issued upon exercise hereof or
conversion thereof except under circumstances that will not result in a
violation of the Act or any applicable state securities laws. Upon exercise of
this Warrant, the Holder shall, if requested by the Company, confirm in writing,
in a form satisfactory to the Company, that the shares of Preferred Stock or
Common Stock so purchased are being acquired solely for the Holder's own account
and not as a nominee for any other party, for investment, and not with a view
toward distribution or resale.
(ii) This Warrant and all shares of Preferred Stock or Common Stock
issued upon exercise hereof or conversion thereof shall be stamped or imprinted
with a legend in substantially the following form (in addition to any legend
required by state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. SUCH SECURITIES AND ANY SECURITIES OR
SHARES ISSUED HEREUNDER MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID
ACT. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE
SECURITIES AND RESTRICTING THEIR TRANSFER OR SALE MAY BE OBTAINED
AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD HEREOF
TO THE SECRETARY OF THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES.
(iii) The Company agrees to remove promptly, upon the request of the
holder of this Warrant and Securities issuable upon exercise of the Warrant ,the
legend set forth in Section 6(e)(ii) above from the documents/certificates for
such securities upon full compliance with this Agreement and Rules 144 and 145.
7. Reservation of Stock. The Company covenants that during the term this
--------------------
Warrant is exercisable, the Company will reserve from its authorized and
unissued Preferred Stock or other shares issuable upon exercise of the Warrant a
sufficient number of shares to provide for the issuance of Preferred Stock upon
the exercise of this Warrant (and shares of its Common Stock for issuance on
conversion of such Preferred Stock) and, from time to time, will take all steps
necessary to amend its Restated Certificate of Incorporation (the "Restated
Certificate") to provide sufficient reserves of shares of Preferred Stock
issuable upon exercise of the Warrant (and shares of its Common Stock for
issuance on conversion of such Preferred Stock). The Company further covenants
that all shares that may be issued upon the exercise of rights
-5-
<PAGE>
represented by this Warrant, upon exercise of the rights represented by this
Warrant and payment of the Exercise Price, all as set forth herein, will be free
from all taxes, liens and charges in respect of the issue thereof (other than
taxes in respect of any transfer occurring contemporaneously or otherwise
specified herein).
8. Notices.
-------
(a) Whenever the Exercise price or number of shares purchasable hereunder
shall be adjusted pursuant to Section 10 hereof, the Company shall issue a
certificate signed by its Chief Financial Officer setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated, and the Exercise Price and
number of shares purchasable hereunder after giving effect to such adjustment,
and shall cause a copy of such certificate to be mailed (by first-class mail,
postage prepaid) to the Holder of this Warrant.
(b) In case:
(i) the Company shall take a record of the holders of its Common
Stock (or other stock or securities at the time receivable upon the
exercise of this Warrant) for the purpose of entitling them to receive any
dividend or other distribution, or any right to subscribe for or purchase
any shares of stock of any class or any other securities, or to receive any
other right;
(ii) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation, or any conveyance
of all or substantially all of the assets of the Company to another
corporation;
(iii) of any voluntary dissolution, liquidation or winding-up of the
Company;
(iv) of any redemption or conversion of all outstanding Preferred
Stock or Common Stock; or
(v) of the filing of the Company's first registration statement
with the U.S. Securities and Exchange Commission (the "SEC");
then, and in each such case, the Company will mail or cause to be mailed to the
Holder or Holders a notice specifying, as the case may be, (A) the date on which
a record is to be taken for the purpose of such dividend, distribution or right,
and stating the amount and character of such dividend, distribution or right,
(B) the date on which such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation, winding-up, redemption or
conversion is to take place, and the time, if any is to be fixed, as of which
the holders of record of Preferred Stock or Common Stock (or such stock or
securities at the time receivable upon the exercise of this Warrant) shall be
entitled to exchange their shares of Preferred Stock or Common Stock (or such
other stock or securities) for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or
-6-
<PAGE>
winding-up, or (C) the anticipated date on which the Company expects its first
registration statement with the SEC to become effective. Such notice shall be
mailed at least fifteen (15) days prior to the date therein specified.
(c) All such notices, advices and communications shall be deemed to have
been received (i) in the case of personal delivery, on the date of such delivery
and (ii) in the case of mailing, on the third business day following the date of
such mailing if sent to a U.S. address and on the tenth (10th) business day
following the date of such mailing if sent to an address outside the U.S.
9. Amendments. This Warrant and any term hereof may be changed, waived,
----------
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
10. Adjustments. The Exercise Price and the number of shares purchasable
-----------
hereunder are subject to adjustment from time to time as follows:
(a) Stock Conversion or Redemption of Preferred Stock. Should all of the
-------------------------------------------------
Company's Preferred, as the case may be, at any time prior to the expiration of
this Warrant, redeemed or converted into shares of the Company's Common Stock in
accordance with the Company's Restated Certificate, then this Warrant shall
immediately become exercisable for that number of shares of the Company's Common
Stock equal to the number of shares of the Common Stock that would have been
received if this Warrant had been exercised in full and the Preferred Stock
received thereupon had been simultaneously converted immediately prior to such
event, and the Exercise Price shall be immediately adjusted to equal the
quotient obtained by dividing (x) the aggregate Exercise Price of the maximum
number of shares of Preferred Stock for which this Warrant was exercisable
immediately prior to such conversion or redemption, by (y) the number of shares
of Common Stock for which this Warrant is exercisable immediately after such
conversion or redemption. For purposes of the foregoing, the "Restated
Certificate" shall mean the Articles of Incorporation of the Company as amended
and/or restated and effective immediately prior to the redemption or conversion
of all of the Company's Preferred Stock, as the case may be.
(b) Reclassification, etc. If the Company, at any time while this
---------------------
Warrant, or any portion thereof, remains outstanding and unexpired by
reclassification of securities or otherwise, shall change any of the securities
as to which purchase rights under this Warrant exist into the same or a
different number of securities of any other class or classes, this Warrant shall
thereafter represent the right to acquire such number and kind of securities as
would have been issuable as the result of such change with respect to the
securities that were subject to the purchase rights under this Warrant
immediately prior to such reclassification or other change and the Exercise
Price therefor shall be appropriately adjusted, all subject to further
adjustment as provided in this Section 10. No adjustment shall be made pursuant
to this Section 10(b), upon any conversion or redemption of the Preferred Stock
which is the subject of Section 10(a).
(c) Split, Subdivision or Combination of Shares. If the Company at any
-------------------------------------------
time while this Warrant, or any portion thereof, remains outstanding and
unexpired shall split, subdivide or combine the securities as to which purchase
rights under this Warrant exist, into a different number of securities of the
same class, then (i) in the case of a split or subdivision, the Exercise
-7-
<PAGE>
Price for such securities shall be proportionately decreased and the securities
issuable upon exercise of this Warrant shall be proportionately increased, and
(ii) in the case of a combination, the Exercise Price for such securities shall
be proportionately increased and the securities issuable upon exercise of this
Warrant shall be proportionately decreased.
(d) Adjustments for Dividends in Stock or Other Securities or Property.
------------------------------------------------------------------
If while this Warrant, or any portion hereof, remains outstanding and unexpired
the holders of the securities as to which purchase rights under this Warrant
exist at the time shall have received, or, on or after the record date fixed for
the determination of eligible Stockholders, shall have become entitled to
receive, without payment therefor, other or additional stock or other securities
or property (other than cash) of the Company by way of dividend, then and in
each case, this Warrant shall represent the right to acquire, in addition to the
number of shares of the security receivable upon exercise of this Warrant, and
without payment of any additional consideration therefor, the amount of such
other or additional stock or other securities or property (other than cash) of
the Company that such holder would hold on the date of such exercise had it been
the holder of record of the security receivable upon exercise of this Warrant on
the date hereof and had thereafter, during the period from the date hereof to
and including the date of such exercise, retained such shares and/or all other
additional stock available by it as aforesaid during such period, giving effect
to all adjustments called for during such period by the provisions of this
Section 10.
(e) Certificate as to Adjustments. Upon the occurrence of each adjustment
-----------------------------
or readjustment pursuant to this Section 10, the Company at its expense shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and furnish to each Holder of this Warrant a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Company shall, upon the written
request, at any time, of any such Holder, furnish or cause to be furnished to
such Holder a like certificate setting forth: (i) such adjustments and
readjustments; (ii) the Exercise Price at the time in effect; and (iii) the
number of shares and the amount, if any, of other property that at the time
would be received upon the exercise of the Warrant.
(f) No Impairment. The Company will not, by any voluntary action, avoid
-------------
or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith assist in the carrying out of all the provisions of this Section 10 and in
the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holders of this Warrant against impairment.
11. Miscellaneous.
-------------
(a) This Warrant shall be governed by the laws of the State of California
as applied to agreements entered into in the State of California by and among
residents of the State of California.
(b) In the event of a dispute with regard to the interpretation of this
Warrant, the prevailing party may collect the cost of attorney's fees,
litigation expenses or such other expenses as may be incurred in the enforcement
of the prevailing party's rights hereunder.
-8-
<PAGE>
(c) The holder hereof agrees to be bound by such market standoff
provisions (i.e., restrictions on stock resale provisions following the
Company's sale of securities in the public market) as shall be agreed to by the
majority of purchasers of the Preferred Stock upon the initial closing of the
Preferred Stock financing.
(d) This Warrant shall be exercisable as provided for herein, except that
in the event that the expiration date of this Warrant shall fall on a Saturday,
Sunday and or United States federally recognized Holiday, this expiration date
for this Warrant shall be extended to 5:00 p.m. Pacific standard time on the
business day following such Saturday, Sunday or recognized Holiday.
IN WITNESS WHEREOF, CRITICAL PATH, INC. has caused this Warrant to be
executed by its officers thereunto duly authorized.
Dated: September 11, 1998
CRITICAL PATH, INC.
By______________________________________
Title___________________________________
HAMBRECHT & QUIST LLC
By______________________________________
Title___________________________________
-9-
<PAGE>
NOTICE OF EXERCISE
To: CRITICAL PATH, INC.
(1) The undersigned hereby elects to purchase __________ shares of Series
B Preferred Stock of CRITICAL PATH, INC., pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price for such shares in
full.
(2) In exercising this Warrant, the undesigned hereby confirms and
acknowledges that the shares of Preferred Stock or the Common Stock to be issued
upon conversion thereof are being acquired solely for the account of the
undersigned and not as a nominee for any other party, or for investment, and
that the undersigned will not offer, sell or otherwise dispose of any such
shares of Preferred Stock or Common Stock except under circumstances that will
not result in a violation of the Securities Act of 1933, as amended, or any
applicable state securities laws.
(3) Please issue a certificate or certificates representing said shares of
Series B Preferred Stock in the name of the undersigned or in such other name as
is specified below:
________________________________________
(Name)
_______________________________________
(Name)
(4) Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned or in such other name as is specified
below:
________________________________________
(Name)
____________________ ________________________________________
(Date) (Signature)
<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Assignee named below all of the rights of
the undersigned under the within Warrant, with respect to the number of shares
of Series B Preferred Stock (or Common Stock) set forth below:
No. of
Name of Assignee Address Shares
---------------- ------- ------
and does hereby irrevocably constitute and appoint Attorney ____________________
to make such transfer on the books of CRITICAL PATH, INC., maintained for the
purpose, with full power of substitution in the premises.
The undersigned also represents that, by assignment hereof, the Assignee
acknowledges that this Warrant and the shares of stock to be issued upon
exercise hereof or conversion thereof are being acquired for investment and that
the Assignee will not offer, sell or otherwise dispose of this Warrant or any
shares of stock to be issued upon exercise hereof or conversion thereof except
under circumstances which will not result in a violation of the Securities Act
of 1933, as amended, or any applicable state securities laws. Further, the
Assignee has acknowledged that upon exercise of this Warrant, the Assignee
shall, if requested by the Company, confirm in writing, in a form satisfactory
to the Company, that the shares of stock so purchased are being acquired for
investment and not with a view toward distribution or resale.
Dated: __________, 19__.
________________________________________
Signature of Holder
<PAGE>
EXHIBIT 4.3
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. SUCH SECURITIES AND ANY SECURITIES OR SHARES ISSUED
HEREUNDER MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
OR AN EXEMPTION THEREFROM UNDER SAID ACT. COPIES OF THE AGREEMENT COVERING THE
PURCHASE OF THESE SECURITIES AND RESTRICTING THEIR TRANSFER OR SALE MAY BE
OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD HEREOF TO
THE SECRETARY OF THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES.
No. WA-__
WARRANT TO PURCHASE PREFERRED STOCK
OF
CRITICAL PATH, INC.
This certifies that, for value received, Hambrecht & Quist LLC or its
registered assigns ("Holder") is entitled, subject to the terms and conditions
set forth below, to purchase from Critical Path, Inc. (the "Company"), in whole
or in part 113,001 fully paid and nonassessable shares (the "Warrant Shares") of
Series B Preferred Stock of the Company (the "Preferred Stock") at a purchase
price of $1.9373 per share (the "Exercise Price"). The number, character and
Exercise Price of such shares of Preferred Stock are subject to adjustment as
provided below and all references to "Warrant Shares" and "Exercise Price"
herein shall be deemed to include any such adjustment or series of adjustments.
The term "Warrant" as used herein shall mean this Warrant, and any warrants
delivered in substitution or exchange therefor as provided herein.
1. Term of Warrant. Subject to the terms and conditions set forth
---------------
herein, this Warrant shall be exercisable, in whole or in part, during the term
commencing on the date hereof and ending at 5:00 p.m., Pacific standard time, on
the earliest of the following: (a) the closing of a firmly underwritten public
offering of the Company's Common Stock pursuant to a registration statement
under the Securities Act of 1933, as amended; (b) the closing of a merger or
consolidation of the Company pursuant to which the stockholders of the Company
hold less than fifty percent (50%) of the voting securities of the surviving
entity, or a sale of all or substantially all of the assets of the Company; or
(c) September 11, 2003, and shall be void thereafter (the "Exercise Period").
2. Exercise of Warrant.
-------------------
(a) Cash Exercise. This Warrant may be exercised by the Holder by (i) the
-------------
surrender of this Warrant to the Company, with the Notice of Exercise annexed
hereto duly completed and executed on behalf of the Holder, at the office of the
Company (or such other office or agency of the Company as it may designate by
notice in writing to the Holder at the address of the Holder appearing on the
books of the Company) during the Exercise Period and (ii) the delivery of
payment to the Company, for the account of the Company, by cash, wire transfer
of immediately available funds to a bank account specified by the Company, or by
certified or bank cashier's
-1-
<PAGE>
check, of the Exercise Price for the number of Warrant Shares specified in the
Exercise Form in lawful money of the United States of America. The Company
agrees that such Warrant Shares shall be deemed to be issued to the Holder as
the record holder of such Warrant Shares as of the close of business on the date
on which this Warrant shall have been surrendered and payment made for the
Warrant Shares as aforesaid. A stock certificate or certificates for the Warrant
Shares specified in the Exercise Form shall be delivered to the Holder as
promptly as practicable, and in any event within ten (10) days, thereafter. If
this Warrant shall have been exercised only in part, the Company shall, at the
time of delivery of the stock certificate or certificates, deliver to the Holder
a new Warrant evidencing the rights to purchase the remaining Warrant Shares,
which new Warrant shall in all other respects be identical with this Warrant. No
adjustments shall be made on Warrant Shares issuable on the exercise of this
Warrant for any cash dividends paid or payable to holders of record of Common
Stock prior to the date as of which the Holder shall be deemed to be the record
holder of such Warrant Shares.
(b) Net Issue Exercise. In lieu of exercising this Warrant pursuant to
------------------
Section 2(a), this Warrant may be exercised by the Holder by the surrender of
this Warrant to the Company, with a duly executed Exercise Form marked to
reflect Net Issue Exercise and specifying the number of shares of Preferred
Stock to be purchased, during normal business hours on any Business Day during
the Exercise Period. The Company agrees that such shares of Preferred Stock
shall be deemed to be issued to the Holder as the record holder of such shares
of Preferred Stock as of the close of business on the date on which this Warrant
shall have been surrendered as aforesaid. Upon such exercise, the Holder shall
be entitled to receive shares equal to the value of this Warrant (or the portion
thereof being canceled) by surrender of this Warrant to the Company together
with notice of such election in which event the Company shall issue to Holder a
number of shares of Preferred Stock computed as of the date of surrender of this
Warrant to the Company using the following formula:
X = Y(A-B)
------
A
Where X = the number of shares of Preferred Stock to be issued to Holder under
this Section 2(b);
Y = the number of shares of Preferred Stock otherwise purchasable under
this Warrant (as adjusted to the date of such calculation);
A = the fair market value of one share of the Preferred Stock (Series B
or Series A Preferred) at the date of such calculation;
B = the Exercise Price (as adjusted to the date of such calculation).
(c) Fair Market Value. For purposes of Section 2(b) fair market value of
-----------------
one share of the Company's Preferred Stock shall mean, as of any date:
(i) the fair market value of the shares of Common Stock into which
such share of Preferred Stock is convertible as of such date, as determined
from the last
-2-
<PAGE>
closing price per share of the Company's Common Stock on the principal
national securities exchange on which the Common Stock is listed or
admitted to trading, or
(ii) the fair market value of the shares of Common Stock into which
such share of Preferred Stock is convertible as of such date, as determined
from the last reported sales price per share of the Company's Common Stock
on the Nasdaq National Market or the Nasdaq Small-Cap Market (collectively,
"Nasdaq") if the Company's Common Stock is not listed or traded on any such
exchange, or
(iii) the fair market value of the shares of Common Stock into which
such share of Preferred Stock is convertible as of such date, as determined
from the average of the bid and asked price per share as reported in the
"pink sheets" published by the National Quotation Bureau, Inc. (the "pink
sheets") if the Company's Common Stock is not listed or traded on any
exchange or Nasdaq, or
(iv) if such quotations are not available, the fair market value per
share of the Company's Preferred Stock on the date such notice was received
by the Company as reasonably determined in good faith by the Board of
Directors of the Company.
(d) This Warrant shall be deemed to have been exercised immediately prior
to the close of business on the date of its surrender for exercise as provided
above, and the person entitled to receive the shares of Preferred Stock issuable
upon such exercise shall be treated for all purposes as the holder of record of
such shares as of the close of business on such date. As promptly as
practicable on or after such date and in any event within ten (10) days
thereafter, the Company at its expense shall issue and deliver to the person or
persons entitled to receive the same a certificate or certificates for the
number of shares issuable upon such exercise. In the event that this Warrant is
exercised in part, the Company at its expense will execute and deliver a new
Warrant of like tenor exercisable for the number of shares for which this
Warrant may then be exercised.
3. No Fractional Shares or Scrip. No fractional shares or scrip
-----------------------------
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which the Holder would otherwise be
entitled, the Company shall make a cash payment equal to the Exercise Price
multiplied by such fraction.
4. Replacement of Warrant. On receipt of evidence reasonably
----------------------
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and substance to the Company
or, in the case of mutilation, on surrender and cancellation of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this Warrant, a
new warrant of like tenor and amount.
5. Rights of Stockholders. Subject to Sections 8 and 10 of this Warrant,
----------------------
the Holder shall not be entitled to vote or receive dividends or be deemed the
holder of Preferred Stock or any other securities of the Company that may at any
time be issuable on the exercise hereof for any
-3-
<PAGE>
purpose, nor shall anything contained herein be construed to confer upon the
Holder, as such, any of the rights of a stockholder of the Company or any right
to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon any recapitalization, issuance of stock,
reclassification of stock, change of par value, or change of stock to no par
value, consolidation, merger, conveyance, or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until the
Warrant shall have been exercised as provided herein.
6. Transfer of Warrant.
-------------------
(a) Warrant Register. The Company will maintain a register (the "Warrant
----------------
Register") containing the names and addresses of the Holder or Holders. Any
Holder of this Warrant or any portion thereof may change his address as shown on
the Warrant Register by written notice to the Company requesting such change.
Any notice or written communication required or permitted to be given to the
Holder may be delivered or given by mail to such Holder as shown on the Warrant
Register and at the address shown on the Warrant Register. Until this Warrant
is transferred on the Warrant Register of the Company, the Company may treat the
Holder as shown on the Warrant Register as the absolute owner of this Warrant
for all purposes, notwithstanding any notice to the contrary.
(b) Warrant Agent. The Company may, by written notice to the Holder,
-------------
appoint an agent for the purpose of maintaining the Warrant Register referred to
in Section 6(a) above, issuing the Warrant Shares or other securities then
issuable upon the exercise of this Warrant, exchanging this Warrant, replacing
this Warrant, or any or all of the foregoing. Thereafter, any such
registration, issuance, exchange, or replacement, as the case may be, shall be
made at the office of such agent.
(c) Transferability and Nonnegotiability of Warrant. This Warrant may not
-----------------------------------------------
be transferred or assigned in whole or in part without compliance with all
applicable federal and state securities laws by the transferor and the
transferee (including the delivery of investment representation letters and
legal opinions reasonably satisfactory to the Company, if such are requested by
the Company). Notwithstanding the foregoing, no investment representation
letter or opinion of counsel shall be required for any transfer of this Warrant
(or any portion thereof) or any shares of Preferred Stock or Common Stock issued
upon exercise hereof or conversion thereof (i) in compliance with Rule 144 or
Rule 144A of the Act, or (ii) by gift, will or intestate succession by the
Holder to his or her spouse or lineal descendants or ancestors or any trust for
any of the foregoing; provided that in each of the foregoing cases the
transferee agrees in writing to be subject to the terms of this Section 6(c).
Subject to the provisions of this Warrant with respect to compliance with the
Securities Act of 1933, as amended (the "Act"), title to this Warrant may be
transferred by endorsement (by the Holder executing the Assignment Form annexed
hereto) and delivery in the same manner as a negotiable instrument transferable
by endorsement and delivery.
(d) Exchange of Warrant Upon a Transfer. On surrender of this Warrant for
-----------------------------------
exchange, properly endorsed on the Assignment Form and subject to the provisions
of this Warrant with respect to compliance with the Act and with the limitations
on assignments and transfers and contained in this Section 6, the Company at its
expense shall issue to or on the order of the
-4-
<PAGE>
Holder a new warrant or warrants of like tenor, in the name of the Holder or as
the Holder (on payment by the Holder of any applicable transfer taxes) may
direct, for the number of shares issuable upon exercise hereof.
(e) Compliance with Securities Laws.
-------------------------------
(i) The Holder of this Warrant, by acceptance hereof, acknowledges that
this Warrant and the shares of Preferred Stock or Common Stock to be issued upon
exercise hereof or conversion thereof are being acquired solely for the Holder's
own account and not as a nominee for any other party, and for investment, and
that the Holder will not offer, sell or otherwise dispose of this Warrant or any
shares of Preferred Stock or Common Stock to be issued upon exercise hereof or
conversion thereof except under circumstances that will not result in a
violation of the Act or any applicable state securities laws. Upon exercise of
this Warrant, the Holder shall, if requested by the Company, confirm in writing,
in a form satisfactory to the Company, that the shares of Preferred Stock or
Common Stock so purchased are being acquired solely for the Holder's own account
and not as a nominee for any other party, for investment, and not with a view
toward distribution or resale.
(ii) This Warrant and all shares of Preferred Stock or Common Stock
issued upon exercise hereof or conversion thereof shall be stamped or imprinted
with a legend in substantially the following form (in addition to any legend
required by state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. SUCH SECURITIES AND ANY SECURITIES OR
SHARES ISSUED HEREUNDER MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID
ACT. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE
SECURITIES AND RESTRICTING THEIR TRANSFER OR SALE MAY BE OBTAINED
AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD HEREOF
TO THE SECRETARY OF THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES.
(iii) The Company agrees to remove promptly, upon the request of the
holder of this Warrant and Securities issuable upon exercise of the Warrant ,the
legend set forth in Section 6(e)(ii) above from the documents/certificates for
such securities upon full compliance with this Agreement and Rules 144 and 145.
7. Reservation of Stock. The Company covenants that during the term
--------------------
this Warrant is exercisable, the Company will reserve from its authorized and
unissued Preferred Stock or other shares issuable upon exercise of the Warrant a
sufficient number of shares to provide for the issuance of Preferred Stock upon
the exercise of this Warrant (and shares of its Common Stock for issuance on
conversion of such Preferred Stock) and, from time to time, will take all steps
necessary to amend its Restated Certificate of Incorporation (the "Restated
Certificate") to provide sufficient reserves of shares of Preferred Stock
issuable upon exercise of the Warrant (and shares of its Common Stock for
issuance on conversion of such Preferred Stock). The Company further covenants
that all shares that may be issued upon the exercise of rights
-5-
<PAGE>
represented by this Warrant, upon exercise of the rights represented by this
Warrant and payment of the Exercise Price, all as set forth herein, will be free
from all taxes, liens and charges in respect of the issue thereof (other than
taxes in respect of any transfer occurring contemporaneously or otherwise
specified herein).
8. Notices.
-------
(a) Whenever the Exercise price or number of shares purchasable hereunder
shall be adjusted pursuant to Section 10 hereof, the Company shall issue a
certificate signed by its Chief Financial Officer setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated, and the Exercise Price and
number of shares purchasable hereunder after giving effect to such adjustment,
and shall cause a copy of such certificate to be mailed (by first-class mail,
postage prepaid) to the Holder of this Warrant.
(b) In case:
(i) the Company shall take a record of the holders of its
Common Stock (or other stock or securities at the time receivable upon the
exercise of this Warrant) for the purpose of entitling them to receive any
dividend or other distribution, or any right to subscribe for or purchase
any shares of stock of any class or any other securities, or to receive any
other right;
(ii) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation, or any conveyance
of all or substantially all of the assets of the Company to another
corporation;
(iii) of any voluntary dissolution, liquidation or winding-up of
the Company;
(iv) of any redemption or conversion of all outstanding
Preferred Stock or Common Stock; or
(v) of the filing of the Company's first registration
statement with the U.S. Securities and Exchange Commission (the "SEC");
then, and in each such case, the Company will mail or cause to be mailed to the
Holder or Holders a notice specifying, as the case may be, (A) the date on which
a record is to be taken for the purpose of such dividend, distribution or right,
and stating the amount and character of such dividend, distribution or right,
(B) the date on which such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation, winding-up, redemption or
conversion is to take place, and the time, if any is to be fixed, as of which
the holders of record of Preferred Stock or Common Stock (or such stock or
securities at the time receivable upon the exercise of this Warrant) shall be
entitled to exchange their shares of Preferred Stock or Common Stock (or such
other stock or securities) for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or
-6-
<PAGE>
winding-up, or (C) the anticipated date on which the Company expects its first
registration statement with the SEC to become effective. Such notice shall be
mailed at least fifteen (15) days prior to the date therein specified.
(c) All such notices, advices and communications shall be deemed to have
been received (i) in the case of personal delivery, on the date of such delivery
and (ii) in the case of mailing, on the third business day following the date of
such mailing if sent to a U.S. address and on the tenth (10th) business day
following the date of such mailing if sent to an address outside the U.S.
9. Amendments. This Warrant and any term hereof may be changed, waived,
----------
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
10. Adjustments. The Exercise Price and the number of shares purchasable
-----------
hereunder are subject to adjustment from time to time as follows:
(a) Stock Conversion or Redemption of Preferred Stock. Should all of the
-------------------------------------------------
Company's Preferred, as the case may be, at any time prior to the expiration of
this Warrant, redeemed or converted into shares of the Company's Common Stock in
accordance with the Company's Restated Certificate, then this Warrant shall
immediately become exercisable for that number of shares of the Company's Common
Stock equal to the number of shares of the Common Stock that would have been
received if this Warrant had been exercised in full and the Preferred Stock
received thereupon had been simultaneously converted immediately prior to such
event, and the Exercise Price shall be immediately adjusted to equal the
quotient obtained by dividing (x) the aggregate Exercise Price of the maximum
number of shares of Preferred Stock for which this Warrant was exercisable
immediately prior to such conversion or redemption, by (y) the number of shares
of Common Stock for which this Warrant is exercisable immediately after such
conversion or redemption. For purposes of the foregoing, the "Restated
Certificate" shall mean the Articles of Incorporation of the Company as amended
and/or restated and effective immediately prior to the redemption or conversion
of all of the Company's Preferred Stock, as the case may be.
(b) Reclassification, etc. If the Company, at any time while this
----------------------
Warrant, or any portion thereof, remains outstanding and unexpired by
reclassification of securities or otherwise, shall change any of the securities
as to which purchase rights under this Warrant exist into the same or a
different number of securities of any other class or classes, this Warrant shall
thereafter represent the right to acquire such number and kind of securities as
would have been issuable as the result of such change with respect to the
securities that were subject to the purchase rights under this Warrant
immediately prior to such reclassification or other change and the Exercise
Price therefor shall be appropriately adjusted, all subject to further
adjustment as provided in this Section 10. No adjustment shall be made pursuant
to this Section 10(b), upon any conversion or redemption of the Preferred Stock
which is the subject of Section 10(a).
(c) Split, Subdivision or Combination of Shares. If the Company at any
-------------------------------------------
time while this Warrant, or any portion thereof, remains outstanding and
unexpired shall split, subdivide or combine the securities as to which purchase
rights under this Warrant exist, into a different number of securities of the
same class, then (i) in the case of a split or subdivision, the Exercise
-7-
<PAGE>
Price for such securities shall be proportionately decreased and the securities
issuable upon exercise of this Warrant shall be proportionately increased, and
(ii) in the case of a combination, the Exercise Price for such securities shall
be proportionately increased and the securities issuable upon exercise of this
Warrant shall be proportionately decreased.
(d) Adjustments for Dividends in Stock or Other Securities or Property.
------------------------------------------------------------------
If while this Warrant, or any portion hereof, remains outstanding and unexpired
the holders of the securities as to which purchase rights under this Warrant
exist at the time shall have received, or, on or after the record date fixed for
the determination of eligible Stockholders, shall have become entitled to
receive, without payment therefor, other or additional stock or other securities
or property (other than cash) of the Company by way of dividend, then and in
each case, this Warrant shall represent the right to acquire, in addition to the
number of shares of the security receivable upon exercise of this Warrant, and
without payment of any additional consideration therefor, the amount of such
other or additional stock or other securities or property (other than cash) of
the Company that such holder would hold on the date of such exercise had it been
the holder of record of the security receivable upon exercise of this Warrant on
the date hereof and had thereafter, during the period from the date hereof to
and including the date of such exercise, retained such shares and/or all other
additional stock available by it as aforesaid during such period, giving effect
to all adjustments called for during such period by the provisions of this
Section 10.
(e) Certificate as to Adjustments. Upon the occurrence of each adjustment
-----------------------------
or readjustment pursuant to this Section 10, the Company at its expense shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and furnish to each Holder of this Warrant a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Company shall, upon the written
request, at any time, of any such Holder, furnish or cause to be furnished to
such Holder a like certificate setting forth: (i) such adjustments and
readjustments; (ii) the Exercise Price at the time in effect; and (iii) the
number of shares and the amount, if any, of other property that at the time
would be received upon the exercise of the Warrant.
(f) No Impairment. The Company will not, by any voluntary action, avoid
-------------
or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith assist in the carrying out of all the provisions of this Section 10 and in
the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holders of this Warrant against impairment.
11. Miscellaneous.
-------------
(a) This Warrant shall be governed by the laws of the State of California
as applied to agreements entered into in the State of California by and among
residents of the State of California.
(b) In the event of a dispute with regard to the interpretation of this
Warrant, the prevailing party may collect the cost of attorney's fees,
litigation expenses or such other expenses as may be incurred in the enforcement
of the prevailing party's rights hereunder.
-8-
<PAGE>
(c) The holder hereof agrees to be bound by such market standoff
provisions (i.e., restrictions on stock resale provisions following the
Company's sale of securities in the public market) as shall be agreed to by the
majority of purchasers of the Preferred Stock upon the initial closing of the
Preferred Stock financing.
(d) This Warrant shall be exercisable as provided for herein, except that
in the event that the expiration date of this Warrant shall fall on a Saturday,
Sunday and or United States federally recognized Holiday, this expiration date
for this Warrant shall be extended to 5:00 p.m. Pacific standard time on the
business day following such Saturday, Sunday or recognized Holiday.
IN WITNESS WHEREOF, CRITICAL PATH, INC. has caused this Warrant to be
executed by its officers thereunto duly authorized.
Dated: January 13, 1999
CRITICAL PATH, INC.
By______________________________________
Title___________________________________
HAMBRECHT & QUIST LLC
By______________________________________
Title___________________________________
-9-
<PAGE>
NOTICE OF EXERCISE
To: CRITICAL PATH, INC.
(1) The undersigned hereby elects to purchase __________ shares of Series
B Preferred Stock of CRITICAL PATH, INC., pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price for such shares in
full.
(2) In exercising this Warrant, the undesigned hereby confirms and
acknowledges that the shares of Preferred Stock or the Common Stock to be issued
upon conversion thereof are being acquired solely for the account of the
undersigned and not as a nominee for any other party, or for investment, and
that the undersigned will not offer, sell or otherwise dispose of any such
shares of Preferred Stock or Common Stock except under circumstances that will
not result in a violation of the Securities Act of 1933, as amended, or any
applicable state securities laws.
(3) Please issue a certificate or certificates representing said shares of
Series B Preferred Stock in the name of the undersigned or in such other name as
is specified below:
______________________________________
(Name)
______________________________________
(Name)
(4) Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned or in such other name as is specified
below:
______________________________________
(Name)
____________________ ______________________________________
(Date) (Signature)
<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Assignee named below all of the rights of
the undersigned under the within Warrant, with respect to the number of shares
of Series B Preferred Stock (or Common Stock) set forth below:
No. of
Name of Assignee Address Shares
---------------- ------- ------
and does hereby irrevocably constitute and appoint Attorney ____________________
to make such transfer on the books of CRITICAL PATH, INC., maintained for the
purpose, with full power of substitution in the premises.
The undersigned also represents that, by assignment hereof, the Assignee
acknowledges that this Warrant and the shares of stock to be issued upon
exercise hereof or conversion thereof are being acquired for investment and that
the Assignee will not offer, sell or otherwise dispose of this Warrant or any
shares of stock to be issued upon exercise hereof or conversion thereof except
under circumstances which will not result in a violation of the Securities Act
of 1933, as amended, or any applicable state securities laws. Further, the
Assignee has acknowledged that upon exercise of this Warrant, the Assignee
shall, if requested by the Company, confirm in writing, in a form satisfactory
to the Company, that the shares of stock so purchased are being acquired for
investment and not with a view toward distribution or resale.
Dated: __________, 19__.
________________________________________
Signature of Holder
<PAGE>
EXHIBIT 4.4
NEITHER THE SECURITY EVIDENCED BY THIS WARRANT NOR THE SECURITIES ISSUABLE UPON
EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY APPLICABLE STATE LAW, AND NO INTEREST HEREIN OR THEREIN MAY
BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS
(A) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS COVERING ANY SUCH TRANSACTION INVOLVING SAID SECURITIES,
(B) THE COMPANY RECEIVES OPINION OF LEGAL COUNSEL FOR THE HOLDER OF SAID
SECURITIES (REASONABLY CONCURRED IN WITH LEGAL COUNSEL FOR THE COMPANY) STATING
THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION, OR (C) THE COMPANY OTHERWISE
SATISFIES ITSELF THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION.
No. W-
ISSUED: January 29, 1999
CRITICAL PATH, INC.
SERIES B PREFERRED STOCK PURCHASE WARRANT
THIS IS TO CERTIFY that, subject to the terms and conditions hereof,
America Online, Inc. (the "Holder") or assigns is entitled to subscribe for and
purchase from Critical Path, Inc., a California corporation (the "Company"), at
any time on or after the date hereof but not later than 5:00 p.m., San Francisco
time, on January 29, 2006 (the "Exercise Period"), subject to the provisions
hereof, up to a maximum of that number of shares (subject to adjustment as
provided herein) (the "Warrant Shares ") of fully paid and non-assessable shares
of Series B Preferred Stock, $.001 par value, of the Company (the "Series B
Preferred Stock"), at a price per share (the "Exercise Price") as set forth in
Section 1.1 hereto. This Warrant is being issued pursuant to a certain Email
Services Agreement dated as of January 29, 1999 between ICQ, Inc., a California
corporation and the Company (the "Agreement"). All capitalized terms used but
not otherwise defined herein shall have the meaning ascribed to such terms in
the Agreement.
1. EXERCISE
1.1 WARRANT SHARES ELIGIBLE TO BE PURCHASED
(a) Subject to the provisions of Section 1.1.2, (x) the Holder's rights to
purchase Warrant Shares during the Exercise Period shall vest and (y) the
Exercise Price for such Warrant Shares shall be determined as set forth in the
table below.
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Percentage of Warrant Shares Vesting Exercise Price
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
(A) 1,791,362 Warrant Shares Immediately upon execution of $1.9373 per share.
(Representing Two percent the Agreement.
(2.0%) of the Fully Diluted
Stock (the "Initial Warrant
Shares"), with the Warrant
for these shares being
issued in consideration of
the agreement to sub-brand
set forth in Section 3.1 of
the Agreement.
- ------------------------------------------------------------------------------------------------
(B) 895,681 Warrant Shares, On the date that the Company $2.50 per share.
Representing One percent completes registration of the
(1.0%) of the Fully Diluted first 250,000 sub-branded ICQ
Stock (the "A Warrant Mail Boxes pursuant to the
Shares") Agreement.
- ------------------------------------------------------------------------------------------------
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Percentage of Warrant Shares Vesting Exercise Price
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
(C) 895,681 Warrant Shares, On the date that the Company $3.00 per share.
Representing One percent completes registration of
(1.0%) of the Fully Diluted 250,000 sub-branded ICQ Mail
Stock ( the "B Warrant Boxes pursuant to the
Shares") Agreement in addition to those
registered in (B) above.
- ------------------------------------------------------------------------------------------------
(D) 895,681 Warrant Shares, On the date that the Company $4.00 per share.
Representing One percent completes registration of
(1.0%) of the Fully Diluted 250,000 sub-branded ICQ Mail
Stock (the "C Warrant Boxes pursuant to the
Shares") Agreement in addition to those
registered in (B) and (C)
above.
- ------------------------------------------------------------------------------------------------
(E) 895,681 Warrant Shares, On the date that the Company $5.00 per share.
Representing One percent completes registration of
(1.0%) of the Fully Diluted 250,000 sub-branded ICQ Mail
Stock (the "D Warrant Boxes pursuant to the
Shares") Agreement in addition to those
registered in (B), (C) and (D)
above.
- ------------------------------------------------------------------------------------------------
</TABLE>
(b) Anything contained herein to the contrary notwithstanding, if any of
the A Warrant Shares, the B Warrant Shares, the C Warrant Shares or the D
Warrant Shares have not vested on or prior to the end of the Vesting Period as
defined in the Agreement, then the Holder's rights to purchase those unvested A
Warrant Shares , B Warrant Shares, C Warrant Shares and D Warrant Shares shall
terminate.
(c) Notwithstanding the foregoing, the A Warrant Shares, the B Warrant
Shares, the C Warrant Shares and the D Warrant Shares shall become fully vested
and exercisable immediately upon the Termination of the Agreement by ICQ
pursuant to Sections 16.3, 16.4 or 16.5 of the Agreement.
(d) The Company represents to Holder that the Exercise Price for the
Initial Warrant Shares (i.e. $1.9373 per share) is equal to the price for Series
B Preferred Stock in the most recent round of outside equity financing of the
Company.
(e) The Company represents to Holder that, as of January 29, 1999 (the
"Designated Date"), the aggregate 5,374,086 Warrant Shares, if all issued as of
the Designated Date, would constitute six percent (6%) of the number of shares
of voting capital stock of the Company
-3-
<PAGE>
outstanding on the Designated Date after giving effect to the exercise, exchange
or conversion of all outstanding securities, rights, options, warrants
(including this Warrant), calls, commitments or agreements of any nature or
character (whether debt or equity) that are, directly or indirectly, exercisable
or exchangeable for, or convertible into or otherwise represent the right to
purchase or otherwise receive, directly or indirectly, any such capital stock or
other arrangement to acquire at any time or under any circumstance, voting
capital stock of the Company or any such other outstanding securities and
including all shares or other equity interests subject, as of the Designated
Date to issued stock options or other rights to acquire equity of any nature to
officers, directors, employees or consultants of the Company under all
agreements, plans or arrangements theretofore approved by the Board of Directors
of the Company, whether on not the right to exercise such outstanding options or
other rights is currently effective or vested (collectively, the "Fully-Diluted
Stock").
(f) In the event, the Series B Preferred Stock is automatically converted
into Common Stock of the Company (the "Common Stock"), pursuant to the Articles
of Incorporation of the Company, then the Warrants shall become exercisable for
that number of shares of Common Stock into which the Series B Preferred Stock
issuable hereunder are converted.
1.2 PROCEDURE FOR EXERCISE
Subject to the foregoing, this Warrant may be exercised by the Holder, as
to those shares of Warrant Shares for which this Warrant is then exercisable as
determined in accordance with Section 1.1, at any time during the Exercise
Period in whole or part by delivering to the Company, at the address of the
Company set forth in Section 17, (a) the form of Exercise Notice attached hereto
duly completed and executed by the Holder, (b) this Warrant certificate, and (c)
cash or a bank cashier's check payable to the Company in the amount of the
Exercise Price multiplied by the number of shares for which this Warrant is
being exercised (the "Purchase Price"). The Holder will be deemed to be the
holder of record of the shares of Series B Preferred Stock as to which the
Warrant was exercised in accordance with this Warrant, effective at the close of
business, San Francisco time, on the date such exercise is completed and all
documents specified above are delivered to the Company.
1.3 NET EXERCISE
Notwithstanding the payment provisions set forth above, the Holder may
elect to exercise this Warrant by converting this Warrant into shares of Warrant
Shares as provided in this Section 1.3, such election to be effected by
surrender of this Warrant at the principal office of the Company, together with
the Notice of Exercise indicating such election, in which case the Company shall
issue to the Holder the number of shares of Warrant Shares determined as
follows:
-4-
<PAGE>
X = Y (A-B)
-------
A
Where: X = the number of shares of Warrant Shares to be issued
Y = the number of shares of Warrant Shares as to which the Warrant
is being exercised
A = the Fair Market Value (as defined below) of one (1) share of
Warrant Shares
B = the applicable Exercise Price
For purposes of the above calculation, the Fair Market Value of a share of
Warrant Shares shall be determined in good faith by the Board of Directors of
the Company (the "Board"); provided, however, that if a public market for the
common stock of Company (the "Common Stock") exists at the time of such
exercise, then such Fair Market Value shall be calculated by treating the Series
B Preferred Stock as converted into Common Stock at the then conversion rate,
and with the value of the Common Stock deemed to be equal to the average of the
closing bid and asked prices of the Common Stock as quoted in the Over-the-
Counter Market Summary or the last reported sale price of the Common Stock or
the closing price quoted on the Nasdaq National Market System or on any exchange
on which the Common Stock is then listed, whichever is applicable, for the five
(5) trading days prior to the date of exercise of this Warrant. Notwithstanding
the foregoing, in the event this Warrant is exercised in connection with the
Company's initial public offering of Common Stock, the Fair Market Value per
share of Common Stock shall be deemed to be equal to the per share offering
price to the public of the Company's initial public offering.
The Board shall promptly respond in writing to an inquiry by the Holder as
to the Fair Market Value of one share of Warrant Shares.
2. DELIVERY OF STOCK CERTIFICATE
Within twenty days after the exercise of this Warrant (in full or in part)
and payment of the Purchase Price then due, the Company at its expense shall
issue in the name of and deliver to the Holder (a) a certificate or certificates
for the number of fully paid and nonassessable shares of Warrant Shares to which
the Holder shall be entitled upon such exercise and (b) if applicable, a new
Warrant of like tenor to purchase up to that number of shares of Warrant Shares,
if any, as to which this Warrant shall not have been previously exercised by the
Holder or repurchased by the Company.
3. Covenants as to Warrant Shares
The Company covenants and agrees that the Company will at all times have
authorized and reserved a sufficient number of shares of Series B Preferred
Stock to provide for the exercise of the rights represented by this Warrant and
a sufficient number of shares of Common Stock for conversion of the Series B
Preferred Stock into Common Stock. The Company further covenants that all shares
of Series B Preferred Stock which may be issued upon the exercise of the rights
-5-
<PAGE>
represented by this Warrant, and all shares of Common Stock which may be issued
upon conversion of the Series B Preferred Stock into Common Stock, will, upon
issuance, in accordance with the terms of this Warrant, be validly issued, fully
paid and non-assessable and free from all taxes, liens and charges solely with
respect to the issuance thereof. The Company further covenants and agrees that
the Company will from time to time take all such action as may be requisite to
assure that the stated or par value per share of the Series B Preferred Stock is
at all times equal to or less than the then effective Exercise Price per share
of the Series B Preferred Stock issuable upon exercise of this Warrant. If and
so long as the Common Stock issuable upon the conversion of the Series B
Preferred Stock issuable upon exercise of the rights represented by this Warrant
is listed on any national securities exchange, the Company will, if permitted by
the rules of such exchange, use its best efforts to list and keep listed in such
exchange, upon official notice of issuance, all shares of such capital stock.
4. Effects of Reorganization
In the event of a of a merger or consolidation of the Company with another
entity or the acquisition by another Company of all or substantially all of the
assets or stock of the Company by another entity (collectively such events being
a "Reorganization"), the following provisions will apply:
(a) AOL will be provided with notice of such Reorganization at least
thirty (30) business days in advance of its scheduled consummation. In addition,
AOL will be provided copies of any notice sent to shareholders of the Company in
connection with such Reorganization (including notice of any shareholder's
meetings and shareholder's consents), simultaneously with such notice being
provided to any shareholder.
(b) If the Reorganization constitutes an assignment under the Section 18.8
of the Agreement or is a sale of substantially all of the assets of the Company,
then, in addition to any other rights that AOL or ICQ may have under the
Agreement as the result of such assignment or sale, all of the A Warrant Shares,
B Warrant Shares, C Warrant Shares and D Warrant Shares shall vest and become
fully exercisable upon completion of the Reorganization (and AOL will be
entitled to conditionally exercise such Warrants effective concurrently with
completion of the Reorganization (but immediately prior thereto).
(c) Whether or not the Reorganization constitutes an assignment under
Section 18.8, (including if ICQ authorizes an assignment under Section 18.8 in
its discretion and the Agreement is assigned to another entity), in the event
the stockholders of the Company receive cash, stock or other property or
contractual rights in respect of their stock in the Company (including upon any
Reorganization where the Company is not the surviving entity), this Warrant will
be exchanged for a warrant to purchase such kind and number of shares of capital
stock or other securities or property or rights of the Company or the surviving
entity to which the Holder would have been entitled if it had held the Series B
Preferred Stock issuable upon the exercise hereof immediately prior to such
Reorganization, which warrant shall have the same terms and conditions hereof.
Despite the foregoing, if the sole consideration received by stockholders in any
such Reorganization is cash, then Company shall not be required to issue an
exchange warrant if it pays to Company immediately upon closing, cash based on
the amount that the Holder would have received in such Reorganization upon full
exercise of the Warrant for all
-6-
<PAGE>
Warrant Shares, whether or not then vested; it is understood that the net amount
payable will be the net exercise price therefor calculated in the manner
specified in Section 1.3 above.
5. ADJUSTMENTS FOR STOCK SPLITS AND SIMILAR MATTERS
5.1 STOCK SPLITS AND REVERSE STOCK SPLITS
If after conversion of the Series B Preferred Stock the Company shall issue
any shares of Common Stock as a stock dividend or subdivide the number of
outstanding shares of Common Stock into a greater number of shares, then, in
either such case, then the Exercise Price in effect before such dividend or
subdivision shall be proportionately reduced and the number of shares of Warrant
Shares at that time purchasable pursuant to this Warrant shall be
proportionately increased; and, conversely, if the Company shall reduce the
number of outstanding shares of Common Stock by combining such shares into a
smaller number of shares, then the Exercise Price in effect before such
combination shall be proportionately increased and the number of shares of
Warrant Shares at that time purchasable pursuant to this Warrant shall be
proportionately decreased. Upon each adjustment in the Exercise Price pursuant
to this Section 5, the number of shares of Warrant Shares purchasable hereunder
shall be adjusted, to the nearest whole share, to the product obtained by
multiplying such number of shares purchasable immediately prior to such
adjustment in the Exercise Price by a fraction, the numerator of which shall be
the Exercise Price immediately prior to such adjustment and the denominator of
which shall be the Exercise Price immediately thereafter. The Holder shall be
entitled to the same notice and information regarding such dividend or
subdivision as is furnished to holders of Common Stock, which notice shall be
sent to the Holder no later than the date such notice is sent to all holders of
Common Stock. The foregoing is intended to protect Holder against dilution to
due stock dividends and stock splits. If the rights of holders of Series B
Preferred Stock are such that the foregoing adjustments and protections are
taken care of due to changes in the rights of Series B Preferred Stock that are
provided to Holder hereunder because the Warrant is for Series B Preferred, than
the rights hereunder will not be effective to the extent they would duplicate
the same rights available to holder by reason of the fact that this Warrant is
for Series B Preferred.
5.2 OTHER DIVIDENDS AND DISTRIBUTIONS
In case the Company shall take a record of the holders of its Common Stock
(or other stock or securities at the time receivable upon the exercise of this
Warrant) for the purpose of entitling them to receive any dividend or other
distribution other than as described in Section 5.1, or any right to subscribe
for or purchase any shares of stock of any class or any other securities, or to
receive any other right, then the Company will mail or cause to be mailed to the
Holder a notice specifying the date on which a record is to be taken for the
purpose of such dividend, distribution or right (the "Record Date"), and stating
the amount and character of such dividend, distribution or right. Such notice
shall be mailed at least 15 days prior to the Record Date therein specified.
-7-
<PAGE>
6. FRACTIONAL SHARES
No fractional shares shall be issued upon the exercise of this Warrant. In
lieu of fractional shares, the Company shall pay the Holder a sum in cash equal
to the fair market value of the fractional shares (as determined under paragraph
1.2 above) on the date of exercise.
7. RESTRICTIONS ON TRANSFER
Neither this Warrant nor any securities purchased upon exercise of this
Warrant may be transferred unless (a) such transfer is registered under the
Securities Act of 1933, as amended (the "Securities Act"), and any applicable
state securities or blue sky laws, (b) the Company has received a legal opinion
reasonably satisfactory to the Company to the effect that the transfer is exempt
from the prospectus delivery and registration requirements of the Securities Act
and any applicable state securities or blue sky laws; provided, however, that
-------- -------
no such opinion of counsel shall be necessary for a transfer of Warrant Shares
pursuant to Rule 144(k) promulgated under the Securities Act or any successor
rule thereto ("Rule 144(k)"), or (c) the Company otherwise satisfies itself that
such transfer is exempt from registration. In addition, this Warrant itself
(but not the securities purchased upon exercise hereof) may not be assigned or
transferred except as permitted by Section 16 hereof.
8. LEGEND
A legend setting forth or referring to the above restrictions shall be
placed on this Warrant, any replacement hereof and any certificate representing
a security issued pursuant to the exercise hereof, and a stop transfer
restriction or order shall be placed on the books of the Company and with any
transfer agent until such securities may be legally sold or otherwise
transferred; provided, however, that such legend shall not be required and a
-------- -------
stop transfer restriction order shall not be placed if (i) in the opinion of
counsel to the Holder (reasonably concurred with by counsel to the Company)
registration of any future transfer is not required by the applicable provisions
of the Securities Act, (ii) the Company shall have waived the requirements of
such legends or (iii) the transfer of Warrant Shares shall be made in compliance
with the requirements of Rule 144(k).
9. HOLDER AS OWNER
The Company may deem and treat the Holder of this Warrant as the absolute
owner hereof for all purposes regardless of any notice to the contrary.
10. WARRANTHOLDER RIGHTS
10.1 RIGHTS IN CONNECTION WITH WARRANT SHARES
(a) Upon exercise of all or part of this Warrant, the holder of the
Warrant Shares shall be entitled to rights with respect to such shares of
Warrant Shares as set forth on Exhibit A attached hereto (the "Rights
Agreement").
(b) The Company hereby represents and warrants to the Holder that the
Holder Rights (as hereinafter defined) of the current holders of
Series B Preferred are at least as
-8-
<PAGE>
favorable as the Holder Rights of any other holders of stock or other
equity securities of the Company issued in connection with any
financing consummated by the Company prior to the date of this
Agreement (the "Other Rights") The Company hereby also agrees that
the Holder is be entitled to all rights and privileges (contractual
or otherwise) granted or agreed to by the Company to holders of
Series B Preferred Stock issued in the last round of sale of such
Series B Preferred Stock (including rights granted in the Purchase
Agreement for such last round). In the event that the above
representation is not accurate and there are outstanding Other Rights
more favorable to the holders thereof than the rights granted to
Holder hereunder (the "Warrant Rights"), then the Holder shall,
automatically and without any further action on the part of the
Holder or the Company, be entitled to, and the Company is hereby
deemed to grant to such Holder in respect of the Warrant Shares, such
more favorable rights, and the Company shall take all action
reasonable necessary to effectuate the foregoing. For purposes of
this Section: (i) "Holder Rights" shall mean all rights which a
holder of any equity securities of Company may be entitled to either
pursuant to the rights, preferences or privileges of the equity
securities, or pursuant to any contractual rights, including without
limitation, voting rights, dividend rights, registration rights and
anti-dilution rights; and (ii) equity securities will include,
without limitation, options, warrants, rights, calls, commitments or
agreements of any character to which the Company is a party or by
which it is bound calling for the issuance of shares of capital stock
or any securities convertible into or exercisable or exchangeable
for, or capital stock or other arrangement to acquire, at any time or
under any circumstances, shares of capital stock or any such
securities.
(c) The Company represents and warrants to the Holders that the Restated
Articles of Incorporation of the Company filed on September 4, 1998,
as amended by Certificates of Amendment dated December 17, 1998 and
January 5, 1999, copies of which have been provided to the Holder,
constitute the Articles of Incorporation of the Company as currently
in effect, and have not been modified or amended through the date of
this Warrant.
10.2 NO STOCKHOLDER RIGHTS
Other than as set forth in Section 10.1 above, this Warrant shall not
entitle the Holder to any voting rights or any other rights as a stockholder of
the Company or to any other rights whatsoever except the rights stated herein;
and except as otherwise provided herein, no dividend or interest shall be
payable or shall accrue in respect of this Warrant or the Warrant Shares
purchasable hereunder unless, until and to the extent that this Warrant shall be
exercised.
11. CONSTRUCTION
The validity and interpretation of the terms and provisions of this Warrant
shall be governed by the laws of the State of California. The descriptive
headings of the several sections of this Warrant are inserted for convenience
only and shall not control or affect the meaning or construction of any of the
provisions thereof.
-9-
<PAGE>
12. EXPIRATION
This Warrant shall be void and all rights represented thereby shall cease
unless exercised during the Exercise Period, as such period may be adjusted
pursuant to Section 4 hereof. All restrictions set forth herein on the shares
of capital stock issued upon exercise of any rights hereunder shall survive such
exercise and expiration of the rights granted hereunder.
13. EXCHANGE OF WARRANT
This Warrant is exchangeable upon the surrender hereof by the Holder at the
office of the Company for new Warrants of like tenor representing in the
aggregate the rights to subscribe for and purchase the number of shares which
may be subscribed for and purchased hereunder, each of such new Warrants to
represent the right to subscribe for and purchase such number of shares as shall
be designated by the Holder at the time of such surrender.
14. LOST WARRANT CERTIFICATE
If this Warrant is lost, stolen, mutilated or destroyed, the Company shall,
upon request in writing from the Holder and subject to compliance by Holder with
the following sentence, issue a new Warrant of like denomination, tenor and date
as this Warrant, subject to the Company's right to require the Holder to give
the Company a bond or other satisfactory security sufficient to indemnify the
Company against any claim that may be made against it (including any expense or
liability) on account of the alleged loss, theft, mutilation or destruction of
this Warrant or the issuance of such new Warrant. The Holder shall reimburse
the Company for any and all expenses and costs incurred by the Company in
connection with issuing a new Warrant under this Section.
15. WAIVERS AND AMENDMENTS
This Warrant or any provision hereof may be changed, waived, discharged or
terminated only by a statement in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought.
16. SUCCESSORS AND ASSIGNS.
This Warrant shall be binding upon the Company and inure to the benefit of
AOL and its successors and assigns; provided, however, that the Warrant shall
-------- -------
only be assignable by AOL to its Subsidiaries (as hereinafter defined). For
purposes of this Warrant, the term "Subsidiary" shall mean a corporation,
association, trust, partnership, joint venture or other entity in which AOL
owns, directly or indirectly, any capital stock or other proprietary interest
representing at least fifty percent (50%) of the voting power of such
corporation, association, trust, partnership, joint venture or other entity.
17. NOTICES
All notices or other communications required or permitted hereunder shall
be in writing and shall be delivered by personal delivery, reputable overnight
courier service, telecopier or
-10-
<PAGE>
mailed by United States mail, first-class postage prepaid, or by registered or
certified mail with return receipt requested, addressed as follows:
If to the Holder:
America Online, Inc.
22000 AOL Way
Dulles, VA 20166
Fax: (703) 265-2208
Attention: Legal Counsel
If to the Company:
Critical Path, Inc.
320 First Street
San Francisco, CA 94105
Fax: 415-808-8777
Attention: General Counsel
Each of the foregoing parties shall be entitled to specify a different
address by giving five days' advance written notice as aforesaid to the other
parties. All such notices and communications shall be deemed to have been
received (i) in the case of personal delivery, on the date of such delivery and
(ii) in the case of mailing, on the third business day following the date of
such mailing.
-11-
<PAGE>
18. INVESTMENT INTENT
By accepting this Warrant, the Holder represents that it is acquiring this
Warrant for investment and not with a view to, or for sale in connection with,
any distribution thereof.
IN WITNESS WHEREOF, the Company has executed this Warrant as of the date
first written above.
CRITICAL PATH, INC.
/s/ David Thatcher
By: ________________________________________
David Thatcher, Vice President and Chief
Financial Officer
ACCEPTED AND AGREED:
America Online, Inc.
/s/ David M. Colburn
___________________________
/s/ David M. Colburn
By:________________________
SVP, Busniess Affairs
Its:_______________________
2-4-99
Date:______________________
-12-
<PAGE>
NOTICE OF EXERCISE
TO CRITICAL PATH, INC.
The undersigned hereby irrevocably elects to exercise the Warrant delivered
herewith pursuant to Section 1.2 thereof as to __________ shares of Common Stock
and requests that certificates for such shares (or so many thereof as may be
issuable upon this exercise, if this exercise is being made pursuant to Section
1.3 of the Warrant) be issued in the name of and delivered to the undersigned at
the address stated below, and, if additional shares remain available for
purchase pursuant to the Warrant, the new Warrant evidencing the right to
purchase the balance of such shares shall be registered in the name of, and
delivered to, the undersigned at the address stated below. The undersigned
hereby agrees with and represents to the Company that said shares of common
stock are acquired for investment and not with a view to, or for sale in
connection with, any distribution or public offering thereof within the meaning
of the Securities Act of 1933, as amended, and agrees that the exercise of the
Warrant and the issuance and transfer of the common stock to be purchased are
subject to Sections 7 and 8 of the Warrant.
Payment is enclosed in the amount of $____________________
Dated:___________
________________________________
By:_____________________________
Its:____________________________
ADDRESS:
__________________________________
__________________________________
__________________________________
EIN: _____________________________
PHONE: ___________________________
FACSIMILE: _______________________
<PAGE>
EXHIBIT A
REGISTRATION RIGHTS
[Attach Investor Rights Agreement, including all amendments]
<PAGE>
EXHIBIT 10.22
ICQ-CRITICAL PATH
EMAIL SERVICES AGREEMENT
THIS EMAIL SERVICES AGREEMENT (this "Agreement") is entered into as of January
29, 1999 (the "Effective Date"), by and between ICQ, INC., a Delaware
corporation, with principal offices at 22000 AOL Way, Dulles, Virginia 20166
("ICQ") and CRITICAL PATH INC., a California corporation, with principal offices
at 320 First Street, San Francisco, CA 94105 ("CP"), with reference to the
following:
A. ICQ is a provider of online communication services, including the ICQ
Service and a subsidiary of America Online, Inc., a Delaware corporation
("AOL").
B. CP is a provider of email services to Internet service providers, web
hosting companies and other entities that resell such services to their end
users through Internet websites ("CP Service"). The CP Service is or may be
provided through certain client and host software created and owned by CP (the
"CP Email Software") and through certain hosting activities and services
provided by CP.
C. The parties wish for CP to develop and provide to ICQ a customized
version of the CP Service that can be integrated with the ICQ Service so as to
enable ICQ Users and others to send and receive email from an ICQ-branded
website.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties agree as follows:
1. Definitions
Capitalized terms used but not defined in the body of this Agreement shall have
the respective meanings given to such terms in Exhibit A, attached hereto.
2. Development Obligations
2.1 ICQ Mail Service. CP shall customize the CP Email Software as provided in
----------------
this Section 2.1.
(a) Initial Version. The initial version of the ICQ Mail Service shall be
---------------
developed by CP by customizing the existing CP Email Software to conform to the
product specifications provided by ICQ and set forth in Exhibit B, attached
hereto (the "Specifications"). As part of such customization, the ICQ Mail
Software shall be developed to function in an integrated manner with the
operation of the ICQ Client. CP shall complete the development and internal
testing of the initial version of the ICQ Mail Software by [**].
(b) Updates. CP will develop the additional Updates to the ICQ Mail
-------
Service specified as Phase II improvements on Exhibit B (the "Phase II
Updates"); CP shall complete the development and internal testing of the Phase
II Updates by [**]. In addition, if, during the term of this Agreement, CP
develops any other Updates of the CP Service, including (except as provided in
the last sentence of this Section 2.1(b)), any customized version of the CP
Service which CP has provided to a third party (including without limitation any
Updates that incorporate new features or functionality, including Premium Email
Services), CP shall, in each such case, promptly notify ICQ of such Update.
Following the receipt of such notice, ICQ may request that CP develop and
provide ICQ with an updated version of the ICQ Mail Service that incorporates,
as appropriate, all or any part of the material modifications, improvements,
additions, deletions, features and functionality implemented by such Updates.
Unless otherwise agreed by the parties, CP shall comply with such request and
complete the development and
[**] CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN
INFORMATION CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
1
<PAGE>
development and internal testing of such updated version of the ICQ Mail
Service within [**] following the receipt of such request from ICQ (or such
shorter period as CP provides for revisions or Updates to any other CP partner
or licensee). Notwithstanding the foregoing, CP shall not be obligated to
offer or notify ICQ of any feature or functionality of the CP Service (or any
customized version of the CP Service) provided by CP to another customer that
is both (i) unique to such customer's needs and (ii) owned by such customer or
otherwise subject to restrictions that would prohibit CP from providing it to
ICQ hereunder.
(c) Additional ICQ Modifications. ICQ may in its discretion, from time to
----------------------------
time during the term of this Agreement, request that CP (i) add new
functionality or features to the ICQ Mail Service, (ii) modify elements of the
user interface of the ICQ Mail Service, (iii) integrate into the ICQ Mail
Service support for Expanded Premium Services that are to be offered by ICQ, CP
or any third party, (iv) modify the ICQ Mail Service in connection with
modifications of the ICQ Client and ICQ Service (which regularly occur at least
[**]), or (v) expand the ICQ Mail Service to Expanded Services as provided in
Section 2.1(d) below. Upon the receipt of any such a request, CP shall [**] on
a [**] (which basis[**]) to the [**] of the [**] the modifications [**]. The
parties shall mutually agree upon an appropriate schedule for the development of
such updated version, taking into account the nature of the modifications
requested by ICQ, and CP shall complete the development and internal testing of
such updated version in accordance with such schedule. If ICQ so requests (and
in connection with such request ICQ agrees to reimburse CP, then [**], including
without limitation the system [**]. The results of any other development
activity under this Section 2.1(c) other than ICQ Owned Customizations shall be
deemed Updates to the CP Service except as provided in Section 12.3 hereof.
(d) Expansion to Cover other Services and Platforms of ICQ and AOL. It
--------------------------------------------------------------
is expressly understood that ICQ and AOL may expand the ICQ Mail Service to
provide service through any and all platforms and services now or hereafter
offered by or through ICQ or AOL or any affiliate of AOL, or by any
Interactive Service which is branded with a brand owned by AOL or its
affiliates ("Expanded Services") Each Expanded Service may be separate in any
or all respects from the ICQ Mail Service or each other, including as to
branding, operation, web-sites, registration processes, etc. Updates required
to provide for any such Expanded Service shall be covered by this Section 2.1
Despite the foregoing, for all purposes hereof, each such Expanded Service
shall be considered part of the ICQ Mail Service, all rights of ICQ and AOL
hereunder shall apply to such Expanded Services and users of such services
shall be considered ICQ Users; [**] In addition, it is understood that if any
Expanded Service is primarily a POP service and/or IMAP service (i.e. where the
initial adoption is of such a POP and/or IMAP service),
[**] CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN
INFORMATION CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
2
<PAGE>
then pricing for the POP service [**].
(e) Delivery and Acceptance. Following the completion of the development
-----------------------
and internal testing of any version of the ICQ Mail Service, CP shall deliver
such version to ICQ for evaluation and acceptance. ICQ shall have [**] following
such delivery by CP to evaluate whether such version both (i) functions properly
(i.e., in accordance with specifications, including, in the case of the initial
version, the Specifications set forth in Exhibit B, without Severity 1 or
Severity 2 Problems and without materially disrupting the operation of other
applications or the relevant operating system), and (ii) satisfactorily
incorporates the modifications to the user interface, features and functions
requested by ICQ. If ICQ reasonably determines that any such version of the ICQ
Mail Service either (i) does not function properly, or (ii) does not
satisfactorily incorporate the modifications requested by ICQ, ICQ may reject
such version by providing CP with written notice within such [**] period
specifying in detail the reason for rejection. Any version of the ICQ Mail
Service that has not been rejected within such [**] period shall be deemed
accepted. If ICQ rejects any version of the of the ICQ Mail Service, CP shall as
promptly as commercially possible but in any case within [**] following ICQ's
notice of rejection, correct, to the reasonable satisfaction of ICQ, the
deficiencies in such version that were specified in ICQ's notice of rejection.
The failure to correct such deficiencies to the reasonable satisfaction of ICQ
within such [**] period shall constitute a material breach of this Agreement by
CP.
(f) Assistance from ICQ. ICQ shall provide CP with reasonable consultative
-------------------
assistance in connection with the development obligations of CP as set forth in
this Section 2.1. In addition, during the term of this Agreement, ICQ agrees to
notify CP in advance of any modifications and/or changes to the ICQ System
through which the ICQ Mail Service is provided that ICQ believes may result in
incompatibility between the parties' respective systems or interruptions in the
ICQ Mail Service (including without limitation, network configuration changes
and system maintenance), as well as upgrades and removal of devices that impact
the production and network connectivity from, ICQ's system through which the ICQ
Mail Service is provided. The parties will work together to resolve any such
potential and actual incompatibility or interruptions in connection with ICQ's
implementation of any such change and/or modification.
2.2 ICQ Mail Website.
----------------
(a) Development and Control. The parties shall design and develop the
-----------------------
collection of Internet webpages that shall serve as the location at which ICQ
Mail Users are able to access and use the ICQ Mail Service (the "ICQ Mail
Website"); provided that ICQ shall control all aspects of the design,
development and functionality of the ICQ Mail Service, including the ICQ Mail
Website, and all content on, and navigational elements of, the ICQ Mail Service,
subject to the technical limitations and design requirements of the CP Service
and CP System (which shall themselves remain subject to the Specifications and
other requirements outlined hereunder). The ICQ Mail Website will be branded as
provided in Section 3.1, and all pages will be situated on ICQ URLs owned by ICQ
(e.g., http://www.icq.com/icqmail).
(b) Hosting by CP. Except as otherwise provided in Section 2.1(c), the ICQ
-------------
Mail Website (and the relevant host portions of the ICQ Mail Service) shall be
physically hosted on servers maintained [**] provided that, as may from time
to time become appropriate so as to meet the performance requirements set forth
in Section 2.4 and Exhibits B and C, [**] may expand its hosting locations to
other locations, including international locations. [**]
[**] CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN
INFORMATION CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
3
<PAGE>
[**]. During the period that the ICQ Mail Website (and the relevant host
portions of the ICQ MailService) is hosted by CP, CP shall comply with all
hosting, administrative obligations and reporting requirements required to
perform its obligations hereunder, including without limitation those set forth
on Exhibits B and C and shall cause the ICQ Mail Service to comply with the
requirements set forth on Exhibits B and C.
(c) [**]. Notwithstanding the provisions of Section 2.2(b), [**] may
exercise in its discretion at any time during the term of this Agreement
(including prior to [**]), to [**] of the [**] (and the relevant [**]) to [**]
located at location(s) [**] exercise this option by providing [**] written
notice of its wish [**]. The parties shall then work together [**] as soon as
reasonably possible, but in any event within ninety (90) days following the
receipt of such notice [**]. In carrying out [**], the parties shall work
together to minimize [**] in [**]. If, in the course of the parties' good faith
[**] determines that [**] will not be technologically possible or will not be
[**], then [**] or (if applicable) [**], and thereafter [**] have all [**]
responsibilities for [**] as provided herein. If [**] it option [**] shall
provide [**] sufficient [**] to remotely perform its administrative functions
and other obligations with respect to [**] (or other access necessary to [**]
such functions and obligations). Upon any such [**] administrative and
reporting requirements under Exhibit C shall be modified as specified on Exhibit
C.
2.3 Premium Services.
----------------
(a) Core Premium Services. As part of the operation of the ICQ Mail
---------------------
Service: (i) CP will make the Core Premium Services available to ICQ for ICQ to
offer to ICQ Mail Users; and (ii) ICQ shall offer such services in connection
with ICQ Mail Service at its option with the particular placement and method of
integration of the Core Premium Services into the ICQ Mail Service to be at the
discretion of ICQ. In accordance with the provisions of Section 2.1, CP shall
develop or modify the ICQ Mail Service, as necessary or appropriate, to support
the provision of the Core Premium Services as specified by ICQ.
(b) Expanded Premium Services. CP shall, at its expense, create Updates to
-------------------------
the ICQ Mail Service from time to time so as to keep the ICQ Mail Service
competitive with other web-based e-mail services as required by Section 2.4,
including the creation of Expanded Premium Services. As part of the operation
of the ICQ Mail Service, ICQ may, but shall not be required to, offer one or
more Expanded Premium Services to ICQ Mail Users. Such Expanded Premium
Services may include services offered by ICQ, CP or any third party. In
accordance with the provisions of Section 2.1, CP shall, upon the request of
ICQ, develop or modify the ICQ Mail Service, as necessary or appropriate, to
create, or support the provision of, Expanded Premium Services in the manner
specified by ICQ.
(c) Pricing of Premium Services. ICQ shall, in its discretion, determine
---------------------------
the pricing, if any, to be charged to ICQ Mail Users for the right to use any
Core Premium Services and/or Expanded Premium Services. ICQ shall pay CP in
respect of premium services only as indicated in Section 6.5 below.
[**] CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN
INFORMATION CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
4
<PAGE>
2.4 Competitive Performance Standards. Throughout the term of this Agreement,
---------------------------------
CP shall take all steps reasonably necessary to ensure that, except to the
extent otherwise agreed by ICQ, the ICQ Mail Service shall provide ICQ Mail
Users with a set of features and functions that is, in ICQ's reasonable
judgment, at least as good (in terms of the number and types of features and
functions and the quality thereof) as the features and functions then available
through the best other web-based email service providers listed in the attached
Exhibit G ("Other Webmail Service Providers"). ICQ shall have the right from
time to time by written notice to CP to modify the list of Other Webmail Service
Providers from time to time to reflect the then-leading web-based email service
providers as determined in ICQ's reasonable judgment. Further, CP shall take
all steps reasonably necessary to ensure that the performance of the ICQ Mail
Service is at least as good as the performance of the web-based email services
of the Other Webmail Service Providers and otherwise complies with the
performance requirements set forth on Exhibit C. In furtherance of the [**] of
this Section 2.4, the parties agree to discuss [**] into the ICQ Mail Service.
2.5 Other Modifications. Notwithstanding anything to the contrary contained
-------------------
herein, ICQ reserves the right to redesign and/or modify the organization,
structure, "look and feel," navigation, features and other elements of the ICQ
Service and the ICQ Mail Service, subject to the technical limitations and
design requirements of the CP Service and CP System (which shall themselves
remain subject to the Specifications and other requirements outlined hereunder).
3. Product Branding and Other Promotional Obligations
3.1 Product Branding. All components of the ICQ Mail Service, the ICQ Mail
----------------
Website and all client components of the ICQ Mail Service that are integrated
into the ICQ Client shall be branded in ICQ's sole discretion and shall not
include any other branding. Despite the foregoing, [**]. All aspects of such
recognition shall be determined by ICQ, including placement, size, and look
and feel (subject to any applicable trademark usage guidelines provided by CP
with respect to any of its marks that are used in such recognition other than
those that relate to size and placement). ICQ shall not have any obligation
with respect to any particular promotion of the ICQ Mail Service or placement
of the ICQ Mail Service within the ICQ Service or elsewhere, including
relative to any other email service or provider.
3.2 Promotion of ICQ Service by CP. CP shall use commercially reasonable
------------------------------
efforts to promote the ICQ Service to its customers and partners and to persuade
such customers and partners to adopt the ICQ Service as an integrated component
of the email products and services provided to such customers and partners by
CP. Without limiting the foregoing, CP will [**] ICQ shall assist CP, as
reasonably appropriate, in such promotional efforts, including by making
available to CP the addresses need for the application modifications described
in subpart (b) above. In addition, in the event CP provides its own email
service (i.e., one not offered on behalf of a third party), CP will as soon as
practicable integrate the ICQ Service into such email service.
[**] CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN
INFORMATION CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
5
<PAGE>
4. ICQ Mail User Registration and Information
4.1 Ownership of Assets and Customer Relationships. ICQ shall own all goodwill
----------------------------------------------
and tangible and intangible assets and aspects of the ICQ Mail Service and the
ICQ Mail Website, including all materials provided by ICQ to CP for the purpose
of branding the ICQ Mail Service and the ICQ Mail Website ("ICQ Branding
Materials") [**] Despite the foregoing, ICQ has no rights to or ownership of the
CP System (including the CP Email Software or ICQ Mail Software) or the CP
Service, as further provided in Section 12.2, except for the contractual rights
expressly provided hereby.
4.2 User Registration. In order to use the ICQ Mail Service, an ICQ User will
-----------------
be required to register for the ICQ Mail Service. ICQ shall determine, in its
sole discretion, any agreements to be obtained from and/or information to be
collected from the ICQ User as part of the registration process and any domain
names, email addresses and passwords to be assigned and/or used with the ICQ
Mail Service. Despite the foregoing, ICQ will indemnify CP against any loss,
liability or expenses that CP incurs based on any claims made against CP by a
user of the ICQ Mail Service or by any third party to the extent that CP can
demonstrate that either such claim would not have prevailed or CP would have
been indemnified by the user, had ICQ entered into an agreement with the
applicable user(s) consistent with, and providing no less protection to CP, than
the Acceptable Use Policy and Terms of Use attached hereto as Exhibit F.
Registration for the ICQ Mail Service shall take place at the ICQ Mail Website
or at such other location as may be specified by ICQ. The billing and
collection of any fees or other amounts to be charged to ICQ Mail Users from
time to time (including, if applicable, fees for the use of the basic ICQ Mail
Service or for the use of any Core Premium Services or Expanded Premium
Services) shall be performed by ICQ and CP shall not directly contact or
communicate with ICQ Mail Users except with the express consent in writing of
ICQ to so do, which consent must be obtained for each contact or communication.
4.3 ICQ User Information and Solicitation
--------------------------------------
(a) Ownership of ICQ User Information. ICQ shall own any and all
---------------------------------
information collected from ICQ Members in connection with the ICQ Mail
Service, including information collected during the registration processes for
the ICQ Service and the ICQ Mail Service, respectively, and information then
or subsequently obtained from any use of the ICQ Service and/or the ICQ Mail
Service, including without limitation all information relating to ICQ User
names, passwords, ICQ numbers, email addresses, domain names (including vanity
domain names), addresses, credit card information, user preferences or history
or other identifying information (collectively, "User Information"). All User
Information shall be deemed Confidential Information of ICQ. CP agrees, both
during and after the term of this Agreement (and despite any provisions of
Sections 4.3(b) or 4.3(c)), not to use any User Information for any purpose
other than the operation of the ICQ Mail Service or to disclose any such
information to any third party without the prior written consent of ICQ, which
consent may be granted or withheld in ICQ's sole and absolute discretion,
provided that CP may access and disclose User Information solely as necessary
to comply with applicable laws, regulations and government orders or requests
or to protect CP's or its customers' or partners' rights or property, provided
that CP uses all reasonable efforts to limit any such disclosure to the
minimum required and not to use such information except for such purposes and
provides ICQ with as much advance written notice of CP's intended use or
disclosure as is practicable. CP will at all times comply with all privacy
policies that ICQ or AOL may implement and provide to CP from time to time
with respect to the ICQ Service, the ICQ Mail Service and/or User Information,
subject to CP's rights with respect to the User Information as provided
hereunder.
[**] CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN
INFORMATION CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
6
<PAGE>
(b) No Competitive Solicitation. During the term of this Agreement and
---------------------------
for the two-year period following the expiration or termination of this
Agreement (and without limiting any other provision of this Agreement,
including Section 4.3(a)), [**] Nothing in this Section 4.3(b) shall be
construed to prohibit CP from soliciting, promoting, or providing the CP Service
to any third party, whether during the term of this Agreement or thereafter,
provided that CP complies with the terms of Section 9 (Exclusivity) during the
term of this Agreement and Section 13 (Confidential Information) at all times.
(c) No Communication. During the term of this Agreement and for the two-
----------------
year period following the expiration or termination of this Agreement (and
without limiting any other provision of this Agreement, including Section
4.3(a)), CP agrees not to send any ICQ User any messages or communications on or
through the ICQ Service or the ICQ Mail Service, unless (i) CP has a Prior
Business Relationship with such ICQ User, and (ii) such message or communication
complies with the applicable end-user agreement for the ICQ Service or the ICQ
Mail Service, any standard privacy policies for the ICQ Service or the ICQ Mail
Service and all applicable laws and regulations. For purposes of the foregoing,
a "Prior Business Relationship" shall mean that the ICQ User has either (i)
purchased products or services from CP, or (ii) voluntarily provided information
to CP (other than as a result of being an ICQ Mail User) through a contest,
registration, or other communication, which included clear and conspicuous
notice to the ICQ User that the information provided by the ICQ User could
result in a message or communication being sent to that ICQ User by CP or its
agents.
5. Technical Support
ICQ shall provide all frontline technical and customer support to ICQ Mail Users
who have problems with, or questions concerning, the installation, use,
operation or maintenance of the ICQ Mail Service, all in such manner as ICQ
determines in its sole discretion. CP shall, at no cost to ICQ, provide to ICQ
the back-end support and training and support regarding the ICQ Mail Service
specified on Exhibit D.
6. Revenue Provisions
6.1 Net Advertising Revenue for Standard Email Services.
---------------------------------------------------
(a) Revenue Sharing. During the term of this Agreement, subject to the
---------------
volume reductions specified in Section 6.1(b), ICQ agrees to pay CP [**] of the
Net Advertising Revenue (as defined in Section 6.1(c)) that is actually
collected by ICQ for each calendar quarter during the term of this Agreement in
which the ICQ Mail Service is operational.
(b) Volume Reductions. The percentage of Net Advertising Revenue that is
-----------------
payable to CP pursuant to Section 6.1(a) shall be reduced by [**] per each block
of [**] Active ICQ Mail Users during such quarter (but excluding the first such
block of [**] Active ICQ Mail Users), up to a maximum reduction of [**]
(resulting in a percentage of Net Advertising Revenue to CP of [**]. For
example, if in Q1 the [**] Mail Users is [**], then the [**] Net Advertising
Revenue payable to CP for such quarter would be [**] Active ICQ Mail Users,
after the first such block of [**] Active ICQ Mail Users). If, however, in Q2,
the [**] Mail Users
[**] CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN
INFORMATION CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
7
<PAGE>
increases to [**], then the percentage of Net Advertising Revenue payable to CP
for such quarter would be [**] Active ICQ Mail Users after [**], but subject to
the maximum [**] to CP.
(c) Definition of Net Advertising Revenue. For purposes of this Agreement,
-------------------------------------
"Net Advertising Revenue" shall mean, [**]
(d) Ownership of Advertising. The right of CP to participate in the Net
------------------------
Advertising Revenue pursuant to the provisions of this Section 6.1 shall in no
way create any ownership interest in CP with respect to ICQ advertising
inventory. ICQ owns all right, title and interest in and to the advertising and
promotional spaces within the ICQ Mail Service, the ICQ Mail Website and the ICQ
Client and has the sole authority to market and sell such advertising inventory;
provided that ICQ agrees that it will not include any advertisements or sell any
advertising inventory on the ICQ Mail Service or the ICQ Mail Website for or to
CP Competitors. Further, ICQ shall be solely responsible for all obligations,
liabilities and duties under any and all agreements that ICQ has with third
parties and otherwise with regard to such advertisements.
6.2 Revenues from Premium Services.
------------------------------
(a) Revenue Sharing. During the term of this Agreement, for any Core
---------------
Premium Services and Expanded Premium Services offered by CP which ICQ chooses
to offer to ICQ Mail Users, CP shall [**] or (ii) the [**] price offered by
[**] service (or as otherwise may be [**]
(b) Volume Reductions. All prices payable by ICQ to CP pursuant to Section
-----------------
6.2(a) for any Premium Service ([**]) shall be reduced in any quarter by [**]
per each block of [**] Active ICQ Mail Users using such Premium Service during
such quarter (but excluding the first such block of [**] Active ICQ Mail Users),
up to a maximum reduction of [**] from the prices payable pursuant to Section
6.2(a). For example, if in Q1 the number of Active ICQ Mail Users is [**] then
the prices otherwise payable during such quarter for Core Premium Services or
Expanded Premium Services would be reduced by [**] (i.e. [**] for each full
block of [**] Active ICQ Mail Users, after the first such block of [**] Active
ICQ Mail Users)
[**] CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN
INFORMATION CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
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<PAGE>
6.3 No Other Revenue Sharing. Except as expressly provided in this Section 6,
------------------------
ICQ shall be entitled to all revenues derived from, or related to, the operation
of the ICQ Service and the ICQ Mail Service, including without limitation
revenues from advertising and marketing and from the provision of products and
services, and, except as the parties may otherwise agree in writing, shall not
be required to share any portion of any such revenues with CP.
6.4 [**] represents [**] that the [**] to which [**] hereunder are [**]
Services or [**] thereof [**]. For purposes of this Section 6.4, [**] a web-
based email [**] of [**] (i.e. where [**] is of [**]) to customers with [**]
(offered [**] for which customers [**]) that may [**]. Further, in the event
that during the term of this Agreement [**] or any [**] thereof pursuant to
which such [**] terms provided [**] that it shall also [**] such [**].
6.5 Minimum Revenue Commitment. ICQ agrees that in any month during the term
--------------------------
in which there are at least [**], CP shall be entitled to receive at least the
minimum amount of revenue calculated under this Section 6.5 (the "Minimum
Monthly Revenue"). The Minimum Monthly Revenue for any month shall be equal to
[**] for each Active ICQ Mail User during such month [**], up to a maximum
amount of [**] in [**]. By way of example of the foregoing, if during a calendar
month, there are [**], the Minimum Monthly Revenue for such month shall be
[**]. In connection with any quarterly report under Section 6.6, ICQ shall
calculate the Minimum Monthly Revenue for each month during such quarter. If
the amount otherwise payable by ICQ during such quarter is less than the
cumulative Minimum Monthly Revenue for the months in such quarter, then ICQ
shall pay to CP the amount of such Minimum Monthly Revenue. By way of example,
if during a quarter, the Minimum Monthly Revenue for the three (3) months is,
in the aggregate [**], and if the amount otherwise payable under this Section
6 (including payments under Sections 6.1 and 6.2) during such quarter would be
[**], then ICQ shall pay CP [**] with the quarterly report provided under
Section 6.6 (net of payments previously made during such quarter, if any). If,
on the other hand, in the foregoing example, the amount otherwise payable
under this Section 6 (including any payments under Sections 6.1 and 6.2)
during such quarter, were [**], then ICQ shall pay such [**] (net of any
payments previously made during such quarter, if any), and there shall be no
additional amounts due based on the Minimum Monthly Revenue.
6.6 Reports and Payments. Within thirty (30) days following the end of each
--------------------
calendar quarter, ICQ shall provide CP with a report that contains information
detailing the amount of any revenue payable to CP for such quarter pursuant to
the provisions of this Section 6. Such report shall, with reasonable detail,
explain the basis upon which such revenue obligations have been determined and
be accompanied by payment in full of all amounts indicated on such report as due
for such month.
6.6 Audit Rights. Each party shall have the right to have mutually acceptable
------------
independent CPA auditors (which auditors shall not be compensated on a
contingency basis and shall be bound to keep all information confidential except
as necessary to disclose discrepancies to the auditing party) audit and
[**] CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN
INFORMATION CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
9
<PAGE>
analyze the other party's relevant accounting records to ensure compliance with
the other party's payment obligations under this Section 6. Any such audit
shall be permitted within thirty (30) days of receipt by the audited party of a
written request from the auditing party to audit, during normal business hours,
at a time mutually agreed upon; provided, however, that no audit of ICQ's
accounting records may be conducted during the months of June through September.
The cost of such an audit shall be borne by the auditing party unless a material
discrepancy is found, in which case the cost of the audit shall be borne by the
audited party. A discrepancy shall be deemed material if it involves a payment
or adjustment of more than five percent (5%) of the amount actually due from the
audited party in any given quarterly period. Neither party shall be audited
more frequently than annually. Audits shall not interfere unreasonably with the
audited party's business activities and shall be conducted in the audited
party's facilities during normal business hours, at a time mutually agreed upon.
An audit may cover any period; provided that: (i) the period has not been
previously audited; and (ii) the period under audit is within a three year
period immediately preceding the commencement of the audit. The audited party
shall promptly reimburse the auditing party for the amount of any discrepancy
arising out of such audit which indicates that the auditing party is owed
amounts hereunder as well as the costs of the audit, if applicable, as provided
above.
6.7 Penalty For Breach. If CP fails to deliver any product or Update,
------------------
including the initial version and any final Update after testing under Section
2.1(e), or otherwise fails to perform any material obligation hereunder within
the time frame required under this Agreement, or in the event the ICQ Mail
Service does not perform in accordance with requirements of Section 2.4 and
Exhibits B and C in any material way, then the following provisions shall apply:
(i) if any such delay or performance failure lasts for more than five (5) days
during any calendar month, then, for the entire such calendar month, the revenue
allocations under Section 6.1 and the prices payable by ICQ for Premium Services
will be reduced as follows: (i) if there was no reduction in the prior calendar
month, then CP's share of Net Advertising Revenues under Section 6.1 shall
decrease by [**] (so that, if [**]; and (ii) if there was a reduction in
the prior calendar month (i.e., there was a delay or failure in such prior
calendar month), [**] and the prices otherwise payable by ICQ under Section
6.2 shall be reduced by [**]. In any month that there is a reduction pursuant
to this Section 6.7, no Minimum Monthly Revenue shall be payable for such
month. By way of example of the foregoing, if in three consecutive months,
there are reductions under this Section 6.7, then in the first such month the
reductions would be calculated under subpart (i) of the second preceding
sentence and for the next two such months (and any subsequent consecutive
month), the reductions would be calculated under subpart (ii) of the second
preceding sentence. In calculating delays or failures hereunder there shall
not be included any delay or failure to the extent CP can demonstrate that it
was caused by the failure or delay of ICQ or AOL to perform any obligation
hereunder.
7. Stock Warrants
7.1 Warrants. Attached hereto as Exhibit E is a form of Stock Warrant (the
--------
"Warrant Form"), pursuant to which, in consideration of the execution of this
Agreement by ICQ, CP hereby concurrently grants to AOL: (a) warrants vested and
exercisable as of the date hereof entitling AOL to purchase 1,791,362 shares of
Series B Preferred stock of CP that CP represents shall, as of the date of this
Agreement, represent two percent (2%) of all equity interests in CP on a fully-
diluted basis (i.e., assuming exercise of all outstanding equity options and
full conversion of all notes, debts, loans and
[**] CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN
INFORMATION CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
10
<PAGE>
other instruments that are convertible into CP equity) (the "Vested Warrants");
(b) warrants entitling AOL to purchase up to an additional 3,582,724 shares of
Series B Preferred stock of CP that CP represents shall, as of the date of this
Agreement, represent an additional four percent (4%) of all equity interests in
CP on a fully-diluted basis (the "Additional Warrants"). The Additional
Warrants will vest and become exercisable in four (4) equal increments of one
percent (1%) of the outstanding equity each, upon registration of certain
numbers of ICQ Mail Service email boxes that are CP sub-branded as provided in
Section 3.2 (each "CP Sub-branded Boxes") within the first four (4) years of the
term of this Agreement (the "Vesting Period"), consisting of the Initial Term
and two Extension Periods, if exercised, as defined in Section 16.1(a) and (b),
respectively), as set forth more fully in the Warrant Form.
7.2. Payment if Registration Milestones Not Met. As noted above, and as set
------------------------------------------
forth in the Warrant Form, the Additional Warrants will vest in four (4)
increments upon registration within the Vesting Period of certain numbers of CP
Sub-branded Boxes. If during the Vesting Period there are not registrations of
a sufficient number of CP Sub-branded Boxes to vest all of the Additional
Warrants (the "Minimum Vesting Registrations"), then ICQ shall pay to CP the sum
of [**] (the "Additional Warrant Payment"), as additional consideration for the
issuance to it of the Vested Warrants and the Additional Warrants. The
Additional Warrant Payment shall not be payable if ICQ terminates this Agreement
prior to the end of the Vesting Period pursuant to any right provided to ICQ
pursuant to Sections 16.1 through 16.5, but shall be payable if CP terminates
this Agreement for ICQ's breach as provided in Section 16.3 during the Vesting
Period and prior to achievement of the Minimum Vesting Registrations. If the
Additional Warrant Payment becomes payable hereunder, it shall be paid within
thirty (30) days of the date it becomes payable (i.e., within thirty (30) days
of the end of the Vesting Period, or within thirty (30) days of any earlier
termination upon which the Additional Warrant Payment becomes payable).
7.3 Other Terms; Construction with Warrant Form. All remaining terms of the
-------------------------------------------
Vested Warrants and the Additional Warrants are set forth in the Warrant Form,
including without limitation, the exercise price, period and method of exercise
and the other rights preferences and privileges of AOL with respect to the
Vested Warrants and Additional Warrants. In the event of any conflict between
the provisions of this Section 7 and the provisions of the Warrant Form, the
provisions of the Warrant Form will control. Attached to the Warrant Form as
Exhibit "A" is an Amended and Restated Investors' Rights Agreement, including a
Second Amendment thereto that will make AOL a party to that agreement. CP will,
within thirty (30) days hereof, obtain all required signatures on the Second
Amendment to make it effective.
8. Board Observation Seat Option
During the term of this Agreement, AOL shall have the right (but not the
obligation) to appoint one person to act as an observer to the board of
directors of CP, exercisable at AOL's option upon written notice to CP. Such
observer will have the right to attend all meetings of CP's board of directors
and receive all notices thereof as if a member of the board, as well as to
receive all other notices sent to board members and all information reviewed or
available to board members, and will generally have all other rights of a board
member, other than the right to vote as a member of CP's board of directors.
9. Exclusivity
Except as provided in this Section 9, the parties agree that the relationship
created by this Agreement shall be non-exclusive, and each of the parties may
enter into the same or a similar relationship with one or more third parties.
Without limiting the generality of the foregoing, ICQ shall be free to enter
into agreements with third parties for the use and integration of other web-
based email software and services
[**] CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN
INFORMATION CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
11
<PAGE>
with the ICQ Service, and CP shall be free to enter into agreements with third
parties pursuant to which it provides email products and services to such third
parties. However, notwithstanding the foregoing, CP agrees that, during the
term of this Agreement, [**] During the term of this Agreement, CP will promote
ICQ as CP's preferred integrated instant messaging service and product.
10. License from CP
10.1 License.
-------
(a) Subject to all the terms and conditions of this Agreement, CP hereby
grants to ICQ and to AOL a worldwide, non-exclusive, non-transferable, royalty-
free license to use, reproduce, distribute directly and indirectly, transmit and
sublicense the client components of the ICQ Mail Software, if any, in object
code form only for use by end-users of the ICQ Mail Service (including any
Expanded Services).
(b) If [**] the ICQ Mail Website ([**] the ICQ Mail Service) pursuant to
[**], then, subject to all the terms and conditions of this Agreement, [**] in
connection with such [**] hereunder. Such [**] may be in [**] both. If
provided [**] have the right to [**] solely in connection with [**] (and
applicable [**]) in accordance with the terms and conditions of this Agreement.
(c) The foregoing [**] intended to [**] to effectuate all of their rights
and conduct all of the business contemplated hereunder, including [**]) pursuant
to the terms and conditions of this Agreement. [**] (including [**]) in [**].
The [**] herein does not include, and [**] shall have any right to under any
circumstances, or to [**] ([**] provided herein), [**] or any documentation that
may be provided [**] (other than as expressly provided herein). In no event
[**], except and only as reasonably necessary to [**] writing to abide by the
terms of this Agreement [**]. The [**] shall constitute Confidential
Information of CP and subject to the restrictions of Section 13. All copies of
the
[**] CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN
INFORMATION CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
12
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ICQ Mail Software made hereunder shall include all proprietary notices included
on the copy provided by CP, and neither ICQ nor AOL may remove, deface or
obscure any of CP's or its licensors' proprietary rights notices on or in the
Software or on output generated by the Software; provided that the placement of
such notices shall be subject to ICQ's prior written approval. ICQ and AOL
agree that any and all copies of the ICQ Mail Software distributed to third
parties shall be pursuant to binding license agreements no less restrictive or
protective of CP's rights than this Section 10.1. ICQ and AOL agrees that any
material violation of this Section 10.1 by ICQ or AOL shall constitute a
material breach of this Agreement. CP agrees to provides the CP Email Software,
or portions thereof, with all required Documentation to ICQ and AOL as and when
needed for ICQ and AOL to exercise their rights this Agreement. Promptly after
creation, CP will provide to ICQ and AOL, all Updates to the foregoing, together
with the ICQ Mail Software and all Updates thereto in object code form or, as
applicable, source code form. In addition, if ICQ transfers back to CP the
hosting responsibilities pursuant to Section 2.2(c), then ICQ shall return to
CP, or destroy, at CP's option, all hosting components of the ICQ Mail Software
(in [**]),and all copies thereof, in ICQ's or AOL's possession or control.
10.2 [**]. Subject to all the terms and conditions of this Agreement, and
effective only upon the Release Condition as defined herein, [**] for the
purposes of undertaking any activity which [**] as required hereunder. [**]
upon the occurrence of all of the following [**] material obligations hereunder
to provide, maintain or support [**] such material breach; [**] such material
breach [**]. The foregoing does not include any right [**] Confidential
Information of [**] provided that [**] the terms of this Agreement and provided
[**]. Promptly after execution of this Agreement, and in any event within
thirty (30) days, [**] acceptable to each party which shall be consistent with
the provisions of this Section. The [**] normal conditions requiring that [**]
it has provided [**] and that the [**] to it. [**] (one that is a [**]) if
[**]. The [**] upon [**] that each [**] been met, unless[**]. The [**] shall
[**] designed to make such agreement effective and binding despite any
subsequent bankruptcy of CP to the fullest extent permitted by law. In
addition, [**] any copies thereof, [**] obtain such [**] the terms of this
Section 10.2.
10.3 Access to CP's Test Environment. CP shall provide and make available
-------------------------------
to ICQ and/or AOL a test system that is a stable replication of the live system
for the testing of new features or customizations for a thirty (30) day period
prior to the planned release of such new features or
[**] CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN
INFORMATION CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
13
<PAGE>
customizations to the live system. The primary (stable) test system shall meet
the same uptime requirements as the live system and provide the same processing
monitoring capability. Once new features are released to the live system, the
primary test system will be updated to reflect the new features added to the
live system within a reasonable time period after such release to the live
system.
11. Publicity
11.1 Press Releases. After execution of this Agreement, CP and ICQ shall issue
--------------
an initial joint press release, with terms to be mutually agreed by the parties,
regarding this Agreement and the relationship between the parties established
hereby. The parties will mutually agree on the appropriate timing of such
release and any other initial public announcement of the relationship; provided
that such release and announcement will not occur until after February 15, 1999.
The initial press release and any other initial announcement shall contain no
information regarding the financial or compensatory provisions of this
Agreement. Following the initial press release, CP agrees that it shall not
issue any press release or make any public statement regarding ICQ or the ICQ
Mail Service, without the prior written consent of ICQ; provided, however, that
CP shall be permitted, without ICQ's prior consent, to merely list ICQ as one of
its industry partners. Further, CP agrees to notify the following persons in
the event of any circumstances requiring public response: (i) Jeanie Meyer at
RLM; and (ii) Pam McGraw and Ronald Grant at AOL. AOL will provide contact
information for such parties.
11.2 Statements to Third Parties. Neither party shall make, publish, or
---------------------------
otherwise communicate, or cause to be made, published, or otherwise
communicated, any deleterious remarks whatsoever to any third parties concerning
the other party or its affiliates, directors, officers, employees or agents,
including without limitation, the other party's products, services, business
projects, business capabilities, performance of duties and services or financial
position.
12. Ownership
12.1 ICQ Properties. As between the parties, ICQ owns all copyrights, patents,
--------------
trade secrets, trademarks and trade name rights and all other right, title and
interest in and to the ICQ Service, the ICQ Client, the ICQ Mail Service, the
ICQ Mail Website (including all URLs), the ICQ Branding Materials and the ICQ
Owned Customizations, and any Updates, enhancements and improvements thereto,
and all derivative works thereof and all proprietary rights therein, subject to
CP's ownership of the underlying software and technology as provided in Section
12.2. Without limiting the generality of the foregoing, all right, title and
interest in all servers and server-based technology related to the ICQ Service,
including, without limitation, protocols, parameters, designs, specifications
and user identification algorithms and technology underlying such algorithms are
owned by ICQ. CP agrees that it will not, at any time during or after this
Agreement, (i) do anything which may adversely affect the validity or
enforceability of any trademark, trade name, patent, copyright or trade secret
belonging to or licensed to ICQ (including any act, or assistance to any act,
which may infringe or lead to the infringement of any proprietary right in any
ICQ product or service), or (ii) exercise, or attempt to exercise, any
proprietary rights in any ICQ products or services, other than as expressly set
forth herein and in any other written agreement(s) that may be entered into by
the parties.
12.2 CP Properties. As between the parties, CP owns all copyrights, patents,
-------------
trade secrets, trademarks and trade name rights and all other right, title and
interest in and to the CP System, the CP Service, the CP Email Software and the
ICQ Mail Software (other than the ICQ Owned Customizations and ICQ provided
specifications), including, without limitation, all development tools, routines,
subroutines, applications, software and other materials that CP may use in
connection with branding the ICQ Mail Website or otherwise providing the ICQ
Mail Service (other than the ICQ Branding Materials and the
14
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URLs associated with the ICQ Mail Service, and the ICQ Owned Customizations and
ICQ provided specifications), and any Updates, enhancements and improvements
thereto, and derivative works thereof, and all proprietary rights therein,
subject to the license rights expressly granted to ICQ and AOL as set forth in
this Agreement. Without limiting the generality of the foregoing, all right,
title and interest in all servers and server-based technology related to the CP
Service, including, without limitation, protocols, parameters, designs,
specifications and user identification algorithms and technology underlying such
algorithms are owned by CP. ICQ agrees that it will not, at any time during or
after this Agreement, (i) do anything which may adversely affect the validity or
enforceability of any trademark, trade name, patent, copyright or trade secret
belonging to or licensed to CP (including any act, or assistance to any act,
which may infringe or lead to the infringement of any proprietary right in any
CP product or service), or (ii) exercise, or attempt to exercise, any
proprietary rights in any CP products or services, other than as expressly set
forth herein and in any other written agreement(s) that may be entered into by
the parties.
12.3 Co-Development. Any intellectual property resulting from or constituting
--------------
work product ("Work Product") from co-development efforts under this Agreement
shall be owned by ICQ, subject to CP's and ICQ's respective proprietary rights
in any underlying software or technology to the extent incorporated or included
in such Work Product. ICQ and AOL hereby grant to CP a fully paid-up, royalty
free, perpetual, irrevocable and worldwide license to CP to use, reproduce,
distribute, transmit, sublicense, modify and create derivative works of such
Work Product, and to make, use, offer for sale and sell products and services
that incorporate such Work Product or modifications thereof, provided that CP
shall not make, use, offer for sale or sell any products or services
incorporating such Work Product until nine (9) months after the termination or
expiration of this Agreement. For purposes of this Agreement, "co-development"
shall consist of (a) work, even if performed solely by CP, that primarily
involves integration, pursuant to non-ICQ-provided specifications, of features
and functionality into the ICQ Service (or other real time messaging
technologies) or their functions and resources (such as member directories); and
(b) other work where employees of each party meet the statutory requirements
under U.S. patent and/or copyright law (such as 35 U.S.C. Sec. 16 and 17 U.S.C.
Secs. 101 and 201) to be deemed co-authors or co-inventors (including any work
product consisting of or conforming to published API's or specifications of ICQ
or AOL). CP hereby assigns to ICQ or AOL, as appropriate, any and all of CP's
rights, title and interests in any co-developed work, and shall promptly deliver
to ICQ or AOL all such co-developed work, including without limitation source
code and all available Documentation, in form and manner specified by ICQ. CP
shall cooperate with ICQ at ICQ's expense in documenting and perfecting all such
rights, including executing any necessary assignments, applications or other
documentation. Notwithstanding any of the foregoing, this Section 12.3 shall
not construed to include, and CP retains sole ownership of all proprietary
rights in and to, features, functionality, and all other aspects of the CP
Service that prior to such development CP provides to other customers as part of
the CP Service or otherwise develops apart from this Agreement. Further, this
Section 12.3 shall not be construed to include any generic modules (which shall
mean any software object, program, application, API, driver, tool, module, plug-
in, routine, subroutine, algorithm and/or other technology that is not uniquely
specific to ICQ's or AOL's technical, operational or commercial requirements
under this Agreement and that can be readily adapted to other uses or
applications and that is not based on any ICQ or AOL proprietary specifications
---
or Confidential Information provided hereunder).
13. Confidential Information.
Each party acknowledges that Confidential Information may be disclosed to the
other party during the course of this Agreement. Each party agrees that, during
and after the term of this Agreement, it shall only use Confidential Information
of the other party as expressly permitted by this Agreement and shall take
reasonable steps, at least substantially equivalent to the steps it takes to
protect its own similar
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proprietary information, to prevent the duplication or disclosure of
Confidential Information, other than to its employees or agents who must have
access to the Confidential Information to perform such party's obligations
hereunder, who shall each agree to comply with this Section 13 or with similar
confidentiality obligations that are at least as protective of such Confidential
Information.
14. Representations and Warranties
14.1 Joint. Each party represents and warrants to the other party that: (i)
-----
such party has the full corporate right, power and authority to enter into this
Agreement, to grant the licenses granted hereunder and to perform the acts
required of it hereunder; (ii) the execution of this Agreement by such party,
and the performance by such party of its obligations and duties hereunder, do
not and shall not violate any agreement to which such party is a party or by
which it is otherwise bound; (iii) when executed and delivered by such party,
this Agreement shall constitute the legal, valid and binding obligation of such
party, enforceable against such party in accordance with its terms; and (iv)
such party acknowledges that the other party makes no representations,
warranties or agreements related to the subject matter hereof which are not
expressly provided for in this Agreement.
14.2 CP. CP represents and warrants to ICQ that the ICQ Mail Service, including
--
the ICQ Mail Software, and the CP System, do not and will not infringe or
violate any patents, copyrights, trade secrets, trademarks or other proprietary
rights of any third party. CP shall, at its sole cost and expense, indemnify,
defend and hold ICQ and AOL harmless from and against any third party claim,
loss, damage, expense or liability (including reasonable attorney's fees and
costs) that may result by reason of any breach of the foregoing representation
and warranty. The foregoing representation and indemnity obligation shall not
include any claim, loss, damage expense or liability to the extent that it is
based on or arises out of the ICQ Branding Materials, ICQ provided
specifications or other modifications to the CP Service, the ICQ Mail Service or
the CP System made in compliance with or pursuant to ICQ's request, or the use
of the ICQ Mail Service in combination with the ICQ Service or any Expanded
Service where such violation occurs only as the result of such combination. ICQ
shall promptly notify CP in writing of any indemnifiable claim after ICQ first
learns of such claim, and shall provide CP with such assistance and cooperation
as CP may reasonably request from time to time in connection with the defense
thereof. ICQ and AOL shall have the right to employ separate counsel and to
participate in the defense of any such claim and to have their own respective
counsel in attendance at all times; ICQ and AOL will pay all costs of their
counsel. Also, in its discretion, ICQ or AOL may assume control of the defense
of any infringement claim; provided that under such circumstance ICQ or AOL
shall bear all costs of such defense (but not of any consequent judgment or
liability or settlement if made by AOL or ICQ without the prior written consent
of CP which may not be unreasonably withheld). If any settlement requires an
affirmative obligation of, results in any ongoing liability to, or prejudices or
detrimentally impacts in any way, ICQ or AOL, then such settlement shall require
ICQ's and/or AOL's written consent, as the case may be. If ICQ or AOL is
enjoined or restrained from exercising any of its rights under this Agreement as
a result of an infringement claim, CP shall, as promptly as practical either (i)
obtain a license at no cost to ICQ and AOL permitting continued use of the
infringed intellectual property rights on terms and conditions consistent with
the rights granted to ICQ and AOL hereunder, (ii) modify the software to perform
its intended function without infringing third party rights and without
materially adversely affecting the functionality or performance of the software,
or (iii) substitute software of comparable functionality and performance. If CP
is unable to obtain a license, modify the software to perform its intended
function without infringing third party rights, or substitute software of
comparable performance and instead chooses to simply remove the infringing
technology, CP shall be liable to ICQ and AOL for any reasonable damages
suffered by ICQ and AOL as the result of such removal, including, without
limitation, the cost to ICQ and/or AOL of replacing the infringing technology,
subject to ICQ's and AOL's duty to use reasonable efforts to mitigate its
damages. THE FOREGOING STATES ICQ'S AND
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AOL'S SOLE AND EXCLUSIVE REMEDY, AND CP'S SOLE AND EXCLUSIVE LIABILITY, WITH
RESPECT TO INFRINGEMENT.
15. Limitations on Liability
15.1 EXCEPT AS EXPLICITLY PROVIDED HEREIN, NEITHER PARTY MAKES ANY WARRANTIES,
EXPRESS OR IMPLIED, REGARDING THE ICQ SERVICE, THE ICQ CLIENT, THE ICQ MAIL
SERVICE, THE ICQ MAIL WEBSITE, THE ICQ MAIL SOFTWARE, CP SYSTEM, THE CP SOFTWARE
OR OTHERWISE UNDER THIS AGREEMENT TO THE OTHER PARTY, AND EACH PARTY HEREBY
EXPRESSLY DISCLAIMS ALL SUCH WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT
LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
15.2 EXCEPT WITH RESPECT TO A BREACH BY CP OF ITS REPRESENTATION AND WARRANTY
UNDER SECTION 14.2, UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE
OTHER PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY
DAMAGES (EVEN IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES), WHETHER ARISING IN TORT (INCLUDING WITHOUT LIMITATION NEGLIGENCE),
CONTRACT, BY OPERATION OF LAW OR OTHERWISE, SUCH AS, BUT NOT LIMITED TO, LOSS OF
REVENUE OR ANTICIPATED PROFITS OR LOST BUSINESS. DESPITE THE FOREGOING, IT IS
UNDERSTOOD THAT LOSS TO A PARTY OF PROFIT THROUGH NORMAL OPERATIONS AS
CONTEMPLATED BY THIS AGREEMENT THAT IT CAN DEMONSTRATE TO A COURT, ARBITRATOR OR
OTHER TRIER OF FACT IT WOULD MORE LIKELY THAN NOT HAVE RECEIVED IF THE OTHER
PARTY HAD NOT BREACHED THIS AGREEMENT WILL BE DEEMED DIRECT DAMAGES, NOT SUBJECT
TO THE LIMITATIONS OF THIS SECTION 15.2..
16. Term and Termination.
16.1 Term.
----
(a) Initial Term. Unless earlier terminated as set forth herein, the
------------
initial term of this Agreement (the "Initial Term") shall be [**] from the
Effective Date.
(b) Extension Periods. Upon the expiration of the Initial Term, and upon
-----------------
the expiration of the [**] Extension Periods, ICQ may elect, in its sole
discretion, to extend the term of this Agreement for an additional [**] year
period (each, an "Extension Period"), up to an aggregate maximum of [**]
Extension Periods. ICQ shall be deemed to have exercised its option for any
Extension Period unless, at least thirty (30) days prior to the expiration of
the Initial Term, or of the first, second or third Extension Periods, as
applicable, ICQ provides written notice to CP that ICQ does not wish to exercise
its option for the forthcoming Extension Period.
16.2 Termination for Convenience. ICQ may terminate this Agreement in its
---------------------------
discretion at any time during the Initial Term or any Extension Period upon 90
days written notice to CP.
16.3 Termination for Breach. Either party may terminate this Agreement at any
----------------------
time in the event of a material breach by the other party which remains uncured
after thirty (30) days written notice thereof. In the event a party contests
the existence of a breach and/or termination of this Agreement, the other party
will continue to perform its obligations hereunder pending a final, non-
appealable judgement confirming the breach and termination, or an order of a
court of competent jurisdiction permitting such party to cease performing its
obligations hereunder.
[**] CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN
INFORMATION CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
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16.4 Termination Relating to Interactive Service. ICQ may terminate this
-------------------------------------------
Agreement, upon thirty (30) days' prior written notice to CP, if (a) CP enters
into an agreement pursuant to which a controlling interest in CP is to be
acquired by an Interactive Service or a person or entity owning a controlling
interest in an Interactive Service, (b) an Interactive Service or person or
entity controlling an Interactive Service actually acquires control of CP, (c)
CP enters into an agreement by which CP is to acquire a controlling interest in
an Interactive Service or a person or entity owning a controlling interest in an
Interactive Service, (d) CP actually acquires a controlling interest in an
Interactive Service or person or entity owning a controlling interest in an
Interactive Service, or (e) CP commences operating an Interactive Service either
directly or as a joint venture with another party or positions its business so
as to be substantially associated with an Interactive Service. ICQ will not
have the right to terminate this Agreement under this Section 16.4 solely as the
result of any arrangement where CP directly or indirectly provides internet
access solely to permit users of the CP System to access and utilize their email
service.
16.5 Termination for Bankruptcy/Insolvency. Either party may terminate this
-------------------------------------
Agreement immediately following written notice to the other party if the other
party (i) ceases to do business in the normal course, (ii) becomes or is
declared insolvent or bankrupt, (iii) is the subject of any proceeding related
to its liquidation or insolvency (whether voluntary or involuntary) which is not
dismissed within ninety (90) calendar days or (iv) makes an assignment for the
benefit of creditors.
16.6 Transition Assistance. In the event of a termination of this Agreement
---------------------
pursuant to Sections 16.2, 16.3, 16.4 or 16.5, CP will provide to ICQ the
dedicated, full-time services of one (1) qualified engineer for a period of
ninety (90) days to assist ICQ and/or AOL in migrating or transitioning the ICQ
Mail Service to another provider. In the event of termination for ICQ's breach
under Section 16.3, ICQ shall pay for CP's assistance in the migration or
transition at the then-current CP Time-and-Materials Rate and shall pay any out-
of-pocket expenses incurred by CP in connection with such migration or
transition.
16.7 Transition Period. For a period of ninety (90) days following the
-----------------
termination or expiration of this Agreement (the "Transition Period"), ICQ and
AOL shall have all of the rights granted hereunder and ICQ will have all of the
obligations with respect to the ICQ Mail Service created prior to the date of
termination or expiration (including all rights necessary to enable ICQ and AOL
to transition the ICQ Mail Service to another system without interruption of
service. During such period, CP will not be entitled to any revenues or fees
hereunder if the termination is by ICQ pursuant to Sections 16.3 or 16.4; in any
other circumstance, CP will be entitled to the fees and revenue sharing for
services provided hereunder, subject to equitable reduction as the scope of
their services reduce hereunder. Further, all end-user sublicenses of the ICQ
Mail Software shall survive the termination or expiration of this Agreement
pursuant to the terms of such end user license agreement as provided herein.
During the Transition Period, CP shall remain obligated to provide to ICQ the
support services described in Section 5. Also, during the Transition Period, CP
shall provide ICQ with reasonable assistance in developing a new version of the
ICQ Client that is not integrated with (and does not contain) any portion of the
ICQ Mail Software and shall otherwise reasonably assist ICQ, as appropriate or
necessary, to migrate or transition the email services provided in connection
with the ICQ Service to another provider. ICQ shall be entitled to seek
injunctive relief such as specific performance in the event CP fails to comply
with its transition obligations under Section 16.6 and this Section 16.7
(without resort to the dispute resolution mechanisms specified in Section 17).
16.8 Return of Information. Upon the expiration or termination of this
---------------------
Agreement, each party shall, upon the written request of the other party, return
or destroy (at the option of the party receiving the request) all Confidential
Information of the other party.
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16.9 Survival. Notwithstanding anything to the contrary contained herein, the
--------
provisions of Sections 1, 4.2, 6.1, 6.2 and 6.5 (as to amounts accrued but
unpaid), 6.6, 7, 12, 13, 14, 15, 16.6, 16.7, 16.8, 16.9, 17 and 18 shall survive
the termination, cancellation or expiration of this Agreement.
17. Dispute Resolution.
-------------------
17.1 Management Committee. The Parties will establish a "Management Committee"
--------------------
made up of one (1) senior executive from each of the Parties for the purpose of
resolving Disputes (as defined below).
17.2 Dispute Resolution by Management Committee. If the Parties are unable to
------------------------------------------
resolve any dispute by, controversy or claim arising under or related to this
Agreement or the transactions contemplated hereby (excluding any disputes
relating to intellectual property rights or confidentiality) (each a "Dispute"),
such Dispute will be promptly submitted for resolution by the Management
Committee. The foregoing shall not limit the right of either party to at any
time apply to a court for an action for a temporary restraining order,
preliminary injunction or other equitable relief to stop or prevent irreparable
harm.
17.3 Binding Arbitration. Except for the right of either party to apply to a
-------------------
court for an action for a temporary restraining order, preliminary injunction,
specific performance or other equitable relief to stop or prevent irreparable
harm, all claims, disputes, controversies and other matters in question between
the parties to this Agreement, arising out of, or relating to this Agreement, or
the breach thereof, and which cannot be resolved by the parties pursuant to
Section 17.2, shall be settled only by binding arbitration in accordance with
the Commercial Rules of the American Arbitration Association ("AAA") then in
effect, including matters involving negligence, strict liability or intentional
acts or omissions by either party, provided that the following will apply:
(a) The parties shall have the right to discovery by any or all methods
provided in the Federal Rules of Civil Procedure. The arbitrators may, upon
request, exclude any evidence not made available to the other party pursuant to
a proper discovery request from being used in the arbitration proceeding.
(b) Demand for arbitration shall be served upon the other party by
certified mail and specify in reasonable detail the nature of the dispute. The
demand shall be effective upon receipt, shall be made within a reasonable time
after the claim, dispute or controversy has arisen, and shall in no event be
made more than one year after the claim or cause of action arises. The
proceeding shall be held in Washington D.C.
(c) Within thirty (30) days after service of a demand for arbitration, the
parties shall attempt to agree upon a single arbitrator. If the parties cannot
agree upon a single arbitrator, either party may request the AAA to appoint an
arbitrator in accordance with its rules, subject to the qualifications specified
below. If the parties fail to agree on an arbitrator from those named by the
AAA or if for any reason the appointment cannot be made from the AAA submitted
lists, each party shall appoint an arbitrator within seven (7) days thereafter
and the third arbitrator shall be appointed by the AAA. For any three member
arbitration panel, the chairman shall be an attorney with experience in handling
disputes in the computer industry and the other two shall have background or
training in computer law, computer science or the computer industry. A single
arbitrator agreed upon by the parties shall have a background or training in
computer law, computer science or the computer industry.
(d) The arbitrators shall have no power or authority to reform this
Agreement. The arbitrators shall have the power and authority to award
equitable relief other than reformation, including
injunction and specific performance, nor to determine any matter requiring
agreement of the parties. The arbitrators shall have no power or authority to
award punitive damages. The arbitrators shall have the power and authority to
award consequential, special, indirect, or incidental damages only as permitted
by the terms of this Agreement.
(e) This Agreement shall remain in effect during the pendency of the
dispute resolution process without any interruption of service or performance by
either party.
(b) The cost of the arbitration shall be borne equally pending the
arbitrator's award. The prevailing party in any arbitration proceeding or
litigation hereunder shall be entitled, in addition to such other relief as
may be
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granted, to recover reasonable attorney's fees and the costs incurred in
connection with arbitration or litigation under this Agreement.
(c) The commencement, and any resolution reached as a result, of any
dispute resolution procedure under this Section shall be considered
confidential and shall not be disclosed by either party or by the arbitrators.
(d) The Federal Rules of Evidence will apply in toto to any such Dispute.
(e) The decision of the arbitrator on the points in the Dispute will be
final and binding, and judgment on any award may be entered in any court
having jurisdiction thereof.
18. General Provisions
18.1 Acknowledgment. ICQ AND CP EACH ACKNOWLEDGE THAT THE PROVISIONS OF THIS
--------------
AGREEMENT WERE NEGOTIATED TO REFLECT AN INFORMED, VOLUNTARY ALLOCATION BETWEEN
THEM OF ALL RISKS (BOTH KNOWN AND UNKNOWN) ASSOCIATED WITH THE TRANSACTIONS
CONTEMPLATED HEREUNDER. THE LIMITATIONS AND DISCLAIMERS RELATED TO WARRANTIES
AND LIABILITY CONTAINED IN THIS AGREEMENT ARE INTENDED TO LIMIT THE
CIRCUMSTANCES AND EXTENT OF LIABILITY. THE PROVISIONS OF THIS SECTION 18.1
SHALL BE ENFORCEABLE INDEPENDENT OF AND SEVERABLE FROM ANY OTHER ENFORCEABLE OR
UNENFORCEABLE PROVISION OF THIS AGREEMENT.
18.2 Independent Contractors. The parties to this Agreement are independent
-----------------------
contractors. Neither party is an agent, representative, or partner of the other
party. Neither party shall have any right, power or authority to enter into any
agreement for or on behalf of, or incur any obligation or liability of, or to
otherwise bind, the other party. This Agreement shall not be interpreted or
construed to create an association, agency, joint venture or partnership between
the parties or to impose any liability attributable to such a relationship upon
either party.
18.3 Notice. Any notice, approval, request, authorization, direction or other
------
communication under this Agreement will be given in writing and will be deemed
to have been delivered and given for all purposes (i) on the delivery date if
delivered by confirmed facsimile; (ii) on the delivery date if delivered
personally to the Party to whom the same is directed; (iii) one business day
after deposit with a commercial overnight carrier, with written verification of
receipt; or (iv) five business days after the mailing date, whether or not
actually received, if sent by U.S. mail, return receipt requested, postage and
charges prepaid, or any other means of rapid mail delivery for which a receipt
is available.
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To ICQ: To CP:
ICQ, Inc. Critical Path Inc.
22000 AOL Way 320 First Street
Dulles, Virginia 20166 San Francisco, CA 94105
Attention: Fred Singer Attention: Mari Tangredi
Phone: (703) 265-2727 Phone: (415) 808-8800
Fax: (703) 265-1204 Fax: ( 415 ) 808-8777
Copy to:
America Online, Inc.
22000 AOL Way
Dulles, VA 20166
Attention: General Counsel
Fax: (703) 265-2208
18.4 No Waiver. The failure of either party to insist upon or enforce strict
---------
performance by the other party of any provision of this Agreement or to
exercise any right under this Agreement shall not be construed as a waiver or
relinquishment to any extent of such party's right to assert or rely upon any
such provision or right in that or any other instance; rather, the same shall
be and remain in full force and effect.
18.5 Entire Agreement. This Agreement sets forth the entire agreement, and
----------------
supersedes any and all prior agreements of the parties with respect to the
transactions set forth herein. Neither party shall be bound by, and each party
specifically objects to, any term, condition or other provision which is
different from or in addition to the provisions of this Agreement (whether or
not it would materially alter this Agreement) and which is proffered by the
other party in any correspondence or other document, unless the party to be
bound thereby specifically agrees to such provision in writing.
18.6 Amendment. No change, amendment or modification of any provision of this
---------
Agreement shall be valid unless set forth in a written instrument signed by
the party subject to enforcement of such amendment.
18.7 Further Assurances. Each party shall take such action (including, but not
------------------
limited to, the execution, acknowledgment and delivery of documents) as may
reasonably be requested by any other party for the implementation or
continuing performance of this Agreement.
18.8 Assignment. Neither party may assign any of its rights, interest or
----------
benefits or delegate any of its duties under this Agreement, or otherwise
transfer this Agreement without the prior written consent of the other party;
provided that ICQ may assign this Agreement to any affiliate of ICQ (including
any entity controlling ICQ, controlled by ICQ or under common control with ICQ),
and provided further that either party may assign this Agreement for purposes of
reincorporation or change of domicile. For purposes of the foregoing, any
merger of a party with or into, or sale of all or substantially all of the
assets of a party to, or the acquisition of controlling interest in a party's
voting stock by, another entity shall be considered an assignment subject to the
foregoing restriction. Subject to the foregoing, this
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Agreement shall be fully binding upon, inure to the benefit of and be
enforceable by the parties hereto and their respective successors and assigns.
18.9 Construction. In the event that any provision of this Agreement
------------
conflicts with the law under which this Agreement is to be construed or if any
such provision is held invalid by a court with jurisdiction over the parties to
this Agreement, (i) such provision shall be deemed to be restated to reflect as
nearly as possible the original intentions of the parties in accordance with
applicable law, and (ii) the remaining terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect.
18.10 Applicable Law; Jurisdiction. This Agreement shall be interpreted,
----------------------------
construed and enforced in all respects in accordance with the laws of the
Commonwealth of Virginia except for its conflicts of laws principles. Each
party irrevocably consents to the exclusive jurisdiction of the courts of the
Commonwealth of Virginia and the federal courts situated in the Commonwealth of
Virginia, in connection with any action to enforce the provisions of this
Agreement, to recover damages or other relief for breach or default under this
Agreement, or otherwise arising under or by reason of this Agreement. Each
party acknowledges that a violation of this Agreement could cause irreparable
harm to the other party for which monetary damages may be difficult to ascertain
or an inadequate remedy. Each party therefore agrees that the other party shall
have the right, in addition to its other rights and remedies, to seek and obtain
injunctive relief for any violation of this Agreement.
18.11 Export Controls. Both parties shall adhere to all applicable laws,
---------------
regulations and rules relating to the export of technical data and shall not
export or re-export any technical data, any products received from the other
party or the direct product of such technical data to any proscribed country
listed in such applicable laws, regulations and rules unless properly
authorized.
18.12 Headings. The captions and headings used in this Agreement are inserted
--------
for convenience only and shall not affect the meaning or interpretation of this
Agreement.
18.13 Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall be deemed an original and all of which together shall constitute one
and the same document. This Agreement may also be signed by facsimile
transmission and any signature sent or received via facsimile transmission shall
constitute an original signature.
18.14 Force Majeure. CP shall not be responsible for any delays, errors,
-------------
failures to perform, interruptions or disruptions in the ICQ Mail Services or
the CP System caused by or directly resulting from any acts of God, strikes,
lockouts, riots, acts of war, governmental regulations, fire, power failure,
earthquakes, severe weather, floods or other natural disaster or from any
unforeseeable events outside of CP's reasonable control occurring with respect
to ICQ, ICQ Mail User's or any third party's hardware, software or
communications equipment or facilities (not including any subcontractor of
services provided by CP hereunder) (each, a "Force Majeure Event"). The
foregoing shall not relieve CP from
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responsibility to the extent that reasonable actions or actions normally
provided in the industry or required as a result of the obligations of CP under
Exhibits B or C (such as back-up servers, alternative routing providers, etc,)
would have made such events within CP's reasonable control or prevented any such
delay, error, failure, interruptions or disruptions. In addition, in no event
will a Force Majeure Event permit any delay, error, failure, interruption or
disruption for longer than a commercially reasonable time considering the event
and after such reasonable time period, the Force Majeure Event shall not longer
be deemed to exist or apply. If the Force Majeure Event lasts for a period of
sixty (60) days or longer, then ICQ shall be entitled to terminate this
Agreement upon written notice to CP. Neither party shall have any liability or
obligation to the other party as a result of such termination, and CP agrees to
provide reasonable transition assistance pursuant to Section 16.7 if not
prevented by the Force Majeure Event.
18.15 Insurance. CP, at its cost and expense, shall secure and maintain
---------
adequate insurance coverage as is necessary, as a reasonable prudent business
matter, for CP to bear all of its obligations under this Agreement. Maintenance
of such insurance shall not be deemed to relieve or limit CP of any
responsibility or obligation hereunder whatsoever. CP assumes full and complete
liability for all injuries to, or death of, any person or for any damages to
property arising from its acts or omissions. CP will add ICQ and AOL as
additional insureds on all appropriate insurance policies, including all
liability policies, with endorsements that require 30 days notice of ICQ and AOL
of any cancellation of such policies, and shall promptly provide ICQ and AOL
with copies of such policies and endorsements and any changes thereto from time
to time. CP's insurance shall be primary as to any other insurance the ICQ or
AOL may have.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
ICQ, INC. CRITICAL PATH INC.
/s/ David M. Colburn /s/ Douglas T. Hickey
By: _________________________________ By: _________________________________
David M. Colburn Douglas T. Hickey
Print Name: ________________________ Print Name: ________________________
SVP, Business Affairs President & CEO
Title: ______________________________ Title: ______________________________
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EXHIBIT A
Definitions
"AOL" shall mean America Online, Inc., a Delaware corporation.
"Active ICQ Mail User" shall mean, for any given period (i.e., a calendar
quarter for measurements specified herein as applying for a calendar quarter or
for a calendar month for periods specified herein as applying for a calendar
month) an ICQ Mail User who, during such applicable period accesses his email
account on the ICQ Mail Service at least once (whether or not such ICQ Mail User
actually sends or receives email from such account during such period).
"Change of Control" shall mean any event that results in any person or entity
not having control of a referenced party as of the date hereof acquiring control
of such party by any means whatsoever, including (i) the consummation of a
reorganization, merger or consolidation or sale or other disposition of
substantially all of the assets of the referenced party; or (ii) the acquisition
by any individual, entity or group (within the meaning of Section13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1933, as amended) of either
beneficial ownership (within the meaning of Rule 13d-3 promulgated under such
Act) of a sufficient percentage of the voting securities or right to vote or
take action as to result in control or the contractual right to exercise control
In all instances, the acquisition of more than 50% of either (A) the then
outstanding shares of common stock or other common equity of such party; or (B)
the combined voting power of the then outstanding voting securities of such
party entitled to vote generally, including as to the election of directors or
other governing body shall conclusively be deemed control.
"Control" (including the terms "controlling", "controlled by" or "under common
control with") shall mean the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by contract or otherwise.
"Confidential Information" shall mean any information relating to or disclosed
in the course of the negotiation or performance of this Agreement, which is, or
should be reasonably understood to be, confidential or proprietary to the
disclosing party, including, but not limited to, the existence and material
terms of this Agreement, User Information or other information about ICQ Users,
technical processes and formulas, source codes, product designs, sales, cost and
other unpublished financial information, product and business plans, projections
and marketing data. Without limiting the generality of the foregoing, all
protocols, parameters, designs, specifications and user identification
algorithms relating to the ICQ Service are Confidential Information of ICQ.
"Confidential Information" shall not include information that the receiving
party can establish is (a) already lawfully known to or independently developed
by the receiving party, (b) generally known to the public, (c) lawfully obtained
from any third party, (d) required to be disclosed by law, or (e) permitted to
be disclosed pursuant to the terms of this Agreement.
[**]
"CP Competitors" shall mean solely entities whose primary business is to provide
web-based email services which are directly competitive with the CP System. CP
Competitors will not include any entity that only provides web-based email
services as part of a general Interactive Service.
"CP Email Software" shall mean the current standard suite of client and host
software products distributed by CP that enables the provision of email and
related communication services to end users through one or more Internet
websites, all Documentation therefor and any Updates thereto.
[**] CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN
INFORMATION CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
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"CP Service" shall mean the system and services pursuant to which CP provides
web-based email, including without limitation the CP Email Software and the
hosting and other services required in connection therewith.
"CP System" shall mean the software and related systems pursuant to which CP
provides the CP Service, including without limiting the CP Email Software and
all intellectual property rights therein.
"CP Time-and-Materials Rate" shall mean the rate of $200 per hour for the first
one-year period during the term of this Agreement, and for each year thereafter,
a rate that is an increase from the rate for the previous year that is no more
than the lesser of the increase in the Consumer Price Index for All Consumers
(Washington D.C. area) and 5% .
"Documentation" means all documentation at any times existing relating to
applicable software, including all technical documentation and source code
notations used or created by the creating party or provided to or used by any
end-user or any support or other technical personnel.
[**]
"ICQ Client" shall mean the client software developed and distributed by ICQ
that enables ICQ Users to access and use the ICQ Service, and any Updates
thereto.
"ICQ Mail Service" shall mean the web-based email and email-related services
provided to ICQ Mail Users by ICQ, utilizing the services of CP hereunder,
including any Updates thereto.
"ICQ Mail Software" shall mean the customized version(s) of the CP Email
Software created by CP pursuant to the provisions of Section 2.1, including both
client components intended to run on an end-user's computer and host components
used to provide and operate email services through the ICQ Mail Website and
including all Documentation therefor and all Updates thereto.
"ICQ Mail User" shall mean an ICQ User who, pursuant to the provisions of
Section 4.1, has registered with ICQ to use the ICQ Mail Service.
"ICQ Mail Website" shall mean have the meaning given to such term in Section
2.2(a).
"ICQ Service" shall mean the ICQ-branded service, currently available through
the Internet, that enables ICQ Users to communicate with one another, including
through real-time, personal text messaging, and to monitor each other's online
status.
"ICQ User" shall mean any registered user of the ICQ Service and any registered
user of the ICQ Mail Service (including any Expanded Service). As set forth on
Exhibit B, it is understood that, in Phase II (as described on Exhibit B), the
ICQ Mail Service will be offered to the general public, including those who are
not registered users of the ICQ Service.
[**]
[**] CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN
INFORMATION CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
25
<PAGE>
"Premium Email Services" shall mean any existing or future products or services
that are ancillary or complementary to the provision of typical, standard email
services, including those for which end-users are generally charged an
additional or separate fee.
"Severity 1 Problems" are problems that in ICQ's reasonable determination halt
or materially disrupt product execution, cause a major loss of product
functionality or reduction in capability of core functions or data corruption or
damage or create an emergency which will cause significant financial or
reputation loss or other loss or business disruption.
"Severity 2 Problems" are problems that in ICQ's reasonable determination are
not Severity 1 Problems but that require prompt correction but do not prevent
the material use of the core functions of the system (such as, for example, an
isolated, consistently reproducible problem resulting in system crash loss of
core or material functionality, but which can be avoided without undue
disruption or the failure of a significant utility).
"Severity 3 Problems" are problems, including all other bugs, that in ICQ'
reasonable determination are not Severity 1 Problems or Severity 2 Problems.
"Standard Email Services" shall mean all email services and functions included
in the Specifications (including Phase II specifications), other than those
expressly listed as Premium Services, together with such other email services as
from time to time become considered typical, standard email services or for
which no fee is generally charged by other web-based email services or otherwise
agreed to by the parties.
"Updates" shall mean, as to any product, all subsequent releases thereof
including maintenance releases and services patches, error corrections,
upgrades, upgrades, enhancements, additions, improvements, extensions,
modifications and new, replacement or successor versions or products, and all
related Documentation.
26
<PAGE>
Exhibit B
Initial Specifications for ICQ Mail Service
(Developed and Provided by ICQ)
- --------------------------------------------------------------------------------
[**]
Draft 2.0
- --------------------------------------------------------------------------------
I. Objectives
II. Timeframe and Delivery
III. ICQ Deliverables
IV. Phase I Features
V. Phase II Features
1.2 I. ICQ Email Objectives:
[**]
- ----
II. Timeframe and Delivery
[**]
[**] CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN
INFORMATION CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
27
<PAGE>
[**]
III ICQ Deliverables
[**]
IV Phase I Features
[**]
[**] CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN
INFORMATION CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
28
<PAGE>
[**]
[**] CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN
INFORMATION CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
29
<PAGE>
[**]
[**] CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN
INFORMATION CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
30
<PAGE>
[**]
[**] CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN
INFORMATION CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
31
<PAGE>
V Phase II Features
[**]
[**] CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN
INFORMATION CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
32
<PAGE>
[**]
[**] CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN
INFORMATION CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
33
<PAGE>
[**]
[**] CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN
INFORMATION CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
34
<PAGE>
[**]
[**] CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN
INFORMATION CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
35
<PAGE>
Exhibit C
CP Hosting and Email Performance Obligations
Any content or any other data from non-CP hosted servers shall not be included
in the calculation or measurement of the performance metrics and all other CP
requirements of this Exhibit
<TABLE>
<CAPTION>
Key Process/Measurement Accuracy/functionality Standard Timeliness Standard
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Service Availability Min acceptable: [**] average weekly Schedule downtime to occur only on
availability (24 hrs, 7 days a week, Saturdays, [**] Pacific time no more
365 days) excluding planned than 26 times per year or with written
maintenance windows . Users should see permission from ICQ. In addition,
screen explaining downtime or warning of planned system downtime should be
potential lag time in messages communicated to ICQ at least 48 hours
in advance and should not occur at
peak traffic times
- -----------------------------------------------------------------------------------------------------------------------
Processing emails [**] of all messages processed by the Monthly avg response time for http
Service will be handled without Error sessions under [**] for [**] of user's
meaning that the message is intact service requests End to end time to
upon receipt. send/receive a message from another
service should be less than [**] for [**]
of all messages. However, CP will not be
responsible for delays outside of the CP
System or other Force Majeure Events
End to end time to send/receive a message
that is hosted internally by CP should be
less than [**] for [**] of all messages.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
[**] CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN
INFORMATION CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
36
<PAGE>
<TABLE>
<CAPTION>
Key Process/Measurement Accuracy/functionality Standard Timeliness Standard
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Service response time Images load, links work [**] of time All pages should completely load (including images) and
functions completed in a time equal or less than other
leading webmail service providers
- ----------------------------------------------------------------------------------------------------------------------------------
Capacity/Planning Peak usage for all components (greater Thresholds to generate a new Capacity upgrade should be
than) [**] capacity. initiated at [**] utilization for all components
AOL agrees to provide estimated
quarterly projections to CP of
anticipated new mailboxes to assist
in such capacity planning.
- ----------------------------------------------------------------------------------------------------------------------------------
Customer service Support all end user problems/issues [**] of emails acknowledged
inbound/outbound emails with Service including but not limited Within [**] or within [**] with auto-responders; [**] of
to Premium Services, but not including emails responded to within [**] business days and [**] of
Non-affiliated Premium Services (such problems will have resolution within [**] business days
as JFAX). Minimum acceptable [**]
accurate; Minimum coverage of emails
[**] Pacific Standard Time plus part-time
coverage in evenings and weekends to
support performance standards.
- ----------------------------------------------------------------------------------------------------------------------------------
Testing CP to conduct ongoing system testing to Testing should be continuous (in intervals less than
ensure that [**] of performance metrics or equal to [**] [**]): [**] of problems with any of
are tracked; Should include but not the performance metrics including
limited to continuous page
</TABLE>
[**] CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN
INFORMATION CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
37
<PAGE>
<TABLE>
<CAPTION>
Key Process/Measurement Accuracy/functionality Standard Timeliness Standard
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
loading testing of a ICQ URLS from multiple but not limited to those listed in Exhibit E, must be
geographically separate monitoring identified within a [**] hour period and plan of
locations on the internet and as well as resolution ready within [**] hours of problem
testing of as well as testing of email/all identification/notification
other service throughput times (send,
receive, forward etc) from at least one
external source "Performance metrics"
means the service availability, processing
emails and service response time
requirements indicated above. CP will
monitor and take a baseline for the
first 30 days of service and track
degradation on an ongoing basis.
- ----------------------------------------------------------------------------------------------------------------------------------
Monthly Reporting [**] accurate Monthly reports to include: Reports should be received no later than 5 business days
(For each ICQ email domain, CP System uptime Number of new user after close of month
including "vanity domains" mailboxes Number of deleted user
and for all premium mailboxes Total number of user
services individually) mailboxes Member storage used for
user mailboxes-(to be available for
Phase 2) Number of CP System Outages
System total downtime and average
daily and monthly downtime Changes
to CP System Reason for change Areas
affected
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[**] CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN
INFORMATION CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
38
<PAGE>
<TABLE>
<CAPTION>
Key Process/Measurement Accuracy/functionality Standard Timeliness Standard
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Daily Reporting as available Number of messages received Daily reports should be available every 24 hour period
(For each ICQ email domain, on a password-accessible website
including "vanity domains" Number of recipients
and for all premium
services individually) Number of messages sent
Number of senders
- ----------------------------------------------------------------------------------------------------------------------------------
System Outage Reports Specific System outage details Reports shouldbe faxed within [**] of outage
Time of Outage
Length of outage
Affected areas
Reason for outage
ICQ contact notified (if any) and time
of notification
Remedy to prevent outage reoccurrence
- ----------------------------------------------------------------------------------------------------------------------------------
System Outage Response If a system outage occurs, CP will report System outages will be identified within [**] [**] of
outage to ICQ upon discovery occurrence, and ICQ will be contacted within same time
frame.
First, by phone call to ICQ NOC if any
Next, by email to designated address which
ICQ will provide
Further, CP will make available a support
pager number manned 24/7/365.
- ----------------------------------------------------------------------------------------------------------------------------------
Data Integrity User must be able to access all To extent measurable, will match or
</TABLE>
[**] CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN
INFORMATION CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
39
<PAGE>
<TABLE>
<CAPTION>
Key Process/Measurement Accuracy/functionality Standard Timeliness Standard
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
mailbox and folders contents and exceed Other Leading Webmail Service Providers;
preferences [**] of time (subject to [**] of such unaccessed data should be restored
mutual agreement on archiving and within competitive standards to be mutually
offline storage policy for older agreed upon
information)
- ----------------------------------------------------------------------------------------------------------------------------------
Security Security features and system capabilities If leading competitor(s) offers a new security element,
should be equal or better to that offered Critical Path will match it within a reasonable time
by Other Leading Webmail Service Providers period
consistent with product spec and timeline
- ----------------------------------------------------------------------------------------------------------------------------------
Spam Controls Spam control features and system If a leading competitor offers a new spam control
capabilities should be equal or better to element, Critical Path should Match it with a
that offered by Other Leading Webmail reasonable time period. Such tools will be
Service Providers and consistent with continuously running and account can be closed,
standards established throughout the ICQ if necessary, immediately after reasonable
web-site investigation is conducted.
Critical Path will offer identification
statistics and controls to continuously
monitor for outbound spam of any kind
and allow for shutting down account
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[**] CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN
INFORMATION CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
40
<PAGE>
Exhibit D
CP Back-End Support Obligations
Available Contacts; Response
- ----------------------------
CP shall appoint dedicated technical contacts with reasonable and substantial
relevant training and experience to whom ICQ may address all technical questions
relating to the ICQ Mail Software. Such contacts must be available twenty four
hours a day, 7 days a week, 365 days a year.
Such contacts will be available by phone or pager 24 hours a day. Calls not
answered should be returned in all instances within one-half hour.
Additional Technical Support.
- ----------------------------
At ICQ's request, CP will provide to ICQ appropriate technical personnel to
provide support and advice to ICQ at locations specified by ICQ at the then
current CP Time-and-Materials Rate or as otherwise agreed. Actual travel
expenses shall be reimbursed to CP under ICQ's standard practices and policies,
including maximum amounts for reimbursement and coach air travel.
Error Correction
- ----------------
CP shall correct problems as specified herein:
. For Severity 1 Problems, CP will respond within [**] and use best commercial
efforts to provide ICQ a patch, workaround, or other temporary solution within
[**] after ICQ notifies CP and a permanent problem resolution within [**]
. For Severity 2 Problems, CP will respond with [**] and use best commercial
efforts to provide ICQ a patch, workaround, or other temporary solution within
[**] after ICQ notifies ICQ and a permanent problem resolution within [**]
. For Severity 3 problems, CP will use best commercial efforts to provide a
patch, work around or other temporary solution within [**] after ICQ notifies
ICQ and a permanent problem resolution must be provided within a time frame
that is commercially reasonable considering the severity of the problem and in
no event later than the next scheduled release (or earlier if mutually
agreed).
If any problem cannot be reproduced by CP after best commercial and prompt
efforts, CP and ICQ shall mutually determine how to reproduce the problem and
correct it.
Training
- --------
CP will, at no cost to ICQ, provide ICQ personnel with sufficient training to
enable ICQ to undertake its obligations and obtain its benefits hereunder. The
parties will mutually agree on the amount and content of such training, the
personnel who will be trained, the timing of such training and location of such
training. Each party will pay its own travel expenses for such training.
[**] CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN
INFORMATION CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
41
<PAGE>
Spamming Response
- -----------------
CP shall promptly respond and resolve any spam issues on the ICQ Mail Service,
including but not limited to using commercially reasonable efforts to block spam
(which efforts will be not be less than those required under Exhibits B and C.)
42
<PAGE>
Exhibit E
Stock Warrant Form
43
<PAGE>
EXHIBIT F
ACCEPTABLE USE POLICY AND TERMS OF USE
[THIS POLICY IS ONLY FOR REFERENCE IN THE EVENT OF A CLAIM FOR
INDEMNIFICATION UNDER SECTION 4.2]
Acceptable Use Policy
This Acceptable Use Policy ("AUP") provides a set of guidelines that
Customers and End Users of the services provided by Critical Path Inc.
("Services") must follow in the use of their Services accounts. Critical Path
reserves the right to update this AUP often. Please review this AUP on a
frequent basis to stay current on the acceptable uses of the Services.
Prohibited Activities
. Customers and End Users may not transmit or disseminate: (i)
advertising, chain letters, spam, junk mail or any other type of unsolicited e-
mailing (whether commercial or informational) to persons or entities that have
not agreed to be part of such mailings; (ii) harassing, libelous, abusive,
threatening, obscene or otherwise objectionable materials or materials which
infringe or violate any third party's copyright, trademark, trade secret,
privacy or other proprietary or property right, or that could constitute a
criminal offense, give rise to civil liability or otherwise violate any
applicable law or regulation; or (iii) viruses or other harmful, disruptive or
destructive files.
. In addition, Customers and End Users may not use or attempt to use
another person's or entity's account, service or system without authorization
from the owner, nor will any Customer or any End User interfere with the
security of, or otherwise abuse, the Service, system resources or accounts, or
any network or another user's use or enjoyment of the mail services.
. No Customer or End User may forge header or address information.
Following are more specific (but not exhaustive) examples of the prohibited
activities and Critical Path's policies with respect to them.
Unsolicited Bulk E-mail (popularly known as "spam")
Without exception, Critical Path does not tolerate the practice of mass-mailing
unwanted email solicitations of any type, regardless of content, and will not
permit its Customers or End Users to transmit or disseminate this type of email
using the Services.
.Any Customer or End User who sends unsolicited advertisements or
solicitations, commercial or otherwise, may have its account disabled and be
disallowed further service.
.Each Customer is responsible for ensuring that the Services are used in an
appropriate manner by Customer's End Users. Therefore, the Customer must take
steps to manage the use of the Services so that violations of this AUP and other
network abuse is minimized. The Customer must also make contact information
available to its End Users, respond in a timely manner to any complaints and, if
applicable to Critical Path's Services, forward such complaints to Critical Path
for consideration.
.In extreme cases, Critical Path may immediately suspend the use of any account
in order to prevent further abuse or damage to e-mail systems or otherwise
protect Critical Path's interests. If this occurs, Critical Path will notify
the Customer as soon as possible.
44
<PAGE>
.Unsolicited advertisements or solicitations sent from other networks which
reference e-mail accounts hosted by Critical Path will be treated as if they
originated from the referenced account, unless Critical Path knows, or has
sufficient evidence to believe, that the message originated with some unrelated
party.
.Likewise, postings made to usenet newsgroups or other online forums which
reference e-mail accounts hosted by Critical Path, and are deemed to be
inappropriate according to this AUP, the forum's ethical standards or other
general Internet use standards, may be treated in the same manner as unsolicited
bulk e-mail above.
Filtering of Incoming E-mail
. It is Critical Path's policy to respect the privacy of its Customers and their
End Users. Critical Path does not censor or control the contents of Customers'
and End Users' e-mail messages. Customers and End Users are responsible for the
contents of the messages obtained through the Services, and the consequences of
any such messages.
.As owner of the equipment and other resources used in providing the Services,
Critical Path reserves the right to employ blocking or filtering software or
other monitoring devices or techniques if deemed necessary or reasonable to
detect and/or protect spam with respect to electronic communications received by
Customers or End Users from other entities.
.Whenever possible, Critical Path will attempt to notify the party being
blocked before such action occurs.
Illegal Activities
.The Services offered may only be used for lawful purposes. Transmission,
distribution, or storage of any information, data or material in violation of
any applicable law, regulation, ordinance or other rule imposed by any
governmental authority, is prohibited. This includes, but is not limited to,
material protected by copyright, trademark, trade secret, or other proprietary
right.
.Critical Path will cooperate with law enforcement and other legal authorities
in investigating claims of illegal activity.
.Critical Path will not release any personally-identifiable information
regarding its Customers (other than information that is already publicly
available, such as the InterNIC's WHOIS database) or their End Users to any
third party except to the extent necessary or appropriate to cooperate with such
law enforcement or other legal authorities, to comply with applicable laws or
regulations or in legal or administrative proceedings where such information is
relevant, or to properly provide the Services, operate or maintain its systems
or protect itself or its customers.
.Critical Path reserves the right to terminate any Customer's or End User's
account if Critical Path learns that such Customer or End User has provided
Critical Path with false or misleading registration information.
Account and Password
.Each Customer and End User is responsible for maintaining the
confidentiality of its account number and password and is responsible for all
uses of its account, whether or not authorized by the Customer or End User.
.Customer or End User agrees to immediately notify Customer of any
unauthorized use of its account.
45
<PAGE>
Rights and Responsibilities
.Certain violations of this AUP may subject Customer and/or End User to criminal
and/or civil liability.
.Critical Path considers most instances of unsolicited bulk e-mail to be a theft
of Services and reserves the right to take appropriate actions against
originators of same, including terminating the applicable account(s) and suing
for damages.
. Customer and End User agrees to indemnify and hold Critical Path, its
suppliers and their respective affiliates and agents, harmless from any claim,
action or demand, including reasonable attorneys' fees, made by any third party
due to, arising out of or related to Customer's or User's use of the Services or
the violation of this AUP, including without limitation the infringement by
Customer or End User, or any other user of the applicable account, of any
intellectual property or other right of any person or entity.
.Nothing contained in this document shall be construed to limit action
Critical Path may take or remedies available to it in any way with respect to
any prohibited activity or conduct. Critical Path reserves the right to take
any additional actions it may consider appropriate with respect to such activity
or conduct, including without limitation taking action to recover costs and
expenses of identifying offenders and removing them from Critical Path's network
or systems, and levying cancellation charges to cover costs in the event of
disconnection for the causes outlined in this AUP. In addition, Critical Path
reserves the right to charge and/or sue for damages (including damage to
software, hardware and other equipment and the time and expense incurred in
repairing such damage) if any harm is done to its network or equipment which
requires repair or reconfiguration of any kind.
.Non-enforcement of any term of this AUP does not constitute consent or waiver,
and Critical Path Inc. reserves the right to enforce such term at its sole
discretion.
- -----------------------------------------------------------------------
DEFINITIONS
."Customer" refers to the business entity which has contracted with Critical
Path, Inc. for e-mail services. Each Customer may have multiple domain accounts
and each domain account may have one or more End User.
."End User" refers to the person, persons, or entity using a specific account
(designated by a unique e-mail address) within a domain controlled by the
Customer and operated by Critical Path, Inc.
- ------------------------------------------------------------------------
Selected Bibliography (if you are concerned about spam and other uses of the
- ---------------------
Internet and email, the following websites might be of interest to you.
Critical Path does not make these sites available and makes no warranties or
representations regarding them.)
.RFC 1855 "Netiquette Guidelines" (the "unwritten" rules)
.Fight Spam on the Internet! (the central site for the anti-spam activist
community; includes filtering methods, example policies, and much more)
.Coalition Against Unsolicited Commercial E-mail (the world's largest online
organization)
.The Net Abuse FAQ (mainly deals with Usenet; maintained by a Critical Path
employee)
46
<PAGE>
TERMS OF USE
------------
Please read the following agreement carefully.
You must accept the agreement to be able to use the CUSTOMER Service.
1. Acceptance of Terms of Use
CUSTOMER's mail service ("CUSTOMER Service") is provided free of charge to
registered users (each, a "User") under these Terms of Use. BY COMPLETING THE
REGISTRATION PROCESS AND CLICKING THE "I ACCEPT" BUTTON, YOU ARE INDICATING YOUR
AGREEMENT TO BE BOUND BY THESE TERMS OF USE. These Terms of Use are the entire
agreement between you and CUSTOMER with respect to the services provided by
CUSTOMER.
2. Privacy of Information
It is CUSTOMER's policy to respect the privacy of its Users. CUSTOMER does not
censor or control the contents of its Users' email messages. You alone are
responsible for the contents of your messages, and the consequences of any such
messages. As owner of the equipment and other resources used in providing the
CUSTOMER Service, CUSTOMER and its suppliers reserve the right to employ
blocking or filtering software or other monitoring devices or techniques if
deemed necessary or reasonable to detect and/or protect itself from spam with
respect to electronic communications received by Users from other persons or
entities.
CUSTOMER will cooperate with law enforcement and other legal authorities in
investigating claims of illegal activity and to report to law enforcement
officials any suspected illegal activity.
CUSTOMER will not release any personally-identifiable information regarding its
Users to any third party except to the extent necessary or appropriate to
cooperate with such law enforcement or other legal authorities, to comply with
applicable laws or regulations or in legal or administrative proceedings where
such information is relevant, or to properly provide the CUSTOMER Service,
operate or maintain its systems or protect itself or its customers. You agree
that CUSTOMER's judgment as to the validity of any court order or government
directive to disclose information shall be considered proper and final.
CUSTOMER reserves the right to terminate any User's account if CUSTOMER learns
that such User has provided CUSTOMER false or misleading registration
information.
3. Modifications of these Terms of Use
CUSTOMER may modify these Terms of Use from time to time in its sole discretion.
CUSTOMER will provide you with reasonable notice of any such changes, and your
continued use of the CUSTOMER Service will be deemed to constitute your
acceptance of any such changes.
4. CUSTOMER's Rights
CUSTOMER may modify or discontinue your account or the CUSTOMER Service with or
without notice, without liability to you or any third party.
5. Prohibited Activities
47
<PAGE>
The CUSTOMER Service may only be used for lawful purposes. Transmission,
distribution, or storage of any information, data or material in violation of
any applicable law, regulation, ordinance or other rule imposed by any
governmental authority, is prohibited. This includes, but is not limited to,
material protected by copyright, trademark, trade secret, or other proprietary
right.
You agree that you will not transmit or disseminate: (i) advertising,
chain letters, spam, junk mail or any other type of unsolicited emailing
(whether commercial or informational) to persons or entities that have not
agreed to be part of such mailings; (ii) harassing, libelous, abusive,
threatening, obscene or otherwise objectionable materials or materials which
infringe or violate any third party's copyright, trademark, trade secret,
privacy or other proprietary or property right, or that could constitute a
criminal offense, give rise to civil liability or otherwise violate any
applicable law or regulation; or (iii) viruses or other harmful, disruptive or
destructive files. You may not alter headers of email messages to conceal the
email address or prevent others from responding to the messages.
You agree that you will not use or attempt to use another person's or entity's
account, service or system without authorization from the owner, nor will you
interfere with the security of the CUSTOMER Service, system resources or
accounts or any network. You may not abuse systems, or make use of the CUSTOMER
Service in a way that disrupts the normal use of CUSTOMER's system or services
for others. This includes but is not limited to, running excessive numbers of
processes, attempting to disrupt the connections or other customers, consuming
excessive amounts of CPU time, memory or disk space, or running multiple
simultaneous logins.
Unsolicited advertisements or solicitations sent from other networks which
reference email accounts hosted by CUSTOMER will be treated as if they
originated from the referenced account, unless CUSTOMER knows, or has sufficient
evidence to believe, that the message originated with some unrelated party.
Likewise, you may not post inappropriate messages to newsgroups. Criteria
for whether a post is inappropriate include, but are not limited to, the written
charter/FAQ of the newsgroup, established Usenet conventions, the system
resources effected by the posting and applicable laws. You are responsible for
determining whether or not a newsgroup permits the type of message you intend to
post. You may not "flood" or disrupt Usenet groups, or cancel or modify
articles posted by others.
6. Violations
If CUSTOMER and/or its suppliers become aware of possible violations, they may,
in their sole discretion, , initiate an investigation, suspend or terminate the
account, remove materials from its server, cancel newsgroup posts, issue a
warning, or take other responsive action. You agree to respond in a timely
manner to any complaints. CUSTOMER and its suppliers reserve the right to
assess a charge of $500.00 per complaint received by CUSTOMER or its suppliers
and to recover damages for such complaints for any harm done to the system or
service or for employee hours devoted to responding to complaints. Nothing
contained in these Terms of Use shall be construed to limit the actions CUSTOMER
or its suppliers may take or remedies available to it in any way with respect to
any prohibited activity or conduct.
Certain violations of these Terms of Use may subject User to criminal and/or
civil liability.
Non-enforcement of any term of these Terms of Use does not constitute consent or
waiver, and CUSTOMER reserves the right to enforce such term at its sole
discretion.
7. Account and Password
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You warrant that you are at least 18 years of age or older. You are responsible
for maintaining the confidentiality of your account number and password. You
are responsible for all uses of your account, whether or not authorized by you.
You agree to immediately notify CUSTOMER of any unauthorized use of your
account.
8. Disclaimer of Warranties
YOU EXPRESSLY AGREE THAT USE OF THE CUSTOMER SERVICE IS AT YOUR SOLE RISK. THE
CUSTOMER SERVICE IS PROVIDED ON AN "AS IS" AND "AS AVAILABLE" BASIS.
CUSTOMER DISCLAIMS ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING
WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE OR NON-INFRINGEMENT.
CUSTOMER DOES NOT MAKE ANY WARRANTY THAT THE CUSTOMER SERVICE WILL MEET YOUR
REQUIREMENTS, OR THAT THE CUSTOMER SERVICE WILL BE UNINTERRUPTED, TIMELY,
SECURE, OR ERROR FREE; NOR DOES CUSTOMER MAKE ANY WARRANTY AS TO THE RESULTS
THAT MAY BE OBTAINED FROM THE USE OF THE CUSTOMER SERVICE OR AS TO THE ACCURACY
OR RELIABILITY OF ANY INFORMATION OBTAINED THROUGH THE CUSTOMER SERVICE.
YOU UNDERSTAND AND AGREE THAT ANY MATERIAL AND/OR DATA DOWNLOADED OR OTHERWISE
OBTAINED THROUGH THE USE OF THE CUSTOMER SERVICE IS AT YOUR OWN DISCRETION AND
RISK AND THAT YOU WILL BE SOLELY RESPONSIBLE FOR ANY DAMAGE TO YOUR COMPUTER
SYSTEM OR LOSS OF DATA THAT RESULTS FROM THE DOWNLOAD OF SUCH MATERIAL AND/OR
DATA.
CUSTOMER DOES NOT MAKE ANY WARRANTY REGARDING ANY GOODS OR SERVICES PURCHASED OR
OBTAINED THROUGH THE CUSTOMER SERVICE OR ANY TRANSACTIONS ENTERED INTO BY USE OF
OR THROUGH THE CUSTOMER SERVICE.
NO ADVICE OR INFORMATION, WHETHER ORAL OR WRITTEN, OBTAINED BY YOU FROM CUSTOMER
OR THROUGH THE CUSTOMER SERVICE SHALL CREATE ANY WARRANTY NOT EXPRESSLY MADE
HEREIN.
9.Limitation of Liability
CUSTOMER AND ITS SUPPLIERS SHALL NOT BE LIABLE FOR ANY DIRECT, INDIRECT,
INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES, RESULTING FROM THE USE OR THE
INABILITY TO USE THE CUSTOMER SERVICE OR FOR THE COST OF PROCUREMENT OF
SUBSTITUTE GOODS AND SERVICES OR RESULTING FROM ANY GOODS OR SERVICES PURCHASED
OR OBTAINED OR MESSAGES RECEIVED OR TRANSACTIONS ENTERED INTO BY MEANS OF OR
THROUGH THE CUSTOMER SERVICE OR RESULTING FROM UNAUTHORIZED ACCESS TO OR
ALTERATION OF YOUR TRANSMISSIONS OR DATA, INCLUDING BUT NOT LIMITED TO, DAMAGES
FOR LOSS OF PROFITS, USE, DATA OR OTHER INTANGIBLE, EVEN IF CUSTOMER OR ITS
SUPPLIER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
10.Email Message Storage
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CUSTOMER does not assume any responsibility for the deletion or failure to store
email messages. If you exceed the maximum permitted storage space, CUSTOMER
reserves the right to delete email messages from the affected mailboxes, at its
discretion.
11. Promotional Messages
CUSTOMER and/or third parties may, from time to time, send email messages to you
containing advertisements, promotions, etc. CUSTOMER does not make any
representation or warranty with respect to any such email messages or any goods
or services which may be obtained from such third parties, and you agree that
CUSTOMER shall have no liability with respect thereto.
12. Indemnification
You agree to indemnify and hold CUSTOMER, its suppliers and their respective
affiliates, officers, directors, employees and agents, harmless from any claim,
action or demand, including reasonable attorneys' fees, made by any third party
due to, arising out of or related to your use of the CUSTOMER Service or
violation of these Terms of Use, including without limitation the infringement
by you, or any other user of your account, of any intellectual property or other
right of any person or entity.
13. Applicable Law
These Terms of Use shall be governed by and construed in accordance with the
laws of the State of California, without giving effect to its conflict of laws
provisions.
I ACCEPT/I DECLINE
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EXHIBIT G
OTHER WEBMAIL SERVICE PROVIDERS
(as of the Effective Date of the Agreement)
1. Yahoo
2. Excite
3. IName
4. Hot Mail
5. WhoWhere
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