<PAGE>
As filed with the Securities and Exchange Commission on March 31, 2000
Registration No. 333-30674
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
----------------
AMENDMENT NO. 2
FORM S-1
REGISTRATION STATEMENT
Under
The Securities Act of 1933
----------------
SUPPORT.COM, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 7389 94-3282005
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
575 Broadway
Redwood City, CA 94063
(650) 556-9440
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
----------------
RADHA RAMASWAMI BASU
Chief Executive Officer
SUPPORT.COM, INC.
575 Broadway
Redwood City, CA 94063
(650) 556-9440
(Name, address, including zip code and telephone number, including area code,
of agent for service of process)
----------------
Copies to:
<TABLE>
<S> <C>
Jorge del Calvo, Esq. Mark A. Bertelsen, Esq.
Allison Leopold Tilley, Esq. Jose F. Macias, Esq.
Davina K. Kaile, Esq. Betsey Sue, Esq.
Pillsbury Madison & Sutro LLP Wilson Sonsini Goodrich & Rosati
2550 Hanover Street 650 Page Mill Road
Palo Alto, CA 94304 Palo Alto, CA 94304
</TABLE>
----------------
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 this Form is a post-effective amendment filed pursuant to 462(d) 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.
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- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration filed with the Securities +
+and Exchange Commission is effective. This prospectus is not an offer to sell +
+securities, and we are not soliciting offers to buy these securities in any +
+state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MARCH , 2000
Shares
(logo)
Common Stock
-----------
Before this offering, there has been no public market for our common stock.
The initial public offering price of the common stock is expected to be between
$ and $ per share. We have applied to list our common stock on The
Nasdaq Stock Market's National Market under the symbol SPRT.
The underwriters have an option to purchase a maximum of
additional shares to cover over-allotments of shares.
At our request, the underwriters have reserved up to shares of common
stock for sale at the initial public offering price to employees, directors and
other persons associated with us. These shares are part of the shares that
will be issued through the underwriters.
Investing in our common stock involves risks. See Risk Factors on page 7.
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public Commissions Support.com
-------- ------------- -----------
<S> <C> <C> <C>
Per Share.................................... $ $ $
Total........................................ $ $ $
</TABLE>
Delivery of the shares of common stock will be made on or about .
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
Credit Suisse First Boston
Chase H&Q
Bear, Stearns & Co. Inc.
Wit SoundView
The date of this prospectus is .
<PAGE>
Graphic depicting Support.com's business:
Support.com Logo
eBusiness infrastructure software that increases the strategic
value of support by automating, personalizing and enhancing
user support over the Internet
<TABLE>
<S> <C> <C> <C>
Corporate information technology [GRAPHIC OF PERSON WEARING HEADSET] Internet [SUPPORT.COM LOGO]
departments use our software to Corporate Customers [GRAPHIC OF PERSON
provide support for the systems Information Technology Departments FACING A COMPUTER
and applications used by their TERMINAL]
employees, partners and customers.
Support outsourcers use our [GRAPHIC OF PERSON WEARING HEADSET]
software to meet customer service Support outsourcers
requirements for the complex
environments they support.
Internet service providers use our [GRAPHIC OF PERSON WEARING HEADSET] [SUPPORT.COM LOGO]
software to address Internet Internet Service [SUPPORT.COM LOGO] Extranet Partners
connectivity, email, browser and Providers Clients
other subscriber issues. Suppliers
Application service providers use [GRAPHIC OF PERSON WEARING HEADSET] Intranet [SUPPORT.COM LOGO]
our technology to enhance their Application Service Employees
web-based software delivery with Providers
automated, web-based support.
</TABLE>
<PAGE>
------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Summary............................. 3
Risk Factors........................ 7
Special Note About Forward-Looking
Statements......................... 19
Use of Proceeds..................... 20
Dividend policy..................... 20
Capitalization...................... 21
Dilution............................ 22
Selected Financial Data............. 23
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 24
Business............................ 32
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Management....................... 51
Certain Transactions............. 63
Principal Stockholders........... 65
Description of Capital Stock..... 67
Recission Offer.................. 71
Shares Eligible for Future Sale.. 72
Underwriting..................... 74
Notice to Canadian Residents..... 77
Legal Matters.................... 78
Experts.......................... 78
Where You Can Find More
Information..................... 78
Index To Financial Statements.... F-1
</TABLE>
------------
Dealer Prospectus Delivery Obligation
Until (25 days after the commencement of this offering, all dealers that
participate in transactions with these securities, whether or not participating
in this offering, may be required to deliver a prospectus. This is in addition
to the dealer's obligation to deliver a prospectus when acting as an
underwriter and unsold allotments or subscriptions.
<PAGE>
SUMMARY
This summary highlights information contained elsewhere in this prospectus.
You should read the entire prospectus carefully before making a decision
whether to purchase our common stock.
Support.com
We are a leading provider of eBusiness infrastructure software that
automates, personalizes and enhances user support. Our eSupport software is
designed to accelerate eBusiness growth by increasing the strategic value of
support organizations that would otherwise constrain expanding Internet
initiatives. eBusiness refers to business conducted with customers and partners
over the Internet, and eSupport is the automated delivery of user support over
the Internet. Our suite of eSupport products allows customers to automate
problem avoidance through system self-healing, promote call avoidance through
user self-service portals and improve problem resolution through intelligent
online assisted support. We sell our products and services to corporate
information technology departments, Internet service providers, application
service providers and support outsourcers. Our customers include Bear Stearns,
Compaq Professional Services, Computer Sciences Corp., everdream, Excite@Home,
Globo Cabo, JCPenney and micronpc.com.
Businesses are rapidly implementing Internet technologies to automate and
improve interactions between employees, customers, and members of their network
of suppliers, distributors and business partners. As businesses increasingly
conduct operations in this environment, high-quality user support can become a
competitive asset that enables them to differentiate their products and
services. Organizations can deploy eSupport solutions to transform support
operations from inefficient cost centers to highly productive and scalable
competitive assets that increase customer loyalty, improve operational
efficiencies and generate incremental revenue. IDC estimates that the market
for these eSupport solutions will grow to over $14 billion in 2003.
We believe technical support has become the most critical form of user
support, as businesses and users increasingly rely upon complex information
technology and the Internet to conduct business. The growing complexity of
information systems, the proliferation of electronic devices, and the
escalation in the number of users has made technical support increasingly
difficult to deliver. Also, many organizations lack an adequate support
infrastructure to meet the demands imposed by the increasing volume of Internet
commerce transactions. These complexities and demands require a highly
personalized, automated and web-based approach to support that intelligently
identifies and resolves user problems.
Our eSupport solution is an integrated suite of web-based software
products--Healing Agent, Support Center, Support Portal, and Foundry--that help
customers automate online information collection, enhance communication between
support analysts and users and enable self-healing and automated problem
resolution. We believe our products deliver the following benefits:
. Reduced costs through the automation and personalization of the support
process.
. Increased customer satisfaction through rapid problem resolution.
. Accelerated eBusiness growth by converting the traditional call center
into a business services desk that increases the efficiency in the
support process and generates revenues.
3
<PAGE>
We believe that our leadership in providing eSupport infrastructure software
gives us a competitive advantage as we develop solutions to address broader
customer support opportunities.
We were incorporated in Delaware in December 1997 under the name Replicase,
Inc. We changed our name to Tioga Systems, Inc. in October 1998 and to
Support.com in December 1999. Our principal executive offices are located at
575 Broadway, Redwood City, California 94063, and our telephone number at that
address is (650) 556-9440. Our web site is located at www.support.com. The
information on our web site is not part of this prospectus.
Our trademarks include Support.com, the Support.com logo, ContextResponse
Technology, Self-Healing, SupportAction and TierZero. This prospectus also
includes trade names, trademarks and service marks of other companies and
organizations.
You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This document may be used only where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document.
4
<PAGE>
The Offering
<TABLE>
<C> <S>
Common stock offered by Support.com................ shares
Common stock to be outstanding after the offering.. shares
Use of proceeds.................................... For repayment of debt and
general corporate
purposes, including
working capital.
Proposed Nasdaq National Market symbol............. SPRT
</TABLE>
----------------
Unless otherwise indicated, the number of shares of our common stock to be
outstanding after this offering is based on the number of shares outstanding on
December 31, 1999 and assumes:
. no exercise of the underwriters' over-allotment option,
. the exercise of warrants to purchase 38,461 shares of our preferred stock
that will expire if not exercised before completion of this offering and
. conversion of all outstanding shares of preferred stock into common
stock,
and excludes:
. 3,944,895 shares issuable upon exercise of options outstanding at a
weighted average exercise price of $0.47 per share,
. 245,189 shares issuable upon exercise of warrants outstanding and
. 7,307,545 additional shares available for future issuance under our stock
plans.
5
<PAGE>
Summary Financial Data
(in thousands, except per share data)
<TABLE>
<CAPTION>
Period from
incorporation on
December 3, 1997 Year Ended
to December 31, December 31,
1998 1999
---------------- ------------
<S> <C> <C>
Statement of Operations Data:
Total revenue................................... $ 18 $ 3,315
Loss from operations............................ (2,804) (14,464)
Net loss........................................ (2,750) (14,294)
Accretion on redeemable convertible preferred
stock.......................................... (214) (1,072)
Net loss attributable to common stockholders.... (2,964) (15,366)
Net loss per share:
Basic and diluted............................. (0.57) (2.31)
Weighted average shares--basic and diluted.... 5,227 6,643
Pro forma net loss per share:
Basic and diluted............................. (0.71)
Weighted average shares--basic and diluted.... 20,137
</TABLE>
<TABLE>
<CAPTION>
December 31, 1999
---------------------
Pro Forma
Actual as Adjusted
-------- -----------
<S> <C> <C>
Balance Sheet Data:
Cash, cash equivalents and short-term investments......... $ 12,489 $
Working capital........................................... 9,698
Total assets.............................................. 17,525
Long-term obligations, net of current portion............. 2,277
Redeemable convertible preferred stock.................... 21,449
Stockholders' equity (deficit)............................ (13,253)
</TABLE>
----------------
The statement of operations for the year ended December 31, 1998 is
presented for the period from our incorporation on December 3, 1997. Operating
expenses totaled approximately $9,000 for the period from our incorporation on
December 3, 1997 to December 31, 1997.
Please see note 1 of the notes to the financial statements for an
explanation of the determination of the number of shares used in computing per
share data.
The pro forma as adjusted balance sheet data gives effect to the sale of the
shares of common stock that we are offering under this prospectus at an
assumed initial public offering price of $ per share and after deducting
the estimated underwriting discounts and commissions and estimated offering
expenses payable by us.
6
<PAGE>
RISK FACTORS
You should carefully consider the risks described below and the other
information in this prospectus before deciding to invest in shares of our
common stock. If any of the following risks actually occur, our business,
results of operations and financial condition would likely suffer. In these
circumstances, the market price of our common stock could decline, and you may
lose all or part of your investment.
Risks Related to Support.com
We expect continuing losses and may never achieve profitability, which may
cause the market price of our stock to decline.
We incurred net losses of approximately $17.0 million for the period from
December 3, 1997, through December 31, 1999. We expect to continue to incur
substantial net losses in the future. If we do not become profitable within the
timeframe expected by securities analysts or investors, the market price of our
stock will likely decline. If we continue to incur net losses, we may not be
able to increase our number of employees or our investment in capital
equipment, sales, marketing and research and development programs. We do not
know when or if we will become profitable. If we do achieve profitability, we
may not sustain or increase profitability in the future and may not be able to
continue to operate.
Our quarterly results fluctuate and if we do not meet quarterly financial
expectations, our stock price could decline.
We were incorporated in December 1997. Because of our limited operating
history and other factors, our quarterly revenue and operating results are
difficult to predict. Our quarterly revenue and operating results may fluctuate
from quarter to quarter. It is possible that our operating results in some
quarters may fall below the expectations of securities analysts or investors,
which would likely cause the market price of our common stock to decline.
Several factors are likely to cause fluctuations in our operating results,
including:
. demand for our eSupport infrastructure software;
. the price and mix of products and services we or our competitors offer;
. our ability to retain customers; and
. the amount and timing of operating costs and capital expenditures
relating to expansion of our business and infrastructure.
We expect to continue to spend substantial financial and other resources on
developing and introducing new products and services, and expanding our sales
and marketing organization and operating infrastructure. We expect that our
operating expenses will continue to increase in absolute dollars and may
increase as a percentage of revenue. If our revenue does not correspondingly
increase, our business and operating results could suffer. We base our expense
levels in part on our expectations regarding future revenue levels. If our
revenue for a particular quarter is lower than we expect, we may be unable to
proportionately reduce our operating expenses for that quarter.
7
<PAGE>
Our quarterly results depend on the size of a small number of orders, so the
delay or loss of any single large order during a quarterly period, and
especially an order for a perpetual license rather than a subscription license,
could harm that quarter's results and cause our stock price to decline.
Our operating results could suffer if any large orders are delayed or
cancelled in any future period. Each quarter, we derive a significant portion
of our license revenue from a small number of relatively large orders for the
licensing of our eSupport infrastructure software. We also license our eSupport
infrastructure software under perpetual and subscription licenses. Perpetual
licenses typically result in our recognition of a larger amount of revenue in
the quarter in which the license is granted as compared with subscription
licenses. Revenue from a perpetual license is generally recognized upon
delivery of a product. Revenue from a subscription license is recognized on a
monthly basis over the term of the subscription, which is typically three
years. In 1999, though 18% of our licenses were perpetual, these licenses
accounted for 67% of our revenue. We expect that we will continue to depend
upon a small number of large orders for a significant portion of our license
revenue.
Because a small number of customers has accounted for and may continue to
account for substantial portions of our revenue, our revenue could decline due
to the delay of customer orders or the failure of existing customers to renew
licenses.
In 1999, Bear Stearns accounted for 53% of our total revenue and Compu.com
accounted for 10% of our total revenue. No other single customer accounted for
10% or more of our total revenue in 1999, although our top four customers
together accounted for approximately 81% of our total revenue in 1999. Because
we have a small number of customers and a few customers are likely to continue
to account for a significant portion of our revenue, our revenue could decline
due to the loss or delay of a single customer order or the failure of an
existing customer to renew its subscription license. We may not obtain
additional customers. The failure to obtain additional customers, the loss or
delay of customer orders and the failure of existing customers to renew
licenses will harm our business and operating results.
We face competitive price pressures which may reduce our gross margin and could
harm our operating results.
If competitive price pressures cause prices to fall faster than we expect or
if we must reduce our prices for any reason, we may experience pressure on our
gross margin. Our gross margin will also depend in part on the following:
. our costs related to third-party technologies in our product offerings;
. increased services-related costs associated with increased services
orders; and
. increased licenses and sales through indirect channels which typically
carry lower gross margins.
We must achieve broad adoption and acceptance of our eSupport products and
services or our business will suffer.
We must achieve broad market acceptance and adoption of our products and
services or our business and operating results will suffer. Specifically, we
must encourage our customers to transition from using traditional support
methods. To accomplish this, we must:
. continually improve the performance, features and reliability of our
products and services to address changing industry standards and customer
needs; and
8
<PAGE>
. develop integration with other support-related technologies.
We may have little or no control over the factors that might influence
market acceptance of our solution. These factors include:
. the willingness of enterprises to transition to automated support and
eSupport;
. the willingness of businesses to manage high volumes of customer
communications over the Internet;
. acceptance of competitors' automated support or eSupport solutions; and
. changes in security and reliability of online transactions and
communications.
We must attract and retain qualified personnel, which is particularly difficult
for us because we are headquartered in the San Francisco Bay Area, where
competition for personnel is extremely intense.
Our future success will also depend on our ability to attract, retain and
motivate highly skilled personnel. If we fail to retain and recruit the
necessary personnel, our ability to develop new products and services and to
provide acceptable levels of customer service could suffer. We currently plan
to substantially increase our number of employees over the next 12 months.
Competition for these personnel is intense, especially in the San Francisco Bay
Area. We have had difficulty hiring qualified personnel as quickly as we have
desired. In particular, we may be unable to hire a sufficient number of
qualified support, training and engineering professionals. If we hire employees
from our competitors, these competitors may claim that we have engaged in
unfair hiring practices. We could incur substantial costs in defending
ourselves against any of these claims, regardless of their merits.
Failure of our sales and marketing activities to extend our brand recognition
would prevent us from achieving broad acceptance of our eSupport software.
If we do not successfully expand our sales and marketing activities, we
cannot expand our business and our stock price could decline. We believe that
continued expansion of our brand recognition will be critical to achieve
widespread acceptance of our eSupport infrastructure software. Favorable public
perception of our brand will depend largely on our ability to continue
providing our customers with effective eSupport infrastructure software and the
success of our marketing efforts. Our brand promotion activities may not yield
increased revenue and, even if they do, any increased revenue may not offset
the expenses we incur in building our brand.
We must develop and introduce new versions of eSupport infrastructure software
to meet changing customer demands or technological standards or our business
will suffer.
If we fail to develop, in a timely manner, new or enhanced versions of our
eSupport infrastructure software or to provide new products and services that
achieve rapid and broad market acceptance, our business will suffer. We may
fail to identify new product and service opportunities successfully. Our
existing products will become obsolete if we fail to introduce new products or
product enhancements that meet new customer demands, support new standards or
integrate with new or upgraded versions of packaged applications. Product
innovations may not achieve the market penetration or price stability necessary
for profitability.
9
<PAGE>
Our eSupport software may not operate with the hardware and software platforms
that are used by our customers now or in the future, and as a result our
business and operating results may suffer.
We currently serve a customer base with a wide variety of constantly
changing hardware, packaged software applications and networking platforms.
With the exception of our Support Portal, our eSupport infrastructure software
is currently available only on Microsoft Windows operating systems. If there is
widespread adoption of other operating system environments, or if we fail to
release versions of our eSupport infrastructure software that are compatible
with these other operating systems, our business and operating results will
suffer. Our future success also depends on the following:
. our ability to integrate our product with multiple platforms and to
modify our product as new versions of packaged applications are
introduced;
. the number of different operating systems and databases that our product
can work with; and
. our management of software being developed by third parties for our
customers or for use with our product.
We do not know if our business model will sustain revenue growth or be
profitable. We may have to change our business model in order to become
profitable and we may not be able to do so successfully.
Our business depends on our ability to generate revenue streams from
multiple sources, including direct and indirect sales of software products and
sales of our services. We do not know if our business model will succeed or be
sustainable as our business grows. Therefore, we may change our business model
to attempt to take advantage of new business opportunities, including business
areas in which we do not have extensive experience. Furthermore, we may revise
our business model as consumer preferences change and new competitors emerge.
If we make these changes to our business model and are not successful, it will
harm our business and reputation.
Our products and services rely on third-party programming tools and
applications, and if we lose access to these tools and applications or are
unable to modify our product in response to changes in these tools and
applications, our revenue could decline.
We depend upon access to third-party programming tools and application
program interfaces, known as APIs, used for integration of external software
products and our software. If the provider of applications we rely on denies or
delays our access to their APIs, our business may be harmed. Some application
providers may become competitors or establish alliances with our competitors,
increasing the likelihood that we would not be granted access to their APIs.
Loss of the ability to use these technologies, delays in upgrades or failure of
these third parties to support these technologies could cause our revenue to
decline.
We rely on third-party technologies and our inability to use or integrate
third-party technologies could harm our business.
We intend to continue to license technologies from third parties including
applications used in our research and development activities and technologies,
which are integrated into our products and services. These technologies may not
continue to be available to us on commercially reasonable terms or at all. We
may fail to successfully integrate any licensed technology into our products or
services. Third-party licenses expose us to increased risks. These risks
include, but are not limited to:
. risks of product malfunction after the integration of new technology;
10
<PAGE>
. the diversion of resources from the development of our own proprietary
technology; and
. our inability to generate revenue from new technology sufficient to
offset associated acquisition and maintenance costs.
Our inability to obtain any of these licenses could delay product and
service development until equivalent technology can be identified, licensed and
integrated. This would harm our business and operating results.
We may engage in future acquisitions or investments that could dilute our
existing stockholders, or cause us to incur significant expenses which could
harm our business.
We may acquire or invest in complementary businesses, technologies or
products. We recently entered into an agreement to evaluate technology that
relates to problem identification, and as part of the agreement, we have an
option to purchase this technology for up to $11,350,000, which we may or may
not exercise. If we are unable to use or integrate any newly acquired entities
or technologies effectively, our operating results could suffer. Future
acquisitions by us could also result in large and immediate write-offs,
incurrence of debt and contingent liabilities or amortization of expenses
related to goodwill and other intangibles, which could harm our operating
results. Additional funds to finance any acquisitions may not be available on
terms that are favorable to us, or at all, and, in the case of equity
financings, may dilute our stockholders. Even if completed, we may be unable to
operate any acquired businesses profitably.
Our recent growth has placed a strain on our management systems and resources
and if we fail to integrate new employees or manage our future growth, our
business could suffer.
We are currently experiencing a period of rapid expansion in our personnel,
facilities, systems and infrastructure. For example, substantially all of our
employees were hired in 1999. Our expansion has placed, and we expect that it
will continue to place, a significant strain on our management controls and
operational and financial resources. Our failure to manage growth could harm
our ability to provide adequate levels of service to our customers, disrupt our
operations, delay execution of our business plan and harm our business. We
expect further significant expansion, including expansion outside the San
Francisco Bay Area. We will need to obtain additional office space prior to the
end of 2000, and if we fail to obtain sufficient space, our business could
suffer.
We have recently hired a number of new senior management personnel and their
failure to integrate effectively may interfere with our operations.
Over the last 12 months, we have hired a number of new officers, including
our chief executive officer, Radha R. Basu, our chief financial officer, Brian
M. Beattie, and our senior vice president of sales and business development,
Jim R. Hilbert. These individuals, who have worked together for only a short
period of time, must spend a significant amount of time learning our business
model and management system while performing their regular duties. The
integration of new personnel could disrupt our ongoing operations. If our
senior management are unable to work effectively as a team, our business
operations could be harmed.
Because we do not have long-term employment agreements with most of our key
personnel, we may lose their services, which in turn would harm our business.
Our success will depend on the skills, experience and performance of our
senior management, engineering, sales, marketing and other key personnel. We do
not have long-term employment
11
<PAGE>
agreements with many of our key employees. The loss of the services of any of
our senior management or other key personnel, including our chief executive
officer, Radha R. Basu, our chief financial officer, Brian Beattie, our chief
technology officer, Scott W. Dale, and our chief software officer, Cadir B.
Lee, could harm our business.
Our failure to establish and expand our strategic alliances would harm our
ability to achieve market acceptance of our eSupport infrastructure software.
If we fail to maintain, establish or successfully implement strategic
alliances, our ability to achieve market acceptance of our eSupport
infrastructure software will suffer and our business and operating results will
be harmed. Specifically, we must establish and extend existing distribution
alliances with specialized technology and services firms such as support
outsourcers. We must also establish and extend existing solutions alliances
with leading providers of complementary support technologies, including call
center or help desk management companies, knowledge management companies and
systems management firms.
We need to expand and upgrade our infrastructure to meet customer requirements
and our failure to do so would harm our business.
As the volume and complexity of customers' needs increase, we will need to
expand our systems and network infrastructure. We may not be able to expand or
adapt our network infrastructure to meet additional demand or our customers'
changing requirements in a timely manner, or at all. The expansion and
adaptation of our network infrastructure for any reason will require
substantial financial, operational and management resources as well as
uncertain equipment incompatibility and capacity issues.
eSupport products depend on complex software and our business and reputation
could suffer if our products fail to perform properly due to errors or similar
problems.
Our eSupport products depend on complex software, both internally developed
and licensed from third parties. Complex software often contains errors. These
errors could result in:
. delays in product shipments;
. unexpected expenses and diversion of resources to correct errors;
. damage to our reputation;
. lost sales;
. product liability claims;
. delays in or loss of market acceptance of our products; and
. product returns.
Our system security may be breached, we may be subject to claims associated
with invasion of privacy or inappropriate disclosure and our business and
reputation could suffer.
A fundamental requirement for online communications, transactions and
support is the secure transmission of confidential information. Third parties
may attempt to breach our security or that of
12
<PAGE>
our customers. We may be liable to our customers for any breach in security and
any breach could harm our business and reputation. Our software contains
features which may allow us or our customers to control, monitor or collect
information from computers running the software without notice to the computing
users. Therefore we may be subject to claims associated with invasion of
privacy or inappropriate disclosure, use or loss of this information. Any
imposition of liability, particularly liability that is not covered by
insurance or is in excess of insurance coverage, could harm our operating
results. Also, computers are vulnerable to computer viruses, physical or
electronic break-ins and similar disruptions, which could lead to
interruptions, delays or loss of data. We may be required to expend significant
capital and other resources to further protect against security breaches or to
correct problems caused by any breach.
The sales cycle for our eSupport software is lengthy and variable, which may
cause us not to achieve our revenue expectations.
Our sales cycle for our eSupport infrastructure software can be as long as
nine months or more and may vary substantially from customer to customer. While
our customers are evaluating our products and services, we may incur
substantial sales and marketing expenses and spend significant management
effort. If revenue forecasted from a specific customer for a particular quarter
is not realized in that quarter, we may incur significant expenses that are not
offset by corresponding sales. Any delay in completing sales in a particular
quarter could cause our operating results to be below expectations.
We have limited experience in international operations and if we do not
successfully address the risks associated with our international operations,
our business could suffer.
We intend to expand further into international markets. If our revenue from
international operations does not exceed the expense associated with
establishing and maintaining our international operations, our business could
suffer. We have limited experience in international operations and may not be
able to compete effectively in international markets. Some risks we face in
conducting business internationally include:
. difficulties and costs of staffing and managing international operations;
. differing technology standards;
. difficulties in collecting accounts receivable and longer collection
periods;
. changes in currency exchange rates and controls;
. dependence on local vendors;
. compliance with multiple conflicting and changing governmental laws and
regulations; and
. longer sales cycles.
Technical problems with either our internal or our outsourced computer and
communications systems could reduce our ability to provide eSupport services
and could harm our business and our reputation.
The success of our eSupport infrastructure software depends on the efficient
and uninterrupted operation of our own and outsourced computer and
communications hardware and software systems. These systems and operations are
vulnerable to damage or interruption from human error, natural disasters,
telecommunications failures, break-ins, sabotage, computer viruses, intentional
acts of
13
<PAGE>
vandalism and similar events. Any system failure that causes an interruption in
our customers' ability to use our eSupport products or services or a decrease
in their performance could harm our relationships with our customers and result
in reduced revenue. Since all of our internal computer and communications
hardware and networks systems are located in the San Francisco Bay Area, an
earthquake or other natural disaster could affect all of our facilities and our
systems located there simultaneously. We have no formal disaster recovery plan
in the event of damage to or interruption of our internal or outsourced
systems, and business interruption insurance may not adequately compensate us
for losses that may occur.
Problems arising from use of our products with other vendors' products could
cause us to incur significant costs, divert attention from our product
development efforts and cause customer relations problems.
Our customers may use our eSupport products together with products from
other companies. When problems occur, it may be difficult to identify the
source of the problem. Even when these problems are not caused by our products,
they may cause us to incur significant warranty costs, divert the attention of
our engineering personnel from our product development efforts and cause
significant customer relations problems.
We may not obtain sufficient patent protection, and as a result our business
may be harmed.
Our success and ability to compete depend to a significant degree upon the
protection of our software and other proprietary technology. We believe the
protection of patentable inventions is important to our business. It is
possible that:
. any of our pending patent applications may not be issued;
. any patents issued to us may not be broad enough to protect our
proprietary rights;
. any issued patent could be successfully challenged;
. competitors may independently develop similar technologies, duplicate our
products or design around any of our patents; and
. effective patent protection may not be available in every country in
which we do business.
We rely upon trademarks, copyrights and trade secrets to protect our
proprietary rights and if these rights are not sufficiently protected, it could
significantly harm our business.
We also rely on a combination of laws, such as copyright, trademark and
trade secret laws, and contractual restrictions, such as confidentiality
agreements and licenses, to establish and protect our proprietary rights.
However, despite any precautions that we have taken,
. laws and contractual restrictions may not prevent misappropriation of our
technologies or deter others from developing similar technologies;
. other companies may claim common law trademark rights that precede the
federal registration of our marks; and
. policing unauthorized use of our products and trademarks is difficult,
expensive and time-consuming, and we may be unable to determine the
extent of this unauthorized use.
Also, the laws of other countries in which we market our products may offer
little or no effective protection of our proprietary technologies. Reverse
engineering, unauthorized copying or
14
<PAGE>
other misappropriation of our proprietary technologies could enable third
parties to benefit from our technologies without paying us for it, which would
significantly harm our business.
We may face intellectual property infringement claims that could be costly to
defend and result in our loss of significant rights.
Other parties may assert infringement claims against us and our products may
infringe issued patents. Intellectual property litigation is expensive and
time-consuming and could divert management's attention from our business in the
event of a successful claim of infringement. We may be required to develop non-
infringing technology or enter into royalty or license agreements. These
royalty or license agreements, if required, may not be available on acceptable
terms, if at all. Our failure or inability to develop non-infringing
technologies or license the proprietary rights on a timely basis would harm our
business. Our products may infringe issued patents that may relate to our
products. Also, patent applications may have been filed which relate to our
software products. We and our customers may be subject to legal proceedings and
claims, including claims of alleged infringement of the trademarks and other
intellectual property rights of third parties.
Industry Risks
We must compete successfully in the eSupport market or our business will fail.
The market for our products is intensely competitive, rapidly changing and
significantly affected by new product introductions and other market activities
of industry participants. Competitive pressures could reduce our market share
or require us to reduce the price of products and services, any of which could
harm our business and operating results. Although we do not currently compete
against any one entity with respect to all aspects of our eSupport solution,
our integrated software solution does compete against various vendors' software
products designed to accomplish specific elements of a complete eSupport
solution. For example, we currently compete with companies that provide
automated development of support solutions such as Serena Software, Inc., as
well as with companies that provide automated delivery of support solutions
such as Motive Communications, Inc.
We may encounter competition from companies such as:
. customer communications software companies;
. question and answer companies;
. customer relationship management solution providers;
. consolidated service desk solution vendors;
. Internet infrastructure companies; and
. operating systems providers.
Our potential competitors may have longer operating histories, significantly
greater financial, technical, and other resources or greater name recognition
than we do. Our competitors may be able to respond more quickly to new or
emerging technologies and changes in customer requirements.
15
<PAGE>
Because our eSupport infrastructure software is designed to support businesses
operating over the Internet, our success depends on the continued growth and
levels of performance of Internet usage.
Because a majority of our products are designed to support businesses
operating over the Internet, our success depends on the continued development
and maintenance of the Internet infrastructure. Because global commerce on the
Internet and the online exchange of information is evolving, we cannot predict
whether the Internet will continue to be a viable commercial marketplace. The
success of our business will depend on the continued improvement of the
Internet as a convenient means of consumer interaction and commerce, as well as
an efficient medium for the delivery and distribution of information by
enterprises to their employees.
Governmental regulation and legal uncertainties could impair the growth of the
Internet and decrease demand for our products or increase our cost of doing
business.
The laws and regulations that govern our business change rapidly. Any
changes in laws and regulations could impair the growth of the Internet and
could reduce demand for our products or increase our cost of doing business.
The United States government and the governments of other states and foreign
countries have attempted to regulate activities on the Internet and the
distribution of software. A number of laws have been proposed involving the
Internet. These proposed laws include laws addressing user privacy, pricing,
content, copyrights, distribution, antitrust and characteristics and quality of
products and services. Moreover, the applicability to the Internet of existing
laws governing issues is uncertain and may take years to resolve. Evolving
areas of law that are relevant to our business include privacy law, proposed
encryption laws, content regulation and sales and use tax laws and regulations.
Any new laws and regulations could harm us by subjecting us to liability or
forcing us to change how we do business. For example, in 1998, Congress passed
the Internet Freedom Act, which imposes a three-year moratorium on state and
local taxes on Internet-based transactions. Failure to renew this moratorium
would allow various states to impose taxes on e-commerce. This in turn might
harm our business directly and indirectly by harming the businesses of our
customers, potential customers and business alliances.
Offering Risks
Our stock price may be volatile, and you may not be able to sell your shares at
or above the offering price.
Before this offering, our common stock has not been publicly traded, and an
active trading market may not develop or be sustained after this offering. You
may not be able to sell your shares at or above the offering price. The price
at which our common stock will trade after this offering is likely to be highly
volatile and may fluctuate substantially because of the following:
. actual or anticipated fluctuations in our operating results;
. changes in or our failure to meet securities analysts' expectations;
. conditions and trends in the Internet and other technology industries;
and
. fluctuations in stock market price and volume, which are particularly
common among securities of software and Internet-oriented companies.
16
<PAGE>
The initial public offering price is expected to be substantially higher than
the book value per share of our common stock, which will cause you to suffer
immediate and substantial dilution.
Purchasers of our common stock in this offering will experience immediate
dilution of $ in the pro forma net tangible book value per share of common
stock, based on an assumed initial public offering price of $ per share.
Purchasers will also experience additional dilution upon the exercise of
outstanding stock options and warrants. The initial public offering price is
expected to be substantially higher than the book value per share of our common
stock. Some elements of our market value do not originate from measurable
transactions. Therefore, there is not a corresponding rise in book, or
historical accounting, value for our rise in market value, if any. Examples of
these elements include the perceived value associated with our strategic
relationships, perceived growth prospects of our market and our perceived
competitive position within that market.
After this offering, our directors, executive officers and principal
stockholders will continue to have substantial control over matters requiring
stockholder approval, which could delay or prevent a change in control of
Support.com.
After this offering, our directors, executive officers and stockholders who
currently own over 5% of our common stock will collectively beneficially own,
in the aggregate, approximately % of our outstanding common stock. These
stockholders, if they vote together, will be able to significantly influence
all matters requiring stockholder approval, including the election of directors
and approval of significant corporate transactions. This concentration of
ownership may also delay or prevent a change in control of Support.com.
Most of our outstanding shares of common stock may be sold in the market
shortly after this offering, which may cause our stock price to decline.
Sales of a substantial number of shares of common stock, including shares
issued upon the exercise of outstanding options and warrants, in the public
market after this offering or after the expiration of lockup and holding
periods could cause the market price of our common stock to decline. After this
offering, we will have approximately shares of common stock
outstanding. All the shares sold in this offering will be freely tradable. The
remaining shares of common stock outstanding after this offering are
subject to lock-up agreements that prohibit the sale of the shares for 180 days
after the date of this prospectus. Any or all of these shares may be released
before expiration of the 180-day lockup period at the discretion of Credit
Suisse First Boston Corporation. Immediately after the 180-day lockup period,
of these shares of outstanding options and warrants will become
available for sale. The remaining shares of our common stock will become
available at various times thereafter upon the expiration of one-year holding
periods.
Our stock price is expected to be volatile, which may result in securities
class action litigation against us, that could divert management's attention
and harm our business.
The stock market has experienced significant price and volume fluctuations
that have affected the market prices for the common stocks of technology
companies, particularly Internet companies. These broad market fluctuations may
cause the market price of our common stock to decline. After periods of
volatility in the market price of a particular company's securities, securities
class action litigation has often been brought against that company. We may
become involved in this type of litigation in the future. Litigation is often
expensive and diverts management's attention and resources, which could harm
our business and operating results.
17
<PAGE>
We may need additional capital, which may not be available and which may dilute
existing stockholders.
We believe that our existing capital resources, including the anticipated
proceeds of this offering, will enable us to maintain our current and planned
operations for at least the next 12 months. However, we may choose to, or be
required to, raise additional funds because of unforeseen circumstances. If our
capital requirements vary materially from those currently planned, we may
require additional financing sooner than anticipated. This financing may not be
available in sufficient amounts or on terms acceptable to us and may be
dilutive to existing stockholders. If adequate funds are not available or are
not available on acceptable terms, our ability to hire, train or retain
employees, to fund our expansion, take advantage of unanticipated
opportunities, develop or enhance services or products, or respond to
competitive pressures would be significantly limited.
Our certificate of incorporation, bylaws and Delaware corporate law contain
provisions which could delay or prevent a change in control even if the change
in control would be beneficial to our stockholders.
Delaware law as well as our certificate of incorporation and bylaws contain
provisions that could delay or prevent a change in control of Support.com, even
if it were beneficial to the stockholders. These provisions could limit the
price that investors might be willing to pay in the future for shares of our
common stock. These provisions:
. authorize the issuance of preferred stock without prior stockholder
approval to deter or prevent a takeover attempt;
. require all stockholder actions to be taken at a meeting of our
stockholders;
. limit the ability of stockholders to call special meetings; and
. establish advance notice requirements for nominations of directors or for
proposing matters that can be acted upon at stockholder meetings.
Also, Section 203 of the Delaware General Corporation Law may discourage,
delay or prevent a change in control of Support.com.
Our management has significant flexibility in using the net proceeds of this
offering, and if they do not use the proceeds in a manner that increases our
operating results or market value, our business could suffer.
Our management will have significant flexibility in applying the net
proceeds of this offering. The net proceeds could be applied in ways that do
not increase our operating results. We intend generally to use the net proceeds
from this offering to repay $2.4 million in debt and for general corporate
purposes, including working capital. We have not determined the actual expected
expenditures and thus cannot estimate the amounts to be used for each specified
purpose. The actual amounts and timing of these expenditures will vary
significantly depending on a number of factors, including the amount of cash
used in or generated by our operations and the market response to the
introduction of any new product and service offerings. Depending on future
developments and circumstances, we may use some of the proceeds for purposes
other than those described above. You will not have the opportunity, as part of
your investment decision, to assess whether proceeds are being used
appropriately.
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<PAGE>
Shares issued, and option grants made, under our 1998 stock option plan
violated the registration requirements of state securities laws.
Shares issued and options granted under our 1998 stock option plan violated
state securities laws because these stock issuances and option grants were not
exempt from registration or qualification under state securities laws and
registration or qualification was not obtained. If the rescission offer that we
intend to make to the holders of these shares and options is accepted, we could
be required to make aggregate payments to the holders of these shares and
options of up to $200,455 plus statutory interest of seven percent per year. If
any or all of these holders reject the rescission offer, we may continue to be
liable under state securities laws for up to an aggregate amount of
approximately $200,455 plus statutory interest of seven percent per year.
SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. These statements relate
to our, and in some cases our customers' and/or alliance partners', future
plans, objectives, expectations, intentions and financial performance. In some
cases, you can identify forward-looking statements because they use terms such
as anticipates, believes, continue, could, estimates, expects, intends, may,
plans, potential, predicts, should or will or the negative of those terms or
other comparable words. These statements involve risks, uncertainties and other
factors that may cause industry trends or our actual results, activities or
achievements to be materially different from those expressed or implied by
these statements. These factors include those listed under Risk Factors,
Business, Management's Discussion and Analysis of Financial Condition and
Results of Operations and elsewhere in this prospectus.
Although we believe that expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Moreover, neither we nor any other
person assumes responsibility for the accuracy and completeness of these
statements. We are under no duty to update any of the forward-looking
statements after the date of this prospectus to conform these statements to
actual results or changes in our expectations. You should not place undue
reliance on these forward-looking statements, which apply only as of the date
of this prospectus.
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<PAGE>
USE OF PROCEEDS
We estimate that we will receive net proceeds of approximately $
million from the sale of shares of our common stock. If the
underwriters exercise their over-allotment option in full, we estimate that we
will receive aggregate net proceeds of approximately $ . These net proceed
amounts are based on an initial public offering price of $ per share
less the estimated underwriting discounts, commissions and offering expenses
payable by us.
We intend to use the net proceeds of this offering to repay $2.4 million in
principal under secured and subordinated debt facilities and for general
corporate purposes, including working capital.
We may also use a portion of the net proceeds to acquire additional
businesses, products and technologies that we believe will complement our
business. We currently have a 90-day option, which we may or may not exercise,
to purchase for up to $11,350,000 technology related to problem identification.
We may use some of the proceeds from this offering to purchase the technology.
We do not have more specific plans for the net proceeds from this offering.
The amounts and timing of any expenditures will vary depending on the amount of
cash generated by our operations, competitive and technological developments
and the rate of growth, if any, of our business. As a result, we will retain
broad discretion in the allocation of the net proceeds of this offering.
Pending the uses described above, we will invest the net proceeds of this
offering in short term interest bearing, investment-grade securities. We may
not invest the proceeds to yield a favorable return. We believe that our
available cash, together with the net proceeds of this offering, will be
sufficient to meet our capital requirements for at least the next 12 months.
DIVIDEND POLICY
We have never declared or paid dividends on our capital stock and do not
anticipate paying any dividends. We currently expect to retain our earnings, if
any, for the development of our business. Our bank line of credit currently
prohibits the payment of dividends.
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<PAGE>
CAPITALIZATION
The following table lists our capitalization as of December 31, 1999:
. on an actual basis;
. on a pro forma basis after giving effect to:
. the assumed exercise of outstanding warrants to purchase an aggregate
of 38,461 shares of preferred stock at an exercise price of $6.50 that
expire upon completion of this offering; and
. the conversion of all outstanding shares of preferred stock into common
stock and changes to our authorized capital stock upon completion of
this offering;
. on the same pro forma basis as adjusted to give effect to the sale of
shares of common stock by us at an assumed initial public
offering price of $ per share and after deducting the
underwriting discounts and commissions and estimated offering expenses
payable by us.
<TABLE>
<CAPTION>
December 31, 1999
--------------------------------
Pro Forma
Actual Pro Forma as Adjusted
-------- --------- -----------
(in thousands except share
data)
<S> <C> <C> <C>
Long-term obligations, excluding current
portion....................................... $ 2,277 $ 2,277 $
-------- -------- ----
Redeemable convertible preferred stock:
12,156,108 shares authorized:
series B--7,346,108 shares designated,
7,346,108 issued and outstanding actual,
none authorized, issued and outstanding pro
forma and pro forma as adjusted............. 5,641 -- --
series C--4,810,000 shares authorized,
4,638,618 issued and outstanding actual,
none authorized, issued and outstanding pro
forma and pro forma as adjusted............. 15,808 -- --
Stockholders' equity (net capital deficiency):
series A preferred stock, 3,571,600 shares
authorized, 3,571,600 shares issued and
outstanding actual, none authorized, issued
and outstanding pro forma and pro forma as
adjusted.................................... 1 -- --
common stock, 31,060,000 shares authorized,
10,874,374 shares issued and outstanding
actual; 150,000,000 shares authorized,
26,469,161 shares issued and outstanding pro
forma; shares issued and
outstanding pro forma as adjusted........... 1 3
Additional paid-in capital................... 19,491 41,189
Receivable from stockholders................. (1,450) (1,450)
Deferred compensation........................ (14,252) (14,252)
Accumulated deficit.......................... (17,044) (17,044)
-------- --------
Total stockholders' equity (deficit)....... (13,253) (8,446)
-------- --------
Total capitalization....................... $ 10,473 $ 10,723
======== ========
</TABLE>
This table excludes the following shares:
. 245,189 shares of common stock issuable upon exercise of warrants that
will be outstanding after this offering at a weighted average exercise
price of $9.91 per share;
. 3,944,895 shares of common stock subject to options outstanding under our
1998 stock option plan as of December 31, 1999; and
. 7,307,545 shares of common stock reserved for issuance under our 1998
stock option plan, 2000 omnibus equity incentive plan and our 2000
employee stock purchase plan.
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<PAGE>
DILUTION
The pro forma net tangible book value of our common stock was approximately
$8.6 million, or approximately $0.33 per share, on December 31, 1999.
Calculation of pro forma net tangible book value assumes that, upon completion
of this offering, a warrant for 38,461 shares of preferred stock will be
exercised and all outstanding shares of preferred stock will convert into
common stock upon completion of the offering.
Pro forma net tangible book value per share represents the amount of our
total tangible assets less total liabilities divided by the number of shares of
common stock outstanding. Dilution in net tangible book value per share
represents the difference between the amount per share paid by purchasers of
our common stock in this offering and the net tangible book value per share of
our common stock immediately afterwards.
Assuming our sale of shares of common stock offered by this
prospectus at an assumed initial public offering price of $ per share, and
after deducting estimated underwriting discounts, commissions and offering
expenses, our pro forma net tangible book value at December 31, 1999 would have
been approximately $ million or $ per share. This represents an
immediate increase in net tangible book value of $ per share to the
existing stockholders and an immediate dilution of $ per share to new
investors purchasing common stock in this offering.
The following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share................. $
Pro forma net tangible book value per share at December 31,
1999.......................................................... $0.33
Increase per share attributable to new investors...............
-----
Pro forma net tangible book value per share after this
offering.......................................................
----
Pro forma dilution per share to new investors................... $
====
</TABLE>
The following table summarizes, on a pro forma basis, as of December 31,
1999, the differences between the number of shares of common stock purchased
from us, the total consideration paid and the average price per share paid by
existing stockholders and by the new investors purchasing shares in this
offering. We used the assumed initial public offering price of $ per
share, and we have not deducted estimated underwriting discounts and
commissions and estimated offering expenses in our calculations.
<TABLE>
<CAPTION>
Shares Purchased Total Consideration Average
------------------ ------------------- Price
Number Percent Amount Percent Per Share
---------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders.......... 26,469,161 % $22,577,000 % $0.85
New investors.................. $ $
---------- ------ ----------- ------
Total........................ 100.00% $ 100.00%
========== ====== =========== ======
</TABLE>
The above discussion and table assume no exercise of any outstanding stock
options. The exercise of options outstanding under our stock option plans
having an exercise price less than the offering price would increase the
dilutive effect to new investors.
If the underwriters exercise the over-allotment in full, the following will
occur:
. the number of shares of common stock held by existing stockholders will
decrease to approximately % of the total number of shares of our
outstanding common stock; and
. the number of shares held by new investors will increase to ,
or approximately % of the total number of shares of our common stock
outstanding after completion of this offering.
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<PAGE>
SELECTED FINANCIAL DATA
The following selected statement of operations data for the period from our
incorporation on December 3, 1997 through December 31, 1998 and the year ended
December 31, 1999 and the selected balance sheet data as of December 31, 1998
and 1999 are derived from our audited financial statements that have been
prepared in accordance with generally accepted accounting principles. Our
historical results are not necessarily indicative of results to be expected for
any future period.
The data should be read together with Management's Discussion and Analysis
of Financial Condition and Results of Operations and the financial statements
and related notes included elsewhere in this prospectus.
<TABLE>
<CAPTION>
Period from
incorporation on
December 3, 1997 Year ended
to December 31, December 31,
1998 1999
---------------- ------------
(in thousands
except per share data)
<S> <C> <C>
Statement of Operations Data:
Revenue:
License fees.................................. $ 18 $ 2,746
Services...................................... -- 569
------- --------
Total revenue............................... 18 3,315
Costs and expenses:
Cost of license fees.......................... -- 4
Cost of services.............................. -- 965
Research and development...................... 1,132 2,401
Sales and marketing........................... 1,197 8,974
General and administrative.................... 477 1,881
Amortization of deferred compensation......... 16 3,554
------- --------
Total costs and expenses.................... 2,822 17,779
------- --------
Loss from operations............................ (2,804) (14,464)
Interest and other income (expense), net........ 54 170
------- --------
Net loss........................................ (2,750) (14,294)
Accretion on redeemable convertible preferred
stock.......................................... (214) (1,072)
------- --------
Net loss attributable to common stockholders.... $(2,964) $(15,366)
======= ========
Basic and diluted net loss per share............ $ (0.57) $ (2.31)
======= ========
Shares used in computing basic and diluted net
loss per share................................. 5,227 6,643
======= ========
Unaudited pro forma basic and diluted net loss
per share...................................... $ (0.71)
========
Shares used in computing unaudited pro forma
basic and diluted net loss per share........... 20,137
========
</TABLE>
<TABLE>
<CAPTION>
December 31,
-----------------
1998 1999
------- --------
(in thousands)
<S> <C> <C>
Balance Sheet Data:
Cash, cash equivalents and short-term investments............ $ 2,807 $ 12,489
Working capital (deficit).................................... 2,979 9,698
Total assets................................................. 3,672 17,525
Long-term obligations, net of current portion................ 449 2,277
Redeemable convertible preferred stock....................... 5,237 21,449
Total stockholders' equity (deficit)......................... (2,423) (13,253)
</TABLE>
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
We are a leading provider of eSupport infrastructure software. From our
incorporation in December 1997 through the end of 1998, we primarily engaged in
research activities and developing and marketing our products. We first began
generating revenue from software license fees from the initial version of our
products in December 1998. During 1999, we continued to enhance the
functionality of our products, and build our management team and operational
infrastructure. We began shipping the second version of our products in June
1999 and the third version of our products in January 2000. As our revenue
increased from quarter to quarter during 1999, we also incurred significant
operating expenses as we expanded our research and development organization,
our direct sales force and professional services department. At December 31,
1999, we had an accumulated deficit of $17.0 million.
We generate revenue primarily from software licenses and related
professional services. We market our products through a combination of direct
sales, resellers, support outsourcers and distributors. Through 1999,
substantially all of our revenue was derived from direct sales. We focused on
building our indirect sales channel in the fourth quarter of 1999. Although we
expect direct sales to continue to account for a majority of revenue in the
future, we anticipate a more significant portion of sales to be generated
through our indirect channel. In 1998, no revenue was attributable to licenses
to customers outside of North America and, in 1999, 2% of our revenue was
attributable to these customers. We plan to expand our international operations
significantly, particularly in Europe and Asia.
We license our software under subscription and perpetual licenses. Revenue
under subscription licenses is recognized ratably over the term of the
subscription period beginning upon delivery of the product. Subscription
licenses typically have a term of three years, with payments generally made at
the beginning of each annual period. We began licensing software under a
subscription model in June 1999. Because revenue under perpetual license
agreements is recognized more rapidly than subscription-based revenue, a
majority of the revenue recognized to date has been derived from perpetual
licenses. To date, however, a majority of the licenses executed were
subscription-based. In determining whether we recognize revenue for
subscription and perpetual license fee arrangements, we consider whether
evidence of an arrangement exists, delivery has occurred, the fee is fixed or
determinable, and collection is probable. If any of these criteria are not met,
revenue recognition is deferred until such time as all of the criteria are met.
Subscription and perpetual licensing arrangements may include service
elements. Services consist primarily of fees from professional services, such
as consulting services, maintenance and support. Consulting services include a
range of services including installation, implementation and building of
complex and non-complex interfaces for the customer's specific application. Our
maintenance arrangements provide technical support and include the right to
unspecified upgrades, if and when available.
In all cases, we assess whether the service element of the arrangement is
essential to the functionality of the other elements of the arrangement. In
this determination we focus on whether the software is off-the-shelf software,
whether the services include significant alterations to the features and
functionality of the software, whether the services involve the building of
complex interfaces, the timing of payments and the existence of milestones. In
determining whether the installation of our
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software may require the building of complex or non-complex interfaces to the
customer's existing applications, we consider:
. the relative fair value of the services compared to the software;
. the amount of time and effort subsequent to delivery of the software
until the interfaces or other modifications are completed;
. the degree of technical difficulty in building interfaces;
. whether the services are available from other vendors or could be
performed by the customer;
. the degree of involvement of customer personnel; and
. any contractual cancellation, acceptance, or termination provisions for
failure to complete the interfaces.
In those instances where we determine that the service elements are
essential to the other elements of the arrangement, we account for the entire
arrangement in accordance with Accounting Research Bulletin (ARB) No. 45, Long-
Term Construction-Type Contracts, using the relevant guidance in SOP 97-2, and
in SOP 81-1, Accounting for Performance of Construction-Type and Certain
Production-Type Contracts.
For those arrangements for which we have concluded that the service element
is not essential to the other elements of the arrangement we determine:
. whether the services are available from other vendors;
. whether the services do not involve a significant degree of risk or
unique acceptance criteria; and
. whether we have sufficient experience in providing the service to be able
to separately account for the service.
When the service qualifies for separate accounting and we have established
vendor-specific objective evidence of fair value for the service, we (1)
recognize revenue for the fees associated with a perpetual license using the
residual method in accordance with SOP 98-9, regardless of any separate prices
stated within the contract for each element or, (2) recognize revenue for the
fees associated with a subscription license on a monthly basis over the
remaining term of the subscription period. Vendor-specific objective evidence
of fair value of services is based upon hourly rates. We have entered into
stand alone contracts for services. These hourly rates are used to assess the
vendor-specific objective evidence of fair value in multiple element
arrangements.
Maintenance is not priced or offered separately in subscription licensing
arrangements and is therefore recognized as part of the subscription fee over
the subscription period. For perpetual licensing arrangements, in accordance
with paragraph 57 of SOP 97-2, vendor-specific objective evidence of fair value
of maintenance is determined by reference to the price the customer will be
required to pay when it is sold separately, that is, the renewal rate. Vendor-
specific objective evidence of fair value for maintenance contracts under a
perpetual license arrangement is based upon our pricing practice that
maintenance renewal fees are based upon a percentage of the quoted license fees
in the related contract. Each contract typically offers additional renewal
periods at a stated price. Maintenance contracts are typically one year in
duration. To date we have had one maintenance contract come up for renewal
which the customer elected to renew. We believe that given the nature of our
products, our customers view maintenance of those products as important to
their business. As a result, we believe renewals will occur in the future as
more contracts come up for renewal.
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To date we have not entered into arrangements solely for license of our
products and, therefore, we have not demonstrated vendor-specific objective
evidence of fair value for the license element in perpetual license
arrangements. In those instances where perpetual licenses are bundled with
other elements we have used the residual method following the guidance in SOP
98-9. We account for license fees in these perpetual arrangements when vendor-
specific objective evidence of fair value exists for all undelivered elements
in the arrangement and when the fair value of all the undelivered elements is
less than the arrangement fee. We defer the total fair value of the undelivered
elements, until they are delivered, and recognize as license revenues the
difference between the total arrangement and the amount deferred for the
undelivered elements.
For the fiscal year ended December 31,1999 we recognized 71% of license and
services revenues on perpetual arrangements under the residual method, 23%
under subscription arrangements and 6% under the contract accounting method.
We intend to continue to invest in product development and technologies to
enhance our current products and services, develop new products and services
and further advance our solution offerings. Also, an important part of our
strategy is to expand our operations and employee base and build our sales,
marketing, customer support, technical and operational resources. As a result,
we expect to continue to incur substantial operating losses in the future, and
our expected increase in operating expenses will require significant increases
in revenue before we become profitable.
For purposes of this discussion, references to 1998 include the period from
our incorporation on December 3, 1997 to December 31, 1998.
Results of Operations
Revenue
Total revenue increased from $18,000 in 1998 to $3.3 million in 1999. During
1999, Bear Stearns and CompuCom licensed our software under a perpetual
licensing arrangement. Bear Stearns accounted for 53% of our total revenue in
1999. CompuCom accounted for 10% of our total revenue in 1999. No other single
customer accounted for more than 10% of our total revenue.
License revenue
License revenue increased from approximately $18,000 in 1998 to $2.7 million
in 1999. This increase was primarily because we did not ship our first product
until December 1998.
Services revenue
Services revenue increased from $0 in 1998 to $569,000 in 1999. This
increase was primarily because maintenance on new licenses and increased
implementation and consulting services performed with increased license sales.
Cost of revenue
Total cost of revenue increased from $0 in 1998 to approximately $969,000 in
1999.
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Cost of license revenue
Cost of license revenue in 1999 consists primarily of expenses incurred to
manufacture, package and distribute software products and related documentation
and license fees paid to third parties under technology license arrangements
which have not been significant to date. Cost of license revenue increased from
$0 in 1998 to approximately $4,000 in 1999. We expect cost of license revenue
to continue to remain a relatively small percentage of total revenue and to
grow in absolute dollars as we license third party technologies.
Cost of services revenue
Cost of services revenue includes salaries and other expenses related to our
customer support organization and related overhead expenses, and payments made
to third parties for consulting services provided to our customers. Cost of
services revenue increased from $0 in 1998 to approximately $965,000 in 1999.
This increase was primarily because of an increase in the number of employees
in our customer support and professional services organizations from no
employees at December 31, 1998 to 13 at December 31, 1999. Cost of services
revenue exceeds services revenue during 1999 because of the increase in the
number of personnel in our services organization. We expect to continue to
invest heavily in customer support, professional services, consulting and
training and expect cost of services revenue to increase as well.
Operating Expense
Research and development. Research and development expense consists
primarily of payroll expenses and related costs for research and development
personnel. Research and development expense is expensed as incurred. Research
and development expenses increased from approximately $1.1 million in 1998 to
approximately $2.4 million in 1999. This increase was primarily because of the
increase in the number of engineering personnel from 10 at December 31, 1998 to
30 at December 31, 1999. We expect research and development expense to increase
in absolute dollars in 2000 as we continue to hire additional research and
development personnel and spend additional amounts on third party development
efforts.
Sales and marketing. Sales and marketing expense consists primarily of
payroll expense, including salaries and commissions and related costs for sales
and marketing personnel and promotional expenditures, including public
relations, advertising and trade shows. Sales and marketing expense increased
from approximately $1.2 million in 1998 to approximately $9.0 million in 1999.
This increase was primarily because of a $2.5 million increase in personnel
costs associated with the increase in the number of direct sales, pre-sales
support and marketing employees. We also incurred $0.3 million of expense as we
increased the number of regional and international sales offices. Also, sales
commissions increased $1.6 million as we expense sales commissions in the
period in which a sale occurs. As a result, we expect that sales and marketing
expense will continue to be a significant component of operating expense. We
expect sales and marketing expense will increase in absolute dollars as we
increase our sales and marketing activities.
General and administrative. General and administrative expense consists
primarily of payroll expense and related costs of administrative personnel and
professional fees for legal, accounting and other professional services.
General and administrative expense increased from approximately $477,000 in
1998 to approximately $1.9 million in 1999. The increase was primarily because
of increased numbers of administrative personnel from five at December 31, 1998
to 15 at December 31, 1999. We expect general and administrative expense to
increase as we hire additional
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administrative personnel to support the anticipated growth of our business and
our operations as a public company.
Deferred stock-based compensation. We have recorded deferred stock-based
compensation related to stock options granted to employees and consultants
through December 31, 1999 of approximately $17.8 million. This amount
represents the difference between the exercise price of these stock option
grants and the fair value of the common stock at the time of grant as set by
the board of directors. Of this amount, we amortized approximately $3.5 million
through December 31, 1999. The remaining $14.3 million and the additional
amount of stock-based compensation from recent grants will be amortized over
the remaining vesting period of the options. Based on option grants through
December 31, 1999, we expect to amortize approximately $2.7 million in each of
the first and second quarters of 2000, $2.1 million in the third quarter of
2000 and $1.8 million in the fourth quarter of 2000. We expect to recognize
lower amounts in subsequent quarters.
Interest and other income (expense), net. Interest income, net consists
primarily of interest earned on our cash, cash equivalents and short term
investments offset by interest expenses associated with our capital leases and
equipment advances. Interest and other income, net was approximately $54,000 in
1998 and approximately $170,000 in 1999. The increase in interest income and
other income, net relates primarily to increased average cash balances
resulting from our equity financing in June 1999.
Provision for income taxes. From our incorporation in December 1997 through
December 31, 1999, we incurred net losses for federal and state tax purposes
and have not recognized any tax provision or benefit. As of December 31, 1999,
we had $10.1 million of federal and state net operating loss carryforwards to
offset future taxable income. The net operating loss carryforwards begin to
expire on varying dates beginning in 2005 through 2019. Given our limited
operating history, our losses incurred to date and the difficulty in accurately
forecasting our future results, management does not believe that the
realization of the related deferred income tax asset meets the criteria
required by generally accepted accounting principles. Therefore we have
recorded a 100% valuation allowance against the deferred income tax asset.
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Quarterly Results of Operations
The following table sets forth unaudited quarterly statement of operations
data for the four quarters ended December 31, 1999. This information has been
derived from our unaudited financial statements, which, in management's
opinion, have been prepared on the same basis as the audited financial
statements and include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the information for the
quarters presented. The operating results for any quarter are not necessarily
indicative of the operating results for any future period.
<TABLE>
<CAPTION>
Three months ended
----------------------------------
Mar. June Sept. Dec.
31, 30, 30, 31,
1999 1999 1999 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Statement of Operations Data:
Revenue
License fees............................. $ 330 $ 492 $ 624 $ 1,300
Services................................. 4 21 154 390
------- ------- ------- -------
Total revenue.......................... 334 513 778 1,690
Costs and expenses
Cost of license fees..................... 1 -- 2 1
Cost of services......................... 73 128 240 524
Research and development................. 373 370 787 871
Sales and marketing...................... 862 1,648 2,576 3,888
General and administrative............... 182 322 488 889
Amortization of deferred compensation.... 52 183 1,324 1,995
------- ------- ------- -------
Total costs and expenses............... 1,543 2,651 5,417 8,168
------- ------- ------- -------
Loss from operations....................... (1,209) (2,138) (4,639) (6,478)
Interest and other income (expense), net... 2 (22) 88 102
------- ------- ------- -------
Net loss................................... $(1,207) $(2,160) $(4,551) $(6,376)
======= ======= ======= =======
</TABLE>
Our quarterly revenue increased sequentially in 1999 due to the
introduction of and increased demand for our software products as well as the
growth of our direct sales force. In June 1999, we began offering subscription
licenses of our software. Services revenue consisting of the maintenance
components of our license agreements and consulting services which began in
the second quarter. Services revenue and related costs increased sequentially
as we hired services personnel and grew our customer base.
On a quarterly basis we have increased the level of spending throughout the
organization. Total operating expenses increased primarily because of expenses
associated with building a sales and marketing infrastructure, and increased
spending on research and development to support new product introductions.
Specifically:
. Sales and Marketing. During the third and fourth quarters, sales and
marketing expenses increased because of additional personnel costs which
include commissions and travel expenditures, as we grew our direct sales
force and indirect sales channel. We also incurred expenses in this
period in connection with the launch and branding of the Support.com
name and web site.
. Research and Development. In the third quarter, research and development
costs increased because of additional hiring of engineering personnel,
and related recruitment expenses.
. General and Administrative. In the fourth quarter, general and
administrative costs increased as we hired additional personnel to
manage our expanding operations and incurred expenses associated with
executive recruiting, information technology and other infrastructure
developments.
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Interest and other income (expense), net increased in the third and fourth
quarters primarily because of the financing we obtained in June 1999. We
invested the proceeds of the financing in short term investments.
We have incurred operating losses since our incorporation in December 1997,
and we may never achieve profitability in the future. In the past, a
significant portion of our sales have been realized near the end of the
quarter. As a result, a delay in an anticipated sale past the end of a
particular quarter could negatively impact our results of operations for that
quarter. We believe that future operating results will fluctuate on a quarterly
basis.
Liquidity and Capital Resources
Since our incorporation in December 1997, we have financed our operations
primarily through the private placement of our preferred stock, and to a lesser
extent through revenues, bank borrowings and capital equipment lease financing.
As of December 31, 1999, we had $12.5 million in cash, cash equivalents and
short-term investments. Net cash provided by financing activities was $17.9
million in 1999 and $5.5 million in 1998. In both cases, the cash was primarily
from the net proceeds from the issuance of preferred stock.
We have both a secured and subordinated debt facility with a single lender
under which we are entitled to borrow up to $2.5 million, all of which has been
used. We intend to repay $2.4 million in principal under secured and
subordinated debt facilities with the proceeds of this offering. We also have
an aggregate of $2.5 million available under equipment lease credit facilities,
of which $1.1 million is currently outstanding. Under the equipment lease line,
we are entitled to lease equipment with payment terms extending 48 months. The
ability to lease new equipment expires in July 2001. Amounts outstanding under
these facilities bear interest at rates ranging from 9.0% to 12.0% and are
secured by substantially all of our assets.
Net cash used in operating activities was $2.4 million in 1998 and $8.0
million in 1999. Cash used in operating activities was primarily the result of
net losses and increases in accounts receivable, partially offset by increases
in deferred revenue accounts payable and accrued expenses.
Net cash used in investing activities was $307,000 in 1998 and $8.7 million
in 1999. Net cash used in investing activities during 1999 included $8.5
million net purchases of short-term investments.
As of December 31, 1999, our principal commitments consisted of obligations
outstanding under notes payable, capital and operating leases. Although we have
no material commitments for capital expenditures, we anticipate a substantial
increase in our capital expenditures and lease commitments consistent with our
anticipated growth in operations, infrastructure and personnel. As of
December 31, 1999, future lease commitments for our office facility were $1.3
million in 2000 and $850,000 in 2001. We expect to require additional space to
meet our needs in the next 12 months. Adequate space may not be available on
commercially reasonable terms.
We believe that the net proceeds from the sale of common stock in this
offering, together with our current cash balances, will be sufficient to meet
our working capital and capital expenditure requirements for at least the next
12 months. Although there are no present understandings, commitments or
agreements with respect to any acquisition of other businesses, products and
technologies, we evaluate potential acquisitions of other businesses, products
and technologies and may in the future require additional equity or debt
financings to accomplish any potential acquisitions.
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If we require additional capital resources to grow our business internally
or to acquire complementary technologies and businesses at any time in the
future, we may seek to sell additional equity or debt securities. The sale of
additional equity or convertible debt securities could result in additional
dilution to our stockholders. Financing arrangements may not be available to
us, or may not be available in amounts or on terms acceptable to us.
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Financial
Instruments and for Hedging Activities", which provides a comprehensive and
consistent standard for the recognition and measurement of derivatives and
hedging activities. SFAS 133 is effective for all fiscal quarters for fiscal
years beginning after June 15, 2000 and is not anticipated to have a
significant impact on our operating results or financial condition when
adopted.
Qualitative and Quantitative Disclosures about Market Risk
We develop products in the United States and market and sell in North
America, South American, Asia and Europe. As a result, our financial results
could be affected by factors such as changes in foreign currency exchange
rates or weak economic conditions in foreign markets. As all sales are
currently made in U.S. dollars, a strengthening of the dollar could make our
products less competitive in foreign markets. Our interest income is sensitive
to changes in the general level of U.S. interest rates, particularly since the
majority of our investments are in short-term instruments. Because of the
nature of our short-term investments, we have concluded that there is no
material market risk exposure.
Our investment policy requires us to invest funds in excess of current
operating requirements in:
. obligations of the U.S. government and its agencies;
. investment grade state and local government obligations;
. securities of U.S. corporations rated A1 or AA by Standard and Poors or
the Moody's equivalent; and
. money market funds, deposits or notes issued or guaranteed by U.S. and
non-U.S. commercial banks, meeting credit rating and net worth
requirements with maturities of less than two years.
At December 31, 1999, our cash and cash equivalents consisted primarily of
demand deposits and money market funds held by large institutions in the U.S.
and our short-term investments were invested in corporate debt securities
maturing in less than one year.
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BUSINESS
Overview
We are a leading provider of eBusiness infrastructure software that
automates, personalizes and enhances user support over the Internet. Our
eSupport software is designed to accelerate eBusiness growth by increasing the
strategic value of support organizations and reducing support inefficiencies
that would otherwise constrain expanding Internet initiatives. We offer
customers the ability to automate problem avoidance through self-healing,
promote call avoidance through user self-service and improve problem resolution
through online assisted support. We believe that by deploying our eSupport
infrastructure, customers can transform eBusiness support operations from
inefficient cost centers to highly productive and scalable competitive assets
that increase customer loyalty, improve operational efficiencies and generate
incremental revenue. We sell our products and services to corporate information
technology departments, Internet service providers, application service
providers and support outsourcers. Our customers include Bear Stearns, Compaq
Professional Services, Computer Sciences Corp., everdream, Excite@Home, Globo
Cabo, JCPenney and micronpc.com.
Industry Background
User Support Is Critical for eBusiness
Businesses are increasingly relying on the Internet to sell more products
and services, drive efficiencies in supply chains and distribution channels,
establish and improve customer relationships and increase employee
productivity. Among these organizations are traditional businesses that are
increasingly conducting business over the Internet, companies that are formed
specifically to deliver products and services over the Internet, and Internet-
related technology vendors and service providers. To support their eBusiness
initiatives, businesses are deploying Internet, intranet and extranet
technology solutions that automate and improve the interaction between the
enterprise and its employees and customers, as well as the members of an
extended enterprise of suppliers, distributors and business partners.
In this environment, high-quality support is critical for customers and
eBusiness infrastructure users and the growth of eBusiness initiatives. As
businesses increase their reliance on the Internet, user support becomes a
primary interface between a business and its employees, supply chain partners
and customers. High-quality, personalized and continuous user support enables
internal and external systems to run more efficiently, improves employee
productivity and increases customer acquisition, retention and satisfaction.
Therefore, deploying a comprehensive Internet-based support infrastructure is
becoming a competitive asset that enables a company to differentiate its
products and services and improve the efficiency of its operations.
The Growing Difficulty in Delivering User Support
We believe technical support has become the most critical form of user
support, as businesses and users increasingly rely upon complex information
technology infrastructure and the Internet to conduct business. IDC estimates
that 59% of businesses either lose business, or are no longer able to conduct
business, if their system or network is not available. Delivering technical
support is increasingly complex and difficult as systems become more
sophisticated, different electronic devices proliferate and the number of users
and their demands grow.
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Millions of Individuals Are Using the Web. According to IDC, the number of
people using the web will grow from 196 million in 1999 to 502 million in 2003.
These users have a broad range of support requirements and levels of
sophistication. Supporting this growing demographic is further complicated by
each user's dependence on different applications and devices. These users also
face a proliferation of new web-based services and require real-time training
and electronic support.
Computing Environments Are Becoming More Complicated. A typical business
uses a broad range of operating systems, networking technologies, e-commerce
software, security solutions, server applications, packaged and internally
developed applications and productivity tools. In many cases, these
applications are integrated within the corporation and with the systems and
applications of the extended enterprise, through a variety of networks and
protocols.
Electronic Devices Are Proliferating. Businesses and consumers use many
different electronic devices to conduct business, access the Internet and
purchase products and services, such as personal computers, personal digital
assistants and other mobile devices. Each device bears an individual profile--a
different configuration of applications, operating system components, network
access protocols and personal settings. To illustrate this proliferation,
according to IDC, the number of shipped personal computers alone will grow from
approximately 112 million in 1999 to 190 million in 2003.
Applications Are Multiplying. Meta Group estimates that the number of
programs on the average personal computer has risen from approximately 200 in
1997 to over 600 in 1999. These applications are frequently upgraded, and
combinations will increase exponentially. Also, we believe that the variability
of device configurations will increase as customers download, install and use
thousands of programs from the Internet or access hosted applications.
Existing Support Solutions Are Inadequate
Existing approaches to user support are increasingly inefficient and costly
in today's rapidly evolving and dynamic Internet economy. Providing scalable,
personalized technical support is especially difficult. Businesses have
traditionally provided support to users on-site or remotely through call
centers and help desks. These methods are highly labor intensive because
support is typically provided through time consuming phone interaction, e-mail
or on-site visits. Moreover, call centers and help desks generally experience
high turnover and have difficulty scaling. Support professionals are provided
with limited knowledge of users, their systems and business needs and therefore
cannot properly and rapidly diagnose and resolve users' problems. Also, user
self-help options such as manuals and software help features have been of
limited effectiveness, as they are static and require intensive user effort.
The increasing complexity of support requires a highly personalized,
automated and web-based approach to the development and delivery of support. To
date, support infrastructure technology investments have primarily focused on
making incremental improvements to existing call center and help desk
solutions. For example, work-flow solutions, such as automated call-tracking,
and web-based applications, such as email response management systems, have
increased the efficiency of support delivery. However, these solutions do not
reduce the need for assisted support, offer automated support or provide web-
based technologies for personalized problem diagnosis or resolution.
The Growth of eSupport
According to the Gartner Group, the volume of non-financial goods and
services sold through business-to-business e-commerce is expected to reach over
$7 trillion worldwide in 2004. However,
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most organizations lack an adequate support infrastructure to meet the demands
imposed by this increasing volume of Internet commerce. The inadequacy of
existing support infrastructure impedes the growth and rapid acceptance of
eBusiness. Therefore, businesses are seeking more effective and efficient ways
to deliver user support. Support solutions must deliver highly personalized
services that are able to automatically and intelligently identify and resolve
user problems and questions. Organizations need to transform eBusiness support
operations from inefficient cost centers to highly productive and scalable
competitive assets that increase customer loyalty, improve operational
efficiencies and generate incremental revenue. Businesses must fully build out
their web-based support infrastructure. The market for eSupport, the automated
delivery of user support over the Internet, is estimated by IDC to grow to over
$14 billion in 2003.
The Support.com Solution
We are a leading provider of eBusiness infrastructure software that
automates, personalizes and enhances user support over the Internet. The core
of our solution is an Internet support infrastructure that automates
information collection from the user's system, enhances communication between
support analysts and users, and enables self-healing and automated problem
resolution. Our web-based offerings are available in a variety of
configurations, including a full-service web site, or support portal, that
serves as the nexus of an eBusiness support infrastructure.
The key features of our products include:
Personalized Support. Our software automatically discovers and tracks the
unique characteristics of each user's system and that system's components to
personalize and increase the efficiency of the support process.
Self-Healing. Our software proactively recognizes, diagnoses and resolves
potential problems as they arise, without the need for the user to request
specific assistance.
Self-Service. Our software helps users to resolve their own problems through
a single, intuitive interface that provides adaptive, context-sensitive
resolution of problems and queries.
Assisted Service. Our solution is designed to ensure that when a problem or
query is escalated to the level at which it requires the assistance of a
support analyst, that analyst will have detailed information about the user's
system and access to sets of support actions to accelerate problem resolution.
Web Support Content Authoring. Our solution enables support analysts to
develop support actions that automatically implement problem diagnosis and
repair, user training and just-in-time help through the web. These actions are
made available to other support analysts and users to further automate the
support process.
Internet-Based Architecture. Our products are primarily web-based, meaning
that they can be delivered and updated through the Internet, are secure,
scalable and extensible. By structuring our software this way, we are able to
offer solutions to users, corporate information technology departments and
other support providers that are geographically unconstrained and easy to use
and deploy. By designing a new eSupport process that uses the Internet, we are
able to improve the effectiveness and efficiency of support with automated and
detailed information exchange.
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Through the features, our solutions:
Accelerate eBusiness Growth. Our software's high degree of automation and
scalability provides our customers with a means for eliminating the support
bottlenecks that would constrain their rapidly expanding eBusiness initiatives.
Our products provide information-gathering capabilities that can help our
customers convert the traditional help desk into a revenue generating business
services desk. For instance, one of our customers utilizes our eSupport
solution in their support portal to drive sales of additional products and
services.
Reduce Support Costs. Traditional support solutions involve multiple
instances of human interaction by telephone and in person. Our products can
enable fully automated problem and query resolution directly by users--that is,
without necessarily requiring remote or in-person assistance. We refer to this
user self-service as tier zero, and believe that it is an effective and
efficient means of providing support. By providing a 24-hour, seven-days-a-week
automated support button on systems, our software minimizes escalation of
problems from tier zero to levels requiring human interaction. As a result, our
customers can enhance their existing support infrastructure, reduce their
overall support costs, and create an internal environment that allows them to
attract and retain high-quality support analysts.
Increase Customer Satisfaction. Our products are personalized, context-
sensitive, and adapt to dynamically changing system environments. Our patented
DNA Probe, for example, recognizes individual system settings and provides our
eSupport solution with the information necessary to resolve technical problems
at tier zero. In situations where problems are not eliminated at tier zero, the
Support.com infrastructure provides support analysts with detailed user and
process information and problem history. Our approach resolves user problems
faster and more quickly than traditional support solutions, while increasing
user satisfaction and reducing downtime.
Rapidly Deploy and Integrate with Existing Solutions. Our products are
designed to reduce customer configuration deployment times and installation
costs. Our software helps customers to preserve their investments in and
deployments of call center and help desk products, workflow tools, knowledge
bases and other applications. Our solution can enhance these capabilities and
integrate them into a cohesive, automated and personalized Internet support
infrastructure. Our solution is also designed to effectively support third-
party software and does not require lengthy development, testing or maintenance
cycles.
Enable Businesses to Achieve Competitive Advantage. Our comprehensive
eSupport solution can accelerate problem resolution, reduce system downtime and
increase user productivity, each of which is important to maintaining a
competitive advantage in the Internet economy. We also offer our customers the
ability to differentiate their product offerings, improve their customer
satisfaction and enhance their online presence by enabling them to brand their
own version of our support portal.
Support.com Strategy
Our mission is to be the leading provider of comprehensive eSupport
infrastructure software. Key components of our strategy include:
Grow with eBusiness and the Internet. We believe that as businesses continue
to use the power of the Internet to realize efficiencies in their interactions
with customers, supply chain partners and employees, the opportunities to
provide web-based products that address the support needs of these
constituencies will be substantial. As companies increasingly use the Internet
to automate
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business processes, their contact with customers is progressively becoming
limited to those support interactions that occur when a user has a problem. Our
goal is to use our technologies and web-based architecture to help our
customers provide superior levels of customer care through the Internet.
Continue to Develop Advanced Support Technologies. Our current eSupport
product offerings are based on patented technology and are designed to solve
many complex user support problems, primarily those revolving around technical
support. We intend to continue investing substantial resources in developing
innovative web-based technologies that enhance the personalization, automation
and overall effectiveness of our solutions. We also plan to continue developing
technologies to support additional platforms and applications and to address
the complex and evolving natures of corporate computing environments and the
Internet. We believe that our focus on providing technical support
infrastructure gives us a competitive advantage as we develop solutions to
address broader customer support opportunities.
Extend Market Leadership Position by Expanding Our Sales and Distribution
Capabilities. We plan to continue developing both our internal sales force and
our indirect sales channel of resellers, systems integrators, support
outsourcers and other service providers. We also intend to expand our web-based
sales strategies. We believe that our indirect sales channel and web sales will
add cost efficiencies to and increase the scalability of our sales process. We
believe that distribution of our products through Internet service providers
and application service providers, which typically have large numbers of
customers, will help promote recognition of our brand and enhance our market
penetration and position. We believe the combination of our existing base of
reference accounts and our consultative selling approach will assist us to
further penetrate our markets and to attract new customers.
Expand our Technology Relationships. Our relationships with key technology
vendors are important to delivering a comprehensive support solution and
increasing our brand recognition. We currently work with leading technology
companies in the areas of knowledge management, customer communications, call
center and help desk software to ensure that our offerings can be integrated
with our customers' existing infrastructure. We intend to strengthen our
relationships with these and other key technology providers in the future to
support additional platforms and applications and to increase the functionality
and applicability of our product offerings.
Continue to Increase Customer Return on Investment. We work in close
partnership with our customers to develop an in-depth understanding of their
businesses, and to effectively deploy our eSupport solution to increase their
return on investment. We intend to continue to provide a high level of customer
service and support through our services organization and by using our own
eSupport technologies. We will continue to work with our customers as they grow
with the Internet to improve the quality of our product offerings and to
identify and address their new support challenges.
Products
Our eSupport infrastructure products and services can enable our customers
to support their customers, supply chain partners and employees automatically
and through the Internet, extranets or intranets. Our software allows our
customers to provide their users with personalized, automated support solutions
tailored to meet the needs of each of their business environments. Support
solutions generated by our products are unique for each user and are
intelligent because they are interactive, adaptable and have the capability to
automatically update themselves as the user's support
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<PAGE>
requirements change. Our products are web-based, which reduces user deployment
and installation expenses. This ease of deployment makes our software scalable
in corporate environments.
The following table highlights the features of our products:
<TABLE>
<CAPTION>
Product Description
<C> <S>
Healing Agent A comprehensive, context-sensitive user-based support
application that enables personalized self-service and makes
software self-healing by proactively identifying and repairing
problems on users' systems.
- -------------------------------------------------------------------------------
Support Center A centralized support infrastructure and a suite of software
components for remote assisted service, enterprise-wide
problem resolution and management and administration of the
overall support environment. Builds on the Healing Agent's
capabilities to rapidly resolve user requests that are
escalated to a support analyst.
- -------------------------------------------------------------------------------
Support Portal An interactive web platform that enables self-service and
assisted service. Works with the Internet-enabled Support
Center and Healing Agent to provide support organizations with
the components and infrastructure they need to provide
interactive, full-service and personalized online support.
- -------------------------------------------------------------------------------
Foundry A comprehensive application for authoring automated support
actions and managing support content that can then be utilized
by the Healing Agent, Support Center and Support Portal.
</TABLE>
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<PAGE>
Our eSupport suite consists of four products that provide a modular approach
to building comprehensive eSupport solutions. The following diagram illustrates
the components of our eSupport Suite and how they interact:
[GRAPHIC APPEARS HERE]
Healing Agent
The Healing Agent provides users with self-healing and automated self-
service capabilities to resolve problems and questions that normally require a
call to the call center or help desk. The Healing Agent acts as the user's
personalized, context-sensitive support assistant, proactively identifying and
automatically solving problems as they arise. The Healing Agent provides a
single source of information for addressing software and system malfunctions
and responding to users' queries. The Healing Agent serves as the foundation
for our comprehensive support infrastructure.
The Healing Agent includes the following features:
Self-Healing Capabilities. By actively monitoring the applications and
components of a user's changing system, the Healing Agent can intelligently
eliminate problems before they cause downtime.
Automated Self-Service. Enables users to address support problems that
normally require calls to the call center or help desk. This reduces the number
of calls to the call center and provides users with a more efficient and
satisfying support experience.
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Support for Disconnected and Mobile Users. Allows users to solve problems
when they are completely disconnected from their networks. The solutions
critical to disconnected and mobile users reside locally on the user's
machine.
Undo Capability. Provides users with the ability to undo actions taken by
the Healing Agent.
Support Center
The Support Center provides a centralized support infrastructure and a
suite of software components for remote assisted service, enterprise-wide
problem resolution and management and administration of the overall support
environment. This product provides support analysts with the ability to
deliver context-sensitive diagnosis and resolution of user problems. The
Support Center builds on the Healing Agent's support capabilities in an effort
to rapidly resolve support requests that are escalated to the call center or
help desk. The Support Center provides support for a comprehensive range of
call types, including solving problems, answering questions and resolving
requests for system modifications.
The Support Center enables support analysts to provide enhanced assisted
service with a set of tools for diagnosing and resolving problems from remote
locations. By integrating the Healing Agent's knowledge and user history with
remote assisted service, the Support Center provides support analysts with
appropriate information that they would normally have to gather manually. The
Support Center allows support analysts to identify the fundamental causes of
problems and enable users and support staff to systematically and rapidly
resolve them without desktop visits or lengthy interactions between the user
and the analyst. The result is significant reductions in call times, which can
lead to improved service to users and lower support costs.
The enterprise healing capabilities of the Support Center enable the
support organization to solve problems for a large number of users across the
organization before user productivity becomes impaired. Enterprise healing
allows the support organization to identify problems that could affect large
numbers of users and repair them before users suffer downtime.
The administration and management capabilities of the Support Center
provide centralized user management, usage and status reporting, storage
maintenance, security administration and instructions for the Healing Agent.
The Support Center manages characteristics and privileges for users and
support analysts and reports on support activities. For instance, periodic
maintenance can be performed from the Support Center to manage security
parameters and storage requirements. The Support Center provides centralized
instructions for the Healing Agents, which control their behavior and
activity.
The Support Center includes the following features:
Knowledge-Driven Remote Diagnosis. Provides the support analyst with the
knowledge and tools to remotely diagnose problems on a user's system. The
Support Center provides support analysts with information about the current
configuration of a user's system, a history of all prior actions taken to
resolve the user's problems and tools to present context-sensitive solutions
to the support analyst. This allows for analysis of problems based on the
status of the user's system and personalized support requirements and results
in quicker diagnosis of the fundamental cause of the problem and its solution.
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Remote Repair. Enables the support analyst to remotely solve problems with
no user interaction. This reduces desktop visits and costly, time-consuming
interaction with users. Remote repair allows the support analyst to initiate
online chat sessions with users, edit their files and execute commands on their
systems.
Reporting. Provides support organizations with information for monitoring
support transactions, identifying trends and potential problems and measuring
the effectiveness of our eSupport suite.
Extensibility. Provides an open architecture to enhance and extend the
capabilities of the Support Center to meet changing support needs. The Support
Center enables support organizations to transfer and use information with
knowledge bases and automatically transfers information into call tracking
databases.
Security. The user can control which activities are allowed or disallowed by
the support analyst. Also, support administrators manage overall user and group
security. All support activity occurs using industry standard security,
including encryption and the use of digital certificates.
Undo capabilities. Provides support analysts with the ability to undo
actions taken from the Support Center.
Support Portal
The Support Portal is an interactive web platform that enables businesses to
add to or enhance self-service or assisted service capabilities. The Support
Portal works with the Internet-enabled Support Center and Healing Agent to
provide support organizations with the components and infrastructure they need
to build interactive, full-service, context-sensitive and personalized online
support. The Support Portal enhances existing support solutions, such as
knowledge bases and call tracking systems, by delivering context-sensitive
information that allows for better solution matching and automated problem
resolution. The result is a support experience in which the Support Portal
interacts with the user, the system and other support technologies to provide a
personalized solution to the user's support request.
The Support Portal includes the following features:
Web-Based Solution. The Support Portal serves as a single point of
integration for all support content, technologies and processes.
Interactive, Context-Sensitive Support. Interacts with users' systems to
guide those users through the complexities of their specific environments,
offering them context-sensitive, personalized support.
Support Process Automation. Connects users to support providers and
automates and reduces inefficiencies in the support process. This includes:
. self-service;
. routing of support requests to the support organization;
. user identification and privilege verification;
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. problem description;
. diagnosis and repair; and
. logging of actions taken by all parties involved in the support
transaction.
Foundry
The Foundry is a development environment for authoring support actions and
managing support content that can be utilized by the Healing Agent, Support
Center and Support Portal. The Foundry's authoring capabilities enable support
organizations to create automated solutions, or SupportActions, that support
user applications and operating system components, automate common support
activities and schedule jobs to manage user systems. SupportActions can be
created for a complete range of support requests.
The Foundry includes the following features:
Content Creation and Content Management. The Foundry enables support
organizations to create, publish, integrate and maintain automated
SupportActions. The Foundry is a platform for authoring automated
SupportActions from a point-and-click interface. This includes support content
automation and the ability to easily integrate existing support content into a
database of solutions and content.
Personalization. The Foundry enables the support organization to create
personalized support content. Using the Foundry's capabilities, a company can:
. create support solutions that automatically identify and address the
unique support requirements of each user.
. deliver automated support solutions to a single user or set of users
based on the unique characteristics of their systems, the history of
their support needs and other criteria.
Technology
We believe that our core technologies provide the foundation for a scalable
support infrastructure. The intelligent nature of our core technologies enables
our products to automatically adapt to varying environments and to reduce the
manual labor associated with the support process.
DNA Probe--Personalized Support
The DNA Probe provides detailed data about each user, their system and the
software on their system. The patented DNA Probe technology automatically
identifies the characteristics of each user's software applications and
operating system components and tracks them over time. This personalized data
can be used to quickly sift through large amounts of information, compare
historical data and highlight potential fundamental causes of problems. For
example, the DNA Probe technology automatically identifies all of the network
settings for each individual user, including the network address, machine name,
Internet configuration and the specific drivers for their network card.
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In contrast to other support process methodologies, which involve authoring
generic solutions and attempting to apply those to numerous unique users,
support organizations can use the DNA Probe's ability to learn about each
dynamic environment to efficiently provide users with personalized support
solutions.
ContextResponse--Context-Sensitive Support
ContextResponse analyzes the data gathered by the DNA Probe, identifies and
diagnoses the most relevant information, and then delivers a solution for a
user's problem or question. It is the ability to gather, analyze and transmit
context-sensitive information which efficiently automates the support process.
ContextResponse personalizes and automates the support process by:
. automatically gathering information that normally requires a time-
consuming and frequently complex interaction between the user and the
support analyst. For example, rather than asking a user to identify their
specific operating system parameters and software versions,
ContextResponse automatically gathers this information and electronically
relays the information to the support analyst.
. analyzing information to identify potential problems. ContextResponse is
designed to identify the fundamental cause of a problem by analyzing the
results of diagnostic programs or comparing the user's current system
configuration to a previous working configuration, a reference
configuration or another user's configuration.
SupportActions--Point and Click Development and Delivery
Many custom support solutions can be packaged as SupportActions, which
enable the automation of common support activities such as solving problems or
answering questions. Support analysts use the Foundry to create custom
SupportActions using a point-and-click interface. Support organizations can
integrate existing programs, commands and content into SupportActions to turn
static information into automated knowledge. For example, the support
organization could integrate frequently asked questions or a diagnostic program
into a SupportAction so that the user can automatically perform the steps
described by the answers to the frequently asked questions or the diagnostics
program. SupportActions can accomodate many scripting languages and a wide
range of content.
Change Management Infrastructure
Our change management infrastructure provides a common mechanism for the
distribution and application of changes to one or more machines. This
infrastructure is used across our products so that changes made to a user's
machine are consistent, reversible and recorded. Repair to a user's machine,
comparison of one machine to another, installation, modification and
distribution can all be achieved using our common change management
infrastructure. Support solutions are easier to develop with this
infrastructure because steps that are done manually and are potentially error-
prone are replaced by automatic and consistent mechanisms. This can facilitate
rapid development and reduce the cost of on-going maintenance.
Nexus--Enhanced Communication Infrastructure
Our products communicate directly with each other using secure protocols,
but firewalls and other network components often restrict direct communication
across the Internet. If a firewall or
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other device prevents direct communication between remote parties, our products
are designed to communicate indirectly using our Nexus technology as an
intermediary. Our Nexus technology allows communication to take place between
parties in circumstances where direct communication is unreliable or
impossible.
Software Vaults--Efficient Storage Management
Once a user's problem is diagnosed, the solution is delivered to the user
from the Software Vault. Support solutions generally require access to a large
amount of support content, in the form of files, programs and other
information, which must be available locally or across a network. Our patent-
pending Software Vault provides storage, retrieval and management of this
support content. Files and programs associated with supported applications,
operating system components and all SupportActions are stored in the Software
Vault.
The Software Vault provides a redundant, distributed mechanism for this
support content. For example, if a particular file on a user's system has been
corrupted and needs to be replaced, one or more Software Vaults will be
accessed in a logical sequence until the needed file has been found. Software
Vaults reside on servers to support thousands of users, and portions of
Software Vaults can also be placed locally on a user's system to provide
support for critical applications and operating system components when the user
is completely disconnected from the network.
The Software Vault's file storage mechanism is efficient. By storing each
unique file only once, the Software Vault minimizes disk space, communications
and bandwidth requirements. For example, if a number of users have multiple
applications that all use a particular version of a file or program, only one
copy of that file is kept in the Software Vault.
Services and Support
Our services organization provides a range of support offerings from
architectural design to on-going customer support and is critical to our focus
on customer satisfaction. Our services group customizes solutions for our
customers that can be used across all or parts of their organization. Our
services and support capabilities are divided into three areas:
. Implementation--Provides architectural design, transformation, product
integration and deployment services to our customers. Each implementation
is customized according to the customer's organizational and technical
requirements.
. Education--Trains our customers and those parties with whom we have
alliances in the design, implementation and use of our products.
. Technical Support--Responds to design, feature, implementation and
deployment questions.
Under a maintenance contract, our customers receive generally available new
releases, corrections, enhancements, updates and other changes to the products
they have licensed.
As of January 31, 2000, we had 12 employees engaged in services and support
activities.
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Customers
We market and sell our eSupport solutions to corporate information
technology departments, support outsourcers, Internet service providers,
application service providers and other businesses that use the Internet. In
1999, Bear Stearns accounted for 53% of our total revenue.
Organizations in our target markets can use our software to provide user
support to their employees, partners and customers. For example, corporate
information technology departments use our software in their help desk to
support users of internal software and their call centers to support software
used by external customers and partners. With our software, customer support
departments of Internet service providers resolve many of the questions or
problems of their subscribers, including those related to Internet
connectivity, email and browser use. Application service providers use our
technology to enhance their web-based application delivery models with web-
based support for the software and systems they provide. Support outsourcers
use our software to meet customer service levels for the complex environments
they support.
The following is a representative list of companies who have purchased our
products and services organized by our customer focus categories. We have
listed our customers who have orders with us of at least $100,000.
<TABLE>
<CAPTION>
Corporate ISP/ASP Support Outsourcers
--------- ------------- ----------------------------
<S> <C> <C>
Bear Stearns everdream Compaq Professional Services
Broadcom Excite@Home CompuCom
Cadence Design Systems Globo Cabo Computer Sciences Corp.
Chase H&Q Jamcracker Inacom
Equifax micronpc.com Samsung
KBA Marketing Xerox Connect
JCPenney
McKesson HBOC
</TABLE>
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Case Studies
The following case studies illustrate how our customers integrate our
solution:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Customer Description
<C> <S>
Bear, Stearns & Co. Bear, Stearns & Co. Inc. is a leading investment
Inc. banking and securities trading and brokerage firm
serving organizations and individuals worldwide. Bear
Stearns was seeking a solution to manage the more than
11,000 troubleshooting calls per month received by its
support organization from internal and external users.
Bear Stearns selected us because of our ability to
solve complex problems related to the diverse
environments of its systems. By using our software,
Bear Stearns support analysts can remotely support
these users, streamline the support process and solve
their most common problems in a more effective and
timely manner. Bear Stearns support analysts now have
more time to focus on additional support issues.
- -------------------------------------------------------------------------------
Excite@Home Excite@Home is a global media company that provides
high-speed Internet access to over 1,200,000 consumer
and small business users. Excite@Home needed a
solution to better manage calls related to
connectivity difficulties, one of their most common
support calls. They chose the Support.com Healing
Agent, which is installed as a standard part of
Excite@Home's service. The Healing Agent supports
personal computer, network and Internet
configurations, provides continuous support for
network components and client software, and can
automatically solve user's connection problems. The
Support.com solution also delivers the information the
support team needs to perform remote diagnosis. As a
result, Excite@Home has seen a reduction in the number
of connection related calls to the help desk, as well
as a reduction in the time it takes to solve calls
that do reach the help desk.
- -------------------------------------------------------------------------------
JCPenney JCPenney, the worldwide leader in the retail industry,
was seeking a solution to enhance its support process
while providing a better service level to its
employees. JCPenney uses our software to provide a
full range of eSupport solutions focused on automating
the support process and improving the user community
experience with the help desk.
- -------------------------------------------------------------------------------
Compaq Professional Compaq Professional Services, a division of Compaq
Services Computer Corporation, operates one of the world's
largest and leading multi-lingual help desks,
providing service to some of Compaq's corporate
clients. Compaq was looking for a solution to resolve
user problems as quickly as possible and decrease
overall support costs. The eSupport solution for
Compaq is a part of the Compaq Professional Services
global help desk and provides comprehensive self-
healing, self-service and assisted service over the
Internet.
- -------------------------------------------------------------------------------
everdream everdream is an application service provider that
delivers hardware, software, networking infrastructure
and support to small business customers, thereby
offering its customers a single point of support. With
the integration of our self-healing, self-service and
assisted service technology on the everdream platform,
everdream is able to increase the number of technical
problems solved for its customers and decrease the
time it takes to solve them. As a result, everdream's
customers can experience increased productivity and
cost savings.
</TABLE>
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Strategic Alliances
An important element of our sales and marketing strategy is to expand our
strategic alliances with industry leaders to increase market awareness,
acceptance and distribution of our products and services. We have established
formal and informal distribution and solutions alliances with industry leaders
to help us to deliver comprehensive solutions and allow us to focus on our core
area of expertise: developing eSupport software. We employ this network of
alliances to expand our sales, service and marketing capabilities and to extend
the technical and functional application of our eSupport solutions.
Distribution Alliances
We have established distribution alliances with specialized technology and
services firms that deliver our solutions to specific market segments. These
distribution relationships allow us to benefit from the marketing and lead
generation capabilities of these firms and are intended to increase geographic
sales coverage and to address small- to-medium-sized businesses and large
corporate customers. Also, the companies with which we have distribution
alliances can enhance their product and service offerings and increase customer
satisfaction with our products while effectively managing costs associated with
providing support to their customers.
The following table illustrates our formal distribution alliances:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Target Category Company
<S> <C>
Support Outsourcers deliver outsourced Compaq Professional Services
technical support and
help desk capabilities to large corporations. CompuCom
Computer Sciences Corp.
Cotelligent
Inacom
Samsung
Service911.com
Sykes Enterprises
Xerox Connect
- -------------------------------------------------------------------------------
Internet Service Providers offer their Excite@Home
customers Internet access.
Globo Cabo
- -------------------------------------------------------------------------------
Personal Computer Vendors provide support to Omni Tech
their customers
with their hardware product offerings. Premio Computer
- -------------------------------------------------------------------------------
Application Service Providers offer hardware, everdream
software,
networking infrastructure with Internet Jamcracker
accessible applications
and support to small- and medium-sized micronpc.com
companies.
- -------------------------------------------------------------------------------
Support Integrators provide strategic Support Technologies
consulting and implementation services to
organizations building their
support infrastructure.
</TABLE>
Solutions Alliances
We have established solutions alliances with leading providers of
complementary support technologies such as call center/help desk management
companies, knowledge management companies and systems management firms. Our
relationships with these technology providers help us deliver comprehensive
solutions to our customers and allow us to adapt our solutions to our
customers' needs. We also seek to generate referral sales from these alliances.
By establishing alliances with Support.com, these technology providers can
provide a more comprehensive support solution to their customers while
informing and educating their customers about new support products and
technologies.
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The following table illustrates our formal and informal solutions alliances:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Target Category Company
<S> <C>
Call Center/Help Desk Management solution providers HP OpenView
offer software that allows organizations to respond to Peregrine Systems
service call requests and monitor support activity. Remedy
- -------------------------------------------------------------------------------
Knowledge Management companies provide solutions that Inference
collect, organize and share an enterprise's support
data. ServiceWare
- -------------------------------------------------------------------------------
Email Management solutions providers enable help Kana Communications
desk/customer service departments to route, track and
respond to high volumes of customer email.
- -------------------------------------------------------------------------------
Systems Management solutions providers enable global Computer Associates
organizations to control their information technology Tivoli
resources, increase application availability and
improve customer service.
- -------------------------------------------------------------------------------
Password Reset companies provide solutions to automate Courion
the reset and synchronization of user passwords.
- -------------------------------------------------------------------------------
Content Providers deliver support-related content. MyHelpdesk.com
Shaman Corporation
ZDNet
- -------------------------------------------------------------------------------
Hardware Diagnostics solutions providers offer utilities PC-Doctor
to accurately determine the cause of hardware problems.
</TABLE>
Research and Development
The emerging market for eSupport solutions is characterized by rapid
technological change, new product introductions and enhancements, evolving
customer requirements and rapidly changing industry standards. We devote a
substantial portion of our resources to developing new and enhanced versions of
our eSupport infrastructure software, conducting product testing and quality
assurance testing and improving our core technologies.
As of January 31, 2000, we had 30 employees in research and development
activities. Our research and development expenditures were approximately $1.1
million in 1998 and $2.4 million in 1999. We expect to continue to devote
significant resources to research and development for the next several years.
Sales and Marketing
We currently sell our eSupport software through a combination of direct and
indirect sales channels. Our direct sales efforts to corporate customers are
focused on several industries, including financial services,
telecommunications, retail and manufacturing. Our indirect sales channel to
corporate customers consists of outsourcers, live support providers and system
integrators. We primarily sell to Internet service providers and application
service providers through our direct sales channel. In the near future, we plan
to establish a telephone and web sales organization that will be responsible
for lead management, customer follow-up, add-on business and new sales over the
web to existing customers and new market segments.
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We maintain direct and indirect sales personnel in North America covering
the United States, Canada and Latin America, in the United Kingdom covering
Europe, the Middle East and Africa, and in Singapore covering the Asia Pacific
region.
Our sales strategy utilizes partner relationships and consultative selling
techniques and incorporates a comprehensive communication infrastructure for
both our direct and indirect sales forces. We plan to continue to invest and
increase the size and geographical locations of both our direct and indirect
sales model on a global basis.
Our marketing efforts include needs assessment and market analysis, brand
awareness, category education and lead generation, and educating organizations
in our target markets.
As of January 31, 2000, approximately 45 of our employees were engaged in
sales and marketing activities.
Competition
Our competitors may be able to respond more quickly to new or emerging
technologies and changes in customer requirements. Our potential competitors
may have longer operating histories, significantly greater financial, technical
and other resources or greater name recognition than we do. Competition could
seriously harm our ability to sell additional software, maintenance renewals
and services on terms favorable to us. Competitive pressures could reduce our
market share or require us to reduce the price of products and services, any of
which could harm our business, financial condition and operating results.
Current Competition
The market for our products is intensely competitive, subject to rapid
change and significantly affected by new product introductions and other market
activities of industry participants. Although we do not currently compete
against any one entity with respect to all aspects of our eSupport solution, we
do compete with various vendors as to specific elements of our eSupport
solution. These elements include automated development of support solutions,
automated delivery of support solutions, and an Internet support
infrastructure. For example, we currently compete with companies that provide
automated development of support solutions, such as Serena Software, Inc. We
also compete with companies that provide automated delivery of support
solutions, such as Motive Communications, Inc.
Future Competition
We may encounter competition from other software companies to the extent
that we enter each other's market. These companies may include:
. customer communications software companies, including Kana
Communications, Inc. and eGain Communications, Inc.;
. question and answer companies, including Ask Jeeves;
. customer relationship management, or CRM, solutions companies, including
Siebel Systems, Inc., Oracle Corporation and Silknet Software, Inc.;
. consolidated service desk solution vendors, including Clarify, Inc.,
Peregrine Systems, Inc. and Remedy Corporation; and
. operating systems providers, including Microsoft Corporation.
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We believe that the principal competitive factors in our market include:
. establishing a significant base of reference customers;
. demonstrating ongoing value and return-on-investment;
. product functionality, quality and performance;
. introducing new products to the market in a timely manner;
. customer service and support; and
. pricing.
Although we believe our solutions compete favorably with respect to each of
these factors, the market for our products is new and rapidly evolving. We may
not be able to maintain our competitive position against current and potential
competitors, especially those with greater resources.
Intellectual Property
Patents
We have one patent in the general area of automated discovery of dynamic
configurations. We currently have four patent applications pending in the
United States, and we may seek additional patents in the future. We do not know
if our patent applications or any future patent application will result in a
patent being issued with the scope of the claims we seek, if at all. In
addition, we do not know whether any patents we have or may receive will be
challenged or invalidated. It is difficult to monitor unauthorized use of
technology, particularly in foreign countries where the laws may not protect
our proprietary rights as fully as in the United States, and our competitors
may independently develop technology similar to ours.
Copyright, Trademark and other Proprietary Rights
Third parties may infringe or misappropriate our copyrights, trademarks and
similar proprietary rights. We rely on a combination of copyright, trade
secret, trademark and contractual protection to establish and protect our
proprietary rights that are not protected by patent. We also enter into
confidentiality agreements with our employees and consultants involved in
product development. We routinely require our employees, customers and
potential business partners to enter into confidentiality agreements before we
will disclose any sensitive aspects of our business. Also, we require employees
to agree to surrender to us any proprietary information, inventions or other
intellectual property they generate or come to possess while employed by us.
Despite these efforts, unauthorized parties may attempt to copy or obtain and
use our products or technology. These precautions may not prevent
misappropriation or infringement of our intellectual property.
Our Infringement of Others' Intellectual Property
We may be subject to legal proceedings and claims in the ordinary course of
our business, including claims of alleged infringement of the patents,
trademarks and other intellectual property rights of third parties. Our
products may infringe issued patents that may relate to our products. Also,
patent applications may have been filed which relate to our software products.
Intellectual property litigation is expensive and time-consuming and could
divert management's attention away from running our business. This litigation
could also require us to develop non-infringing technologies or enter into
royalty or license agreements. These royalty or license agreements, if
required, may not be
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available on acceptable terms, if at all. Our failure or inability to develop
non-infringing technologies or license the proprietary rights on a timely basis
would harm our business.
Employees
As of January 31, 2000, we had 102 full-time employees, including 30 in
research and development, 12 in services, 45 in sales and marketing and 15 in
general and administrative. None of our employees are covered by collective
bargaining agreements. We believe our relations with our employees are good.
Legal Proceedings
We are not a party to any material legal proceeding. We may be subject to
various claims and legal actions arising in the ordinary course of business.
Facilities
Our corporate headquarters are located in Redwood City, California, where we
lease approximately 23,200 square feet under a lease that expires in August
2001. As of December 31, 1999, we also leased office space in 6 other cities
for our sales and support personnel. The terms of these leases expire beginning
in April 2000 and ending in July 2001, and automatically renew unless earlier
terminated. We are currently subleasing our previous office space in Palo Alto,
California, which is approximately 10,000 square feet, and anticipate
terminating the sublease and occupying the subleased space until that lease
expires in July 2001.
We expect to require additional space to meet our needs in the next 12
months. We are currently pursuing our options with respect to obtaining
additional facilities. Adequate space may not be available on commercially
reasonable terms.
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MANAGEMENT
Directors and Executive Officers
Our directors, executive officers and key employees and their ages as of
December 31, 1999 are as follows:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Radha R. Basu.................. 49 Chief Executive Officer, President and Director
Mark J. Pincus................. 34 Chairman of the Board
Brian M. Beattie............... 46 Chief Financial Officer, Senior VP of Finance and
Administration
Jim R. Hilbert................. 39 Senior Vice President of Sales and Business
Development
Scott W. Dale.................. 30 Chief Technical Officer
Cadir B. Lee................... 28 Chief Software Officer
Lucille K. Hoger............... 46 Vice President of Operations
Michael P. O'Rourke............ 40 Vice President of Engineering
Anthony C. Rodoni.............. 35 Vice President of Marketing
Matthew T. Cowan............... 28 Director
William L. Dunn................ 63 Director
Bruce Golden................... 40 Director
Edward S. Russell.............. 39 Director
Roger J. Sippl................. 44 Director
</TABLE>
Radha R. Basu. Ms. Basu has served as president, chief executive officer and
as a director of Support.com since July 1999. Ms. Basu worked at Hewlett-
Packard Company, a computing and imaging solutions provider company, from
November 1978 to January 1999, and held various general management positions,
most recently the general manager of the Electronic Business Software
Organization. Ms. Basu also serves as chairman of the board of directors of
Seec, Inc., an eBusiness solutions company. Ms. Basu holds a B.S. in
engineering from the University of Madras, a Masters degree in electrical
engineering and computer science from the University of Southern California and
is a graduate of the Stanford University Executive Management Program.
Mark J. Pincus. Mr. Pincus co-founded, and has served as the chairman of
Support.com since its inception in December 1997. Mr. Pincus served as the
chief executive officer and president of Support.com since its incorporation
until July 1999. Mr. Pincus is also a part-time employee of Support.com. From
1995 to 1997, Mr. Pincus was a co-founder and chief executive officer of
FreeLoader, Inc., a web-based push technology service. From 1994 to 1995, he
served as vice president with Columbia Capital, a venture capital firm. From
1993 to 1994, he served as manager at Tele-Communications, Inc. now AT&T Cable.
Mr. Pincus holds a B.S. in economics from Wharton, University of Pennsylvania
and an MBA from Harvard Business School.
Brian M. Beattie. Mr. Beattie has served as executive vice president of
finance and administration and chief financial officer of Support.com since
October 1999. From May 1998 to May 1999, he served as vice president of
finance, mergers and acquisitions of Nortel Networks Corporation, a voice and
data networking company. From July 1996 to April 1998, Mr. Beattie served as
Group Vice President of Meridian Solutions of Nortel Networks Corporation. From
February 1993 to June 1996, Mr. Beattie served as vice president of finance,
Enterprise Networks, for Nortel Networks Corporation. Mr. Beattie holds a
Bachelor of Commerce and an MBA from Concordia University in Montreal.
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<PAGE>
Jim R. Hilbert. Mr. Hilbert has served as senior vice president of sales and
business development of Support.com since December 1999. From December 1998 to
December 1999, he served as vice president and general manager of Tivoli
Systems, Inc., a provider of systems management software and subsidiary of
International Business Machines Corporation. From March 1997 to December 1998,
he served as vice president of sales of Tivoli Systems, Inc. From 1987 to 1997,
he served in several senior management positions in sales and marketing for
Amdahl Corporation, a computer company. Mr. Hilbert holds a B.S. in computer
science from the University of Texas.
Scott W. Dale. Mr. Dale co-founded Support.com and has served as the chief
technical officer of Support.com since its incorporation in December 1997. From
January 1997 to December 1997, Mr. Dale served as a software consultant for M&I
Data Services, a financial transaction software company. From July 1992 to
January 1997, Mr. Dale served as a software consultant to Hewlett-Packard
Company, a computing and imaging solutions provider company. Mr. Dale holds a
B.S. in computer science from Stanford University.
Cadir B. Lee. Mr. Lee co-founded Support.com and has served as the chief
software officer of Support.com since its incorporation in December 1997. From
1995 to 1997, Mr. Lee served as a software consultant to Hewlett-Packard
Company, a computing and imaging solutions provider company. Mr. Lee holds a
B.S. in biological sciences and a B.A. in music from Stanford University.
Lucille K. Hoger. Ms. Hoger has served as the vice president of operations
of Support.com since February 2000. From 1996 to 2000, Ms. Hoger served as the
chief operating officer at ConnectInc.com, an e-commerce software company. From
1992 to 1995, she served as a principal for Gemini Consulting, an affiliate of
Cap Gemini, a consulting company. Ms. Hoger holds a B.A. in accounting from
Southwest Texas State University.
Michael P. O'Rourke. Mr. O'Rourke has served as the vice president of
engineering of Support.com since December 1999. From July 1999 to December 1999
he served as vice president of operations of Support.com. From April 1993 to
June 1999, Mr. O'Rourke served in several executive positions at Tivoli
Systems, a provider of systems management software and subsidiary of
International Business Machines Corporation. Mr. O'Rourke most recently served
as vice president of the packaged solutions business unit at Tivoli Systems.
Mr. O'Rourke holds a B.S. in computer science from the University of Vermont.
Anthony C. Rodoni. Mr. Rodoni has served as vice president of marketing of
Support.com since June 1998. From March 1988 to June 1998, Mr. Rodoni served in
a variety of management positions, most recently as general manager of the data
warehouse business unit, at Informix Software, Inc., a database software
company. Mr. Rodoni holds a B.S. in computer science from the University of
California at Santa Barbara and an MBA from Santa Clara University.
Matthew T. Cowan. Mr. Cowan has served as a director of Support.com since
June 1999. From September 1998 to the present, Mr. Cowan has served as general
partner of Bowman Capital Management, an institutional investor specializing in
both public and private technology growth companies. From July 1994 to
September 1998, Mr. Cowan served as director, corporate business development of
Intel Corporation. Mr. Cowan holds a B.A. degree in political science from
Tufts University.
William L. Dunn. Mr. Dunn has served as a director of Support.com since
April 1998. From 1961 to 1989, Mr. Dunn served as an executive vice-president
of Dow-Jones & Company, a publishing company. Mr. Dunn holds a B.A. in
economics from Drake University.
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<PAGE>
Bruce Golden. Mr. Golden has served as a director of Support.com since June
1998. Since September 1997, Mr. Golden has served initially as entrepreneur-in-
residence and then as a partner at Accel Partners, a venture capital firm. From
1993 to August 1996, Mr. Golden served as a vice president of marketing at
Illustra Information Technology, which was acquired by Informix Corporation, a
database company, in 1996. Mr. Golden was employed by Informix Corporation
after the acquisition. Mr. Golden holds a B.A. in political science from
Columbia University.
Edward S. Russell. Mr. Russell has served as a director of Support.com since
June 1998. Since October 1996, Mr. Russell served as a general partner at
Softbank Technology Ventures, Inc. From 1988 to October 1996, Mr. Russell
served as the executive director at SBC Warburg. Mr. Russell is a director of
Buy.com, a multi-category Internet superstore. Mr. Russell received his B.S. in
computer science from Carnegie Mellon University and an Executive MBA from
London School of Business.
Roger J. Sippl. Mr. Sippl has served as a director of Support.com since
January 1999. Since August 1995, Mr. Sippl has served as the managing partner
of Sippl Macdonald Ventures, a venture capital firm. From 1980 to 1989, Mr.
Sippl was the founder and served as chief executive officer and chairman of the
board of Informix Corporation, a database company. From 1989 to 1993, Mr. Sippl
served as chairman of the board of Informix Corporation. From December 1990 to
1996, he co-founded and served as a director of The Vantive Corporation, a
customer relationship management solutions company. From 1996 to 1998, he
served as chairman of the board of The Vantive Corporation. From February 1993
until March 1998, Mr. Sippl was the founder and served as the chief executive
officer and chairman of the board of Visigenic Software, Inc., a software tools
provider company. From March 1998 to July 1998, he served as chief technology
officer of Borland International, Inc. Mr. Sippl holds a B.S. in computer
science from the University of California at Berkeley.
There are no family relationships among any of our directors or executive
officers.
Board Committees
Our board of directors has a compensation committee and an audit committee.
Our compensation committee is responsible for determining salaries,
incentives and other forms of compensation for our directors and executive
officers and administering various incentive compensation and benefit plans.
Our board of directors established executive compensation levels for 1999.
Bruce Golden and Roger J. Sippl are the current members of the compensation
committee. Radha R. Basu, our chief executive officer, will participate in all
discussions and decisions regarding salaries and incentive compensation for all
non-executive employees and consultants.
Our audit committee reviews our annual audit and meets with our independent
auditors to review our internal controls and financial management practices.
Edward S. Russell, Matthew T. Cowan and William L. Dunn are the current members
of the audit committee.
Director Compensation
Except for the grant of stock options and the grant of common stock under
restricted stock purchase agreements, we do not currently compensate our
directors for their services as directors. Our directors are eligible to
participate in our 2000 omnibus equity incentive plan and our directors who are
employees of Support.com are eligible to participate in our 2000 employee stock
purchase plan. We also reimburse each member of our board of directors for out-
of-pocket expenses incurred by attending board meetings.
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<PAGE>
We granted Bruce Golden, a director of Support.com, an option to purchase
50,000 shares of our common stock under our 1998 stock option plan at a
purchase price of $0.10 per share. We granted William Dunn, a director of
Support.com, the right to purchase 80,000 shares of our common stock pursuant
to a restricted stock purchase agreement at a purchase price of $0.10 per
share. On February 18, 1999, Mr. Dunn purchased these shares of our common
stock, subject to our right of repurchase which lapses over time. We granted
Roger J. Sippl, a director of Support.com, the right to purchase 100,000 shares
of our common stock pursuant to a restricted stock purchase agreement, at a
purchase price of $0.10 per share. On January 14, 1999, Mr. Sippl purchased
these shares of our common stock, subject to our right of repurchase which
lapses over time.
Executive Compensation
The following table provides summary information concerning compensation
earned by or paid to our chief executive officer, our former chief executive
officer and to our three other most highly compensated executive officers whose
total annual salary and bonus exceeded $100,000, for services provided in all
capacities to Support.com during 1999. These individuals are referred to as the
named executive officers. Other than the salary and bonus described below,
Support.com did not pay any executive officer named in the summary compensation
table any fringe benefits, perquisites or other compensation in excess of 10%
of that executive officer's salary and bonus during 1999.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
------------
Annual
Compensation(1) Security
-------------------- Underlying
Name and Principal Position Salary ($) Bonus ($) Options (#)
- --------------------------- ---------- --------- ------------
<S> <C> <C> <C>
Radha R. Basu................................. $ 94,744 $45,834 1,680,189
President and Chief Executive Officer
Mark J. Pincus(1)............................. 146,692 -- 500,000
Chairman of the Board
Scott W. Dale................................. 120,833 -- 250,000
Chief Technical Officer
Cadir B. Lee.................................. 120,833 -- 250,000
Chief Software Officer
Anthony C. Rodoni............................. 135,000 30,000 25,000
Vice President of Marketing
</TABLE>
- --------
(1) Mr. Pincus served as our Chief Executive Officer until July 15, 1999.
Option Grants in Last Fiscal Year
The percentage of total options granted is based on an aggregate of
6,326,139 options granted in 1999. The exercise price on the date of grant was
equal to the fair market value on the date of grant as determined by the board
of directors. Options have a maximum term of 10 years subject to earlier
termination for specified events related to termination of employment. The 5%
and 10%, assumed rates of appreciation are required by the rules of the
Securities and Exchange Commission and do not represent Support.com's estimate
or projection of the future stock price.
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<PAGE>
The values reflected in the table may never be achieved. The dollar values
have been calculated by determining the difference between the fair market
value of the securities underlying the options at December 31, 1999 and the
exercise prices of the options. Solely for purposes of determining the value of
the options at December 31, 1999, we have assumed that the fair market value of
shares of common stock issuable upon exercise of options was $ per share,
the assumed initial public offering price, since the common stock was not
traded in an established market before the offering.
These stock options were granted under the 1998 stock plan and are
immediately exercisable. We have a right to repurchase at cost any shares which
have been exercised but remain unvested at the time of the officer's cessation
of employment. Ms. Basu's options vest at a rate of 25% upon the first
anniversary of her vesting start date and then at a rate of 1/48 per month. If
we merge or consolidate with another entity or sell all or substantially all of
our assets and Ms. Basu is terminated without reason or if she terminates her
employment under specified circumstances following such event, all of her
remaining unvested shares will vest.
Of Mr. Pincus' 500,000 options, 250,000 options vest at a rate of 25% upon
the first anniversary of his vesting start date and then at a rate of 1/48 per
month, and 250,000 options vest at a rate of 1/12 per month over one year. If
we merge or consolidate with another entity or sell all or substantially all of
our assets and Mr. Pincus is terminated without reason or if he terminates his
employment under specified circumstances following such event, all of his
remaining unvested shares will vest.
Mr. Dale's and Mr. Lee's options vest at a rate of 25% upon the first
anniversary of their vesting start dates and then at a rate of 1/48 per month.
Mr. Rodoni's options were fully vested on the date of grant.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------- Potential Realizable Value at
Number of % of Assumed Annual Rates of
Shares Total Options Exercise Stock Price Appreciation for
Underlying Granted to or Base Option Term
Options Employees in Price Expiration -------------------------------
Name Granted (#) Fiscal Year ($/Share) Date 5% ($) 10% ($)
- ---- ----------- ------------- --------- ---------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Radha R. Basu........... 1,680,189 26.55% $0.40 7/15/09
Mark J. Pincus.......... 500,000 7.90 0.99 7/22/09
Scott W. Dale........... 250,000 3.95 0.90 7/22/09
Cadir B. Lee............ 250,000 3.95 0.90 7/22/09
Anthony C. Rodoni....... 7,500 0.12 0.10 2/11/09
</TABLE>
55
<PAGE>
The following table assumes a per-share fair market value equal to
$ , the mid-point of the initial public offering range.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options at
Acquired on Value Options at FY-End (#) FY-End ($)
Name Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ------------ ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
Radha R. Basu........... -- $ -- 1,680,189/-- $ /
Mark J. Pincus.......... 500,000 --/-- /
Scott W. Dale........... -- -- 250,000/--
Cadir B. Lee............ -- -- 250,000/--
Anthony C. Rodoni....... 286,944 170,556/--
</TABLE>
Compensation Committee Interlocks and Insider Participation
The members of our compensation committee are currently Bruce Golden and
Roger J. Sippl. No interlocking relationship exists, or has existed in the
past, between the board of directors or compensation committee and the board of
directors or compensation committee of any other company.
1998 Stock Option Plan
General
The board of directors in October 1998 adopted our 1998 stock option plan.
Our 1998 stock option plan provides for the grant of incentive stock options as
defined in Section 422 of the Internal Revenue Code to employees and the grant
of nonstatutory stock options to employees, non-employee directors and
consultants. A total of 8,124,434 shares of common stock have been reserved for
issuance under our 1998 stock option plan as of December 31, 1999. In February
2000 we increased the number of shares of common stock reserved for issuance
under our 1998 stock option plan by an aggregate of 1,300,000 shares. As of
December 31, 1999,
. 4,171,994 shares of common stock have been issued upon the exercise of
options; and
. 7,545 shares were available for future awards.
Administration
Our compensation committee and our non-insider option committee administer
our 1998 stock option plan. Our compensation committee consists of at least two
directors who are non-employee directors, as defined in Rule 16b-3. The board
of directors may amend our 1998 stock option plan as desired without further
action by Support.com's stockholders except as required by applicable law. Our
1998 stock option plan will continue in effect until terminated by the board or
for a term of 10 years from its amendment and restatement date, whichever is
earlier.
The consideration for each award under our 1998 stock option plan will be
established by the compensation committee, but the option price for incentive
stock options will not be less than 100% of the fair market value of the stock
on the date of grant. Awards will have the terms and be exercisable in the
manner and at the times as the compensation committee may determine. However,
each incentive stock option must expire within a period of not more than 10
years from the date of grant.
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<PAGE>
Vesting
Generally, options granted under the 1998 stock option plan vest over four
years and are nontransferable other than by will or the laws of descent and
distribution. If there are specified changes in control of Support.com, the
acquiring or successor corporation may assume or substitute for options
outstanding under the 1998 stock option plan, or these options will terminate.
Some options granted to our executive officers provide for partial acceleration
upon a change in control of Support.com.
2000 Omnibus Equity Incentive Plan
General
The 2000 omnibus equity incentive plan was adopted by our board of directors
on February 15, 2000 and will be submitted for approval by our stockholders
prior to the completion of this offering.
Administration
The 2000 omnibus equity incentive plan will be administered by our
compensation committee. The 2000 omnibus equity incentive plan provides for the
direct award or sale of shares of common stock and for the grant of options to
purchase shares of common stock. The 2000 Omnibus Equity Incentive Plan
provides for the grant of incentive stock options as defined in Section 422 of
the Internal Revenue Code and the grant of nonstatutory stock options and stock
purchase rights to employees, non-employee directors, advisors and consultants.
The board of directors will be able to amend or modify the 2000 omnibus equity
incentive plan at any time, subject to any required stockholder approval. The
2000 omnibus equity incentive plan will terminate no later than .
Authorized Shares
4,000,000 shares of common stock have been authorized for issuance under the
2000 omnibus equity incentive plan. However, no participant in the 2000 omnibus
equity incentive plan can receive option grants or direct stock issuances for
more than 1,000,000 shares in the aggregate per fiscal year. The number of
shares reserved for issuance under the 2000 omnibus equity incentive plan will
be increased on the first day of each of our fiscal years from 2000 through
2009 by the lesser of:
. 2,000,000;
. 5% of our outstanding common stock on the last day of the immediately
preceding fiscal year; or
. the number of shares determined by the board of directors.
Plan Features
The 2000 omnibus equity incentive plan will have the following features:
. Qualified employees will be eligible for the grant of incentive stock
options to purchase shares of common stock;
. Qualified non-employee directors will be eligible to receive automatic
option grants to purchase shares of common stock at an exercise price
equal to 100% of the fair market value of those shares on the date of
grant;
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<PAGE>
. The compensation committee will determine the exercise price of options
or the purchase price of stock purchase rights, but the option price for
incentive stock options will not be less than 100% of the fair market
value of the stock on the date of grant;
. The exercise price or purchase price may, at the discretion of the
compensation committee, be paid in cash, cash equivalents, full-recourse
promissory notes, past services or future services.
Vesting
The 2000 omnibus equity incentive plan will include change in control
provisions that may result in the accelerated vesting of outstanding option
grants and stock issuances. The committee may grant options or stock purchase
rights in which all or some of the shares shall become vested if there is a
change in control of Support.com. Change in control is defined under the 2000
omnibus equity incentive plan as:
. a change in the composition of the board of directors, as a result of
which fewer than one-half of the incumbent directors are directors who
either:
. had been directors of Support.com 24 months before the change; or
. were elected, or nominated for election, to the board with the
affirmative votes of at least a majority of the directors who had been
directors 24 months before the change and who were still in office at
the time of the election or nomination; or
. an acquisition or aggregation of securities by a person, including two or
more persons acting together, as a result of which the person becomes the
beneficial owner of 20% or more of the voting power of Support.com's
outstanding securities.
2000 Employee Stock Purchase Plan
General
The board of directors adopted our 2000 employee stock purchase plan on
February 15, 2000, to be effective upon completion of this offering. We will be
submitting it for approval by our stockholders before the completion of this
offering. A total of 2,000,000 shares of common stock have been reserved for
issuance under our employee stock purchase plan. The number of shares reserved
for issuance under the 2000 employee stock purchase plan will be increased on
the first day of each of our fiscal years from 2000 through 2009 by the lesser
of:
. 2,000,000;
. 3% of our outstanding common stock on the last day of the immediately
preceding fiscal year; or
. the number of shares determined by the board of directors.
Administration
Our 2000 employee stock purchase plan, which is intended to qualify under
Section 423 of the Internal Revenue Code, is administered by the board of
directors or by a committee appointed by the board. Employees, including
officers and employee directors of Support.com but excluding 5% or greater
stockholders, are eligible to participate if they are customarily employed for
more than 20
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<PAGE>
hours per week and for at least five months in any calendar year. Our 2000
employee stock purchase plan permits eligible employees to purchase common
stock through payroll deductions, which may not exceed 15% of an employee's
total compensation. The maximum number of shares a participant may purchase
during a single offering period is 1,000 shares.
Offering and Participation Periods
The 2000 employee stock purchase plan will be implemented by a series of
overlapping offering periods of 24 months' duration, with new offering periods,
other than the first offering period, beginning in January and July of each
year. The board of directors will establish participation periods for our 2000
employee stock purchase plan, none of which will exceed six months. During each
participation period, payroll deductions will accumulate, without interest. On
the purchase dates set by the board of directors for each participation period,
accumulated payroll deductions will be used to purchase common stock. The
initial offering period is expected to begin on the date of this offering and
end on December 31, 2001. The initial purchase period is expected to begin on
the date of this offering and end on June 30, 2000.
The purchase price will be equal to 85% of the fair market value per share
of common stock on either the first day of the participation period or on the
purchase date, whichever is less. Employees may withdraw their accumulated
payroll deductions at any time. Participation in our 2000 employee stock
purchase plan ends automatically on termination of employment with Support.com.
Immediately before the effective time of a corporate reorganization, the
participation period then in progress shall terminate and stock will be
purchased with the accumulated payroll deductions, unless the 2000 employee
stock purchase plan is assumed by the surviving corporation or its parent
corporation pursuant to the plan of merger or consolidation.
401(k) Plan
We have established a tax-qualified employee savings and retirement plan for
which Support.com's employees will generally be eligible. Pursuant to the
401(k) Plan, employees may elect to reduce their current compensation and have
the amount of such reduction contributed to the 401(k) Plan. To date,
Support.com has made no matching contributions. The 401(k) Plan is intended to
qualify under Section 401 of the Internal Revenue Code of 1986, so that
contributions to the 401(k) Plan, and income earned on plan contributions, are
not taxable to employees until withdrawn from the 401(k) Plan, and so that any
contributions by Support.com will be deductible by Support.com when made.
Employment Agreements
Officer Offer Letters
We have offer letters with our chief executive officer, our chief financial
officer, our senior vice president of sales and business development, our vice
president of engineering, our vice president of marketing and our vice
president of operations.
Ms. Basu's offer letter provides for an initial annual salary of $200,000
and an incentive bonus of up to $100,000. The offer letter also provides for
her election to our board of directors. Ms. Basu received an option to purchase
1,680,189 shares of our common stock at an exercise price of $0.40 per share.
If we terminate her employment without reason or if she terminates her
employment under
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<PAGE>
specified circumstances, we must pay her salary and other benefits for 12
months after termination, unless Ms. Basu is employed full-time by another
employer. We must also pay a pro-rata share of her bonus if specified criteria
are met before termination. If we merge or consolidate with another entity or
sell all or substantially all of our assets and Ms. Basu is terminated without
reason or if she terminates her employment, her remaining unvested shares will
vest and she will receive her salary for 12 months in a lump sum and benefits
for 12 months after termination and a pro-rata share of her bonus if specified
criteria are met before termination. Ms. Basu's employment may be terminated at
any time.
Mr. Beattie's offer letter provides for an initial annual salary of $180,000
and a $15,000 bonus paid immediately upon signing of the letter. Mr. Beattie is
also eligible for an annual bonus of up to $72,000. Mr. Beattie received an
option to purchase 560,000 shares of our common stock at an exercise price of
$0.90 per share. If we terminate his employment without reason or if he
terminates his employment under specified circumstances, we must pay his salary
and other benefits for six months after termination, unless Mr. Beattie is
employed full-time by another employer. We must also pay a pro-rata share of
his bonus if specified criteria are met before termination. If we merge or
consolidate with another entity or sell all or substantially all of our assets
and Mr. Beattie is terminated without reason or if he terminates his
employment, 50% of any unvested shares will vest and Mr. Beattie will receive
his salary for six months in a lump sum and benefits for six months after
termination and a pro-rata share of his bonus if specified criteria are met
before termination. Mr. Beattie's employment may be terminated at any time.
Mr. Hilbert's offer letter provides for an initial annual salary of $150,000
and an incentive bonus. Mr. Hilbert received an option to purchase 500,000
shares of our common stock at an exercise price of $0.90 per share. If we
terminate his employment without reason or if he terminates his employment
under specified circumstances, we must pay his salary and other benefits for
six months following termination, unless Mr. Hilbert is employed full-time by
another employer. If we merge or consolidate with another entity or sell all or
substantially all of our assets and Mr. Hilbert is terminated without reason or
if he terminates his employment under specified circumstances, 50% of any
unvested shares will vest and Mr. Hilbert will receive his salary for six
months in a lump sum and benefits for six months after termination and a pro-
rata share of his bonus if specified criteria are met before termination.
Mr. Hilbert's employment may be terminated at any time.
Mr. O'Rourke's offer letter provides for an annual salary of $160,000 and an
annual incentive bonus for shares of common stock up to 25,000 shares per year
for two years and a $30,000 bonus paid when he signed the letter. Mr. O'Rourke
received an option to purchase 350,000 shares of our common stock at an
exercise price of $0.40 per share. Mr. O'Rourke's employment may be terminated
at any time.
Mr. Rodoni's offer letter provides for an annual salary of $135,000 and an
incentive bonus of up to $30,000 and options to purchase 25,000 shares of
common stock in 1999 and $15,000 in 1998 and shares of common stock tied to
specified criteria. Instead of receiving his cash bonus in 1998, Mr. Rodoni
received a grant of 7,500 shares of our common stock. Mr. Rodoni received an
option to purchase 425,000 shares of our common stock at an exercise price of
$0.10 per share. If we merge or consolidate with another entity or sell all or
substantially all of our assets, 50% of his unvested shares will vest. Mr.
Rodoni's employment may be terminated at any time.
Ms. Hoger's offer letter provides for an annual salary of $160,000 and an
incentive bonus of up to $20,000. Ms. Hoger received an option to purchase
300,000 shares of our common stock at an
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exercise price of $2.00 per share. On January 20, 2001, Ms. Hoger is eligible
to receive an additional option to purchase 50,000 shares of our common stock.
If we terminate her employment without reason or if she terminates her
employment under specified circumstances, we must pay her salary and other
benefits for six months, unless Ms. Hoger is employed full-time by another
employer. If we merge or consolidate with another entity or sell all or
substantially all of our assets and Ms. Hoger is terminated without reason or
if she terminates her employment under specified circumstances following this
type of event, 50% of her unvested shares will vest and she will receive her
salary and benefits for six months after termination. Ms. Hoger's employment
may be terminated at any time.
Officer Employment Agreements
We have formal employment agreements with our chief technical officer and
our chief software officer.
Scott Dale, our chief technical officer, entered into an employment
agreement with us in August 1999. This agreement establishes Mr. Dale's annual
salary of $150,000 and eligibility for benefits and bonuses tied to criteria
established by our board of directors. The initial term of the agreement is one
year and is automatically renewed for three successive additional one-year
terms unless terminated with 30 days notice. If we terminate his employment for
good reason, we must pay his salary and other benefits through the date of his
termination. If his employment is terminated for disability, we must pay his
salary and other benefits for three months after the date of termination. Mr.
Dale received options to purchase 250,000 shares of our common stock at an
exercise price of $0.90 per share. Mr. Dale's agreement also contains a non-
competition provision.
Cadir Lee, our chief software officer, entered into an employment agreement
with us in August 1999. This agreement establishes Mr. Lee's annual salary of
$150,000 and eligibility for benefits and bonuses tied to criteria established
by our board of directors. The initial term of the agreement is one year and is
automatically renewed for three successive additional one-year terms unless
terminated with 30 days notice. If we terminate his employment for good reason,
we must pay his salary and other benefits through the date of his termination.
If his employment is terminated for disability, we must pay his salary and
other benefits for three months after the date of termination. Mr. Lee received
options to purchase 250,000 shares of our common stock at an exercise price of
$0.90 per share. Mr. Lee's agreement also contains a non-competition provision.
Limitation of Liability and Indemnification Matters
Delaware Law
Our certificate of incorporation limits the liability of directors to the
maximum extent permitted by Delaware law. Delaware law provides that directors
of a corporation will not be personally liable for monetary damages for breach
of their fiduciary duties as directors, except liability for:
. any breach of their duty of loyalty to the corporation or its
stockholders;
. acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
. unlawful payments of dividends or unlawful stock repurchases or
redemption; or
. any transaction from which the director derived an improper personal
benefit.
This limitation of liability does not apply to liabilities arising under the
federal securities laws and does not affect the availability of equitable
remedies such as injunctive relief or rescission.
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Certificate of Incorporation and Bylaws
Our certificate of incorporation and bylaws provide that we will indemnify
our directors and executive officers and may indemnify our other officers and
employees and other agents to the fullest extent permitted by law. Our bylaws
also permit us to purchase insurance on behalf of any officer, director,
employee or other agent for any liability arising out of his or her actions in
such capacity, regardless of whether the bylaws would permit indemnification.
Indemnification Agreements
We are also entering into agreements to indemnify our directors and
executive officers. We believe that these provisions and agreements are
necessary to attract and retain qualified persons as directors and executive
officers.
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CERTAIN TRANSACTIONS
Since our incorporation, we have not been a party to any transaction or
series of transactions in which:
. the amount involved exceeded or exceeds $60,000 and
. any director, executive officer or 5% stockholder or any of their
immediate family had or will have a material interest.
Prior Sales of Equity
Between December 1997 and June 1999, we issued and sold the following
securities:
. December 8, 1997 and June 22, 1998: 6,428,880 shares of common stock to
Mark Pincus, Scott Dale and Cadir Lee for an aggregate consideration of
$646,
. December 8, 1997 to March 19, 1998: 3,571,600 shares of Series A
preferred stock at a price of $0.07 per share,
. June 22, 1998: 7,346,108 shares of Series B preferred stock at a price of
$0.68747 per share, and
. June 14, 1999: 4,638,618 shares of Series C preferred stock at a price of
$3.27148 per share.
Upon completion of this offering, each share of Series A, Series B and
Series C preferred stock will convert into one share of common stock.
Transactions with Management and Others
The following table summarizes purchases, valued in excess of $60,000, of
shares of our capital stock by our directors, executive officers and our 5%
stockholders:
<TABLE>
<CAPTION>
Shares
-----------------------------
Series A Series B Series C
--------- --------- ---------
<S> <C> <C> <C>
Directors and Executive Officers:
Mark J. Pincus.................................. 1,535,788 -- --
Roger J. Sippl (1).............................. -- -- 305,672
5% Stockholders Affiliated with Directors:
Entities affiliated with Accel VI L.P. (2)...... -- 3,618,503 775,394
Entities affiliated with Softbank Technology
Ventures IV (3)................................ -- 3,254,834 697,465
Entities affiliated with Spinnaker Founders
Fund, L.P. (4)................................. -- -- 1,528,359
</TABLE>
- --------
(1) Roger J. Sippl, one of our directors, is a managing partner of venture
funds associated with Sippl MacDonald Ventures, a venture fund associated
with Sippl MacDonald Ventures II, L.P. and its related entities.
(2) Bruce Golden, one of our directors, is a partner of venture funds
associated with Accel Partners, a venture fund associated with Accel VI
L.P. and its related entities.
(3) Edward S. Russell, one of our directors, is a general partner of venture
funds associated with Softbank Technology Ventures, Inc. and its related
entities.
(4) Matthew T. Cowan, one of our directors, is a general partner of Bowman
Capital Management, a venture fund associated with Spinnaker Founders
Fund, L.P. and its related entities.
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These affiliates purchased the securities described above at the same price
and on the same terms and conditions as the unaffiliated investors in the
private financings. Mark J. Pincus was affiliated with Support.com when he
purchased the securities described above. Accel VI L.P, Softbank Technology
Ventures IV and their affiliated entities became affiliates of Support.com when
they purchased their shares of series B preferred stock. Spinnaker Founders
Fund, L.P. and its affiliated entities became affiliates of Support.com when
they purchased their shares of the series C preferred stock.
Indebtedness of Management
It is our policy that all transactions between us and our officers,
directors, 5% stockholders and their affiliates will be entered into only if
these transactions are approved by a majority of the disinterested directors,
are on terms at least as favorable to us as those that could be obtained from
unaffiliated parties and are reasonably expected to benefit us.
The following individuals have elected to pay the exercise price for some of
their outstanding options with full recourse promissory notes secured by the
common stock underlying the options. The notes bear interest at 5.86% per year
and payment on the notes is set forth below. As of December 31, 1999, the
original and outstanding aggregate principal amounts of the promissory notes
executed by each executive officer in favor of Support.com are listed below:
<TABLE>
<CAPTION>
Aggregate
Original
and
Outstanding
Executive Officer Note Amount
----------------- -----------
<S> <C>
Mark J. Pincus/Chairman of the Board......................... $ 99,999.90(1)
Mark J. Pincus/Chairman of the Board......................... $147,500.10(2)
Mark J. Pincus/Chairman of the Board......................... $247,500.00(2)
Brian M. Beattie/Chief Financial Officer..................... $504,000.00(3)
Jim R. Hilbert/Senior Vice President......................... $449,950.00(3)
</TABLE>
- --------
(1) 50% of the principal and interest will be due and payable on the earlier
of our initial public offering or two years from the date of the note. The
remaining 50% will be due upon the earlier of our initial public offering
or four years from the date of the note.
(2) 50% of the principal and interest will be due and payable on the earlier
of the date nine months following the effective date of our initial public
offering or two years from the date of the note. The remaining 50% will be
due upon the earlier of the date nine months after the effective date of
our initial public offering or four years from the date of the note.
(3) 50% of the principal and interest will be due and payable on the earlier
of one year from the effective date of our initial public offering or two
years from the date of the note. The remaining 50% will be due upon the
earlier of one year from the effective date of our initial public offering
or four years from the date of the note.
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<PAGE>
PRINCIPAL STOCKHOLDERS
The following table provides information regarding beneficial ownership of
common stock as of December 31, 1999, by:
. each person or entity known to us to own beneficially more than 5% of our
common stock;
. each of the named executive officers;
. each of our directors; and
. all executive officers and directors as a group.
The following table assumes no exercise of the underwriters' over-allotment
option. Applicable percentage ownership is based on 26,469,161 shares of common
stock outstanding as of December 31, 1999 and shares outstanding
immediately after completion of this offering.
Beneficial ownership is determined according to the rules and regulations of
the Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of common stock subject to options held by that person that are
currently exercisable or exercisable within 60 days of December 31, 1999 are
deemed outstanding. These shares, however, are not deemed outstanding for the
purposes of computing the percentage ownership of any other person. Except as
indicated in the footnotes to this table and pursuant to applicable community
property laws, each stockholder named in the table has sole voting and
investment power with respect to the shares listed opposite that stockholder's
name.
Unless otherwise indicated, the address for the following stockholders is
c/o Support.com Corp., 575 Broadway, Redwood City, California 94063.
<TABLE>
<CAPTION>
Percentage of
Common Stock
Total Shares -----------------
Beneficially Before After
Name and Address of Beneficial Owner Owned Offering Offering
- ------------------------------------ ------------ -------- --------
<S> <C> <C> <C>
5% Stockholders:
Entities affiliated with Accel VI L.P. (1)...... 4,393,896
c/o Accel Partners, 428 University Avenue, Palo
Alto, California 94301
Entities affiliated with Softbank Technology
Ventures IV (2)................................ 3,952,299
333 W. San Carlos St., Suite 1225, San Jose,
California 95110
Entities affiliated with Spinnaker Founders
Fund, L.P. (3)................................. 1,528,359
c/o Bowman Capital Management, 1875 South Grand
Street, Suite 600, San Mateo, California 94402
Executive Officers and Directors:
Radha R. Basu (4)............................... 1,680,189
Mark J. Pincus ................................. 5,250,228
Scott W. Dale (5)............................... 2,375,114
Cadir B. Lee (6)................................ 2,375,114
Anthony C. Rodoni (7)........................... 457,500
Matthew T. Cowan (3)............................ 1,528,359
William L. Dunn (8)............................. 80,000
Bruce Golden (1)(9)............................. 4,443,897
Edward S. Russell (2)........................... 3,952,299
Roger J. Sippl (10)............................. 405,672
All directors and executive officers as a group
(14 persons)(11)............................... 24,358,372
</TABLE>
- --------
* Less than 1%.
(1) Includes 3,576,631 shares held by Accel VI L.P. Accel VI Associates L.L.C.
is the general partner of Accel VI L.P. and has the sole voting and
investment power. Arthur C. Patterson,
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<PAGE>
ACP Family Partnership L.P., James R. Swartz, James W. Breyer, The Breyer
1995 Trust dated 10/4/95, Swartz Family Partnership L.P., J. Peter Wagner,
and G. Carter Sednaoui are the managing members of Accel VI Associates
L.L.C. and share these powers.
Also includes 456,965 shares held by Accel Internet Fund II L.P. Accel
Internet Fund II Associates L.L.C., or AIF2A, is the general partner of
Accel Internet Fund II L.P. and has the sole voting and investment
power. Arthur C. Patterson, ACP Family Partnership L.P., James R.
Swartz, James W. Breyer, Swartz Family Partnership L.P., J. Peter
Wagner, and G. Carter Sednaoui are the managing members of AIF2A and
share these powers.
Also includes 57,121 shares held by Accel Keiretsu VI L.P. Accel Keiretsu
VI Associates L.L.C. is the general partner of Accel Keiretsu VI L.P. and
has the sole voting and investment power. Arthur C. Patterson, James R.
Swartz, James W. Breyer, J. Peter Wagner, and G. Carter Sednaoui are the
managing members of Accel Keiretsu VI Associates L.L.C. and share these
powers.
Also includes 303,179 shares held by Accel Investors '98 L.P. Arthur C.
Patterson, James R. Swartz, James W. Breyer, J. Peter Wagner, and G.
Carter Sednaoui are the general partners of Accel Investors '98 L.P. and
therefore share the voting and investment powers. Bruce Golden, a partner
at Accel Partners and one of our directors, disclaims beneficial ownership
of these shares except to the extent of his pecuniary interest in entities
affiliated with Accel Partners.
(2) Includes 3,874,090 shares held by Softbank Technology Ventures IV, L.P.
and 78,209 shares held by Softbank Technology Advisors Fund, L.P. Edward
S. Russell, a general partner at Softbank Technology Ventures, Inc. is
one of our directors. Mr. Russell disclaims beneficial ownership of these
shares except to the extent of his pecuniary interest in entities
affiliated with Softbank Technology Ventures, Inc.
(3) Includes 470,315 shares held by Spinnaker Founders Fund, L.P., 366,806
shares held by Spinnaker Technology Fund, L.P., 366,806 shares held by
Spinnaker Technology Offshore Fund, Ltd., 263,297 shares held by
Spinnaker Offshore Founders Fund, Ltd. and 61,135 shares held by
Spinnaker Clipper Fund, L.P. Mr. Cowan is a general partner of Bowman
Capital Management and one of our directors. Mr. Cowan disclaims
beneficial ownership of all these shares except to the extent of his
pecuniary interest in entities affiliated with Spinnaker Founders Fund,
L.P.
(4) Includes 1,680,189 shares of common stock issuable upon immediately
exercisable options and subject to our right of repurchase.
(5) Includes 250,000 shares of common stock issuable under immediately
exercisable options and subject to our right of repurchase.
(6) Includes 250,000 shares of common stock issuable under immediately
exercisable options and subject to our right of repurchase.
(7) Includes 56,319 shares of common stock subject to our right of
repurchase and 181,806 shares of common stock issuable under immediately
exercisable options, of which 166,806 shares are subject to our right of
repurchase.
(8) Includes 80,000 shares of common stock subject to our right of
repurchase.
(9) Includes 50,000 shares of common stock subject to our right of
repurchase.
(10) Includes 200,000 shares of common stock held by Sippl MacDonald Ventures
II, L.P., 105,672 shares of common stock held by Sippl Investments LLC
and 100,000 shares of common stock held by Mr. Sippl, subject to our
right of repurchase. Mr. Sippl is a managing partner of Sippl MacDonald
Ventures and one of our directors. Mr. Sippl disclaims beneficial
ownership of the shares held by Sippl MacDonald Ventures II, L.P. and
Sippl Investments LLC, except to the extent of his pecuniary interest in
those entities.
(11) Includes 305,444 shares of common stock subject to our right of
repurchase. Also includes 2,350,745 shares of common stock issuable
under immediately exercisable options and subject to our right of
repurchase.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
When this offering is completed and after the conversion of all outstanding
preferred stock into common stock and the amendment of our certificate of
incorporation, our authorized capital stock will consist of 150,000,000 shares
of common stock and 5,000,000 shares of preferred stock.
Common Stock
As of December 31, 1999, there were 10,874,374 shares of common stock
outstanding held by approximately 98 stockholders of record.
Subject to preferences that may be applicable to any preferred stock
outstanding at the time, the holders of common stock are entitled to the
following:
Dividends. Holders of common stock are entitled to receive dividends out of
assets legally available for the payment of dividends at the times and in the
amounts as the board of directors may determine.
Voting. Holders of common stock are entitled to one vote for each share held
on all matters submitted to a vote of stockholders, including the election of
directors, and will not have cumulative voting rights unless Support.com is
subject to Section 2115 of the California Corporations Code.
Cumulative voting for the election of directors is not authorized by our
certificate of incorporation, which means that the holders of a majority of the
shares voted can elect all of the directors then standing for election.
Preemptive rights, conversion and redemption. The common stock is not
entitled to preemptive rights and is not subject to conversion or redemption.
Liquidation, dissolution and winding-up. Upon liquidation, dissolution or
winding-up of Support.com, the holders of common stock are entitled to share
ratably in all assets remaining after payment of liabilities and the
liquidation of any preferred stock.
Each outstanding share of common stock is, and all shares of common stock to
be outstanding upon completion of this offering will be, when paid for, duly
and validly issued, fully paid and nonassessable.
Preferred Stock
The board of directors is authorized, without action by the stockholders, to
designate and issue up to 5,000,000 shares of preferred stock in one or more
series. The board of directors can fix the rights, preferences and privileges
of the shares of each series and any qualifications, limitations or
restrictions on these shares.
The board of directors may authorize the issuance of preferred stock with
voting or conversion rights that could adversely affect the voting power or
other rights of the holders of common stock.
The issuance of preferred stock could have the effect of delaying, deferring
or preventing a change in control of Support.com. We have no current plans to
issue any shares of preferred stock.
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<PAGE>
Warrants
We issued warrants to purchase 283,650 shares of Series C preferred stock as
follows:
. 98,511 shares at an exercise price of $1.979 per share,
. 38,461 shares at an exercise price of $6.50 per share,
. 27,511 shares at an exercise price of $3.27 per share, and
. 119,167 shares at an exercise price of $18.00 per share.
The 38,461 warrants expire upon completion of this offering.
Registration Rights
Upon completion of this offering, the holders of 15,594,787 shares of common
stock issuable upon conversion of the Series A, B and C preferred stock and
upon the exercise of warrants have the right to cause us to register these
shares under the Securities Act as follows:
. Demand Registration Rights. At the earlier of June 14, 2002 or six months
after this offering, one or more holders of 30% of the common stock
issued upon conversion of Series A, B or C preferred stock may request
that we register their shares.
. Piggyback Registration Rights. The holders of registrable securities may
request to have their shares registered anytime we file a registration
statement to register any of our securities for our own account or for
the account of others subject to a pro rata cutback to a minimum of 20%
of any offering other than our initial public offering.
. S-3 Registration Rights. The holders of at least 5% of registrable
securities have the right to request registrations on Form S-3 if we are
eligible to use Form S-3 and have not already effected such an S-3
registration within the past six months and if the aggregate proceeds are
at least $1,000,000.
Registration of shares of common stock pursuant to the exercise of demand
registration rights, piggyback registration rights or S-3 registration rights
under the Securities Act would result in these shares becoming freely tradable
without restriction under the Securities Act immediately upon the effectiveness
of such registration. Support.com will pay all registration expenses, other
than underwriting discounts and commissions, related to any registration. The
registration rights terminate five years after completion of this offering, or,
as to each holder of registrable securities, when the holder can sell all of
the holder's shares in any 90-day period under Rule 144 under the Securities
Act.
Section 2115
We are currently subject to Section 2115 of the California General
Corporation Law. Section 2115 provides that, regardless of a company's legal
domicile, some provisions of California corporate law will apply to that
company if more than 50% of its outstanding voting securities are held of
record by persons having addresses in California and the majority of the
company's operations occur in California. For example, while we are subject to
Section 2115, stockholders may cumulate votes in electing directors. This means
that each stockholder may vote the number of votes equal to the number of
candidates multiplied by the number of votes to which the stockholder's shares
are normally entitled in favor of one candidate. This potentially allows
minority stockholders
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<PAGE>
to elect some members of the board of directors. When we are no longer subject
to Section 2115, cumulative voting will not be allowed and a holder of 50% or
more of our voting stock will be able to control the election of all directors.
Section 2115 also has the following effects:
. enables removal of directors with majority stockholder approval;
. places limitations on the distribution of dividends;
. extends additional rights to dissenting stockholders in any
reorganization, including a merger, sale of assets or exchange of shares;
and
. provides for information rights and required filings if we effect a sale
of assets or complete a merger.
We anticipate that our common stock will be qualified for trading as a
national market security on the Nasdaq National Market and that we will have at
least 800 stockholders of record by the record date for our 2000 annual meeting
of stockholders. If these two conditions occur, then we will no longer be
subject to Section 2115 as of the record date for our 2000 annual meeting of
stockholders.
Delaware Anti-Takeover Law and Certain Charter Provisions
Delaware Takeover Statute
We are subject to Section 203 of the Delaware General Corporation Law,
which, subject to some exceptions, prohibits a Delaware corporation from
engaging in any business combination with any interested stockholder for a
period of three years following the date that such stockholder became an
interested stockholder, unless:
. before this date, the board of directors of the corporation approved
either the business combination or the transaction that resulted in the
stockholder becoming an interested stockholder;
. upon completion of the transaction that resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of the corporation outstanding at the time
the transaction began, excluding for purposes of determining the number
of shares outstanding those shares owned by:
. persons who are directors and also officers, and
. employee stock plans in which employee participants do not have the
right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer; or
. on or after this date, the business combination is approved by the board
of directors and authorized at an annual or special meeting of
stockholders, and not by written consent, by the affirmative vote of at
least 66-2/3% of the outstanding voting stock that is not owned by the
interested stockholder.
In general, Section 203 defines an interested stockholder as any entity or
person who, together with affiliates and associates owns, or within three
years, did own beneficially 15% or more of the outstanding voting stock of the
corporation. Section 203 defines business combination to include:
. any merger or consolidation involving the corporation and the interested
stockholder; and
. any sale, transfer, pledge or other disposition of 10% or more of the
assets of the corporation involving the interested stockholder.
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<PAGE>
. subject to specified exceptions, any transaction that results in the
issuance or transfer by the corporation of any stock of the corporation
to the interested stockholder;
. any transaction involving the corporation that increases the
proportionate share of the stock of any class or series of the
corporation beneficially owned by the interested stockholder; or
. the receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits provided by or
through the corporation.
Certificate of Incorporation and Bylaws
Undesignated Preferred Stock. Under our certificate of incorporation, the
board of directors has the power to authorize the issuance of up to 5,000,000
shares of preferred stock and to determine the price, rights, preferences,
privileges and restrictions, including voting rights, of those shares without
further vote or action by the stockholders. The issuance of preferred stock
may:
. delay, defer or prevent a change in control of Support.com;
. discourage bids for the common stock at a premium over the market price
of our common stock;
. adversely affect the voting and other rights of the holders of our common
stock; and
. discourage acquisition proposals or tender offers for our shares and, as
a consequence, inhibit fluctuations in the market price of our shares
that could result from actual or rumored takeover attempts.
Advance Notice Provisions. Our bylaws establish advance notice procedures
for stockholder proposals and nominations of candidates for election as
directors other than nominations made by or at the direction of the board of
directors or a committee of the board.
Special Meeting Requirements. Our bylaws provide that special meetings of
stockholders be called by the chief executive officer or the board of
directors.
Cumulative Voting. Both our certificate of incorporation and our bylaws do
not provide for cumulative voting in the election of directors.
These provisions may only be amended by approval of the holders of at least
66 2/3% of the outstanding common stock and may have the effect of deterring a
hostile takeover or delaying a change in control or management of Support.com.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is American
Securities Transfer & Trust.
Nasdaq National Market Listing
We have applied to have our common stock quoted on the Nasdaq National
Market under the symbol SPRT.
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RESCISSION OFFER
Reasons for the Offer
Shares issued, and option grants made under, our 1998 stock option plan
were not exempt from registration or qualification under California state
securities laws. These stock issuances and option grants violated the
registration requirements of California state securities laws because
registration or qualification was not obtained. Although we were able to rely
upon Rule 701 exemption under the federal securities law, we were unable to
rely on the exemption provided by Section 25102(f) of the California
Corporation Code because these options were granted, and these shares were
issued, to more than 35 persons during a 12-month period. We were also unable
to rely on the exemption provided by Section 25102(o) of the California
Corporation Code because the required filing under that section was not made.
Terms of the Offer
We intend to make a rescission offer to the holders of these shares and
options. This offer will be held open for 30 days after the date of the offer
to rescind. These holders will be able to accept our rescission offer before
the expiration date of the offer by returning to us shares to be repurchased
and an election notice that we will deliver to the holders together with the
preliminary prospectus. If accepted, our rescission offer could require us to
make aggregate payments to the holders of these shares and options of up to
approximately $200,455 plus statutory interest.
Shares Subject to the Offer
This rescission offer will cover a total of 2,931,150 shares issuable
pursuant to options granted under the 1998 stock option plan, of which
1,660,900 shares were issued upon option exercises and 1,216,500 shares were
never exercised. We will offer to rescind these prior sales at the price per
share paid for them under the 1998 stock option plan, plus interest at a
statutory rate from the date of purchase by the purchaser to the expiration of
the rescission offer. Also, we will offer to rescind these prior option grants
not exercised at a price of $0.01 per share. If any or all of these holders
reject the rescission offer, we may continue to be liable under state
securities laws for up to an aggregate amount of approximately $200,455 plus
statutory interest of seven percent per year.
To date, we are not aware of any claims for rescission of any claims for
rescission against us.
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<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Before this offering, there has been no public market for our common stock,
and we cannot predict the effect, if any, that market sales of shares or the
availability of shares for sale will have on the market price prevailing. As
described below, only a limited number of shares will be available for sale
shortly after this offering due to contractual and legal restrictions on
resale.
Sales of substantial amounts of our common stock in the public market after
the restrictions lapse could cause the market price of our common stock to
decline.
When this offering is completed, we will have a total of shares
of common stock outstanding, assuming no exercise of outstanding options. The
shares offered by this prospectus will be freely tradable
unless they are purchased by a person that directly or indirectly controls, is
controlled by or is under common control with, us. These persons are considered
to be affiliates of ours under Rule 144 of the Securities Act of 1933, as
amended. The remaining 26,469,161 shares are restricted, which means they were
originally sold in offerings that were not subject to a registration statement
filed with the Securities and Exchange Commission. These restricted shares may
be resold only through registration under the Securities Act of 1933 or under
an available exemption from registration, including Rule 144.
Lock-up Agreements
The holders of shares of common stock have agreed to a 180-day
lock-up of these shares. This generally means that they cannot sell these
shares during the 180 days after the date of this prospectus. After the 180-day
lock-up period, these shares may be sold in accordance with Rule 144. Credit
Suisse First Boston may release some or all of these shares before the
expiration of the lock-up period.
Rule 144
In general, under Rule 144, a person or persons whose shares are aggregated,
who has beneficially owned restricted securities for at least one year,
including the holding period of any holder who is not an affiliate, is entitled
to sell within any three-month period a number of our shares of common stock
that does not exceed the greater of:
. 1% of the outstanding shares of our common stock at that time, which will
equal approximately shares upon completion of this offering;
or
. the average weekly trading volume of our common stock on the Nasdaq
National Market during the four calendar weeks before the date on which
notice of sale is filed with the Securities and Exchange Commission.
Sales under Rule 144 are subject to restrictions relating to manner of sale,
notice and the availability of current public information about us. Under Rule
144 and subject to volume limitations, of the restricted shares will
be eligible for sale beginning 180 days after the date of the final prospectus
and the remaining restricted shares will become salable at various times
afterwards.
Rule 144(k)
A person who is not an affiliate of Support.com at any time during the 90
days before a sale and who has beneficially owned shares for at least two
years, including the holding period of any prior
72
<PAGE>
owner who is not an affiliate, would be entitled to sell shares following this
offering under Rule 144(k) without taking into account the volume limitations,
manner of sale provisions, public information or notice requirements of Rule
144.
Rule 701 and Options
Rule 701 permits resales of shares in reliance upon Rule 144 but without
compliance with some restrictions, including the holding period requirement, of
Rule 144. Any employee, officer or director or consultant who purchased his
shares pursuant to a written compensatory plan or contract may be entitled to
rely on the resale provisions of Rule 701. Rule 701 permits affiliates to sell
their Rule 701 shares under Rule 144 without complying with the holding period
requirements of Rule 144. Rule 701 further provides that non-affiliates may
sell such shares in reliance on Rule 144 without having to comply with the
holding period, public information, volume limitation or notice provisions of
Rule 144. All holders of Rule 701 shares are required to wait 90 days after the
date of this prospectus before selling these shares. However, all shares issued
by us pursuant to Rule 701 are subject to lock-up provisions and will only
become eligible for sale upon the expiration of 180 days after the date of this
prospectus.
Registration
After this offering, we intend to file a registration statement under the
Securities Act covering shares of common stock subject to outstanding options
or issued or issuable under our 1998 Stock Plan, our 2000 Stock Incentive Plan
and our 2000 Employee Stock Purchase Plan. Based on the number of shares
subject to outstanding options at December 31, 1999, and currently reserved for
issuance under these plans, this registration statement would cover
approximately 15,424,434 shares.
This registration statement will automatically become effective upon filing.
Accordingly, shares registered under this registration statement will, subject
to Rule 144 volume limitations applicable to our affiliates, be available for
sale in the open market immediately after the expiration of the 180-day lock-up
agreements. Holders of 15,594,787 shares of common stock will be entitled to
registration rights.
73
<PAGE>
UNDERWRITING
Under the terms and subject to the conditions contained in an underwriting
agreement dated , 2000, we have agreed to sell to the underwriters
named below, for whom Credit Suisse First Boston Corporation, Chase Securities
Inc., Bear, Stearns & Co. Inc. and Wit SoundView Corporation, are acting as
representatives, the following respective numbers of shares of common stock:
<TABLE>
<CAPTION>
Number of
Underwriter Shares
----------- ---------
<S> <C>
Credit Suisse First Boston Corporation.............................
Chase Securities Inc...............................................
Bear, Stearns & Co. Inc............................................
Wit SoundView Corporation..........................................
---
Total..........................................................
===
</TABLE>
The underwriting agreement provides that the underwriters are obligated to
purchase all the shares of common stock in the offering if any are purchased,
other than those shares covered by the over-allotment option described below.
The underwriting agreement also provides that if an underwriter defaults, the
purchase commitments of non-defaulting underwriters may be increased or the
offering of common stock may be terminated.
We have granted to the underwriters a 30-day option to purchase on a pro
rata basis up to additional shares at the initial public offering
price less the underwriting discounts and commissions. The option may be
exercised only to cover any over-allotments of common stock.
The underwriters propose to offer the shares of common stock initially at
the public offering price on the cover page of this prospectus and to selling
group members at that price less a concession of $ per share. The
underwriters and selling group members may allow a discount of $ per share
on sales to other broker/dealers. After the initial public offering, the public
offering price and concession and discount to broker/dealers may be changed by
the representatives.
The following table summarizes the compensation and estimated expenses we
will pay.
<TABLE>
<CAPTION>
Per Share Total
----------------------------- -----------------------------
Without With Without With
Over-allotment Over-allotment Over-allotment Over-allotment
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Underwriting discounts
and commissions paid by
us..................... $ $ $ $
Expenses payable by us.. $ $ $ $
</TABLE>
The underwriters have informed us that they do not expect discretionary
sales to exceed 5% of the shares of common stock being offered.
For a period of 180 days after the date of this prospectus, we and our
officers and directors and all of our stockholders have agreed not to do any of
the following without the prior written consent of Credit Suisse First Boston
Corporation:
. offer, sell, contract to sell, pledge or dispose of any of our common
stock or securities convertible into or exchangeable or exercisable for
any of our common stock, or enter into a transaction which would have the
same effect, except common stock issued upon the exercise of employee
stock options outstanding as of the date of this prospectus;
74
<PAGE>
. in our case file with the Securities and Exchange Commission a
registration statement under the Securities Act relating to our common
stock or securities convertible into or exchangeable or exercisable for
any of our common stock;
. in the case of our stockholders enter into any swap, hedge or other
arrangement that transfers any part of the economic consequences of
ownership of our common stock, whether any such transaction is to be
settled by delivery of our common stock, other securities, cash, or other
consideration; or,
. publicly disclose the intention to make any such offer, sale, pledge or
disposition.
The underwriters have reserved for sale, at the initial public offering
price, up to shares of the common stock for employees, directors and
other persons associated with us who have expressed an interest in purchasing
common stock in the offering. This group may include , who have
expressed an interest in acquiring up to shares of common stock in the
offering, based upon an assumed initial public offering price of $ per share.
The number of shares available for sale to the general public in the offering
will be reduced to the extent such persons purchase such reserved shares. Any
reserved shares not so purchased will be offered by the underwriters to the
general public on the same terms as the other shares.
We have agreed to indemnify the underwriters against liabilities under the
Securities Act, or to contribute to payments which the underwriters may be
required to make in that respect.
We have applied to list the shares of common stock on The Nasdaq Stock
Market's National Market under the symbol SPRT.
Prior to this offering, there has been no public market for the common
stock. The initial public offering price will be determined by negotiation
between us and the representatives. The principal factors to be considered in
determining the public offering price include the following:
. the information included in this prospectus;
. market conditions for initial public offerings;
. the history and the prospects for the industry in which we will compete;
. the ability of our management;
. our prospects for our future earnings;
. the present state of our development and our current financial condition;
. the general condition of the securities markets at the time of this
offering; and
. the recent market prices of, and the demand for, publicly traded common
stock of generally comparable companies.
Entities associated with Chase Securities Inc. beneficially own 61,135
shares of our Series C preferred stock. Additionally, Access Technology
Partners, L.P., a fund of outside investors that is managed by an entity
affiliated with Chase Securities Inc., owns 244,538 shares of our Series C
preferred stock. Access Technology Partners, L.P. and the entities associated
with Chase Securities Inc. purchased these shares in June 1999 at $3.27148 per
share in connection with a private placement. In February 2000, one of our
stockholders sold 9,200 shares of his own Series A preferred stock to entities
associated with Chase Securities Inc. at $10.00 per share, and 36,800 shares of
his own Series A preferred stock to Access Technology Partners, L.P. at
$10.00 per share. Chase Securities Inc. is also our customer.
75
<PAGE>
Individuals employed by Bear, Stearns & Co. Inc. purchased 17,000 shares of
our common stock at prices ranging from $0.10 to $0.40 per share. In June 1999,
individuals employed by Bear, Stearns & Co. Inc. purchased 17,642 shares of our
Series C preferred stock at $3.27148 per share in connection with a private
placement. In 1999, we had total revenue of $3.3 million. Bear, Stearns & Co.
Inc. accounted for 53% of our total revenue in 1999.
The representatives may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids in accordance with Regulation
M under the Securities Exchange Act of 1934.
. Over-allotment involves syndicate sales in excess of the offering size,
which creates a syndicate short position.
. Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum.
. Syndicate covering transactions involve purchases of the common stock in
the open market after the distribution has been completed in order to
cover syndicate short positions.
. Penalty bids permit the representatives to reclaim a selling concession
from a syndicate member when the common stock originally sold by such
syndicate member is purchased in a syndicate covering transaction to
cover syndicate short positions.
These stabilizing transactions, syndicate covering transactions and penalty
bids may cause the price of the common stock to be higher than it would be in
the absence of these transactions. These transactions may be completed on the
Nasdaq National Market or such other trading markets as our common stock may be
traded upon in the future, and, if commenced, may be discontinued at any time.
A prospectus in electronic format will be made available on the web sites
maintained by one or more of the underwriters participating in this offering.
The representatives may agree to allocate a number of shares to underwriters
for sale to their online brokerage account holders. Distribution will be
allocated by the underwriters that may make Internet distributions on the same
basis as other allocations.
76
<PAGE>
NOTICE TO CANADIAN RESIDENTS
Resale Restrictions
The distribution of the common stock in Canada is being made only on a
private placement basis exempt from the requirement that we prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of common stock are effected. Accordingly, any resale of the common
stock in Canada must be made in accordance with applicable securities laws
which will vary depending on the relevant jurisdiction, and which may require
resales to be made in accordance with available statutory exemptions or
pursuant to a discretionary exemption granted by the applicable Canadian
securities regulatory authority. Purchasers are advised to seek legal advice
prior to any resale of the common stock.
Representations of Purchasers
Each purchaser of the common stock in Canada who receives a purchase
confirmation will be deemed to represent to us and the dealer from whom such
purchase confirmation is received that (1) such purchaser is entitled under
applicable provincial securities laws to purchase such common stock without the
benefit of a prospectus qualified under such securities laws, (2) where
required by law, that such purchaser is purchasing as principal and not as
agent, and (3) such purchaser has reviewed the text above under Resale
Restrictions.
Rights of Action--Ontario Purchasers
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Ontario securities law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provisions
of the U.S. federal securities laws.
Enforcement of Legal Rights
All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be
possible for Canadian purchasers to effect service of process within Canada
upon the issuer or such persons. All or a substantial portion of the assets of
the issuer and such persons may be located outside of Canada and, as a result,
it may not be possible to satisfy a judgment against the issuer or such persons
in Canada or to enforce a judgment obtained in Canadian courts against such
issuer or such persons outside of Canada.
Notice to British Columbia Residents
A purchaser of the common stock to whom the Securities Act of British
Columbia applies is advised that such purchaser is required to file with the
British Columbia Securities Commission a report within ten days of the sale of
any common stock acquired by such purchaser pursuant to this offering. Such
report must be in the form attached to British Columbia Securities Commission
Blanket Order BOR #95/17, a copy of which may be obtained from us. Only one
such report must be filed in respect of common stock acquired on the same date
and under the same prospectus exemption.
Taxation and Eligibility for Investment
Canadian purchasers of the common stock should consult their own legal and
tax advisors with respect to the tax consequences of an investment in the
common stock in their particular circumstances and with respect to the
eligibility of the common stock for investment by the purchaser under relevant
Canadian legislation.
77
<PAGE>
LEGAL MATTERS
Selected legal matters with respect to the validity of the common stock
offered by this prospectus are being passed upon for Support.com by Pillsbury
Madison & Sutro LLP, Palo Alto, California. Some partners of Pillsbury Madison
& Sutro LLP beneficially own an aggregate of 7,642 shares of Support.com common
stock. The underwriters have been represented by Wilson Sonsini Goodrich &
Rosati, Palo Alto, California.
EXPERTS
Ernst & Young, LLP, independent auditors, have audited our financial
statements at December 31, 1998 and 1999 and for the period from incorporation
on December 3, 1997 to December 31, 1998 and the year ended December 31, 1999,
as set forth in their report. We have included our financial statements in the
prospectus and elsewhere in the registration statement in reliance on Ernst &
Young LLP's report, given on their authority as experts in accounting and
auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-1 under the
Securities Act with respect to the common stock offered by this prospectus.
This prospectus, which is a part of the registration statement, does not
contain all of the information in the registration statement or the exhibits
and schedules which are part of the registration statement.
For more information with respect to Support.com and the common stock
offered by this prospectus, we refer you to the registration statement and the
exhibits and schedules filed as part of the registration statement. You may
read and copy any document we file at the SEC's public reference room at 450
Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-
0330 for further information on the public reference rooms. Our SEC filings are
also available to the public from the SEC's web site at http://www.sec.gov.
Upon completion of this offering, we will become subject to the information
and periodic reporting requirements of the Securities and Exchange Act, as
amended, and will file periodic reports, proxy statements and other information
with the SEC. These periodic reports, proxy statements and other information
will be available for inspection and copying at the SEC's public reference
rooms and the web site of the SEC.
78
<PAGE>
SUPPORT.COM, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Ernst & Young LLP, Independent Auditors........................ F-2
Balance Sheets........................................................... F-3
Statements of Operations................................................. F-4
Statements of Redeemable Convertible Preferred Stock and Stockholders'
Equity (Deficit)........................................................ F-5
Statements of Cash Flows................................................. F-6
Notes to Financial Statements............................................ F-7
</TABLE>
F-1
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Support.com, Inc.
We have audited the accompanying balance sheets of Support.com, Inc. as of
December 31, 1998 and 1999, and the related statements of operations,
redeemable convertible preferred stock and stockholders' equity (deficit), and
cash flows for the period from incorporation on December 3, 1997 to December
31, 1998 and for the year ended December 31, 1999. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Support.com, Inc. at
December 31, 1998 and 1999, and the results of its operations and its cash
flows for the period from incorporation on December 3, 1997 to December 31,
1998 and for the year ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.
/s/ Ernst & Young LLP
Palo Alto, California
February 15, 2000
F-2
<PAGE>
SUPPORT.COM, INC.
BALANCE SHEETS
(in thousands except share and per share data)
<TABLE>
<CAPTION>
Pro Forma
Stockholders'
December 31, Equity at
----------------- December 31,
1998 1999 1999
------- -------- -------------
(unaudited)
<S> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents................... $ 2,807 $ 4,023
Short-term investments...................... -- 8,466
Accounts receivable, less allowance of $10
and $40, respectively...................... 65 3,450
Prepaids and other current assets........... 516 451
------- --------
Total current assets...................... 3,388 16,390
Property and equipment, net................... 256 881
Other assets.................................. 28 254
------- --------
$ 3,672 $ 17,525
======= ========
Liabilities and stockholders' equity (deficit)
Current liabilities:
Notes payable, current portion.............. $ 50 $ 921
Capital lease obligations, current portion.. -- 274
Accounts payable............................ 98 1,227
Accrued compensation........................ 60 1,168
Other accrued liabilities................... 159 494
Deferred revenue............................ 42 2,608
------- --------
Total current liabilities................. 409 6,692
Notes payable, net of current portion......... 449 1,478
Capital lease obligations, net of current
portion...................................... -- 799
Deferred revenue--long-term portion........... -- 360
Commitments
Redeemable convertible preferred stock;
7,346,108 and 12,156,108 shares authorized at
December 31, 1998 and 1999, $0.0001 par
value, issuable in series:
Series B redeemable convertible preferred
stock; 7,346,108 shares designated, issued
and outstanding at December 31, 1998 and
1999, and none pro forma (liquidation
preference at December 31, 1999 of
$5,668).................................... 5,237 5,641
Series C redeemable convertible preferred
stock; 4,810,000 shares designated;
4,638,618 shares issued and outstanding at
December 31, 1999, and none pro forma
(liquidation preference at December 31,
1999 of $15,844)........................... -- 15,808
Stockholders' equity (deficit):
Series A convertible preferred stock; par
value $0.0001, 3,571,600 shares authorized,
3,571,600 shares issued and outstanding at
December 31, 1998 and 1999, and none pro
forma (liquidation preference at December
31, 1999 of $250).......................... 1 1 $ --
Common stock; par value $0.0001, 31,060,000
shares authorized, 6,468,880 and 10,874,374
shares issued and outstanding at December
31, 1998 and 1999, respectively;
150,000,000 authorized, 26,430,700 shares
issued and outstanding pro forma........... 1 1 3
Additional paid-in capital.................. 478 19,491 40,939
Receivable from stockholders................ -- (1,450) (1,450)
Deferred compensation....................... (153) (14,252) (14,252)
Accumulated deficit......................... (2,750) (17,044) (17,044)
------- -------- --------
Total stockholders' equity (deficit)...... (2,423) (13,253) $ 8,196
------- -------- ========
Total liabilities and stockholders' equity
(deficit)................................ $ 3,672 $ 17,525
======= ========
</TABLE>
See accompanying notes.
F-3
<PAGE>
SUPPORT.COM, INC.
STATEMENTS OF OPERATIONS
(in thousands except per share data)
<TABLE>
<CAPTION>
Period from
incorporation on
December 3, 1997 to Year ended
December 31, 1998 December 31, 1999
------------------- -----------------
<S> <C> <C>
Revenue:
License fees.......................... $ 18 $ 2,746
Services.............................. -- 569
------- --------
Net revenues........................ 18 3,315
------- --------
Costs and expenses:
Cost of license fees.................. -- 4
Cost of services...................... -- 965
Research and development.............. 1,132 2,401
Sales and marketing................... 1,197 8,974
General and administrative............ 477 1,881
Amortization of deferred compensation
(1).................................. 16 3,554
------- --------
Total costs and expenses............ 2,822 17,779
------- --------
Loss from operations.................... (2,804) (14,464)
Interest income......................... 105 501
Interest expense........................ (51) (331)
------- --------
Net loss................................ (2,750) (14,294)
Accretion on redeemable convertible
preferred stock........................ (214) (1,072)
------- --------
Net loss attributable to common
stockholders........................... $(2,964) $(15,366)
======= ========
Basic and diluted net loss per share.... $ (0.57) $ (2.31)
======= ========
Shares used in computing basic and
diluted net loss per share............. 5,227 6,643
======= ========
Pro forma basic and diluted net loss per
share (unaudited)...................... $ (0.71)
========
Shares used in computing pro forma basic
and diluted net loss per share
(unaudited)............................ 20,137
========
</TABLE>
- --------
(1) Amortization of deferred compensation relates to the following in 1999:
<TABLE>
<S> <C>
Cost of services..................................................... $ 53
Research and development............................................. 742
Sales and marketing.................................................. 1,122
General and administrative........................................... 1,637
------
Total.............................................................. $3,554
======
</TABLE>
See accompanying notes.
F-4
<PAGE>
SUPPORT.COM, INC.
STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
(DEFICIT)
(in thousands except share and per share data)
<TABLE>
<CAPTION>
Redeemable
Convertible Convertible Notes
Preferred Stock Preferred Stock Common Stock Additional Receivable
------------------ ---------------- ----------------- Paid-In From
Shares Amount Shares Amount Shares Amount Capital Stockholders
---------- ------- --------- ------ ---------- ------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of
common stock to
founders at
$0.0001,
$0.0077, and
$0.0155 per
share for cash.. -- $ -- -- $ -- 6,428,880 $ 1 $ -- $ --
Issuance of
Series A
convertible
preferred stock
at $0.07 per
share for cash,
net of issuance
costs of $6..... -- -- 3,571,600 1 -- -- 244 --
Issuance of
Series B
redeemable
convertible
preferred stock
at $0.68747 per
share for cash
and receivable,
net of issuance
costs of $27.... 7,346,108 5,023 -- -- -- -- -- --
Issuance of
common stock
upon exercise of
stock options... -- -- -- -- 40,000 -- 4 --
Issuance of
warrants........ -- -- -- -- -- -- 249 --
Issuance of
stock options to
non-employees... -- -- -- -- -- -- 26 --
Accretion on
redeemable
convertible
preferred
stock........... -- 214 -- -- -- -- (214) --
Deferred
compensation
related to grant
of stock
options......... -- -- -- -- -- -- 169 --
Amortization of
deferred
compensation.... -- -- -- -- -- -- -- --
Net loss........ -- -- -- -- -- -- -- --
---------- ------- --------- ---- ---------- ---- ------- -------
Balances at
December 31,
1998............ 7,346,108 5,237 3,571,600 1 6,468,880 1 478 --
Issuance of
Series C
redeemable
convertible
preferred stock
at $3.271 per
share for cash,
net of issuance
costs of $36.... 4,638,618 15,140 -- -- -- -- -- --
Issuance of
common stock
upon exercise of
options to
employees and to
consultants for
cash and
promissory
notes........... -- -- -- -- 4,131,994 -- 1,914 (1,450)
Issuance of
common stock for
services........ -- -- -- -- 51,500 -- 132 --
Issuance of
warrants........ -- -- -- -- -- -- 94 --
Issuance of
restricted stock
to non-
employees....... -- -- -- -- 222,000 -- 37 --
Expense on
issuance of
restricted stock
and stock
options to non-
employees....... -- -- -- -- -- -- 255 --
Accretion on
redeemable
convertible
preferred
stock........... -- 1,072 -- -- -- -- (1,072) --
Deferred
compensation
related to grant
of stock
options......... -- -- -- -- -- -- 17,653 --
Amortization of
deferred
compensation.... -- -- -- -- -- -- -- --
Net loss........ -- -- -- -- -- -- -- --
---------- ------- --------- ---- ---------- ---- ------- -------
Balances at
December 31,
1999............ 11,984,726 $21,449 3,571,600 $ 1 10,874,374 $ 1 $19,491 $(1,450)
- --------------------------------------------------
========== ======= ========= ==== ========== ==== ======= =======
<CAPTION>
Total
Deferred Stockholders'
Stock Accumulated Equity
Compensation Deficit (Deficit)
------------ ----------- -------------
<S> <C> <C> <C>
Issuance of
common stock to
founders at
$0.0001,
$0.0077, and
$0.0155 per
share for cash.. $ -- $ -- $ 1
Issuance of
Series A
convertible
preferred stock
at $0.07 per
share for cash,
net of issuance
costs of $6..... -- -- 245
Issuance of
Series B
redeemable
convertible
preferred stock
at $0.68747 per
share for cash
and receivable,
net of issuance
costs of $27.... -- -- --
Issuance of
common stock
upon exercise of
stock options... -- -- 4
Issuance of
warrants........ -- -- 249
Issuance of
stock options to
non-employees... -- -- 26
Accretion on
redeemable
convertible
preferred
stock........... -- -- (214)
Deferred
compensation
related to grant
of stock
options......... (169) -- --
Amortization of
deferred
compensation.... 16 -- 16
Net loss........ -- (2,750) (2,750)
------------ ----------- -------------
Balances at
December 31,
1998............ (153) (2,750) (2,423)
Issuance of
Series C
redeemable
convertible
preferred stock
at $3.271 per
share for cash,
net of issuance
costs of $36.... -- -- --
Issuance of
common stock
upon exercise of
options to
employees and to
consultants for
cash and
promissory
notes........... -- -- 464
Issuance of
common stock for
services........ -- -- 132
Issuance of
warrants........ -- -- 94
Issuance of
restricted stock
to non-
employees....... -- -- 37
Expense on
issuance of
restricted stock
and stock
options to non-
employees....... -- -- 255
Accretion on
redeemable
convertible
preferred
stock........... -- -- (1,072)
Deferred
compensation
related to grant
of stock
options......... (17,653) -- --
Amortization of
deferred
compensation.... 3,554 -- 3,554
Net loss........ -- (14,294) (14,294)
------------ ----------- -------------
Balances at
December 31,
1999............ $(14,252) $(17, 044) $(13,253)
- --------------------------------------------------
============ =========== =============
</TABLE>
See accompanying notes.
F-5
<PAGE>
SUPPORT.COM, INC.
STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Period from
incorporation on
December 3, 1997 to Year ended
December 31, 1998 December 31, 1999
------------------- -----------------
<S> <C> <C>
Operating activities
Net loss............................... $(2,750) $(14,294)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization........ 23 294
Amortization of deferred
compensation........................ 16 3,554
Other................................ 39 425
Changes in assets and liabilities:
Accounts receivable, net........... (65) (3,385)
Prepaids and other current assets.. (29) (129)
Accounts payable................... 98 1,129
Accrued compensation............... 60 1,108
Other accrued liabilities.......... 159 335
Deferred revenue................... 42 2,926
------- --------
Net cash used in operating activities.. (2,407) (8,037)
------- --------
Investing activities
Purchases of property and equipment.... (279) (89)
Proceeds from sale of equipment........ -- 99
Other assets........................... (28) (226)
Purchases of short-term investments.... -- (12,266)
Sales of short-term investments........ -- 3,800
------- --------
Net cash used in investing activities.. (307) (8,682)
------- --------
Financing activities
Proceeds from notes payable............ 500 2,000
Proceeds from sale-leaseback........... -- 183
Proceeds from issuance of preferred
stock, net............................ 5,017 15,390
Proceeds from issuances of common
stock................................. 5 501
Repayment of notes payable............. (1) (100)
Principal payments under capital lease
obligations........................... -- (39)
------- --------
Net cash provided by financing
activities............................ 5,521 17,935
------- --------
Net increase in cash and cash
equivalents............................. 2,807 1,216
Cash and cash equivalents at beginning of
period.................................. -- 2,807
------- --------
Cash and cash equivalents at end of
period.................................. $ 2,807 $ 4,023
======= ========
Supplemental disclosure of noncash
financing activities
Note received from stockholder in
exchange for preferred stock.......... $ 250 $ --
======= ========
Note received from stockholders in
exchange for common stock............. $ -- $ 1,450
======= ========
Equipment acquired under capital lease
obligation............................ $ -- $ 1,112
======= ========
Supplemental schedule of cash flow
information
Interest paid.......................... $ 39 $ 249
======= ========
</TABLE>
See accompanying notes.
F-6
<PAGE>
SUPPORT.COM, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
1. Organization and Summary of Significant Accounting Policies
Nature of Operations
Support.com, Inc. ("Support.com"), formerly known as Tioga Systems, Inc.
and Replicase, Inc., was incorporated in the state of Delaware on December 3,
1997. Support.com is a provider of eBusiness infrastructure software that
automates, personalizes and enhances the efficiency of user support over the
Internet. Support.com's suite of eSupport software products and services is
designed to accelerate eBusiness growth by enabling the elimination of user
support bottlenecks that would otherwise constrain expanding Internet
initiatives. Support.com sells its products primarily in the United States
and, to a lesser extent in Europe, through its direct sales force.
Support.com commenced operations in December 1997. Operations through
December 31, 1997 consisted of initial development activities. Operating
expenses were approximately $9,000 for the period from incorporation on
December 3, 1997 to December 31, 1997. As such activities were not
significant, the results have been included in operations for the period ended
December 31, 1998.
Support.com has incurred operating losses to date and had an accumulated
deficit of $17,044,000 at December 31, 1999. Support.com's activities have
been primarily financed through private placements of equity securities and
capital lease financings. Support.com may need to raise additional capital
through the issuance of debt or equity securities and capital lease
financings. Such financing may not be available on terms satisfactory to
Support.com, if at all. If adequate funds are not available, Support.com may
be required to reduce its level of spending.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
the accompanying notes. Actual results could differ materially from these
estimates.
Concentration of Credit Risk and Significant Customers
Financial instruments that potentially subject Support.com to concentration
of credit risk consist principally of cash investments and trade receivables.
Support.com invests cash which is not required for immediate operating needs
principally in money market funds and commercial paper, which incur minimal
risk. Support.com's customers are currently concentrated in the United States.
Support.com performs ongoing evaluations of its customers' financial condition
and generally does not require collateral. Support.com maintains reserves for
credit losses, and such losses have been within management's expectations.
For the year ended December 31, 1999, two customers accounted for 53% and
10% of revenue.
Fair Value of Financial Instruments
The fair value of notes payable is estimated by discounting the future cash
flows using the current interest rates at which similar loans would be made to
borrowers with similar credit ratings and for the
F-7
<PAGE>
SUPPORT.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1999
same remaining maturities. The carrying value of the notes payable approximated
its fair value. The fair value of short-term and long-term capital lease
obligations is estimated based on current interest rates available to
Support.com for debt instruments with similar terms, degrees of risk and
remaining maturities. The carrying values of these obligations approximate
their fair values.
Cash, Cash Equivalents and Short-Term Investments
Support.com considers all highly liquid, low-risk debt instruments with an
original maturity at the date of purchase of three months or less to be cash
equivalents. Through December 31, 1998, Support.com maintained cash and cash
equivalents in money market accounts with major financial institutions for
which the carrying amount approximated its fair value. Upon the completion of
the Series C Financing (see Note 4), Support.com invested some of its proceeds
in short-term investments with original maturities of greater than three
months. At December 31, 1999, cash equivalents and short-term investments
consist primarily of commercial paper, other debt instruments and money market
funds. Support.com's cash equivalents and short-term investments are classified
as available-for-sale in accordance with the provisions of Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities."
Currently, Support.com classifies its securities as available-for-sale,
which are reported at amortized cost which approximated fair value at December
31, 1998 and 1999. Material unrealized gains and losses, if any, are reported
in stockholders' equity (deficit) and included in other comprehensive loss. The
amortized cost of debt securities is adjusted for amortization of premiums and
accretion of discounts to maturity, both of which are included in interest
income. Realized gains and losses are recorded using the specific
identification method. For the period from incorporation on December 3, 1997 to
December 31, 1998 and for the year ended December 31, 1999, gross unrealized
gains and losses on available-for-sale securities were immaterial.
The following is a summary of available-for-sale securities at cost, which
approximates fair value (in thousands):
<TABLE>
<CAPTION>
December 31, December 31,
1998 1999
------------ ------------
<S> <C> <C>
Cash and cash equivalents
Cash............................................. $ 699 $ 296
Money market funds............................... 2,108 2,729
Municipal bonds.................................. -- 998
------ ------
$2,807 $4,023
====== ======
Short-term investments
Municipal bonds.................................. $ -- $6,466
Auction backed securities........................ -- 2,000
------ ------
$ -- $8,466
====== ======
</TABLE>
Property and Equipment
Property and equipment are stated at cost, less accumulated depreciation
which is provided using the straight-line method over the estimated useful
lives of the assets, generally three years.
F-8
<PAGE>
SUPPORT.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1999
Revenue Recognition
License revenue is comprised of fees for perpetual and subscription licenses
of Support.com's software by corporate customers and resellers. Revenue from
perpetual license fees is recognized when persuasive evidence of an agreement
exists, delivery of the product has occurred, no obligations remain, the fee is
fixed or determinable and collectibility is probable. If the fee due from the
customer is not fixed or determinable, revenue is recognized as payments become
due from the customers. If collectibility is not considered probable, revenue
is recognized when the fee is collected. Revenue related to arrangements with
resellers is recognized when the product is delivered to the end user. Revenue
from subscription licenses is recognized ratably over the term of the
subscription beginning upon the delivery of the licensed product.
Services revenue is primarily comprised of revenue from professional
services, such as consulting services, maintenance and support. Consulting
services include a range of services including installation, implementation and
building of complex and non-complex interfaces for the customer's specific
application. Maintenance agreements provide for technical support and include
the right to unspecified upgrades on an if-and-when-available basis.
In all cases, Support.com assesses whether the service element of the
arrangement is essential to the functionality of the other elements of the
arrangement. In this determination, Support.com focuses on whether the software
is off-the-shelf software, whether the services include significant alterations
to the features and functionality of the software, whether the services involve
the building of complex interfaces, the timing of payments and the existence of
milestones. Judgement is required in the determination of whether the building
of interfaces to the customer's existing applications constitute complex
interfaces. In making this determination Support.com considers the following:
(1) the relative fair value of the services compared to the software, (2) the
amount of time and effort subsequent to delivery of the software until the
interfaces or other modifications are completed, (3) the degree of technical
difficulty in building of the interface, (4) the services are available from
other vendors or could be performed by the customer, (5) the degree of
involvement of customer personnel, and (6) any contractual cancellation,
acceptance, or termination provisions for failure to complete the interfaces.
In those instances where Support.com determines that the service elements
are essential to the other elements of the arrangement, Support.com accounts
for the entire arrangement in accordance with Accounting Research Bulletin
(ARB) No. 45, "Long--Term Construction--Type Contracts," using the relevent
guidance in SOP 97-2, and in SOP 81-1, "Accounting for Performance of
Construction-Type and Certain Production-Type Contracts."
For those arrangements for which Support.com has concluded that the service
element is not essential to the other elements of the arrangement, Support.com
determines whether the services are available from other vendors, do not
involve a significant degree of risk or unique acceptance criteria, and whether
Support.com has sufficient experience in providing the service to be able to
separately account for the service. When the service qualifies for separate
accounting and Support.com has vendor-specific objective evidence of fair value
(VSOE) for the service,
F-9
<PAGE>
SUPPORT.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1999
Support.com (1) recognizes revenue for the fees associated with a perpetual
license using the residual method in accordance with SOP 98-9, regardless of
any separate prices stated within the contract for each element or, (2)
recognizes revenue for the fees associated with a subscription license on a
monthly basis over the remaining term of the subscription period. VSOE of
services in multiple element arrangements is based upon hourly rates which
Support.com has charged in stand alone contracts for services.
Maintenance is not priced or offered separately in subscription licensing
arrangements and is therefore recognized as part of the subscription fee over
the subscription period. For perpetual licensing arrangements, in accordance
with paragraph 57 of SOP 97-2, VSOE for maintenance is determined by reference
to the price the customer will be required to pay when it is sold separately,
that is, the renewal rate. VSOE for maintenance contracts under perpetual
license arrangements is based upon Support.com's pricing practice that
maintenance renewal fees are based upon a percentage of the quoted license fees
in the related contract. Each contract typically offers additional renewal
periods at a stated price. Maintenance revenue is deferred and recognized on a
straight-line basis as services revenue over the life of the related agreement,
which is typically one year.
To date Support.com has not entered into arrangements solely for license of
products and, therefore, Support.com has not demonstrated VSOE for the license
element. In those instances where perpetual licenses are bundled with other
elements, Support.com has used the residual method following the guidance in
SOP 98-9. Support.com accounts for such license fees when VSOE exists for all
undelivered elements in the arrangement and when the fair value of all the
undelivered elements is less than the arrangement fee. Support.com defers the
total fair value of the undelivered elements, until such time as they are
delivered, and recognizes as revenue the difference between the total
arrangement and the amount deferred for the undelivered elements.
For the year ended December 31, 1999, Support.com recognized 71% of license
and services revenues on perpetual arrangements under the residual method, 23%
under subscription arrangements and 6% under the contract accounting method.
Customer advances and billed amounts due from customers in excess of revenue
recognized are recorded as deferred revenue.
Support.com adopted Statement of Position 97-2, "Software Revenue
Recognition" ("SOP 97-2"), and Statement of Position 98-4, "Deferral of the
Effective Date of a Provision of SOP 97-2, Software Revenue Recognition" ("SOP
98-4"), as of January 1, 1998. SOP 97-2 and SOP 98-4 provide guidance for
recognizing revenue on software transactions and supersede SOP 91-1, "Software
Revenue Recognition." Full implementation guidelines for these standards have
not yet been issued. Once available, the current revenue accounting practices
may need to change and such changes could affect Support.com's future revenues
and results of operations. In December 1998, the American Institute of
Certified Public Accountants issued Statement of Position 98-9, "Modification
of SOP 97-2, Software Revenue Recognition, With Respect to Certain
Transactions" ("SOP 98-9"). SOP 98-9 amends SOP 98-4 to extend the deferral of
the application of certain passages of SOP 97-2 provided by SOP 98-4 through
fiscal years beginning on or before March 15, 1999. All other
F-10
<PAGE>
SUPPORT.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1999
provisions of SOP 98-9 are effective for transactions entered into in fiscal
years beginning after March 15, 1999. Support.com does not expect the final
adoption of SOP 98-9 to have a material impact on its future revenues or
results of operations.
Research and Development
Research and development expenditures are generally charged to operations as
incurred. Statement of Financial Accounting Standards No. 86, "Accounting for
the Costs of Computer Software to Be Sold, Leased or Otherwise Marketed,"
requires the capitalization of certain software development costs subsequent to
the establishment of technological feasibility. Based on Support.com's product
development process, technological feasibility is established upon the
completion of a working model. Costs incurred by Support.com between the
completion of the working model and the point at which the product is ready for
general release have been insignificant. Accordingly, Support.com has charged
all such costs to research and development expense in the accompanying
statement of operations. Support.com did not incur any cost related to software
developed or obtained for internal use as defined SOP 98-1.
Advertising Costs
Advertising costs are recorded as sales and marketing expense in the period
in which they are incurred. Advertising expense for the period from
incorporation on December 3, 1997 to December 31, 1998 was $0 and for the year
ended December 31, 1999 was $70,675.
Stock-Based Compensation
Support.com accounts for stock-based compensation using the intrinsic value
method prescribed in Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" ("APB 25"), and has adopted the disclosure only
alternative of Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation" ("FAS 123").
Any deferred stock compensation calculated according to APB 25 is amortized
over the vesting period of the individual options, generally four years, using
the graded vesting method. The graded vesting method provides for vesting of
portions of the overall awards at interim dates and results in greater vesting
in earlier years than straight-line.
All stock-based awards to non-employees are accounted for at their fair
value, as calculated using the Black-Scholes model, in accordance with FAS 123
and Emerging Issues Task Force Consensus No. 96-18 ("EITF 96-18"). The options
and restricted stock purchase arrangements are subject to periodic re-valuation
over their vesting terms.
Net Loss Per Share
Basic and diluted net loss per share are presented in accordance with
Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("FAS
128"), for all periods presented. Pursuant to the Securities and Exchange
Commission Staff Accounting Bulletin No. 98, ordinary
F-11
<PAGE>
SUPPORT.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1999
shares and convertible preferred shares issued or granted for nominal
consideration prior to the anticipated effective date of Support.com's initial
public offering must be included in the calculation of basic and diluted net
loss per share as if they had been outstanding for all periods presented. To
date, Support.com has not had any issuances or grants for nominal
consideration.
Basic and diluted net loss per share has been computed using the weighted-
average number of shares of common stock outstanding during the period. Had
Support.com been in a net income position, diluted earnings per share would
have included the shares used in the computation of basic net loss per share as
well as the impact of common shares outstanding subject to repurchase and
outstanding options and warrants to purchase an additional 2,306,761 and
7,586,002 shares, prior to the application of the treasury stock method, for
the period from incorporation on December 3, 1997 to December 31, 1998 and the
year ended December 31, 1999. Such shares have been excluded because they are
antidilutive for all periods presented. Shares of convertible preferred stock
have been excluded from the computation.
Comprehensive Loss
Support.com adopted Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" ("FAS 130"), at December 31, 1998. Under FAS
130, Support.com is required to display comprehensive income and its components
as part of the financial statements. Other comprehensive income includes
certain changes in equity that are excluded from net loss. Support.com has no
material components of other comprehensive loss and, as a result, the
comprehensive loss is the same as the net loss for all periods presented.
Segment Information
Support.com operates in one segment. For the year ended December 31, 1999,
revenue from customers located outside the United States was approximately
$46,000 and was derived from customers in Canada and the United Kingdom.
Pro Forma Net Loss Per Share (Unaudited)
Pro forma net loss per share is computed using the weighted-average number
of shares of common stock outstanding, including the pro forma effects of the
automatic conversion of Support.com's convertible preferred stock into shares
of common stock, effective upon the closing of Support.com's initial public
offering as if such conversion occurred at the date of original issuance. Pro
forma stockholders' equity at December 31, 1999, as adjusted for the conversion
of the convertible preferred stock, is disclosed on the balance sheet.
F-12
<PAGE>
SUPPORT.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1999
A reconciliation of shares used in the calculation of basic and diluted and
pro forma net loss per share follows (In thousands except per share data):
<TABLE>
<CAPTION>
Period from
incorporation on
December 3, 1997 to Year ended
December 31, 1998 December 31, 1999
------------------- -----------------
<S> <C> <C>
Net loss attributable to common
stockholders........................ $(2,964) $(15,366)
======= ========
Basic and diluted:
Weighted-average shares of common
stock outstanding................. 6,432 7,166
Less weighted-average shares
subject to repurchase............. (1,205) (523)
------- --------
Shares used in computing basic and
diluted net loss per share........ 5,227 6,643
======= ========
Basic and diluted net loss per
share............................... $ (0.57) $ (2.31)
======= ========
Pro forma:
Net loss........................... $(14,294)
========
Shares used above.................. 6,643
Unaudited pro forma adjustment to
reflect weighted effect of assumed
conversion of convertible
preferred stock................... 13,494
--------
Shares used in computing unaudited
pro forma basic and diluted net
loss per share.................... 20,137
========
Unaudited pro forma basic and diluted
net loss per share.................. $ (0.71)
========
</TABLE>
Recent Accounting Pronouncements
In June 1998, the FASB issued Statement of Financial Accounting Standard No.
133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133"), which will be effective for the year ending December 31, 2001. This
statement establishes accounting and reporting standards requiring that every
derivative instrument, including certain derivative instruments embedded in
other contracts, be recorded in the balance sheet as either an asset or
liability measured at its fair value. The statement also requires that changes
in the derivative's fair value be recognized in earnings unless specific hedge
accounting criteria are met. Support.com believes the adoption of SFAS 133 will
not have a material effect on the financial statements, since it currently does
not invest in derivative instruments and engage in hedging activities.
F-13
<PAGE>
SUPPORT.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1999
2. Property and Equipment
Property and equipment are stated at cost and consist of the following (In
thousands):
<TABLE>
<CAPTION>
December
31,
------------
1998 1999
---- ------
<S> <C> <C>
Computer and software equipment................................ $168 $1,193
Furniture and equipment........................................ 106 5
Leasehold improvements......................................... 5 --
---- ------
279 1,198
Accumulated depreciation and amortization...................... (23) (317)
---- ------
$256 $ 881
==== ======
</TABLE>
As of December 31, 1999, property and equipment included amounts acquired
under capital leases of approximately $1,112,000, with related accumulated
amortization of approximately $267,000. This includes property and equipment
with a net book value of approximately $122,000 at December 31, 1999 that was
acquired in 1998 and financed in 1999 through a sale-leaseback transaction.
3. Capital Leases, Borrowings and Commitments
In October 1998, Support.com entered into a loan and security agreement, a
subordinated loan and security agreement and a lease agreement with a financial
institution. In connection with each of these agreements, Support.com issued
warrants to the financial institution (see Note 4). Additionally, Support.com
cannot declare or pay any cash dividends or make a distribution on any class of
stock without the consent of the lender.
The loan and security agreement allows Support.com to borrow up to
$1,500,000 in minimum installments of $500,000 evidenced by secured promissory
notes. Each promissory note bears interest at the rate of 9% per year, is
payable in 36 monthly installments, and is secured by substantially all of
Support.com's assets. At December 31, 1999, Support.com had borrowed $1,500,000
under this agreement. Remaining principal payments under these notes are
approximately $639,000 in 2000, $699,000 in 2001 and $61,000 in 2002.
The subordinated loan and security Agreement allows Support.com to borrow up
to $1,000,000 in two installments of $500,000 evidenced by subordinated secured
promissory notes. Each promissory note bears interest at the rate of 12.5% per
year, is payable in 9 monthly installments of interest only followed by
33 monthly installments of principal and interest. Each note is secured by
substantially all of Support.com's assets. At December 31, 1999, Support.com
had borrowed $1,000,000 under this agreement. Principal payments due are
approximately $282,000 in 2000, $362,000 in 2001 and $356,000 in 2002.
The lease agreement allows Support.com to borrow up to $2,500,000.
Support.com can borrow under this agreement until 2001 and advances may only be
used to finance purchases of equipment,
F-14
<PAGE>
SUPPORT.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1999
software and tenant improvements, subject to certain limitations. Advances are
secured by the assets acquired. Each equipment advance is payable in 48 monthly
installments of principal and interest, computed at the monthly rate of 2.9% of
the principal balance. At December 31, 1999, Support.com had borrowed
approximately $1,112,000 under this agreement.
Support.com leases its facilities under noncancelable operating lease
agreements which expire at various dates from 2000 to 2001. Rent expense was
approximately $783,000 for the year ended December 31, 1999 and approximately
$184,000 for the period from incorporation on December 3, 1997 to December 31,
1998. Support.com has subleased one of its facilities to a third party.
Sublease rental income was approximately $162,000 for the year ended December
31, 1999 and approximately $45,000 for the period from incorporation on
December 3, 1997 to December 31, 1998. Payments due under the sublease rental
agreement are approximately $309,000 in 2000 and $178,000 in 2001. The sublease
rental agreement expires in July 2001.
As of December 31, 1999, minimum payments under noncancelable lease
agreements were as follows (in thousands):
<TABLE>
<CAPTION>
Years ending Capital Operating
December 31, Leases Leases
------------ ------- ---------
<S> <C> <C>
2000.................................................... $ 336 $1,349
2001.................................................... 344 850
2002.................................................... 344 --
2003.................................................... 187 --
------ ------
Total minimum lease and principal payments............ 1,211 $2,199
======
Amount representing interest............................. (138)
------
Present value of future payments......................... 1,073
Current portion of capital lease obligations............. 274
------
Noncurrent portion....................................... $ 799
======
</TABLE>
4. Redeemable Convertible Preferred Stock and Stockholders' Equity
Preferred Stock
Each share of preferred stock is, at the option of the holder, convertible
into one share of common stock, subject to certain adjustments for dilution, if
any, resulting from future stock issuances. The outstanding shares of preferred
stock automatically convert into common stock immediately prior to the closing
of an underwritten public offering of common stock under the Securities Act of
1933 in which Support.com receives at least $15,000,000 in gross proceeds and
the market valuation for Support.com is at least $125,000,000. Each class of
preferred stock automatically converts into common stock at the election of
holders of at least a majority of the outstanding shares.
F-15
<PAGE>
SUPPORT.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1999
As of December 31, 1999, convertible preferred stock consisted of the
following:
<TABLE>
<CAPTION>
Non-
cumulative Liquidation
Shares Shares Dividend Preference
Authorized Outstanding Per Share Per Share
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Series A....................... 3,571,600 3,571,600 $ -- $0.070
Series B....................... 7,346,108 7,346,108 $0.550 $0.687
Series C....................... 4,810,000 4,638,618 $0.262 $3.271
---------- ----------
15,727,708 15,556,326
========== ==========
</TABLE>
The holders of Series B and C preferred stock are entitled to receive
dividends payable in preference and priority to any payment of any dividend on
Series A preferred stock and common stock. No dividends have been declared as
of December 31, 1999.
The liquidation preference of the convertible preferred stock is subject to
appropriate adjustment in the event of any stock dividend, stock split,
combination, or other similar recapitalization affecting such share and, in
addition, an amount equal to all declared but unpaid dividends on the shares of
preferred stock. The liquidation preference of the Series B and C preferred
stock is increased at the rate, without compounding, of 8% per year, such rate
to be prorated over the length of any partial year. Any remaining assets would
then be distributed on a pro rata basis among the holders of common stock.
The majority of the holders of Series B redeemable convertible preferred
stock can require Support.com to redeem one-third, two-thirds, and all of the
outstanding Series B redeemable convertible preferred stock, together with a 8%
annual rate of return, at any time after June 19, 2003, June 19, 2004 and June
19, 2005. The carrying amount of Series B redeemable convertible preferred
stock is being increased by periodic accretions so that its carrying amount
will equal the redemption amount at the redemption date.
The majority of the holders of Series C redeemable convertible preferred
stock can require Support.com to redeem one-third, two-thirds, and all of the
outstanding Series C redeemable convertible preferred stock, together with a 8%
annual rate of return, at any time after June 14, 2004, June 14, 2005 and June
14, 2006. The carrying amount of Series C redeemable convertible preferred
stock is being increased by periodic accretions so that its carrying amount
will equal the redemption amount at the redemption date.
The preferred stockholders have voting rights equal to the common shares
issuable upon conversion of their preferred shares.
At December 31, 1998, Support.com had a receivable from a stockholder for
$250,229 in connection with the purchase of Series B preferred stock. The
receivable was included in prepaids and other currents assets. Support.com
collected the receivable during 1999.
F-16
<PAGE>
SUPPORT.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1999
Common Stock
Support.com has reserved shares of common stock for issuance at December 31,
1999 as follows:
<TABLE>
<S> <C>
Stock Option Plan................................................. 3,952,440
Warrants.......................................................... 164,483
Conversion of preferred stock..................................... 15,556,326
----------
19,673,249
==========
</TABLE>
During 1999, certain option holders exercised options to purchase 1,560,000
shares of common stock at prices ranging from $0.90 to $0.99, with a weighted-
average exercise price of $0.93 per share in exchange for four-year, full
recourse promissory notes. The notes bear interest at 5.9% and expire on
various dates through 2003. Support.com has the right to repurchase all
unvested shares purchased by the notes at the original exercise price in the
event of employee termination. The number of shares subject to this repurchase
right decreases as the shares vest under the original option terms, generally
over four years.
Subsequent to year end, an option holder exercised 1,680,189 options to
purchase shares of common stock in exchange for a four-year, full recourse
promissory note. The note has terms which are identical to the notes exercised
prior to year end. These options were exercised at a price per share of $0.40.
Stock Warrants
In October 1998 and July 1999, Support.com issued warrants to a financial
institution in conjunction with the loan and security agreement, subordinated
loan and security agreement and the master lease agreement (see Note 3). The
warrant issued in October 1998 allows the financial institution to purchase
98,511 shares of Support.com's Series C preferred stock at an exercise price of
$1.98 per share. The warrant issued in July 1999 allows the financial
institution to purchase 27,511 shares of Support.com's Series C preferred stock
at an exercise price of $3.27 per share. The warrants became exercisable in
June 1999 and July 1999, respectively. The warrants granted in July 1999 shall
be exercisable for a period of seven years or three years from the effective
date of Support.com's initial public offering, whichever is longer. The
warrants granted in October 1998 will expire 7 years from issuance or at the
time of Support.com's initial public offering. The warrants were valued using
the Black-Scholes model. In applying the Black-Scholes model, Support.com used
an expected dividend yield of zero, a risk-free interest rate of 6.5% and a
volatility factor of 0.5. The value of approximately $249,000 on the warrant
issued in 1998 and $59,000 on the warrant issued in 1999 is being amortized to
interest expense over the term of the financing agreements.
In August 1999, Support.com issued warrants to a lessor in conjunction with
a sublease agreement. The warrant allows the lessor to purchase 38,461 shares
of Support.com's Series C preferred stock at an exercise price of $6.50 per
share. The warrant is immediately exercisable and expires in November 2001 or
at the time of Support.com's initial public offering. The warrants were valued
using the Black-Scholes model. In applying the Black-Scholes model, Support.com
used an
F-17
<PAGE>
SUPPORT.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1999
expected dividend yield of zero, a risk-free interest rate of 6.5% and a
volatility factor of 0.5. The total value of approximately $35,000 is being
amortized to interest expense over the term of the lease agreements.
Restricted Common Stock
In 1999, Support.com issued 42,000 shares of restricted common stock to non-
employees and 180,000 shares of restricted common stock to two members of the
board of directors. Support.com has the right to repurchase all unvested shares
purchased at the original exercise price. The number of shares subject to this
repurchase right decreases as the shares vest under the original terms of the
restricted stock purchase agreements, generally over four years. As of December
31, 1999, there were 201,029 shares subject to repurchase. The restricted stock
was purchased at prices ranging from $0.10 to $0.90, with a weighted-average
exercise price of $0.17 per share.
The restricted stock issued to the directors was valued using the intrinsic
value method prescribed in APB 25. The restricted stock issued to non-employees
was valued using the Black-Scholes model prescribed in FAS 123 and EITF 96-18.
In applying the Black-Scholes model, Support.com used an expected dividend
yield of zero, a risk-free interest rate of 6.5%, a volatility factor of 0.5
and the deemed fair value of Support.com's common stock on the date such
restricted stock became vested. The restricted stock issued to non-employees is
subject to periodic re-valuation over the vesting terms. The total value of the
restricted stock which became fully vested in 1999 of approximately $123,000
was recognized as compensation expense in 1999.
1998 Stock Option Plan
During fiscal 1998, Support.com adopted the 1998 stock option plan (the
"plan"). Under the plan, up to 8,124,434 shares of Support.com's common stock
may be granted as options or sold to eligible participants. Under the plan,
options to purchase common stock may be granted at no less than 85% of the fair
value on the date of the grant (110% of fair value in certain instances), as
determined by the board of directors. Options under the plan are immediately
exercisable; however, shares issued are subject to Support.com's right to
repurchase such shares at the original issuance price, which lapses in a series
of installments measured from the vesting commencement date of the option.
Options generally vest and the repurchase rights lapse over a 48-month period
from the date of grant and have a maximum term of 10 years.
Pro forma information regarding net loss is required by FAS 123 and has been
determined as if Support.com had accounted for its employee stock options under
the fair value method of FAS 123. The fair value of these options was estimated
at the date of grant using the minimum value method with the following
weighted-average assumptions: risk-free interest rates of 6.5%; a dividend
yield of 0%; and a weighted-average expected life of the option of 4.5 years
for the years ended December 31, 1998 and 1999.
F-18
<PAGE>
SUPPORT.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1999
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the vesting period of the options using a
graded vesting method. The effects of applying FAS 123 for pro forma
disclosures are not likely to be representative of the effects on reported net
loss for future years.
Support.com's pro forma information follows (in thousands, except per share
amounts):
<TABLE>
<CAPTION>
Period from incorporation
on December 3, 1997 to Year ended
December 31, 1998 December 31, 1999
------------------------- -----------------
<S> <C> <C>
Net loss:
As reported.................. $(2,964) $(15,366)
Pro forma.................... (2,969) (15,468)
Basic and diluted net loss per
share:
As reported.................. $ (0.57) $ (2.31)
Pro forma.................... (0.57) (2.33)
</TABLE>
Information with respect to stock option activity is summarized as follows:
<TABLE>
<CAPTION>
Options Outstanding Weighted
Options ----------------------- Average
Available Number of Price Per Exercise
for Grant Shares Share Price
---------- ---------- ----------- --------
<S> <C> <C> <C> <C>
Shares authorized.............. 2,929,434 -- -- --
Options granted................ (2,343,250) 2,343,250 $ 0.10 $0.10
Options exercised.............. -- (40,000) $ 0.10 $0.10
Options canceled............... 95,000 (95,000) $ 0.10 $0.10
---------- ---------- -----------
Balance at December 31, 1998... 681,184 2,208,250 $ 0.10 $0.10
Shares authorized.............. 5,195,000 -- -- --
Options granted................ (6,326,139) 6,326,139 $0.10-$0.99 $0.57
Options exercised.............. -- (4,131,994) $0.10-$0.99 $0.46
Options canceled............... 457,500 (457,500) $0.10-$0.90 $0.23
---------- ---------- -----------
Balance at December 31, 1999... 7,545 3,944,895 $0.10-$0.90 $0.47
========== ========== ===========
</TABLE>
At December 31, 1998 and 1999, zero and 3,299,905 shares which had been
issued upon exercise of options were subject to repurchase. At December 31,
1998 and 1999, options to acquire 5,500 and 444,899 shares were vested but not
exercised.
F-19
<PAGE>
SUPPORT.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1999
Exercise prices for options outstanding as of December 31, 1999 and the
weighted-average remaining contractual life are as follows:
<TABLE>
<CAPTION>
Options Outstanding and Exercisable
-------------------------------------------------
Weighted-
Average
Remaining
Exercise Number of Contractual
Price Range Shares Life
----------- --------- -----------
(In years)
<S> <C> <C>
$0.10 764,556 7.79
$0.40 2,163,689 9.54
$0.90 1,016,650 9.68
--------- ----
3,944,895 9.22
========= ====
</TABLE>
The weighted-average fair value of options granted during 1998 was $0.02
and 1999 was $0.12.
Stock Compensation
During the period from incorporation December 31, 1997 to December 31, 1998
and for the year ended December 31, 1999, in connection with the grant of
certain share options to employees, Support.com recorded deferred stock
compensation of approximately $169,000 and $17.7 million, respectively,
representing the difference between the exercise price and the deemed fair
value of Support.com's common stock on the date such stock options were
granted. Such amounts are included as a reduction of stockholders' equity
(deficit) and are being amortized by charges to operations on a graded vesting
method. Support.com recorded amortization of deferred stock compensation
expense of approximately $16,000 in 1998 and $3.5 million in 1999. At December
31, 1999, Support.com had a total of approximately $14.3 million remaining to
be amortized over the corresponding vesting period of each respective option,
generally four years. The amortization expense relates to options awarded to
employees in all operating expense categories. This amount has not been
separately allocated to these categories.
5. Income Taxes
No provision for income taxes has been recorded as Support.com incurred net
operating losses for the period from incorporation on December 3, 1997 to
December 31, 1998 and for the year ended December 31, 1999. The following is a
reconciliation of the statutory federal income tax rate (35%) to Support.com's
effective income tax rate (In thousands):
<TABLE>
<CAPTION>
Period from incorporation
on December 3, 1997 to Year ended
December 31, 1998 December 31, 1999
------------------------- -----------------
<S> <C> <C>
Statutory federal income tax
expense (benefit)................ $(963) $(5,003)
Loss for which no tax benefit is
currently recognizable........... 963 5,003
----- -------
$ -- $ --
===== =======
</TABLE>
F-20
<PAGE>
SUPPORT.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1999
Significant components of Support.com's deferred tax assets are as follows
(in thousands):
<TABLE>
<CAPTION>
December 31,
----------------
1998 1999
------- -------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards......................... $ 1,000 $ 4,100
Deferred compensation.................................... -- 1,400
Other.................................................... 100 900
------- -------
Total deferred tax assets.............................. 1,100 6,400
Valuation allowances....................................... (1,100) (6,400)
------- -------
Net deferred tax assets.................................... $ -- $ --
======= =======
</TABLE>
Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes," provides for the recognition of deferred tax assets if realization of
such assets is more likely than not. Based upon the weight of available
evidence, which includes Support.com's historical operating performance and the
reported cumulative net losses in all periods, Support.com has provided a full
valuation allowance against its net deferred tax assets.
The valuation allowance increased by approximately $1.1 million during the
period from incorporation on December 3, 1997 to December 31, 1998 and $5.3
million during the year ended December 31, 1999.
As of December 31, 1999, Support.com had federal and state net operating
loss carryforwards each of approximately $10.1 million. The net operating loss
carryforwards will expire at various dates beginning in 2005 through 2019, if
not utilized.
Utilization of the net operating loss carryforwards may be subject to a
substantial annual limitation due to the "change in ownership" provisions of
the Internal Revenue Code and similar state provisions. The annual limitation
may result in the expiration of net operating loss carryforwards before
utilization.
6. Subsequent Events (Unaudited)
Initial Public Offering
In February 2000, the board of directors authorized the filing of a
registration statement with the Securities and Exchange Commission to register
shares of its common stock in connection with a proposed initial public
offering ("IPO"). If the offering is consummated under the terms presently
anticipated, all of the currently outstanding convertible preferred stock will
convert to shares of common stock upon the closing of the IPO on a one-for-one
basis. The effect of this conversion has been reflected as unaudited pro forma
stockholders' equity in the accompanying balance sheet at December 31, 1999.
In February 2000, the board of directors also authorized 5,000,000 shares of
undesignated preferred stock, for which the board of directors is authorized to
fix the designation, powers,
F-21
<PAGE>
SUPPORT.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1999
preferences and rights, and an increase in the authorized number of shares of
common stock to 150,000,000 shares.
2000 Employee Stock Purchase Plan
In February 2000, the board of directors approved the adoption of
Support.com's 2000 employee stock purchase plan (the "2000 purchase plan"). A
total of 2,000,000 shares of common stock have been reserved for issuance under
the 2000 purchase plan. On January 1 of each year, the number of shares
reserved automatically increases by the lesser of 2,000,000 shares, 3% of the
outstanding shares, or an amount determined by the board of directors. The 2000
purchase plan permits eligible employees to acquire shares of Support.com's
common stock through periodic payroll deductions of up to 15% of total
compensation. No more than 1,000 shares may be purchased on any purchase date
per employee. Each offering period will have a maximum duration of 24 months.
Purchases occur on the last day of each June and December of each offering
period. The price at which the common stock may be purchased is 85% of the
lesser of the fair market value of Support.com's common stock on each
employee's applicable enrollment date or on the last day of the respective
purchase period. The initial offering period commenced on the effectiveness of
the initial public offering and will end on the last business day of December
2001.
2000 Omnibus Equity Incentive Plan
In February 2000, the board of directors approved the adoption of
Support.com's 2000 omnibus equity incentive plan (the "2000 incentive plan"),
subject to stockholder approval. A total of 4,000,000 shares of common stock
have been reserved for issuance to eligible participants under the 2000
incentive plan. On January 1 of each year, the number of shares reserved
automatically increases by the lesser of 2,000,000 shares, 5% of outstanding
shares, or an amount determined by the board of directors. The types of awards
that may be made under the 2000 incentive plan include the grant of incentive
stock options, the grant of nonstatutory stock options and stock purchase
rights to employees, non-employee directors, advisors and consultants. Any
shares not yet issued under Support.com's 1998 stock option plan as of the date
of Support.com's IPO will be available for grant under the 2000 incentive plan.
The exercise price for incentive stock options may not be less than 100% of the
fair market value of Support.com's common stock on the date of grant (85% for
nonstatutory options).
Increase in Shares Available Under the 1998 Stock Option Plan
In February 2000, the board of directors authorized, and the stockholders
approved, an increase of 1,300,000 shares for issuance under Support.com's
stock option plan.
Equity Activity
From January 1, 2000 to March 30, 2000, options to purchase 1,168,067 shares
of common stock were granted to employees pursuant to the 1998 stock option
plan with exercise prices of between $2.00 and $8.00 per share. Support.com
estimates that additional deferred compensation of $4.9 million will be
recorded as a result of these option grants and will be amortized to expense in
F-22
<PAGE>
SUPPORT.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1999
accordance with Support.com's policy. Support.com also expects to incur non-
cash charges of at least $700,000 in the first quarter of 2000 associated with
other option arrangements.
In February 2000, Support.com issued warrants to a customer in conjunction
with a license agreement. The warrant allows the customer to purchase 119,167
shares of Support.com's Series C preferred stock at an exercise price of $18.00
per share. The warrant is immediately exercisable and expires in August 2002.
The warrants will be valued using the Black-Scholes valuation model. The value
of the warrants will be recorded as a reduction to license revenues as the
related revenues are recognized under the agreement.
Rescission Offer
Specific shares issued, and option grants made under, Support.com's 1998
stock option plan were not exempt from registration or qualification under
California state securities laws, and these stock issuances and option grants
violated the registration requirements of California state securities laws
because registration or qualification was not obtained. Support.com intends to
make a rescission offer of $0.01 per share to the holders of 2,931,150 shares
and options which will be held open for 30 days. If accepted, the rescission
offer could require Support.com to make payments of up to $200,000 as
consideration for the return of any such shares issued and options granted
including statutory interest.
F-23
<PAGE>
[Company Logo]
<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.............................................. $16,395
National Association of Securities Dealers, Inc. filing fee....... 6,710
Nasdaq National Market Listing Fee................................ 95,000
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 145 of the Delaware General Corporation Law 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 XI.B. of the
Registrant's Amended and Restated Certificate of Incorporation (Exhibit 3.1
hereto) and Article XII of the Registrant's Amended and Restated Bylaws
(Exhibit 3.2 hereto) provide for indemnification of the Registrant's
directors, officers, employees and other agents to the extent and under the
circumstances permitted by the Delaware General Corporation Law. The
Registrant has also entered into agreements with its directors and officers
that will require the Registrant, 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 not prohibited by law.
The Underwriting Agreement (Exhibit 1.1) provides for indemnification by the
Underwriters of the Registrant, its directors and officers, and by the
Registrant of the Underwriters, for certain liabilities, including liabilities
arising under the Act and affords certain rights of contribution with respect
thereto.
The Underwriting Agreement (Exhibit 1.1) provides for indemnification by
ourselves, 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 December 1997 to December 31, 1999, the Registrant issued and
sold 10,874,374 shares of common stock to employees, directors and
consultants at prices ranging from $0.0001 to $0.90 per share.
2. From December 8, 1997 to March 19, 1998, the Registrant issued and
sold 3,571,600 shares of Series A preferred stock to a total of 4 investors
for an aggregate purchase price of $250,012.00.
3. On June 22, 1998, the Registrant issued and sold 7,346,108 shares of
Series B preferred stock to a total of 9 investors for an aggregate
purchase price of $5,050,228.87.
4. On June 14, 1999, the Registrant issued and sold 4,638,618 shares of
Series C preferred stock to a total of 35 investors for an aggregate
purchase price of $15,175,147.93.
II-1
<PAGE>
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 a 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
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------- -----------------------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1** Amended and Restated Certificate of Incorporation, to be effective
upon consummation of this offering.
3.2** Amended and Restated Bylaws, to be effective upon consummation of this
offering.
3.3** Amended and Restated Certificate of Incorporation.
3.4** Certificate of Correction of the Amended and Restated Certificate of
Incorporation.
3.5** Bylaws.
4.1* Form of Common Stock Certificate.
4.2** Registration Rights Agreement, dated June 22, 1998, by and among the
registrant and the parties who are signatories thereto.
4.3** Amended and Restated Registration Rights Agreement, dated June 14,
1999, by and among the registrant and the parties who are signatories
thereto.
4.4** Warrant Agreement to Purchase Shares of Series C Convertible Preferred
Stock, dated July 12, 1999, by and between the registrant and
Comdisco, Inc.
4.5** Warrant Agreement to Purchase Shares of Series C Preferred Stock,
dated October 27, 1998, by and between the registrant and Comdisco,
Inc.
4.6** Warrant Agreement to Purchase Shares of Series C Preferred Stock,
dated October 27, 1998, by and between the registrant and Comdisco,
Inc.
4.7** Warrant Agreement to Purchase Shares of Series C Preferred Stock,
dated October 27, 1998, by and between the registrant and Comdisco,
Inc.
4.8** Letter Agreement, dated June 7, 1999, by and between the registrant
and Comdisco, Inc.
4.9** Warrant Agreement to Purchase Shares of Series C Preferred Stock by
and between the registrant and Excite, Inc.
4.10** Warrant Agreement to Purchase Shares of Series C Preferred Stock dated
February 17, 2000 by and between the registrant and General Electric
Company.
5.1* Opinion of Pillsbury Madison & Sutro LLP.
10.1** Registrant's Amended and Restated 1998 Stock Option Plan.
10.2** Registrant's 2000 Omnibus Equity Incentive Plan.
10.3 Registrant's 2000 Employee Stock Purchase Plan.
10.4** Form of Directors and Officers' Indemnification Agreement.
10.5** Employment Agreement, dated June 24, 1998, by and between the
registrant and Anthony C. Rodoni.
10.6** Employment Agreement, dated May 26, 1999, by and between the
registrant and Michael O'Rourke.
10.7** Employment Agreement, dated July 15, 1999, by and between the
registrant and Radha R. Basu.
10.8** Employment Agreement, dated August 16, 1999, by and between the
registrant and Scott Dale.
10.9** Employment Agreement, dated August 16, 1999, by and between the
registrant and Cadir Lee.
10.10** Employment Agreement, dated September 27, 1999, by and between the
registrant and Brian M. Beattie.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------- -----------------------
<C> <S>
10.11** Employment Agreement, dated December 7, 1999, by and between the
registrant and Jim Hilbert.
10.12** Employment Agreement, dated January 18, 2000, by and between the
registrant and Lucille Hoger.
10.13* Employment Agreement, dated February , 2000, by and between the
registrant and Mark Pincus.
10.14 Sublease Agreement, dated August 6, 1999, by and between the
registrant and Excite, Inc.
10.15+** Enterprise License Agreement, dated May 27, 1999, by and between the
registrant and Bear, Stearns & Co., Inc.
10.16+** Amendment No. 1 to Enterprise License Agreement, dated October 6,
1999, by and between the registrant and Bear, Stearns & Co., Inc.
10.17+** Enterprise License Agreement dated February 17, 2000 by and between
the registrant and General Electric Company.
10.18 Form of Proprietary Information and Inventions Agreement.
10.19+ OEM Agreement, dated July 14, 1994, by and between the registrant and
Excite@Home.
10.20+ Amendment to OEM Agreement, dated March , 2000, by and between the
registrant and Excite@Home.
10.21+ Reseller Agreement, dated March , 2000, by and between the
registrant and Samsung SDS Co. Ltd.
10.22+ Sale and License Agreement, dated March 20, 2000.
23.1 Consent of Ernst & Young LLP.
23.2* Consent of Pillsbury Madison & Sutro LLP (contained in their opinion
filed as Exhibit 5.1).
24.1** Power of Attorney.
27.1** Financial Data Schedule for Support.com, Inc.
99.1 Consent of Bear, Stearns & Co. Inc.
99.2 Consent of Excite@Home.
99.3 Consent of JCPenney.
99.4 Consent of Compaq Professional Services.
99.5 Consent of everdream.
</TABLE>
- --------
* To be filed by amendment.
** Previously Filed.
+ Confidential Treatment Requested. Confidential portions of the exhibit have
been omitted and filed separately with the Commission.
(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
II-3
<PAGE>
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 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-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment Number 2 to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Redwood City, State of California, on the 31st day of March, 2000.
Support.Com, Inc.
/s/ Radha Ramaswami Basu
By __________________________________
Radha Ramaswami Basu
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/ Radha Ramaswami Basu President, Chief Executive March 31, 2000
____________________________________ Officer and Director
Radha Ramaswami Basu (Principal Executive
Officer)
/s/ Brian M. Beattie Senior Vice President of March 31, 2000
____________________________________ Finance and Administration,
Brian M. Beattie Chief Financial Officer
(Principal Financial Officer
and Principal Accounting
Officer)
* Director March 31, 2000
____________________________________
Mark J. Pincus
* Director March 31, 2000
____________________________________
Matthew T. Cowan
* Director March 31, 2000
____________________________________
William L. Dunn
* Director March 31, 2000
____________________________________
Bruce Golden
* Director March 31, 2000
____________________________________
Edward S. Russell
* Director March 31, 2000
____________________________________
Roger J. Sippl
</TABLE>
/s/ Radha Ramaswami
Basu
*By:___________________________
Radha Ramaswami Basu
(Attorney-in-Fact)
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------- -----------------------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1** Amended and Restated Certificate of Incorporation, to be effective
upon consummation of this offering.
3.2** Amended and Restated Bylaws, to be effective upon consummation of
this offering.
3.3** Amended and Restated Certificate of Incorporation.
3.4** Certificate of Correction of the Amended and Restated Certificate of
Incorporation.
3.5** Bylaws.
4.1* Form of Common Stock Certificate.
4.2** Registration Rights Agreement, dated June 22, 1998, by and among the
registrant and the parties who are signatories thereto.
4.3** Amended and Restated Registration Rights Agreement, dated June 14,
1999, by and among the registrant and the parties who are signatories
thereto.
4.4** Warrant Agreement to Purchase Shares of Series C Convertible
Preferred Stock, dated July 12, 1999, by and between the registrant
and Comdisco, Inc.
4.5** Warrant Agreement to Purchase Shares of Series C Preferred Stock,
dated October 27, 1998, by and between the registrant and Comdisco,
Inc.
4.6** Warrant Agreement to Purchase Shares of Series C Preferred Stock,
dated October 27, 1998, by and between the registrant and Comdisco,
Inc.
4.7** Warrant Agreement to Purchase Shares of Series C Preferred Stock,
dated October 27, 1998, by and between the registrant and Comdisco,
Inc.
4.8** Letter Agreement, dated June 7, 1999, by and between the registrant
and Comdisco, Inc.
4.9** Warrant Agreement to Purchase Shares of Series C Preferred Stock by
and between the registrant and Excite, Inc.
4.10** Warrant Agreement to Purchase Shares of Series C Preferred Stock
dated February 17, 2000 by and between the registrant and General
Electric Company.
5.1* Opinion of Pillsbury Madison & Sutro LLP.
10.1** Registrant's Amended and Restated 1998 Stock Option Plan.
10.2** Registrant's 2000 Omnibus Equity Incentive Plan.
10.3 Registrant's 2000 Employee Stock Purchase Plan.
10.4** Form of Directors and Officers' Indemnification Agreement.
10.5** Employment Agreement, dated June 24, 1998, by and between the
registrant and Anthony C. Rodoni.
10.6** Employment Agreement, dated May 26, 1999, by and between the
registrant and Michael O'Rourke.
10.7** Employment Agreement, dated July 15, 1999, by and between the
registrant and Radha R. Basu.
10.8** Employment Agreement, dated August 16, 1999, by and between the
registrant and Scott Dale.
10.9** Employment Agreement, dated August 16, 1999, by and between the
registrant and Cadir Lee.
10.10** Employment Agreement, dated September 27, 1999, by and between the
registrant and Brian M. Beattie.
10.11** Employment Agreement, dated December 7, 1999, by and between the
registrant and Jim Hilbert.
10.12** Employment Agreement, dated January 18, 2000, by and between the
registrant and Lucille Hoger.
10.13* Employment Agreement, dated February , 2000, by and between the
registrant and Mark Pincus.
10.14 Sublease Agreement, dated August 6, 1999, by and between the
registrant and Excite, Inc.
10.15+** Enterprise License Agreement, dated May 27, 1999, by and between the
registrant and Bear, Stearns & Co., Inc.
</TABLE>
<PAGE>
EXHIBIT INDEX--(Continued)
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------- -----------------------
<C> <S>
10.16+** Amendment No. 1 to Enterprise License Agreement, dated October 6,
1999, by and between the registrant and Bear, Stearns & Co., Inc.
10.17+** Enterprise License Agreement dated February 17, 2000 by and between
the registrant and General Electric Company.
10.18 Form of Proprietary Information and Inventions Agreement.
10.19+ OEM Agreement, dated July 14, 1994, by and between the registrant
and Excite@Home.
10.20+ Amendment to OEM Agreement, dated March , 2000, by and between the
registrant and Excite@Home.
10.21+ Reseller Agreement, dated March , 2000, by and between the
registrant and Samsung SDS Co. Ltd.
10.22+ Sale and License Agreement, dated March 20, 2000.
23.1 Consent of Ernst & Young LLP.
23.2* Consent of Pillsbury Madison & Sutro LLP (contained in their opinion
filed as Exhibit 5.1).
24.1** Power of Attorney.
27.1** Financial Data Schedule for Support.com, Inc.
99.1 Consent of Bear, Stearns & Co. Inc.
99.2 Consent of Excite@Home.
99.3 Consent of JC Penney.
99.4 Consent of Compaq Professional Services.
99.5 Consent of everdream.
</TABLE>
- --------
* To be filed by amendment.
** Previously Filed.
+ Confidential Treatment Requested. Confidential portions of the exhibit have
been omitted and filed separately with the Commission.
<PAGE>
EXHIBIT 10.3
SUPPORT.COM, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
(Adopted by the Board on February 15, 2000)
<PAGE>
Table of Contents
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1 Purpose Of The Plan................................................................................. 1
SECTION 2 Definitions......................................................................................... 1
(a) "Accumulation Period............................................................................ 1
(b) "Board"......................................................................................... 1
(c) "Code".......................................................................................... 1
(d) "Committee"..................................................................................... 1
(e) "Company"....................................................................................... 1
(f) "Compensation".................................................................................. 1
(g) "Corporate Reorganization"...................................................................... 1
(h) "Eligible Employee"............................................................................. 2
(i) "Exchange Act".................................................................................. 2
(j) "Fair Market Value"............................................................................. 2
(k) "IPO"........................................................................................... 2
(l) "Offering Period"............................................................................... 2
(m) "Participant"................................................................................... 2
(n) "Participating Company"......................................................................... 2
(o) "Plan".......................................................................................... 2
(p) "Plan Account".................................................................................. 2
(q) "Purchase Price"................................................................................ 3
(r) "Stock"......................................................................................... 3
(s) "Subsidiary".................................................................................... 3
SECTION 3 Administration Of The Plan.......................................................................... 3
(a) Committee Composition........................................................................... 3
(b) Committee Responsibilities...................................................................... 3
SECTION 4 Enrollment And Participation........................................................................ 3
(a) Offering Periods................................................................................ 3
(b) Accumulation Periods............................................................................ 3
(c) Enrollment...................................................................................... 3
(d) Duration of Participation....................................................................... 3
(e) Applicable Offering Period...................................................................... 4
SECTION 5 Employee Contributions.............................................................................. 4
(a) Frequency of Payroll Deductions................................................................. 4
(b) Amount of Payroll Deductions.................................................................... 4
(c) Changing Withholding Rate....................................................................... 4
(d) Discontinuing Payroll Deductions................................................................ 4
(e) Limit on Number of Elections.................................................................... 5
SECTION 6 Withdrawal From The Plan............................................................................ 5
(a) Withdrawal...................................................................................... 5
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
(b) Re-enrollment After Withdrawal.................................................................. 5
SECTION 7 Change In Employment Status......................................................................... 5
(a) Termination of Employment....................................................................... 5
(b) Leave of Absence................................................................................ 5
(c) Death........................................................................................... 5
SECTION 8 Plan Accounts And Purchase Of Shares................................................................ 5
(a) Plan Accounts................................................................................... 5
(b) Purchase Price.................................................................................. 5
(c) Number of Shares Purchased...................................................................... 6
(d) Available Shares Insufficient................................................................... 6
(e) Issuance of Stock............................................................................... 6
(f) Unused Cash Balances............................................................................ 6
(g) Stockholder Approval............................................................................ 6
SECTION 9 Limitations On Stock Ownership...................................................................... 7
(a) Five Percent Limit.............................................................................. 7
(b) Dollar Limit.................................................................................... 7
SECTION 10 Rights Not Transferable............................................................................. 7
SECTION 11 No Rights As An Employee............................................................................ 7
SECTION 12 No Rights As A Stockholder.......................................................................... 8
SECTION 13 Securities Law Requirements......................................................................... 8
SECTION 14 Stock Offered Under The Plan........................................................................ 8
(a) Authorized Shares............................................................................... 8
(b) Antidilution Adjustments........................................................................ 8
(c) Reorganizations................................................................................. 8
SECTION 15 Amendment Or Discontinuance......................................................................... 8
SECTION 16 Execution........................................................................................... 9
</TABLE>
-ii-
<PAGE>
SUPPORT.COM, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
SECTION 1 Purpose Of The Plan.
- -----------------------------
The Plan was adopted by the Board on February 15, 2000, effective as of the
date of the IPO. The purpose of the Plan is to provide Eligible Employees with
an opportunity to increase their proprietary interest in the success of the
Company by purchasing Stock from the Company on favorable terms and to pay for
such purchases through payroll deductions. The Plan is intended to qualify
under section 423 of the Code.
SECTION 2 Definitions.
- ---------------------
(a) "Accumulation Period" means a six-month period during which
-------------------
contributions may be made toward the purchase of Stock under the Plan, as
determined pursuant to Section 4(b).
(b) "Board" means the Board of Directors of the Company, as constituted
-----
from time to time.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
----
(d) "Committee" means a committee of the Board, as described in Section 3.
---------
(e) "Company" means Support.com, Inc., a Delaware Corporation.
-------
(f) "Compensation" means (i) the total compensation paid in cash to a
------------
Participant by a Participating Company, including salaries, wages, bonuses,
incentive compensation, commissions, overtime pay and shift premiums, plus (ii)
any pre-tax contributions made by the Participant under section 401(k) or 125 of
the Code. "Compensation" shall exclude all non-cash items, moving or relocation
allowances, cost-of-living equalization payments, car allowances, tuition
reimbursements, imputed income attributable to cars or life insurance, severance
pay, fringe benefits, contributions or benefits received under employee benefit
plans, income attributable to the exercise of stock options, and similar items.
The Committee shall determine whether a particular item is included in
Compensation.
(g) "Corporate Reorganization" means:
------------------------
(i) The consummation of a merger or consolidation of the Company with
or into another entity, or any other corporate reorganization; or
(ii) The sale, transfer or other disposition of all or substantially
all of the Company's assets or the complete liquidation or dissolution of
the Company.
-1-
<PAGE>
(h) "Eligible Employee" means any employee of a Participating Company
-----------------
customary employment is for more than five months per calendar year and for
more than 20 hours per week.
The foregoing notwithstanding, an individual shall not be considered an
Eligible Employee if his or her participation in the Plan is prohibited by the
law of any country which has jurisdiction over him or her or if he or she is
subject to a collective bargaining agreement that does not provide for
participation in the Plan.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
(j) "Fair Market Value" means the market price of Stock, determined by the
-----------------
Committee as follows:
(i) If Stock was traded on The Nasdaq National Market on the date
in question, then the Fair Market Value shall be equal to the last-
transaction price quoted for such date by The Nasdaq National Market;
(ii) If Stock was traded on a stock exchange on the date in
question, then the Fair Market Value shall be equal to the closing price
reported by the applicable composite transactions report for such date; or
(iii) If none of the foregoing provisions is applicable, then the
Fair Market Value shall be determined by the Committee in good faith on
such basis as it deems appropriate.
Whenever possible, the determination of Fair Market Value by the Committee
shall be based on the prices reported in the Wall Street Journal or as reported
-------------------
directly to the Company by Nasdaq or a stock exchange. Such determination shall
be conclusive and binding on all persons.
(k) "IPO" means the initial offering of Stock to the public pursuant to a
---
registration statement filed by the Company with the Securities and Exchange
Commission.
(l) "Offering Period" means a 24-month period with respect to which the
---------------
right to purchase Stock may be granted under the Plan, as determined pursuant to
Section 4(a).
(m) "Participant" means an Eligible Employee who elects to participate in
-----------
the Plan, as provided in Section 4(c).
(n) "Participating Company" means (i) the Company and (ii) each present or
---------------------
future Subsidiary designated by the Committee as a Participating Company.
(o) "Plan" means this Support.com, Inc. 2000 Employee Stock Purchase Plan,
----
as it may be amended from time to time.
(p) "Plan Account" means the account established for each Participant
------------
pursuant to Section 8(a).
-2-
<PAGE>
(q) "Purchase Price" means the price at which Participants may purchase
--------------
Stock under the Plan, as determined pursuant to Section 8(b).
(r) "Stock" means the Common Stock of the Company.
-----
(s) "Subsidiary" means any corporation (other than the Company) in an
----------
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
SECTION 3 Administration Of The Plan.
- -------------------------------------
(a) Committee Composition. The Plan shall be administered by the
---------------------
Committee. The Committee shall consist exclusively of one or more directors of
the Company, who shall be appointed by the Board.
(b) Committee Responsibilities. The Committee shall interpret the Plan
--------------------------
and make all other policy decisions relating to the operation of the Plan. The
Committee may adopt such rules, guidelines and forms as it deems appropriate to
implement the Plan. The Committee's determinations under the Plan shall be final
and binding on all persons.
SECTION 4 Enrollment And Participation.
- ---------------------------------------
(a) Offering Periods. While the Plan is in effect, two Offering Periods
----------------
shall commence in each calendar year. The Offering Periods shall consist of the
24-month periods commencing on each January 1 and July 1, except that the first
------
Offering Period shall commence on the date of the IPO and end on December 31,
2001.
(b) Accumulation Periods. While the Plan is in effect, two Accumulation
--------------------
Periods shall commence in each calendar year. The Accumulation Periods shall
consist of the six month periods commencing on January 1 and July 1, except that
the first Accumulation Period shall commence on the date of the IPO and end on
June 30, 2000.
(c) Enrollment. Any individual who, on the day preceding the first day of
----------
an Offering Period, qualifies as an Eligible Employee may elect to become a
Participant in the Plan for such Offering Period by executing the enrollment
form prescribed for this purpose by the Committee. The enrollment form shall be
filed with the Company at the prescribed location not later than 15 days prior
to the commencement of such Offering Period.
(d) Duration of Participation. Once enrolled in the Plan, a Participant
-------------------------
shall continue to participate in the Plan until he or she ceases to be an
Eligible Employee, withdraws from the Plan under Section 5(a) or reaches the end
of the Offering Period in which his or her employee contributions were
discontinued under Section 5(d) or 9(b). A Participant who discontinued employee
contributions under Section 5(d) or 9(b) or withdrew from the Plan under Section
6(a) may again become a Participant, if he or she then is an Eligible Employee,
by following the procedure described in Subsection (c) above. A Participant
whose employee contributions were discontinued automatically under Section 9(b)
shall automatically resume participation at the
-3-
<PAGE>
beginning of the earliest Offering Period ending in the next calendar year, if
he or she then is an Eligible Employee.
(e) Applicable Offering Period. For purposes of calculating the purchase
--------------------------
price under Section 8(b), the applicable Offering Period shall be determined as
follows:
(i) Once a Participant is enrolled in the Plan for an Offering
Period, such Offering Period shall continue to apply to him or her until
the earliest of: (A) the end of such Offering Period; (B) the end of his or
her participation under Subsection (d) above; or (C) re-enrollment in a
subsequent Offering Period under Paragraph (ii) below.
(ii) In the event that the Fair Market Value of Stock on the last
trading day before the commencement of the Offering Period in which the
Participant is enrolled is higher than on the last trading day before the
commencement of any subsequent Offering Period, the Participant shall
automatically be re-enrolled for such subsequent Offering Period.
(iii) When a Participant reaches the end of an Offering Period but
his or her participation is to continue, then such Participant shall
automatically be re-enrolled for the Offering Period that commences
immediately after the end of the prior Offering Period.
SECTION 5 Employee Contributions.
- ---------------------------------
(a) Frequency of Payroll Deductions. A Participant may purchase shares of
-------------------------------
Stock under the Plan solely by means of payroll deductions. Payroll deductions,
as designated by the Participant pursuant to Subsection (b) below, shall occur
on each payday during participation in the Plan.
(b) Amount of Payroll Deductions. An Eligible Employee shall designate on
----------------------------
the enrollment form the portion of his or her Compensation that he or she elects
to have withheld for the purchase of Stock. Such portion shall be a whole
percentage of the Eligible Employee's Compensation, but not less than 1% nor
more than 15%.
(c) Changing Withholding Rate. If a Participant wishes to change the
-------------------------
rate of payroll withholding, he or she may do so by filing a new enrollment form
with the Company at the prescribed location at any time. The new withholding
rate shall be effective as soon as reasonably practicable after such form has
been received by the Company. The new withholding rate shall be a whole
percentage of the Eligible Employee's Compensation, but not less than 1% nor
more than 15%.
(d) Discontinuing Payroll Deductions. If a Participant wishes to
--------------------------------
discontinue employee contributions entirely, he or she may do so by filing a new
enrollment form with the Company at the prescribed location at any time. Payroll
withholding shall cease as soon as reasonably practicable after such form has
been received by the Company. (In addition, employee contributions may be
discontinued automatically pursuant to Section 9(b)). A Participant who has
discontinued employee contributions may resume such contributions by filing a
new enrollment form with the Company at the prescribed location. Payroll
withholding
-4-
<PAGE>
shall resume as soon as reasonably practicable after such form has been received
by the Company.
(e) Limit on Number of Elections. No Participant shall make more than two
----------------------------
elections under Subsection (c) or (d) above during any Offering Period.
SECTION 6 Withdrawal From The Plan.
- -----------------------------------
(a) Withdrawal. A Participant may elect to withdraw from the Plan by
----------
filing the prescribed form with the Company at the prescribed location at any
time before the last day of an Accumulation Period. As soon as reasonably
practicable thereafter, payroll deductions shall cease and the entire amount
credited to the Participant's Plan Account shall be refunded to him or her in
cash, without interest. No partial withdrawals shall be permitted.
(b) Re-enrollment After Withdrawal. A former Participant who has
------------------------------
withdrawn from the Plan shall not be a Participant until he or she re-enrolls in
the Plan under Section 4(c). Re-enrollment may be effective only at the
commencement of an Offering Period.
SECTION 7 Change In Employment Status.
- --------------------------------------
(a) Termination of Employment. Termination of employment as an Eligible
-------------------------
Employee for any reason, including death, shall be treated as an automatic
withdrawal from the Plan under Section 6(a). (A transfer from one Participating
Company to another shall not be treated as a termination of employment.)
(b) Leave of Absence. For purposes of the Plan, employment shall not be
----------------
deemed to terminate when the Participant goes on a military leave, a sick leave
or another bona fide leave of absence, if the leave was approved by the Company
in writing. Employment, however, shall be deemed to terminate ninety (90) days
after the Participant goes on a leave, unless a contract or statute guarantees
his or her right to return to work. Employment shall be deemed to terminate in
any event when the approved leave ends, unless the Participant immediately
returns to work.
(c) Death. In the event of the Participant's death, the amount credited
-----
to his or her Plan Account shall be paid to a beneficiary designated by him or
her for this purpose on the prescribed form or, if none, to the Participant's
estate. Such form shall be valid only if it was filed with the Company at the
prescribed location before the Participant's death.
SECTION 8 Plan Accounts And Purchase Of Shares.
- -----------------------------------------------
(a) Plan Accounts. The Company shall maintain a Plan Account on its books
-------------
in the name of each Participant. Whenever an amount is deducted from the
Participant's Compensation under the Plan, such amount shall be credited to the
Participant's Plan Account. Amounts credited to Plan Accounts shall not be trust
funds and may be commingled with the Company's general assets and applied to
general corporate purposes. No interest shall be credited to Plan Accounts.
(b) Purchase Price. The Purchase Price for each share of Stock purchased
--------------
at the close of an Accumulation Period shall be the lower of:
-5-
<PAGE>
(i) 85% of the Fair Market Value of such share on the last trading
day in such Accumulation Period; or
(ii) 85% of the Fair Market Value of such share on the last trading
day before the commencement of the applicable Offering Period (as
determined under Section 4(e)) or, in the case of the first Offering Period
under the Plan, 85% of the price at which one share of Stock is offered to
the public in the IPO.
(c) Number of Shares Purchased. As of the last day of each Accumulation
--------------------------
Period, each Participant shall be deemed to have elected to purchase the number
of shares of Stock calculated in accordance with this Subsection (c), unless the
Participant has previously elected to withdraw from the Plan in accordance with
Section 6(a). The amount then in the Participant's Plan Account shall be divided
by the Purchase Price, and the number of shares that results shall be purchased
from the Company with the funds in the Participant's Plan Account. The foregoing
notwithstanding, no Participant shall purchase more than 1,000 shares of Stock
with respect to any Accumulation Period nor more than the amounts of Stock set
forth in Sections 9(b) and 14(a). The Committee may determine with respect to
all Participants that any fractional share, as calculated under this Subsection
(c), shall be (i) rounded down to the next lower whole share or (ii) credited as
a fractional share.
(d) Available Shares Insufficient. In the event that the aggregate number
-----------------------------
of shares that all Participants elect to purchase during an Accumulation Period
exceeds the maximum number of shares remaining available for issuance under
Section 14(a), then the number of shares to which each Participant is entitled
shall be determined by multiplying the number of shares available for issuance
by a fraction, the numerator of which is the number of shares that such
Participant has elected to purchase and the denominator of which is the number
of shares that all Participants have elected to purchase.
(e) Issuance of Stock. Certificates representing the shares of Stock
-----------------
purchased by a Participant under the Plan shall be issued to him or her as soon
as reasonably practicable after the close of the applicable Accumulation Period,
except that the Committee may determine that such shares shall be held for each
Participant's benefit by a broker designated by the Committee (unless the
Participant has elected that certificates be issued to him or her). Shares may
be registered in the name of the Participant or jointly in the name of the
Participant and his or her spouse as joint tenants with right of survivorship or
as community property.
(f) Unused Cash Balances. An amount remaining in the Participant's Plan
--------------------
Account that represents the Purchase Price for any fractional share shall be
carried over in the Participant's Plan Account to the next Accumulation Period.
Any amount remaining in the Participant's Plan Account that represents the
Purchase Price for whole shares that could not be purchased by reason of
Subsection (c) above, Section 9(b) or Section 14(a) shall be refunded to the
Participant in cash, without interest.
(g) Stockholder Approval. Any other provision of the Plan
--------------------
notwithstanding, no shares of Stock shall be purchased under the Plan unless and
until the Company's stockholders have approved the adoption of the Plan.
-6-
<PAGE>
SECTION 9 Limitations On Stock Ownership.
- -------------------------------------------
(a) Five Percent Limit. Any other provision of the Plan
------------------
notwithstanding, no Participant shall be granted a right to purchase Stock under
the Plan if such Participant, immediately after his or her election to purchase
such Stock, would own stock possessing more than 5% of the total combined voting
power or value of all classes of stock of the Company or any parent or
Subsidiary of the Company. For purposes of this Subsection (a), the following
rules shall apply:
(i) Ownership of stock shall be determined after applying the
attribution rules of section 424(d) of the Code;
(ii) Each Participant shall be deemed to own any stock that he or
she has a right or option to purchase under this or any other plan; and
(iii) Each Participant shall be deemed to have the right to purchase
1,000 shares of Stock under this Plan with respect to each Accumulation
Period.
(b) Dollar Limit. Any other provision of the Plan notwithstanding, no
------------
Participant shall purchase Stock with a Fair Market Value in excess of the
following limit:
Any other provision of the Plan notwithstanding, no Participant shall
purchase Stock with a Fair Market Value in excess of $25,000 per calendar year
(under this Plan and all other employee stock purchase plans of the Company or
any parent or Subsidiary of the Company).
For purposes of this Subsection (b), the Fair Market Value of Stock shall
be determined in each case as of the beginning of the Offering Period in which
such Stock is purchased. Employee stock purchase plans not described in section
423 of the Code shall be disregarded. If a Participant is precluded by this
Subsection (b) from purchasing additional Stock under the Plan, then his or her
employee contributions shall automatically be discontinued and shall resume at
the beginning of the earliest Accumulation Period ending in the next calendar
year (if he or she then is an Eligible Employee).
SECTION 10 Rights Not Transferable.
- -----------------------------------
The rights of any Participant under the Plan, or any Participant's interest
in any Stock or moneys to which he or she may be entitled under the Plan, shall
not be transferable by voluntary or involuntary assignment or by operation of
law, or in any other manner other than by beneficiary designation or the laws of
descent and distribution. If a Participant in any manner attempts to transfer,
assign or otherwise encumber his or her rights or interest under the Plan, other
than by beneficiary designation or the laws of descent and distribution, then
such act shall be treated as an election by the Participant to withdraw from the
Plan under Section 6(a).
SECTION 11 No Rights As An Employee
- ------------------------------------
Nothing in the Plan or in any right granted under the Plan shall confer
upon the Participant any right to continue in the employ of a Participating
Company for any period of specific duration or interfere with or otherwise
restrict in any way the rights of the Participating
-7-
<PAGE>
Companies or of the Participant, which rights are hereby expressly reserved by
each, to terminate his or her employment at any time and for any reason, with or
without cause.
SECTION 12 No Rights As A Stockholder.
- --------------------------------------
A Participant shall have no rights as a stockholder with respect to any
shares of Stock that he or she may have a right to purchase under the Plan until
such shares have been purchased on the last day of the applicable Offering
Period.
SECTION 13 Securities Law Requirements.
- ---------------------------------------
Shares of Stock shall not be issued under the Plan unless the issuance and
delivery of such shares comply with (or are exempt from) all applicable
requirements of law, including (without limitation) the Securities Act of 1933,
as amended, the rules and regulations promulgated thereunder, state securities
laws and regulations, and the regulations of any stock exchange or other
securities market on which the Company's securities may then be traded.
SECTION 14 Stock Offered Under The Plan.
- ----------------------------------------
(a) Authorized Shares. The maximum aggregate number of shares of Stock
-----------------
available for purchase under the Plan is two million (2,000,000), plus an annual
increase to be added on the first day of the Company's fiscal year beginning in
2001 equal to the lesser of (i) two million (2,000,000) shares, (ii) 3% of the
outstanding shares on such date or (iii) a lesser amount determined by the
Board. The aggregate number of Shares available for purchase under the Plan
shall at all times be subject to adjustment pursuant to Section 14.
(b) Antidilution Adjustments. The aggregate number of shares of Stock
------------------------
offered under the Plan, the 1,000 share limitation described in Section 8(c) and
the price of shares that any Participant has elected to purchase shall be
adjusted proportionately by the Committee for any increase or decrease in the
number of outstanding shares of Stock resulting from a subdivision or
consolidation of shares or the payment of a stock dividend, any other increase
or decrease in such shares effected without receipt or payment of consideration
by the Company, the distribution of the shares of a Subsidiary to the Company's
stockholders or a similar event.
(c) Reorganizations. Any other provision of the Plan notwithstanding,
---------------
immediately prior to the effective time of a Corporate Reorganization, the
Offering Period then in progress shall terminate and shares shall be purchased
pursuant to Section 8, unless the Plan is assumed by the surviving corporation
or its parent corporation pursuant to the plan of merger or consolidation. The
Plan shall in no event be construed to restrict in any way the Company's right
to undertake a dissolution, liquidation, merger, consolidation or other
reorganization.
SECTION 15 Amendment Or Discontinuance.
- ---------------------------------------
The Board shall have the right to amend, suspend or terminate the Plan at
any time and without notice. Except as provided in Section 14, any increase in
the aggregate number of shares of Stock to be issued under the Plan shall be
subject to approval by a vote of the stockholders of the Company. In addition,
any other amendment of the Plan shall be subject to approval by a
-8-
<PAGE>
vote of the stockholders of the Company to the extent required by an applicable
law or regulation.
SECTION 16 Execution.
- ---------------------
To record the adoption of the Plan by the Board on February 15, 2000, the
Company has caused its authorized officer to execute the same.
Support.com, Inc.
By: _____________________________
Title: __________________________
Title: __________________________
-9-
<PAGE>
EXHIBIT 10.14
SUBLEASE
1. Parties:
This Sublease is made and entered into as of August 6,1999 by and between
Excite, Inc. ("Sublandlord") and Tioga Systems, Inc., a Delaware Corporation,
("Subtenant") under the Master Lease dated March 14, 1997 as amended by the
First Amendment To Lease dated October 1, 1997 (as amended, the "Master Lease")
between Martin/Campus Associates, L.P., as "Lessor" and Sublandlord under this
Sublease as "Lessee". A copy of the Master Lease is attached hereto as
Attachment I and incorporated herein by this reference.
2. Provisions Constituting Sublease:
2.1 This Sublease is subject and subordinate to all of the terms and
conditions of the Master Lease. Subtenant hereby assumes and agrees to perform
all of the obligations of "Lessee" under the Master Lease to the extent said
obligations apply to the Subleased Premises and Subtenant's use of the Common
Areas, except as specifically set forth herein. Sublandlord hereby agrees to
use commercially reasonable efforts to cause Lessor to perform all of the
obligations of Lessor under the Master Lease to the extent said obligations
apply to the Subleased Premises and Subtenant's use of the Common Areas.
Subtenant shall not commit or permit to be committed on the Subleased Premises
or on any other portion of the Project any act or omission which violates any
term or condition of the Master Lease. Except to the extent waived or consented
to in writing by the other party or parties hereto who are affected thereby,
neither of the parties hereto will, by renegotiation of the Master Lease,
assignment, subletting, default or any other voluntary action, avoid or seek to
avoid the observance or performance of the terms to be observed or performed
hereunder by such party, but will at all times in good faith assist in carrying
out all the terms of this Sublease and in taking all such action as may be
necessary or appropriate to protect the rights of the other party or parties
hereto who are affected thereby against impairment. Nothing contained in this
Section 2.1 or elsewhere in this Sublease: (i) shall obligate Sublandlord to
exercise its option to extend the Term of the Master Lease; or (ii) shall
prevent or prohibit Sublandlord (a) from exercising its right to terminate the
Master Lease pursuant to paragraph 23 thereof or (b) from assigning its interest
in this Sublease or subletting the Premises to any other third party.
2.2 All of the terms and conditions contained in the Master Lease are
incorporated herein, except as specifically provided below, and such terms and
conditions, together with the terms and conditions specifically set forth in
this Sublease, shall constitute the complete terms and conditions of this
Sublease, except the following paragraphs of the Master Lease which shall remain
solely the rights and obligations of Sublandlord: 1, 4, 5, 7, 9, 15, 16, 17, 35,
Work Letter C, Exhibit D and E.
3. Subleased Premises and Rent:
3.1 Subleased Premises: Sublandlord leases to Subtenant and
------------------
Subtenant leases from Sublandlord the Subleased Premises upon all of the terms,
covenants and conditions contained in this Sublease. The Subleased Premises
consist of those portions of the premises located at 575 Broadway, Redwood City,
CA, as displayed in the floor plan attached hereto as Exhibit A, of
---------
approximately 23,216=/- square feet.
<PAGE>
3.2 Rent: Subtenant shall pay to Sublandlord as Full Service Rent
----
for the Subleased Premises the sum of Eighty-One Thousand Two Hundred Fifty-Six
Dollars ($81,256.00) per month, without deductions, prior notice or demand. Rent
shall be payable by Subtenant to Sublandlord in consecutive monthly installments
on or before the first (1st) day of each calendar month from September 1, 1999
through August 14, 2000. Effective September 1, 2000 through August 14, 2001,
the monthly Full Service Rent shall be increased to Eighty-Three Thousand Five
Hundred Seventy-Eight Dollars ($83,578.00). If the Sublease Commencement Date or
the Termination Date of the Sublease occurs on a date other than the first (1st)
day of a calendar month, then the Rent for such partial month shall be prorated
and the prorated Rent shall be payable on the Sublease Commencement Date or on
the first (1st) day of the calendar month in which the Sublease Termination Date
occurs, respectively.
3.3 Security Deposit: In addition to the Rent specified above,
----------------
Subtenant shall pay to Sublandlord, upon execution of this Sublease, an
equivalent of one month's Rent, the sum of Eighty-One Thousand Two Hundred
Fifty-Six Dollars ($81,256.00), as a non-interest bearing Security Deposit.
Sublandlord may commingle the Security Deposit with its other funds and is not a
trustee of the Security Deposit. Subtenant is not entitled to interest on the
Security Deposit. Sublandlord may use the Security Deposit to cure Subtenant's
defaults and to compensate Sublandlord for damages suffered by reason of
Subtenant's defaults. If Sublandlord so uses a portion of the Security Deposit,
Subtenant must replenish the Security Deposit to its full amount within five (5)
days after written demand. The Security Deposit shall not be applied by
Subtenant against the last month's Rent. In the event Subtenant has performed
all of the terms and conditions of this Sublease during the term hereof,
Sublandlord shall return to Subtenant, within ten (10) days after Subtenant has
vacated the Subleased Premises, the Security Deposit less any sums due and owing
to Sublandlord.
4. Use:
Subtenant shall use the Subleased Premises only for those purposes
permitted in the Master Lease, unless Sublandlord and Lessor consent in writing
to other uses prior to the commencement thereof.
5. Sublease Term:
5.1 Sublease Term: The Sublease Term shall be for the period
-------------
commencing September 1, 1999 ("Commencement Date") and continuing through August
14 31, 2001, or such earlier date as the Master Lease or this Sublease may be
terminated in accordance with its terms ("Sublease Termination Date"). In no
event shall the Sublease Term extend beyond the Term of the Master Lease.
5.2 Inability to Deliver Possession: Subtenant shall be entitled to
-------------------------------
early occupancy of the Subleased Premises as of August 20, 1999 ("Early
Occupation Date"). Subtenant shall not be obligated to pay Rent for early
occupancy, but otherwise the early occupancy shall be on the terms
2
<PAGE>
and conditions of this Sublease and Subtenant's obligation to pay Rent shall
commence on the Commencement Date. In the event Sublandlord is unable to
deliver possession of the Subleased Premises at the Early Occupation Date,
Sublandlord shall not be liable for any damage caused thereby, nor shall this
Sublease be void or voidable but Subtenant shall not be liable for Rent on or
after the Commencement Date until such time as Sublandlord offers to deliver
possession of the Subleased Premises to Subtenant. The Sublease Term shall not
be extended by such delay. If Subtenant, with Sublandlord's consent, takes
possession prior to commencement of the Sublease Term, Subtenant shall do so
subject to all the covenants and conditions hereof and shall pay Rent for the
period ending with the commencement of the Sublease Term at the same rental as
that prescribed for the first month of the Sublease Term prorated at the rate of
1/30/th/ thereof per day. In the event Sublandlord has been unable to deliver
possession of the Subleased Premises within thirty (30) days from the
Commencement Date, Subtenant, at Subtenant's option, may terminate this Sublease
by written notice to Sublandlord prior to delivery of the Subleased Premises.
5.3 Right of First Offer: Subtenant shall have no right to remian in
--------------------
the Subleased Premises at any time after the Sublease Termination Date. In the
event that prior to the Sublease Termination Date Sublandlord elects in its sole
discretion to sublease the Subleased Premises for any period that commences on
or after the day following the Sublease Termination Date, Sublandlord shall so
notify Subtenant in writing and shall offer to continue to sublease the
Subleased Premises to Subtenant for a fair market rental determined by
Sublandlord in its sole discretion exercised in good faith for such period as
Sublandlord may elect in its sole discretion and otherwise on terms
substantially the same as those contained in this Sublease. Subtenant shall have
fifteen (15) days in which to accept Sublandlord's offer and enter into a new
sublease agreement or extension of this Sublease. If Subtenant fails to do so,
this right of first offer shall be of no further force or effect, Subtenant
shall have no further rights hereunder, and Sublandlord shall have the right to
sublease the Subleased Premises to such persons and on such terms (subject to
the Master Lease) as Sublandlord may elect in its sole discretion.
6. Operating Expenses:
This is a Full Service Sublease and Sublandlord shall pay all direct
operating expenses of the Subleased Premises and expense pass throughs for the
property as may be provided for in the Master Lease. Except as expressly
provided herein, Sublandlord shall provide all standard utility services (except
telephone usage), all of the telephone and data communication equipment listed
in the Inventory of Communications Equipment (attached hereto as Exhibit B) and
---------
janitorial services (as described in the attached Exhibit D) to the Subleased
---------
Premises. Subtenant acknowledges that the Building provides HVAC from 6:00 a.m.
to 10:00 p.m., Monday through Friday, and 6:00 a.m. to 5:00 p.m. on Saturdays
and Sundays. If Subtenant desires after-hours HVAC service, Sublandlord and
Subtenant shall make an arrangement so that Subtenant may procure such after-
hours HVAC directly from the Lessor, all at Subtenant's sole cost and expense.
If the Lessor invoices Sublandlord for Subtenant's after-hours HVAC usage,
Subtenant shall pay such amount directly to Sublandlord within ten (10) days
after receipt of invoice so that Sublandlord may timely pay Lessor without
advancing funds on Subtenant's behalf.
7. Personal Property:
3
<PAGE>
The furniture and fixtures provided by Sublandlord for Subtenant's use
during the term of this Sublease are listed on Exhibit C attached hereto and
---------
are collectively referred to as the "Personal Property". Sublandlord shall
deliver such Personal Property to Subtenant in good condition and repair. By
taking possession of the Subleased Premises, Subtenant shall be deemed to have
acknowledged and agreed that all Personal Property is present at the Subleased
Premises and is in good condition and repair. On the Termination Date,
Subtenant shall return all of the Personal Property to Sublandlord in good
condition and repair, reasonable wear and tear and damage by fire, earthquake or
other casualty excepted. Subtenant shall not modify or remove any of the
workstations or other Personal Property without Sublandlord's consent.
8. Security and Telephones:
Sublandlord shall have absolutely no responsibility or liability with
respect to the security of the Subleased Premises. Without limiting the
generality of the foregoing: (a) with respect to the card-key system,
Sublandlord shall leave the existing card-key system in place, and upon
Subtenant's request, Sublandlord shall provide card-keys to Subtenant and shall
program the card-key system to limit access to the Subleased Premises to
Subtenant's employees; (b) Subtenant may perform whatever rekeying it may elect,
all at its sole risk and cost, and Subtenant shall ensure that Sublandlord has
operative keys to all areas of the Subleased Premises at all times; and (c) the
fire alarm and burglar alarm systems shall be left in place for Subtenant's use
if Subtenant so elects, but without any Sublandlord representation, warranty or
other duty to Subtenant with respect thereto. Sublandlord shall provide
reasonable access to Sublandlord's existing telephone and voice mail systems (as
described in Exhibit B) for the use of Subtenant and Subtenant's employees in
the conduct of their business, but all telephone service shall be the sole
responsibility of Subtenant.
9. Sublandlord's Right to Enter Upon the Subleased Premises:
In accordance with paragraph 19 of the Master Lease, Subtenant shall permit
Sublandlord and Sublandlord's Agents to enter the Subleased Premises at all
reasonable times with reasonable notice except for emergencies in which case no
notice shall be required.
10. Indemnity:
Except for claims arising from the gross negligence or willful misconduct
of Sublandlord (against which Sublandlord shall indemnify and hold Subtenant
harmless), Subtenant shall indemnify, defend and hold Sublandlord harmless from
and against any and all claims, damages, losses, liabilities and costs
(including without limitation reasonable attorneys' fees, costs and
disbursements) relating in any manner, directly or indirectly, in whole or in
part, to: (a) any failure by Subtenant to timely and properly perform each of
its obligations under this Sublease; (b) any accident occurring or other
circumstance existing on or about the Subleased Premises at any time during the
period between the Early Occupation Date or Sublease Commencement Date,
whichever is earlier, and the Termination Date (and any holdover period) due to
any cause whatsoever; and (c) any negligence or willful misconduct on the part
of Subtenant or any of its officers, directors, employees, guests, invitees,
agents or contractors. Subtenant shall promptly assume its defense and
indemnification obligations upon written notice from Sublandlord. Subtenant
shall not settle any
4
<PAGE>
claim without the consent of Sublandlord if Sublandlord would incur any
liability for such claim under or following such a settlement, which consent
shall not be unreasonably withheld.
11. Condition of the Subleased Premises:
The Subleased Premises shall be delivered in their "AS IS" condition.
Sublandlord shall have no obligation to make any capital improvements, repairs
or alterations to the Subleased Premises. By taking possession of the Subleased
Premises, Subtenant shall be deemed to have accepted the Subleased Premises in
its condition on the date of delivery of possession. Subtenant acknowledges
that neither Sublandlord nor any agent of Sublandlord has made any
representation or warranty with respect to the condition of the Subleased
Premises, the parking and common areas surrounding the Subleased Premises, or
with respect to the suitability of same for the conduct of Subtenant's business.
Subtenant further acknowledges that Sublandlord shall have no obligation to
construct or complete any additional alterations or improvements within or about
the Subleased Premises. Subtenant shall not alter or improve the Subleased
Premises without the consent of Sublandlord and Lessor, to the extent required
under the Master Lease. Notwithstanding the foregoing, to Sublandlord's actual
knowledge, the existing electrical and data communications equipment and
associated wiring in the Subleased Premises is in good working condition and
repair.
12. Sublandlord's Representations and Warranties:
Sublandlord represents and warrants to Subtenant that: (a) there are no
amendments to the Master Lease other than the First Amendment To Lease dated
October 1, 1997; (b) to Sublandlord's actual knowledge, neither Sublandlord nor
Lessor is in default under the Master Lease; and (c) to Sublandlord's actual
knowledge, there is no claim or threatened claim by Lessor that Sublandlord is
in default under the Master Lease.
13. Notices:
All notices, demands, consents and approvals which may or are required to
be given by either party to the other hereunder shall be given in the manner
provided in the Master Lease, at the addresses shown on the signature page
hereof. Sublandlord shall notify Subtenant of any default under the Master
Lease, or of any other event of which Sublandlord has actual knowledge which
will impair Subtenant's ability to conduct its normal business at the Subleased
Premises, as soon as reasonably practicable following Sublandlord's receipt of
notice from the Landlord of a default or actual knowledge of such impairment. If
Sublandlord elects to terminate the Master Lease, Sublandlord shall so notify
Subtenant by giving at least thirty (30) days notice prior to the effective date
of such termination pursuant to paragraph 23 thereof.
14. Broker Fee:
Each party represents and warrants to the other that it has not had any
contract or dealings regarding the Property, or any communication in connection
with the subject matter of this transaction, through any licensed real estate
broker or other person who can claim a commission or finder's fee. In the event
that any broker or finder asserts a claim for a commission or finder's fee based
upon any contract, dealing or communications with either party, such party shall
indemnify, defend and hold the other party harmless from all costs and expenses
(including without limitation reasonable attorneys' fees and costs of defense at
the trial and appellate levels) incurred in
5
<PAGE>
connection with such claim. The provisions of this section shall survive any
termination of this Sublease.
15. Subtenant Improvements/Compliance With Americans With
Disabilities Act:
Subtenant shall be responsible for the installation and cost of any and all
improvements, alterations or other work required on or to the Subleased Premises
or to any other portion of the property and/or building of which the Subleased
Premises are a part, required or reasonably necessary because of: (1)
Subtenant's use of the Subleased Premises or any portion thereof; or (2) the use
by a subtenant by reason of assignment or sublease. Compliance with the
provisions of this Section 13 shall be a condition of Sublandlord granting its
consent to any assignment or sublease of all or a portion of this Sublease and
the Subleased Premises described in this Sublease. Sublandlord shall be
responsible for the installation and cost of any and all improvements,
alterations or other work required on or to the Subleased Premises or to any
other portion of the property and/or building of which the Subleased Premises
are a part, required or reasonably necessary under the Americans With
Disabilities Act of 1990.
16. Toxic Contamination Disclosure:
Sublandlord and Subtenant each acknowledge that they have been advised that
numerous federal, state, and/or local laws, ordinances and regulations ("Laws")
affect the existence and removal, storage, disposal, leakage of and
contamination by materials designated as hazardous or toxic ("Toxics"). Many
materials, some utilized in everyday business activities and property
maintenance, are designated as hazardous or toxic.
Some of the Laws require that Toxics be removed or cleaned up by
landowners, future landowners or former landowners without regard to whether the
party required to pay for "clean up" caused the contamination, owned the
property at the time the contamination occurred or even knew about the
contamination. Some items, such as asbestos or PCBs, which were legal when
installed, now are classified as Toxics, and are subject to removal
requirements. Civil lawsuits for damages resulting from Toxics may be filed by
third parties in certain circumstances.
Sublandlord and Subtenant each acknowledge that Sublandlord has made no
representations or warranties with respect to environmental assessment or
physical condition of the Subleased Premises, including, but not limited to,
matters relating to: (i) problems which may be posed by the presence or disposal
of hazardous or toxic substances on or from the Subleased Premises, (ii)
problems which may be posed by the Subleased Premises being within the Special
Studies Zone as designated under the Alquist-Priolo Special Studies Zone Act
(Earthquake Zones), Section 2621-2630, inclusive of the California Public
Resources Code, and (iii) problems which may be posed by the Subleased Premises
being within a HUD Flood Zone as set forth in the U.S. Department of Housing and
Urban Development "Special Flood Zone Area Maps," as applicable.
independent investigation or determination of the physical or environmental
condition of the Subleased Premises, including, but not limited to, the
existence or nonexistence of any underground tanks, sumps, piping, toxic or
hazardous substances on the Subleased Premises. Subtenant agrees that it will
rely solely upon its own investigation and/or the investigation of professionals
retained by it.
6
<PAGE>
17. Rent Abatement and Damages to Personal Property:
In the event Sublandlord, pursuant to the terms of the Master Lease, is
entitled to and receives rent abatement, then to the extent such rent abatement
affects the Subleased Premises, Subtenant shall be entitled to a corresponding
rent abatement in an amount that the net rentable area of the Subleased Premises
bears to the total net rentable area of the Master Lease, and only to the extent
any such abatement applies to the Sublease Term. In addition, any amounts paid
or credited to Sublandlord under the terms of the Master Lease for damage to
Subtenant's personal property shall be credited to Subtenant, subject to the
same limitations set forth above.
18. Sign Rights:
Subtenant shall be permitted to place its sign on the exterior of the
Subleased Premises in accordance with paragraph 20 of the Master Lease.
Sublandlord shall remove its signage within fifteen (15) days after the Sublease
Commencement Date.
19. Entire Agreement:
This Sublease and the Exhibits attached hereto set forth the entire
agreement between the parties with respect to the Sublease of the Subleased
Premises. Except as specifically set forth herein, there are no agreements,
representations, or warranties whatsoever between the parties as to any matter.
Any prior agreements, conversations, or writings, are merged herein, superseded
hereby and extinguished.
Exhibits to be attached include:
Exhibit A - Floor plan showing the improvements to the Premises
---------
Exhibit B - Inventory of Communications Equipment supplied by Sublandlord
---------
Exhibit C - Inventory list of all furniture, fixtures and other
---------
equipment supplied by Sublandlord
Exhibit D - Janitorial services specification or copy of Sublandlord's
---------
current janitorial services agreement
Sublandlord: EXCITE, INC. Address: 555 Broadway
Redwood City, CA 94063
By /s/ Elizabeth M. Berez Date: 8/6/99
------------------------------------ -----------------------------
Subtenant: TIOGA SYSTEMS, INC., a Address: 1816 Embarcadero Road
Delaware corporation Palo Alto, CA 94303
By /s/ Mark Vranesh Date: 8/6/99
------------------------------------ -----------------------------
7
<PAGE>
CONSENT TO SUBLEASE
-------------------
DATE: ___________________ 1999
RE: BUILDING: MidPoint Technology Park, 575 Broadway, Redwood City, CA
SUBLET PREMISES: Approximately 23,216 rentable square feet
DATE OF MASTER LEASE: Lease dated March 14, 1997, ("Master Lease")
MASTER LESSOR: Martin/Campus Associates, L.P., a Delaware limited
partnership
MASTER TENANT: Excite, Inc., a Delaware corporation
SUBTENANT: Tioga Systems, Inc., a Delaware corporation
TERM OF SUBLETTING: August 15, 1999 through August 14, 2001
Mr. Robert Hood
Excite, Inc.
Dear Mr. Hood:
Pursuant to the terms of the Master Lease covering the above-captioned
premises ("Sublet Premises"), Excite has requested Landlord's consent to your
subletting the Sublet Premises to the above-referenced Subtenant, hereinafter
referred to as the "Sublease."
Landlord hereby grants consent to such Subletting upon the following
express terms and conditions:
Such subletting is subject and subordinate to the Master Lease and to all
of its terms, covenants, conditions, provisions and agreements.
1. The Subtenant shall perform faithfully and be bound by all of the
applicable terms, covenants, conditions, provisions and agreements of the Master
Lease, for the period of such subletting and to the extent of the Sublet
Premises.
2. Neither such subletting nor this consent thereto shall:
(a) release or discharge you from any liability, whether past,
present or future, under the Master Lease;
(b) operate as a consent or approval by us to or of any of the terms,
covenants, conditions, provisions or agreements of the Sublease and we shall not
be bound thereby;
<PAGE>
(c) be construed to modify, waive or affect any of the terms,
covenants, conditions provisions or agreements of the Master Lease, or to waive
any breach thereof, or any of our rights as Landlord thereunder; or to enlarge
or increase our obligations as Landlord thereunder, or
(d) be construed as a consent by us to any further subletting either
by you or by the Subtenant or to any assignment by you of the Master Lease or
assignment by the Subtenant of the Sublease, whether or not the Sublease
purports to permit the same and, without limiting the generality of the
foregoing, both you and the Subtenant agree that the Subtenant has no right
whatsoever to assign, mortgage or encumber the Sublease nor to sublet any
portion of the Sublet Premises or permit any portion of the Sublet Premises to
be used or occupied by any other party; in connection herewith, both you and the
Subtenant agree that an assignment by operation of law or a transfer of control
of Subtenant (including but not limited to transfer of the controlling interest
of the stock of Subtenant, if Subtenant is a corporation) shall be deemed to be
a prohibited assignment hereunder, subject to our consent.
4. You shall not be released from any liability under the Master Lease
because of our failure to give notice of default under or in respect of any of
the terms, covenants, conditions, provisions or agreements of the Master Lease.
5. In the event of your default under the provisions of the Master Lease,
the rent due from the Subtenant under the Sublease shall be deemed assigned to
us and we shall have the right, under such default, at any time at our option,
to give notice of such assignment to the Subtenant and to demand that Subtenant
pay the rent and any other charges due under the Sublease directly to us. We
shall credit you with any rent received by us under such assignment but the
acceptance of any payment on account of rent from the Subtenant as the result of
any such default shall in no manner whatsoever be deemed an attornment by the
Subtenant to us, or serve to release you from liability under the terms,
covenants, conditions and provisions of agreements under the Master Lease.
Notwithstanding the foregoing, any other payment of rent from the Subtenant
directly to us, regardless of the circumstances or reasons therefor, shall in no
manner whatsoever be deemed an attornment by the Subtenant to us in the absence
of a specific written agreement signed by us to such an effect.
6. Both you and the Subtenant shall be and continue to be liable for the
payment of all bills rendered by us for charges incurred by the Subtenant for
services and materials supplied to the Sublet Premises.
7. The term of the Sublease shall expire and come to an end on its
natural expiration date or any premature termination date thereof or
concurrently with any premature termination or expiration of the Master Lease
(whether by consent or other right, now or hereafter agreed to by Landlord or
Tenant under the Master Lease, or by operation of law or at Landlord's option in
the event of default by tenant under the Master Lease).
8. This consent is not assignable, nor shall this consent be deemed a
consent to any amendment, modification, extension or renewal of the Sublease,
without our prior written consent.
<PAGE>
9. You and the Subtenant covenant and agree that under no circumstances
shall we be liable for any brokerage commission or other charge or expense in
connection with the Sublease and you both agree to indemnify us against same and
against any cost or expense (including but not limited to counsel fees) incurred
by us in resisting any claim for any such brokerage commission.
10. Notwithstanding any provision of the Sublease or this Consent to the
contrary, the Subtenant agrees that Master Landlord shall not be: (i) liable for
any act or omission of the Master Tenant as Sublessor under the Sublease; (ii)
subject to any offsets or defenses which the Subtenant may have against the
Master Tenant as Sublessor; (iii) bound by any payment of rent or other sums
made by the Subtenant for any advance period under the Sublease; (iv) bound by
any security deposits which the Subtenant might have paid to the Master Tenant
as Sublessor or any other party, or (v) bound by any amendment or modification
of the Sublease made without Master Landlord's prior written consent, which may
be withheld in the sole and absolute discretion of Master Landlord.
11. This Consent shall not be effective until executed by all the parties
hereto.
12. Concurrent with the execution of this Consent, Master Tenant shall pay
to Master Landlord an amount equal to $300.00, representing Master Landlord's
attorney fees and costs incurred in connection with the review of the Sublease
and the preparation of this Consent.
13. Master Landlord shall be named as an additional insured under all
liability insurance required to be carried by the Subtenant pursuant to the
Sublease, and Master Tenant shall furnish Master Landlord with a certificate of
insurance before the commencement of the term of the Sublease.
14. Master Landlord hereby waives all rights under paragraph 15.D of the
Lease during the term of the Sublease, including the ability to collect fifty
percent (50%) of any excess of the Subrent over the Rent payable pursuant to the
Lease and caused by this Consent to Sublease.
[SIGNATURES FOLLOW THIS PAGE]
<PAGE>
The execution of a copy of this Consent by you (as Master Tenant) and by
the Subtenant shall indicate your joint and several confirmation of the
foregoing conditions and of your agreement to be bound thereby and shall
constitute Subtenant's acknowledgment that it has received a copy of the Master
Lease from you.
MASTER LESSOR:
Martin/Campus Associates., a Delaware limited partnership
By: Martin/Redwood Associates, L.P., a California limited partnership
Its: General Partner
By: The Martin Group of Companies, Inc., a California corporation
Its: General Partner
By: _____________________________________________
Name: ___________________________________________
Title: __________________________________________
Date: ___________________________________________
MASTER TENANT:
Excite, Inc., a Delaware corporation
By: /s/ Elizabeth M. Berez
------------------------------------------
Name: Elizabeth M. Berez
------------------------------------------
Title: VP, Finance
------------------------------------------
Date: August 6, 1999
------------------------------------------
SUBTENANT:
Tioga Systems, Inc., a Delaware corporation
By: /s/ Mark Vranesh
------------------------------------------
Name: Mark Vranesh
------------------------------------------
Title: Dir Fin/Corp. Sec
------------------------------------------
Date: 8/6/99
------------------------------------------
<PAGE>
EXHIBIT A
---------
[graphic depicting a floor plan image]
<PAGE>
EXHIBIT B
---------
Inventory of Communications Equipment
<TABLE>
<CAPTION>
Quantity Part # Description
Meridian 1 Opt 11C
<S> <C> <C>
1 NTSF1001 OPTION 11C SNGL CABNT HW PKG (AC)
1 NTSF2001 OPTION 11C 30FT EXPANSION CABINET
1 NTDK22AA 30 FT FIBER DAUTERBOARD
1 NT6R78AB OPT 11C R23 ENG DOCUMEN PKG COIL
1 NTSF8021 OPT 11 C ENTERPRISE BUS SW PKG
1 NTSF8103 OPT 11 C 100 ADD TNS ENTERPRISE
1 NT8D09AL ANALOG MESSAGE WAITING LINE CARD
4 NT8D14BB UNIVERSAL TRUNK CARD
10 NT8D02GA DIGITAL LINE CARD (DLC)
1 AMP1102 CREDIT: System AMP
Meridian Mail 12Port/24 Hour
1 NTZC49AA ENH MM CARD OPT 4-12 PS, 5/10/24/54HRS
1 SW7100H MMAIL CARD OPTION R12 BASE SW
2 NTZC51AA ENH MM OP FS PORTS - 5&6 OR 9&10
2 NTZC51BA ENH MM OP FS PORTS - 7&8 OR 11&12
10 NT1F94AA MMAIL 12 VOICE MESSAGING PKG
1 NTAK30DB EXTERNAL TAPE DRIVE, TANDBERG
1 A0630697 MAGNUS 2.5B DATA CARTRIDGE
1 SW7102 MM CARD OPT EXP STRG SW LEVEL 1
1 SW7103 MM CRD OPT EXP STRG SW LEVEL 2
1 SW7140 MM CRD OPT EXP STRG SW LEVEL 3-4
Peripheral Equipment
1 017-102-XX CFR1500 1500 VA/1005W ON-LINE UPS
1 032-047-21 EBP48E EXTERNAL BATTERY PACK
1 LX300 EPSON LX-300 9-PIN DOT MTX PRINTER-SE
1 70364 M/F 10' RS232 SERIAL CABLE
1 000839-0 US ROBOTICS 28.8 KBPS MODEM
1 HQ-P1331A MICO-MINI PRINTER BUFFER, 64K, SER/SE
1 SEBII SITE EVENT BUFFER - 2 PORT/128K
30 ----------------------- MERIDIAN 266 DISPLAY PHONES
60 ----------------------- MERIDIAN 2008 PHONES
1 ----------------------- RECEPTIONIST CONSOLE
</TABLE>
EXHIBIT B
Page 1 of 1
<PAGE>
EXHIBIT C
575 Broadway Inventory
<TABLE>
<CAPTION>
Hardwall Offices
<S> <C>
Rosemount Workstations 12
Task Chairs 12
Guest Chairs 24
Ped (BBF) 12
Ped (FF) 12
Cubicles 103
Herman Miller Ethospace
Task Chairs 103
White Boards 102
Ped (BBF) 103
Ped (FF) 103
Overhead Bin 103
Overhead Shelf 103
Break/Common Areas
8' Racetrack Table 2
Credenza 2
Red Conference Room Chairs 14
Blue Conference Room Chairs 10
Green Conference Room Chairs 10
Black Soft Seating 20
Coffee Tables 4
Lowenstein High Seating Red 6
Lowenstein High Seating Black 6
Lowenstein Low Seating Red 4
Lowenstein Low Seating Black 4
48" square table 2
</TABLE>
<PAGE>
EXHIBIT D
PENINSULA JANITORIAL SERVICE CO.
================================================================================
<PAGE>
<TABLE>
<CAPTION>
Monthly Service Plan: Monthly
- --------------------- -------
<S> <C>
Routine 5 x weekly service (Sunday - Thursday)........... $3,675.00
Day porter service 5 x weekly (Monday - Thursday 10:00
to 6:00, and Friday 1:00 to 7:00)........................ $1,980.00
Optional:
- ---------
Second floor area 5 x weekly service..................... $1,840.00
Floor Care Program:
- -------------------
Window wash 2 x yearly inside/outside.................... $ 80.00
Clean carpets quarterly.................................. $ 740.00
Shampoo all wall to wall 1 x yearly...................... $ 440.00
Scrub & wax all floors 1 x yearly & buff monthly......... $ 320.00
4 x yearly dust all high areas........................... $ 210.00
Total Monthly Professional Fee........................... $7,445.00
</TABLE>
<TABLE>
<CAPTION>
PERIODIC SERVICES (priced separately) Per Service Per Sq. Ft. $ Minimum
---------------- --------------- ----------------
<S> <C> <C> <C>
Carpeting:
- ----------
Truck-mounted steam extraction...................... .06 $45.00
Tile: Vinyl
- -------------
Spray & buff tile................................... "
Machine scrub & recoat.............................. .10 "
Strip & wax tile.................................... .15 "
Tile: Ceramic
- ---------------
Machine scrub & reseal.............................. .10 "
Strip, restore grout & reseal....................... .15 "
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTRANCES / OUTSIDE Weekly Monthly Verify
<S> <C> <C> <C>
Remove trash including all small pieces of debris......... 5
Remove cobwebs at entrances (as needed)................... 5
Clean ash urns............................................ 5
Clean entrance glass & door frames........................ 5
Empty trash receptacles................................... 5
Clean trash receptacles (as needed)....................... 1
Spot clean lobby windows, especially lower areas.......... 5
LOBBY AND RECEPTION AREA Weekly Monthly Verify
All routine services apply, including:
- --------------------------------------
Entrance doors: Clean inside and out..................... 5
Detail clean & dust all furniture & furnishings........... 5
Polish bright metal....................................... 5
Detail clean reception desk............................... 5
Remove cobwebs (high, low, corners)....................... 5
Spot clean upholstered furniture (as needed).............. 5
Vacuum upholstered furniture (as needed).................. 5
Vacuum carpeting.......................................... 5
Dry mop and damp mop wooden grain vinyl................... 5
Detail clean floor edges & corners........................ 1
Dust ceiling lights (as needed) & high ceiling............ 1
Scrub entry thresholds.................................... 1
Clean carpeting........................................... 1
Fully clean lobby glass (inside & outside)................ 1
GENERAL OFFICE AREAS & CONFERENCE ROOMS Weekly Monthly Verify
Vacuum carpet (moving light furniture).................... 5
Spot clean carpets........................................ 5
Dust desks, work surfaces, filing cabinets and furniture.. 5
Clean all table tops...................................... 5
Damp wipe surfaces to remove stains (as needed)........... 5
Empty trash & replace liners as needed.................... 5
Sweep & damp mop tile floors.............................. 5
Remove scuff marks from tile.............................. 5
Clean and polish bright metal as needed................... 5
Clean & polish drinking fountains......................... 5
Empty water cooler tray scrub / disinfect as needed....... 5
Spot clean interior partition glass....................... 5
Remove cobwebs / high, low, corners....................... 5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GENERAL OFFICE AREAS (continued) Weekly Monthly Verify
<S> <C> <C> <C>
Dust white board trays.................................... 5
Properly arrange all furniture............................ 5
Turn off all designated lights when finished.............. 5
Remove smudges from doors & frames........................ 5
Dust partition tops....................................... 3
Wipe clean copiers, printers, & fax machines.............. 1
Clean & disinfect telephones.............................. 1
Detail dust and wipe: e.g. chair legs, picture frames..... 1
Detail clean desks & work surfaces........................ 1
Wipe clean monitor & computer casings..................... 1
Feather dust computer keyboards & screens................. 1
Dust silk plants.......................................... 1
Dust window sills......................................... 1
Wipe clean light switches................................. 1
Detail clean counters, bookcases, shelves, file cabinets.. 1
Dust skylights for cobwebs................................ 1
Detail vacuum carpet edges, around & behind furniture..... 1
Vacuum & spot clean upholstered chairs: offices........... 1
Dust high surfaces including door frames.................. 1
Dust all window blinds.................................... 1
Vacuum under photo copy machines.......................... 1
Brush vacuum ceiling air vents............................ 1
Dust & high areas for cobwebs............................. 1
Polish conference room & executive furniture.............. Per specs
Clip off any loose carpet loops (safety hazard)........... As needed
Vacuum fabric partition walls............................. 4
Total clean interior partition glass...................... 4
EXECUTIVE SERVICE Weekly Monthly Verify
Areas include lobby, conference / demo rooms,
- -----------------------------------------------
executive offices
- -------------------
All routine services apply, including:
- ----------------------------------------
Detail clean furniture & furnishings...................... 5
Detail clean floors....................................... 1
Polish conference room & executive furniture.............. Per specs
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COFFEE AREAS Weekly Monthly Verify
<S> <C> <C> <C>
Empty trash & replace liners.............................. 5
Clean coffee machines / remove old grounds................ 5
Scrub clean coffee pots / clean cups as needed............ 5
Wipe clean entire counter top & cabinet fronts............ 5
Wipe clean inside cabinet doors & trash container......... 5
Detail clean entire coffee areas walls & floor............ 1
LUNCHROOMS Weekly Monthly Verify
Empty trash / replace liners.............................. 5
Clean trash receptacles................................... 5
Clean walls near trash receptacles........................ 5
Scrub clean coffee pots................................... 5
Turn off & clean coffee makers & appliances............... 5
Clean microwaves, refrigerator & vending machines......... 5
Wipe clean tables, chairs & bases (detail edges).......... 5
Clean inside microwaves................................... 5
Spot clean all walls...................................... 5
Remove scuff marks from tile floor........................ 5
Clean & polish water cooler............................... 5
Clean entry doors......................................... 5
Vacuum carpets & remove spots............................. 5
Sweep & damp mop tile floor with mild degreaser........... 5
Properly arrange furniture................................ 5
Detail clean entire lunchroom............................. 1
Detail clean tables and chairs............................ 1
Detail clean all surfaces, entire facility................ 1
Clean tops of cabinets.................................... 1
Detail clean & scrub baseboards & edges................... 1
Clean inside cabinets especially doors.................... 1
Clean inside refrigerators/clean up any spills............ 1
Discard spoiled food from refrigerators................... 1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RESTROOM MAINTENANCE Weekly Monthly Verify
<S> <C> <C> <C>
Clean and sanitize sinks & counter tops................... 5
Clean and disinfect all toilets & urinals................. 5
Clean & disinfect handles................................. 5
Clean partitions & walls by urinals....................... 5
Wet mop tile floor using a germicidal cleaner............. 5
Dispose of waste and clean waste receptacles.............. 5
Check for paper products and refill as needed............. 5
Check for soap products and refill as needed.............. 5
Clean and shine all chrome fixtures and mirrors........... 5
Wipe clean light switches................................. 5
Clean doors & push-plates................................. 5
Check all dispensers for proper operation................. 5
Report any items needing repair or maintenance............ 5
Check feminine hygiene product dispensers for product..... 5
Disinfect floor drains / Keep traps filled................ 5
Detail clean & disinfect entire restroom.................. 1
Totally clean partitions & walls.......................... 1
Wipe clean baseboards..................................... 1
Brush vacuum ceiling air vents............................ 1
Replace or replenish deodorizers (as needed).............. 1
SHOWERS Weekly Monthly Verify
Wash walls w/ non-scratch disinfectant cleaners........... 5
Wash & polish all faucets and shower heads................ 5
Wet mop floor w/ disinfectant germicidal cleaner.......... 5
Report any items needing repair........................... 5
Detail clean & disinfect entire shower area............... 1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DAY PORTER Weekly Monthly Verify
<S> <C> <C> <C>
LOBBY:
Spot clean entry doors.................................... 5
Sweep any debris (at entrance)............................ 5
Scrub clean metal entry thresholds........................ 1
LUNCHROOMS:
Duties, performed after lunch:
------------------------------
Clean all table tops and chairs with a moistened cloth
including all edges & bases............................... 5
Empty trash & replace liners.............................. 5
Clean trash receptacles................................... 5
Sweep/damp mop the floor.................................. 5
Vacuum carpeting, moving tables & chairs to reach all
food & debris............................................. 5
Clean coffee area including sink, water dispenser,
coffee machine and counter................................ 5
Check all walls and clean as required..................... 5
Check all microwaves, inside and out...................... 5
Perform additional duties as needed....................... 5
RESTROOMS:
Check for paper products and refill as needed............. 5
Check for soap products and refill as needed.............. 5
Wipe down counter tops / pick up trash.................... 5
Check trash receptacles and empty as needed............... 5
OFFICE AREAS:
Duties performed "as required" daily, weekly, monthly
-----------------------------------------------------
OUTSIDE ENTRANCES & GROUNDS:
Duties to be determined & performed as needed
---------------------------------------------
DUMPSTER AREA:
Dispose of loose trash around bins........................ 5
Detail sweep around bins (or often as needed)............. 1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMPUTER ROOM Weekly Monthly Verify
<S> <C> <C> <C>
Wipe clean tables, chairs, & stools....................... 5
Wipe clean other specified surfaces....................... 5
Dry mop floor............................................. 5
Damp mop floor (as needed)................................ 5
Empty trash & replace liners.............................. 5
Detail clean all surfaces................................. 1
Vacuum floor edges & corners.............................. 1
WINDOW & PARTITION GLASS: Routine Cleaning) Weekly Monthly Verify
Entrance glass: Clean entry doors & glass................. 5
Spot clean lobby glass.................................... 5
Clean all lobby glass..................................... 1
Interior partition glass: Spot clean...................... 5
Interior partition glass: Clean total surface............. 4
TILE FLOOR & CARPET CARE (routine maintenance) Weekly Monthly Verify
Carpeting:
Vacuum floors thoroughly.................................. 5
Spot clean................................................ 5
Detail vac (edges, corners, behind furniture)............. 1
Vinyl Tile:
Dust mop w/ treated mop................................... 5
Damp mop.................................................. 5
Remove scuff marks........................................ 5
Detail clean edges and corners............................ 1
Ceramic Tile:
Sweep & damp mop.......................................... 5
Detail clean edges & corners.............................. 1
Other:
Wipe clean baseboards..................................... 1
Scrub metal entry threshold (main entrance)............... 1
RECYCLING Weekly Monthly Verify
Process recycling appropriately: aluminum, glass,
paper, cardboard. (Non-recyclables put into compactor)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
JANITORIAL CLOSET Weekly Monthly Verify
<S> <C> <C> <C>
Organize janitorial closet (all items shelved if poss.)... 5
Clean, sanitize mop heads & hang up....................... 5
Empty & clean mop bucket.................................. 5
Inventory supplies........................................ 1
Sweep and mop floor....................................... 1
Replace mop heads with new ones........................... 1
Remove trash and excess cleaning agents................... as needed
Deodorize................................................. as needed
COMPACTOR AREA Weekly Monthly Verify
Insure trash goes into compactor.......................... 5
Report problems with overflow or mixing recycling......... 5
Sweep area under & around compactor....................... 1
HEALTH & SAFETY
Maintain MSDS sheets in Janitor's closet always
Report safety hazards immediately, repair if possible as needed
SECURITY
No persons admitted into building by servicers
No employee substitutions will be made without auth.
Make sure all doors are locked during & following work
Keep building secured when dumping trash in back.
QUALITY ASSURANCE
1. Servicers use checklists
2. Supervisor inspects work & documentation per
schedule nightly.
3. Quality Assurance Inspector will arrange routine
inspection w/client once each week.
INITIAL SERVICES (No charge)
1. Detail clean entire facility.
2. Service includes all services routinely performed
daily, weekly & monthly.
</TABLE>
<PAGE>
MAINTENANCE: Routine or Emergency
1. Maintenance is available. As needed
2. Duties will vary according to the need.
NOTES
1. Team leader working nights will speak English.
2. Day Porter / Utility person during the day will speak
English & will be very good-natured, helpful, &
proactive.
3. Computer Room: When floor is being cleaned,
dedicated mop bucket will be kept outside the
computer room.
CHEMICALS AND PAPER PRODUCTS
1. Peninsula provides cleaning agents and equipment.
2. Paper goods, trash can liners, hand soaps &
deodorants are either provided by client or billed
separately through Peninsula Janitorial Service.
<TABLE>
<CAPTION>
SQUARE FOOTAGE / FLOOR COVERINGS Square Ft.
----------
<S> <C>
Vinyl tile........................................... 2,000
Wood grain tile...................................... 500
Ceramic tile......................................... 2,200
Raised floor......................................... 5,000
Carpeting............................................ 78,521
-------
Total Square Footage................................. 88,221
</TABLE>
CLEANING DAYS
5 x Weekly S M T W T F S
Days Specified: Times Specified:
Time Specified:
<PAGE>
<TABLE>
<CAPTION>
PERIODIC SERVICES (continued) Per Service Per Sq. Ft. $ Minimum
----------- ----------- ---------
<S> <C> <C> <C>
Window Cleaning:
----------------
Clean windows outside................................ $ 240 "
Clean windows inside................................. $ 240 "
Interior Partition Glass............................. $ 280 "
Cubicle Panels:
---------------
Steam/dry clean fabric panels........................ $2/side/panel
Skylights:
----------
Clean interior....................................... $ 200 "
Clean exterior....................................... $ 100 "
Construction clean inside & outside.................. $ 600 "
High Areas: (pipers, air ducts, fluorescent lights)
---------------------------------------------------
Brush vacuum (recommended 2 x yrly).................. $ 400 "
</TABLE>
<PAGE>
STAFFING
Nights: 3 cleaners
1 supervisor
Days: 1 day porter
Inspector: 1 x weekly Q.A. Inspection
Floors: Separate 2 man crew conducting periodic
floor care
FORM OF OWNERSHIP
1. Corporation
2. All cleaners & supervisors are employees on payroll
TERM OF PROPOSAL
1. Peninsula guarantees pricing 1 year
2. Client month-to-month
EQUIPMENT LIST
1. Bucket w/ wringers
2. Mops (heads replaced monthly)
3. Treated dust mops
4. Upright vacuums
5. Back pack vacuum w/pole extension
6. Buffer-scrubbing
7. Buffer-high speed buffing
8 Steam extractor portable
9. Steam extractor-truck mount
10. Dry chemical carpet cleaning available
11. Chem 5 cleaning solution system
12. Tall ladder for high cleaning
<PAGE>
EXHIBIT 10.18
SUPPORT.COM
-----------
EMPLOYMENT, CONFIDENTIAL INFORMATION AND
INVENTION ASSIGNMENT AGREEMENT
As a condition of my employment with Support.com, its subsidiaries,
affiliates, successors or assigns (together the "Company"), and in consideration
of my employment with the Company and my receipt of the compensation now and
hereafter paid to me by Company, I agree to the following:
1. At-Will Employment. I UNDERSTAND AND ACKNOWLEDGE THAT MY EMPLOYMENT
------------------
WITH THE COMPANY IS FOR AN UNSPECIFIED DURATION AND CONSTITUTES "AT-WILL"
EMPLOYMENT. I ACKNOWLEDGE THAT THIS EMPLOYMENT RELATIONSHIP MAY BE TERMINATED
AT ANY TIME, WITH OR WITHOUT GOOD CAUSE OR FOR ANY OR NO CAUSE, AT THE OPTION
EITHER OF THE COMPANY OR MYSELF, WITH OR WITHOUT NOTICE.
2. Confidential information.
------------------------
(a) Company Information. I agree at all times during the term of my
-------------------
employment and thereafter, to hold in strictest confidence, and not to use,
except for the benefit of the Company, or to disclose to any person, firm or
corporation without written authorization of the Board of Directors of the
Company, any Confidential Information of the Company. I understand that
"Confidential Information" means any Company proprietary information, technical
data, trade secrets or know-how, including, but not limited to, research,
product plans, products, services, customer lists and customers (including, but
not limited to, customers of the Company on whom I called or with whom I became
acquainted during the term of my employment), markets, software, developments,
inventions, processes, formulas, technology, designs, drawings, engineering,
hardware configuration information, marketing, finances or other business
information disclosed to me by the Company either directly or indirectly in
writing, orally or by drawings or observation of parts or equipment. I further
understand that Confidential Information does not include any of the foregoing
items which has become publicly known and made generally available through no
wrongful act of mine or others who were under confidentiality obligations as to
the item or items involved.
(b) Former Employment Information. I agree that I will not, during
------------------------------
my employment with the Company, improperly use or disclose any proprietary
information or trade secrets of any former or concurrent employer or other
person or entity and that I will not bring onto the premises of the Company any
unpublished document or proprietary information belonging to any such employer,
person or entity unless consented to in writing by such employer, person or
entity.
(c) Third Party Information. I recognize that the Company has
------------------------
received and in the future will receive from third parties their confidential or
proprietary information subject to a duty on the Company's part to maintain the
confidentiality of such information and to use it only for certain limited
purposes. I agree to hold all such confidential or proprietary
<PAGE>
information in the strictest confidence and not to disclose it to any person,
firm or corporation or to use it except as necessary in carrying out my work
for the Company consistent with the Company's agreement with such third party.
3. Inventions.
-----------
(a) Inventions Retained and Licensed. I have attached hereto, as
---------------------------------
Exhibit A, a list describing all inventions, original works of authorship,
- ---------
developments, improvements, and trade secrets which were made by me prior to my
employment with the Company (collectively referred to as "Prior Inventions"),
which belong to me, which relate to the Company's proposed business, products or
research and development, and which are not assigned to the Company hereunder;
or, if no such list is attached, I represent that there are no such Prior
Inventions. If in the course of my employment with the Company, I incorporate
into a Company product, process or machine a Prior Invention owned by me or in
which I have an interest, the Company is hereby granted and shall have a
nonexclusive, royalty-free, irrevocable, perpetual, worldwide license to make,
have made, modify, use and sell such Prior Invention as part of or in connection
with such product, process or machine.
(b) Assignment of Inventions. I agree that I will promptly make full
-------------------------
written disclosure to the Company, will hold in trust for the sole right and
benefit of the Company, and hereby assign to the Company, or its designee, all
my right, title, and interest in and to any and all inventions, original works
of authorship, developments, concepts, improvements or trade secrets, whether or
not patentable or registrable under copyright or similar laws, which I may
solely or jointly conceive or develop or reduce to practice, or cause to be
conceived or developed or reduced to practice, during the period of time I am in
the employ of the Company (collectively referred to as "Inventions"), except as
provided in Section 3(f) below. I further acknowledge that all original works
of authorship which are made by me (solely or jointly with others) within the
scope of and during the period of my employment with the Company and which are
protectible by copyright are "works made for hire," as that term is defined in
the United States Copyright Act.
(c) Inventions Assigned to the United States. I agree to assign to
-----------------------------------------
the United States government all my right, title, and interest in and to any and
all Inventions whenever such full title is required to be in the United States
by a contract between the Company and the United States or any of its agencies.
(d) Maintenance of Records. I agree to keep and maintain adequate
-----------------------
and current written records of all Inventions made by me (solely or jointly with
others) during the term of my employment with the Company. The records will be
in the form of notes, sketches, drawings, and any other format that may be
specified by the Company. The records will be available to and remain the sole
property of the Company at all times.
(e) Patent and Copyright Registrations. I agree to assist the
-----------------------------------
Company, or its designee, at the Company's expense, in every proper way to
secure the Company's rights in the Inventions and any copyrights, patents, mask
work rights or other intellectual property rights relating thereto in any and
all countries, including the disclosure of the Company of all pertinent
<PAGE>
information and data with respect thereto, the execution of all applications,
specifications, oaths, assignments and all other instruments which the Company
shall deem necessary in order to apply for and obtain such rights and in order
to assign and convey to the Company, its successors, assigns, and nominees the
sole and exclusive rights, title and interest in and to such Inventions, and any
copyrights, patents, mask work rights or other intellectual property rights
relating thereto. I further agree that my obligation to execute or cause to be
executed, when it is in my power to do so, any such instrument or papers shall
continue after the termination of this Agreement. If the Company is unable
because of my mental or physical incapacity or for any other reason to secure my
signature to apply for or to pursue any application of any United States or
foreign patents or copyright registrations covering Inventions or original works
of authorship assigned to the Company as above, then I hereby irrevocably
designate and appoint the Company and its duly authorized officers and agents as
my agent and attorney in fact, to act for and in my behalf and stead to execute
and file any such applications and to do all other lawfully permitted acts to
further the prosecution and issuance of letters patent or copyright
registrations thereon with the same legal force and effect as if executed by me.
(f) Exception to Assignments. I understand that the provision of
-------------------------
this Agreement requiring assignment of Inventions to the Company do not apply to
any invention which qualifies fully under the provisions of California Labor
Code Section 2870 (attached hereto as Exhibit B). I will advise the Company
---------
promptly in writing of any inventions that I believe meet the criteria in
California Labor Code Section 2870 and not otherwise disclosed on Exhibit A.
---------
4. Conflicting Employment. I agree that, during the term of my
-----------------------
employment with the Company, I will not engage in any other employment,
occupation, consulting or other business activity directly related to the
business in which the Company is now involved or becomes involved during the
term of my employment.
5. Returning Company Documents. I agree that, at the time of leaving the
----------------------------
employ of the Company, I will deliver to the Company (and will not keep in my
possession, recreate or deliver to anyone else) any and all devices, records,
data, notes, reports, proposals, lists, correspondence, specifications,
drawings, blueprints, sketches, materials, equipment, other documents or
property, or reproductions of any aforementioned items developed by me pursuant
to my employment with the Company or otherwise belonging to the Company, its
successors or assigns. In the event of the termination of my employment, I
agree to sign and deliver the "Termination Certification" attached hereto as
Exhibit C.
- ----------
6. Notification of New Employer. In the event that I leave the employ of
-----------------------------
the Company, I hereby grant consent to notification by the Company to my new
employer about my rights and obligations under this Agreement.
7. Solicitation of Employees. I agree that for a period of twelve (12)
--------------------------
months immediately following the termination of my relationship with the Company
for any reason, whether with or without cause, I shall not either directly or
indirectly solicit, induce, recruit or encourage any of the Company's employees
to leave their employment, or take away such
<PAGE>
employees, or attempt to solicit, induce, recruit, encourage or take away
employees of the Company, either for myself or for any other person or entity.
8. Conflict of Interest Guidelines. I agree to diligently adhere to the
--------------------------------
Conflict of Interest Guidelines attached as Exhibit D hereto.
---------
9. Representations. I agree to execute any proper oath or verify any
----------------
proper document required to carry out the terms of this Agreement. I represent
that my performance of all the terms of this Agreement will not breach any
agreement to keep in confidence proprietary information acquired by me in
confidence or in trust prior to my employment by the Company. I have not
entered into, and I agree I will not enter into, any oral or written agreement
in conflict herewith.
10. Arbitration and Equitable Relief.
---------------------------------
(a) Arbitration. EXCEPT AS PROVIDED IN SECTION 10(b) BELOW, I AGREE
------------
THAT ANY DISPUTE OR CONTROVERSY ARISING OUT OF, RELATING TO, OR CONCERNING ANY
INTERPRETATION, CONSTRUCTION, PERFORMANCE OR BREACH OF THIS AGREEMENT, SHALL BE
SETTLED BY ARBITRATION TO BE HELD IN SAN MATEO COUNTY, CALIFORNIA, IN ACCORDANCE
WITH THE RULES THEN IN EFFECT OF THE AMERICAN ARBITRATION ASSOCIATION. THE
ARBITRATOR MAY GRANT INJUNCTIONS OR OTHER RELIEF IN SUCH DISPUTE OR CONTROVERSY.
THE DECISION OF THE ARBITRATOR SHALL BE FINAL, CONCLUSIVE AND BINDING ON THE
PARTIES TO THE ARBITRATION. JUDGMENT MAY BE ENTERED ON THE ARBITRATOR'S
DECISION IN ANY COURT HAVING JURISDICTION. THE COMPANY AND I SHALL EACH PAY
ONE-HALF OF THE COSTS AND EXPENSES OF SUCH ARBITRATION, AND EACH OF US SHALL
SEPARATELY PAY OUR COUNSEL FEES AND EXPENSES.
THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EMPLOYEE'S RIGHT TO A JURY
TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF
THE EMPLOYER/EMPLOYEE RELATIONSHIP (EXCEPT AS PROVIDED IN SECTION 10(b) BELOW),
INCLUDING, BUT NOT LIMITED TO, THE FOLLOWING CLAIMS:
i. ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT; BREACH OF
CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT OF GOOD FAITH AND
FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR INTENTIONAL INFLICTION OF
EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL MISREPRESENTATION; NEGLIGENT OR
INTENTIONAL INTERFERENCE WITH CONTRACT OR PROSPECTIVE ECONOMIC ADVANTAGE; AND
DEFAMATION;
ii. ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL, STATE OR
MUNICIPAL STATUTE, INCLUDING, BUT NOT LIMITED TO, TITLE VII OF THE CIVIL RIGHTS
ACT OF 1964, THE CIVIL RIGHTS ACT OF 1991, THE AGE
<PAGE>
DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE AMERICANS WITH DISABILITIES ACT
OF 1990, THE FAIR LABOR STANDARDS ACT, THE CALIFORNIA FAIR EMPLOYMENT AND
HOUSING ACT, AND LABOR CODE SECTION 201, et seq.;
iii. ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND REGULATIONS
RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.
(b) Equitable Remedies. I AGREE THAT IT WOULD BE IMPOSSIBLE OR
-------------------
INADEQUATE TO MEASURE AND CALCULATE THE COMPANY'S DAMAGES FROM ANY BREACH OF THE
COVENANTS SET FORTH IN SECTIONS 2, 3, AND 5 HEREIN. ACCORDINGLY, I AGREE THAT
IF I BREACH ANY OF SUCH SECTIONS, THE COMPANY WILL HAVE AVAILABLE, IN ADDITION
TO ANY OTHER RIGHT OR REMEDY AVAILABLE, THE RIGHT TO OBTAIN AN INJUNCTION FROM A
COURT OF COMPETENT JURISDICTION RESTRAINING SUCH BREACH OR THREATENED BREACH AND
TO SPECIFIC PERFORMANCE OF ANY SUCH PROVISION OF THIS AGREEMENT. I FURTHER
AGREE THAT NO BOND OR OTHER SECURITY SHALL BE REQUIRED IN OBTAINING SUCH
EQUITABLE RELIEF AND I HEREBY CONSENT TO THE ISSUANCE OF SUCH INJUNCTION AND TO
THE ORDERING OF SPECIFIC PERFORMANCE.
(c) Consideration. I UNDERSTAND THAT EACH PARTY'S PROMISE TO RESOLVE
--------------
CLAIMS BY ARBITRATION IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT,
RATHER THAN THROUGH THE COURTS, IS CONSIDERATION FOR OTHER PARTY'S LIKE PROMISE.
I FURTHER UNDERSTAND THAT I AM OFFERED EMPLOYMENT IN CONSIDERATION OF MY PROMISE
TO ARBITRATE CLAIMS.
11. General Provisions.
-------------------
(a) Governing Law; Consent to Personal Jurisdiction. This Agreement
------------------------------------------------
will be governed by the laws of the State of California. I hereby expressly
consent to the personal jurisdiction of the state and federal courts located in
California for any lawsuit filed there against me by the Company arising from or
relating to this Agreement.
(b) Entire Agreement. This Agreement sets forth the entire agreement
-----------------
and understanding between the Company and me relating to the subject matter
herein and merges all prior discussions between us. No modification of or
amendment to this Agreement, nor any waiver of any rights under this agreement,
will be effective unless in writing signed by the party to be charged. Any
subsequent change or changes in duties, salary or compensation will not affect
the validity or scope of this Agreement.
(c) Severability. If one more of the provisions in this Agreement
-------------
are deemed void by law, then the remaining provisions will continue in full
force and effect.
(d) Successors and Assigns. This Agreement will be binding upon my
-----------------------
heirs,
<PAGE>
executors, administrators and other legal representatives and will be for the
benefit of the Company, its successors, and its assigns.
Date:
---------------------- --------------------------------------
Signature
--------------------------------------
Name of Employee (typed or printed)
- ---------------------------
Witness
<PAGE>
EXHIBIT A
---------
LIST OF PRIOR INVENTIONS
AND ORIGINAL WORKS OF AUTHORSHIP
Identifying
Title Date or Brief Description Number
- -------------------------------------------------------------------------------
_______ No inventions or improvements
_______ Additional Sheets Attached
Signature of Employee:
-------------------
Print Name of Employee:
-------------------
Date:
------------------------------------
<PAGE>
EXHIBIT B
---------
CALIFORNIA LABOR CODE SECTION 2870
EMPLOYMENT AGREEMENTS;
ASSIGNMENT OF RIGHTS
"(a) Any provision in an employment agreement which provides that an
employee shall assign, or offer to assign, any of his or her rights
in an invention to his or her employer shall not apply to an
invention that the employee developed entirely on his or her own
time without using the employer's equipment, supplies, facilities,
or trade secret information except for those inventions that
either:
(1) Relate at the time of conception or reduction to practice of
the invention to the employer's business, or actual or
demonstrably anticipated research or development of the
employer.
(2) Result from any work performed by the employee for the
employer.
(b) To the extent a provision in an employment agreement purports to
require an employee to assign an invention otherwise excluded from
being required to be assigned under subdivision (a), the provision
is against the public policy of this state and is unenforceable."
<PAGE>
EXHIBIT C
---------
SUPPORT.COM
-----------
TERMINATION CERTIFICATION
This is to certify that I do not have in my possession, nor have I
failed to return, any devices, records, data, notes, reports, proposals, lists,
correspondence, specifications, drawings, blueprints, sketches, materials,
equipment, other documents or property, or reproductions of any aforementioned
items belonging to Support.com, its subsidiaries, affiliates, successors or
assigns (together, the "Company").
I further certify that I have complied with the terms of the Company's
Employment Confidential Information and Invention Assignment Agreement signed by
me, including the reporting of any inventions and original works of authorship
(as defined therein), conceived or made by me (solely or jointly with others)
covered by that agreement.
I further agree that, in compliance with the Employment, Confidential
Information and Invention Assignment Agreement, I will preserve as confidential
all trade secrets, confidential knowledge, data or other proprietary information
relating to products, processes, know-how, designs, formulas, developmental or
experimental work, computer programs, data bases, other original works of
authorship, customer lists, business plans, financial information or other
subject matter pertaining to any business of the Company or any of its
employees, clients, consultants or licensees.
I further agree that for twelve (12) months from this date, I will
not, directly or indirectly, solicit, induce, recruit or encourage any of the
Company's employees to leave their employment.
Date:
------------------------------
----------------------------------
(Employee's Signature)
----------------------------------
(Type/Print Employee's Name)
<PAGE>
EXHIBIT D
---------
SUPPORT.COM
-----------
CONFLICT OF INTEREST GUIDELINES
It is the policy of Support.com to conduct its affairs in strict
compliance with the letter and spirit of the law and to adhere to the highest
principles of business ethics. Accordingly, all officers, employees and
independent contractors must avoid activities which are in conflict, or give the
appearance of being in conflict, with these principles and with the interest of
the Company. The following are potentially compromising situations which must
be avoided. Any exceptions must be reported to the President and written
approval for continuation must be obtained.
1. Revealing confidential information to outsiders or misusing
confidential information. Unauthorized divulging of information is
a violation of this policy whether or not for personal gain and
whether or not harm to the Company is intended (The Employment,
Confidential Information and Invention Assignment Agreement
elaborates on this principle and is a binding agreement.)
2. Accepting or offering substantial gifts, excessive entertainment,
favors or payments which may be deemed to constitute undue
influence or otherwise be improper or embarrassing to the Company.
3. Participating in civic or professional organizations that might
involve divulging confidential information of the Company.
4. Initiating or approving personal actions affecting reward or
punishment of employees or applicants where there is a family
relationship or is or appears to be a personal or social
involvement.
5. Initiating or approving any form of personal or social harassment
of employees.
6. Investing or holding outside directorships in any competing
companies, including financial speculations, where such investment
or directorship might influence in any manner a decision or course
of action of the Company.
7. Borrowing from or lending to employees, customers, or suppliers.
8. Acquiring real estate of interest to the Company.
9. Improperly using or disclosing to the Company any proprietary
information or trade secrets of any former or concurrent employer
or other person or entity with whom obligations of confidentiality
exist.
<PAGE>
10. Unlawfully discussing prices, costs, customers, sales or markets
with competing companies or their employees.
11. Making any unlawful agreement with distributors with respect to
prices.
12. Improperly using or authorizing the use of any inventions which
are the subject of patent claims of any other person or entity.
Each officer, employee and independent contractor must take every
necessary action to ensure compliance with these guidelines and to bring
problem areas to the attention of higher management for review. Violations of
this conflict of interest policy may result in discharge without warning.
<PAGE>
EXHIBIT 10.19
CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.
OEM AGREEMENT
This OEM Agreement (this "Agreement") is entered into as of July 14, 1999
---------
(the "Effective Date") by and between Tioga Systems, Inc., a Delaware
--------------
corporation ("Tioga"), and At Home Corporation d/b/a Excite@Home, a Delaware
----- -
corporation ("OEM").
---
WHEREAS, Tioga has developed a class of enterprise software management
solutions, known, collectively, as the "Tioga Self-Healing(TM) System;"
-----------------------------
WHEREAS, OEM provides internet services to its customers;
WHEREAS, Tioga desires to license to OEM the Tioga Agent and the Tioga
Healing Console as set forth below;
WHEREAS, OEM desires to license from Tioga the Tioga Agent and Tioga
Healing Console to market and sublicense the Tioga Agent directly to end-users
in conjunction with OEM's internet services and for internal use in OEM's
internet services business;
NOW THEREFORE, in consideration of the mutual covenants set forth herein,
the parties agree as follows:
SECTION 1. DEFINITIONS
-----------
1.1 "Copy" means an exact copy of the software of the Tioga Agent in
object code form only, together with an exact copy of the Documentation and the
Materials.
1.2 "Confidential Information" means information about either party's
business or activities that is proprietary and confidential, which shall include
all business, financial, technical and other information of a party marked or
designed by such party as "confidential" or "proprietary;" or information which,
by the nature of the circumstances surrounding the disclosure, ought in good
faith be treated as confidential, including, without limitation, the specific
terms, pricing and fees set forth in this Agreement.
1.3 "Documentation" means any user manuals and any other support
documentation, as provided by Tioga in electronic file format to be bundled with
the Tioga Agent.
1.4 "End-User" means any third party who is entitled to use the Tioga
Agent in conjunction with services obtained directly from OEM solely for its own
personal or internal use at its principal place of business.
1.5 "First Level Support" means all direct interaction with End-Users
regarding (i) the use and operation of OEM's internet service offerings
including the Product, (ii) the intake and classification of all End-User
inquiries regarding suspected errors in OEM's internet service offerings
including the Product and (iii) the delivery to End-Users of error corrections,
work-arounds, new releases and upgrades that OEM is authorized to provide to
End-Users pursuant to this Agreement.
Tioga Systems, Inc. Page 1
Proprietary and Confidential
<PAGE>
1.6 "Intellectual Property Rights" means patent rights (including patent
applications and disclosures), copyrights (including copyright applications),
trade secrets, moral rights, know-how and any other similar rights or intangible
assets recognized under any laws or international conventions, and in any
country or jurisdiction in the world, as intellectual creations to which rights
of ownership accrue.
1.7 "Product" means the Tioga Healing Console, the Tioga Agent, and the
OEM Factory as described in Schedule A, including any new releases, bug fixes,
----------
patches, work-arounds or maintenance upgrades that Tioga provides to OEM,
together with the Documentation.
1.8 "Second Level" support means the resolution of suspected errors
reported by End-Users that do not require access to the Product source code to
resolve and the resolution of End-User questions regarding the use and operation
of OEM's internet service offerings including the Products, including, without
limitation, (i) having qualified, trained OEM technical employees review all
reported errors to determine if such error is the result of software or hardware
other than the Products, (ii) if OEM determines that there is an error in a
Product, having such employees submit a detailed description of the error to
Tioga sufficient for Tioga to reproduce the error, or if OEM is not able to
replicate the error, OEM will provide any additional information required by
Tioga including, if possible, remote access to the End-User's computer system
and (iii) making its technical staff available to Tioga for problem
identification and resolution.
1.9 "Third Level Support" means the resolution by Tioga of errors in
Product source code or documentation for OEM in accordance with Tioga's
maintenance and support procedures that are generally applicable to Tioga's
customers that are under Product maintenance and support plans, including
providing to OEM any bug fixes, patches, work-arounds or maintenance upgrades of
the Product made generally available by Tioga to its customers that are under
maintenance and support plans.
1.10 "Tioga Agent" means the software described as Tioga Agent on Schedule
A hereto.
1.11 "Tioga Healing Console" means the software described as the Tioga
Healing Console on Schedule A hereto.
1.12. "OEM Cable Distribution Affiliates" means cable companies who provide
internet services to OEM's End-Users and who distribute and support the software
licensed by OEM to OEM's End-Users pursuant to agreements with OEM. All OEM
Cable Distribution Affiliates must be subject to an agreement with respect to
the Products at least as restrictive as the terms and conditions contained
herein.
1.13. "OEM Factory" means the software described as the OEM Factory on
schedule A hereto.
1.14 "OEM Independent Contractors" means the third party consultants
working under OEM's direct guidance and subject to a confidentiality agreement
at least as restrictive as those set forth in this Agreement; provided however,
that no consultant may be the employee of or a Tioga competitor.
Tioga Systems, Inc. Page A-2
Proprietary and Confidential
<PAGE>
1.15 "Licensed Applications" means internet connectivity and client
applications that OEM is providing to the End User as part of OEM's internet
service offering bundle.
1.16 "Tioga Marks" means the mark TIOGA, the mark SELF-HEALING, the Tioga
Logo (shown below), and the composite mark including the mark TIOGA and the
Tioga Logo.
1.17 "Tioga ***" means any of *** or *** or any successor entity
thereto, and any entity added by written notice as set forth in this Section
1.15 from Tioga to OEM during the term of this Agreement. For the purposes of
Section 1.13, Tioga may add additional ***during the term of the Agreement upon
written notice to OEM. For the purposes of Section 8.9, Tioga may add
additional ***during the term of the Agreement upon ninety (90) days written
notice to OEM.
SECTION 2. LICENSE GRANT
-------------
2.1. License Grant. Subject to the limitations set forth in Section 2.3
-------------
hereof and to the other terms and conditions of this Agreement, Tioga hereby
grants to OEM, during the term of this Agreement, a royalty bearing, non-
exclusive, non-transferable, worldwide license to copy and sublicense the Tioga
Agent as part of a bundled service offering only with OEM's internet service
offerings, and only to End-Users who have previously agreed in writing, or have
otherwise agreed via a binding shrinkwrap or clickwrap license, to be bound by a
license agreement (i) in substantially the form attached as Exhibit A hereto or
(ii) including terms that are at least as restrictive as the terms set forth on
Exhibit A (an "End-User License Agreement"). Except as required by applicable
--------------------------
law, the End-User License Agreement shall not be transferable or sublicensable
by the End-User.
2.2 Product Use Grant. Subject to the limitations set forth in Section
-----------------
2.3 hereof and the other terms and conditions of this Agreement, Tioga grants to
OEM, during the term of this Agreement, a non-exclusive, non-transferable
license in the United States
(i) to make, use and display Copies of the Products for the sole purpose
of carrying out marketing, advertising and promotional activities
directed to End-Users,
(ii) to make Copies and to use internally such Copies of the Products for
the sole purpose of supporting and maintaining the Products;
(iii) to make Copies and to use internally such Copies of the Tioga Agent
and the Tioga Healing Console to diagnose and repair End-User
systems which have a Tioga Agent that has been properly sublicensed
pursuant to the terms of this agreement, and
(iv) to make Copies and to use internally such Copies of the OEM Factory
to configure properly sublicensed copies of the Tioga Agent, as
permitted by this Agreement; and
Tioga Systems, Inc.
Proprietary and Confidential
* CONFIDENTIAL MATERIALS REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
Page A-3
<PAGE>
(v) to sublicense OEM's rights under subsections (i), (ii) and (iii) to
OEM's Cable Distribution Affiliates.
2.3 Limitations.
-----------
2.3.1 Copying Limitations. OEM may only make Copies of the Products
-------------------
at its own facilities and may not permit any third party to make Copies of the
Product without Tioga's prior written approval; provided, however, that OEM may
have Copies made by OEM Cable Distribution Affiliates for distribution to OEM's
End-Users only. OEM shall reproduce, and shall ensure that all OEM Cable
Distribution Affiliates reproduce, on all Copies of the Product, the unaltered
copyright and proprietary information notices that are affixed to the original
copy of the Product delivered to OEM by Tioga, or any subsequent version or
update thereof provided by Tioga to OEM. OEM shall make and have made only the
minimum number of Copies of the Product as is necessary for OEM to fill its
orders from End-Users plus no more than ten (10) additional Copies in order to
carry out its support and maintenance and promotional, advertising and marketing
activities, as permitted in Section 2.2 hereof.
2.3.2. No Delegation. Except as expressly provided herein, OEM may
-------------
not use sub-distributors, agents, OEMs or otherwise sublicense its rights or
delegate any of its obligations hereunder in any manner; provided, however, that
(a) OEM may have Copies made and distributed by OEM Cable Distribution
Affiliates to OEM's End-Users only, (b) OEM may have OEM Cable Distribution
Affiliates provide First Level Support to OEM's End-Users only. and (c) OEM may
use OEM Independent Contractors solely to exercise OEM's rights under Section
2.2 (i)-(iv).
2.3.3. Tioga Agent. The Tioga Agent may only be configured,
-----------
sublicensed and used to protect, diagnose, and repair Licensed Applications.
The Tioga Agent may only be (i) sublicensed as part of an OEM internet service
offering bundle, (ii) sublicensed and used to protect Licensed Applications by
returning the application to a previous working state, and (iii) used for
application repair by the End-User or OEM. The Tioga Healing Console may only be
used to diagnose and repair End-User systems which have a Tioga Agent that has
been properly sublicensed per the terms of this agreement. Neither the OEM
Factory nor the Tioga Healing Console may be sublicensed by OEM, except as
expressly provided herein, and each may only be copied for use by OEM at their
principal place of business. The OEM Factory may only be used to configure
properly sublicensed copies of the Tioga Agent prior to providing use of such
Tioga Agent to end users as allowed by this agreement. Under no circumstances
may the Tioga Agent be used to protect or repair any applications other than
those permitted herein by Section 2.3.3.(ii).
2.4 Retention of Ownership. Except as expressly licensed to OEM herein,
----------------------
Tioga and its licensors retain all right and title to (i) all Intellectual
Property related to the Product and all Copies thereof (by whomever produced)
and (ii) all Intellectual Property of Tioga. OEM shall take any actions
reasonably requested by Tioga, including the execution, registration and
recordation of instruments, that may be necessary or appropriate to assign these
rights to Tioga or its licensor or perfect these rights in Tioga's or its
licensor's name, provided that Tioga agrees to reimburse OEM's reasonable out-
of-pocket expenses incurred in taking such actions. Except as set forth in
Section 2.5 ("Source Escrow") below, OEM will have no right to receive or
license any source code with respect to any Product. Tioga and its licensors
reserve all rights and licenses to the Products not expressly granted to OEM
hereunder. OEM shall acquire no right, title or interest in any
Tioga Systems, Inc. Page A-4
Proprietary and Confidential
<PAGE>
Intellectual Property related to the Products or any Copies thereof (by whomever
produced) other than the license rights as described by Section 2 of this
Agreement. All usage of such Intellectual Property shall inure to Tioga's
benefit. OEM shall not at any time do any act which would impair such
Intellectual Property. OEM agrees to take no action inconsistent with Tioga's
ownership of and interest in such Intellectual Property, or assist any third
party in doing the same.
2.5 Source Code Escrow.
------------------
2.5.1 The parties agree that Tioga will deposit a copy of all source
code to the Products, and subsequently developed error corrections and updates
provided to OEM by Tioga pursuant to this Agreement (the "Source Code"), any
development tools owned or controlled by Tioga and internal technical
documentation as is required for the compilation and implementation of the
Source Code (collectively, the "Deposit") in confidential escrow with a
mutually agreed upon third party escrow company, within thirty (30) days of the
execution of this Agreement. Such escrow will be subject to the procedures,
terms and conditions set forth in an escrow agreement between Tioga, OEM and the
third party escrow company in a form mutually agreed upon by the parties. The
parties agree to share the fees and other costs of the third party escrow
company equally.
2.5.2 Release Conditions. Tioga agrees that OEM has the right to
------------------
obtain the Deposit from escrow immediately upon the occurrence of any of the
following events: (i) Tioga's material breach of its support and maintenance
obligations which remains uncured forty-five (45) days after OEM's written
notice to Tioga specifying such material breach; (ii) Tioga's decision to
abandon that portion of its business relating to the Products; (iii) Tioga's
failure to continue to do business; (iv) Tioga becoming the subject of a
voluntary proceeding relating to insolvency, receivership, liquidation, or
composition for the benefit of creditors; (v) Tioga becomes the subject of an
involuntary petition in bankruptcy, or any involuntary proceeding relating to
the insolvency, receivership, liquidation, or composition for the benefit of
creditors, if such petition or proceeding is not dismissed within sixty (60)
days of filing.
2.5.3 In the event of a release of the Deposit, OEM shall be entitled
to use the Deposit only to the extent set forth in the license granted under
Section 2.5.3 below.
2.5.4 SOURCE CODE LICENSE. TIOGA HEREBY GRANTS OEM A NON-EXCLUSIVE,
-------------------
NON-TRANSFERABLE ROYALTY FREE LICENSE TO USE, COPY, AND MODIFY THE SOURCE CODE
AND OBJECT CODE FOR THE pRODUCTS FOR THE SOLE PURPOSE OF MAINTAINING AND
SUPPORTING THE PRODUCTS IN THE EVENT OF A RELEASE OF THE DEPOSIT FROM ESCROW.
SECTION 3. DELIVERY
--------
3.1. Delivery of Documentation and Materials. From time to time, Tioga
---------------------------------------
shall deliver to OEM Documentation in electronic file format.
3.2. Delivery of the Products. Tioga shall deliver to OEM a golden master
------------------------
electronic copy of the Products, in object code format (the "Golden Master"), on
-------------
the Effective Date of this Agreement at the "ship to" address set forth below.
The Golden Master may contain software that
Tioga Systems, Inc. Page A-5
Proprietary and Confidential
<PAGE>
is not licensed to OEM under this Agreement, and OEM acknowledges that it has no
right to such software and agrees not to use such unlicensed software for any
purpose.
3.3. Replacement Version. If at any time during this Agreement Tioga
-------------------
notifies OEM of the development of a replacement version or update of the
Products or any part thereof, OEM shall use reasonable commercial efforts to
cease use and distribution of the existing version of the Products, or the
affected part thereof:
(a) if Tioga provides OEM with thirty (30) days advance notice of such
replacement version or update and such version or update is related
to a possible infringement or warranty issue, as determined in
Tioga's reasonable discretion, then within ten (10) days after Tioga
makes such version or update available to OEM; and
(b) in any other case, as soon as practicable, but in no event later than
eighteen months (18) after Tioga makes the replacement version or
update of the Products available to OEM.
Tioga will provide OEM with reasonable notice of and documentation
explaining any such replacement version or update such that OEM can make a
replacement with minimal disruption to End Users.
SECTION 4. LICENSE FEES
------------
4.1. License Fees. Subject to the terms and conditions of this Agreement,
------------
OEM shall pay to Tioga license fees of ***(USD$***) pursuant to the schedule set
forth below for right to copy and sublicense the Tioga Agent product during the
initial term of this Agreement, such fees are non-refundable. Payments shall be
due on the Payment Date shown below.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Payment Date Amount of License Fee Due
- -----------------------------------------------------------------------------
<S> <C>
*** $***
- -----------------------------------------------------------------------------
*** $***
- -----------------------------------------------------------------------------
*** $***
- -----------------------------------------------------------------------------
*** $***
- -----------------------------------------------------------------------------
*** $***
- -----------------------------------------------------------------------------
*** $***
- -----------------------------------------------------------------------------
*** $***
- -----------------------------------------------------------------------------
*** $***
- -----------------------------------------------------------------------------
*** $***
- -----------------------------------------------------------------------------
*** $***
- -----------------------------------------------------------------------------
*** $***
- -----------------------------------------------------------------------------
*** $***
- -----------------------------------------------------------------------------
*** $***
- -----------------------------------------------------------------------------
*** $***
- -----------------------------------------------------------------------------
Total: USD$***
- -----------------------------------------------------------------------------
</TABLE>
Tioga Systems, Inc.
Proprietary and Confidential
* CONFIDENTIAL MATERIALS REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
Page A-6
<PAGE>
4.2 Taxes. OEM will pay all transportation charges and shall be
-----
responsible for all taxes (except Tioga's income or property taxes) duties and
other governmental assessments incurred by either party as a result of the
consummation of the transactions contemplated by this Agreement. OEM shall be
solely responsible for any withholding or other taxes due to any government
other than the United States government and shall not withhold any such amounts
from payments to Tioga. OEM acknowledges and agrees that it shall be the
obligation of OEM to report income received by OEM hereunder to all appropriate
taxing entities.
4.3 Late Payments. Payments not received by Tioga within forty-five days
after the due date shall be subject to late payment interest charges at a rate
of one and one-half percent (1.5%) per month or the maximum allowed by law,
whichever is lower.
SECTION 5. CUSTOMER SUPPORT AND CONSULTING
5.1. First and Second Level Support. OEM shall provide to End-Users all
------------------------------
First Level Support and all Second Level Support with respect to the Tioga
Agent, and shall distribute bug fixes, patches, work-arounds and other benefits
of the Third Level Support which it receives from Tioga to OEM's End-Users. OEM
will identify for Tioga a primary point of contact for managing all support
communications, and an escalation point of contact for escalating any issues
related to support or maintenance services.
5.2. Third Level Support. Tioga will provide Third Level Support directly
-------------------
to OEM. Tioga shall have no obligation to provide Third Level Support directly
to any End-User. Tioga will also identify for OEM a primary point of contact
for managing all support communications, and an escalation point of contact for
escalating any issues related to support or maintenance services.
5.3 Technical Consulting. Subject to the payment of the applicable
---------------------
Consulting Fees, Tioga will provide technical consulting services to OEM with
respect to (a) limited customization of the Tioga Agent and (b) support of OEM's
use, configuration and deployment of the Tioga Agent, as reasonably requested by
OEM. OEM may request up to ten person days of such consulting services in
connection with the initial deployment of the Tioga Agent, ten person days of
such consulting services in connection with the subsequent deployment of the
Tioga Agent during September through November 1999 ("Subsequent Fall
Deployment"), and consulting services as mutually agreed upon in writing by the
parties and paid for by OEM during each quarter thereafter. Tioga will provide
OEM with up to () person days of technical consulting services *** for each of
(a) the initial deployment and (b) the Subsequent Fall Deployment and up to ()
additional person days of technical consulting services ***during the initial
term of this Agreement; provided however that such technical consulting services
must be used during the applicable period, or such services will be forfeited .
For all other technical consulting services, OEM will pay to Tioga a Consulting
Fee of *** (USD$***) per person day, plus reimburse Tioga for all reasonable
travel and expenses approved by OEM prior to expenditure.
SECTION 6. EXPENSES
--------
6.1. Each party will be responsible for their own travel and other
expenses required to negotiate and execute this Agreement.
Tioga Systems, Inc.
Proprietary and Confidential
* CONFIDENTIAL MATERIALS REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
Page A-7
<PAGE>
6.2. Except for fees payable to Tioga for consulting as provided in
Section 5 or as otherwise expressly set forth herein, (a) OEM and Tioga will not
charge each other for personnel time expended in the performance of the
Agreement, and (b) each of OEM and Tioga will be responsible for its own
expenses in connection with the exercise of its rights or performance of its
obligations under this Agreement.
SECTION 7. RECORDS. DURING THE TERM OF THIS AGREEMENT AND FOR ONE (1) YEAR
-------
AFTER ITS TERMINATION, OEM AGREES (A) TO RETAIN ALL USUAL AND PROPER RECORDS AND
BOOKS OF ACCOUNT AND ALL USUAL AND PROPER ENTRIES RELATING TO THE PRODUCTS
SUFFICIENT TO SUBSTANTIATE OEM'S COMPLIANCE WITH THIS AGREEMENT AND (B) NO MORE
THAN ONCE PER YEAR, TO ALLOW TIOGA'S REPRESENTATIVE TO REVIEW, AUDIT AND INSPECT
OEM'S DOCUMENTS, FINANCIAL STATEMENTS, OR BUSINESS RECORDS, COMPUTER PROCESSORS,
EQUIPMENT AND FACILITIES FOR THE PRECEDING ONE (1) YEAR IN ORDER TO VERIFY OEM'S
COMPLIANCE WITH THE TERMS OF THIS AGREEMENT. ANY REVIEW, AUDIT AND/OR
INSPECTION SHALL BE CONDUCTED DURING REGULAR BUSINESS HOURS AT OEM'S AND/OR
OEM'S SUBSIDIARY'S FACILITIES ON REASONABLE PRIOR NOTICE. ANY AUDIT SHALL BE
CONDUCTED BY AN INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT SELECTED BY tIOGA AND
ACCEPTABLE TO OEM (BUT OEM MAY NOT UNREASONABLY WITHHOLD OR DELAY SUCH
ACCEPTANCE), AND AT TIOGA'S EXPENSE EXCEPT AS SET FORTH IN THE LAST SENTENCE OF
THIS SECTION 7 BELOW. IF TIOGA'S REPRESENTATIVE'S REVIEW, AUDIT OR INSPECTION
REVEALS ANY MATERIAL BREACH OF THIS AGREEMENT AS REASONABLY ESTABLISHED BY
TIOGA, THEN WITHIN THIRTY (30) DAYS AFTER RECEIVING NOTICE THEREOF OEM SHALL
REIMBURSE TIOGA FOR ALL REASONABLE COSTS OF THE AUDIT, IN ADDITION TO ANY OTHER
REMEDIES THAT TIOGA IS ENTITLED TO UNDER THE LAW.
SECTION 8. MARKETING
---------
8.1. Marketing Efforts. OEM shall, at its own expense, use its
-----------------
commercially reasonable efforts to execute a marketing campaign to increase
awareness of the strategic relationship and to actively promote and market the
value and differentiation the Products bring to OEM's internet service offerings
to its customers and prospective customers.
8.2 General Announcement. Both parties may communicate the general
--------------------
existence of this Agreement to other parties, including the general marketing,
OEM, and cooperative development aspects, provided, however, that specific terms
of pricing, as well as specific terms and conditions in this Agreement may not
be disclosed.
8.3 Joint Press Releases. OEM and Tioga will cooperate to provide joint
--------------------
press releases and press and analyst communications regarding the relationship
from time to time as mutually and reasonably agreed upon in writing, including
without limitation, a joint press release announcing the partnership shortly
after this agreement is signed.
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8.4 Joint Marketing. Tioga and OEM will cooperate on joint marketing,
---------------
including events, seminars, customer mailings, customer success stories and case
studies, supporting quotes, and other activities as mutually agreed upon.
8.5 Reference. OEM will serve as a reference for Tioga and the Products,
---------
including for example, providing executive quotes, having executives speak on
occasion with press, analysts and prospective and current Tioga customers.
Without limiting the generality of the foregoing, OEM agrees to have
executive(s) participate in live calls with press, analysts or prospects.
8.6 Support of OEM Marketing. Tioga will provide reasonable support for
------------------------
OEM's efforts related to marketing OEM's internet service support and service
levels, including, for example, providing executive quotes, having executives
speak on occasion with press and analysts, upon OEM's reasonable request.
8.7 Success Story. OEM agrees to serve as a subject of a success story
-------------
discussing OEM's use of the Products. The target audience for such piece will
be Tioga's prospects and customers. Tioga will author such collateral piece and
OEM will be provided with a draft of the collateral piece for review and
approval, not to be unreasonably withheld.
8.8 Preferred Provider. OEM will acknowledge Tioga as the leading provider
------------------
of software programs that repair or "heal" other software applications and as
the first and primary provider of OEM's support solution.
8.9 *** of *** OEM will *** Tioga a *** of *** for providing support
---
solutions *** OEM purchases products *** a Tioga ***. OEM will allow Tioga the
*** to prepare and *** OEM with a *** to provide the functionality that OEM
desires *** a Tioga ***, such first *** will be for the *** of *** (***) ***.
During such *** (***) day period, OEM will not *** the *** functionality that
OEM desires *** any Tioga ***. If after such *** (***) ***period, OEM is ***
purchasing products *** one *** a Tioga *** then OEM will provide Tioga with ***
of the terms and conditions of *** proposed. Tioga will have *** (***) business
days to respond to OEM's notice *** a proposal of *** OEM agrees to accept
Tioga's *** if the *** and *** of *** proposals are *** or if the *** and *** of
Tioga's *** are more *** OEM than the Tioga *** proposal.
8.10 Tioga Trademark License. Tioga hereby grants to OEM a royalty-free,
-----------------------
non-exclusive, non-transferable, worldwide license to use the Tioga Marks solely
in connection with the sales and marketing of the Products in the United States.
8.10.1 OEM agrees to comply with the Tioga Trademark Usage Guidelines set
forth on Exhibit B attached hereto.
8.10.2 OEM shall ensure that all advertisements, marketing materials or
other documents on which the Tioga Marks are placed (the "Marked
Materials") shall not reflect adversely upon the good name of
Tioga. OEM acknowledges that if the Marked Materials distributed by
OEM were of inferior quality in design, material or workmanship,
the substantial good will which Tioga has established and now
possesses through the Tioga Marks would be impaired. Accordingly,
OEM agrees that the Marked Materials shall be of high standard and
of such nature, style, appearance and quality as shall be
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adequate and suited to the protection of the Tioga Marks and the
goodwill associated therewith.
8.10.3 Upon Tioga's request, OEM shall provide to Tioga, free of cost, two
samples of Marked Materials. Tioga, in Tioga's reasonable
discretion, shall determine whether (i) the Marked Materials
submitted by OEM comply with this Agreement, and (ii) such Marked
Materials are of a high standard and of such nature, style,
appearance and quality as to be adequate and suited to the
protection and enhancement of the Tioga Marks and the goodwill
associated therewith. If Tioga disapproves of any sample of the
Marked Materials, Tioga shall provide OEM with the specific reasons
for such disapproval.
8.10.4 OEM shall promptly make all such changes to the Marked Materials as
Tioga shall reasonably request to protect the value of the Tioga
Marks.
8.10.5 OEM shall not use the Tioga Marks on Marked Materials that are
disapproved by Tioga or on non-conforming Marked Materials.
8.10.6 OEM shall use commercially reasonable efforts to cease use and/or
distribution of any non-conforming Marked Materials.
8.10.7 Tioga shall have the right to inspect Marked Materials upon
reasonable prior notice to OEM and during OEM's normal business
hours to confirm that Marked Materials conform to approved Marked
Materials.
8.10.8 OEM shall not use the Tioga Marks, or any part thereof, as part of
or in conjunction with any other names or trademarks except with
Tioga's prior written approval. OEM shall not use the Tioga Marks
or any confusingly similar or diluting mark, term or design, except
as expressly authorized in this Agreement, and OEM shall not
attempt to register or aid any third party in using or attempting
to register any such mark, term or design. OEM shall not use any of
the Tioga Marks in any manner that will indicate that it is using
such mark other than as a licensee.
8.10.9 Refusal to submit samples, or non-compliance with the provisions of
Section 8.10 of this Agreement and/or the Tioga Trademark Usage
Guidelines set forth in Exhibit B, will result in Tioga's right to
revoke OEM's license to use the Tioga Marks.
8.10.10 The Tioga Marks and the goodwill associated therewith are and
remain Tioga's exclusive property. OEM shall acquire no right,
title or interest in the Tioga Marks or the goodwill associated
therewith, other than the limited license and right to use the
Tioga Marks set forth by the express terms of this Agreement. All
usage of the Tioga Marks by OEM shall inure to Tioga's benefit. OEM
shall not at any time do or suffer to be done any act which would
impair the Tioga Marks or the goodwill associated therewith. OEM
shall take any actions reasonable requested by Tioga, including the
execution of instruments, that may be necessary or appropriate to
register or otherwise confer or perfect Tioga's rights in the Tioga
Marks in any jurisdiction in Tioga's
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name. OEM agrees to take no action inconsistent with Tioga's
ownership of and interest in the Tioga Marks, or assist any third
party in doing any of the same.
8.10.11 Under no circumstances will anything in this Agreement be construed
as granting, by implication, estoppel or otherwise, any licenses or
rights in the Tioga Marks not expressly granted to OEM in this
Section 8.10.
8.10.12 OEM shall promptly notify Tioga in writing of any actual or
suspected infringement of the Tioga Marks by a third party of which
OEM becomes aware and of any evidence in OEM's possession or
control. OEM shall cooperate, at Tioga's expense, with Tioga's
efforts to investigate, terminate and recover damages for any
actual or suspected infringement of the Tioga Marks.
8.11. OEM Trademark License. Subject to the terms and conditions of
---------------------
Exhibit C hereto, OEM hereby grants to Tioga a royalty-free, non-exclusive, non-
transferable license in the United States to use OEM's logos and trademarks, as
set forth on Exhibit C hereto, in conformance with OEM's standard trademark
guidelines as revised by OEM from time to time and provided to Tioga in writing,
solely in connection with the sales, promotion and marketing with respect to the
Products, and only as used in compliance with this Agreement. The OEM logos and
trademarks and all ownership rights, including goodwill, therein remain with OEM
and under no circumstances will anything in this Agreement be construed as
granting, by implication, estoppel or otherwise, any licenses or rights in any
OEM logo or trademark not expressly granted to Tioga in this Section 8.11.
Tioga shall promptly notify OEM in writing of any actual or suspected
infringement of OEM's logos or trademarks by a third party of which Tioga
becomes aware in the course of fulfilling Tioga's obligations hereunder and of
any evidence thereof that comes into Tioga's possession in the course of
fulfilling Tioga's obligations hereunder. Tioga shall cooperate, at OEM's
expense, with OEM's efforts to investigate, terminate and recover damages for
any actual or suspected infringement of OEM's logos or trademarks.
8.12. Creation of Hyper-Links. OEM and Tioga will cooperate in good faith
-----------------------
to develop and publish Web site entries on their respective web sites in order
to promote their strategic relationship and include cross links to each other's
web sites. When the hyper-links are activated, the End-User shall be linked
directly to the parties respective Home Pages and not to any other Web site
page. The materials and any information made available on either party's Web
site are provided "AS IS AND WITHOUT WARRANTY OF ANY KIND". Materials and
information made available on Tioga's Web site shall not in anyway be deemed a
representation or warranty of Tioga with respect to the Products.
8.13 Conditions. OEM and Tioga each agree (i) to conduct its marketing,
----------
promotion and sales activities in a manner that reflects favorably at all times
on OEM's internet service offerings and the Products and the good name, goodwill
and reputation of OEM and Tioga; and (ii) to avoid deception, misleading or
unethical practices that are or might be detrimental to Tioga, OEM, or the
public, including but not limited to, disparagement of Tioga, OEMor their
products, and acceptance or payment of bribes, kickbacks or secret profits. OEM
further agrees (a) to make no representations, warranties or guarantees, whether
express or implied, to End-Users or others with respect to the specifications,
features or capabilities of Products other than those stated in writing in the
Documentation or marketing and sales materials provided by Tioga; and (b) not to
publish or
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use (or cooperate in the publication or use of) any written or printed materials
about the Products not provided by Tioga without Tioga's prior written consent
or any misleading or deceptive advertising material. Tioga further agrees (y) to
make no representations, warranties or guarantees, whether express or implied,
to End-Users or others with respect to the specifications, features or
capabilities of OEM's internet service offerings other than those stated in
writing in the documentation or marketing and sales materials provided by OEM;
and (z) not to publish or use (or cooperate in the publication or use of) any
written or printed materials about OEM's internet service offerings not provided
by OEM without OEM's prior written consent or any misleading or deceptive
advertising material with respect to OEM's internet service offerings.
SECTION 9. OEM REPRESENTATIONS
-------------------
9.1. OEM shall not (and shall not allow any third party to) (i)
decompile, disassemble, or otherwise reverse engineer (except to the extent that
applicable law prohibits reverse engineering restrictions) or attempt to
reconstruct or discover any source code, underlying ideas, algorithms, file
formats or programming or interoperability interfaces of the Products by any
means whatsoever, (ii) remove any product identification, copyright or other
notices, (iii) other than as permitted by this Agreement, lease, lend, use for
timesharing, service bureau or hosting purposes or otherwise use or allow others
to use the Products to or for the benefit of third parties, (iv) modify, or,
except to the extent expressly authorized herein, incorporate into or with other
software or create a derivative work of any part of the Products, (v) except as
expressly permitted by this Agreement and requested by Tioga, disseminate
information or analysis (including, without limitation, benchmarks) regarding
the quality or performance of the Products from any source other than Tioga,
except to OEM Cable Distribution Affiliates who are subject to confidentiality
restrictions at least as restrictive as those set forth herein, without prior
written authorization by Tioga and, (vi) except as expressly permitted by this
Agreement, use the output or other information generated by the Products
(including, without limitation, output describing the structure of a software
program) for any purpose other than use of the Products in accordance with its
specifications.
9.2. OEM shall comply with all laws and regulations applicable to this
Agreement or the transactions contemplated hereby, including without limitation
all laws and regulations related to export of the Products. The Products may
not be exported by OEM unless OEM complies with any applicable export laws and
regulations and unless OEM obtains all licenses required therefor. Tioga agrees
to provide OEM notice of the export licenses which Tioga holds with respect to
the Products.
9.3. Except to the extent prohibited by agreements between OEM and End-
Users, OEM shall provide Tioga with periodic information as to any problems
encountered with the Products and any resolutions arrived at for those problems,
and to communicate promptly to Tioga any and all modifications, design changes
or improvements of the Products suggested by any End-User, employee or agent.
OEM further agrees (i) that Tioga shall have any and all right, title and
interest in and to any such suggested modifications, design changes or
improvements of the Products, without the payment of any additional
consideration therefor either to OEM, or its employees or agents and (ii) that
it will reasonably cooperate with Tioga in this regard.
9.4. Except to the extent prohibited by agreements between OEM and End-
Users, OEM shall provide Tioga with periodic information as to the nature and
frequency of desktop and/or
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network malfunctions encountered by the End-Users and how such malfunctions were
detected and/or repaired (whether or not using the Products).
9.5. OEM will, and its OEM Cable Distribution Affiliates will, perform
First and Second Level Support to qualified End-Users in a timely and
professional manner.
9.6. Enforcement. OEM hereby agrees to enforce against all End-Users the
-----------
material provisions of the applicable End-User License Agreement. If OEM learns
that any End-User has breached any such provision, OEM will immediately notify
Tioga and take, at OEM's expense, all reasonable steps that may be available to
enforce such agreement, including availing itself of actions for seizure or
injunctive relief. If OEM fails to take such reasonable steps in a timely and
adequate manner, OEM will provide such assistance to Tioga as it reasonably
requests in enforcing such agreement.
SECTION 10. CONFIDENTIALITY
---------------
Each party agrees that it will hold in strict confidence and not
disclose the Confidential Information of the other party to any third party and
to use the Confidential Information of the other party for no purpose other than
the purposes expressly permitted by this Agreement. Each party shall only
permit access to the other party's Confidential Information to those of its
employees having a need to know and who have signed confidentiality agreements
containing terms at least as restrictive as those contained in this Section 10.
Each party shall maintain the confidentiality and prevent accidental or other
loss or disclosure of any Confidential Information of the other party with at
least the same degree of care as it uses to protect its own Confidential
Information but in no event with less than reasonable care.
A party's obligations of confidentiality under this Agreement shall not
apply to information which such party can document (i) is in the public domain
without the breach of any agreement or fiduciary duty or the violation of any
law, (ii) was known to the party prior to the time of disclosure without the
breach of any agreement or fiduciary duty or the violation of any law, (iii) is
independently developed by the party prior to receiving such Confidential
Information without reference to any Confidential Information, (iv) is required
to be disclosed pursuant to a judicial order, a requirement of a governmental
agency or by operation of law, provided that such party gives the other party
written notice of any such requirement immediately after learning of any such
requirement, and takes all reasonable measures to avoid or limit disclosure
under such requirements and to obtain confidential treatment or a protective
order and has allowed such other party to participate in the proceeding. Upon
written request by either party hereto, the other party shall promptly return
all documents and other tangible materials representing the requesting party's
Confidential Information and all copies thereof.
SECTION 11. LIMITED LIABILITY
-----------------
EXCEPT FOR WITH RESPECT TO INDEMNITY OBLIGATIONS UNDER SECTION 12, AS TO
BREACHES OF THE OBLIGATIONS UNDER SECTION 2.5.3 AND 10 AND AS TO WILLFUL
BREACHES OF THE OBLIGATIONS UNDER SECTION 2.3, 2.5.3, 9.1, 9.2 AND 9.6,
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, NEITHER TIOGA, OEM,
NOR THEIR SUPPLIERS SHALL BE LIABLE OR OBLIGATED
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WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT OR UNDER CONTRACT,
NEGLIGENCE, STRICT LIABILITY OR ANY OTHER LEGAL OR EQUITABLE THEORY (I) FOR ANY
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT LIMITATION, FOR
ANY COST OF PROCUREMENT OF SUBSTITUTE GOODS, TECHNOLOGY, SERVICES OR RIGHTS);
(II) FOR INTERRUPTION OF USE OR LOSS OR CORRUPTION OF DATA; OR (III) FOR ANY
MATTER BEYOND ITS REASONABLE CONTROL. SOME STATES DO NOT ALLOW THE EXCLUSION OR
LIMITATION OF INCIDENTAL OR CONSEQUENTIAL DAMAGES, SO THE ABOVE LIMITATIONS AND
EXCLUSIONS MAY NOT APPLY. IN NO EVENT WILL TIOGA'S OR ITS SUPPLIERS' AGGREGATE
LIABILITY TO OEM BASED ON INTELLECTUAL PROPERTY INFRINGEMENT INDEMNITY UNDER
SECTION 12.1 EXCEED ***($***); PROVIDED HOWEVER THAT IF TIOGA PROVIDES A HIGHER
LIMITATION ON LIABILITY FOR INTELLECTUAL PROPERTY INFRINGEMENT BASED ON THE
PRODUCTS TO ANY THIRD PARTY, THE FOREGOING AMOUNT SHALL BE INCREASED TO THE
LESSER OF SUCH HIGHER LIMITATION AND ***($***). NOTWITHSTANDING THE FOREGOING
SENTENCE, THE FOREGOING LIMIT SHALL NOT APPLY TO INFRINGEMENT INDEMNITY BASED ON
COPYRIGHT, TRADE SECRET AND UNITED STATES TRADEMARKS.IN NO EVENT WILL TIOGA'S OR
ITS SUPPLIERS' AGGREGATE LIABILITY TO OEM BASED ON ANY OTHER CLAIM EXCEED AN
AMOUNT EQUAL TO THE AGGREGATE OF THE FEES PAID TO TIOGA BY OEM WITH RESPECT TO
THE PRODUCTS THAT ARE THE SUBJECT OF THE CLAIM DURING THE TWELVE MONTH PERIOD
PRIOR TO THE CAUSE OF ACTION.
SECTION 12. INDEMNIFICATION
---------------
12.1. By Tioga. Tioga shall indemnify and hold harmless OEM against all
--------
damages, costs, expenses, and liabilities (including reasonable attorneys' fees
and expenses) (collectively, "Damages") arising out of any claim of infringement
-------
of a copyright or a patent claim or trademark or misappropriation of a trade
secret is asserted against OEM by a third party based upon OEM's exercise of its
rights in full compliance with this Agreement including OEM's use, in full
compliance with this Agreement, of Tioga's trademarks in the promotion or
marketing of the Products; provided, that, in each case, Tioga shall have (x)
received from OEM written notice of said claim as soon as practicable after the
assertion thereof, provided however that if there is a delay in providing such
notice that materially and adversely prejudices the defense of such claim Tioga
shall be released from the indemnification obligations set forth in this Section
12.1. ; (y) have received from OEM the exclusive right to control and direct the
investigation, defense, or settlement of such claims; and (z) received the
complete cooperation and assistance of OEM so long as Tioga reimburses OEM's
reasonable out-of-pocket expenses. Tioga may not settle any such claim in a
manner that would restrict OEM's exercise of the rights granted to OEM hereunder
without OEM's written consent, which may not be unreasonably withheld. In the
event Tioga reasonably believes that any Product infringes a third party
Intellectual Property right, Tioga may either: (1) substitute for such Product
substantially similar programs and documentation, (2) procure for OEM the right
to continue using such Product or, if Tioga fails after commercially reasonable
efforts to accomplish options (1) and (2) above,(3) terminate this Agreement
upon thirty (30) days advance written notice and refund the license fees paid
for the Product that is the subject of the claim less depreciation as calculated
on a three-year straight-line basis commencing as of the Effective Date and
subject to the limitations set forth in Section 11 of this Agreement. This
Section 12.1 sets forth OEM's sole and
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exclusive remedy with respect to any claim of Intellectual Property
infringement. The foregoing obligations of Tioga do not apply (A) with respect
to a Product which is modified after shipment by any party other than Tioga, if
the alleged infringement relates to such modification, if the unmodified Product
would not have given rise to the infringement, (B) with respect to Product that
was combined with any non-Tioga products, processes or materials where the
alleged infringement relates to such combination if the Product alone would not
have given rise to the infringement, (C) where the allegedly infringing activity
continues after Tioga has informed OEM of modifications that would have avoided
the alleged infringement and OEM has not complied with its obligations under
Section 3.3 of this Agreement or (D) with respect to infringement based on use
of a version other than the then current version (so long as OEM has had a
reasonable amount of time, not more than thirty (30) days to receive and
implement the then current version) of the Product if such infringement could
have been avoided by use of the then current version.
12.2. By OEM. Without limiting Tioga's Intellectual Property
------
indemnification obligation under Section 12.1 above, OEM shall indemnify and
hold harmless Tioga against Damages arising out of (i) any third party claim
directly related to OEM's actions or omissions in its marketing, promotion,
advertising or sublicense of the Products and (ii) any claim of infringement of
a trademark asserted by a third party based upon Tioga's use, in full compliance
with this Agreement, of OEM's trademarks; provided, that, in each case OEM shall
have (x) received from Tioga notice of said claim as soon as practicable after
the assertion thereof, provided however that if there is a delay in providing
such notice that materially and adversely prejudices the defense of such claim
OEM shall be released from the indemnification obligations set forth in this
Section 12.2. ; (y) have received from Tioga the exclusive right to control and
direct the investigation, defense, or settlement of such claims; and (z)
received complete cooperation and assistance of Tioga.
SECTION 13. WARRANTY DISCLAIMER
-------------------
Tioga warrants and represents to OEM as follows:
13.1. Tioga warrants to OEM that for a period of sixty (60) days from the
Effective Date, the Products, if operated as directed, will substantially
achieve the functionality described in the Documentation. Tioga does not
warrant, however that OEM's use of the Products will be uninterrupted or that
the operation of the Products will be error-free or secure. Tioga also
warrants that the media provided by Tioga to OEM containing the Products will be
free from defects in material and workmanship and will so remain for ninety (90)
days from the date OEM acquired the Products. Tioga's sole liability (and OEM's
exclusive remedy) for any breach of the warranties under this Section 13.1 shall
be, in Tioga's sole discretion, to use commercially reasonable efforts: (i) to
replace OEM's defective Products; or (ii) to advise OEM how to achieve
substantially the same functionality with the Products as described in the
Documentation through a procedure different from that set forth in the
Documentation; or (iii) if the above remedies are impracticable, to refund the
license fee paid for the Products and terminate this Agreement. Tioga shall
have no obligation with respect to a warranty claim unless notified of such
claim within the applicable warranty period. Tioga will use reasonable
commercial efforts to repair, replace, advise or refund pursuant to the
foregoing warranty within thirty (30) days of being so notified.
13.2 Tioga represents and warrant to OEM that it has the corporate
authority to enter into this Agreement.
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13.3 If any modifications are made to any Product by any party other than
Tioga during the warranty period, if the media is subjected to accident, abuse,
or improper use, or if OEM breaches any of the terms of this Agreement, then
this warranty shall immediately terminate. This warranty shall not apply if any
Product is used on or in conjunction with hardware or software other than the
unmodified version of hardware and software with which such Product was designed
to be used as described in the Documentation.
13.4 THE PROVISIONS OF SECTION 13.1 AND 13.2 ABOVE CONSTITUTE A LIMITED
WARRANTY, AND IT IS THE ONLY WARRANTY MADE BY TIOGA OR ITS SUPPLIERS OR OEMS TO
OEM. NO DEALER, AGENT OR EMPLOYEE OF TIOGA IS AUTHORIZED TO MAKE ANY
MODIFICATIONS, EXTENSIONS OR ADDITIONS TO THIS LIMITED WARRANTY. TIOGA MAKES NO
OTHER REPRESENTATION OR WARRANTY OF ANY KIND WHETHER EXPRESS OR IMPLIED (EITHER
IN FACT OR BY OPERATION OF LAW) WITH RESPECT TO THE PRODUCTS OR OTHER MATERIALS
PROVIDED BY TIOGA. TIOGA EXPRESSLY DISCLAIMS ALL IMPLIED WARRANTIES OF NON-
INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. TIOGA DOES
NOT WARRANT THAT THE PRODUCTS ARE ERROR-FREE OR THAT OPERATION OF THE PRODUCTS
WILL BE SECURE OR UNINTERRUPTED. OEM MAY HAVE OTHER STATUTORY RIGHTS. HOWEVER,
TO THE FULL EXTENT PERMITTED BY LAW, THE DURATION OF STATUTORILY REQUIRED
WARRANTIES, IF ANY, SHALL BE LIMITED TO THE ABOVE LIMITED WARRANTY PERIOD.
MOREOVER, IN NO EVENT WILL WARRANTIES PROVIDED BY LAW, IF ANY, APPLY UNLESS THEY
ARE REQUIRED TO APPLY BY STATUTE.
SECTION 14. TERM AND TERMINATION
--------------------
14.1. Term. This Agreement shall become effective, as of the Effective
----
Date and, unless terminated earlier as provided herein, this Agreement shall
remain in effect until ***, ***.
14.2. Termination.
-----------
14.2.1. If OEM provides Tioga with written notice no later than 90
days prior to ***, then OEM may terminate this Agreement for convenience
effective as of ***. In the event of termination under this Section 14.2.1, OEM
will be required to pay the license fees due on the Payment Dates up to and
including ***.
14.2.2 Either party shall have the right to terminate this Agreement
immediately upon written notice to the other party if the other party ceases to
do business, dissolves, liquidates or otherwise terminates its business
operations.
14.2.3 Either party shall have the right to terminate this
Agreement if the other party breaches any material provision of this Agreement
and, fails to cure such breach within thirty (30) days after receiving written
notice describing such breach.
14.2.4 Either party shall have the right to terminate this
Agreement immediately upon written notice to the other party if the other party
shall attempt to seek protection under any insolvency, bankruptcy, receivership,
creditors arrangement, or comparable proceeding, or if any such proceeding is
instituted against the other party or such other party makes a general
assignment
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for the benefit of creditors. 14.2.5. This Agreement may be terminated upon the
mutual agreement of the parties herein.
14.3. Termination Duties. Upon termination or expiration of this Agreement,
------------------
(i) all rights and licenses granted to OEM hereunder shall terminate; (ii) each
party will immediately return to the other party all Confidential Information of
such other party and will promptly cease using any Intellectual Property of the
other party and (iii) OEM shall immediately return to Tioga the Golden Master
and all Copies of the Products and any other materials in its possession,
custody or control in whichever form held (including all copies or embodiments
thereof) relating to the Products accompanied by an affidavit of an officer of
OEM certifying that OEM has complied with all of its termination obligations
contemplated by this Agreement. The following sections shall survive, in
accordance with their terms, any expiration or termination of this Agreement:
Sections 1, 2.4, 4, 7, 9.6, 10, 11, 12, 13, 14.3-14.7 and 15.
14.4. Disclaimer. If OEM is entitled under local law or otherwise for any
----------
special payment or termination indemnity as a consequence of termination or
expiration of this Agreement, OEM hereby waives and disclaims, to the fullest
extent permitted by law, any right to such payment or indemnity.
14.5. Post-Termination Matters.
------------------------
14.5.1. Immediate Payment. Subject to Section 14.2.1, immediately
-----------------
upon any termination of this Agreement, OEM will pay to Tioga all License Fees
currently due. Further, if Tioga terminates this Agreement for OEM's material
breach pursuant to Section 14.2.3 prior to ***, then OEM will pay to Tioga, any
License Fees which would have accrued after termination if the Agreement did not
terminate until December 31, 2000; provided however that if such termination for
OEM's material breach occurs on or after ***, then OEM will pay the License Fees
which would have accrued after termination if the Agreement did not terminate
until ***.The foregoing payments shall be in addition to any other remedies
which Tioga may have under the law. If OEM terminates this Agreement for Tioga's
breach pursuant to Section 14.2.3, then OEM will pay Tioga all License Fees then
due but will be released from any further payment of License Fees under this
Agreement.
14.5.2 Immediate Termination of License. Upon any expiration or
--------------------------------
termination of this Agreement, all licenses granted to OEM under this Agreement
shall terminate.
14.6 Additional Remedies. Except as expressly limited by this Agreement,
-------------------
termination of this Agreement shall be without prejudice to any other remedy
which may be available to a party due to default of this Agreement. The parties
agree that violation of obligations under this Agreement may cause irreparable
harm and significant injury to the extent that may be extremely difficult to
ascertain. Accordingly, the parties agree that each party will have, in addition
to any other rights or remedies available to it at law or in equity, the right
to seek injunctive relief to enjoin any breach or violation of this Agreement.
14.7 Limitation on Liability. NEITHER PARTY SHALL BE LIABLE TO THE OTHER
-----------------------
FOR COMPENSATION, REIMBURSEMENT OR DAMAGES ON ACCOUNT OF THE LOSS OF PROSPECTIVE
PROFITS OR ANTICIPATED SALES OR ON ACCOUNT OF
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EXPENDITURES, INVESTMENTS, LEASES OR COMMITMENTS IN CONNECTION WITH THE BUSINESS
OR GOODWILL OF TIOGA OR OEM BECAUSE OF TERMINATION OF THIS AGREEMENT IN
ACCORDANCE WITH ITS PROVISIONS.
SECTION 15. GENERAL PROVISIONS
------------------
15.1. Relationship of Parties. The parties hereto expressly understand and
-----------------------
agree that OEM is an independent contractor in the performance of each and every
part of this Agreement, and is solely responsible for all of its employees and
agents and its labor costs and expenses arising in connection therewith. Tioga
is in no manner associated with or otherwise connected with the actual
performance of this Agreement on the part of OEM, nor with OEM's employment of
other persons or incurring of other expenses. Except as expressly provided
herein, Tioga shall have no right to exercise any control whatsoever over the
activities or operations of OEM.
15.2. Assignment. Neither party may assign this Agreement, in whole or in
----------
part, without the other party's written consent, except that (i) Tioga may
assign this Agreement to a wholly owned subsidiary of Tioga, or to a successor
of all or substantially all of the business and assets of the party regardless
of how the transaction or series of related transactions is structured. Subject
to the foregoing, the provisions of this Agreement shall apply to and bind the
successors and permitted assigns of the parties. Any attempted assignment or
other transfer of this Agreement not in compliance with this Section 15.2 shall
be null and void and shall be deemed to be a material breach of this Agreement
which is not capable of cure.
15.3. Amendment and Waiver. Except as otherwise expressly authorized
--------------------
herein, any provision of this Agreement may be amended and the observance of any
provision of this Agreement may be waived only with the written consent of the
parties.
15.4. Governing Law and Legal Actions. This Agreement shall be governed
-------------------------------
by and construed under the laws of the State of California and the United States
without regard to conflicts of laws provisions thereof and without regard to the
United Nations Convention on Contracts for the International Sale of Goods. The
sole jurisdiction and venue for actions related to the subject matter hereof
shall be the California state and U.S. federal courts located in Santa Clara
County, California. Both parties consent to the jurisdiction of such courts and
agree that process may be served in the manner provided herein for giving of
notices or otherwise as allowed by California state or U.S. federal law. In any
action or proceeding to enforce rights under this Agreement, the prevailing
party shall be entitled to recover costs and attorneys' fees.
15.5. Headings. Headings and captions are for convenience only and are
--------
not to be used in the interpretation of this Agreement.
15.6. Notices. All notices, statements, and reports required or permitted
-------
by this Agreement shall be in writing and deemed to have been effectively given
and received; (i) five (5) business days after the date of mailing if sent by
registered or certified U.S. mail, postage prepaid, with return receipt
requested; (ii) when transmitted if sent by facsimile, provided a confirmation
of transmission is produced by the sending machine and a copy of such facsimile
is promptly sent by another means specified in this Section 15.6; or (iii) when
delivered if delivered personally or sent by express courier service. Notices
shall be addressed as follows:
Tioga Systems, Inc. Page A-18
Proprietary and Confidential
<PAGE>
<TABLE>
If to Tioga: If to OEM:
<S> <C>
Tioga Systems, Inc. At Home Corporation
1816 Embarcadero Road 425 Broadway
Palo Alto, CA 94303 Redwood City, CA 94063
Telecopy: (650) 565-8300 Attn: Dave Bagshaw
Attn: Secretary
With copies to: With Copies to: General Counsel
Christine F. Nakagawa
Pillsbury Madison & Sutro LLP All invoices shall be sent to the above address,
2550 Hanover Street Attention: Dave Bagshaw.
Palo Alto, California 94304
</TABLE>
15.7. Entire Agreement. This Agreement supersedes all proposals, oral or
-----------------
written, all negotiations, conversations, or discussions between or among
parties relating to the subject matter of this Agreement and all past dealing or
industry custom.
15.8. Severability. If any provision of this Agreement is held to be
------------
illegal or unenforceable, that provision shall be limited or eliminated to the
minimum extent necessary so that this Agreement shall otherwise remain in full
force and effect and enforceable.
15.9. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
Tioga Systems, Inc. Page A-19
Proprietary and Confidential
<PAGE>
IN WITNESS WHEREOF, the Parties have executed this OEM Agreement on the
Effective Date.
OEM: TIOGA:
TIOGA SYSTEMS, INC.:
By: /s/ David Bagshaw By: /s/ Robert Amaral Jr.
------------------------------- -----------------------------
Name: David Bagshaw Name: Robert Amaral Jr.
----------------------------- ---------------------------
Title: S.V.P. Excite@Home Title: Vice President of Sales
---------------------------- --------------------------
Ship to: At Home Corporation
425 Broadway
Redwood City, CA 94063
Attention: Ken Erbs.
Tioga Systems, Inc. Page A-20
Proprietary and Confidential
<PAGE>
SCHEDULE A
Description of the Products
---------------------------
The Products are as follows:
1. "Tioga Agent" is the stand alone version of the product referred to by Tioga
as Tioga Agent, in object code format, as described in the Documentation.
2. "Tioga Healing Console" means the product referred to by Tioga as Tioga
Healing Console and provided by Tioga to OEM for use solely to remotely
connect to any client system, and diagnose and repair protected network
connectivity and client applications.
3. "OEM Factory", means the Tioga Administration Console in object code format,
which is used to configure the protection scheme of the stand alone Tioga
Agent as described in (1) above
Tioga Systems, Inc. Page SA-1
Proprietary and Confidential
<PAGE>
EXHIBIT A
END-USER LICENSE AGREEMENT
Tioga Systems, Inc. Page A-1
Proprietary and Confidential
<PAGE>
Licensee Information
- ----------------------------------------------------------------------------
Licensee: Contact:
- ----------------------------------------------------------------------------
Address: Phone:
- ----------------------------------------------------------------------------
Email: Fax:
- ----------------------------------------------------------------------------
LICENSE AGREEMENT
This License Agreement ("Agreement") is entered into as of ________________
____________ (the "Effective Date") by and between ____________________., a
_________ corporation with offices at _________________________ ("OEM"), and
___________________________________, a ________________ corporation with offices
at _____________________________________________________ ("Licensee"), and sets
forth the terms and conditions under which OEM agrees to license software to
Licensee.
SECTION 1. LICENSE
-------
1.1. License Grant. OEM grants to Licensee and Licensee accepts from OEM
-------------
for the duration of the term of this Agreement a non-exclusive, non-
sublicensable and non-transferable license (the "License") in the United States
to install and use the software specified on Exhibit A attached hereto together
with any related technical specification documentation provided by OEM (the
"Documentation" and, unless otherwise noted, together with the software
specified on Exhibit A, the "Software").
1.2. Title. Subject only to the License, OEM's licensor shall retain all
-----
right, title and interest, including all copyrights and trademarks, in and to
the Software.
1.3. Backup Copies. In addition to copies made pursuant to Section 1.1
-------------
above, Licensee may make a reasonable number of copies of the Software for
backup and archival purposes. Licensee must reproduce and include the copyright
and trademark notices and any other notices that appear on the original Software
on any copies and any media therefor.
1.4. Restrictions. Licensee shall not (and shall not allow any third
------------
party to) (i) decompile, disassemble, or otherwise reverse engineer (except to
the extent that applicable law prohibits reverse engineering restrictions) or
attempt to reconstruct or discover any source code, underlying ideas,
algorithms, file formats or programming or interoperability interfaces of the
Software by any means whatsoever, (ii) remove any product identification,
copyright, trademark or other notices, (iii) provide, lease, lend, use for
timesharing, service bureau or hosting purposes or otherwise use or allow others
to use the Software to or for the benefit of third parties, (iv) modify, or,
except to the extent expressly authorized herein, incorporate into or with other
software or create a derivative work of any part of the Software, (v)
disseminate information or analysis (including, without limitation, benchmarks)
regarding the quality or performance of the Software Licensee from any source,
without prior written authorization by OEM and (vi) use the output or other
information generated by the Software (including, without limitation, output
describing the structure of a software program) for any purpose other than use
by the Software in accordance with its specifications. Licensee must reproduce
and include the copyright notice, trademark notice and other proprietary notices
that appear on the original Software on any copies and any media thereof made in
accordance with the terms of this Agreement.
1.5 Additional Restriction Applicable to OEM Agent. The OEM Agent may
only be used (i) by Licensee to protect applications which are configured for
protection by OEM as part of the OEM internet service configuration process,
(ii) to protect internet connectivity and applications which are provided to
Licensee by OEM as part of a internet service, and which are in fact being
sublicensed to the Licensee by
Tioga Systems, Inc. Page A-2
Proprietary and Confidential
<PAGE>
OEM as part of the internet service, and (iii) for application repair by OEM as
part of their internet service support, or by Licensee as part of a stand alone
system.
SECTION 2. PAYMENT
-------
In consideration for the License granted under Section 1.1, Licensee agrees
to pay OEM the License Fees set forth in Exhibit B. All prices are exclusive of
taxes, and Licensee shall be solely responsible for any sales, value-added or
similar tax, other than taxes imposed on OEM's income.
SECTION 3. WARRANTY
--------
OEM warrants and represents to Licensee as follows:
3.1. OEM warrants to Licensee that for a period of thirty (30) days from
the Effective Date, the Software, if operated as directed, will substantially
achieve the functionality described in the Documentation. OEM does not warrant,
however that Licensee's use of the Software will be uninterrupted or that the
operation of the Software will be error-free or secure. OEM also warrants that
the media containing the Software, if any, is free from defects in material and
workmanship and will so remain for ninety (90) days from the date Licensee
acquired the Software. OEM's sole liability (and Licensee's exclusive remedy)
for any breach of this warranty shall be, in OEM's sole discretion, the use of
commercially reasonable efforts: (i) to replace Licensee's defective media or
Software; or (ii) to advise Licensee how to achieve substantially the same
functionality with the Software as described in the Documentation through a
procedure different from that set forth in the Documentation; or (iii) if the
above remedies are impracticable, to refund the license fee paid for the
Software and terminate this Agreement. OEM shall have no obligation with
respect to a warranty claim unless notified of such claim and provided evidence
of the license purchase within the applicable warranty period. OEM will use
reasonable commercial efforts to repair, replace, advise or refund pursuant to
the foregoing warranty within thirty (30) days of being so notified.
3.2 If any modifications are made to the Software by Licensee during the
warranty period, if the media is subjected to accident, abuse, or improper use,
or if Licensee violates the terms of this Agreement, then this warranty shall
immediately terminate. This warranty shall not apply if the Software is used on
or in conjunction with hardware or software other than the unmodified version of
hardware and software with which the Software was designed to be used as
described in the Documentation.
3.3 THIS IS A LIMITED WARRANTY, AND IT IS THE ONLY WARRANTY MADE BY OEM.
NO WARRANTY OF ANY KIND, EXPRESS OR IMPLIED IS OFFERED BY TIOGA SYSTEMS, INC.
NO DEALER, AGENT OR EMPLOYEE OF OEM IS AUTHORIZED TO MAKE ANY MODIFICATIONS,
EXTENSIONS OR ADDITIONS TO THIS LIMITED WARRANTY. OEM MAKES NO OTHER
REPRESENTATION OR WARRANTY OF ANY KIND WHETHER EXPRESS OR IMPLIED (EITHER IN
FACT OR BY OPERATION OF LAW) WITH RESPECT TO THE SOFTWARE OR OTHER MATERIALS
PROVIDED BY OEM. OEM AND TIOGA SYSTEMS, INC. EXPRESSLY DISCLAIM ALL IMPLIED
WARRANTIES OF NONINFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE. OEM DOES NOT WARRANT THAT THE SOFTWARE IS ERROR-FREE OR THAT OPERATION
OF THE SOFTWARE WILL BE SECURE OR UNINTERRUPTED. LICENSEE MAY HAVE OTHER
STATUTORY RIGHTS. HOWEVER, TO THE FULL EXTENT PERMITTED BY LAW, THE DURATION OF
STATUTORILY REQUIRED WARRANTIES, IF ANY, SHALL BE LIMITED TO THE ABOVE LIMITED
WARRANTY PERIOD. MOREOVER, IN NO EVENT WILL WARRANTIES PROVIDED BY LAW, IF ANY,
APPLY UNLESS THEY ARE REQUIRED TO APPLY BY STATUTE.
SECTION 5 TERM AND TERMINATION.
---------------------
5.1 Term. This Agreement shall commence on the Effective Date, and shall
----
continue until the termination of Licensee's agreement with OEM respect to
internet service.
Tioga Systems, Inc. Page A-3
Proprietary and Confidential
<PAGE>
5.2 Termination. OEM may terminate this Agreement for cause if Licensee
-----------
fails to cure any material breach of this Agreement within thirty (30) days
after written notice of such breach (or immediately in the case of the failure
to pay any amounts in accordance with the payment terms specified herein).
Sections 1.2, 1.4, 3.3, 6.2, 7, 8, and 9 shall survive termination.
5.3 Effect of Termination or Expiration. Upon any termination or
expiration of this Agreement, Licensee shall immediately cease all use of the
Software and return or destroy all copies of the Software and all portions
thereof and so certify to OEM. Termination is not an exclusive remedy and all
other remedies will be available whether or not this Agreement is terminated.
SECTION 6 LIMITATION OF LIABILITY.
-----------------------
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, OEM SHALL NOT
BE LIABLE OR OBLIGATED WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT OR
UNDER CONTRACT, NEGLIGENCE, STRICT LIABILITY OR ANY OTHER LEGAL OR EQUITABLE
THEORY (I) FOR ANY AMOUNTS IN EXCESS IN THE AGGREGATE OF THE FEES PAID TO OEM BY
LICENSEE WITH RESPECT TO THE COPIES OF SOFTWARE THAT ARE THE SUBJECT OF THE
CLAIM DURING THE TWELVE MONTH PERIOD PRIOR TO THE CAUSE OF ACTION, (II) FOR ANY
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT LIMITATION, FOR
ANY COST OF PROCUREMENT OF SUBSTITUTE GOODS, TECHNOLOGY, SERVICES OR RIGHTS);
(III) FOR INTERRUPTION OF USE OR LOSS OR CORRUPTION OF DATA; OR (IV) FOR ANY
MATTER BEYOND ITS REASONABLE CONTROL. SOME STATES DO NOT ALLOW THE EXCLUSION OR
LIMITATION OF INCIDENTAL OR CONSEQUENTIAL DAMAGES, SO THE ABOVE LIMITATIONS AND
EXCLUSIONS MAY NOT APPLY TO LICENSEE.
SECTION 8 GENERAL PROVISIONS
------------------
8.1 Cumulative Remedies. The remedies under this Agreement shall be
-------------------
cumulative and not alternative and the election of one remedy for a breach shall
not preclude pursuit of other remedies unless as expressly provided in this
Agreement.
8.2 Governing Law. This Agreement shall be governed in all respects by
-------------
the substantive laws of the State of California, United States of America
(excluding conflict of laws rules) as applied to agreements entered into and to
be performed entirely within the State of California between California
residents, without regard to the U.N. Convention on Contracts for the
International Sale of Goods. Any dispute regarding this Agreement shall be
subject to the exclusive jurisdiction of the California state courts in and for
Santa Clara County, California or, if there is federal jurisdiction, the United
States District Court for the Northern District of California, and the parties
agree to submit to the personal and exclusive jurisdiction and venue of these
courts.
8.3 Notices. All notices, statements, and reports required or permitted
-------
by this Agreement shall be in writing and deemed to have been effectively given
and received; (i) five (5) business days after the date of mailing if sent by
registered or certified U.S. mail, postage prepaid, with return receipt
requested; (ii) when transmitted if sent by facsimile, provided a confirmation
of transmission is produced by the sending machine and a copy of such facsimile
is promptly sent by another means specified in this Section 9.3; or (iii) when
delivered if delivered personally or sent by express courier service. Notices
shall be addressed as follows:
If to Licensee: As set forth at the top of the Agreement
---------------
Tioga Systems, Inc. Page A-4
Proprietary and Confidential
<PAGE>
If to OEM:
----------
Attn: _______________
8.3 Export Restrictions. Licensee understands and acknowledges that
-------------------
certain technology licensed hereunder may be subject to regulation by agencies
of the U.S. government, including the U.S. Department of Commerce, which
prohibit export or diversion of certain products and technology to certain
countries. Licensee warrants that it will comply in all respects with the
export restrictions applicable to any materials or technology provided hereunder
and will otherwise comply with the Export Administration Regulations or other
United States laws and regulations in effect from time to time.
8.4 Assignment. Licensee shall not assign or otherwise transfer any of
----------
its rights, obligations or licenses hereunder without the prior written consent
of OEM, including any assignment by operation of law as a result of the merger
or acquisition of Licensee. Subject to the foregoing, the provisions of this
Agreement shall apply to and bind the successors and permitted assigns of the
parties.
8.5 Independent Contractor. The relationship created by this Agreement is
----------------------
one of independent contractors, and not partners, franchisees or joint
venturers. No employees, consultants, contractors or agents of one party are
employees, consultants, contractors or agents of the other party, nor do they
have any authority to bind the other party by contract or otherwise to any
obligation, except as expressly set forth herein. Neither party will represent
to the contrary, either expressly, implicitly or otherwise.
8.6 Headings. The descriptive headings of this Agreement are intended for
--------
reference only and shall not affect the construction or interpretation of this
Agreement.
8.7 Severability. If any covenant set forth in this Agreement is
------------
determined by any court to be unenforceable by reason of its extending for too
great a period of time or by reason of its being too extensive in any other
respect, such covenant shall be interpreted to extend only for the longest
period of time and to otherwise have the broadest application as shall be
enforceable. The invalidity or unenforceability of any particular provision of
this Agreement shall not affect the other provisions hereof, which shall
continue in full force and effect.
8.8 Waiver of Rights. The failure of either party to insist, in any one
------------------
or more instances, upon the performance of any of the terms, covenants, or
conditions of this Agreement or to exercise any right hereunder, shall not be
construed as a waiver or relinquishment of the future performance of any rights,
and the obligations of the party with respect to such future performance shall
continue in full force and effect.
8.9 Entire Agreement; Conflict. This Agreement, together with all
--------------------------
exhibits and schedules hereto, constitutes the complete, final and exclusive
statement of the terms of the Agreement among the parties pertaining to the
subject matter hereof and supersedes all prior agreements, understandings,
negotiations and discussions of the parties. No modification or rescission of
this Agreement shall be binding unless executed in writing by the party to be
bound thereby. In the event of any conflict between the terms and conditions of
this Agreement and an Exhibit , the terms and conditions of the Exhibit shall
prevail.
8.10 Force Majeure. Either party shall be excused from any delay or
-------------
failure in performance hereunder, except the payment of monies by Licensee
caused by reason of any occurrence or contingency beyond its reasonable control,
including but not limited to, acts of God, earthquake, floods, lightning, labor
disputes and strikes, other labor or industrial disturbances, riots, war, acts
of the public enemy, insurrections, embargoes, blockages, regulations or orders
of any government, agency or subdivision thereof, shortages of materials,
rationing, utility or communication failures, casualty, novelty of product
manufacture or other unanticipated product development problems, and
governmental requirements. The obligations and rights of the party so excused
shall be extended on a day-to-day basis for the period of time equal to that of
Tioga Systems, Inc. Page A-5
Proprietary and Confidential
<PAGE>
the underlying cause of the delay; provided that such party shall give notice of
such force majeure event to the other party as soon as reasonably possible.
8.11 Presumptions. In construing the terms of this Agreement, no
------------
presumption shall operate in either party's favor as a result of its counsel's
role in drafting the terms or provisions hereof.
8.12 Authority. Each party represents that all corporate action necessary
---------
for the authorization, execution and delivery of this Agreement by such party
and the performance of its obligations hereunder has been taken.
8.13 Legal Expenses. The prevailing party in any legal action brought by
--------------
one party against the other and arising out of this Agreement will be entitled,
in addition to any other rights and remedies it may have, to reimbursement for
its expenses, including court costs and reasonable attorneys' fees.
8.14 Government End-Users. The Software and accompanying documentation
---------------------
are deemed to be "commercial computer software" and "commercial computer
software documentation", respectively, pursuant to DFAR Section 227.7202 and FAR
Section 2.212, as applicable. Any use, modification, reproduction, release,
performing, displaying or disclosing of the software and accompanying
documentation by the U.S. Government shall be governed solely by the terms of
this Agreement and shall be prohibited except to the extent expressly permitted
by the terms of this Agreement. Manufacturer is Tioga Systems, Inc., 1816
Embarcadero Road, Palo Alto, CA 94303.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
and delivered as of the day and year first above written.
ACCEPTED BY:
_____________________________ _______________________________
("Licensee") ("OEM")
By: /s/ David Bagshaw By:
-------------------------- ----------------------------
Name: David Bagshaw Name:
------------------------ --------------------------
Title: S.V.P. Excite@Home Title:
----------------------- -------------------------
Tioga Systems, Inc. Page A-6
Proprietary and Confidential
<PAGE>
EXHIBIT A
Description of the Software
---------------------------
The Software shall include the following:
The version of the ""OEM Agent" as provided by OEM to Licensee in object code
format.
ACCEPTED BY:
________________________________ _______________________________
("Licensee") ("OEM"
By: /s/ David Bagshaw By:
----------------------------- ----------------------------
Name: David Bagshaw Name:
--------------------------- --------------------------
Title: S.V.P. Excite@Home Title:
-------------------------- -------------------------
Tioga Systems, Inc. Page A-7
Proprietary and Confidential
<PAGE>
EXHIBIT B
PAYMENT TERMS AND FEE SCHEDULE
------------------------------
I. Payment Terms:
- ------------------
All fees due and payable *** from invoicing.
II. Software License Fees
- -------------------------
Item Fees
- ---- ----
License Fees
III. Technical Support Fee Schedule
- -----------------------------------
Item Fees
- ---- ----
Standard Technical Support
IV. [Deployment and Implementation] Fee Schedule
- ------------------------------------------------
Item Fees
- ---- ----
[Implementation] Services
V. Training Fees
- ------------------------------ ----
TBD (outlined in Exhibit D)
ACCEPTED BY:
______________________________ ___________________________
("Licensee") ("OEM")
By: /s/ David Bagshaw By:
--------------------------- ------------------------
Name: David Bagshaw Name:
------------------------- ----------------------
Title: S.V.P. Excite@Home Title:
------------------------ ---------------------
Tioga Systems, Inc.
Proprietary and Confidential
* CONFIDENTIAL MATERIALS REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
Page A-8
<PAGE>
EXHIBIT C
SUPPORT
-------
Tioga Systems, Inc. Page A-9
Proprietary and Confidential
<PAGE>
EXHIBIT D
TRAINING
--------
Tioga Systems, Inc. Page A-10
Proprietary and Confidential
<PAGE>
EXHIBIT B
TIOGA TRADEMARK USAGE GUIDELINES
GUIDELINES FOR USAGE
- --------------------
Tioga has established the following set of Guidelines to be followed in all
collateral, advertising, and related materials and activities in which Tioga
Marks are used.
Graphic Element
- ---------------
1. Always use production-quality art (electronic or camera-ready) to reproduce
any of the Tioga Marks.
2. The Tioga Logo may only be reproduced (in print or electronically) in black,
black and Pantone 485, white, or white and Pantone 485 (white or white and
Pantone 485 may only be used when reversed out of a dark background).
3. When printing or electronically reproducing the Tioga Logo in two colors,
the vertical rings in the Tioga Logo print black, while the horizontal ring
prints Pantone 485.
4. The mark TIOGA and/or the Tioga Logo must be accurately shown in standard
proportions and placement, and must never be distorted, superimposed,
outlined, or rated in any way.
5. The mark TIOGA when reproduced in logo typeface should never appear without
the Tioga Logo in the appropriate position and proportion.
6. The Tioga Logo should never appear without the mark TIOGA in the appropriate
position and proportion.
7. With consent from Tioga, the mark TIOGA and/or the Tioga Logo may be used to
note compatibility with other computer software products. However, no
compatible product may be identified as being provided by Tioga nor may
there be an implication that Tioga produces, endorses, or supports the
product.
Trademark Requirements
- ----------------------
1. At the first mention of the Tioga Marks in the body or printed or on-line
material, proper notice of trademark ownership ( i.e. ) must appear. If the
first mention is in a headline, the does not have to appear at that mention,
provided there is text following where the notice does appear.
Tioga Systems, Inc. Page B-1
Proprietary and Confidential
<PAGE>
2. When writing about Tioga, its products or technology, trademarks must be
used as proper adjectives.
3. Advertising and all other printed materials must include credit lines for
Tioga products and/or technologies. If more than one Tioga Mark is used,
credit for all trademarks may be incorporated into one sentence. A sample
credit line that meets these criteria is as follows:
The following are trademarks of Tioga Systems, Inc.: Tioga(TM), Self
Healing(TM), and the Tioga Logo.
Tioga reserves the right to amend this Exhibit B at anytime. OEM shall use
commercially reasonable efforts to cease use and/or distribution of the existing
non-conforming Marked Materials, within ten (10) days after Tioga makes the
amendments to this Exhibit C available to OEM.
Tioga Systems, Inc. Page B-2
Proprietary and Confidential
<PAGE>
EXHIBIT C
OEM'S TRADEMARKS
Tioga Systems, Inc. Page C-1
Proprietary and Confidential
<PAGE>
EXHIBIT 10.20
CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.
AMENDMENT
This Amendment is entered into as of March __, 2000 ("Amendment Effective
Date") by and between Support.com, Inc., a Delaware corporation, formerly doing
business as Tioga Systems, Inc. ("SPRT") and At Home Corporation, doing
business as Excite@Home, a Delaware corporation ("EAH"). This Amendment
modifies the OEM Agreement dated as of July 14, 1999, by and between SPRT and
EAH (the "Agreement") to provide the terms for SPRT's development of an
extension to its Product and for the parties to participate in certain co-
marketing efforts with respect to such extension, in accordance with the terms
of this Amendment.
1. Definitions. As used in this Amendment, the following terms have the
-----------
following meanings. Capitalized terms used but not defined in this Amendment
have the meanings specified in the Agreement.
1.1 Product Extension. "Product Extension" means the version of the
-----------------
Product that SPRT will develop pursuant to this Amendment.
1.2 Initial Term. "Initial Term" means the *** month period beginning
------------
with the Amendment Effective Date.
1.3 Referred Customers. "Referred Customers" means the customers of
------------------
SPRT that have purchased licenses to the Product Extension and that are referred
to SPRT by EAH in accordance with this Amendment.
1.4 Net Revenue. "Net Revenue" means the amount collected by SPRT for
-----------
SPRT's sale of licenses to the Product Extension to Referred Customers, *** (a)
***% for sales expenses, and (b) any associated freight charges, insurance and
other costs of shipping and handling, taxes and duties.
1.5 Preliminary Specifications. "Preliminary Specifications" means
--------------------------
the preliminary specifications for the Product Extension set forth in Exhibit A
to this Amendment.
1.6 Renewal Term. "Renewal Term" means the 12-month period after the
------------
Initial Term or Renewal Term, as applicable, of this Amendment.
1.7 Specifications. The "Specifications" means the specifications for
--------------
the Product Extension agreed upon by the parties pursuant to Section 2.1 of this
Amendment.
1.8 Term. "Term" means the Initial Term and any and all Renewal
----
Terms.
1
* CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
<PAGE>
2. Product Extension Development; Ownership.
----------------------------------------
2.1 Within thirty (30) business days following the Amendment
Effective Date, SPRT will submit to EAH a proposal for specifications for the
Product Extension (the "Specifications") to be effective during the twelve (12)
month period following the Amendment Effective Date. Neither the proposed
Specifications nor EAH's proposed modifications will in any event add any new
functionality to the Preliminary Specifications set forth in Exhibit A, but will
provide additional detail associated with each component of the Preliminary
Specifications. Within ten (10) business days following its receipt of the
proposed Specifications, EAH shall notify SPRT that the proposed Specifications
are acceptable or, if they are not acceptable in any respect, then EAH shall
deliver to SPRT reasonable proposed modifications to the proposed
Specifications. Any failure by EAH to notify SPRT that the proposed
Specifications are not acceptable within the time frame set forth above shall be
deemed an acceptance of the proposed Specifications. Within five (5) business
days of receipt of EAH's modifications, SPRT must either accept and incorporate
the proposed modifications or notify EAH that the modifications are not
acceptable. Any failure by SPRT to notify EAH that the modifications are not
acceptable within the time frame set forth above shall be deemed an acceptance
of the modifications. If SPRT properly notifies EAH that the modifications are
not acceptable, then the parties shall negotiate in good faith for a period of
fifteen (15) days using commercially reasonable efforts to mutually agree upon
acceptable Specifications. If after fifteen (15) days the parties are unable to
mutually agree upon acceptable Specifications, then SPRT shall have an
additional five (5) days to either accept EAH's most recent modifications or
immediately terminate the Amendment. Upon the parties reaching agreement as to
the Specifications, they each will execute a copy of an Exhibit setting forth
the Specifications which shall then be appended as Exhibit A to this Amendment.
2.2 Within thirty (30) business days prior to (a) the first
anniversary of the Amendment Effective Date, and (b) each subsequent six (6)
month period during the Initial Term, SPRT will submit to EAH proposed
specifications ("Enhancement Specifications") with respect to such six (6) month
period for enhancements to the Product Extension ("Enhancements"), for review
and comment. Such Enhancement Specifications and EAH's proposed modifications
thereto (a) will be for feature enhancements to the components and functionality
in the Specifications, (b) will not in any event require a level of development
effort on SPRT's part greater than one half (1/2) of the development effort
required to develop the Product Extension as specified in the Specifications,
and (c) will not be for new components which are not a part of the
Specifications, unless mutually agreed upon. EAH must within ten (10) business
days following its receipt of any such proposed Enhancement Specifications
notify SPRT that the proposal is acceptable or, if not acceptable in any
respect, then EAH must advise SPRT as to any proposed modifications to the
proposed Enhancement Specifications. Any failure by EAH to notify SPRT that the
proposal is not acceptable within the time frame set forth above shall be deemed
an acceptance of the applicable Enhancement Specifications. SPRT will have five
(5) business days following receipt of notice of proposed modifications to
either incorporate the proposed modifications into the proposal or notify EAH of
its rejection of those proposed modifications. Any failure by SPRT to
2
<PAGE>
notify EAH that the modifications are not acceptable within the time frame set
forth above shall be deemed an acceptance of the modifications. If SPRT properly
notifies EAH that the modifications are not acceptable, then the parties shall
negotiate in good faith for a period of fifteen (15) days using commercially
reasonable efforts to mutually agree upon acceptable Enhancement Specifications.
If after fifteen (15) days the parties are unable to mutually agree upon
acceptable Enhancement Specifications, then SPRT shall have an additional five
(5) days to either accept EAH's most recent modifications or immediately
terminate the Amendment. The foregoing notwithstanding, EAH and SPRT may add any
new features or components to the Enhancement Specification by mutual agreement.
Upon the parties reaching agreement as to the Enhancement Specifications, for
each such six (6) month period, each party will execute a copy of an Exhibit
setting forth the agreed-upon Enhancement Specifications which shall then be
appended as a new Exhibit to this Amendment.
2.3 Subject to the terms and conditions of this Amendment, SPRT will
develop and deliver the Product Extensions and Enhancements in accordance with
the Specifications and Enhancement Specifications, as applicable, including but
not limited to delivery of such Product Extensions or Enhancements within the
time frame set forth in the applicable Specification or Enhancement
Specification, with allowance for slippage of delivery of any component by an
additional ***% of the number of business days between the acceptance of the
applicable Specification or Enhancement Specification and the time frame set
forth for such component in such applicable Specification or Enhancement
Specification. Upon completion of each Product Extension or Enhancement, SPRT
will provide it to EAH. Within *** (***) *** after EAH's receipt of a Product
Extension or Enhancement thereof (which will be provided in executable object
code only), EAH will advise SPRT whether EAH considers the Product Extension or
Enhancement to comply in all material respects with the applicable
Specifications or Enhancement Specifications and will provide the reasons
(including supporting documentation) of any material non-conformities. Any
failure by EAH to notify SPRT that the Product Extension or Enhancements are not
acceptable within the time frame set forth above shall be deemed acknowledgement
by EAH that the Product Extension and/or Enhancements comply in all material
respects with the applicable Specifications or Enhancement Specifications. In
the case that EAH provides SPRT with such notice of any material non-
conformities, SPRT shall have *** (***) *** to correct the non-conformities and
re-submit the Product Extension or Enhancement to EAH for acceptance. Within ***
(***) *** after receipt of the corrected Product Extension or Enhancement, EAH
will advise SPRT whether EAH considers the Product Extension or Enhancement to
comply in all material respects with the applicable Specifications or
Enhancement Specifications and will provide the reasons (including supporting
documentation) of any material non-conformities. Any failure by EAH to notify
SPRT that the Product Extension or Enhancements are not acceptable within the
time frame set forth above shall be deemed acknowledgement by EAH that the
Product Extension and/or Enhancements comply in all material respects with the
applicable Specifications or Enhancement Specifications. This process shall
continue until the earlier to occur of: (i) EAH's acknowledgement that the
Product Extension and/or Enhancements comply in all material respects with the
applicable Specifications or Enhancement Specifications, or (ii) *** from the
date of the initial notification by EAH of non-conformity of the applicable
Product Extension
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and/or Enhancement. In the event that the Product Extension and/or Enhancements
fail to comply in all material respects with the applicable Specification or
Enhancement Specification after *** (***) days from the initial notification by
EAH of non-conformity of the applicable Product Extension and/or Enhancement,
EAH may, at its sole discretion, terminate the Amendment.
2.4 Upon completion of the Product Extension or Enhancement, the
Product Extension or Enhancement will be deemed to be included in the Agreement
as the "Product" and all terms relating thereto shall apply equally to the
Product Extension and Enhancement, including but not limited to the license to
EAH set forth in Section 2.1 through 2.3 and SPRT's ownership set forth in
Section 2.4. Notwithstanding the foregoing, EAH shall not be entitled to
sublicense the Product, Product Extensions or Enhancements, except for the
client-side component (referred to in the Agreement as the Tioga Agent), subject
to terms of the Agreement.
3. Referral of Customers.
---------------------
3.1 From time to time, EAH will, during the term of this Amendment,
refer to SPRT certain EAH customers and partners who may be interested in
licensing the Product, Product Extension, and/or Enhancements. EAH agrees that
EAH will position the Product Extension and Enhancements to its customers and
partners as the preferred solution for supporting an end user internet service.
For each such customer or partner that EAH intends to refer to SPRT, EAH will
provide a written notice of such referral, indicating contact information and
other information reasonably requested by SPRT, in the form as mutually agreed
by the parties. Referred Customers shall not include an entity which (a)
Support.com, at the time the contact information is provided, had already
contacted with respect to Support.com products, or (b) is already a customer of
Support.com.
3.2 SPRT may enter into an agreement with the Referred Customers at
SPRT's own discretion and subject to terms and conditions agreed to with the
Referred Customers. Nothing herein shall obligate SPRT to enter into any
agreement with such Referred Customers. SPRT will have the right to determine
in its sole discretion the price at which SPRT licenses the Product Extension to
Referred Customers.
4. Marketing.
---------
4.1 The parties will issue and globally distribute a joint press
release announcing the parties' relationship within 30 calendar days of the
Amendment Effective Date. The parties may, as from time to time they may
mutually agree, issue additional joint press releases regarding successful
development and marketing efforts of the Product Extension and Enhancements, and
regarding the parties' relationship established by this Amendment. Neither party
may otherwise issue any press releases or other public announcements with
respect to this Amendment, without the other party's prior written consent.
4
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<PAGE>
4.2 The parties will co-brand the Product Extension and the
Enhancements for EAH partners and customers.
5. Payments.
--------
5.1 EAH agrees to pay SPRT for the development of the Product
Extension the amount of *** U.S. Dollars ($***), payable over a *** period as
set forth in Exhibit B. EAH shall also pay SPRT for professional services time
on the same terms and conditions as set forth in the Agreement. Such payments
shall be in addition to the License Fees set forth in Section 4.1 of the
Agreement.
5.2 As consideration for EAH's referral of Referred Customers to SPRT
with respect to the Product Extension and/or Enhancements as provided under this
Amendment, and in the event that SPRT actually utilizes the contact information
provided by EAH to license the Product Extension or the Enhancements to the
Referred Customer during the Term, then SPRT will pay EAH *** percent (***%) of
SPRT's Net Revenue over $*** from licensing of the Product Extension or the
Enhancements to such Referred Customers. For the avoidance of doubt, EAH shall
be entitled to receive *** percent (***%) of additional Net Revenue received by
SPRT for Product Extension license fees from such Referred Customers during the
Term.
5.3 Notwithstanding the foregoing, the parties agree that EAH will
not be entitled to share in revenue received by SPRT from Referred Customers
solely for upgrades to the Product Extension that arise in connection with or
are necessary because of modifications made by SPRT to the Product Extension, if
SPRT charges for such upgrades. If any such upgrade is included as part of the
original sale of the Product Extension license to the Referred Customer, then
EAH will be entitled to its share of the Net Revenue from that sale pursuant to
Section 5.2, other than the portion of the Net Revenue attributable to the
upgrade.
5.4 EAH's share of the Net Revenues, if any which may accrue under
this Amendment will be payable on a quarterly basis throughout the Term and will
be payable by SPRT within 60 days after the end of each calendar quarter. Along
with each payment, SPRT will provide EAH with a report detailing the amount of
Net Revenues paid hereunder. Such report will include, at a minimum, Referred
Customer name, date of purchase, installation date, calculation of Net Revenue
and EAH's share of the Net Revenue. SPRT will pay in United States dollars.
6. Term and Termination.
--------------------
6.1 This Amendment shall take effect as of the Amendment Effective
Date and shall continue in effect, unless and until terminated in accordance
with this Section, during the Term.
6.2 The term of the Agreement, as set forth in Section 14.1 of the
Agreement, shall be extended to be co-terminus with this Amendment. Section
14.2.1 of
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<PAGE>
the Agreement shall no longer have any force or effect. Notwithstanding the
foregoing, termination of this Amendment shall not affect the terms and
obligations of the Agreement, and in the event of termination of this Amendment,
the Agreement shall no longer be co-terminus with this Amendment.
6.3 This Amendment shall terminate automatically upon any termination
of the Agreement.
6.4 This Amendment may be terminated by either party if the other
party breaches any of its material obligations and fails to cure such breach
within a 30-day period after written notice of such breach.
6.5 Upon any termination of this Amendment, only those payments that
have accrued pursuant to this Amendment prior to the effective date of
termination will survive and be payable within 60 days of the effective date of
termination, even if longer terms had been provided previously. The provisions
of Section 14.3 through 14.5 of the Agreement shall apply.
7. Effect of Amendment; Modification. In the event of a conflict between
---------------------------------
a term or terms of this Amendment and a term or terms of the Agreement, the term
or terms in this Amendment shall control. This Amendment constitutes the entire
agreement between the parties with respect to the subject matter contained
herein, and supersedes all prior oral or written communications between the
parties with respect to the subject matter hereof, but does not supersede the
Agreement unless expressly provided otherwise in this Amendment. This Amendment
may not be modified, amended or discharged except in writing signed by duly
authorized representatives of both parties.
8. Counterparts. This Amendment may be executed in counterparts, each of
------------
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
Amendment Effective Date.
At Home Corporation Support.com, Inc.
BY: /s/ Lenny Alugas BY: /s/ Radha R. Basu
- ----------------------------- -------------------------------
NAME: Lenny Alugas NAME: Radha R. Basu
----------------------- ------------------------------
TITLE: V.P. Customer Care TITLE: CEO & President
----------------------- -----------------------------
6
<PAGE>
Exhibit A
Preliminary Specifications
The Product Extension shall have the following components or capabilities:
1. *** with ***: SPRT shall implement *** with *** within *** (***) ***
of acceptance of the Specifications.
2. The ability for *** to *** a set of *** from the ***, and to take
appropriate action *** ("*** and ***") shall be *** by SPRT within ***
(***) *** of *** of the Specifications.
3. *** of *** shall be *** by SPRT within *** (***) *** of *** of the
Specifications.
4. A *** version of the *** user *** (the "***") shall be *** within ***
(***) *** of *** of the Specifications.
7
* CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
<PAGE>
Exhibit B
License Fees
- -------------------------------------------
Payment Due Date
- -------------------------------------------
$*** ***
- -------------------------------------------
$*** ***
- -------------------------------------------
$*** ***
- -------------------------------------------
$*** ***
- -------------------------------------------
$*** ***
- -------------------------------------------
$*** ***
- -------------------------------------------
$*** ***
- -------------------------------------------
$*** ***
- -------------------------------------------
$*** ***
- -------------------------------------------
$*** ***
- -------------------------------------------
$*** ***
- -------------------------------------------
$*** Total
- -------------------------------------------
8
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<PAGE>
CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.
EXHIBIT 10.21
RESELLER AGREEMENT
THIS RESELLER AGREEMENT ("Agreement") is entered as of March___, 2000 (the
"Effective Date") by and between SUPPORT.COM, INC. ("Support.com"), a Delaware
-----------------
corporation, with its principal place of business at 575 Broadway Street,
Redwood City, California 94063, and Samsung SDS Co., Ltd. ("Samsung"), a Korea
corporation, with its principal place of business at 707-19, Yoksam-Dong,
Kangnam-Gu, Seoul, Korea 135-080, Korea.
SECTION 1. DEFINITIONS
-----------
1.1 "Copy" means an exact copy of the software of the applicable
----
Product in object code form only, together with an exact copy of the related
Documentation.
1.2 "Confidential Information" means information about either
------------------------
party's business or activities that is proprietary and confidential, which shall
include all business, financial, technical and other information of a party
marked or designed by such party as "confidential" or "proprietary;" or
information which, by the nature of the circumstances surrounding the
disclosure, ought in good faith be treated as confidential, including, without
limitation, the specific terms, pricing and fees set forth in this Agreement.
1.3 "Documentation" means Product related technical specification
-------------
documentation provided by Support.com along with the applicable Product.
1.4 "End-Users" means a third party who acquires a Copy from
---------
Samsung solely for its own personal or internal use at its principal place of
business and not for resale or transfer to others and who have previously agreed
in writing or via a binding shrinkwrap or clickwrap license, to be bound by a
license agreement containing terms and conditions at least as restrictive as
those set forth for the applicable Product in the Reseller License Guide
attached as Exhibit B hereto.
1.5 "Intellectual Property Rights" means patent rights (including
----------------------------
patent applications and disclosures), copyrights (including copyright
applications), trade secrets, moral rights, trademarks, know-how and any other
similar rights or intangible assets recognized under any laws or international
conventions, in any country or jurisdiction in the world.
1.6 "Marketing Materials" means any materials provided by
-------------------
Support.com for use in advertising, promotion, sales or marketing of the
Product.
1.7 "Product" means the products and service offerings listed on
-------
the Product List in Exhibit A, together with the Documentation or other
packaging materials provided therewith by Support.com and includes any new
releases, bug fixes, patches, work-arounds or maintenance upgrades for the
applicable Product which are made generally available by Support.com to its
customers at no additional charge. Support.com reserves the right to change,
modify or discontinue any Product.
1.8 "License Fee" the monthly subscription fee payable for each
-----------
license of the Product in order to use the Product.
1.9 "First Level Support" means all direct interaction with End-
-------------------
Users regarding (i) the use and operation of the Product, (ii) the intake and
classification of all End-User inquiries
Support.com, Inc PAGE 1
Proprietary and Confidential - For Intended Recipient Only
<PAGE>
regarding suspected errors in the Product and (iii) the delivery to End-Users of
error corrections, work-arounds, new releases and upgrades that Samsung is
authorized to provide to End-Users pursuant to this Agreement.
1.10 "Second Level Support" means the resolution of suspected errors
---------------------
reported by End-Users that do not require access to the Product source code to
resolve and the resolution of End-User questions regarding the use and operation
of the Products, including, without limitation, (i) having qualified, trained
Samsung technical employees isolate errors and determine possible workarounds,
(ii) reviewing all reported errors to determine if such error is the result of
software or hardware other than the Products, (iii) if error continues to
persist, providing Support.com a written notification via e-mail of the error in
the Product along with the product version, severity, all steps taken to isolate
and or resolve the problem, and reasoning why Samsung believes it is a Third
Level Support problem; and (iv) assigning an engineer to work with Support.com
to recreate and resolve the problem as well as test the patch, if any.
1.11 "Third Level Support" means the resolution of errors in Product
-------------------
source code or Documentation in accordance with Support.com's maintenance and
support procedures that are generally applicable to Support.com's customers that
are under Product maintenance and support plans, including providing to Samsung
any new releases, bug fixes, patches, work-arounds or maintenance upgrades of
the applicable Product made generally available by Support.com to its customers
that are under maintenance and support plans.
1.12 "Territory" means the geographical area set forth on Exhibit A.
---------
1.13 "Order" is defined at Section 6.1.
------
SECTION 2. LICENSE GRANT
-------------
2.1 License Grant. In consideration for the payment of fees set
-------------
forth in Section 6 of this Agreement, and subject to the limitations set forth
in Section 2.2 hereof and to the other terms and conditions of this Agreement:
(a) License to make Copies. Support.com hereby grants to Samsung,
during the term of this Agreement, a royalty bearing, non-exclusive, non-
transferable license in the Territory to make Copies of the Product solely for
the purpose of use and distribution of such Copies in accordance with this
Agreement.
(b) License to Distribute and Sublicense Copies. During the term of
this Agreement, a non-exclusive, non-transferable license to distribute and
sublicense Copies in the Territory, either as a stand-alone product or as part
of a bundled service offering, for limited terms of at least *** (***) *** and
no more than *** (***) *** ("Term Sublicenses") but only to End-Users for which
Samsung places an Order in accordance with this Agreement and pays Support.com
fees in accordance with Exhibit A. Notwithstanding the foregoing, in the event
Samsung seeks to distribute and sublicense additional Copies to a single End-
User, the term of the original Term Sublicense for such End-User must be
extended such that all Copies sublicensed by a single department or division of
a certain End-User are co-terminus. On a case-by-case basis and only upon
consent from Support.com, Samsung may sublicense additional Copies which are not
co-terminus. On a case-by-case basis and only upon consent from Support.com,
Samsung may license
Support.com, Inc PAGE 2
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<PAGE>
the Products with a perpetual term; in such case, except as otherwise stated,
all references to "Term Sublicenses" mentioned herein shall apply to such
perpetual use licenses.
(c) License to use Copies in Providing Service. A non-exclusive, non-
transferable license to use the Copies in the Territory to provide a bundled
service offering to End-Users with Term Sublicenses granted in accordance with
Section 2.1(b) for the duration of each such Term Sublicense, but only for End-
Users for which Samsung places an Order in accordance with this Agreement and
pays Support.com fees in accordance with Exhibit A. Notwithstanding the
foregoing, in the event Samsung seeks to distribute and sublicense additional
Copies to provide the bundled service to a single department or division of a
certain End-User, the term of the original Term Sublicense for such End-User
must be extended such that all Copies sublicensed by a single End-User are co-
terminus. On a case-by-case basis and only upon consent from Support.com,
Samsung may sublicense additional Copies which are not co-terminus. In the event
Samsung seeks to customize the Healing Agent, it may only customize the user
interface of the Healing Agent and must comply with the user interface
requirements set forth in Support.com's standard User Interface Guidelines,
which are incorporated herein by this reference; at least ten (10) days prior to
the distribution of each different customized Healing Agent, Samsung shall
provide Support.com with one (1) fully enabled copy of such customized Healing
Agent, at no charge, for use by Support.com solely for license, trademark, and
user interface guidelines compliance verification purposes.
(d) License to use Copies Internally. During the term of this
Agreement, a non-exclusive, non-transferable license to use the number of Copies
internally to support Samsung employees provided that Samsung places an Order in
accordance with this Agreement and pays Support.com fees as set forth in Exhibit
A. Usage by Samsung shall be subject to the terms and conditions for the
applicable Product, as set forth in the Reseller License Guide. Unless otherwise
agreed upon by Support.com in writing, the term of such internal use licenses
shall be *** (***) months. Notwithstanding the foregoing, in the event Samsung
seeks to license additional Copies for internal usage by a single department or
division, the term of the original licenses must be extended such that all
Copies licensed for internal usage are co-terminus. On a case-by-case basis and
only upon consent from Support.com, Samsung may sublicense additional Copies
which are not co-terminus.
(e) License for Marketing Materials. Support.com hereby grants to
Samsung, during the term of this Agreement, a non-exclusive, non-transferable
license in the Territory to make exact copies of the Marketing Materials and to
use such copies in the Territory for the sole purpose of marketing, advertising
and promoting the Products or Samsung's service offering bundled with the
Products.
2.2 Limitations.
-----------
(a) Deployment. Samsung shall be responsible for deployment and
implementation of the Product. Any assistance provided by Support.com with such
deployment and implementation shall be considered Consulting Services and
subject to a fee as set forth in Section 5.2 of this Agreement.
(b) Bundling Limitations. Under no circumstances may the Product or
Copies be bundled with competing products. For purposes of this Agreement,
"competing products" means self-healing, self-servicing, and assisted service
software packages designed to solve break/fix and
Support.com, Inc PAGE 3
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* CONFIDENTIAL MATERIALS REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
<PAGE>
"how-to" computer problems, including but not limited to ***'s software
solution. This bundling limitation shall not prevent Samsung from selling,
distributing, or developing competing products to be sold separately from the
Products, provided Samsung does not breach this Agreement, including but not
limited to Section 11. Notwithstanding the foregoing, in order to maintain its
standing as the *** in the *** (as set forth in Section III. of Exhibit A),
Samsung shall not sell, distribute, or develop competing products for sale in
the *** for the period beginning on the Effective Date and ending December 31,
2001.
(c) Copying Limitations. Samsung may only make Copies of the Product at
its own facilities and may not permit any other third party to make Copies of
the Products without Support.com's prior written approval. Samsung shall
reproduce on all Copies of the Products, the unaltered copyright and proprietary
information notices that are affixed to the original copy of the Product
delivered to Samsung by Support.com, or any subsequent version or update thereof
provided by Support.com to Samsung. Samsung shall make only the minimum number
of Copies of the Product as is necessary for Samsung to exercise the license
grants in Section 2.1.
(d) No Delegation. Except as expressly provided herein, Samsung may not
use subdistributors, agents, resellers or otherwise sublicense its rights or
delegate any of its obligations hereunder in any manner.
(e) End-User Limitations. Each sublicense of the Products must be
pursuant to an agreement in writing or via a binding shrinkwrap or clickwrap
license, under which the End-User agrees to be bound by a license agreement
containing terms and conditions at least as restrictive as those set forth for
the applicable Product in the Reseller License Guide attached as Exhibit B
hereto. Samsung shall not make Copies, distribute or sublicense any releases,
bug fixes, patches, work-arounds or maintenance upgrades of the Product that are
provided to Samsung by Support.com as Third Level Support to End-Users for whom
Samsung has not paid to Support.com the required maintenance and support fees.
End-User license agreements shall not be transferable or sublicensable.
(f) Retention of Ownership. Except as expressly licensed to Samsung
herein, Support.com and its licensors retain all right and title to (i) all
Intellectual Property Rights related to the Product, Copies, Marketing Materials
or copies thereof (by whomever produced) and (ii) all Intellectual Property
Rights of Support.com. Samsung shall take any reasonable actions requested by
Support.com, including the execution, registration and recordation of
instruments, that may be necessary or appropriate to assign these rights to
Support.com or its licensor or perfect these rights in Support.com's or its
licensor's name. Samsung will have no right to receive or license any source
code with respect to any Product. Support.com and its licensors reserve all
rights and licenses to the Product not expressly granted to Samsung hereunder.
Samsung shall acquire no right, title or interest in any Intellectual Property
related to the Product or any Copies thereof (by whomever produced) other than
the license rights as described by Section 2.1 of this Agreement. All usage of
such Intellectual Property shall inure to Support.com's benefit. Samsung shall
not at any time do any act which would impair such Intellectual Property Rights.
Samsung agrees to take no action inconsistent with Support.com's ownership of an
interest in such Intellectual Property, or assist any third party in doing the
same.
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<PAGE>
SECTION 3. TERM AND TERMINATION
--------------------
3.1 Term. This Agreement shall become effective as of the Effective
----
Date and, unless terminated earlier as provided herein, this Agreement shall
remain in effect for an initial term of four (4) years following the Effective
Date. After the initial term, this Agreement shall renew automatically for
subsequent one (1) year terms, unless either party provides written notice to
the other of nonrenewal at least ninety (90) days prior to anniversary of the
Effective Date.
3.2 Termination.
-----------
(a) Either party shall have the right to terminate this Agreement if
the other party materially breaches any material provision of this Agreement and
fails to cure such breach within thirty (30) days (other than Samsung's
obligation to pay fees hereunder when due) after receipt of written notice
describing the breach; provided however that the cure period with respect to
breaches of any payment obligations shall be ten (10) days after receipt of
written notice.
(b) Either party shall have the right to terminate this Agreement
immediately upon written notice to the other party if the other party ceases to
do business, dissolves, liquidates or otherwise terminates its business
operations.
(c) Either party shall have the right to terminate immediately upon
written notice to the other party if the other party shall attempt to seek
protection under any bankruptcy, receivership, trust deed, creditors
arrangement, or comparable proceeding or if any such proceeding is instituted
against the other party or such other party makes a general assignment for the
benefit of creditors.
(d) This Agreement may be terminated upon the mutual agreement of the
parties therein.
3.3 Termination Duties. Upon termination or expiration of this
------------------
Agreement (i) all rights and licenses of Samsung hereunder shall terminate, (ii)
Samsung shall immediately deliver the report required by Section 7.1 hereof; and
(iii) Samsung shall immediately return to Support.com all Confidential
Information, the Golden Master and all Copies of the Product and any other
related materials in its possession, custody or control (including all copies or
embodiments thereof) accompanied by an affidavit of an officer of Samsung
certifying that Samsung has complied with all of its obligations contemplated by
this Section 3.3. The following sections shall survive, in accordance with their
terms, any expiration or termination of this Agreement: 1, 2.2, 3, 5, 6, 7, 9,
10, 11, 12, 13, 14.
3.4 Post-Termination Matters.
------------------------
(a) Survival of End-User Licenses; Payment Immediately Due. If this
Agreement expires or is terminated for any reason, each Term Sublicense properly
granted to End-Users prior to such expiration or termination (the "Continuing
Term Sublicenses") shall remain in effect until the end of the then current term
of such Term Sublicense, and may not be renewed or extended. Immediately upon
any termination or expiration of this Agreement, Samsung will pay to Support.com
all fees attributable to Term Sublicenses, whether or not currently due, and all
Third Level Support Fees accrued as of the expiration or termination date.
(b) Limited Survival of this Agreement. Upon expiration of this
Agreement or upon termination of this Agreement by Samsung pursuant to Sections
3.2, the provisions of this
Support.com, Inc PAGE 5
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<PAGE>
Agreement (including, without limitation, Sections 5, 6 and 8 hereof) shall
survive with respect to any Continuing Term Sublicenses, and internal usage
licenses, properly granted under this Agreement for the sole and exclusive
purposes of allowing Samsung to fulfill any orders accepted and provide
outsourcing services and any maintenance and support obligations pursuant to
agreements with End-Users entered into prior to such expiration or termination
by Samsung; Support.com shall continue to provide Third Level Support service
provided the applicable fees have been paid. Such survival shall continue until
the earlier of (a) such time as such obligations to End-Users shall terminate or
expire or (b) *** years following such termination of this Agreement, subject to
earlier termination due to Samsung's breach of the surviving obligations.
(c) Immediate Termination Rights. Upon the earlier of expiration of the
*** year period provided in Section 3.4(b) or termination of this Agreement by
Support.com pursuant to Sections 3.2, (i) all licenses granted to Samsung under
this Agreement shall terminate, and (ii) Samsung shall (a) provide Support.com
with (y) the names and contact information for the End-Users granted Term
Sublicenses under this Agreement and (z) the remaining term of any Continuing
Term SubLicenses and the remaining term of the maintenance and support
obligations ("Remaining Licenses"), and (b) Samsung shall pay to Support.com the
outstanding balance, whether or not currently due, of any License Fees owed to
Support.com for such Remaining Licenses and pay to Support.com the remaining
amount, whether or not currently due, of any and all maintenance and support
fees with respect to obligations owed to End-Users.
(d) No Renewal, Extensions or New Sublicenses. Notwithstanding anything
to the contrary herein, following the termination or expiration of this
Agreement, Samsung shall not be permitted to renew or extend the term of any
End-User Term Sublicense, internal use license, or maintenance and support
obligations with respect to the Products and Samsung may not enter into any new
sublicense agreements or maintenance and support arrangements with respect to
the Products.
3.5 Additional Remedies. Except as expressly limited by this Agreement,
-------------------
termination of this Agreement shall be without prejudice to any other remedy
which may be available to a party due to default of this Agreement. The parties
agree that violation of obligations under this Agreement may cause irreparable
harm and significant injury to an extent that may be extremely difficult to
ascertain. Accordingly, the parties agree that each party will have, in addition
to any other rights or remedies available to it at law or in equity, the right
to seek injunctive relief to enjoin any breach or violation of this Agreement.
3.6 Disclaimer. Except as specifically provided herein, if either party
----------
is entitled under local law or otherwise for any special payment or termination
indemnity as a consequence of termination or expiration of this Agreement, such
party hereby waives and disclaims, to the fullest extent permitted by law, any
right to such payment or indemnity.
3.7 Limitation on Liability. Except as expressly set forth in this
-----------------------
Section 3, neither party shall incur any liability whatsoever for any damage,
loss or expenses of any kind suffered or incurred by the other (or for any
compensation to the other) arising from or incident to any termination of this
Agreement pursuant to its. NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR
COMPENSATION, REIMBURSEMENT OR DAMAGES ON ACCOUNT OF THE LOSS OF PROSPECTIVE
PROFITS OR ANTICIPATED SALES OR ON ACCOUNT OF EXPENDITURES, INVESTMENTS, LEASES
OR COMMITMENTS IN CONNECTION WITH
Support.com, Inc PAGE 6
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* CONFIDENTIAL MATERIALS REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
<PAGE>
THE BUSINESS OR GOODWILL OF SUPPORT.COM OR SAMSUNG BECAUSE OF TERMINATION OF
THIS AGREEMENT IN ACCORDANCE WITH ITS TERMS.
SECTION 4. DEVELOPMENT AND DELIVERY
------------------------
4.1 Delivery of Documentation and Materials. From time to time,
---------------------------------------
Support.com shall deliver to Samsung the Documentation in electronic file format
and the Marketing Materials. Samsung may only distribute the Products
accompanied by the Documentation.
4.2 Delivery of the Products. Support.com may, at its discretion,
------------------------
deliver to Samsung a golden master electronic copy of the Products, in object
code format only (the "Golden Master"), or ship Products when in receipt of an
-------------
Order. At Support.com's request, Copies of the Product produced from a Golden
Master or other CD shall be individually enabled by an electronic or written
password (an "Enabling Key") which Support.com shall provide to Samsung upon
------------
Samsung's request in "blocks" or "bundles," the size of which shall be at
Support.com's sole discretion.
4.3 Replacement Version. If at any time during this Agreement
-------------------
Support.com notifies Samsung of the development of a replacement version or
update of the Products or any part thereof, Samsung shall use reasonable
commercial efforts to cease use and distribution of the prior version of the
Products, or the affected part thereof, within ten (10) days after Support.com
makes the replacement version or update of the Products available to Samsung.
4.4 Testing. Support.com will test the version of the Products as of
-------
the Effective Date, on the Korean version of the Wintel operating system, at
Support.com's facilities. Support.com will be responsible for all certification
testing of the Korean version of the Product. In order to effect such
certification testing, Samsung will provide engineers to perform such testing at
Support.com's facilities. Samsung will have the rights to resell the generally
available Product (for the Korean version of the Wintel operating system) in
accordance with the terms of this Agreement.
4.5 Localization. Support.com will be responsible for localization
------------
(i.e. language translation) of the Products with respect to the Korean version
of the Product for resale into the Asia/Pacific market. Support.com shall use
commercially reasonable efforts to make such version generally available for
resale by July 15, 2000.
SECTION 5. SAMSUNG TRAINING AND CUSTOMER SUPPORT
-------------------------------------
5.1 Training. Samsung shall use commercially reasonable efforts to
--------
provide First Level Support and Second Level Support with similar response times
as set forth in Exhibit C. Samsung shall use commercially reasonable efforts to
maintain on its staff a reasonable number of engineers who are assigned to
provide, and sufficiently knowledgeable about the Products' usage and deployment
as to be capable of providing the First Level Support and Second Level Support.
Samsung shall use commercially reasonable efforts to maintain appropriately
knowledgeable back up personnel for such engineers. Support.com will provide
standard training at mutually agreed upon locations (as set forth the applicable
Order) at then-current prices.
5.2 Consulting Services. Subject to the payment of the applicable fee,
-------------------
Support.com will provide thirty (30) days of consulting services to Samsung
relating to Product architecture and
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<PAGE>
implementation, subject to fees at Support.com's then current standard rates,
plus all reasonable expenses incurred by Support.com in providing such services.
5.3 Technical Support.
------------------
(a) First and Second Level Support. Samsung shall provide to Samsung
Customers and End-Users all First and Second Level Support with respect to the
Products, and shall distribute bug fixes, patches, work-arounds, and other
benefits of the Third Level Support (deemed by Support.com to be re-
distributable) which it receives from Support.com, as well as maintenance
upgrades, only to End-Users who have sublicensed Products and for whom Samsung
is current on the Support and Maintenance Fees as set forth Exhibit A.
(b) Third Level Support. With respect to the Products, subject to the
payment of the Third Level Support fees, Support.com will provide Third Level
Support directly to Samsung only. Support.com shall have no obligation to
provide Third Level Support directly to any End-User.
(c) Samsung will provide First and Second Level Support in a timely and
professional manner. Samsung shall only provide the benefits of Support.com's
Third Level Support to End-Users who are entitled to such benefits pursuant to
this Agreement.
5.4 Support Contacts. Samsung will identify for Support.com two (2)
----------------
points of contact for managing all support communications, and an escalation
point of contact for escalating any issues related to support or maintenance.
Support.com shall identify for Samsung a primary point of contact for managing
all support communications, and an escalation point of contact for escalating
any issues related to support or maintenance services.
SECTION 6. ORDERS AND FEES
---------------
6.1 "Order" means a written form submitted to Support.com by Samsung
setting forth the Products to be licensed to Samsung or to an End-User. If any
term of this Agreement conflicts with any term of an issued Order, this
Agreement shall take precedence.
6.2 Samsung will order Products by issuing an Order via U.S mail or
facsimile followed by original in U.S. mail. Samsung acknowledges that Orders
issued to Support.com for Products shall conform to the terms and conditions of
this Agreement. Each Order shall specify the following items for each End-User:
this Agreement number, type of Product, quantity for each type of product,
initial order or repeat order for existing End-User (or Samsung, if using for
internal purposes), duration of term, total number and type of existing
Licenses, total prepayment fees as well as catch up fees due and contact
information of End-User. Support.com shall deliver the most current version of
the Products to Samsung. Support.com agrees to accept Orders if they comply
with the provisions of this Agreement; otherwise acceptance of the Orders are at
Support.com's sole discretion. No additional or different provisions proposed
by Samsung (in an Order, purchase order, or otherwise) shall apply unless signed
by both parties.
6.3 License Fees. Samsung shall pay Support.com a monthly license
------------
fee in accordance with Exhibit A per each Product licensed. Fees for the
Products shall be due in accordance with Exhibit A or a fully executed Order.
On a case-by-case basis and only upon consent from
Support.com, Inc PAGE 8
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<PAGE>
Support.com, Samsung may license the Products with a perpetual term; the fees
for such perpetual usage shall be determined by Support.com.
6.4 Services Fees. Samsung shall pay Support.com the fees with
-------------
respect to Training, and Consulting Services provided pursuant to Section 5, at
Support.com's then-current rates. Fees for Technical Support are set forth in
Exhibit A.
6.5 Expenses. Samsung shall reimburse Support.com for the expenses
--------
incurred by Support.com pursuant to Sections 5.1 and 5.2 unless otherwise agreed
upon in a fully executed Order.
6.6 Taxes. Samsung shall be responsible for all taxes (except as
-----
otherwise provided in this Section 6.6 ), duties and other governmental
assessments incurred by either party as a result of the consummation of the
transactions contemplated by this Agreement. Samsung acknowledges and agrees
that it shall be the obligation of Samsung to report income received by Samsung
hereunder to all appropriate taxing entities, and agrees to reimburse, indemnify
and hold Support.com free and harmless from any obligation imposed by law on
Support.com to withhold taxes or other taxes.
Support.com shall be responsible for the withholding and/or payment, as
required by law, of all federal, state and local taxes imposed on Support.com or
its employees because of the licenses or any services hereunder. Further,
Support.com shall comply with all federal and state benefits laws applicable to
Support.com or its employees, if any, including making deductions and
contributions for social security and unemployment tax for social security and
unemployment tax. In the event that Support.com is subject to withholding tax
levied by the government of Republic of Korea which Samsung is required to
withhold with respect to the payment hereof, Samsung shall deduct such tax from
the price or payment to be paid at a rate provided in the relevant article of
the Tax Treaty between U.S.A. (or any country of any permitted assignee) and the
Republic of Korea. In which case, Samsung shall furnish to Support.com, as soon
as practicable, the official tax receipts which is applicable to such
withholding and which designates Support.com as a taxpayer, so that Support.com
can receive a credit for the amount withheld.
6.7 Samsung's Prices. Samsung shall be solely responsible for setting
----------------
the pricing to End-Users and obtaining payment from End-Users. Delays or
failures in obtaining such payments will not affect Samsung's obligation to make
payments to Support.com pursuant to this Agreement.
SECTION 7. EXPENSES
--------
7.1 Each party will be responsible for their own travel and other
expenses required to negotiate and execute this Agreement.
7.2 Other than as specifically provided herein, (a) Samsung and
Support.com will not charge each other for personnel time expended in the
performance of the Agreement, nor for consulting activities intended to improve
the use or salability of the product, and (b) each of Samsung and Support.com
will be responsible for its own expenses in connection with the exercise of its
rights or performance of its obligations under this Agreement.
Support.com, Inc PAGE 9
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<PAGE>
SECTION 8. REPORTS AND PAYMENTS
--------------------
8.1 Currency. All payments due under this Agreement shall be made in
--------
United States Dollars. All amounts set forth in Exhibit A are in United States
Dollars. Support.com shall send invoices for each Order submitted by Samsung
and Samsung shall pay such invoices within thirty (30) days of the receipt of
such invoices.
8.2 End-User Agreements. During the term of this Agreement, Samsung
-------------------
shall promptly provide to Support.com copies of each form of End-User License
Agreement executed by End-Users.
8.3 Late Payments. Late payments shall be subject to late payment
-------------
interest charges at a rate of one and one-half percent (1.5%) per month or the
maximum allowed by law, whichever is lower. Payments not received by Support.com
on or before the due date which were also not recorded as due on the quarterly
report shall be subject to an additional five percent (5%) late payment penalty
fee or the maximum allowed by law, whichever is lower.
8.4 General Reports. During the term of this Agreement and for three
---------------
(3) years after its termination, Samsung agrees (i) to retain all usual and
proper records and books of account and all usual and proper entries relating to
the Products and Copies sufficient to substantiate Samsung's compliance with
this Agreement, including, without limitation, reporting and payment of the
applicable fees and (ii) to allow Support.com and/or its representative to
review, audit and/or inspect Samsung's documents, financial statements, business
records, computer processors, equipment and facilities in order to verify
Samsung's compliance with the terms of this Agreement, including, without
limitation, reporting and payment of the applicable fees. All such information
shall be deemed Confidential Information and subject to Section 11. Any review,
audit and/or inspection shall be conducted during regular business hours at
Samsung's facilities on reasonable prior notice. If Support.com's or its
representative's review, audit or inspection reveals any underpayments, then
Samsung shall within thirty (30) days after notice thereof to pay Support.com
the full amount of the underpayment and any accrued late fees pursuant to
Section 8.3, running from the date payments should have been made had the
reports been accurate. If Samsung underpayment for any quarterly period exceeds
the lesser of (i) $10,000 or (ii) five percent (5%) of total amount due to
Support.com for such period, then Samsung shall reimburse Support.com for all
reasonable costs of the audit. The parties agree that any audit performed under
this Section 8.4 shall be final and binding upon the parties.
SECTION 9. MARKETING.
---------
Support.com and Samsung each agree to the terms and provisions with respect
to marketing which are set forth in Exhibit D attached hereto, and such terms
and provisions are hereby incorporated by reference into this Agreement.
SECTION 10. SAMSUNG COVENANTS AND REPRESENTATIONS
-------------------------------------
10.1 Samsung shall not (and shall not allow any third party) to (i)
decompile, disassemble, or otherwise reverse engineer (except to the extent that
applicable law prohibits reverse engineering restrictions) or attempt to
reconstruct or discover any source code, underlying ideas, algorithms, file
formats or programming or interoperability interfaces of the Products by any
means whatsoever, (ii)
Support.com, Inc PAGE 10
Proprietary and Confidential - For Intended Recipient Only
<PAGE>
remove any product identification, copyright or other notices, (iii) modify, or,
except to the extent expressly authorized herein, incorporate into or with other
software or create a derivative work of any part of the Products, (iv) except as
expressly permitted by this Agreement disseminate information or analysis
(including, without limitation, benchmarks) regarding the quality or performance
of the Products from any source other than Support.com, without prior written
authorization by Support.com, (v) except as expressly permitted by this
Agreement, use the output or other information generated by the Products
(including, without limitation, output describing the structure of a software
program) for any purpose other than permitted use and distribution of the
Products, and (iv) except as expressly permitted by this Agreement, publish or
use (or cooperate in the publication or use of) any trademarks of Support.com
without Support.com's prior written consent.
10.2 Samsung shall comply with all laws and regulations applicable to
this Agreement or the transactions contemplated hereby.
10.3 Except to the extent prohibited by agreements between Samsung and
End-Users, Samsung shall provide Support.com with periodic information as to the
nature and frequency of desktop and/or network malfunctions encountered by the
End-Users and how such malfunctions were detected and/or repaired (whether or
not using the Products) and as to any other problems encountered with the
Products and any resolutions arrived at for those problems, and to communicate
promptly to Support.com any and all modifications, design changes or
improvements of the Products suggested by any End-User, employee or agent.
Samsung further agrees (i) that Support.com shall have any and all right, title
and interest in and to any such suggested modifications, design changes or
improvements of the Products, without the payment of any additional
consideration therefore either to Samsung, or its employees or agents and (ii)
that it will fully cooperate with Support.com in this regard.
10.4 Samsung agrees that if the relationship between the End-User and
Samsung terminates, for any reason, Samsung shall remain liable to Support.com
for the applicable monthly fees for the original duration of the agreement
between such End-User and Samsung. Samsung shall immediately notify Support.com
of such termination and Support.com may offer the Product to such End-User, in
its sole discretion. In the event Support.com collects fees for usage of the
Product, Support.com may, at its discretion, relieve Samsung of its obligation
to pay the applicable monthly fees for such former End-Users to the extent
Support.com is collecting fees twice for the same usage.
10.5 Enforcement. Samsung hereby agrees to enforce against all End-Users
-----------
the material provisions of the applicable End-User License Agreement. If Samsung
learns that any End-User has breached any such provision, Samsung will
immediately notify Support.com and take, at Samsung's expense, all steps that
may be available to enforce such agreement, including availing itself of actions
for seizure or injunctive relief. If Samsung fails to take these steps in a
timely and adequate manner, Samsung will provide such assistance to Support.com
as it reasonably requests in enforcing such agreement and will reimburse
Support.com for any costs that it incurs in enforcing such End-User License
Agreement.
10.6 Export Restrictions. Samsung shall not (and shall not allow others
-------------------
to) remove or export from the United States (or re-export from anywhere) any
part of the Product or any direct product hereof except in compliance with and
with all licenses and approvals required under
Support.com, Inc PAGE 11
Proprietary and Confidential - For Intended Recipient Only
<PAGE>
applicable export laws and regulations, including without limitation, those of
the U.S. Department of Commerce.
10.7 Privacy. The Product contains features which may allow Samsung to
-------
collect data from, collect data from, control and or/monitor computers running
the Product. Samsung is solely responsible for, and assumes all liability with
respect to all such activity. Samsung shall indemnify and hold Support.com
harmless from and against any damages, claims, losses, settlements, attorneys'
fees and other expenses related to any such activities.
10.8 High Risk Activity. Samsung acknowledges that the Products are not
------------------
intended for use in connection with any high risk or strict liability activity
(including, without limitation, air or space travel power plant operation, life
support or emergency medical operations) and that Support.com makes no warranty
and shall have no liability in connection with any use of the Products in such
situations.
SECTION 11. CONFIDENTIALITY
---------------
11.1 Each party agrees that it will hold in strict confidence and not
disclose the Confidential Information of the other party to any third party and
to use the Confidential Information of the other party for no purpose other than
the purposes expressly permitted by this Agreement. Each party shall only
permit access to the other party's Confidential Information to those of its
employees having a need to know and who have signed confidentiality agreements
containing terms at least as restrictive as those contained in this Section 11.
Each party shall maintain the confidentiality and prevent accidental or other
loss or disclosure of any Confidential Information of the other party with at
least the same degree of care as it uses to protect its own Confidential
Information but in no event with less than reasonable care.
11.2 A party's obligations of confidentiality under this Agreement shall
not apply to information which such party can document (i) is in the public
domain without the breach of any agreement or fiduciary duty or the violation of
any law, (ii) was known to the party prior to the time of disclosure without the
breach of any agreement or fiduciary duty or the violation of any law, (iii) is
independently developed by the party prior to receiving such Confidential
Information without reference to any Confidential Information, (iv) is required
to be disclosed pursuant to a judicial order, a requirement of a governmental
agency or by operation of law, provided that such party gives the other party
written notice of any such requirement immediately after learning of any such
requirement, and takes all reasonable measures to avoid or limit disclosure
under such requirements and to obtain confidential treatment or a protective
order and has allowed such other party to participate in the proceeding. Upon
written request by either party hereto, the other party shall promptly return
all documents and other tangible materials representing the requesting party's
Confidential Information and all copies thereof.
SECTION 12. LIMITED LIABILITY
------------------
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, NEITHER
SUPPORT.COM NOR ITS SUPPLIERS SHALL BE LIABLE OR OBLIGATED WITH RESPECT TO ANY
SUBJECT MATTER OF THIS AGREEMENT OR UNDER CONTRACT, NEGLIGENCE, STRICT LIABILITY
OR ANY OTHER LEGAL OR EQUITABLE THEORY (I) FOR ANY AMOUNTS IN EXCESS IN THE
AGGREGATE OF THE FEES PAID
Support.com, Inc PAGE 12
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<PAGE>
TO SUPPORT.COM BY SAMSUNG WITH RESPECT TO THE COPIES OF THE PRODUCTS THAT
ARE THE SUBJECT OF THE CLAIM DURING THE TWELVE MONTH PERIOD PRIOR TO THE CAUSE
OF ACTION, (II) FOR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING,
WITHOUT LIMITATION, FOR ANY COST OF PROCUREMENT OF SUBSTITUTE GOODS, TECHNOLOGY,
SERVICES OR RIGHTS); (III) FOR INTERRUPTION OF USE OR LOSS OR CORRUPTION OF
DATA; OR (IV) FOR ANY MATTER BEYOND ITS REASONABLE CONTROL. SOME STATES DO NOT
ALLOW THE EXCLUSION OR LIMITATION OF INCIDENTAL OR CONSEQUENTIAL DAMAGES, SO THE
ABOVE LIMITATIONS AND EXCLUSIONS MAY NOT APPLY TO SAMSUNG.
SECTION 13. INDEMNIFICATION
---------------
13.1 By Support.com. Support.com shall indemnify and hold harmless
--------------
Samsung against all damages, costs, expenses, liabilities and losses (including
reasonable attorneys' fees and expenses) (collectively, "Damages") arising out
of any claim of infringement of a valid, registered United States copyright or
United States trademark or misappropriation of a United States trade secret is
asserted against Samsung by a third party based upon Samsung's sublicensing,
distribution or marketing of the Products in full compliance with this Agreement
or Samsung's use, in full compliance with this Agreement, of Support.com's
trademarks in the sales, distribution or marketing of the Products; provided,
that, in each case, Support.com shall have (x) received from Samsung written
notice of said claim within ten (10) days of the assertion thereof; (y) have
received from Samsung the exclusive right to control and direct the
investigation, defense, or settlement of such claims; and (z) received the
complete cooperation and assistance of Samsung. In the event Support.com
reasonably believes that any Product infringes a third party Intellectual
Property Rights, Support.com may either: (1) substitute for such Product
substantially similar programs and documentation, (2) procure for Samsung the
right to continue using such Product or (3) terminate this Agreement upon thirty
(30) days advance written notice and refund the license fees paid for the
Product that is the subject of the claim less depreciation as calculated on an
eight-year straight-line basis commencing as of the Effective Date. This
Section 13.1 sets forth Samsung's sole and exclusive remedy with respect to any
claim of Intellectual Property Rights infringement. The foregoing obligations
of Support.com do not apply (A) with respect to Product which is modified after
shipment by any party other than Support.com, if the alleged infringement
relates to such modification, (B) with respect to Product that was combined with
any non-Support.com products, processes or materials where the alleged
infringement relates to such combination, (C) where the allegedly infringing
activity continues after Support.com has notified Samsung thereof or after
Support.com has informed Samsung of modifications that would have avoided the
alleged infringement, (D) where Samsung's use of the Product is incident to an
infringement not resulting primarily from the Product, or (E) with respect to
infringement based on use of a version other than the then current version of
the Product if such infringement could have been avoided by use of the then
current version.
13.2 By Samsung. Samsung shall indemnify and hold harmless Support.com
----------
against Damages arising out of (i) any claim arising from Samsung's actions or
omissions in its marketing, advertising, sales, distribution or sublicense of
the Products, (ii) any claim of infringement of a valid, registered trademark is
asserted against Support.com by a third party based upon Support.com's use, in
full compliance with this Agreement, of Samsung's trademarks in connection
Support.com, Inc PAGE 13
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<PAGE>
with the marketing or advertising of the Products, and (iii) any breach of any
covenant required to be performed by Samsung hereunder; provided, that, in each
case Samsung shall have (x) received from Support.com notice of said claim
within ten (10) days of the assertion thereof; (y) have received from
Support.com the exclusive right to control and direct the investigation,
defense, or settlement of such claims; and (z) received complete cooperation and
assistance of Support.com.
SECTION 14. WARRANTY DISCLAIMER
-------------------
14.1 Limited Warranty. Support.com warrants and represents to Samsung
----------------
that for a period of ninety (90) days from the initial delivery of the Products
by Support.com, such Products, if operated as directed, will substantially
achieve the functionality described in the Documentation. Support.com warrants
that the media provided by Support.com to Samsung containing the Products will
be free from defects in material and workmanship and will so remain for ninety
(90) days from the delivery of the Products by Support.com.
14.2 Support.com's sole liability (and Samsung's exclusive remedy) for
any breach of the warranties under this Section 14 shall be, in Support.com's
sole discretion, to use commercially reasonable efforts: (i) to replace
Samsung's defective Products; or (ii) to advise Samsung how to achieve
substantially the same functionality with the Products as described in the
Documentation through a procedure different from that set forth in the
Documentation; or (iii) if the above remedies are impracticable, to refund the
license fee paid for the Products and terminate this Agreement. Support.com
shall have no obligation with respect to a warranty claim unless notified of
such claim and provided evidence of the license purchase within the applicable
warranty period. Support.com will use reasonable commercial efforts to repair,
replace, advise or refund pursuant to the foregoing warranty within thirty (30)
days of being so notified.
14.3 If any modifications are made to any Product by any party other
than Support.com, if the media is subjected to accident, abuse, or improper use,
or if Samsung breaches any of the terms of this Agreement, then this warranty
shall immediately terminate. This warranty shall not apply if any Product is
used on or in conjunction with hardware or software other than the unmodified
version of hardware and software with which such Product was designed to be used
as described in the applicable Documentation.
14.4 THE PROVISIONS OF SECTION 14.1 ABOVE CONSTITUTE A LIMITED WARRANTY,
AND IT IS THE ONLY WARRANTY MADE BY SUPPORT.COM OR ITS SUPPLIERS OR SAMSUNGS TO
ANY PERSON. NO DEALER, AGENT OR EMPLOYEE OF SUPPORT.COM IS AUTHORIZED TO MAKE
ANY MODIFICATIONS, EXTENSIONS OR ADDITIONS TO THIS LIMITED WARRANTY. SUPPORT.COM
MAKES NO OTHER REPRESENTATION OR WARRANTY OF ANY KIND WHETHER EXPRESS OR IMPLIED
(EITHER IN FACT OR BY OPERATION OF LAW) WITH RESPECT TO THE PRODUCTS OR OTHER
MATERIALS PROVIDED BY SUPPORT.COM. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
THIS AGREEMENT, SUPPORT.COM EXPRESSLY DISCLAIMS ALL IMPLIED WARRANTIES OF NON-
INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. SUPPORT.COM
DOES NOT WARRANT THAT THE PRODUCTS ARE ERROR-FREE OR THAT OPERATION OF THE
PRODUCTS WILL BE SECURE OR UNINTERRUPTED. SAMSUNG MAY HAVE OTHER STATUTORY
RIGHTS. HOWEVER, TO THE FULL EXTENT PERMITTED BY LAW, THE DURATION OF
STATUTORILY REQUIRED WARRANTIES, IF ANY, SHALL BE LIMITED TO THE ABOVE LIMITED
WARRANTY PERIOD. MOREOVER, IN NO EVENT WILL WARRANTIES PROVIDED BY LAW, IF ANY,
APPLY UNLESS THEY ARE REQUIRED TO APPLY.
Support.com, Inc PAGE 14
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SECTION 15. GENERAL PROVISIONS
------------------
15.1 Relationship of Parties. The parties hereto expressly understand
-----------------------
and agree that Samsung is an independent contractor in the performance of each
and every part of this Agreement, and is solely responsible for all of its
employees and agents and its labor costs and expenses arising in connection
therewith. Support.com is in no manner associated with or otherwise connected
with the actual performance of this Agreement on the part of Samsung, nor with
Samsung's employment of other persons or incurring of other expenses. Except as
expressly provided herein, Support.com shall have no right to exercise any
control whatsoever over the activities or operations of Samsung.
15.2 Assignment. Neither party may assign this Agreement, in whole or in
----------
part, without the other party's written consent, except that either party may
assign this Agreement in connection with a merger, acquisition, reorganization,
to a successor of all or substantially all of the business and assets of such
party, or to a wholly-owned subsidiary or Affiliate provided that the assigning
party promptly notify the non-assigning party of such assignment in writing and
provide written evidence that the assignee has assumed all of the obligations of
the assigning party under this Agreement. An "Affiliate" is a company that
controls or is controlled by or is under common control with Licensee. Subject
to the foregoing, the provisions of this Agreement shall apply to bind the
successors and permitted assigns of the parties. Any attempted assignment or
other transfer of this Agreement shall be null and void.
15.3 Amendment and Waiver. Except as otherwise expressly authorized
--------------------
herein, any provision of this Agreement may be amended and the observance of any
provision of this Agreement may be waived only with the written consent of the
parties.
15.4 Governing Law and Legal Actions. This Agreement shall be governed
-------------------------------
by and construed under the laws of the State of New York and the United States
without regard to conflicts of laws provisions thereof and without regard to the
United Nations Convention on Contracts for the International Sale of Goods. If
any conflict or dispute arises out of, or in connection with, this Agreement,
the first attempt at resolution shall be amicable negotiation and reconciliation
between the parties hereto. If no resolution can be reached amicably, all
disputes, controversies, claims, or differences, which may arise between the
parties, out of, in relation to, or in connection with this Agreement, including
without limitation, the breach thereof, but excluding any claim for breach of
Support.com's intellectual property, shall be referred to and finally settled by
arbitration. The arbitration shall take place in New York, in accordance with
its Rules of Conciliation and Arbitration of the International Chamber of
Commerce. The award rendered in arbitration shall be final and binding upon both
parties. The sole jurisdiction and venue for claims not arbitrated shall be the
New York state and U.S. federal courts located in New York. Both parties consent
to the jurisdiction of such courts and agree that process may be served in the
manner provided herein for giving of notices or otherwise as allowed by New York
state or U.S. federal law. In any action or proceeding to enforce rights under
this Agreement, the prevailing party shall be entitled to recover costs and
attorneys' fees.
15.5 Headings. Headings and captions are for convenience only and are
--------
not to be used in the interpretation of this Agreement.
15.6 Notices. Notices under this Agreement shall be sufficient only if
-------
personally delivered, delivered by a major commercial rapid delivery courier
service or mailed by certified or
Support.com, Inc PAGE 15
Proprietary and Confidential - For Intended Recipient Only
<PAGE>
registered mail, return receipt requested to a party at its addresses first set
forth herein or as amended by notice pursuant to this subsection. If not
received sooner, notice by mail shall be deemed received 5 days after deposit in
the U.S. mail.
15.7 Entire Agreement. This Agreement supersedes all proposals, oral or
----------------
written, all negotiations, conversations, or discussions between or among
parties relating to the subject matter of this Agreement and all past dealing or
industry custom. This Agreement includes and incorporates herein by this
reference the Exhibits attached hereto. Any different or additional terms of any
related purchase order, confirmation, invoice, or similar form shall have no
force or effect.
15.8 Severability. If any provision of this Agreement is held to be
------------
illegal or unenforceable, that provision shall be limited or eliminated to the
minimum extent necessary so that this Agreement shall otherwise remain in full
force and effect and enforceable.
15.9 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument
15.10 Force Majeure. If either party is prevented from performing any
-------------
portion of this Agreement by causes beyond its control, including, without
limitation, labor disputes, civil commotion, war, governmental regulations or
controls, casualty, inability to obtain materials or services or acts of God,
then except for payment obligations, such defaulting party will be excused from
performance for the period of the delay and for a reasonable time therefore.
IN WITNESS WHEREOF, the Parties have executed this Samsung Agreement on the
Effective Date.
Samsung SDS Co., Ltd.: SUPPORT.COM, INC.:
By: /s/ Hyun Soo Choi By: /s/ Radha R. Basu
-------------------- ----------------------
Name: Hyun Soo Choi Name: Radha R. Basu
------------------ --------------------
Title: Vice President Title: CEO & President
---------------- ------------------
Support.com, Inc PAGE 16
Proprietary and Confidential - For Intended Recipient Only
<PAGE>
EXHIBIT A
Product and Fees
The fees payable by Samsung to Support.com for the use or resale of the
Support.com Products depend upon the environment in which the Samsung or its
customer is using the products.
I. PRODUCT LIST
------------
SUPPORT.COM SUPPORT CENTER
- --------------------------
Healing Agent License
Healing Console License
Support.com Server License
Components include:
. Healing Console
. Administrative Console
. Healing Agent
. DNA Editor
. Vault Manager
. Data Mover
. Support.com Server
SUPPORT PORTAL LICENSE
Components include:
. Web Application
. Nexus
FOUNDRY LICENSE
Components include:
. DNA Editor
. Web Author
. Content Action Integrator
II. PRICING
-------
All pricing is set forth in United States dollars.
A. INTERNAL USAGE:
In the event Samsung uses the Products for internal usage, Samsung shall
pay Support.com in accordance with the following schedule:
SUPPORT CENTER PRICING:
Number of Healing Agent Licenses Ordered at One Time Fee Per Healing Agent
License Per
Up to *** Licenses $***
***-*** Licenses $***
***-*** Licenses $***
***-*** Licenses $***
***-*** Licenses $***
Support.com, Inc Schedule A PAGE 17
Proprietary and Confidential - For Intended Recipient Only
*CONFIDENTIAL MATERIALS REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
<PAGE>
FOUNDRY PRICING:
Monthly Fee, per Foundry
$***
SUPPORT PORTAL PRICING:
Number of Agent Licenses Monthly Fee, Per Portal^^***
*** $***
*** $***
*** $***
*** $***
. The duration (term) of each License is 36 months.
. The duration of each License shall be extended to be co-terminus with
subsequent orders of additional Healing Agent Licenses for internal usage
by a single department or division; decreased monthly fees per license
shall apply, if at all, only in the event the licenses are extended to be
co-terminus with subsequent orders. On a case-by-case basis and only upon
consent from Support.com, Samsung may sublicense additional licenses which
are not co-terminus.
. Licenses for internal usage must be licensed in minimum increments of ***
(***)
. A Order in the form set forth on Section 6.2 must be issued before Licenses
can be deployed by Samsung for internal usage.
. Samsung must prepay *** (***) *** of fees for each License licensed for
internal use; such prepayment is due sixty (60) days from the date of the
Order. Samsung must also pay a "catch up prepay" for previously ordered
Licenses in an amount equal to the number of months each License is
extended to be co-terminus with the current order multiplied the monthly
rate for the cumulative number of licenses in accordance with the pricing
above. After the expiration of the *** (***) prepaid months, Samsung must
prepay *** (***) months in advance until the remaining *** (***) months of
the term expires.
. *** for a single Order can be *** by Samsung's *** of the ***, as follows:
in the event Samsung *** twenty-four (24) months, Samsung shall be entitled
to an ***% ***, and in the event Samsung *** thirty-six (36) months,
Samsung shall be entitled to ***% ***.
. License fees may not be prorated for any month, and License fees shall
start accruing on the 1st day of the calendar month in which the Order is
received.
. Notwithstanding anything to the contrary in the Agreement, upon the license
of Healing Agents, Samsung is deemed to have licensed *** of Support.com
Server Licenses and Support.com Healing Console Licenses provided such
Licenses are used solely for internal usage to support Samsung's employees.
. Third Level Support is *** in this ***.
B. OUTSOURCING SERVICES TO BUSINESSES:
In the event Samsung distributes Healing Agents to assist in the provision
of technical support services to third party businesses, Samsung shall pay
Support.com as follows:
Support.com, Inc Schedule A PAGE 18
Proprietary and Confidential - For Intended Recipient Only
*CONFIDENTIAL MATERIALS REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
<PAGE>
SUPPORT CENTER PRICING:
<TABLE>
<CAPTION>
Quantity Based Discount Healing Agent Licenses Healing Console Support.com Server
Licenses Licenses Licenses
Number of Agent Discount Monthly Fee, per Monthly Fee, per Monthly Fee, per Server
Agent Licenses Off List Agent License Console License License
<S> <C> <C> <C> <C>
List Price $*** $*** $***
*** ***% $*** $*** $***
*** ***% $*** $*** $***
*** ***% $*** $*** $***
*** ***% $*** $*** $***
*** ***% $*** $*** $***
*** ***% $*** $*** $***
*** ***% $*** $*** $***
</TABLE>
FOUNDRY PRICING:
Monthly Fee, per Foundry License $***
SUPPORT PORTAL PRICING:
Number of Agent Licenses Monthly Fee, Per Portal
*** $***
*** $***
*** $***
*** $***
. This pricing is based upon the number of licenses licensed at one time for a
distinct third party business.
. The duration of each License shall be extended to be co-terminus with
subsequent orders of additional Licenses by the same department or division
of the same third party business; decreased monthly fees per license shall
apply, if at all, only in the event the licenses are extended to be co-
terminus with subsequent orders. On a case-by-case basis and only upon
consent from Support.com, Samsung may sublicense additional licenses which
are not co-terminus.
. Healing Agent Licenses must be licensed in minimum increments of *** (***)
. This pricing is based upon a term for each license of 36 months; in the
event Samsung resells licenses with shorter terms, the following surcharge
on the fees set forth above, for each License, shall apply: ***% surcharge
for a *** (***) month term and ***% surcharge for twelve (12) month term. In
no event shall Samsung sell a license with a term of less than twelve (12)
months or more than *** (***) months.
. An Order in the form set forth in Section 6.2 must be issued before Licensee
can distribute Healing Agent Licenses to third parties; Samsung must ***
(***) months of fees for each License; such prepayment is due sixty (60)
days from the date of the Purchase Order. Samsung must also pay a catch up
prepay for previously ordered Licenses in an amount equal to the number of
months each License is extended to be co-terminus with the current order
multiplied the monthly rate for the cumulative number of licenses in
accordance with the pricing above. Upon expiration of the *** months,
Samsung must *** (***) months in advance until the applicable term expires.
* CONFIDENTIAL MATERIALS REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
<PAGE>
o Additional discounts for a single Order for a distinct third party can be
earned by Samsung's prepayment of the applicable fees, as follows: in the
event Samsung *** (***) months, Samsung shall be entitled to an additional
***% ***, and in the event Samsung *** (***) months, Samsung shall be
entitled to an additional ***% ***.
o License fees may not be prorated for any month, and License fees shall
start accruing on the 1st day of the calendar month in which the Order is
received.
o Samsung may not use Support.com Servers or Healing Consoles received free
for internal use purposes for the purpose of supporting third parties;
Samsung must instead license additional Support.com Server Licenses and
Healing Console Licenses.
o Third Level Support is *** in this ***.
C. RESALE:
In the event Samsung sells Products to third party businesses, Samsung
shall pay Support.com as follows:
SUPPORT CENTER PRICING:
<TABLE>
<CAPTION>
Quantity Based Discount Healing Agent Healing Console Support.com
Licenses Licenses Licenses
Number of Discount Monthly Fee, per Monthly Fee, per Monthly Fee, per Server
Agent Off List Agent License Console License License
Licenses
<S> <C> <C> <C> <C>
List $*** $*** $***
$*** ***% $*** $*** $***
$*** ***% $*** $*** $***
$*** ***% $*** $*** $***
$*** ***% $*** $*** $***
$*** ***% $*** $*** $***
$*** ***% $*** $*** $***
$*** ***% $*** $*** $***
</TABLE>
FOUNDRY PRICING:
Monthly Fee, per Foundry $***
SUPPORT PORTAL PRICING:
Number of Agent Licenses Monthly Fee, Per
*** $***
*** $***
*** $***
*** $***
. This pricing is based upon the number of licenses licensed at one time by a
distinct third party business.
. Healing Agent Licenses must be licensed in minimum *** of *** (***)
. This pricing is based upon a term for each license of 36 months; in the
event Samsung resells licenses with shorter terms, the following surcharge
on the fees set forth above, for each License apply: ***% surcharge for a
*** (***) month term and ***% surcharge for *** (***) month term. In no
event shall Samsung sell a license with a term of less than *** (***)
months or more than *** (***).
. The duration of each License shall be extended to be co-terminus with
subsequent orders of additional Licenses by the same department or division
of the same third party; decreased monthly fees per license shall
Support.com, Inc. ScheduleA. PAGE 20
Proprietary and Confidential - For Intended Recipient Only
* CONFIDENTIAL MATERIALS REDACTED AND FILED WITH THE COMMISSION.
<PAGE>
apply, if at all, only in the event the licenses are extended to be co-terminus
with subsequent orders. On a case-by-case basis and only upon consent from
Support.com, Samsung may sublicense additional licenses which are not co-
terminus.
. An Order in the form set forth in Section 6.2 must be issued to before
Licensee can distribute Products to third parties. Samsung must prepay ***
(***) months of fees for each License; such prepayment is due thirty (30)
days from the date of the Order. Samsung must also pay a "catch up prepay"
for previously ordered Licenses in an amount equal to the number of months
each License is extended to be co-terminus with the current order
multiplied the monthly rate for the cumulative number of licenses in
accordance with the pricing above. Upon expiration of the *** (***) ***
months, Samsung must *** (***) months in advance until the applicable term
expires.
. *** for a single Order for a distinct third party can be earned by
Samsung's *** of the ***, as follows: in the event Samsung *** (***)
months, Samsung shall be *** to an ***% ***, and in the event Samsung ***
(***) months, Samsung shall be entitled to an ***% ***.
. License fees may not be prorated for any month, and License fees shall
start accruing on the 1st day of the calendar month in which the Order is
received.
. Third Level Support is *** in this ***.
D. SPECIAL RESALE PRICING:
----------------------
In the event Samsung seeks to sell Products to Internet Service Providers,
which will then distribute the Healing Agent to it's customers, Samsung
must obtain consent from Support.com and Support.com shall assist Samsung
in generating a license agreement which will allow the "sub-sub" license of
the Healing Agent. Samsung shall be entitled to offer a "lite" version of
the Healing Agent, which protects just the network connectivity and the
related Internet Service Provider software, for $*** per Lite Healing Agent
License per year, with a *** (***) year term.
III. TERRITORY
---------
Australia, New Zealand, India, Japan, Asean countries, Hong Kong, Taiwan, Korea,
China
For the period beginning on the Effective Date and ending on December 31, 2001,
*** shall *** any other *** to *** to companies *** in the *** of the ***.
Support.com may, however, sell directly to customers in *** for such customer's
internal use, outsourcing services, or OEM purposes. This *** to *** in the ***
shall terminate in the event Samsung sells *** products (as defined in Section
2.2(b) of the Agreement) in the ***
IV. MINIMUM COMMITMENTS
-------------------
Samsung agrees to pay Support.com as follows:
<TABLE>
<CAPTION>
Period Minimum Commitment Minimum Commitment Due Date
<S> <C> <C>
3/31/00--3/30/01 $*** $*** due ***, or if later, upon initial delivery
of the Products tested on the Korean Wintel OS
$*** due ****
$*** due ****
3/31/01--3/30/02 $*** $*** due ****
$*** due ****
3/31/02--3/30/03 $*** $*** due ****
$*** due ****
3/31/03--3/30/04 $*** $*** due ****
$*** due ****
****, if ***, upon *** of the *** localized in the ***
</TABLE>
* CONFIDENTIAL MATERIALS REDACTED AND FILED WITH THE COMMISSION.
<PAGE>
. License fees set forth in Orders and invoices shall be applied, at the rates
set forth in Section II above, towards the Minimum Commitment applicable to the
Period in which the Orders and invoices are issued. Service fees shall also
apply to the Minimum Commitment applicable to the Period in which the Services
were Ordered, but only up to *** percent (***%) of such Minimum Commitment.
. In the event aggregate fees set forth in Orders and invoices in a
particular Period exceed the applicable Minimum Commitment, and/or to the extent
service fees exceed *** percent (***%) of the applicable Minimum Commitment,
Samsung shall pay such fees in accordance with Section II above and this
Agreement. Such payments in excess of the applicable Period's Minimum Commitment
shall not decrease subsequent Minimum Commitments or any portion of the
applicable Period's Minimum Commitment. Notwithstanding the foregoing, Samsung
shall no longer be required to pay subsequent Minimum Commitments in the event
all payments to Support.com in the aggregate equal $***, and *** percent (***%)
of such payments were license fees. Thereafter, Samsung shall be required to pay
the fees as they become due, in accordance with Section II above and the
Agreement.
. Each Minimum Commitment or any portion thereof is forfeited at the
expiration of the applicable Period.
These Products and the Pricing for Outsourcing, Resale, and Special Resale
Pricing are subject to change upon thirty (30) days written notice.
Support.com, Inc Schedule A PAGE 22
Proprietary and Confidential - For Intended Recipient Only
* CONFIDENTIAL MATERIALS REDACTED AND FILED WITH THE COMMISSION.
<PAGE>
EXHIBIT B
RESELLER LICENSE GUIDE
(see attached)
Support.com, Inc Exhibit B PAGE 23
Proprietary and Confidential - For Intended Recipient Only
<PAGE>
EXHIBIT C
Standard Technical Support and Maintenance
------------------------------------------
During the period for which Licensee has paid the applicable support and
maintenance fee, Licensee shall be entitled to the following:
Software Maintenance
Whenever Support.com makes Releases generally available at no additional charge
to its maintenance customers, then Support.com shall make the same available to
Licensee at no additional charge in the form such Releases are made available to
other Support.com customers licensing the same Software product licensed
hereunder. Licensee agrees to distribute Releases of the Product on to those
third parties properly licensed to use such Products. Licensee agrees to
install Releases within thirty (30) days of receipt and agrees that any such
Releases shall be subject to the terms and conditions applicable to the Software
as set forth in this Agreement. Unless separately agreed to in writing,
Support.com has no obligation to correct any errors or other problems with
previous releases after the thirty (30) day period following the release of the
current Release has expired. Support.com reserves the right to define the
addition of a major element in the Software as a new product and not a Release.
Support.com shall supply documentation for Releases at its sole discretion.
Implementation and training for Releases is available from Support.com at
mutually agreeable times and at Support.com's then-current standard time and
material rates. Licensee acknowledges and agrees that Support.com is under no
obligation to release any Releases to the Software. Support.com is under no
obligation to modify the Software to operate on any updated versions of
operating systems or platforms.
"Releases" means generally available error corrections, bug fixes, and minor and
major releases for the same Software product licensed hereunder.
Software Technical Support
Support.com shall provide technical support by telephone, or other electronic
means available by Support.com, during the hours of 7 a.m. to 7 p.m. (Pacific
time), Monday through Friday, excluding Support.com holidays ("Business Hours"
or "Business Days", as applicable). All assistance shall be given in English
only to two (2) named employees of Licensee with sufficient knowledge of the
Software ("Designated Licensee Contacts"); such Designated Licensee Contacts may
be changed by Licensee from time to time by written notice to Support.com,
provided such Designated Licensee Contacts have attended appropriate Support.com
training related to the Software. Support.com shall not be required to deal
with any person other than the Designated Licensee Contacts. Additional
Designated Licensee Contacts can be purchased at Support.com's standard rates.
All additional assistance provided by Support.com to Licensee, including, but
not limited to, custom programming, data conversion and consulting shall be
charged at Support.com's then-current standard time and material rates.
Support.com shall use commercially reasonable efforts to remedy any reproducible
Error (as defined below) in the Software reported in writing by Licensee in
accordance with the Severity Levels set forth below. Support.com's obligation
to provide such services shall continue only so long as Licensee maintains the
current installed version of the Software, without modification by any party
other than Support.com and so long as the equipment on which the Software is
installed is configured as specified in the Documentation or as otherwise
specified by Support.com.
"Error" means a material failure of the Software to conform to its functional
specifications as described in the applicable Documentation, which failure is
demonstrable in the environment for which the Software was designed and causes
it to be inoperable, to operate improperly in the environment for which it was
designed, or produces results different from those described in the applicable
Documentation. The specific Severity Levels are set forth below. Failure
resulting from Licensee's negligence or improper use of the Software,
modifications or damages to the software by Licensee, and Licensee's use of the
Software on a platform or with an operating system other than the designated
platform in the Documentation or in combination with any third party software
not provided by Support.com, are not considered Errors.
Support.com, Inc Exhibit C PAGE 24
Proprietary and Confidential - For Intended Recipient Only
<PAGE>
"Severity 1 Error": The Software materially fails to conform to the functional
- -------------------
specifications set forth in Documentation and Licensee is unable to proceed
without a fix to the problem or a work-around solution provided by Support.com
(no functionality, e.g., system down problems). Severity 1 Errors shall be
directly reported to Support.com Technical Support by email at addresses
provided by Support.com. All such Severity 1 Errors will be assigned to
Technical Support Specialist and a Support Manager. Support.com will initially
respond to Licensee within four (4) Business Hours of receipt of notice of the
Severity 1 Error by Support.com. This response will inform Licensee of the
identity of Support.com personnel assigned and of the plan to seek resolution.
Support.com will in addition provide regular status updates.
"Severity 2 Error": The Software contains major functional problems against the
- ------------------
Documentation, which Licensee is able to work around but the Software can only
be used to a limited degree (partial or limited functionality). Severity 2
Errors shall be directly reported to Support.com Technical Support by email. All
such problems. Support.com will initially respond to Licensee within one (1)
Business Day of receipt of the Severity 2 Error by Support.com. This response
will inform Licensee of the identity of Supplier personnel assigned and of the
plan to seek resolution. Support.com will in addition provide regular status
updates.
"Severity 3 Error": Software or documentation contains incorrect logic,
- -------------------
incorrect descriptions, or functional problems, which Licensee is able to work
around, or where a temporary correction has been implemented (fully functional
but needs improvement). Support.com will initially respond to Licensee within
two (2) Business Days of receipt of the Severity 3 Error by Support.com. This
response will inform Licensee of the identity of the Support.com personnel
assigned and of the plan to seek resolution. Support.com, in addition, will
provide regular status updates provided however that Support.com shall have the
right to prioritize Severity 3 Errors and include corrections for such Errors in
future releases at its sole discretion.
Licensee Obligations. In addition to providing Support.com with full, good
faith cooperation and such information as may be required by Support.com in
order to perform the support and maintenance services, Licensee shall provide
Support.com with (i) specific detailed information concerning Licensee's use of
the Software as may be required for the performance of the support and
maintenance services and (ii) all necessary computer services information and
access to key personnel needed to provide the support and maintenance. If
Licensee fails or delays in its performance of any of the foregoing
responsibilities, Support.com shall be relieved of its obligations hereunder to
the extent such obligations are dependent upon such performance.
License Grant. In the event any work product or code is created in the
provision of support and maintenance services hereunder, such work product or
code shall be included within Software and licensed to Licensee under the terms
and conditions of this Agreement, and Support.com shall retain all right, title
and interest in and to such work product or code and any derivatives,
enhancements or modifications to the Software created by Support.com.
Exclusions. Support.com is not required to provide any maintenance services
relating to problems arising out of (i) changes to the operating system or
environment which adversely affect the Software; (ii) use of the Software in a
manner not specified in the Documentation; (iii) accident, negligence, or misuse
of the Software; or (iv) alterations or modifications to the Software by anyone
other than Support.com.
Support.com, Inc Exhibit C PAGE 25
Proprietary and Confidential - For Intended Recipient Only
<PAGE>
EXHIBIT D
MARKETING
---------
Support.com and Samsung agree to the following terms with respect to marketing
efforts as set forth below:
1. Marketing Efforts. Samsung shall, at its own expense, use its commercially
-----------------
reasonable efforts to actively promote, market and license the Copies to its
customers and prospective customers. Support.com shall provide Samsung with
Marketing Materials for this purpose. Samsung agrees (i) to conduct its
marketing, promotion and sales activities in a manner that reflects favorably at
all times on the Products and the good name, goodwill and reputation of
Support.com; (ii) to avoid deception, misleading or unethical practices that are
or might be detrimental to Support.com or the public, including but not limited
to, disparagement of Support.com or its Products, and acceptance or payment of
bribes, kickbacks or secret profits; (iii) to make no representations,
warranties or guarantees, whether express or implied, to End-Users or other
third parties with respect to the specifications, features or capabilities of
Products other than those stated in writing in the Documentation or Marketing
Materials; (iv) not to publish or use (or cooperate in the publication or use
of) any written or printed materials about the Products not provided by
Support.com without Support.com's prior written consent or any misleading or
deceptive advertising material.
2. Trademark License. Samsung agrees that Support.com may refer to Samsung by
-----------------
trade name and trademark, and may briefly describe Samsung's business, in
Support.com's marketing materials and web site. Each party hereby grants to the
other party a royalty-free, non-exclusive, non-transferable (except as set forth
in Section 15.2 of the Agreement) license to use the granting party's Marks
solely in connection with the sales and marketing of the Products pursuant to
this Agreement.
(a) Each party agrees to comply with the other party's then-current
Trademark Usage Guidelines.
(b) Each party shall ensure that all advertisements, marketing materials or
other documents on which the other party's Marks are placed (the
"Marked Materials") shall not reflect adversely upon the good name of
other party. Each party acknowledges that if the Marked Materials
distributed by such party are of inferior quality in design, material
or workmanship, the substantial good will which the other party has
established and now possesses through its Marks would be impaired.
Accordingly, each party agrees that the Marked Materials shall be of
high standard and of such nature, style, appearance and quality as
shall be adequate and suited to the protection of the other party's
Marks and the goodwill associated therewith.
(c) Neither party shall use the other party's Marks, or any part thereof,
as part of or in conjunction with any other names or trademarks except
with the other party's prior written approval. Neither party shall not
use the Support.com Marks or any confusingly similar or diluting mark,
term or design, except as expressly authorized in this Agreement, and
Samsung shall not attempt to register or aid any third party in using
or attempting to register any such mark, term or design. Samsung shall
not use any of the Support.com Marks in any manner that will indicate
that it is using such mark other than as a licensee.
(d) Refusal to submit samples, or non-compliance with the provisions of
this Agreement and/or the other party's Trademark Usage Guidelines,
will result in the licensor party's right to revoke other party's
license to use the licensor party's Marks.
(e) Each party's Marks and the goodwill associated therewith are and remain
such party's exclusive property. The other party shall acquire no
right, title or interest in a licensor party's Marks or the goodwill
associated therewith, other than the limited license and right to use
such Marks as set forth by the express terms of this Agreement. All
usage of the other party's Marks shall inure to the licensor party's
benefit. Neither party shall at any time do or suffer to be done any
act which would impair the other party's Marks or the goodwill
associated therewith. Each party shall take any actions reasonably
requested by the other party, including the execution of instruments,
that may be necessary or appropriate to register or otherwise confer or
perfect the other party's rights in such party's Marks in any
jurisdiction in such party's name. Each party agrees that it will take
no action
Support.com, Inc Exhibit C PAGE 26
Proprietary and Confidential - For Intended Recipient Only
<PAGE>
inconsistent with the other party's ownership of and interest in the
other party's Marks, or assist any third party in doing any of the
same.
(f) Under no circumstances will anything in this Agreement be construed as
granting, by implication, estoppel or otherwise, any licenses or rights
in the other party's Marks not expressly granted in this Section.
(g) Each party shall promptly notify the other party in writing of any
actual or suspected infringement of the other party's Marks by a third
party of which the party becomes aware and of any available evidence
thereof. Each party shall cooperate, at the other party's expense, with
the other party's efforts to investigate, terminate and recover damages
for any actual or suspected infringement of such other party's Marks.
3. Co-Marketing.
------------
(a) General Announcement. Both parties may communicate the general
existence of this Agreement to other parties, including, without
limitation, the general marketing, reseller and cooperative development
aspects, provided, however, that specific terms and conditions,
including without limitation, specific pricing, shall be deemed
Confidential Information of Support.com and subject to the
confidentiality obligations set forth in Section 11, notwithstanding
subsections (i), (ii), or (iii) of Section 11.2.
(b) Joint Press Release. Both parties will cooperate to provide joint press
releases and press and analyst communications regarding the
relationship from time to time as mutually agreed upon. At a minimum,
the parties will make one joint press release announcing the
partnership shortly after this Agreement is signed.
(c) Joint Marketing. Support.com and Samsung will reasonably cooperate on
joint marketing, including events, seminars, customer mailings,
customer success stories and case studies, supporting quotes, and other
activities as mutually agreed upon.
(d) Web Site Presence and Links. Samsung and Support.com will cooperate to
develop and publish information on their respective web sites promoting
the relationship. Samsung and Support.com each agree to include
hyperlinks to the other party's web sites. When the hyper-links are
activated, the End-User shall be linked directly to the parties
respective Home Pages and not to any other Web site page. The materials
and any information made available on each party's Web site are
provided "AS IS AND WITHOUT WARRANTY OF ANY KIND". Materials and
information made available on a party's Web site shall not in anyway be
deemed a representation or warranty of that party with respect to the
Products.
(e) Customer Reference. Samsung will serve as as a reference for
Support.com and the Products, including, without limitation, providing
executive quotes and having Samsung representatives speak upon
Support.com's reasonable request with press, analysts, and prospective
and current Support.com customers.
(f) Success Story. Samsung agrees to serve as the subject of a collateral
piece discussing Samsung's use of the Product. Such collateral piece
will be authored by Support.com and subject to Samsung's review and
approval, which approval shall not be unreasonably delayed or withheld.
The target audience for such collateral piece will be Support.com's
prospective customers.
Support.com, Inc Exhibit C PAGE 27
Proprietary and Confidential - For Intended Recipient Only
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.
EXHIBIT 10.22
SALE AND LICENSE AGREEMENT
THIS SALE AND LICENSE AGREEMENT (the "Agreement") is made as of March 20,
2000 (the "Effective Date") by and between ***, Inc., a Delaware corporation
with its principal place of business at *** ("Company"), and Support.com, Inc.,
a Delaware corporation with its principal place of business at 575 Broadway,
Redwood City, CA 94063 and its affiliates ("Support.com").
RECITALS
WHEREAS, Company owns certain client and server support software known as
***;
WHEREAS, Support.com wishes to receive a license to the source code to the
*** software pursuant to the terms of this Agreement and Company wishes to
provide such license; and
WHEREAS, Company wishes to provide Support.com certain rights if
Support.com exercises the option granted by Company pursuant to this Agreement
and Support.com wishes to provide certain rights back to Company in such event.
NOW THEREFORE, in consideration of the mutual promises set forth below, the
sufficiency of which is hereby acknowledged, the parties agree as follows:
AGREEMENT
1. Definitions.
-----------
1.1 "Delivery Date" means the date Company delivers the Trio Source
Code to Support.com.
1.2 "Employee" means an employee or independent contractor
performing services for or on behalf of Support.com, or Company, as applicable.
1.3 "Intellectual Property Rights" means, to the extent owned or
controlled by the granting or transferring party in any country, all relevant
(i) copyright rights (including copyright applications), (ii) mask work rights,
(iii) rights to exploit trade secrets and other non-public or confidential
information, (iv) patent rights (including patent applications, disclosures,
renewals, divisions, continuations, extensions or continuations in part, and
patentable inventions), (v) moral rights, (vi) trademarks, (vii) know-how and
(viii) any other similar rights or intangible assets recognized under any laws
or international conventions, in any country or jurisdiction in the world,
including but not limited to those patent, copyright and trademark registrations
and pending applications listed on Exhibit D.
1.4 "Licensed Object Code" shall have the meaning stated in Section
3.3.2.
1.5 "Licensed Source Code" shall have the meaning stated in Section
3.3.1.
*CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
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1.6 "Limited Functionality Version of Trio" means the Licensed
Object Code with functionality limited to capabilities described in Exhibit E.
1.7 "New Version" means a new release of Trio which contains new
features and/or additional functionality that Company makes generally available
to its customers or which Company uses on the Company Support Website, and which
is identified by a change in the version number to the left of the decimal
point. New Versions do not include Company Integrated Products.
1.8 "Non-Web-Based" shall have the meaning stated in Section 3.4.
1.9 "Company Integrated Products" means computer code independently
developed by Company without use of or reference to Confidential Information
(other than the Trio Code) which integrates with the Trio Code but does not
incorporate Trio Code or proprietary portions thereof.
1.10 "Company Support Website" means the website operated by Company
identified by the Company domain name or any successor web site, including all
sub-sites containing the same branding, look, feel, and functionality, for
providing a marketplace for support technicians to offer and provide computer
users with technical support services, all affiliated sites, and all co-branded
sites.
1.11 "Object Code" means software in machine readable format.
1.12 "Option Period" shall have the meaning stated in Section 3.1.
1.13 "Option to Purchase" shall have the meaning stated in Section
3.1.
1.14 "Source Code" means software in human-readable format and
accompanying documentation.
1.15 "Trio" means the complete *** client and server software, in
source code form, including any related technical specification documentation
provided by Company, and any necessary build scripts and internal development
tools required to create derivative works including those components as more
particularly described on Exhibit B ("Trio Components"). For the avoidance of
---------
doubt, Trio shall also include all previous versions of what is currently known
as ***. Trio Code does not include any software belonging to ***.
1.16 "Trio Code" shall mean all Source Code, Object Code, Technology
and Intellectual Property Rights for Trio including: (i) as currently released,
(ii) all previously released versions prior to the date that Support.com
exercises the Option to Purchase, (iii) Trio in the form in which it is
integrated with the *** client software as of the date that Support.com
exercises the Option to Purchase, and (iv) all New Versions and Upgrades.
1.17 "Technology" shall mean inventions (whether or not patentable),
ideas, processes, formulas, and know-how related to Trio and controlled by
Company and either (a)
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used by Company as of the date of this Agreement, or (b) used by Company in
development or implementation of New Versions or Upgrades.
1.18 "Upgrade" means a new release of Trio which contains
corrections or bug fixes that Company makes generally available to its customers
who have a current maintenance agreement for Trio or which Company uses on the
Company Support Website, and which is identified by a change in the version
number to the right of the decimal point. An Upgrade does not include New
Versions.
2. Trio Source Code License Grant to Support.com.
---------------------------------------------
2.1 Source Code License. Subject to the terms and conditions of
-------------------
this Agreement, Company hereby grants to Support.com, and Support.com hereby
accepts, a nonexclusive, nontransferable (subject to Section 12.2
("Assignment")), fee-bearing, limited license to use, modify and create
derivative works of the Source Code version of Trio subject to the following
limitations: (i) Support.com may use, modify or create derivative works of the
Source Code only for Support.com's internal development efforts in connection
with integrating the Source Code of Trio with Support.com's software, (ii) only
Employees of Support.com may have access to, use, modify or create derivative
works of the Source Code of Trio, (iii) Support.com will only make copies of the
Source Code of Trio as necessary to utilize the rights stated in this Section
2.1, and (v) Support.com shall take all security precautions to maintain the
confidentiality of and prevent accidental or other loss or disclosure of the
Source Code of Trio as it uses to protect its own source code, but in no event
less than commercially reasonable security precaution. If Support.com does not
exercise the Option to Purchase, then the license for the Trio Source Code
stated in this Section 2.1 shall terminate upon the expiration of the Option
Period. If Support.com exercises such Option to Purchase, then, subject to the
terms of this Agreement, all rights in and to the Trio Source Code shall be
transferred and assigned to Support.com, in accordance with Section 3.
2.1.1 Limitations; Ownership. Except in the event Support.com
----------------------
exercises the Option to Purchase and except for the rights stated in Section 2,
(i) Support.com is granted no rights in Trio, and Company expressly reserves to
itself all rights not granted to Support.com, and (ii) Company retains exclusive
ownership of Trio as well as any modifications and derivative works of Trio
created by Support.com which do not incorporate Support.com code or proprietary
portions thereof. In the event Support.com elects not to exercise the Option to
Purchase, Support.com shall immediately provide Company with all modifications
and derivative works of Trio created by Support.com, unless such modifications
and derivative works incorporate Support.com software code or proprietary
portions thereof. After Support.com exercises the Option to Purchase, it shall
own any modifications and derivative works of Trio that it creates during the
Option Period. Support.com will not alter or remove any proprietary rights
notice in the Source Code of Trio or the documentation therefore unless
Support.com exercises the Option to Purchase.
2.2 Fees For Trio Source Code License. Support.com shall pay to
---------------------------------
Company the sum of *** dollars (US $***) as a one-time, fully-paid license fee
in consideration of the license granted to Support.com in Section 2.1. This
license fee
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shall be paid to Company within thirty (30) days of the Delivery Date. The
license fee shall become non-refundable and non-recoupable upon receipt by
Company.
2.3 Training Regarding Trio Source Code. Company shall provide
-----------------------------------
training to Support.com engineers during a sixty-day period (the "Training
Period") to be specified by Support.com, but in no event shall the Training
Period extend beyond three (3) months after the expiration of the Option Period.
The training shall consist of up to four (4) eight (8) hour days and four (4)
four (4) hour days of training to be provided on dates during the Training
Period to be mutually agreed by the parties; such agreement shall not be
unreasonably withheld. Support.com shall pay to Company the sum of *** dollars
(US $***) for this training. Training shall be provided on-site at Support.com's
facilities and there shall be no limit to the number of Employees entitled to
participate in such training. Such payment shall be made within twenty (20) days
after commencement of the Training Period but in any event no later than the end
of the Option Period. The training fee shall become non-refundable and non-
recoupable upon receipt by Company, and the training shall be deemed complete
three (3) months after expiration of the Option Period or, in the event
Support.com elects not to exercise the Option to Purchase, the expiration of the
Option Period.
2.4 Integration Assistance From Company. For sixty (60) days after
-----------------------------------
the Delivery Date, Company shall provide Support.com with access to two (2)
Company designated technical Employees who are sufficiently knowledgeable
regarding the Source Code of Trio to provide integration assistance to
Support.com. The Company designated Employees shall advise Support.com how to
best integrate the Source Code of Trio with the Support.com software, but such
advice shall not require creation of software code or documentation. If
Support.com deems necessary, such assistance shall be on-site at Support.com
facilities. Support.com shall pay Company a technical assistance fee of ***
dollars (US $***) in consideration of such support provided by Company. The
technical assistance fee shall be payable to Company within thirty (30) days of
the Delivery Date. This payment shall be deemed non-refundable and non-
recoupable upon receipt by Company, and integration assistance shall be deemed
complete upon the earlier of three (3) months after the expiration of the Option
Period or, in the event Support.com elects not to exercise the Option to
Purchase, expiration of the Option Period.
2.5 Maintenance of Trio Source Code. For a period of ninety (90)
-------------------------------
days after the Delivery Date, Company shall provide maintenance and support for
the Trio Source Code as originally provided to Support.com, and for Upgrades or
New Versions, if any, created by Company during such 90-day period. The support
and maintenance shall be provided during Company's regular business hours,
Monday through Friday, 8 am to 5 pm Pacific time, except Company holidays.
Support.com shall contact Company for maintenance and support at
customerservice@***.com. In addition, Company shall provide Backline
maintenance and support for the Trio Source and Object Code, as originally
provided and previous releases, and for Upgrades or New Versions, if any, to
assist Support.com in the transition of support obligations; such Backline
maintenance obligation shall expire upon the earlier to occur of one (1) year
after Support.com elects to exercise the Option to Purchase or expiration of
maintenance and support obligations assigned to Support.com pursuant to Section
3.4. "Backline" maintenance shall mean assistance only after Support.com has
made reasonable attempts to resolve an error in the Trio Source Code or Object
Code. In consideration of the maintenance and support provided, Support.com
shall pay Company *** dollars (US $***).
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<PAGE>
The payment for support and maintenance shall be due and payable within thirty
(30) days after the Delivery Date.
2.6 Engineering Services. Beginning on the Effective Date and
--------------------
ending on the earlier of (i) Support.com's exercise of the Option to Purchase,
or (ii) ninety (90) days after the Delivery Date, Company shall provide
engineering services to Support.com with respect to Trio. Notwithstanding the
foregoing, the engineering services from Company shall be provided for a minimum
of sixty (60) days after the Effective Date. In consideration of such services,
Support.com shall pay to Company *** dollars ($***) for each month during which
Company provides engineering services. The payment for engineering services
shall be due and payable for each month in advance three (3) days after the
Delivery Date and the 23rd day of April and May, 2000. For purposes of this
Section 2.6, the $*** monthly Engineering Services fee is earned by Company
after the first day of such services in each month during the 90 days following
the Effective Date. This payment shall be deemed non-refundable and non-
recoupable upon receipt by Company.
2.7 Upgrades and New Versions. Company agrees to provide the Source
-------------------------
Code for Upgrades and/or New Versions of Trio, if and when available.
Notwithstanding anything to the contrary in Section 2.5, Company's obligation to
provide such Upgrades expires only in the event Support.com elects not to
exercise the Option to Purchase. Upgrades, New Versions, and modifications to
the Source Code for Trio (whether or not made generally commercially available)
shall be provided to Support.com for the term of this Agreement, without
additional charge, after Support.com elects to exercise the Option to Purchase.
3. Option for Source Code Transfer.
-------------------------------
3.1 Option Period. During the period of ninety (90) days after the
-------------
Effective Date (the "Option Period"), Support.com shall have an exclusive option
to exercise its right to purchase and obtain all of the Trio Code (the "Option
to Purchase"). Support.com shall exercise this option by providing notice to
Company as specified in Section 12.10 ("Notices"). If Support.com does not
exercise the option stated in this Section 3 before the end of the Option
Period, then the option shall expire and be of no further effect. During the
Option Period, Company shall not assign, transfer, pledge or otherwise encumber
any Trio Code or agree to do so. Notwithstanding the foregoing and except with
respect to Section 3.3.3 or *** exercising its source code escrow option under
the existing agreement between *** and Company, Company shall not license the
Trio Code to any third party during the Option Period.
3.2 Source Code Transfer. Subject to the terms and conditions of
--------------------
this Agreement and upon exercise of the Option to Purchase:
3.2.1 Company hereby transfers and assigns to Support.com,
and Support.com hereby accepts, all right, title and interest in and to the Trio
Code. Company will, within sixty (60) days of the Effective Date, provide to
Support.com all documentation and information regarding all questions or
challenges or potential bases therefore known to Company as of the Effective
Date with respect to the patentability or validity of any claims of any existing
patents or patent applications relating to the Trio Code.
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3.2.2 Company agrees that all Trio Code shall be the sole
property of Support.com and its assigns, and Support.com and its successors and
assigns shall be the sole owner of all patents, trademarks and copyrights and
all other Intellectual Property Rights relevant thereto.
3.2.3 Company and each of its employees, as necessary
(hereinafter collectively referred to as "Company") assign to Support.com any
rights Company may have or acquire in all Trio Code (subject to those rights
expressly licensed herein.) Company further agrees as to such Trio Code to
assist Support.com in every reasonable way (but at Support.com's expense) to
obtain and from time to time enforce patents, trademarks, copyrights and other
Intellectual Property Rights in the Trio Code in any and all countries, and to
that end Company will execute all documents for use in applying for and
obtaining such rights and enforcing the same, as Support.com may desire,
together with any assignments thereof to Support.com or persons designated by
it. Company's obligation to assist Support.com in any and all countries shall
continue beyond the termination of this Agreement. In the event that Support.com
is unable for any reason whatsoever to secure Company's signature to any lawful
and necessary document required to secure, protect or assert its Intellectual
Property Rights with respect to Trio Code (including renewals, extensions,
continuations, divisions or continuations-in-part of any patents), Company
hereby irrevocably designates and appoints Support.com and its duly authorized
officers and agents, as Company's agents and attorneys-in-fact to act for and in
Company's behalf and instead of Company, to execute and file any such
application and to do all other lawfully permitted acts to further the
prosecution and issuance of patents, the registration of copyrights and
trademarks, or the securing of any other Intellectual Property Rights thereon
with the same legal force and effect as if executed by Company.
3.2.4 Company agrees that this Section 3.2 includes all
rights of paternity, integrity, disclosure and withdrawal and any other rights
that maybe known as or referred to as "moral rights," "artist's rights," "droit
moral," or the like. To the fullest extent any of the foregoing is ineffective
under applicable law, Company hereby provides any and all waivers and consents
necessary to accomplish the purposes of the foregoing to the extent applicable.
3.3 Source Code License to Company. Subject to Company's compliance
------------------------------
with this Agreement and in the event Support.com exercises the Option to
Purchase, Support.com hereby grants to Company the following:
3.3.1 Source Code License. Subject to the terms and
-------------------
conditions of this Agreement, Support.com hereby grants to Company, and Company
hereby accepts, a nonexclusive, nontransferable (subject to Section 12.2
("Assignment")), limited license to use, modify and create derivative works or
Company Integrated Products of the Source Code of Trio in the form in which it
is being used by Company on the day Support.com exercised the Option to
Purchase, and related documentation and any derivative works thereof
(collectively, "Licensed Source Code"), subject to the following limitations:
(i) Company may use, modify or create derivative works of the Licensed Source
Code or Company Integrated Products only (a) for the purpose set forth in, and
subject to, Section 3.3.3, and (b) for the purpose of maintaining the Company
Support Website, subject to Section 3.3.4; (ii) only Employees of Company may
have access to use, modify or create derivative works of the Licensed Source
Code; (iii) Company will
6
<PAGE>
only make copies of the Licensed Source Code as necessary to utilize the rights
stated in this Section 3.3 of the Agreement; and (iv) Company shall take all
security precautions to maintain the confidentiality of and prevent accidental
or other loss or disclosure of the Licensed Source Code as it uses to protect
its own source code, but in no event less than commercially reasonable security
precautions.
3.3.2 Deployment License. Subject to the terms and
------------------
conditions of this Agreement and upon exercise of the option, Support.com grants
to Company, and Company hereby accepts, a world-wide, nontransferable (subject
to Section 12.2 ("Assignment")), non-exclusive, license to (i) use, copy,
modify, and compile into Object Code the Licensed Source Code ("Licensed Object
Code") and related documentation, and (ii) use, copy, and distribute the
Licensed Object Code and related documentation solely (a) to *** Corporation, in
accordance with Section 3.3.3, below, and (b) directly and indirectly in
connection with the Company Support Website, subject to Section 3.3.4.
3.3.3 *** Corporation Relationship. In 1999, *** and Company
----------------------------
entered into a contract regarding the Trio software. For a period of one (1)
year from the Effective Date, *** and Company may amend such contract or enter
into additional contracts regarding Trio (collectively, "*** Contract"). Company
shall have the right to fulfill its contractual obligations to *** Corporation
including but not limited to (i) depositing the Licensed Source Code in an
escrow account pursuant to its obligations to *** Corporation; (ii) providing
support and maintenance services to *** Corporation with respect to the Licensed
Source Code (but only in the event both parties agree, in writing, that Company
may distribute such Licensed Source Code) and Licensed Object Code, and (iii)
provide a defense and indemnity to *** Corporation with respect to the Licensed
Source Code (but only in the event both parties agree, in writing, that Company
may distribute such Licensed Source Code) and Licensed Object Code with respect
to intellectual property rights claims as required by the agreement with ***,
and Support.com agrees to provide reasonable assistance, at Company's expense,
with such defense. All such rights are expressly conditioned upon (i) Company
using best efforts to fulfill the obligations in order to prevent the release
from escrow of source code pursuant to the *** Contract, (ii) providing *** with
only Licensed Object Code (unless both parties agree, in writing, that Company
may distribute such Licensed Source Code), (iii) providing to Support.com on a
monthly basis, all copies of all modifications and derivative works of Licensed
Source Code and the Licensed Object Code (excluding Company Integrated Product)
which Company created in the prior month, (iv) not allowing *** to transfer,
distribute, or resell the server component of Trio, and (v) ***'s agreement to
(x) be subject to a license agreement at least as restrictive as the contract
between *** and Company dated in 1999, and (y) distribute the client-side
component of Trio pursuant only to a license agreement at least as restrictive
as the End User License Agreement attached as Exhibit G.
3.3.4 Company Support Website Conditions. The rights set
----------------------------------
forth in Section 3.3.2(b) are expressly conditioned upon (i) providing third
parties only the Limited Functionality Version, (ii) providing to Support.com on
a monthly basis, all copies of all modifications and derivative works of
Licensed Source Code and the Licensed Object Code (excluding Company Integrated
Product) which Company created in the prior month, (iii) providing third parties
only the License Object Code of the Limited Functionality Version, and
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(iv) distributing the Limited Functionality Version only pursuant to a license
agreement at least as restrictive as the End User License Agreement attached as
Exhibit G.
3.3.5 Restrictions. Company shall have only the rights in
------------
the Licensed Source Code and the Licensed Object Code as stated in this Section
3. All rights not expressly granted to Company are reserved to Support.com.
Company shall not resell, sublicense, or redistribute the Licensed Source Code
or the Licensed Object Code to any third party, except as permitted herein.
Notwithstanding anything else, Support.com retains all title to, and, except as
expressly licensed herein, all rights to Trio, all copies and derivative works
thereof (excluding Company Integrated Products) (by whomever produced) and all
related documentation and materials regarding Trio provided by Support.com to
Company pursuant to this Section 3.
3.3.6 Disclaimer of Warranties. SUPPORT.COM MAKES NO
------------------------
REPRESENTATIONS OR WARRANTY OF ANY KIND WHETHER EXPRESS OR IMPLIED (EITHER IN
FACT OR BY OPERATION OF LAW) WITH RESPECT TO THE LICENSED OBJECT CODE, LICENSED
SOURCE CODE, MODIFICATIONS TO TRIO CODE, OR OTHER MATERIAL PROVIDED BY
SUPPORT.COM. SUPPORT.COM EXPRESSLY DISCLAIMS ALL IMPLIED WARRANTIES OF NON-
INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
3.3.7 Option Price. In consideration of the transfer and
------------
assignment in Section 3.2 ("Source Code Transfer") and in the event that
Support.com exercises its Option to Purchase, Support.com shall pay to Company
the sum of *** dollars ($***). This sum shall be paid to Company on or before
August 10, 2000.
3.4 Existing Customer Transition. If Support.com exercises the
----------------------------
option stated herein, then the parties shall use commercially reasonable efforts
to transition Company's Non-Web-Based customers for Trio, except ***
Corporation, to Support.com. As used in this Agreement, "Non-Web-Based" means
those Company customers who have rights to use Trio through means other than the
Company Support WebSite. Company agrees to assign to Support.com those Non-Web-
Based customer contracts under which Company grants use of Trio that Company may
assign. Company agrees to use commercially reasonable efforts to obtain consent
to assign contracts for use of Trio which may not be assigned without consent.
Once the transition is complete, Support.com shall be fully responsible for
providing all support and maintenance, including Upgrades and New Versions, to
such customers, and Support.com shall be entitled to receive all sums that
become due and owing from customers, or have been paid by the customers for
period of support and maintenance not already provided by Company. Company shall
remain liable for any and all liabilities which accrued prior to the assignment
of customer contract.
3.5 Prospective Customer Transition. During the six (6) months
-------------------------------
after Support.com exercises the option stated herein, the parties shall use
commercially reasonable efforts to transition leads regarding prospective
customers from the Company marketing team to the Support.com marketing team. The
transition efforts shall include transferring Company's contact database,
introductions to Company's contacts, and assistance with sales support efforts
(e.g., product presentations and demonstrations).
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3.6 Restricted Customers. Support.com shall not license Trio either
--------------------
alone or combined with any other software and/or hardware to any of the
following companies for a period of *** commencing on the date that Support.com
exercises the Option to Purchase: ***, and ***.
3.7 Future Payments. In the event that Support.com exercises its
---------------
Option to Purchase, Support.com agrees (i) to pay Company minimum payments equal
to a total of $*** in *** (***) equal *** installments beginning ***, 2000 and
thereafter on the 20th day of the *** of each successive ***, and (ii) for each
agreement Support.com enters into with the companies listed on Exhibit C
("Company Customers"), that includes Trio, during the *** following the exercise
of the Option to Purchase, to pay Company (a) *** percent (***%) of the total
Net License Revenue (defined below) of agreements that Support.com enters into
with Company Customers with respect to Trio as a stand-alone product; and (b)
*** percent (***%) of the total Net License Revenue (defined below) of the
agreements that Support.com enters into with the Company Customers with respect
to Trio, as licensed in combination or incorporated with Support.com products,
provided, however, total payments to Company pursuant to this Section 3.7 shall
not exceed $***. As used in this Agreement, "Net License Revenue" means the
license fees plus professional services fees (but not support and maintenance
fees) for licenses of Trio either as a stand-alone product or as incorporated
into Support.com products, received from such Company Customers during the term
of such agreement with Company Customers.
3.7.1 *** Corporation. In no event may Support.com license
---------------
Trio on a stand-alone basis to *** Corporation during the *** period beginning
on the exercise of the Option Period. In the event Support.com licenses Trio as
integrated with Support.com products, Support.com shall pay Company *** percent
(***%) of Net License Revenue.
3.7.2 ***, Inc. Support.com may license Trio as a stand-
---------
alone product or in combination or incorporated with Support.com products to
***, Inc. provided such sale is under an agreement which requires ***, Inc.'s
participation as a corporate service provider in the Company Support Website.
Support.com agrees to pay Company (a) *** percent (***%) of the total Net
License Revenue of agreements that Support.com enters into with ***, Inc. with
respect to Trio as a stand-alone product; and (b) *** percent (***%) of the
total Net License Revenue of the agreements that Support.com enters into with
***, Inc. with respect to Trio, as licensed in combination or incorporated with
Support.com products, provided, however, total payments to Company pursuant to
this Section shall not exceed $***.
3.7.3 Payment Schedule. Payments to Company for any Net
----------------
License Revenue received from sales to Company Customers, ***, or ***, as
provided above, shall be due and payable within thirty (30) days following the
calendar quarter in which such Net License Revenue is received by Support.com.
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3.8 Records and Audit. Support.com agrees to keep complete, clear
-----------------
and accurate records for at least one (1) year after its obligation to make
payments to Company in Section 3.7 expires relating to the amounts owed to
Company. Company or its agent may audit the applicable records in order to
verify Support.com's compliance with the payment obligation in Section 3.7. Any
such audit shall be conducted during regular business hours at Support.com's
offices, with reasonable advance notice, and in such a manner as not to
interfere unreasonably with Support.com's normal business activities. Company
shall bear the expenses of any such audit unless such audit reveals an
underpayment of five percent (5%) or more, in which event the costs of such
audit shall be borne by Support.com. Support.com shall promptly pay any amount
found due and owing to Company, including interest on past due amounts at the
lesser of 1 1/2 percent per month or the highest rate allowed by applicable law,
and audit expenses, if any, due to Company under this Section.
4. Taxes. Support.com shall be responsible for and shall pay sales,
-----
value-added or similar tax arising from this Agreement except taxes based on
Company's net income.
5. Marketing.
---------
5.1 Press Announcement. Company and Support.com will issue a
------------------
mutually agreeable joint press release regarding this Agreement.
5.2 Support.com Trademark. Support.com hereby grants to Company a
---------------------
non-exclusive, non-transferable (subject to Section 12.2 ("Assignment")),
royalty-free, world-wide right to use or display Support.com's trade name and
trademark ("Support.com Trademarks") as identified on Exhibit A ("Trademarks")
---------
in Company's marketing materials, sales efforts and on Company's web site.
Company shall comply with Support.com's trademark usage guidelines of which
Company has notice in connection with all Company use of the Support.com
Trademarks. All of Company's use of the Support.com Trademarks shall be subject
to Support.com's prior approval not to be unreasonably withheld or delayed. No
approval by Support.com shall be required for the use or display of the
Support.com Trademarks if such use or display has been previously approved by
Support.com. Support.com shall have the right to inspect Company's use of the
Support.com Trademarks to determine if it complies with the trademark guidelines
and is used in a manner that is consistent with quality goods and services. If
Support.com believes that Company's use is inconsistent with the trademark
guidelines or in connection with inferior goods or services, then Support.com
shall notify Company. If Company does not correct the deficiency within thirty
(30) days, then Company shall cease all use of the Support.com Trademarks,
destroy any tangible items containing the Support.com Trademarks, and remove the
Support.com Trademarks from all electronic media. Company acknowledges that all
use of the Support.com Trademarks pursuant to this Agreement, including any
goodwill generated thereby, shall inure to the benefit of Support.com and that
Company shall not have any right, title or interest in the Support.com
Trademarks except as expressly provided herein. Company shall not use any
trademark, service mark, trade name or other designation that is confusingly
similar to the Support.com Trademarks, nor will Company register or attempt to
register the Support.com Trademarks. All rights not granted to Company herein
are expressly reserved by Support.com.
10
<PAGE>
5.3 Company Trademark. Company hereby grants to Support.com a non-
-----------------
exclusive, non-transferable (subject to Section 12.2 ("Assignment")), royalty-
free, world-wide right to use or display Company's trade name and trademark
("Company Trademarks") as identified on Exhibit A ("Trademarks") in
---------
Support.com's marketing materials, sales efforts and on Support.com's web site.
Support.com shall comply with Company's trademark usage guidelines of which
Support.com has notice in connection with all Support.com use of the Company
Trademarks. All of Support.com's use of the Company Trademarks shall be subject
to Company's prior approval not to be unreasonably withheld or delayed. No
approval by Company shall be required for the use or display of the Company
Trademarks if such use or display has been previously approved by Company.
Company shall have the right to inspect Support.com's use of the Company
Trademarks to determine if it complies with the trademark guidelines and is used
in a manner that is consistent with quality goods and services. If Company
believes that Support.com's use is inconsistent with the trademark guidelines or
in connection with inferior goods or services, then Company shall notify
Support.com. If Support.com does not correct the deficiency within thirty (30)
days, then Support.com shall cease all use of the Company Trademarks, destroy
any tangible items containing the Company Trademarks, and remove the Company
Trademarks from all electronic media. Support.com acknowledges that all use of
the Company Trademarks pursuant to this Agreement, including any goodwill
generated thereby, shall inure to the benefit of Company and that Support.com
shall not have any right, title or interest in the Company Trademarks except as
expressly provided herein. Support.com shall not use any trademark, service
mark, trade name or other designation that is confusingly similar to the Company
Trademarks, nor will Support.com register or attempt to register the Company
Trademarks. All rights not granted to Support.com herein are expressly reserved
by Company.
5.4 Trademark Obligations. Neither party shall do or cause to be
---------------------
done any act contesting or in any way impairing or reducing the other party's
right, title, and interest in connection with the use or registration of the
other party's trademarks. Except as provided in this Agreement, both parties
agree not to attach additional trademarks, logos or trade designations to the
trademarks of the other party.
5.5 Joint Marketing and Sales Incentives. If Support.com exercises
------------------------------------
the Option to Purchase, then Company agrees to pay Support.com up to *** dollars
($***) to be used for sales incentives, joint marketing programs, and any other
purpose that the parties use commercially reasonable efforts to mutually agree
in writing in advance for a *** (***)*** period beginning on the date that
Support.com exercises the Option to Purchase. Within forty-five (45) days after
Support.com exercises the Option to Purchase, the parties shall develop a
marketing plan that will describe how the payments from Company shall be
allocated between joint marketing, sales incentives and any other purposes.
5.5.1 Joint Marketing. Support.com and Company agree that
---------------
during the term of this Agreement both parties will promote their business
relationship to the electronic support industry, including without limitation,
endorsements of each party's business and promotion of awareness regarding the
enhanced value to the electronic support industry resulting from the parties'
combined technologies. The portion of the Company joint marketing and sales
incentives described in Section 5.5 allocated to joint marketing projects shall
be used in conjunction with Support.com funds during the *** period. For each
joint marketing
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effort approved by the vice president of marketing for each party, each party
shall pay one half (1/2) of the costs associated with the project, except for
projects which do not require equal involvement, in which case each party may
pay a mutually agreed proportion of the costs. Each project shall specify, at a
minimum, the type of marketing and the vehicle for delivering the message to
make sure that both companies are marketing to the same customers.
5.5.2 Sales Incentives. A portion of the Company joint
----------------
marketing and sales incentives described in Section 5.5, to be agreed upon by
the parties, may be allocated to a sales incentive program for Support.com to
(i) induce Support.com and its sales professionals to bring Qualified Customers
to Company, and (ii) compensate Support.com based upon a percentage of revenue
derived from customers brought to Company by Support.com. As used in this
Agreement, a "Qualified Customer" means one of the following: (i) ***; (ii) ***;
(iii) *** of ***, and (iv) *** and ***. Company shall pay a commission to
Support.com for bringing the Qualified Customer to Company based on a percentage
of the revenue recognized by Company on account of the referred Qualified
Customer. The parties shall negotiate in good faith to determine the percentages
payable to Support.com. Support.com and Company may, in their sole discretion,
agree to allocate the Company financial support for sales incentives to other
programs.
6. Confidential Information.
------------------------
6.1 Confidentiality Obligation. Each party acknowledges that, in
--------------------------
the course of performing its duties under this Agreement, it may receive
information relating to the other party which the receiving party knows, or has
reason to know is of a confidential and/or proprietary nature ("Confidential
Information"). Such Confidential Information may include, but is not limited to,
the terms and conditions of this Agreement, minimum price guidelines, future
product releases, trade secrets, know-how, inventions, techniques, processes,
programs, schematics, software, data, pricing and discount schedules, customer
lists, financial information and business, sales and marketing plans. To be
treated as Confidential Information, information disclosed in written form must
be marked "Confidential" at the time of disclosure or, if disclosed orally, must
be designated as "Confidential". Any information relating to Trio Code shall be
treated as Company's Confidential Information unless Support.com exercises the
Option to Purchase, in which event such information shall be deemed to be
Support.com's Confidential Information, without the necessity of being marked as
"Confidential". The receiving party shall at all times both during the term of
this Agreement and all times thereafter (a) take the same degree of care that it
uses to protect its own confidential and proprietary information of similar
nature and importance (but in any event no less than reasonable care) in order
to protect the confidentiality of, and avoid the unauthorized use, disclosure,
publication or dissemination of the Confidential Information, and (b) not use
such Confidential Information for any purposes other than as may be reasonably
necessary for the performance of its duties or enjoyment of its rights
hereunder. The receiving party shall not disclose any Confidential Information
to any person or entity other than to the receiving party's employees or
consultants as may be reasonably necessary for purposes of performing its duties
or enjoyment of its rights hereunder; provided that such employees and
consultants have first entered into agreements at least as protective of the
Confidential Information as the terms and conditions of this Section 6
("Confidential Information").
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<PAGE>
6.2 Exceptions. The parties' obligation under Section 6.1
----------
("Confidentiality Obligation"), with respect to any portion of Confidential
Information, shall not apply to any such portion that the receiving party can
document: (a) was in the public domain at or subsequent to the time such portion
was communicated to the receiving party by the disclosing party through no fault
of the receiving party; (b) was rightfully in the receiving party's possession
free of any obligation of confidence at or subsequent to the time such portion
was communicated to the receiving party by the disclosing party; (c) was
developed by employees or agents of the receiving party independently of and
without reference to any Confidential Information communicated to the receiving
party by the disclosing party; or (d) was communicated by the disclosing party
to an unaffiliated third party free of any obligation of confidence. A
disclosure of any portion of Confidential Information, either (x) in response to
a valid order by a court or other governmental body or as otherwise required by
law, or (y) with respect to the term and conditions of this Agreement, to a
party's attorneys, accountants or prospective investors of such party, who are
subject to an obligation to keep such Confidential Information confidential,
shall not be considered to be a breach of this Agreement or a waiver of
confidentiality for other purposes; provided, however, that with respect to
subsection (x) above, the party being required to disclose the information shall
provide prompt prior written notice thereof to the other party to enable the
other party to seek a protective order or otherwise prevent such disclosure.
Notwithstanding the foregoing, Company agrees that any and all information
related to the Trio Source Code shall always be deemed Confidential Information,
whether or not the exceptions in this Section 6.2 apply and shall be deemed
Support.com's Confidential Information upon exercise of the Option to the
Purchase until such time as Support.com makes such information available in the
public domain.
7. Indemnification.
---------------
7.1 Company Proprietary Rights Indemnity. For *** after the date
------------------------------------
that Support.com exercises the Option to Purchase, Company shall defend,
indemnify, and hold Support.com harmless from all costs (inclusive of reasonable
attorneys' fees), damages, losses, penalties and expenses incurred due to any
third party claim, suit, or proceeding brought against Support.com arising from
or relating to any third party claims that Trio or any related Intellectual
Property Rights infringe or misappropriate any Canadian or United States patent
granted prior to one year after the date Support.com exercises the Option to
Purchase or any Canadian or United States trademark. Company's obligations with
respect to Canadian patents and trademarks in the foregoing sentence are subject
to Company's due diligence with regard to Canadian rights; and Company agrees to
use commercially reasonable efforts to perform such due diligence within a
reasonable time after the Effective Date, but in any event shall be deemed to
have performed such due diligence within thirty (30) days of the Effective Date.
The foregoing obligation is subject to Support.com (i) giving Company prompt
written notice of any such claim; (ii) allowing Company to control the defense
and settlement of such claim; (iii) not entering into any settlement or
compromise of such claim without Company's prior written consent; and (iv)
providing all reasonable assistance requested by Company in the defense or
settlement of such claim, at Company's expense. Notwithstanding the foregoing,
Support.com may, at its expense, participate in the defense of any indemnity
that is the subject of this Section 7.1, but if Support.com elects not to so
participate, then Company agrees to keep Support.com reasonably informed
regarding the progress of its defense and settlement of any such claims. Company
agrees not to enter into any settlement of any third party claims described in
this
13
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<PAGE>
Section 7.1 without Support.com's consent, which shall not be unreasonably
withheld. In the event of any infringement or misappropriation, Company may, at
its option (i) replace or modify the relevant portion(s) of Trio with non-
infringing software which is functionally equivalent or superior; or (ii) obtain
a license for Support.com to continue using the applicable portion(s) of Trio or
related Intellectual Property Rights in accordance with this Agreement.
Company's obligations hereunder shall not apply (i) if Support.com has modified
Trio (whether or not with Company's approval), but only to the extent such
modification caused the infringement, or (ii) if Company has modified Trio
solely to comply with the request of Support.com, to the extent such
modification is the alleged basis of the suit, or (iii) to the extent any claims
are based upon the use of Trio or any component thereof in combination with
hardware, firmware, or software not supported by Company as set forth in Trio
documentation. THE FOREGOING STATES COMPANY'S SOLE OBLIGATION WITH RESPECT TO
ANY CLAIMS FOR PATENT AND TRADEMARK INFRINGEMENT OR MISAPPROPRIATION OF THIRD
PARTY PROPRIETARY RIGHTS BY TRIO. THE FOREGOING, AND SUPPORT.COM'S RIGHTS TO
BRING SUIT FOR COMPANY'S BREACH OF SECTION 8.1, STATES SUPPORT.COM'S SOLE AND
EXCLUSIVE REMEDIES WITH RESPECT TO ANY CLAIMS FOR PATENT AND TRADEMARK
INFRINGEMENT OR MISAPPROPRIATION OF THIRD PARTY PROPRIETARY RIGHTS BY TRIO.
7.2 Support.com Indemnity. For *** after the date that Support.com
---------------------
exercises the Option to Purchase, Support.com shall defend, indemnify, and hold
Company harmless from all costs (inclusive of reasonable attorneys' fees),
damages, penalties and expenses incurred due to any third party claim, suit, or
proceeding made against Company arising from or relating to (i) any claims,
warranties or representations made by Support.com with respect to Trio, prior to
exercise of the Option to Purchase, that differ from Company's documentation,;
and (ii) any claim for infringement of a United States patent granted prior to
one year after the date Support.com exercises the Option to Purchase or a United
States trademark where the claim is based upon a modification by or for
Support.com of Trio not performed by Company or done by Company in accordance
with Support.com's specification (excluding claims based on Company's
intentional infringement of copyright or misappropriation of trade secret). The
foregoing obligation is subject to Company (i) giving Support.com prompt written
notice of any such claim; (ii) allowing Support.com to control the defense and
settlement of such claim; (iii) not entering into any settlement or compromise
of such claim without Support.com's prior written consent; and (iv) providing
all reasonable assistance requested by Support.com in the defense or settlement
of such claim, at Support.com's expense. THE FOREGOING STATES COMPANY'S SOLE AND
EXCLUSIVE REMEDY AND SUPPORT.COM'S SOLE OBLIGATION WITH RESPECT TO ANY CLAIM OF
INFRINGEMENT OR MISAPPROPRIATION OF THIRD PARTY PROPRIETARY RIGHTS BY TRIO.
8. Warranties.
----------
8.1 Company Warranties. Company warrants and represents the
------------------
following:
8.1.1 It is the sole owner of all rights, title and
interest, including all Intellectual Property Rights in the Trio Code and that
it has full power and authority (a) to transfer and assign the Intellectual
Property Rights as herein transferred and assigned without the
14
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<PAGE>
consent of any other person and (b) to enter into and perform its obligations
under this Agreement.
8.1.2 It has not assigned, transferred, pledged or otherwise
encumbered any Trio Code or agreed to do so and has not licensed or agreed to
license Source Code to Trio except in source code escrow provisions in two
contracts.
8.1.3 It is not aware of any actual or potential
infringement or misappropriation of any third party's intellectual property
rights (or any claim or potential claim thereof).
8.1.4 Entering into or performing under this Agreement will
not violate any right of, or breach any obligation to, any third party under any
agreement or arrangement between Company and such third party.
8.1.5 Trio Code does not infringe any third party trade
secrets or copyrights or knowingly infringe any other third party intellectual
property rights.
8.1.6 The Trio Code contains no "computer viruses" or "time
bombs" as those terms are commonly understood in the information processing
industry and that the Trio Code contains no code or instructions (including any
code or instructions provided by third parties) that may be used to access,
modify, delete, damage, or disable any computer, associated equipment, computer
programs, data files or other electronically stored information operated or
maintained by Support.com or its customers.
8.1.7 The century change is supported in the Object and
Source Code of Trio's logic and data, and shall support the use, entry or
creation of dates on and after January 1, 2000 so that when a properly formatted
and accurate four digit year is either properly entered into or provided to the
Object or Source Code of Trio by another program, it shall not fail or otherwise
product incorrect date results.
8.1.8 For *** commencing on the Delivery Date, the Source
Code and Object Code shall perform in substantial conformance to the applicable
documentation.
8.1.9 Entering into or performing under this Agreement will
not trigger any source code escrow release provision. Company shall use
commercially reasonable efforts to prevent release of Trio Source Code for any
reason, and if such escrow becomes released, any license rights exercisable by
the licensee is limited to internal use for *** or in any other event, to
provide the support services that Company failed to provide.
8.1.10 It has provided to Support.com all license agreements
for Trio, except for the *** Agreement as described in Section 3.3.3.
8.2 Support.com Warranties. Support.com warrants and represents as
----------------------
follows:
8.2.1 Support.com has full power and authority to enter into
and perform its obligations under this Agreement.
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<PAGE>
9. Consequential Damages Waiver.
----------------------------
NEITHER PARTY WILL BE LIABLE FOR ANY LOSS OF USE, INTERRUPTION OF BUSINESS, OR
ANY INDIRECT, SPECIAL, INCIDENTAL, EXEMPLARY, OR CONSEQUENTIAL DAMAGES OF ANY
KIND (INCLUDING LOST PROFITS) REGARDLESS OF THE FORM OF ACTION, WHETHER
CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT PRODUCT LIABILITY OR OTHERWISE,
EVEN IF THE PARTY FROM WHOM DAMAGES ARE SOUGHT HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. THE FOLLOWING EXCEPTIONS SHALL APPLY: (i) THE
FOREGOING LIMITATION SHALL NOT APPLY TO ANY CLAIM FOR BREACH OF SECTION 6
("CONFIDENTIAL INFORMATION"); (ii) COMPANY'S INDEMNITY OBLIGATION STATED IN
SECTION 7.1 SHALL INCLUDE INDIRECT, SPECIAL, INCIDENTAL, EXEMPLARY, OR
CONSEQUENTIAL DAMAGES SUBJECT TO THE DOLLAR CAP STATED IN SECTION 10; AND (iii)
COMPANY'S LIABILITY FOR BREACH OF THE WARRANTY STATED IN SECTION 8.1.5 SHALL NOT
BE SUBJECT TO THE LIMITATIONS OF THIS SECTION.
10. Limitation of Liability.
-----------------------
NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS AGREEMENT TO THE CONTRARY, EACH
PARTY'S LIABILITY TO THE OTHER UNDER THIS AGREEMENT SHALL BE LIMITED TO THE
TOTAL PAYMENTS MADE BY SUPPORT.COM TO COMPANY WITH RESPECT TO TRIO UNDER THIS
AGREEMENT. THE FOLLOWING EXCEPTIONS SHALL APPLY: (i) THE FOREGOING LIMITATION
SHALL NOT APPLY TO ANY CLAIM FOR BREACH OF SECTION 6 ("CONFIDENTIAL
INFORMATION"); (ii) COMPANY'S OBLIGATIONS STATED IN SECTION 7.1 SHALL BE CAPPED
AT *** ($***); (iii) COMPANY'S LIABILITY FOR BREACH OF THE WARRANTY STATED IN
SECTION 8.1.5 SHALL NOT BE SUBJECT TO THE LIMITATIONS OF THIS SECTION; AND (iv)
SUPPORT.COM'S OBLIGATIONS STATED IN SECTION 7.2 SHALL BE CAPPED AT *** DOLLARS
($***).
11. Term and Termination.
--------------------
11.1 Term. This Agreement shall commence on the Effective Date and,
----
if Support.com does not exercise the Option to Purchase, then this Agreement
shall terminate upon the expiration of the Option Period. If, however,
Support.com exercises such option, then this Agreement shall be in effect in
accordance with its terms until terminated as provided herein.
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<PAGE>
11.2 Rights If Option Goes Unexercised. If Support.com does not
---------------------------------
exercise the Option to Purchase, then this Agreement shall terminate, but the
rights and obligations stated in the following Sections shall survive: 1
("Definitions"), 2.1.1 ("Limitations; Ownership"), Fees set forth in Sections
2.2 - 2.6; 6 - ("Confidential Information"), 9 ("Consequential Damages Waiver"),
10 ("Limitation of Liability"), 11.2 ("Rights If Option Goes Unexercised"), and
12 ("Miscellaneous").
11.3 Termination With Cause After Exercise of Option to Purchase.
-----------------------------------------------------------
Either party may terminate this Agreement for cause after Support.com exercises
the Option to Purchase, as follows: (1) after written notice of a material
breach and thirty (30) days opportunity to cure; (2) after written notice and
thirty (30) days opportunity to cure if the other party becomes insolvent or
fails generally to pay its obligations as they arise; or (3) if proceedings are
commenced under state or federal bankruptcy laws by or against the other party
which are not dismissed within ninety (90) days of commencement.
11.4 Rights Upon Termination After Exercise of Option to Purchase.
------------------------------------------------------------
Upon termination for either cause after Support.com exercises the Option to
Purchase, the following shall occur:
11.4.1 All rights and obligations shall terminate except
those identified in Section 11.4.4 All agreements between Support.com and third
parties which are not in breach by which the third party obtained a license to
use a copy of Trio shall remain in full force and effect pursuant to their
respective terms.
11.4.2 The parties shall immediately cease using the
trademarks of the other party.
11.4.3 Each party shall return or destroy the Confidential
Information belonging to the other party.
11.4.4 Survival. The following Sections shall survive
--------
termination for cause as provided under Section 11.3: 1 ("Definitions"), 3.2
("Source Code Transfer"), 6 ("Confidential Information"), 7 ("Indemnification"),
9 ("Consequential Damages Waiver"), 10 ("Limitation of Liability"), 11.4
("Rights Upon Termination After Exercise of Option to Purchase"), and 12
("Miscellaneous"), and only in the event Support.com breaches the agreement, 3.3
("Source Code License to Company"). In the event this Agreement is terminated
for Support.com's breach due to failure to pay, all rights under Section 3.2
("Source Code Transfer") shall be suspended until such failure to pay is cured.
12. Miscellaneous.
-------------
12.1 Import and Export Regulations. Each party acknowledges and
-----------------------------
agrees that it shall not import, export, or re-export, directly or indirectly,
Trio to any country in violation of the import and export laws and regulations
of any applicable jurisdiction. Each party further
17
<PAGE>
agrees to defend, indemnify and hold the other harmless for any losses, costs,
claims or other liabilities arising out of it's breach of this Section 12.1
subject to the notice and cooperation obligations stated in Section 7
("Indemnification").
12.2 Assignment. For a period of three (3) years beginning on the
----------
Effective Date, Support.com may not assign this Agreement without Company's
prior written consent, and any attempt to do so without that consent will be
void. Notwithstanding the foregoing, either party may assign this Agreement
without consent in the event of a merger, acquisition, sale of all or
substantially all of its assets or other similar reorganization, except that if
Company's assignee is a competitor of Support.com as listed on Exhibit F, then
(i) Section 3.8 shall not survive such assignment and shall have no force and
effect; (ii) all Company's right to Licensed Source Code and any copies or
derivatives works thereof (except Company Integrated Code) expire, including but
not limited to Section 3.3.1 and (iii) Company shall immediately destroy all of
Support.com's Confidential Information and not disclose any such information to
competitors. Support.com shall have the right to amend Exhibit F with respect to
its competitors at any time by written notice to Company. Consent to a specific
assignment of this Agreement shall not constitute a consent to further
assignment. This Agreement shall be binding on the parties and their respective
successors and permitted assigns. Any assignment in contravention of this
subsection shall be void.
12.3 No Offset. Payments shall be made in accordance with the terms
---------
of this Agreement. In no event may either party offset the amount due from the
other under any other agreement when making any payments due hereunder.
12.4 Choice of Law. This Agreement will be governed by and construed
-------------
according to the laws of the State of California and the United States, without
regard to that body of law controlling conflicts of laws. The parties agree that
the United Nations Convention on Contracts for the International Sale of Goods
is specifically excluded from application to this Agreement.
12.5 Amendment. This Agreement may be amended or supplemented only
---------
by a writing that refers explicitly to this Agreement and that is signed on
behalf of both parties.
12.6 Waiver. No waiver will be implied from conduct or failure to
------
enforce rights. No waiver will be effective unless in a writing signed on behalf
of the party against whom the waiver is asserted. A waiver in one instance shall
not be construed as a waiver of any subsequent like breaches.
12.7 United States Government Purchases. If either party sublicenses
----------------------------------
Trio to any agency of the U.S. Government, then it shall identify Trio and
related documentation provided in any proposal submitted to or agreement with
such agency as "commercial computer software" and "commercial computer software
documentation," respectively, as such terms are used in 48 C.F.R. 12.212 of the
Federal Acquisition Regulations ("FAR") and its successors and 48 C.F.R.
227.7202 of the Department of Defense FAR Supplement ("DFARS") and its
successors. In accordance with FAR 12.212 or DFARS 227.7202, as applicable, each
party shall provide Trio and related documentation to all U.S. Government end
users with only those rights set forth in the end user license.
18
<PAGE>
12.8 Force Majeure. Except for the obligation to pay money owed,
-------------
neither party will have the right to claim damages or to terminate this
Agreement as a result of the other party's failure or delay in performance due
to circumstances beyond its reasonable control, including, but not limited to,
labor disputes, strikes, lockouts, shortages of or inability to obtain energy,
war, riot, insurrection, epidemic, acts of God, or governmental action not the
fault of the nonperforming party; provided., if such condition continues for
ninety (90) days, the party whose performance is not delayed by such condition
may terminate this Agreement upon written notice.
12.9 Severability. If any provision of this Agreement is held to be
------------
unenforceable or invalid by a court of competent jurisdiction, such
unenforceability or invalidity shall not render this Agreement unenforceable or
invalid as a whole. Rather, such provision shall be stricken from the Agreement
and the remaining provisions shall be fully enforceable.
12.10 Notices. All notices or reports permitted or required under
-------
this Agreement shall be in writing and shall be by personal delivery or by
certified or registered mail, return receipt requested, and deemed given upon
personal delivery or five (5) days after deposit in the mail. Notices shall be
sent to the signatories of this Agreement at the addresses set forth at the
beginning of this Agreement or such other person and/or address as either party
may specify in writing.
12.11 Relationship of Parties. The parties to this Agreement are
-----------------------
independent contractors. There is no relationship of agency, partnership, joint
venture, employment or franchise between the parties. Neither party has the
authority to bind the other or to incur any obligation on its behalf. Neither
party shall have, and shall not represent that it has, any power, right or
authority to bind the other, or to assume or create any obligation or
responsibility, express or implied, on behalf of the other or in the other's
name, except as herein expressly permitted.
12.12 Counterparts. This Agreement may be executed in two
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.13 Entire Agreement. This Agreement, including all Exhibits to
----------------
this Agreement, which are hereby incorporated by reference, represents the
entire agreement between the parties relating to Trio and supersedes all prior
and contemporaneous representations, discussions, negotiations and agreements,
whether written or oral relating to Trio. The following Exhibits are attached:
Exhibit A - Trademarks
Exhibit B - Trio Components
Exhibit C - Company Customers
Exhibit D - Trio Registered Rights
Exhibit E - Limited Functionality Version of Licensed Object Code
Exhibit F - Competitors
Exhibit G - End User License Agreement
19
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first written above.
***, INC.
By: /s/ ***
---------------------------------
Title: President & CEO
------------------------------
Date: March 30th, 2000
-------------------------------
SUPPORT.COM
By: /s/ Radha R. Busu
---------------------------------
Title: CEO & President
------------------------------
Date: March 30, 2000
-------------------------------
*CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
<PAGE>
Exhibit A
---------
Trademarks
----------
Support.com Trademarks
- ----------------------
Support.com (and related logos)
SupportAction
In the event Support.com exercises the Option to Purchase:
***
***
***
***
Company Trademarks
- ------------------
*** (and related logos)
***.com
*CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
<PAGE>
Exhibit B
---------
Trio Components
This Exhibit B describes the components to be licensed to Support.com in
accordance with the License Agreement. For each component, all material in its
source form is included, whether textual or not (e.g. *** resources created and
edited in their binary form using an authoring tool such as *** or ***). The
sections below describe the main elements of the *** Client and the *** Server.
In addition to the items described below, documentation associated with any
demonstrations conducted by Company, documentation associated with any
presentations, and documentation associated with *** including but not limited
to common auxiliary pieces, such as make files, Visual Studio projects and
workspaces, miscellaneous build utilities, product documentation, documentation
of sales demonstrations, slides, and product literature are also included.
A. *** Client
The *** Client comprises the components that ***-enable an application. The
platforms supported are:
. ***
. ***
. ***
. ***
. ***
All versions of the *** Client include the following components:
. API header file this .h file is common across all platforms and describes
the types, constants, and functions available in the ***
Client API.
. *** code this platform-dependent file is provided to customers in
either source or object form depending on the specific
platform. The *** code is statically linked to the ***-
enabled application and implements the *** Client API in
stub form. The *** code is responsible for locating and
loading the "real" runtime client code in the *** Library.
All API calls are passed to the *** Library.
. *** Library this is a platform-dependent, dynamically-loaded library
used at runtime by ***-enabled applications. The dynamic
loading mechanism is different for each platform. The
library includes all the code to implement the *** ***
functionality, ***, data ***, *** creation and population,
and the API. The library, upon receipt of the *** () call,
inserts itself into the *** mechanism appropriate to each
platform.
2
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<PAGE>
. *** this is a "true" application, launched by the *** Library,
the user, or possibly various platform-dependent "startup"
mechanisms. It processes new *** files created by the
Library, collects some additional information for the ***,
interacts with the user if desired, and performs the network
communication with the *** Server.
. Test application each platform has at least one test
application used internally for development to exercise the
*** API and the Client's *** capability.
In addition, the *** version of the *** Client contains some extra functionality
that allows it to be "***" into an application at *** without having to change
the *** or *** any *** components to the application. These components are part
of the "***" mechanism:
. *** this application runs at startup and calls the ***API to ***
the *** of *** applications. When an application ***, a
local list of files names is checked. If the application's
file name is in the list, then that application is "***".
*** also provides a user interface in the *** that allows
the user to initiate the creation of a ***.
. *** this ***is "***" into the application by ***. During
application startup, this code gets control and essentially
executes a call to the *** API function *** () on *** of the
application. This loads the *** Library into the process
space.
. *** this is a small application that allows the user to choose
which application should be associated with a *** that is
created by the user outside the context of any particular
*** application. Because *** from different application may
use different configuration settings and may be sent to
different servers, the user must specify which application
the *** is for.
In addition to the above, there are miscellaneous items associated with the
Client portions of the *** system. Notable items include:
. Java support this is Java code that allows a portion of the *** Client
API to be called from Java applications running on ***
platforms. This is primarily a *** layer that calls the ***
API via *** mechanism. Java compatibility is not officially
supported and this code has not been maintained (although it
works). Also, automatic *** in Java is not possible, but a
reasonable facsimile can be accomplished with a "***"***
that calls the *** API
. *** tools in order to derive *** information from a *** when the
***-enabled application was not *** with *** information,
some of the output from the application *** process needs to
be stored on the *** Server. In addition, this *** output
sometimes needs to be post-processed in order for the ***
Server to use it. Various platform-dependent tools are
included to convert *** output to usable forms.
3
*CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
<PAGE>
. Build tools each time a ***-enabled application is built, a *** file
must be created on the *** Server and shipped with the
application and the *** Client components. In addition, ***
information from that particular *** of the application
needs to be uploaded to the *** Server. Various build tools
are included (primarily ***.pl, a perl script) to facilitate
automating these actions as part of the build process.
. Plug-in *** the *** supports a plug-in architecture for additional data
*** code modules. Plug-ins are platform-specific binary
objects in the appropriate shared library form. Some samples
are included, as are the plug-ins developed by Company for
specific customers.
B *** Server
The *** Server runs on ***. (It will run on *** with the *** release to ***.)
The Server comprises the following:
. *** this is a web server extension for *** on *** and *** on
***. The *** sits outside the firewall and *** incoming ***
with the network connection to the ***. This is an extremely
light-weight component and it does not interpret the data;
it simply acts as a *** to ensure firewall integrity.
. *** this is a ***. The ***communicates with the ***. It's role
is to implement the communication, assign an *** to the
incoming ***, store the *** as a file local to the ***
Server, and register the *** as ready to be processed in the
database. As part of the communication, it may assign a
client ***, generate and communicate an encryption key, and
encrypt/decrypt data over the *** link.
. *** this is an ***. The ***polls the *** for incoming *** to be
processed. Incoming *** are read from the local file system
and put through a series of steps that include *** and ***
handling. *** processes raw data in the *** and generates
more useful data which is then stored as a replacement or in
addition to the raw data. *** are *** servers called by the
***, the bulk of which are always included and are integral
to the operation of ***. (However, it is possible to add
customer- or application-specific ***.) One major *** step
is the *** of *** information for *** and similar items.
Once *** is complete, the *** executes each of the ***. Each
*** is a *** server. One special *** is data-driven and
implements most of the functions available via the ***
Configuration portion of the web user interface. Other ***
perform specific tasks and have no user interface. The data-
driven *** uses information stored in the *** to determine
whether incoming *** meet the given *** criteria and, if so,
to execute the associated
4
*CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
<PAGE>
***. *** are also *** servers and
can be added as desired. Once all *** have run completely
(which may involve delayed retries), the *** is committed to
the ***. The *** performs (or orchestrates) the bulk of the
incoming processing of *** which takes a relatively large
amount of time (up to several seconds per ***). In order to
scale, any number of *** can be run in the save *** Server
network.
. *** this is an ***. *** monitors all the other *** that are part
of the *** Server and can start, stop, or restart them under
administrator-defined conditions. Conditions that can be
monitored include lockup, abnormal termination, memory
leakage, *** leakage, total run time, and anything else that
can be observed with the *** utility ***. *** is a failsafe
mechanism and safety net to ensure that the *** can operate
without human intervention for extended periods, despite
bugs in the operating system or the *** themselves.
. Web most *** Server interaction is performed via a standard web
browser through network connections to one or more instances
of the *** Server Web interface. The web interface is
implemented primarily with *** web pages. The *** pages are
used to perform some logic, some dynamic HTML generation,
and interaction with the bulk of the server-side logic in
the form of *** .
. Web Support these are *** objects called by the *** pages. Most of the
sophisticated logic driven from the web user interface is
implemented as C++ classes encased in ***. This allows them
to be called from many application server technologies (***,
***, ***, etc) as well as from other binary components of
the *** Server. Database interaction, for reporting,
querying, or administration, goes through these "***" ***
objects. The "***" objects use the common classes for
database connectivity and object manipulation. All database
access is abstracted, as is access to the *** and the data
elements (called ***) within the ***.
. *** this is an ***. The *** performs periodic actions for the
*** Server. Automatic *** that can be sent by email can be
scheduled, as well as the removal of old data from the
database. In addition, when *** are removed from the
database via the user interface, they are actually only
marked for deletion; the actual deletion occurs as a
scheduled task. The *** performs or initiates periodic or
scheduled tasks.
. Database Setup these are generally SQL scripts used to create the initial
tables and table content needed by the *** Server.
. Installer this is the "script" for *** that installs the *** Server
components onto an *** system.
. *** Modules these are *** objects registered as ***. *** Modules for the
*** and *** have been implemented. Each uses *** APIs to
create new ***
5
*CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
<PAGE>
and to *** them from the contents of the ***. Common classes
used in each use *** configuration data that describes the
*** between the *** and the ***. A *** application is also
provided as an authoring/administration tool for the
configuration data so that *** can be easily created and
maintained.
. Queries these are text files using an *** syntax to describe the
reports in the *** system. *** reports use a format called
*** (for ***) to describe the query parameters of the
report. These *** files are read and stored in the database
during initial server setup and represent the set of default
reports.
. *** this is a *** application. A portion of the server's
administration parameters are stored in each ***. This
application provides a user-friendly front-end for setting
up and maintaining these configuration parameters.
6
*CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
<PAGE>
Exhibit C
---------
Company Customers
-----------------
The following customers in the Company sales pipeline as of the Effective Date
are as follows:
***
7
*CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
<PAGE>
Exhibit D
---------
Trio Registered Rights
----------------------
Patents, Applications, and Registrations
- ----------------------------------------
***
***
Trademarks, Applications, and Registrations
- -------------------------------------------
To Be Completed Within (30) Days by Company
Copyrights, Applications, and Registrations
- -------------------------------------------
None
8
*CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
<PAGE>
Exhibit E
---------
Limited Functionality Version of Licensed Object Code
-----------------------------------------------------
For use in conjunction with the Company Support Website, the functionality of
Trio will be limited in accordance to the following:
A. Trio Client
1. Only versions for ***, ***, and *** systems will be supported.
Company will not distribute versions of the Trio Client for
*** or *** systems.
2. All copies of the Trio Client distributed by Company will use
the same user interface, as Company may update it from time to
time.
3. All copies of the Trio client will share a single ***
describing the data to be *** by the client; such *** will not
be modifiable except by Company Employees.
4. The Trio Client will *** information only upon initiation by
the end user. Non-end user initiated events will not be used
to initiate ***.
5. The Trio Client will *** information only and will not perform
*** to collect *** information. The Trio Client will not ***
information, such as ***, *** contents, *** values, and ***.
6. The Trio Client may *** and *** and *** between the user and
the system and applications
7. The Trio Client will communicate only with the Trio Server
operated by Company in conjunction with the Company Support
Website, and will send *** information only to that Trio
Server.
B. Trio Server
1. Access will be available to the data for only a single *** at
a time. In particular this means users will not be able to
view lists of available ***.
2. Reports that contain information from multiple *** will not be
available. It
will not be possible to create or edit report definitions.
3. No graphic report formats (pie charts, bar charts, etc.) will
be available.
4. The Trio Server will not initiate the creation of *** within
*** systems.
5. The Trio Server web interface will be restricted to disallow
access to the Server *** section.
6. It will not be possible to create or edit Trio Client
configurations and Trio *** files.
7. No access to Trio ***, plug-in ***, or plug-in *** will be
provided.
8. Web access to the Trio Server will be available only to users
with registered, validated Company accounts.
9
*CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
<PAGE>
9. All features of the Trio Server will be accessible by Company
Employees.
10
<PAGE>
Exhibit F
---------
***
*CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
11
<PAGE>
Exhibit G
---------
End User License Agreement
This End User License Agreement ("Agreement") is entered into as of _______
(the "Effective Date") by and between Licensor and you ("Licensee") and sets
forth the terms and conditions under which Licensor agrees to license software
to Licensee. Licensor is the entity from which you received the software.
1. LICENSE.
-------
1.1 License Grant. Subject to the terms and conditions of this Agreement,
-------------
Licensor grants to Licensee and Licensee accepts from Licensor a non-exclusive,
non-transferable, fully paid up, perpetual license to install and use the
software ("Software") on one computer together with any related technical
specification documentation provided by Licensor ("Documentation"; unless
otherwise noted, the Software and Documentation are referred to collectively
herein as "Software"). Licensee may make a reasonable number of copies of the
Software for backup and archival purposes only.
1.2 Restrictions. Licensee shall not (and shall not allow any third party
------------
to) (i) decompile, disassemble, or otherwise reverse engineer (except to the
extent that applicable law prohibits reverse engineering restrictions) or
attempt to reconstruct or discover any source code, underlying ideas,
algorithms, file formats or programming or interoperability interfaces of the
Software by any means whatsoever, (ii) remove any product identification,
copyright or other notices, (iii) provide, lease, lend, use for timesharing,
service bureau or hosting purposes or otherwise use or allow others to use the
Software to or for the benefit of third parties, (iv) modify or incorporate into
or with other software or create a derivative work of any part of the Software,
(v) disseminate information or analysis (including, without limitation,
benchmarks) regarding the quality or performance of the Software from any
source, (vi) use the output or other information generated by the Software
(including, without limitation, output describing the structure of a software
program) for any purpose other than use by the Software in accordance with its
specifications, or (vii) resell, sublicense or distribute to any third-party the
Software or any component thereof. Notwithstanding anything else, Support.com,
Inc. retains all title to, and, except as expressly licensed herein, all rights
to the Software, all copies thereof and all related documentation and materials.
Licensee must reproduce and include the copyright notice and other proprietary
notices that appear on the original Software on any copies and any media thereof
made in accordance with the terms of this Agreement.
2. Warranty. SOFTWARE IS PROVIDED "AS IS" AND COMPANY MAKES NO WARRANTY OR
--------
REPRESENTATION, WHETHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE
IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NONINFRINGEMENT. WITH RESPECT TO ANY SOFTWARE, YOU (LICENSEE) BEAR THE ENTIRE
RISK AS TO QUALITY AND PERFORMANCE. SHOULD THE SOFTWARE PROVE DEFECTIVE
FOLLOWING LICENSE, YOU (LICENSEE) (AND NOT THE COMPANY OR ANY DISTRIBUTOR OR
RETAILER) ASSUME THE ENTIRE COST OF ALL NECESSARY SERVICING OR REPAIR.
3. TERM AND TERMINATION. This Agreement shall expire upon the date set
--------------------
forth by Licensor. Licensor may terminate this Agreement for cause if Licensee
fails to cure any material breach of this Agreement within thirty (30) days
after written notice of such breach (or immediately in the case of the failure
to pay any amounts in accordance with the payment terms specified herein). All
provisions except Section 1.1 shall survive termination. Upon termination,
Licensee shall immediately cease all use of the Software and return or destroy
all copies of the Software and all portions thereof and so certify to Licensor.
Termination is not an exclusive remedy and all other remedies will be available
whether or not this Agreement is terminated.
4. Limitation of Liability. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO
-----------------------
THE CONTRARY, NEITHER LICENSOR, ITS SUPPLIERS OR RESELLERS SHALL BE LIABLE OR
OBLIGATED WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT OR UNDER
CONTRACT, NEGLIGENCE, STRICT LIABILITY OR ANY OTHER LEGAL OR EQUITABLE THEORY
(I) FOR ANY AMOUNTS IN EXCESS IN THE AGGREGATE OF THE FEES PAID TO LICENSOR BY
LICENSEE WITH RESPECT TO THE COPIES OF SOFTWARE THAT ARE THE SUBJECT OF THE
CLAIM DURING THE TWELVE MONTH PERIOD PRIOR TO THE CAUSE OF ACTION, (II) FOR ANY
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT LIMITATION, FOR
ANY COST OF PROCUREMENT OF SUBSTITUTE GOODS, TECHNOLOGY, SERVICES OR RIGHTS);
(III) FOR INTERRUPTION OF USE OR LOSS OR CORRUPTION OF DATA; OR (IV) FOR ANY
MATTER BEYOND ITS REASONABLE CONTROL. SOME STATES DO NOT ALLOW THE EXCLUSION OR
LIMITATION OF INCIDENTAL OR CONSEQUENTIAL DAMAGES, SO THE ABOVE LIMITATIONS AND
EXCLUSIONS MAY NOT APPLY TO LICENSEE.
5. RIGHT TO AUDIT. On Licensor's written request Licensee shall furnish
--------------
Licensor with a signed certification certifying that the Software is being used
pursuant to the terms of this Agreement including any copy and user limitations.
12
<PAGE>
6. No Export; Government Use. Licensee will not remove or export from the
-------------------------
United States or reexport from anywhere any part of the Software or any direct
product thereof except in compliance with and with all applicable export laws
and regulations, including without limitation, those of the U.S. Department of
Commerce. Licensee warrants that it is not on the United States' prohibited
party list and not located in or a national resident of any country on the
United States' prohibited country list. As defined in Federal Acquisitions
Regulations (or otherwise), the Software is a "commercial item" and commercial
computer software" and commercial computer software documentation" and any use,
modification, reproduction, release, performance, display, or disclosure of such
software or documentation by the U.S. Government shall be governed solely by the
express terms of this Agreement. Licensee acknowledges that the Software
contains encryption technology, export of which is restricted by the U.S. and
certain foreign laws.
7. Privacy. The Software contains features which may allow Licensor to
-------
collect data from, control and or/monitor computers running the Software without
notice to or knowledge by Licensee. Licensee hereby acknowledges such features
and is responsible for familiarizing itself with such features.
8. GENERAL PROVISIONS.
------------------
8.1 Remedies and Legal Actions. The failure of either party to insist, in
--------------------------
any one or more instances, upon the performance of any of the terms, covenants,
or conditions of this Agreement or to exercise any right hereunder, shall not be
construed as a waiver or relinquishment of the future performance of any rights,
and the obligations of the party with respect to such future performance shall
continue in full force and effect. The remedies under this Agreement shall be
cumulative and not alternative and the election of one remedy for a breach shall
not preclude pursuit of other remedies unless as expressly provided in this
Agreement. This Agreement shall be governed in all respects by the substantive
laws of the State of California, United States of America (excluding conflict of
laws rules) as applied to agreements entered into and to be performed entirely
within the State of California between California residents, without regard to
the U.N. Convention on Contracts for the International Sale of Goods. Any
dispute regarding this Agreement shall be subject to the exclusive jurisdiction
of the California state courts in and for Santa Clara County, California or, if
there is federal jurisdiction, the United States District Court for the Northern
District of California, and the parties agree to submit to the personal and
exclusive jurisdiction and venue of these courts. The prevailing party in any
legal action brought by one party against the other and arising out of this
Agreement will be entitled, in addition to any other rights and remedies it may
have, to reimbursement for its expenses, including court costs and reasonable
attorneys' fees. Support.com is an express third party beneficiary of this
Agreement and can enforce this agreement as if a party hereto. If any covenant
set forth in this Agreement is determined by any court to be unenforceable by
reason of its extending for too great a period of time or by reason of its being
too extensive in any other respect, such covenant shall be interpreted to extend
only for the longest period of time and to otherwise have the broadest
application as shall be enforceable.
8.2 Assignment. Licensee shall not assign or otherwise transfer any of its
----------
rights, obligations or licenses hereunder without the prior written consent of
Support.com, including any assignment by operation of law as a result of the
merger or acquisition of Licensee. Subject to the foregoing, the provisions of
this Agreement shall apply to and bind the successors and permitted assigns of
the parties.
8.3 Entire Agreement; Headings. This Agreement, together with all exhibits
--------------------------
and schedules hereto, constitutes the complete, final and exclusive statement of
the terms of the Agreement among the parties pertaining to the subject matter
hereof and supersedes all prior agreements, understandings, negotiations and
discussions of the parties. No modification or rescission of this Agreement
shall be binding unless executed in writing by the party to be bound thereby.
The descriptive headings of this Agreement are intended for reference only and
shall not affect the construction or interpretation of this Agreement.
8.4 Force Majeure. Either party shall be excused from any delay or failure
-------------
in performance hereunder, except the payment of monies by Licensee caused by
reason of any occurrence or contingency beyond its reasonable control, including
but not limited to, acts of God, earthquake, floods, lightning, labor disputes
and strikes, other labor or industrial disturbances, riots, war, acts of the
public enemy, insurrections, embargoes, blockages, regulations or orders of any
government, agency or subdivision thereof, shortages of materials, rationing,
utility or communication failures, casualty, novelty of product manufacture or
other unanticipated product development problems, and governmental requirements.
The obligations and rights of the party so excused shall be extended on a
day-to-day basis for the period of time equal to that of the underlying cause of
the delay; provided that such party shall give notice of such force majeure
event to the other party as soon as reasonably possible.
8.5 Notices; Authority. All notices required or permitted to be given by one
------------------
party to the other under this Agreement shall be sufficient if sent by either
certified mail, return receipt requested, telegram or hand delivered to the
parties. All notices shall be effective upon receipt. Each party represents that
all corporate action necessary for the authorization, execution and delivery of
this Agreement by such party and the performance of its obligations hereunder
has been taken.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
and delivered as of the day set forth above.
ACCEPTED BY:
13
<PAGE>
Licensee: Licensor:
------------------------------- -----------------------
Name: Name:
------------------------------- ---------------------------
Title: Title:
------------------------------- --------------------------
Date: Date:
------------------------------- ---------------------------
14
<PAGE>
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated February 15, 2000, in Amendment No. 2 to the
Registration Statement (Form S-1 No. 333-30674) and related Prospectus of
Support.com, Inc. for the registration of shares of its common stock.
/s/ Ernst & Young LLP
Palo Alto, California
March 30, 2000
<PAGE>
EXHIBIT 99.1
[SUPPORT.COM, INC. LETTERHEAD]
CONFIDENTIAL
- ------------
Bob Garbarino
Bear Stearns
245 Park Ave.
New York, NY 10167
Dear Mr. Garbarino
Support.com, Inc. (the "Company") is in the process of preparing a
Registration Statement on Form S-1 (the "Registration Statement") to be filed
with the Securities and Exchange Commission and would like to use customer case
studies in such Registration Statement, including the case study of Bear,
Stearns & Co. Inc. The Company hereby requests Bear, Stearns & Co. Inc.'s
permission to use the following language in the Registration Statement:
"Bear, Stearns & Co. Inc. is a leading investment banking and
securities trading and brokerage firm serving organizations and
individuals worldwide. Bear Stearns was seeking a solution to manage
the more than 11,000 troubleshooting calls per month received by its
support organization from internal and external users. Bear Stearns
selected us because of our ability to solve complex problems related
to the diverse environments of its systems. By using our software,
Bear Stearns support analysts can remotely support these users,
streamline the support process and solve their most common problems in
a more effective and timely manner. Bear Stearns support analysts now
have more time to focus on additional support issues."
<PAGE>
The undersigned, by execution hereof, hereby consents to the Company's use
of the language set forth above.
Very truly yours,
/s/ Bob Keathly
Bob Keathly
Support.com, Inc.
Sales Executive
Acknowledged and Agreed to:
BEAR, STEARNS & CO. INC.
By /s/ Bob Garbarino
-------------------------
Title Sr. Managing Director
----------------------
Date 3/27/00
-----------------------
<PAGE>
EXHIBIT 99.2
[SUPPORT.COM, INC. LETTERHEAD]
CONFIDENTIAL
- ------------
Lenny Alugas
Excite@Home
450 Broadway Street
Redwood City, CA 94063
Dear Mr. Alugas:
Support.com, Inc. (the "Company") is in the process of preparing a
Registration Statement on Form S-1 (the "Registration Statement") to be filed
with the Securities and Exchange Commission and would like to use customer case
studies in such Registration Statement, including the case study of Excite@Home.
The Company hereby requests Excite@Home's permission to use the following
language in the Registration Statement:
"Excite@Home is a global media company that provides high-speed
Internet access to over 1,200,000 consumer and small business users.
Excite@Home needed a solution to better manage calls related to
connectivity difficulties, one of their most common support calls.
They chose the Support.com Healing Agent, which is installed as a
standard part of Excite@Home's service. The Healing Agent supports PC,
network, and internet configurations, provides continuous support for
network components and client software, and can automatically solve
user's connection problems. The Support.com solution also delivers the
information the support team needs to perform remote diagnosis. As a
result, Excite@Home has seen a reduction in the number of connection
related calls to the help desk, as well as a reduction in the time it
takes to solve calls that do reach the help desk."
<PAGE>
The undersigned, by execution hereof, hereby consents to the Company's use
of the language set forth above.
Very truly yours,
/s/ Jim Laccabue
Jim Laccabue
Support.com, Inc.
Sales Executive
Acknowledged and Agreed to:
EXCITE@HOME
By /s/ Lenny Alugas
---------------------------
Title V.P. Customer Care Development
-------------------------------
Date 3-27-00
-------------------------
<PAGE>
EXHIBIT 99.3
[SUPPORT.COM, INC. LETTERHEAD]
CONFIDENTIAL
- ------------
Jim Blanton
JCPenney
6501 Legacy Dr.
Mail Stop 8318
Plano, TX 75024
Dear Mr. Blanton
Support.com, Inc. (the "Company") is in the process of preparing a
Registration Statement on Form S-1 (the "Registration Statement") to be filed
with the Securities and Exchange Commission and would like to use customer case
studies in such Registration Statement, including the case study of JCPenney.
The Company hereby JCPenney's permission to use the following language in the
Registration Statement:
"JCPenney, the worldwide leader in the retail industry, was seeking a
solution to enhance its support process while providing a better
service level to its employees. JCPenney uses our software to provide
a full range of eSupport solutions focused on automating the support
process and improving the user community experience with the help
desk."
<PAGE>
The undersigned, by execution hereof, hereby consents to the Company's use
of the language set forth above.
Very truly yours,
/s/ Michael Gierkey
Michael Gierkey
Support.com
Sales Executive
Acknowledged and Agreed to:
JCPENNEY
By /s/ James G. Blanton
--------------------------
Title Mgr. of Information Processing
-------------------------------
Date 3/27/2000
------------------------
<PAGE>
EXHIBIT 99.4
[SUPPORT.COM, INC. LETTERHEAD]
CONFIDENTIAL
- ------------
Sue Wadoski
Compaq
P.O. Box 692000
Houston, TX 77269-2000
Dear Ms. Wadoski:
Support.com, Inc. (the "Company") is in the process of preparing a
Registration Statement on Form S-1 (the "Registration Statement") to be filed
with the Securities and Exchange Commission and would like to use customer case
studies in such Registration Statement, including the case study of Compaq
Professional Services. The Company hereby requests Compaq Professional
Services' permission to use the following language in the Registration
Statement:
"Compaq Professional Services, a division of Compaq Computer
Corporation, operates one of the world's largest and leading multi-
lingual help desks, providing service to some of Compaq's corporate
clients. Compaq was looking for a solution to resolve user problems
as quickly as possible and decrease overall support costs. The
eSupport solution for Compaq is a part of the Compaq Professional
Services global help desk and provides comprehensive self-healing,
self-service and assisted service over the Internet."
<PAGE>
The undersigned, by execution hereof, hereby consents to the Company's use
of the language set forth above.
Very truly yours,
/s/ Jim Laccabue
Jim Laccabue
Support.com
Sales Executive
Acknowledged and Agreed to:
COMPAQ PROFESSIONAL SERVICES
By /s/ S. B. Wadoski
----------------------------
Title Marketing Manager, Compaq Professional Services
------------------------------------------------
Date March 29, 2000
--------------------------
<PAGE>
EXHIBIT 99.5
[SUPPORT.COM, INC. LETTERHEAD]
CONFIDENTIAL
- ------------
Gary Griffith
everdream
1288 Pear Ave.
Mountain View, CA 94043
Dear Mr. Griffith:
Support.com, Inc. (the "Company") is in the process of preparing a
Registration Statement on Form S-1 (the "Registration Statement") to be filed
with the Securities and Exchange Commission and would like to use customer case
studies in such Registration Statement, including the case study of everdream.
The Company hereby requests everdream's permission to use the following language
in the Registration Statement:
"everdream is an application service provider that delivers hardware,
software, networking infrastructure and support to small business
customers, thereby offering its customers a single point of support.
With the integration of our self-healing, self-service and assisted
service technology on the everdream platform, everdream is able to
increase the number of technical problems solved for its customers and
decrease the time it takes to solve them. As a result, everdream's
customers can experience increased productivity and cost savings."
<PAGE>
The undersigned, by execution hereof, hereby consents to the Company's use of
the language set forth above.
Very truly yours,
/s/ Dan Brown
Dan Brown
Support.com
Sales Executive
Acknowledged and Agreed to:
EVERDREAM
By /s/ Gary Griffith
-----------------------------
Title CEO, everdream Corp.
--------------------------
Date 3/24/00
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