EXHIBIT 10.4
CRITICAL PATH, INC.
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FOUNDERS STOCK PURCHASE AGREEMENT
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THIS FOUNDER'S STOCK PURCHASE AGREEMENT (the "Agreement") is made as of
February 28, 1998, by and between CRITICAL PATH, INC., a California corporation
(the "Company"), and ▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "Purchaser").
1. Purchase of Shares.
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1.1 Purchase. Purchaser hereby purchases, and the Company hereby sells to
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Purchaser, 5,500,000 shares of the Company's Common Stock (the "Purchased
Shares") at a purchase price of $0.01 per share for an aggregate purchase price
of $55,000 (the "Purchase Price").
1.2 Payment. Concurrently with the execution of this Agreement, Purchaser
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shall pay the Purchase Price for the Purchased Shares, by cash or by the
delivery of a promissory note of Purchaser. Purchaser shall also deliver to the
Secretary of the Company a duly executed blank Assignment Separate from
Certificate (in the form attached hereto as Exhibit A) and any additional
documents required by the Company as a condition for the purchase.
1.3 Delivery of Certificates. The certificates representing the Purchased
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Shares purchased hereunder and subject to the Company's Repurchase Right under
Article 5 hereof shall be held in escrow by the Secretary of the Company as
provided in Article 5 hereof.
2. Securities Law Compliance.
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2.1 Exemption From Registration. The Purchased Shares have not been
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registered under the Securities Act of 1933, as amended (the "1933 Act") and are
being issued to Purchaser in reliance upon the exemption from such registration
provided by Rule 701 of the Securities and Exchange Commission (the
"Commission") for stock issuances under compensatory benefit arrangements such
as this Agreement. Purchaser hereby acknowledges receipt of a copy of this
Agreement.
2.2 Restricted Securities.
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(a) Purchaser hereby confirms that Purchaser has been informed that the
Purchased Shares are "restricted securities" under the 1933 Act and may not be
resold or transferred unless the Purchased Shares are first registered under the
federal securities laws or unless an exemption from such registration is
available. Accordingly, Purchaser hereby acknowledges that Purchaser is
prepared to hold the Purchased Shares for an indefinite period.
(b) Purchaser is aware of the adoption of Rule 144 by the Commission,
promulgated under the 1933 Act, which permits limited public resales of
securities acquired in a nonpublic offering, subject to the satisfaction of
certain conditions, including, among other things: the availability of certain
current public information about the issuer, the resale occurring not less than
one (1) year after the Purchaser has purchased and paid for the securities to be
sold, the sale being through a broker in an unsolicited "broker's transaction"
and the amount of securities
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being sold during any three (3) month period not exceeding specified
limitations. Purchaser is aware that Rule 144 of the Commission under the 1933
Act is not presently available to exempt the sale of the Purchased Shares from
the registration requirements of the 1933 Act. Purchaser further represents that
he understands that at the time he wishes to sell the Purchased Shares there may
be no public market upon which to make such a sale, and that, even if such a
public market exists for the Company's Common Stock, the Company may not be
satisfying the current public information requirement of Rule 144 or other
conditions under Rule 144 which are required of the Company. If so, Purchaser
understands that he will be precluded from selling the securities under Rule
144.
(c) Purchaser represents that prior to acquisition of the Purchased
Shares, Purchaser acquired sufficient information about the Company to reach an
informed knowledgeable decision to acquire the Purchased Shares. Purchaser has
such knowledge and experience in financial and business matters as to make him
capable of evaluating the risks of the prospective investment and to make an
informed investment decision. Purchaser is able to bear the economic risk of
his investment in the Purchased Shares. Purchaser agrees not to make, without
the prior written consent of the Company, any public offering or sale of the
Purchased Shares although permitted to do so pursuant to Rule 144(k) promulgated
under the 1933 Act, until the earlier of the date on which the Company effects
its initial registered public offering pursuant to the 1933 Act or the date on
which it becomes a registered company pursuant to section 12(g) of the
Securities and Exchange Act of 1934.
2.3 Disposition of Shares. Purchaser hereby agrees that Purchaser shall
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make no disposition of the Purchased Shares (other than a permitted transfer
under Section 4.1) unless and until:
(a) Purchaser shall have notified the Company of the proposed disposition
and provided a written summary of the terms and conditions of the proposed
disposition;
(b) Purchaser shall have complied with all requirements of this Agreement
applicable to the disposition of the Purchased Shares; and
(c) Purchaser shall have provided the Company an opinion of counsel in
form and substance satisfactory to the Company, that (i) the proposed
disposition does not require registration of the Purchased Shares under the 1933
Act or (ii) all appropriate action necessary for compliance with the
registration requirements of the 1933 Act or of any exemption from registration
available under the 1933 Act (including Rule 144) has been taken.
The Company shall not be required (i) to transfer on its books any
Purchased Shares that have been sold or transferred in violation of the
provisions of this Article 2 nor (ii) to treat as the owner of the Purchased
Shares, or otherwise to accord voting or dividend rights to, any transferee to
whom the Purchased Shares have been transferred in contravention of this
Agreement.
2.4 Restrictive Legends. In order to reflect the restrictions on the
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disposition of the Purchased Shares, the stock certificates for the Purchased
Shares will be endorsed with restrictive legends, including one or both of the
following legends:
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(a) "The securities represented by this certificate have not been
registered or qualified under the Securities Act of 1933 or the securities laws
of any state, and may be offered and sold only if registered and qualified
pursuant to federal and state securities laws or if the Company is provided an
opinion of counsel satisfactory to the Company that registration and
qualification under federal and state securities laws is not required."
(b) If required by the authorities of any state in connection with the
issuance of the Purchased Shares, the legend or legends required by such state
authorities shall also be endorsed on all such certificates.
3. Special Provisions.
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3.1 Stockholder Rights. Until such time as the Company actually exercises
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its repurchase rights under this Agreement, Purchaser (or any successor in
interest) shall have all the rights of a stockholder (including voting and
dividend rights) with respect to the Purchased Shares, including the Purchased
Shares held in escrow under Article 7, subject, however, to the transfer
restrictions of Article 4.
3.2 Section 83(b) Election. Purchaser understands that under section 83
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of the Internal Revenue Code of 1986, as amended (the "Code"), the difference
between the Purchase Price paid for the Purchased Shares and their fair market
value on the date any forfeiture restrictions applicable to such shares lapse
will be reportable as ordinary income at that time. For this purpose, the term
"forfeiture restrictions" includes the right of the Company to repurchase the
Purchased Shares under Article 5 of this Agreement. Purchaser understands that
he may elect to be taxed at the time the Purchased Shares are acquired hereunder
to the extent the fair market value of the Purchased Shares differs from the
Purchase Price rather than when such Purchased Shares cease to be subject to
such forfeiture restrictions, by filing an election under section 83(b) of the
Code with the I.R.S. within thirty (30) days after the date of purchase
hereunder. The form for making this election is attached as Exhibit B hereto.
Purchaser understands that failure to make this filing within the thirty (30)
day period will result in the recognition of ordinary income by Purchaser (in
the event the fair market value of the Purchased Shares increases after the date
of purchase) as the forfeiture restrictions lapse. PURCHASER ACKNOWLEDGES THAT
IT IS PURCHASER'S SOLE RESPONSIBILITY, AND NOT THE COMPANY'S, TO FILE A TIMELY
ELECTION UNDER SECTION 83(b), EVEN IF PURCHASER REQUESTS THE COMPANY OR ITS
REPRESENTATIVES TO MAKE THIS FILING ON HIS/HER BEHALF. PURCHASER IS RELYING
SOLELY ON HIS OR HER ADVISORS WITH RESPECT TO THE DECISION AS TO WHETHER OR NOT
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TO FILE AN 83(b) ELECTION.
3.3 Market Stand-Off.
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(a) In connection with any underwritten public offering by the Company of
its equity securities pursuant to an effective registration statement filed
under the 1933 Act, including the Company's initial public offering, Purchaser
shall not sell, make any short sale of, loan, hypothecate, pledge, grant any
option for the purchase of, or otherwise dispose or transfer for value or agree
to engage in any of the foregoing transactions with respect to any Purchased
Shares without the prior written consent of the Company or its underwriters, for
such period of time after the effective date of such registration statement as
may be requested by the Company
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or such underwriters (not to exceed one hundred eighty (180) days).
(b) Purchaser shall be subject to the market stand-off provisions of this
Section 3.3 only if the officers and directors of the Company are also subject
to similar arrangements.
(c) In the event of any stock dividend, stock split, recapitalization, or
other change affecting the Company's outstanding Common Stock effected without
receipt of considera tion, then any new, substituted, or additional securities
distributed with respect to the Purchased Shares shall be immediately subject to
the provisions of this Section 3.3, to the same extent the Purchased Shares are
at such time covered by such provisions. This Section 3.3 shall remain in
effect until two years following the effective date of the Company's initial
public offering.
3.4 Stop Transfer. In order to enforce the provisions of Section 3.3, the
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Company may impose stop-transfer instructions with respect to the Purchased
Shares until the end of the applicable stand-off period.
4. Transfer Restrictions.
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4.1 Restriction on Transfer. Purchaser shall not transfer, assign,
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encumber, or otherwise dispose of any of the Purchased Shares that are subject
to the Company's Repurchase Right under Article 5. In addition, Purchased
Shares that are released from the Repurchase Right shall not be transferred,
assigned, encumbered, or otherwise made the subject of disposition in
contravention of the Company's First Refusal Right under Article 6. Such
restrictions on transfer, however, shall not be applicable if Purchaser receives
prior written consent from the Company to (a) a gratuitous transfer of the
Purchased Shares made to Purchaser's spouse or issue, including adopted
children, or to a trust for the exclusive benefit of Purchaser or Purchaser's
spouse or issue, (b) a transfer of title to the Purchased Shares effected
pursuant to Purchaser's will or the laws of intestate succession, or (c) a
transfer to the Company in pledge as security for any purchase-money
indebtedness incurred by Purchaser in connection with the acquisition of the
Purchased Shares.
4.2 Transferee Obligations. Each person (other than the Company) to whom
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the Purchased Shares are transferred by means of one of the permitted transfers
specified in Section 4.1 must, as a condition precedent to such transfer,
acknowledge in writing to the Company that such person is bound by the
provisions of this Agreement and that the trans ferred shares are subject to (a)
both the Company's Repurchase Right and the Company's First Refusal Right
granted hereunder and (b) the market stand-off provisions of Section 3.3, to the
same extent such shares would be so subject if retained by Purchaser.
4.3 Definition of Owner. For purposes of Articles 5, 6 and 7 of this
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Agreement, the term "Owner" shall include Purchaser and all subsequent holders
of the Purchased Shares who derive their chain of ownership through a permitted
transfer from Purchaser in accordance with Section 4.1.
5. Repurchase Right.
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5.1 Grant. The Company is hereby granted the right (the "Repurchase
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Right"), exercisable at any time during the sixty (60) day period following the
date Purchaser ceases for any
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reason to be a Service Provider to the Company, to repurchase at the Purchase
Price all or any portion of the Purchased Shares in which Purchaser has not
acquired a vested interest in accordance with Sections 5.3 and 5.4 (such shares
hereinafter called the "Unvested Shares"). For purposes of this Agreement,
Purchaser shall be deemed to be a Service Provider to the Company for so long as
Purchaser renders periodic services to the Company or one or more of its parent
or subsidiary corporations as an employee, or consultant.
5.2 Exercise of the Repurchase Right. The Repurchase Right shall be
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exercisable by written notice delivered to the Owner of the Unvested Shares
prior to the expiration of the sixty (60) day period specified in Section 5.1.
The notice shall indicate the number of Unvested Shares to be repurchased and
the date on which the repurchase is to be effected, such date to be not more
than thirty (30) days after the date of notice. To the extent one or more
certificates representing Unvested Shares may have been previously delivered out
of escrow to the Owner, then the Owner shall, prior to the close of business on
the date specified for the repurchase, deliver to the Secretary of the Company
the certificates representing the Unvested Shares to be repurchased, properly
endorsed for transfer. The Company shall, concurrently with the receipt of such
stock certificates, pay to the Owner in cash or cash equivalents (including the
cancellation of any purchase-money indebtedness), an amount equal to the
Purchase Price previously paid for the Unvested Shares that are to be
repurchased. The Owner agrees to cooperate affirmatively with the Company, to
the extent reasonably requested by the Company, to enforce rights and
obligations pursuant to this Agreement, and the Owner further agrees and
acknowledges that the Company shall have the right to cancel certificates
representing any Unvested Shares on its books and records in the event the Owner
thereof fails to deliver certificates representing such Unvested Shares upon
notice by the Company of its intention to exercise the Repurchase Right
described herein and the Owner thereafter shall have no rights as a stockholder
of such Unvested Shares.
5.3 Termination of the Repurchase Right. Subject to Section 5.4, the
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Repurchase Right shall terminate with respect to any Unvested Shares for which
it is not timely exercised under Section 5.2. In addition, the Repurchase Right
shall terminate with respect to any and all Purchased Shares in which Purchaser
vests in accordance with the schedule below. Accordingly, for so long as
Purchaser continues to be a Service Provider to the Company following March 1,
1997 (the "Vesting Start Date"), Purchaser shall acquire a vested interest in,
and the Repurchase Right shall lapse with respect to, the Purchased Shares in
accordance with the following vesting schedule:
(i) Upon the one year anniversary of the Vesting Start Date,
Purchaser shall acquire a vested interest in, and the Repurchase Right
shall lapse with respect to 1,375,000 Purchased Shares.
(ii) With respect to the remaining 4,125,000 Purchased Shares,
Purchaser shall acquire a vested interest in, and the Repurchase Right
shall lapse with respect to such shares over a three (3) year period
following the one year anniversary of the Vesting Start Date, as follows:
114,583.33 Purchased Shares shall vest for each full month following the
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one year anniversary of the Vesting Start Date.
All Purchased Shares as to which the Repurchase Right lapses shall,
however, continue
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to be subject to (i) the First Refusal Right under Article 6, and (ii) the
market stand-off provisions of Section 3.3, and (iii) the transfer restrictions
set forth in Articles 2 and 4.
5.4 Accelerated Vesting. If one of the events defined in this Section 5.4
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occurs, the vesting schedule as defined in Section 5.3 will be accelerated in
accordance with the terms in this Section:
(a) Upon the occurrence of any one of the following events (any of such
events, a "Corporate Transaction"), the Repurchase Right shall terminate with
respect to, and the Purchaser shall acquire a vested interest in fifty percent
(50%) of the then remaining Unvested Shares:
(i) Upon the consummation of the acquisition of 51% or more of the
outstanding stock of the Company pursuant to a tender offer validly made
under any federal or state law (other than a tender offer by the Company);
(ii) Upon the consummation of a merger, consolidation or other
reorganization of the Company (other than a reincorporation of the
Company), if after giving effect to such merger, consolidation or other
reorganization of the Company, the stockholders of the Company immediately
prior to such merger, consolidation or other reorganization do not
represent a majority in interest of the holders of voting securities (on a
fully diluted basis) with the ordinary voting power to elect directors of
the surviving or resulting entity after such merger, consolidation or other
reorganization;
(iii) Upon the sale of all or substantially all of the assets of the
Company to a third party who is not an affiliate of the Company; or
(iv) Upon the dissolution of the Company pursuant to action validly
taken by the stockholder of the Company in accordance with applicable state
law;
provided that (1) Purchaser is a Service Provider of the Company at or after the
commencement (as determined by the Board of Directors of the Company in its
reasonable discretion) of the event described above and (2) Purchaser is still a
Service Provider of the Company at the time of the conclusion of such event
(unless Purchaser's employment by, or relationship with, the Company was
terminated involuntarily other than for Cause (as defined below) during the
interim period between the commencement of any such event and the conclusion of
that particular event).
(b) If Purchaser's employment as a Service Provider for the Company is
terminated without Cause (as defined below) on or before the first anniversary
of the effective date of the Change in Control, the Repurchase Right shall
terminate with respect to and the Purchaser shall acquire a vested interest in
all then remaining Unvested Shares.
(i) For the purposes of this Section 5.4, only, "Cause" shall mean the
occurrence of:
(A) Purchaser's willful misconduct or gross negligence in
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performance of his duties hereunder, including Purchaser's refusal to
comply in any material respect with the legal directives of the
Company's Board of Directors so long as such directives are not
inconsistent with the Purchaser's position and duties, and such
refusal to comply is not remedied within ten (10) working days after
written notice from the Company, which written notice shall state that
failure to remedy such conduct may result in termination for Cause;
(B) Dishonest or fraudulent conduct, a deliberate attempt to do
an injury to the Company, or conduct that materially discredits the
Company or is materially detrimental to the reputation of the Company,
including conviction of a felony; or
(C) Purchaser's incurable material breach of any element of the
Company's Confidential Information and Invention Assignment Agreement,
including without limitation, Purchaser's theft or other
misappropriation of the Company's proprietary information.
(c) If the Purchaser's employment as a Service Provider for the Company is
terminated without Cause (as defined in this Section 5.4), the Repurchase Right
shall terminate with respect to and the Purchaser shall acquire a vested
interest in the lesser of (i) all the then remaining Unvested Shares or (ii)
twelve (12) monthly installments of the remaining Unvested Shares (an additional
1,375,000 Purchased Shares).
(d) If the Purchaser's employment as a Service Provider for the Company is
terminated as a result of the Purchaser's death or disability (as defined
below), the Repurchase Right shall terminate with respect to and the Purchaser
shall acquire a vested interest in the lesser of (i) all the then remaining
Unvested Shares or (ii) twelve (12) monthly installments of the remaining
Unvested Shares (an additional 1,375,000 Purchased Shares):
(i) For purposes of this Section 5.4 only, "Disability" shall be
deemed to have occurred when the Purchaser's employment as a Service
Provider on behalf of the Company is terminated because the Purchaser is
unable to engage in any substantial, gainful activity on behalf of the
Company by reason of any medically determinable physical or mental
impairment.
(e) In the event of the termination of Purchaser's employment as a Service
Provider by the Company with Cause, the Repurchase Right shall not terminate
with respect to any Unvested Shares then remaining except as provided in Section
5.3.
5.5 Fractional Shares. No fractional shares shall be repurchased by the
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Company. Accordingly, should the Repurchase Right extend to a fractional share
at the time Purchaser ceases to be a Service Provider, then such fractional
share shall be added to any fractional share in which Purchaser is at such time
vested in order to make one whole vested share no longer subject to the
Repurchase Right.
5.6 Additional Shares or Substituted Securities. In the event of any
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stock dividend, stock split, recapitalization or other change affecting the
Company's outstanding Common
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Stock as a class effected without receipt of consideration, then any new,
substituted or additional securities or other property (including money paid
other than as a regular cash dividend) which is by reason of any such
transaction distributed with respect to the Purchased Shares shall be
immediately subject to the Repurchase Right, but only to the extent the
Purchased Shares are at the time covered by such right. Appropriate adjustments
to reflect the distribution of such securities or property shall be made to the
number of Purchased Shares hereunder and to the price per share to be paid upon
the exercise of the Repurchase Right in order to reflect the effect of any such
transaction upon the Company's capital structure, provided that the aggregate
Purchase Price shall remain the same.
6. Right of First Refusal.
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6.1 Grant. The Company is hereby granted the right of first refusal (the
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"First Refusal Right"), exercisable in connection with any proposed sale or
other transfer of the Purchased Shares in which Purchaser has vested in
accordance with Article 5. For purposes of this Article 6, the term "transfer"
shall include any assignment, pledge, encumbrance or other disposition for
value of the Purchased Shares intended to be made by the Owner, but shall not
include any of the permitted transfers under Section 4.1.
6.2 Notice of Intended Disposition. In the event the Owner desires to
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accept a bona fide third-party offer for any or all of the Purchased Shares (the
shares subject to such offer to be hereinafter called, for purposes of this
Article 6, the "Target Shares"), the Owner shall promptly (a) deliver to the
Secretary of the Company written notice (the "Disposition Notice") of the offer
and the basic terms and conditions thereof, including the proposed purchase
price, and (b) provide satisfactory proof that the disposition of the Target
Shares to the third-party offeror would not contravene the provisions of
Articles 2 and 3 of this Agreement.
6.3 Exercise of Right. The Company (or its assignees) shall, for a period
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of thirty (30) days following receipt of the Disposition Notice, have the right
to repurchase any or all of the Target Shares specified in the Disposition
Notice upon substantially the same terms and conditions specified therein. Such
right shall be exercisable by written notice (the "Exercise Notice") delivered
to the Owner prior to the expiration of the thirty (30) day exercise period. If
such right is exercised with respect to all the Target Shares specified in the
Disposition Notice, then the Company (or its assignees) shall effect the
repurchase of the Target Shares, including payment of the purchase price, not
more than five (5) business days after delivery of the Exercise Notice; and at
such time the Owner shall deliver to the Company the certificates representing
the Target Shares to be repurchased, properly endorsed for transfer. If any of
the Target Shares are at the time held in escrow under Article 7, the
certificates for such shares shall automatically be released from escrow and
surrendered to the Company for cancellation. The Target Shares so purchased
shall thereupon be canceled and cease to be issued and outstanding shares of the
Company's Common Stock.
Should the purchase price specified in the Disposition Notice be payable in
property other than cash or evidences of indebtedness, the Company (or its
assignees) shall have the right to pay the purchase price in the form of cash
equal in amount to the value of such property. If the Owner and the Company (or
its assignees) cannot agree on such cash value within ten (10) days after the
Company's receipt of the Disposition Notice, the valuation shall be made by an
appraiser of recognized standing selected by the Owner and the Company (or its
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assignees), or, if they cannot agree on an appraiser within twenty (20) days
after the Company's receipt of the Disposition Notice, each shall select an
appraiser of recognized standing and the two appraisers shall designate a third
appraiser of recognized standing, whose appraisal shall be determinative of such
value. The cost of such appraisal shall be shared equally by the Owner and the
Company. The closing shall then be held on the latter of (a) the fifth business
day following delivery of the Exercise Notice or (b) the 15th day after such
cash valuation shall have been made.
6.4 Non-Exercise of Right. In the event the Exercise Notice is not given
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to the Owner within thirty (30) days following the date of the Company's receipt
of the Disposition Notice, the Owner shall have a period of thirty (30) days
thereafter, in which to sell or otherwise dispose of the Target Shares upon
terms and conditions (including the purchase price) no more favorable to the
third-party purchaser than those specified in the Disposition Notice; provided
that any such sale or disposition must not contravene the provisions of Article
2 of this Agreement. If any of the Target Shares are at the time held in escrow
under Article 7, the certificates for such shares shall automatically be
released from escrow and surrendered to the Owner. The third-party purchaser
shall acquire the Target Shares free and clear of all the terms and provisions
of this Agreement (including the Company's Repurchase Right under Article 5 and
the First Refusal Right hereunder). If the Owner does not sell or otherwise
dispose of the Target Shares within the specified thirty (30) day period, the
Company's First Refusal Right shall continue to apply to any subsequent
disposition of the Target Shares by the Owner until such right lapses in
accordance with Section 6.7.
6.5 Partial Exercise of Right. In the event the Company (or its
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assignees) makes a timely exercise of the First Refusal Right with respect to a
portion, but not all, of the Target Shares specified in the Disposition Notice,
the Owner shall have the option, exercisable by written notice to the Company
delivered within thirty (30) days after the date of the Disposition Notice, to
effect the sale of the Target Shares pursuant to one of the following
alternatives:
(a) sale or other disposition of all the Target Shares to a third-party
purchaser in compliance with the requirements of Section 6.4, as if the Company
did not exercise the First Refusal Right hereunder; or
(b) sale to the Company (or its assignees) of the portion of the Target
Shares which the Company (or its assignees) has elected to purchase, such sale
to be effected in substantial conformity with the provisions of Section 6.3.
Failure of the Owner to deliver timely notification to the Company under
this Section 6.5 shall be deemed to be an election by the Owner to sell the
Target Shares pursuant to alternative (a) above.
6.6 Recapitalization.
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(a) In the event of any stock dividend, stock split, recapitalization or
other trans action affecting the Company's outstanding Common Stock as a class
effected without receipt of consideration, then any new, substituted or
additional securities or other property which is by reason of such transaction
distributed with respect to the Purchased Shares shall be immediately subject to
the Company's First Refusal Right hereunder, but only to the extent the
Purchased
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Shares are at the time covered by such right.
(b) In the event of a Corporate Transaction (as defined in Section 5.4),
the Company's First Refusal Right shall remain in full force and effect and
shall apply to the new capital stock or other property received in exchange for
the Purchased Shares in consummation of the Corporate Transaction, but only to
the extent the Purchased Shares are at the time covered by such right.
6.7 Lapse. The First Refusal Right under this Article 6 shall lapse and
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cease to have effect upon the closing of a firm commitment underwritten public
offering pursuant to an effective registration statement under the 1933 Act,
covering the offer and sale of the Company's Common Stock in the aggregate
amount of at least $7,500,000.
6.8 Legend. In addition to the legends required by Section 2.4, all
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certificates representing Purchased Shares subject to the Company's Right of
Repurchase and the Right of First Refusal shall be endorsed with the following
legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE
WITH THE TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY AND THE INITIAL
HOLDER HEREOF. SUCH AGREEMENT PROVIDES FOR CERTAIN RESTRICTIONS ON
TRANSFER OF THE SECURITIES, INCLUDING RIGHTS OF FIRST REFUSAL UPON AN
ATTEMPTED TRANSFER OF THE SECURITIES AND CERTAIN REPURCHASE RIGHTS IN FAVOR
OF THE COMPANY UPON TERMINATION OF SERVICE WITH THE COMPANY. THE SECRETARY
OF THE COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY OF SUCH AGREEMENT
TO THE HOLDER HEREOF WITHOUT CHARGE."
7. Escrow.
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7.1 Deposit. Upon issuance, the certificates for the Purchased Shares
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shall be deposited in escrow with the Secretary of the Company to be held in
accordance with the provisions of this Article 7. Each deposited certificate
shall be accompanied by a duly executed Assignment Separate from Certificate in
the form of Exhibit A. The deposited certificates, together with any other
assets or securities from time to time deposited with the Company pursuant to
the requirements of this Agreement, shall remain in escrow until such time or
times as the certificates (or other assets and securities) are to be released or
otherwise surrendered for cancellation in accordance with Section 7.3. Upon
delivery of the certificates (or other assets and securities) to the Company,
the Owner shall be issued an instrument of deposit acknowledging the number of
Purchased Shares (or other assets and securities) delivered in escrow to the
Secretary of the Company.
7.2 Recapitalization. All regular cash dividends on the Purchased Shares
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(or other securities at the time held in escrow) shall be paid directly to the
Owner and shall not be held in escrow. However, in the event of any stock
dividend, stock split, recapitalization or other change affecting the Company's
outstanding Common Stock as a class effected without receipt
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of consideration or in the event of a Corporate Transaction, any new,
substituted or additional securities or other property which is by reason of
such transaction distributed with respect to the Purchased Shares shall be
immediately delivered to the Secretary of the Company to be held in escrow under
this Article 7, but only to the extent the Purchased Shares are at the time
subject to the escrow requirements of Section 7.1.
7.3 Release/Surrender. The Purchased Shares, together with any other
-----------------
assets or securities held in escrow hereunder, shall be subject to the following
terms and conditions relating to their release from escrow or their surrender to
the Company for repurchase and cancellation:
(a) Should the Company exercise the Repurchase Right under Article 5 with
respect to any Unvested Shares, then the escrowed certificates for such Unvested
Shares (together with any other assets or securities issued with respect
thereto) shall be delivered to the Company for cancellation, concurrently with
the payment to the Owner, in cash or cash equivalent (including the cancellation
of any purchase-money indebtedness), of an amount equal to the aggregate
Purchase Price for such Unvested Shares, and the Owner shall have no further
rights with respect to such Unvested Shares (or other assets or securities).
(b) Should the Company exercise its First Refusal Right under Article 6
with respect to any Target Shares held at the time in escrow hereunder, then the
escrowed certificates for such Target Shares (together with any other assets or
securities issued with respect thereto) shall, concurrently with the payment of
the Section 6.3 purchase price for such Target Shares to the Owner, be
surrendered to the Company for cancellation, and the Owner shall have no further
rights with respect to such Target Shares (or other assets or securities).
(c) Should the Company elect not to exercise its First Refusal Right under
Article 6 with respect to any Target Shares held at the time in escrow
hereunder, then the escrowed certificates for such Target Shares (together with
any other assets or securities issued with respect thereto) shall be surrendered
to the Owner for disposition according to the provisions of Section 6.4.
(d) As the interest of Purchaser in the Purchased Shares (or any other
assets or securities issued with respect thereto) vests in accordance with the
provisions of Article 5, the certificates for such vested shares (as well as all
other vested assets and securities) shall be released from escrow and delivered
to the Owner upon the request of the Owner.
8. General Provisions.
------------------
8.1 Assignment. The Company may assign its Repurchase Rights under
----------
Article 5 and/or its First Refusal Right under Article 6 to any person or entity
selected by the Company's Board of Directors, including one or more stockholders
of the Company.
If the assignee of the Repurchase Right is other than a parent or
subsidiary corporation of the Company, then such assignee must make a cash
payment to the Company, upon the assignment of the Repurchase Right, in an
amount equal to the excess (if any) of the fair market value of the Unvested
Shares at the time subject to the Repurchase Right (as determined by the
Company's Board of Directors) and the aggregate Repurchase Price payable for
such Unvested
-11-
EXHIBIT A
---------
SERVICES, CHARGES AND PAYMENT SCHEDULE
--------------------------------------
This Services, Charges and Payment Schedule ("Schedule") is attached
to and made a part of the E-mail Services Agreement between StarMedia Network,
Inc. and Critical Path Inc. (the "Agreement") and is subject to the terms and
conditions of the Agreement.
A. Services Charges Users will be charged the following amounts for
----------------
the following Services:
1. Free web mail: There will be **** for Web-based e-mail service
-------------
provided to Users during the term of the Agreement, including without
limitation for maintenance of e-mail accounts, storage (other than as provided
below) and retrieval of e-mail messages and storage and management of address
books.
2. Value added features: The services listed below (the "Value-Added
--------------------
Features") shall be provided to Users. If, as of the Launch Date, CP's billing
system is not yet available, the Value-Added Features shall be ****. Upon
availability of the billing system, the Users shall be charged for the Value-
Added Features at the prices set forth below.
Suggested Retail Price for Value-Added Features of the Services:
----------------------------------------------------------------
POP3 e-mail hosting ****/Month/Mailbox
----------------------------------------------------------------
Virus Protection ****/Month/Mailbox
----------------------------------------------------------------
Certified Delivery ****/Month/Mailbox
----------------------------------------------------------------
Archiving (storage > 2.5 Mb) ****/Mb/Month/Mailbox
----------------------------------------------------------------
B. Branding and Customization
1. Obligations - CP will provide such engineering, design and other
-----------
services and resources as are needed to expeditiously complete the transition
to the CP System pursuant to Section 1.2 of the Agreement, and to customize
the Services and the CP System to meet and maintain the specifications set
forth in Exhibit B hereto. There will be no setup, maintenance, support cost
or contingent liability of any nature to StarMedia in connection with the
transition to or the launch and maintenance of the Services, except as
provided herein.
2. Branding of Web Mail Page - StarMedia shall provide CP with all
-------------------------
text and images ("Branding Materials") necessary for CP to brand StarMedia's
Web Mail Page. StarMedia warrants and represents to CP that StarMedia has full
power and authority to provide to CP, and to authorize CP's use of, the
Branding Materials provided by StarMedia for branding the Web Mail Page, and
agrees to defend and indemnify CP with respect to any claims arising from CP's
use of such Branding Materials. CP shall develop the branded Web Mail Page
using such Branding Materials and shall provide, or otherwise make available
to StarMedia, such
* CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN INFORMATION
CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL PORTIONS HAVE
BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
Confidential Page 12
9.3 Governing Law. This Agreement shall be governed by, and construed in
-------------
accordance with, the laws of the State of California, as such laws are applied
to contracts entered into and performed in such State.
9.4 Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
9.5 Successors and Assigns. The provisions of this Agreement shall inure
----------------------
to the benefit of, and be binding upon, the Company and its successors and
assigns and Purchaser and Purchaser's legal representatives, heirs, legatees,
distributees, assigns and transferees by operation of law, whether or not any
such person shall have become a party to this Agreement and have agreed in
writing to join herein and be bound by the terms and conditions hereof.
IN WITNESS WHEREOF, the parties have executed this Founder's Stock Purchase
Agreement on the day and year first indicated above.
CRITICAL PATH, INC.
/S/ ▇▇▇▇▇ ▇▇▇▇▇▇
By ------------------------------
Address ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
/S/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Signature
Address ________________________
________________________
________________________
-13-
The Parties shall share Service Revenues (as defined below) as follows:
**** StarMedia
**** Critical Path
The Parties shall share in the Net Advertising Revenues (as defined below) as
follows:
**** StarMedia
**** Critical Path
"Net Advertising Revenues" means cash receipts of revenue (as determined in
accordance with US generally accepted accounting principles) generated from the
sale of advertising on the display on the dedicated e-mail service login page or
within the StarMedia screen frames display of pages generated by the CP System
(excluding headlines or excerpts thereof) ("Gross Revenues"), less (i)
applicable international sales, value added and withholding taxes and (ii)
twenty percent (20%) of Gross Revenues. The parties understand and agree that
StarMedia may enter into additional contractual revenue-sharing arrangements
with third parties to increase site traffic and advertising revenues. To the
extent that any additional revenue sharing rights shall apply to any Net
Advertising Revenues, the Parties' respective shares of such Net Advertising
Revenues shall be proportionately reduced such that the aforementioned 60:40
share ratio is maintained.
The following hypothetical example serves to illustrate the foregoing adjustment
methodology: StarMedia enters into a contractual arrangement with an Internet
service provider ("ISP") pursuant to which ISP shall direct its Spanish and
Portuguese-speaking subscribers to a co-branded Web site which promotes use of
StarMedia Services. Pursuant to such arrangement, ISP is to receive **** of all
net advertising revenues attributable to advertising impressions delivered to
ISP subscribers. For a given period, such revenues total ****, so that the ISP
is to receive $10. In such event, StarMedia's share of Net Advertising Revenues
attributable to advertising impressions delivered to ISP subscribers shall be
reduced by **** to ****, and CP's share of such Net Advertising Revenues shall
be reduced by **** to ****, thereby maintaining the **** ratio.
"Service Revenues" means cash receipts of revenue (as determined in
accordance with US generally accepted accounting principles) generated from the
provision of Value-Added Features to Users as part of the Services under this
Agreement, less (i) applicable international sales, value added and withholding
taxes, (ii) any amounts payable by CP to any non-affiliated third party, with
respect to such revenue, pursuant to a contractual obligation of CP, including
without limitation any and all credit card processing fees, and (iii) any out-
of-pocket expenses incurred by CP with respect to the processing or
administration of the billing or collection from Users.
2. Report - Within ten (10) days after the end of each quarter, each
------
Party shall provide to the other a report ("Report") indicating the total
amount of Net Advertising Revenues or Service Revenues received by each party
during the quarter.
* CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN INFORMATION
CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL PORTIONS HAVE
BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
Confidential Page 14
3. Payment - StarMedia shall pay to CP its share of Net Advertising
-------
Revenues received by StarMedia during the preceding quarter within forty five
(45) days of the end of each quarter. Users and/or credit card companies of
Users shall be directed to deposit payments for Value-Added Features in a bank
account designated by CP. CP shall pay StarMedia its share of Service Revenues
received by CP during the preceding month within forty-five (45) days after
the end of each quarter during the term of this Agreement. If, in prior
remittances, the paying party included revenues in the calculation of
Advertising Revenues or Service Revenues, as to which during the preceding
month the party granted credits or refunds, then the party may reduce the Net
Advertising Revenues or Service Revenues paid to the other party by the amount
of any such credits or refunds.
Confidential Page 15
EXHIBIT B
---------
ELECTION UNDER SECTION 83(b) OF
THE INTERNAL REVENUE CODE
The undersigned hereby makes an election pursuant to Section 83(b) of the
Internal Revenue Code with respect to the property described below and supplies
the following information in accordance with the regulations promulgated
thereunder:
(i) The name, address and social security number of the undersigned:
----------------------------------------------------------------
----------------------------------------------------------------
----------------------------------------------------------------
Social Security No.:__________________________
(ii) Description of property with respect to which the election is being
made:
5,500,000 shares of common stock of Critical Path, Inc. (the
"Company").
(iii) The date on which the property was transferred is February 28, 1998.
(iv) The taxable year to which this election relates is calendar year
1998.
(v) Nature of restrictions to which the property is subject:
The shares of stock transferred to the undersigned taxpayer are
subject to the provisions of a right of repurchase in favor of the Company,
in the event of the undersigned's termination of employment with the
Company.
(vi) The fair market value of the property at the time of transfer
(determined without regard to any lapse restriction) was $0.01 per share.
(vii) The amount paid by taxpayer for the property was $0.01 per share.
(viii) A copy of this statement has been furnished to the Company.
Dated: __________, 1998
______________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇
-16-
CP shall provide StarMedia with access to its provisioning interface for
remote provisioning of domain accounts, mailboxes and poplinks. StarMedia
User status information shall also be available to StarMedia through the
APP.
2. Support Requirements
a. Technical Support: CP shall provide technical support to StarMedia as
provided in Exhibit C.
b. Training: CP shall, at no cost to StarMedia, reasonably assist
StarMedia in the development and implementation of training programs for
first and second level StarMedia support, including training for any
product modifications during the term of the Agreement. CP shall provide
StarMedia with reasonable quantities of training materials and updates
thereto for any product modifications, improvements or changes.
3. Mailbox Requirements
a. Storage Capacity - Each mailbox provided hereunder shall have a maximum
storage capacity of 2.5 MB. Each User may purchase additional storage
space from CP upon payment of CP's then-current fees. CP shall notify any
User that User's mailbox is approaching or exceeds the maximum limit.
Thereafter, if such User exceeds the maximum storage capacity, CP may
delete email message from the affected mailboxes, at CP's discretion upon
prior notice to StarMedia.
b. Features - Upon launching, the Services will include the following
features:
1. Web and POP mail integrated (as applicable)
2. Autoforward
3. **** uptime
4. send/receive
5. spam blocking
6. nicknames
7. LDAP (expected to be available August 1998)
8. attachments to 4 MB*
9. localization
10. postmarking
11. POP retrieval (as applicable)
12. Header options
13. Account provisioning
14. Snarfing
15. POP links (as applicable)
16. Preferences/customizations web mail only
17. Folders web mail only
18. Address book creation, updating and storage
* CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN INFORMATION
CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL PORTIONS HAVE
BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
Confidential Page 17
*To the extent that attachments received exceed a User's storage capacity,
the User will be provided no less than 72 hours notice of the need to purchase
additional storage capacity before any file deletions.
4. Permanent Features. Pursuant to Section 1.9 of the Agreement, CP shall not
-------------------
unilaterally discontinue the following features without StarMedia's prior
consent during the term of the Agreement:
---------------------------------------------------------------------------------------------------------------------
Category Features
---------------------------------------------------------------------------------------------------------------------
Administration Create, Modify, Delete users
---------------------------------------------------------------------------------------------------------------------
Administration Identify and send notification to inactive users automatically
---------------------------------------------------------------------------------------------------------------------
Administration User lockout
---------------------------------------------------------------------------------------------------------------------
Basic Traditional- compose
---------------------------------------------------------------------------------------------------------------------
Basic Traditional- read
---------------------------------------------------------------------------------------------------------------------
Basic Traditional- forward
---------------------------------------------------------------------------------------------------------------------
Basic Traditional- reply
---------------------------------------------------------------------------------------------------------------------
Basic Traditional- reply all
---------------------------------------------------------------------------------------------------------------------
Basic Traditional- next
---------------------------------------------------------------------------------------------------------------------
Basic Traditional- previous
---------------------------------------------------------------------------------------------------------------------
Basic Traditional- delete
---------------------------------------------------------------------------------------------------------------------
Basic Email forwarding- 3rd party
---------------------------------------------------------------------------------------------------------------------
Basic Email forwarding- Web Mail
---------------------------------------------------------------------------------------------------------------------
Basic Access mailbox through POP account or POP-compliant email software
---------------------------------------------------------------------------------------------------------------------
Basic Send/Receive Attachments
---------------------------------------------------------------------------------------------------------------------
Basic Cc capability
---------------------------------------------------------------------------------------------------------------------
Basic Bcc Capability
---------------------------------------------------------------------------------------------------------------------
Basic Address Book storage
---------------------------------------------------------------------------------------------------------------------
Basic Multiple Address Books
---------------------------------------------------------------------------------------------------------------------
Basic Address Book Mailing Lists
---------------------------------------------------------------------------------------------------------------------
Basic Anti-Spam policies/capabilities
---------------------------------------------------------------------------------------------------------------------
Basic Spammer address book blocking
---------------------------------------------------------------------------------------------------------------------
Basic Signature Files
---------------------------------------------------------------------------------------------------------------------
Basic Folders/Filing systems
---------------------------------------------------------------------------------------------------------------------
Basic Ability to create, modify, delete folders
---------------------------------------------------------------------------------------------------------------------
Basic Status indicator/ You Have Mail
---------------------------------------------------------------------------------------------------------------------
Basic Status Indicator per message (read, replied, forwarded)
---------------------------------------------------------------------------------------------------------------------
Basic Sort Messages, By field
---------------------------------------------------------------------------------------------------------------------
Basic Integration with Search Directories
---------------------------------------------------------------------------------------------------------------------
Basic Global Auto-responder
---------------------------------------------------------------------------------------------------------------------
Basic Integration with SMN Directories
---------------------------------------------------------------------------------------------------------------------
Basic Filtering to Folders
---------------------------------------------------------------------------------------------------------------------
Basic Applet for new mail notification
---------------------------------------------------------------------------------------------------------------------
Integration Ability to pass signup/sign-in and user profile data back and forth real-time to
StarMedia
---------------------------------------------------------------------------------------------------------------------
Confidential Page 18
---------------------------------------------------------------------------------------------------------------------
Integration Real-time integration of usage data for ad targeting
---------------------------------------------------------------------------------------------------------------------
Interface Real-time customization of interface based on referring site
---------------------------------------------------------------------------------------------------------------------
Interface Multiple domain support
---------------------------------------------------------------------------------------------------------------------
Interface UI Flexibility
---------------------------------------------------------------------------------------------------------------------
Interface Spanish Interface
---------------------------------------------------------------------------------------------------------------------
Interface Portuguese Interface
---------------------------------------------------------------------------------------------------------------------
Interface StarMedia Branding
---------------------------------------------------------------------------------------------------------------------
Integration Integration with SM ad servers
---------------------------------------------------------------------------------------------------------------------
Migration Full migration of existing StarMedia Mail accounts
---------------------------------------------------------------------------------------------------------------------
Reporting Activity Reporting -
---------------------------------------------------------------------------------------------------------------------
Reporting Activity Monitoring per user? (i.e. inactive account monitoring)
---------------------------------------------------------------------------------------------------------------------
EXHIBIT C
---------
RESPONSE TIME REQUIREMENTS
--------------------------
The Services shall include support, as set forth below, to StarMedia. CP
shall use commercially reasonable efforts to respond to requests for support
within the time frames provided below.
a. Temporary First Level Support by CP: Except as otherwise provided in
-----------------------------------
the Agreement, StarMedia shall be responsible for first-level support, and for
all other support not otherwise specified herein, to StarMedia Users.
Notwithstanding the foregoing, during the first six (6) months after commercial
launch of the Services (subject to extension by mutual consent of the parties),
CP shall provide customer support to Users via e-mail seven (7) days per week.
Such support shall initially be provided in English and in Spanish. CP shall
use commercially reasonable efforts to provide Portuguese language support as
soon as practical, and pending commencement of such support shall provide
sufficient training and resources to enable StarMedia's Portuguese-speaking
staff to perform user support functions. CP shall use commercially reasonable
efforts to respond to e-mail inquiries from Users within 24 hours of receipt by
CP.
b. Second Level Support via Email: Beginning at such time as StarMedia
------------ -----------------
commences providing first and/or second level user support, CP shall provide
support via email for StarMedia User inquiries that cannot be resolved by
StarMedia first or second level. Such support shall be provided in English
only. Email inquiries may be sent to CP from either StarMedia first or second
level support operations. Prior to launch of the Services, CP and StarMedia
will develop criteria for escalation of User email inquiries. The performance
requirements for email inquiries are:
-Email inquiry will be resolved within 12 hours of receipt by CP.
-If the inquiry cannot be resolved within 12 hours, an email (where
appropriate) will be sent to StarMedia first or second level support
informing them that the issue is still pending..
-If the inquiry cannot be resolved within 24 hours, a status email
will be sent to StarMedia first or second level support every 24 hours, or
at an agreed-upon interval, depending upon the severity of the problem,
informing them that the issue is still pending until the issue is resolved.
Confidential Page 19
c. Support via Telephone: CP will provide support for resolving systems
---------------------
performance problems reported by StarMedia's staff, and, at such time as
StarMedia commences providing first and/or second level user support, for
escalation of user support issues that cannot be resolved by StarMedia first or
second level. Such support shall be provided in English only. If StarMedia is
responsible for first level user support, StarMedia will not transfer User calls
unless directed by CP. The performance requirements for telephone support are:
-CP shall respond to and resolve systems performance problems reported
by StarMedia's staff (i) within three hours in the case of system
performance problems which impede the ability of Users to access the
Service or send or receive e-mail, (ii) within 12 hours in all other cases.
-Telephone escalations relating to User inquiries shall be resolved
within 12 hours of receipt by CP.
-If the escalation relating to User inquiries cannot be resolved
within 12 hours, an email (where appropriate) will be sent to the StarMedia
first or second level support informing them that the issue is still
pending. If an email is not appropriate, a phone call shall be made to
StarMedia first or second level to inform them of the status.
-If the escalation relating to User inquiries cannot be resolved
within 24 hours, a status email, when appropriate, will be sent to the
StarMedia first or second level support every 24 hours or at an agreed-upon
interval depending upon the severity of the issue, informing them that the
issue is still pending, until the issue is resolved.
-Escalations to CP will be via a toll free number.
-CP will provide sufficient coverage for the performance metrics to be
mutually agreed upon by the parties. Prior to the launch of the Services
to Users, CP and StarMedia will develop a Management and off-Hours
Escalation Process for emergency situations.
-Telephone Support will be available Monday through Friday, 5:00 a.m.
to 8:00 p.m. PDT/PST, and is expected to be increased to 7 x 24 x 365 by
the end of calendar year 1998.
-Prior to the time that telephone support is available 7 x 24 x 365,
during off-hours, in emergency situations, CP shall provide pager-based on-
call support to StarMedia's staff.
Confidential Page 20
EXHIBIT D
---------
USAGE REPORT STATISTICS
-----------------------
1. Performance
a) Processing E-mails: The monthly average Time Delay (as hereinafter
-------------------
defined) for incoming and outgoing User messages shall be less than **** seconds
for **** of messages. This average does not include any period of unforeseen,
unsolicited bulk email messages that degrade service. "Time Delay" means the
time between (i) in the case of incoming messages, arrival the message at the CP
System and availability of the message to the User on the Web Mail Page or via
the POP3 server, and (ii) in the case of outbound messages, receipt of a "send"
command from a user either on the Web Mail Page or via the SMTP server and such
message leaving the CP System into the Internet or being delivered locally to
another CP System User.
b) Availability of E-mail Server: Monthly average **** up time (not
-----------------------------
including scheduled downtimes for maintenance, which currently takes place
Monday mornings between 12am and 3 am PST).
c) Procedures for System Outages: CP posts a message in the event of a
-----------------------------
system outage, whenever possible.
d) Definition: As used in this Exhibit, "system outage" means any
----------
unplanned interruption in the provision of the Services during which StarMedia's
Users are unable to access or use the Services and which is caused by a problem
in the CP System and confirmed by CP. "System outage" does not include any
interruptions in the Services caused by act, omission or condition beyond CP's
reasonable control, such as acts of nature or any third party.
2. Monitoring/Reporting
a) CP will prepare a monthly Stewardship report that will track the
performance metrics stated in Section 1 of this Exhibit. In addition, the
parties will meet on a regular basis to discuss the Stewardship report and its
associated performance metrics
b) CP will provide StarMedia with monthly reports which document all CP
System outages or enhancements made during such month. Each report include, at a
minimum, the following additional information:
Summary:
. CP System uptime
. Number of new StarMedia User mailboxes
. Number of deleted StarMedia User mailboxes
. Total number of StarMedia User mailboxes
. Number of CP System outages
. CP System total downtime and average daily and monthly downtimes
Specific Outage Report:
* CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN INFORMATION
CONTAINED IN THIS EXHIBIT. THROUGHOUT THIS EXHIBIT CONFIDENTIAL PORTIONS HAVE
BEEN OMITTED FROM THE PUBLIC FILING AND HAVE BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
Confidential Page 21
. Time of outage
. Length of outage
. Affected areas
. Reason for outage
. Long term remedy
. Person notified
Enhancement:
. Reason for change
. Areas affected
Each report shall include the following additional information upon
implementation of a third-party solution for reporting such information (which
is anticipated by third quarter 1998):
. Mean storage used for mailboxes
. Mean POP processing time for incoming messages
. Mean SMTP processing time for outbound messages
. Mean time for availability of incoming messages on Web server
This information will be emailed to StarMedia by the third working day
of the month following the reported month.
In addition, CP will provide StarMedia with a weekly e-mail report with
the following information:
. Number of new StarMedia User mailboxes
. Number of outgoing messages from StarMedia users
. Number of incoming messages to StarMedia users
3. Escalation Procedures
a) Notify StarMedia via the following email address in the event of a
system outage. CP will send an email notice whenever possible. In the event that
email is not working, or CP is otherwise unable to send an email message, then
CP will notify StarMedia by telephone at the number designated below within 30
minutes of the time that CP first learns of the outage.
. StarMedia: Advise email address and telephone number here
b) Status information, if known by CP, to include:
. reason for the outage; and
. estimated time for service restoration.
c) If StarMedia experiences a system outage and has not been notified
by CP, StarMedia will contact the Technical Support staff at CP by pager at
415/764-6203 (or at such other number as CP may designated from time to time
upon notice to StarMedia) and will be given the information listed in 3.b).
Confidential Page 22
d) CP will periodically notify StarMedia with updated status for the
duration of the outage.
e) CP will provide a post-incident summary that will include:
. cause of the problem;
. method used to correct the problem; and
. measures Critical Path will take to prevent similar occurrences in
the future.
f) Upon notification of a system outage, CP shall evaluate, and if CP
verifies that the outage is caused by a problem in the CP System, CP shall
provide StarMedia with a time estimate for resolution of the problem. CP shall
promptly commence remedial activities and use commercially reasonable efforts to
complete the system outage resolution within such time estimate.
4. Business Resumption
a) In the event of a system outage, CP will switch processing from the
primary server to a hot backup server in accordance with Exhibit B, Section B.
b) StarMedia agrees to notify CP no less than ten (10) days in advance
of any modifications and/or network configuration changes (including system
maintenance) to, as well as upgrades and removal of devices that impact the
production and network connectivity from, StarMedia's system through which the
Services are provided if they are outside of the scheduled Monday maintenance
windows. If any such change will or could, in either party's opinion, result in
incompatibility between the parties' respective systems or interruptions in the
Services, then the parties shall work together to resolve any such issue before
StarMedia makes the change.
Confidential Page 23
EXHIBIT E
---------
TERMS OF USE
------------
Please read the following agreement carefully.
You must accept the agreement to be able to use the Customer Service.
1.Acceptance of Terms of Use
Customer's mail service ("Customer Service") is provided free of charge to
registered users (each, a "User") under these Terms of Use. BY COMPLETING THE
REGISTRATION PROCESS AND CLICKING THE "I ACCEPT" BUTTON, YOU ARE INDICATING YOUR
AGREEMENT TO BE BOUND BY THESE TERMS OF USE. These Terms of Use are the entire
agreement between you and Customer with respect to the services provided by
Customer.
2. Registration Information; Disclosure
User agrees that Customer may disclose to third parties certain
information, in the aggregate, contained in users' registration applications,
including User's application. Customer will not disclose User's name, address,
e-mail address or telephone number, without User's prior written consent, except
to the extent necessary or appropriate to comply with applicable laws or
regulations or in legal or administrative proceedings where such information is
relevant. Customer reserves the right to terminate any User's account if
Customer learns that such User has provided Customer false or misleading
registration information.
3. Modifications of these Terms of Use
Customer may modify these Terms of Use from time to time in its sole
discretion. Customer will provide User with reasonable notice of any such
changes, and User's continued use of the Customer Service will be deemed to
constitute User's acceptance of any such changes.
4. Customer's Rights
Customer may modify or discontinue User's account or the Customer Service
with or without notice to User, without liability to User or any third party.
Content presented to User or otherwise available through the Customer
Service provided by Customer or a supplier is protected by copyright, trademark,
service marks, patents or other proprietary rights or laws. User shall only be
permitted to use this content as expressly authorized by the provider. User may
not copy, distribute or create derivative works from such contents without
express permission.
5. Contents of Messages
It is Customer's policy to respect the privacy of its Users. Customer does
not, and cannot, monitor, censor or edit the contents of User's e-mail messages.
User alone is responsible for the contents of User's messages, and the
consequences of any such messages.
User agrees that it will not transmit or disseminate: (i) advertising,
chain letters, spam, junk mail or any other type of unsolicited e-mailing
(whether commercial or informational) to persons or entities that have not
agreed to be part of such mailings; (ii) harassing, libelous,
Confidential Page 24
abusive, threatening, obscene or otherwise objectionable materials or materials
which infringe or violate any third party's copyright, trademark, trade secret,
privacy or other proprietary or property right, or that could constitute a
criminal offense, give rise to civil liability or otherwise violate any
applicable law or regulation; or (iii) viruses or other harmful, disruptive or
destructive files. User agrees that it will not use or attempt to use another
person's or entity's account, service or system without authorization from the
owner, nor will User interfere with the security of, or otherwise abuse, the
Customer Service, system resources or accounts, or any network or another user's
use or enjoyment of the mail services. User may not forge header or address
information. Customer will only access and disclose information as necessary to
comply with applicable laws and government orders or requests, to provide the
services, to operate or maintain its systems or to protect itself or its
suppliers.
Customer reserves the right to terminate User's account if it becomes aware
and determines, in Customer's sole discretion, that User is violating any of
these Terms of Use.
6. Account and Password
User is responsible for maintaining the confidentiality of its account
number and password. User shall be responsible for all uses of its account,
whether or not authorized by User. User agrees to immediately notify Customer
of any unauthorized use of its account.
7. Disclaimer of Warranties
USER EXPRESSLY AGREES THAT USE OF THE CUSTOMER SERVICE IS AT USER'S SOLE
RISK. THE CUSTOMER SERVICE IS PROVIDED ON AN "AS IS" AND "AS AVAILABLE" BASIS.
CUSTOMER DISCLAIMS ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED,
INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE OR NON-INFRINGEMENT.
CUSTOMER DOES NOT MAKE ANY WARRANTY THAT THE CUSTOMER SERVICE WILL MEET
USER'S REQUIREMENTS, OR THAT THE CUSTOMER SERVICE WILL BE UNINTERRUPTED, TIMELY,
SECURE, OR ERROR FREE; NOR DOES CUSTOMER MAKE ANY WARRANTY AS TO THE RESULTS
THAT MAY BE OBTAINED FROM THE USE OF THE CUSTOMER SERVICE OR AS TO THE ACCURACY
OR RELIABILITY OF ANY INFORMATION OBTAINED THROUGH THE CUSTOMER SERVICE.
USER UNDERSTANDS AND AGREES THAT ANY MATERIAL AND/OR DATA DOWNLOADED OR
OTHERWISE OBTAINED THROUGH THE USE OF THE CUSTOMER SERVICE IS AT USER'S OWN
DISCRETION AND RISK AND THAT USER WILL BE SOLELY RESPONSIBLE FOR ANY DAMAGE TO
USER'S COMPUTER SYSTEM OR LOSS OF DATA THAT RESULTS FROM THE DOWNLOAD OF SUCH
MATERIAL AND/OR DATA.
CUSTOMER DOES NOT MAKE ANY WARRANTY REGARDING ANY GOODS OR SERVICES
PURCHASED OR OBTAINED THROUGH THE CUSTOMER SERVICE OR
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ANY TRANSACTIONS ENTERED INTO BY USE OF OR THROUGH THE CUSTOMER SERVICE.
NO ADVICE OR INFORMATION, WHETHER ORAL OR WRITTEN, OBTAINED BY USER FROM
Customer OR THROUGH THE CUSTOMER SERVICE SHALL CREATE ANY WARRANTY NOT EXPRESSLY
MADE HEREIN.
8.Limitation of Liability
CUSTOMER AND ITS SUPPLIERS SHALL NOT BE LIABLE FOR ANY DIRECT, INDIRECT,
INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES, RESULTING FROM THE USE OR THE
INABILITY TO USE THE CUSTOMER SERVICE OR FOR THE COST OF PROCUREMENT OF
SUBSTITUTE GOODS AND SERVICES OR RESULTING FROM ANY GOODS OR SERVICES PURCHASED
OR OBTAINED OR MESSAGES RECEIVED OR TRANSACTIONS ENTERED INTO BY MEANS OF OR
THROUGH THE CUSTOMER SERVICE OR RESULTING FROM UNAUTHORIZED ACCESS TO OR
ALTERATION OF USER'S TRANSMISSIONS OR DATA, INCLUDING BUT NOT LIMITED TO,
DAMAGES FOR LOSS OF PROFITS, USE, DATA OR OTHER INTANGIBLE, EVEN IF CUSTOMER OR
ITS SUPPLIER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
9.E-mail Message Storage
Customer does not assume any responsibility for the deletion or failure to
store e-mail messages. If User exceeds the maximum permitted storage space,
Customer reserves the right to delete e-mail messages from the affected
mailboxes, at its discretion.
10.Promotional Messages
Customer and/or third parties may, from time to time, send e-mail messages
to User containing advertisements, promotions, etc. Customer does not make any
representation or warranty with respect to any such e-mail messages or any goods
or services which may be obtained from such third parties, and User agrees that
Customer shall have no liability with respect thereto.
11.Indemnification
User agrees to indemnify and hold Customer, its suppliers and their
respective affiliates, officers, directors, employees and agents, harmless from
any claim, action or demand, including reasonable attorneys' fees, made by any
third party due to, arising out of or related to User's use of the Customer
Service or the violation of these Terms of Use by User, including without
limitation the infringement by User, or any other user of User's account, of any
intellectual property or other right of any person or entity.
12.Applicable Law
These Terms of Use shall be governed by and construed in accordance with
the laws of the State of California, without giving effect to its conflict of
laws provisions.
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13. Third Party Beneficiary
Critical Path, Inc., as a supplier of Customer, shall be a third party
beneficiary of User's obligations under these Terms of Use and thus shall be
entitled to enforce those obligations against User as if a party to these Terms
of Use.
I ACCEPT/I DECLINE
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