-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CXpojOUfC6IBt2uFAliSV0juKhEfrUkjcXg13Q5knNqs94qEac/P4EIhkuezb5Il 7OVEsEDqaRYu7Eg7KxyM6Q== 0000950130-01-506286.txt : 20020413 0000950130-01-506286.hdr.sgml : 20020413 ACCESSION NUMBER: 0000950130-01-506286 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 20011226 GROUP MEMBERS: CAMPINA ENTERPRISES LIMITED GROUP MEMBERS: CENWELL LIMITED GROUP MEMBERS: HUTCHISON WHAMPOA LIMITED FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CHEUNG KONG HOLDINGS LTD CENTRAL INDEX KEY: 0001164004 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 8TH FLOOR CHEUNG KONG CENTER STREET 2: 2 QUEENS ROAD CENTRAL CITY: HONG KONG CHINA STATE: F5 ZIP: 00000 BUSINESS PHONE: 85221288888 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CRITICAL PATH INC CENTRAL INDEX KEY: 0001060801 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 911788300 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-56169 FILM NUMBER: 1822998 BUSINESS ADDRESS: STREET 1: 320 FIRST STREET CITY: SAN FRANCISCO STATE: CA ZIP: 94105 BUSINESS PHONE: 4158088800 MAIL ADDRESS: STREET 1: 320 FIRST STREET CITY: SAN FRNACISCO STATE: CA ZIP: 94105 SC 13D 1 dsc13d.txt SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 Critical Path, Inc. ------------------- (Name of Issuer) Common Stock, par value $0.001 per share ---------------------------------------- (Title of Class of Securities) 22674V100 --------- (CUSIP Number) Eirene Yeung Cheung Kong (Holdings) Limited 8th Floor, Cheung Kong Center 2 Queen's Road Central Hong Kong (852-2128-8888) ---------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) Copies to: John A. Otoshi Dewey Ballantine LLP Suite 701 Edinburgh Tower, The Landmark 15 Queen's Road Central Hong Kong (852-2509-7000) ---------- December 13, 2001 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box . SCHEDULE 13D CUSIP NO. 22674V100 --------- - ----------- -------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON CHEUNG KONG (HOLDINGS) LIMITED - Not Applicable - ----------- -------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_] (b) [X] - ----------- -------------------------------------------------------------------- 3 SEC US ONLY - ----------- -------------------------------------------------------------------- 4 SOURCE OF FUNDS WC - ----------- -------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] - ----------- -------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Hong Kong - -------------------- ------- ------------------------------------------ NUMBER OF 7 SOLE VOTING POWER SHARES - 0 - ------- ------------------------------------------ BENEFICIALLY 8 SHARED VOTING POWER OWNED BY EACH 11,428,568 (1) (including shares disclaimed, see 11 below) ------- ------------------------------------------ REPORTING 9 SOLE DISPOSITIVE POWER - 0 - PERSON WITH ------- ------------------------------------------ 10 SHARED DISPOSITIVE POWER 11,428,568 (1) (including shares disclaimed, see 11 below) - ----------- -------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11,428,568 (1), of which Cheung Kong expressly disclaims beneficial ownership of 5,714,290 (3) shares beneficially owned by Hutchison Whampoa Limited and Cenwell Limited - ----------- -------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_] - ----------- -------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 8.9% - ----------- -------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON HC, CO - ----------- -------------------------------------------------------------------- SCHEDULE 13D CUSIP NO. 22674V100 --------- - ----------- -------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON CAMPINA ENTERPRISES LIMITED - Not Applicable - ----------- -------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_] (b) [X] - ----------- -------------------------------------------------------------------- 3 SEC US ONLY - ----------- -------------------------------------------------------------------- 4 SOURCE OF FUNDS AF - ----------- -------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] - ----------- -------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION British Virgin Islands - -------------------- ------- ------------------------------------------ 7 SOLE VOTING POWER NUMBER OF - 0 - SHARES ------- ------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY 5,714,278 (2) OWNED BY EACH ------- ------------------------------------------ 9 SOLE DISPOSITIVE POWER REPORTING - 0 - PERSON WITH ------- ------------------------------------------ 10 SHARED DISPOSITIVE POWER 5,714,278 (2) - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 5,714,278 (2) - ----------- -------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_] - ----------- -------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 4.5% - ----------- -------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON CO - ----------- -------------------------------------------------------------------- SCHEDULE 13D CUSIP NO. 22674V100 --------- - ----------- -------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON HUTCHISON WHAMPOA LIMITED - Not Applicable - ----------- -------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_] (b) [X] - ----------- -------------------------------------------------------------------- 3 SEC US ONLY - ----------- -------------------------------------------------------------------- 4 SOURCE OF FUNDS WC - ----------- -------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] - ----------- -------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Hong Kong - -------------------- ------- ------------------------------------------ 7 SOLE VOTING POWER NUMBER OF - 0 - SHARES ------- ------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY 5,714,290 (3) OWNED BY EACH ------- ------------------------------------------ 9 SOLE DISPOSITIVE POWER REPORTING - 0 - PERSON WITH ------- ------------------------------------------ 10 SHARED DISPOSITIVE POWER 5,714,290 (3) - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 5,714,290 (3) - ----------- -------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_] - ----------- -------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 4.5% - ----------- -------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON HC, CO - ----------- -------------------------------------------------------------------- SCHEDULE 13D CUSIP NO. 22674V100 --------- - ----------- -------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON CENWELL LIMITED - Not Applicable - ----------- -------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_] (b) [X] - ----------- -------------------------------------------------------------------- 3 SEC US ONLY - ----------- -------------------------------------------------------------------- 4 SOURCE OF FUNDS AF - ----------- -------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] - ----------- -------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION British Virgin Islands - -------------------- ------- ------------------------------------------ 7 SOLE VOTING POWER NUMBER OF - 0 - SHARES ------- ------------------------------------------ 8 SHARED VOTING POWER BENEFICIALLY 5,714,290 (3) OWNED BY EACH ------- ------------------------------------------ 9 SOLE DISPOSITIVE POWER REPORTING - 0 - PERSON WITH ------- ------------------------------------------ 10 SHARED DISPOSITIVE POWER 5,714,290 (3) - ----------- -------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 5,714,290 (3) - ----------- -------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_] - ----------- -------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 4.5% - ----------- -------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON CO - ----------- -------------------------------------------------------------------- (1) Issuable upon conversion of 872,727 shares of Series D Cumulative Redeemable Convertible Preferred Stock, par value $0.001 per share ("Preferred Stock"), of the Issuer at a conversion price of $1.05 per share. (2) Issuable upon conversion of 436,363 shares of Preferred Stock at a conversion price of $1.05 per share. (3) Issuable upon conversion of 436,364 shares of Preferred Stock at a conversion price of $1.05 per share. Item 1. Security and Issuer. This statement on Schedule 13D relates to the Common Stock, par value $0.001 per share (the "Common Stock"), of Critical Path, Inc., a California corporation (the "Issuer"). The Issuer's principal executive office is 532 Folsom Street, San Francisco, California 94105. Item 2. Identity and Background. This statement is filed by Cheung Kong (Holdings) Limited ("Cheung Kong"), a Hong Kong company; Campina Enterprises Limited ("Campina"), a British Virgin Islands company and an indirect wholly-owned subsidiary of Cheung Kong; Hutchison Whampoa Limited, a Hong Kong company ("HWL"); and Cenwell Limited ("Cenwell"), a British Virgin Islands company and an indirect wholly-owned subsidiary of HWL. Cheung Kong The principal business of Cheung Kong is investment holding and project management, real estate property development and investment, real estate agency and management, hotel operation, and securities investment. The principal business address of Cheung Kong is 7th Floor, Cheung Kong Center, 2 Queen's Road Central, Hong Kong. Cheung Kong indirectly owns 100% of the issued shares of Campina. Cheung Kong's beneficial ownership reported herein and not disclaimed is through its interest in Campina. Cheung Kong owns 49.97% of the issued shares of HWL and may, pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), be deemed to control the voting and disposition of the shares of Preferred Stock beneficially owned by HWL and Cenwell. However, Cheung Kong disclaims beneficial ownership of the shares of Preferred Stock beneficially owned by HWL and Cenwell and the filing of this statement shall in no way be construed as an admission that Cheung Kong is, for purposes of Section 13(d) or 13(g) of the Exchange Act, the beneficial owner of such shares. The name, business address, citizenship and present principal occupation or employment of each executive officer and director of Cheung Kong and the name, principal business and address of any corporation or other organization in which such employment is conducted are set forth on Schedule I hereto and are incorporated herein by reference. During the past five years, neither Cheung Kong nor, to the best knowledge of Cheung Kong, any of its executive officers or directors has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or has 1 been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Campina The principal business of Campina is investment holding. The registered office address of Campina is Pasea Estate, Road Town, Tortola, British Virgin Islands. The name, business address, citizenship and present principal occupation or employment of each executive officer and director of Campina and the name, principal business and address of any corporation or other organization in which such employment is conducted are set forth on Schedule II hereto, respectively, and are incorporated herein by reference. During the past five years, neither Campina nor, to the best knowledge of Campina, any of their executive officers or directors has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. HWL The principal business of HWL is that of investment holding with diversified interests and activities in the following core businesses: ports and related services, telecommunications and e-commerce, property and hotels, retail and manufacturing, and energy, infrastructure, finance and investments. The principal business address of HWL is 22nd Floor, Hutchison House, 10 Harcourt Road, Hong Kong. HWL indirectly owns 100% of the issued shares of Cenwell. HWL's beneficial ownership reported herein is through its interest in Cenwell. The name, business address, citizenship and present principal occupation or employment of each executive officer and director of HWL and the name, principal business and address of any corporation or other organization in which such employment is conducted are set forth on Schedule III hereto and are incorporated herein by reference. During the past five years, neither HWL nor, to the best knowledge of HWL, any of its executive officers and directors has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgement, decree or final order enjoining 2 future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Cenwell The principal business of Cenwell is investment holding. The registered office address of Cenwell is P.O. Box 957 Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands. The name, business address, citizenship and present principal occupation or employment of each executive officer and director of Cenwell and the name, principal business and address of any corporation or other organization in which such employment is conducted are set forth on Schedule IV hereto, respectively, and are incorporated herein by reference. During the past five years, neither Cenwell nor, to the best knowledge of Cenwell, any of their executive officers or directors has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Item 3. Source and Amount of Funds or Other Consideration. The total purchase price of 436,363 shares of Preferred Stock purchased by Campina was $5,999,998.12. The funds for Campina's purchase were provided by Cheung Kong from working capital. The total purchase price of 436,364 shares of Preferred Stock purchased by Cenwell was $5,999,998.13. The funds for Cenwell's purchase were provided by HWL from working capital. Item 4. Purpose of Transaction. On November 8, 2001, the Issuer, General Atlantic Partners LLC and affiliates (collectively, "GA"), Vectis CP Holdings, LLC ("Vectis"), Campina and Cenwell entered into a Stock and Warrant Purchase and Exchange Agreement (the "Stock and Warrant Purchase and Exchange Agreement"), pursuant to which, among other things, Campina and Cenwell purchased 436,363 and 436,364 shares, respectively, of the Issuer's Preferred Stock, which shares are convertible, at the option of each of Campina and Cenwell, at a conversion price of $1.05 per share, subject to certain adjustments as set forth in a Certificate of the Powers, Designations, Preferences and Rights of the Series D Cumulative Redeemable Convertible Participating Preferred Stock (the "Certificate of Designation"). 3 Cheung Kong, Campina, HWL and Cenwell currently own the shares of Preferred Stock reported herein for investment purposes only. Each of Cheung Kong, Campina, HWL and Cenwell intends to review from time to time its ownership of such shares and may, depending upon its evaluations of the business and prospects of the Issuer, or such other considerations as it may consider relevant, determine to increase, decrease or dispose of its holdings in the Preferred Stock. Other than as disclosed in this Item 4 and Item 6, Cheung Kong, Campina, HWL and Cenwell filing this Schedule have no plans or proposals that relate to or would result in: (a) The acquisition by any person of additional securities of the Issuer, or the disposition of securities of the Issuer; (b) An extraordinary corporate transaction involving the Issuer or any of its subsidiaries; (c) A sale or transfer of a material amount of assets of the Issuer or any of its subsidiaries; (d) Any change in the present Board of Directors or management of the Issuer, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the Board; (e) A material change in the present capitalization or dividend policy of the Issuer; (f) Any other material change in the Issuer's business or corporate structure; changes in the Issuer's charter or bylaws or other actions that might impede the acquisition of control of the Issuer by any other person; (g) Causing securities of the Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an interdealer quotation system of a registered national securities association; (h) Causing securities of the Issuer to be eligible for termination of registration pursuant to the Exchange Act, or any other similar action; or (i) A class of equity securities of the issuer becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act. Item 5. Interest in Securities of the Issuer. (a) - (b) Cheung Kong, through its ownership of Campina, is deemed, for purposes of Rule 13d-3 under the Exchange Act, to be the beneficial owner of 436,363 shares of Preferred Stock, which is convertible into 5,714,278 shares of Common Stock, 4 representing 4.5% of the Common Stock upon conversion based on 127,896,823 shares of Common Stock (representing shares of Common Stock outstanding as of November 8, 2001 plus shares upon the conversion of 4 million shares of Preferred Stock by the Buyers). Cheung Kong has shared power over the voting and disposition of such shares. In addition, Cheung Kong, through its ownership of 49.97% of the issued shares of HWL, may be deemed to share voting and dispositive power over the shares of Preferred Stock beneficially owned by HWL and Cenwell. However, pursuant to Rule 13d-4 under the Exchange Act, Cheung Kong expressly disclaims beneficial ownership of such shares. Campina is the beneficial owner of 436,363 shares of Preferred Stock, which is convertible into 5,714,278 shares of Common Stock, representing 4.5% of the Common Stock upon conversion. Campina has shared power over the voting and disposition of such shares. HWL, through its ownership of Cenwell, is deemed, for purposes of Rule 13d-3 under the Exchange Act, to be the beneficial owner of 436,364 shares of Preferred Stock, which is convertible into 5,714,290 shares of Common Stock, representing 4.5% of the Common Stock upon conversion. HWL has shared power over the voting and disposition of such shares. Cenwell is the beneficial owner of 436,364 shares of Preferred Stock, which is convertible into 5,714,290 shares of Common Stock, representing 4.5% of the Common Stock upon conversion. Cenwell has shared power over the voting and disposition of such shares. Except as described herein, none of Cheung Kong, Campina, HWL or Cenwell nor, to the best knowledge of Cheung Kong, Campina, HWL and Cenwell, any executive officer or director of HWL, Cheung Kong, Campina, HWL or Cenwell (i) beneficially owns any securities of the Issuer as of the date hereof or (ii) has any right as of the date hereof to acquire, directly or indirectly, any beneficial ownership of other securities of the Issuer. (c) Except as set forth herein, none of Cheung Kong, Campina, HWL or Cenwell, nor, to the best knowledge of Cheung Kong, Campina, HWL and Cenwell, any executive officer or director of HWL, Cheung Kong, Campina, HWL or Cenwell has effected any transaction in shares of the Common Stock, or securities convertible into shares of the Common Stock, during the past 60 days. (d) Not applicable. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer. 5 On November 8, 2001, the Issuer entered into a $95 million equity financing transaction by a group of investors and their affiliate entities ("Buyers"). The financing transaction consists of approximately $30 million in new equity in the form of shares of Preferred Stock at a conversion price per share (into Common Stock) of $1.05, the retirement of approximately $65 million in face value of the Issuer's 5-3/4% Convertible Subordinated Notes (the "Notes") held by GA, and the issuance to GA of warrants to purchase 2.5 million shares of Common Stock (the "Warrants"). In the transaction, the Issuer issued and sold (subject to the escrow described below) approximately 4 million shares of Preferred Stock (convertible into approximately 52.4 million shares of the Common Stock) to a group of investors led by GA and including Vectis, Campina and Cenwell. In addition, a portion of GA's equity in the transaction (representing 6.2% of the ownership of the Issuer, on a pro forma basis after giving effect to the transaction and the conversion of the shares into common stock) has been placed in a separate escrow to be released to GA only upon either the approval of the shareholders by a majority vote or written confirmation from Nasdaq that the approval of the shareholders to the issuance of the shares of Preferred Stock to GA is not required. The receipt by the Issuer of all financing proceeds from escrow is contingent upon the execution of a Stipulation and Agreement of Settlement in the litigation entitled In Re Critical Path Inc. Securities Litigation. The escrow conditions were fulfilled on December 13, 2001 and the financing proceeds were released to the Issuer on December 20, 2001. The Preferred Stock accrues and cumulates dividends at 8% per year, and is convertible into the Issuer's Common Stock at the option of the holder. The conversion rights of the Preferred Stock do not include any Common Stock trading price-related anti-dilution adjustments. Rather, the only anti-dilution protection for the Preferred Stock is customary anti-dilution protection in the event of stock splits, stock dividends, reorganizations or the like. In the event of a liquidation or change of control of the Issuer, the Preferred Stock is entitled to a liquidation preference payment equal to the purchase price of the Preferred Stock, plus accrued dividends to such date. The Preferred Stock shall also participate with the Common Stock in the event of a liquidation or change of control, after payment of the foregoing preference, up to certain agreed upon amounts. After four years, the Issuer has the option to redeem the Preferred Stock if the Common Stock trading price at such time is in excess of certain agreed upon price levels. After five years, the Preferred Stock shall be automatically redeemed. GA, as lead investor, is entitled to elect one person to the Issuer's Board of Directors. The Board size shall also increase to seven directors from the current five. In addition, Campina and Cenwell are entitled to jointly designate one individual to serve as a non-voting observer on the Board, as long as they continue to own at least 750,000 shares of Preferred Stock. The Preferred Stock has certain voting rights in connection with major corporate events, as well as preemptive rights in connection with any future 6 Issuer private placements. The Buyers have also executed a seven year standstill agreement with the Issuer. In connection with the transaction described above, the Issuer and the Buyers have entered into the Stock and Warrant Purchase and Exchange Agreement, an Escrow Agreement, a Stockholders Agreement, a Registration Rights Agreement, a First Amendment to Escrow Agreement and an Amendment No. 1 to Stock and Warrant Purchase and Exchange Agreement. The Warrants are fully vested and exercisable at any time after November 8, 2002 until November 7, 2006. The exercise price for the Common Stock underlying the Warrants is $1.05 with a four year term. Pursuant to the Registration Rights Agreement, the Issuer has granted demand registration rights to certain of the investors, including Campina and Cenwell, whereby under enumerated circumstances the Issuer is obligated to file a registration statement for an underwritten offering with the Securities and Exchange Commission, in addition to the grant of "piggyback" registration rights for other underwritten offerings. The foregoing description of the transaction is subject to, and qualified in its entirety by reference to, the Certificate of Designation, the Stock and Warrant Purchase and Exchange Agreement, the Escrow Agreement, the Stockholders Agreement, the Registration Rights Agreement, the Amendment No. 1 to Stock and Warrant Purchase and Exchange Agreement and the First Amendment to Escrow Agreement, which are filed as Exhibits 2 to 8 hereto and incorporated by reference into this Item 6. Item 7. Material to be Filed as Exhibits. The documents which have been filed as Exhibits are listed in the Exhibit Index herein. 7 SIGNATURE After reasonable inquiry and to the best of its knowledge and belief, each party certifies that the information set forth in this Statement with respect to it is true, complete and correct. Date: December 22, 2001 FOR AND ON BEHALF OF CHEUNG KONG (HOLDINGS) LIMITED By: \s\ Ip Tak Chuen, Edmond -------------------------------- Name: Ip Tak Chuen, Edmond Title: Director FOR AND ON BEHALF OF CAMPINA ENTERPRISES LIMITED By: \s\ Ip Tak Chuen, Edmond --------------------------------- Name: Ip Tak Chuen, Edmond Title: Director FOR AND ON BEHALF OF HUTCHISON WHAMPOA LIMITED By: \s\ Susan Chow -------------------------------- Name: Susan Chow Title: Director FOR AND ON BEHALF OF CENWELL LIMITED By: \s\ Susan Chow -------------------------------- Name: Susan Chow Title: Director 8 SCHEDULE I Executive Officers and Directors of Cheung Kong (Holdings) Limited As of December 21, 2001
Present Principal Occupation or Employment, Including Name, Name and Principal Business and Address of Business Address/1b/ Citizenship Each Corporation or Organization - ---------------- ----------- -------------------------------- LI Ka-shing Hong Kong Chairman, Cheung Kong (Holdings) Limited Chairman, Hutchison Whampoa Limited LI Tzar Kuoi, Victor Hong Kong Managing Director and Deputy Chairman, Cheung Kong (Holdings) Limited Chairman, Cheung Kong Infrastructure Holdings Limited2 Deputy Chairman and Executive Director, Hutchison Whampoa Limited Co-Chairman, Husky Energy Inc./7/ Executive Director, Hongkong Electric Holdings Limited3 Director, The Hongkong and Shanghai Banking Corporation Limited (banking), No. 1 Queen's Road Central, Hong Kong George Colin MAGNUS British Deputy Chairman, Cheung Kong (Holdings) Limited Chairman, Hongkong Electric Holdings Limited3 Deputy Chairman, Cheung Kong Infrastructure Holdings Limited/2/ Executive Director, Hutchison Whampoa Limited KAM Hing Lam Hong Kong Deputy Managing Director, Cheung Kong (Holdings) Limited Group Managing Director, Cheung Kong Infrastructure Holdings Limited2 Executive Director, Hutchison Whampoa Limited Executive Director, Hongkong Electric Holdings Limited/3/
SCHEDULE I (continued) Executive Officers and Directors of Cheung Kong (Holdings) Limited As of December 21, 2001
Present Principal Occupation or Employment, Including Name, Name and Principal Business and Address of Business Address/1b/ Citizenship Each Corporation or Organization - ---------------- ----------- -------------------------------- CHUNG Sun Keung, Davy Hong Kong Executive Director, Cheung Kong (Holdings) Limited IP Tak Chuen, Edmond Hong Kong Executive Director, Cheung Kong (Holdings) Limited Executive Director, Cheung Kong Infrastructure Holdings Limited/2/ Director, Campina Enterprises Limited Non-executive Director, TOM.COM LIMITED/6/ PAU Yee Wan, Ezra Hong Kong Executive Director, Cheung Kong (Holdings) Limited Director, Campina Enterprises Limited WOO Chia Ching, Grace U.S.A. Executive Director, Cheung Kong (Holdings) Limited CHIU Kwok Hung, Justin Canadian Executive Director, Cheung Kong (Holdings) Limited LEUNG Siu Hon British Independent Non-executive Director, 502 Aon China Building Cheung Kong (Holdings) Limited 29 Queen's Road Central Consultant, Messrs. S.H. Leung & Co. Hong Kong (solicitors' firm), 502 Aon China Building, 29 Queen's Road Central, Hong Kong
2 SCHEDULE I (continued) Executive Officers and Directors of Cheung Kong (Holdings) Limited As of December 21, 2001
Present Principal Occupation or Employment, Including Name, Name and Principal Business and Address of Business Address/1b/ Citizenship Each Corporation or Organization - ---------------- ----------- -------------------------------- FOK Kin-ning, Canning British Non-executive Director, Cheung Kong 22nd Floor, Hutchison House (Holdings) Limited 10 Harcourt Road Chairman, Hutchison Telecommunications Hong Kong (Australia) Limited/4/ Chairman, Partner Communications Company Ltd./5/ Co-Chairman, Husky Energy Inc./7/ Co-Chairman, Hutchison Harbour Ring Limited/8/ Deputy Chairman, Cheung Kong Infrastructure Holdings Limited/2/ Deputy Chairman, Hongkong Electric Holdings Limited/3/ Group Managing Director and Executive Director, Hutchison Whampoa Limited Frank John SIXT Canadian Non-executive Director, Cheung Kong 22nd Floor, Hutchison House (Holdings) Limited 10 Harcourt Road Chairman, TOM.COM LIMITED/6/ Hong Kong Group Finance Director and Executive Director, Hutchison Whampoa Limited Executive Director, Cheung Kong Infrastructure Holdings Limited/2/ Executive Director, Hongkong Electric Holdings Limited3 Director, Hutchison Telecommunications (Australia) Limited /4/ Director, Husky Energy Inc./7/ Director, Partner Communications Company Ltd./5/ Director, Cenwell Limited
3 SCHEDULE I (continued) Executive Officers and Directors of Cheung Kong (Holdings) Limited As of December 21, 2001
Present Principal Occupation or Employment, Including Name, Name and Principal Business and Address of Business Address/1b/ Citizenship Each Corporation or Organization - ---------------- ----------- -------------------------------- CHOW Kun Chee, Roland British Independent Non-executive Director, 602 Aon China Building Cheung Kong (Holdings) Limited 29 Queen's Road Central Consultant, Herbert Tsoi and Partners Hong Kong (solicitors' firm), 602 Aon China Building, 29 Queen's Road Central, Hong Kong WONG Yick-ming, Rosanna Hong Kong Independent Non-executive Director, Room 906, Duke of Windsor Cheung Kong (Holdings) Limited Member of the Social Service Building Executive Council of the 15 Hennessy Road Hong Kong Special Administrative Wanchai, Hong Kong Region Executive Director, Hong Kong Federation of Youth Groups (charitable organisation), Room 906, Duke of Windsor Social Service Building, 15 Hennessy Road, Wanchai, Hong Kong Director, The Hongkong and Shanghai Banking Corporation Limited (banking), No. 1 Queen's Road Central, Hong Kong Chairman, Education Commission of the Hong Kong Special Administrative Region HUNG Siu-lin, Katherine Hong Kong Non-executive Director, Cheung Kong (Holdings) Limited YEH Yuan Chang, Anthony Hong Kong Independent Non-executive Director, 26th Floor, Tower A Cheung Kong (Holdings) Limited Regent Centre Honorary Life President, Tai Ping 63 Wo Yi Hop Road Carpets International Limited (carpet Kwai Chung manufacturing), 26th Floor, Tower A, Hong Kong Regent Centre, 63 Wo Yi Hop Road, Kwai Chung, Hong Kong
4 SCHEDULE I (continued) Executive Officers and Directors of Cheung Kong (Holdings) Limited As of December 21, 2001
Present Principal Occupation or Employment, Including Name, Name and Principal Business and Address of Business Address/1b/ Citizenship Each Corporation or Organization - ---------------- ----------- -------------------------------- CHOW Nin Mow, Albert British Non-executive Director, Cheung Kong 2602 Henley Building (Holdings) Limited 5 Queen's Road Central Chairman & Managing Director, Hong Kong Wah Yip (Holdings) Limited (property development and investment), 2602 Henley Building, 5 Queen's Road Central, Hong Kong Simon MURRAY British Independent Non-executive Director, Room 2108 Gloucester Tower Cheung Kong (Holdings) Limited The Landmark Chairman, General Enterprise Management 15 Queen's Road Central Services Limited (investment fund), Hong Kong Room 2108 Gloucester Tower, The Landmark, 15 Queen's Road Central, Hong Kong Non-Executive Director, Hutchison Whampoa Limited KWOK Tun-li, Stanley Canadian Independent Non-executive Director, Ste 970-355 Burrard Street Cheung Kong (Holdings) Limited Vancouver, British Columbia Director, Amara International Investment V6C 2G8, Canada Corporation (investment holdings), Ste 970-355 Burrard Street, Vancouver, British Columbia, V6C 2G8, Canada
5 SCHEDULE II Executive Officers and Directors of Campina Enterprises Limited As of December 21, 2001
Present Principal Occupation or Employment, Including Name, Name and Principal Business and Address of Business Address/1b/ Citizenship Each Corporation or Organization - ---------------- ----------- --------------------------------- IP Tak Chuen, Edmond Hong Kong Director, Campina Enterprises Limited Executive Director, Cheung Kong (Holdings) Limited Executive Director, Cheung Kong Infrastructure Holdings Limited/2/ Non-executive Director, TOM.COM LIMITED/6/ PAU Yee Wan, Ezra Hong Kong Director, Campina Enterprises Limited Executive Director, Cheung Kong (Holdings) Limited LAU Chin Sung, John Australian Director, Campina Enterprises Limited 707-8th Avenue S.W., Box 6525, Station President and Chief Executive Officer, D, Calgary, Alberta, Canada, T2P 3G7 Husky Energy Inc./7/ Neil Douglas McGEE Australian Director, Campina Enterprises Limited 707-8th Avenue S.W., Box 6525, Station Vice President and Chief Financial Officer, D, Calgary, Alberta, Canada, T2P 3G7 Husky Energy Inc./7/ Director, Cenwell Limited YEO May Ann, Annie Singaporean Director, Campina Enterprises Limited 150 Beach Road General Manager, Property Enterprises #17-03 Gateway West Development Pte Ltd, Japura Pte Ltd, Singapore 189720 Japura Development Pte Ltd and Glenfield Investments Pte Ltd (all are property development), all at 150 Beach Road, #17-03 Gateway West, Singapore 189720
6 SCHEDULE II (continued) Executive Officers and Directors of Campina Enterprises Limited As of December 21, 2001
Present Principal Occupation or Employment, Including Name, Name and Principal Business and Address of Business Address/1b/ Citizenship Each Corporation or Organization - ---------------- ----------- --------------------------------- CHUI Sing Loi Singaporean Director, Campina Enterprises Limited 150 Beach Road Senior Project Manager, Property #17-03 Gateway West Enterprises Development Pte Ltd, Japura Singapore 189720 Pte Ltd, Japura Development Pte Ltd and Glenfield Investments Pte Ltd (all are property development), all at 150 Beach Road, #17-03 Gateway West, Singapore 189720
7 SCHEDULE III Executive Officers and Directors of Hutchison Whampoa Limited As of December 21, 2001
Present Principal Occupation or Employment, Including Name, Name and Principal Business and Address of Business Address/1a/ Citizenship Each Corporation or Organization - ---------------- ----------- --------------------------------- LI Ka-shing Hong Kong Chairman, Hutchison Whampoa Limited 7th Floor, Cheung Kong Center Chairman, Cheung Kong (Holdings) 2 Queen's Road Central Limited Hong Kong LI Tzar Kuoi, Victor Hong Kong Deputy Chairman and Executive Director, 7th Floor, Cheung Kong Center Hutchison Whampoa Limited 2 Queen's Road Central Chairman, Cheung Kong Infrastructure Hong Kong Holdings Limited/2/ Co-Chairman, Husky Energy Inc./7/ Managing Director and Deputy Chairman, Cheung Kong (Holdings) Limited Executive Director, Hongkong Electric Holdings Limited3 Director, The Hongkong and Shanghai Banking Corporation Limited (banking), No. 1 Queen's Road Central, Hong Kong FOK Kin-ning, Canning British Group Managing Director and Executive Director, Hutchison Whampoa Limited Chairman, Hutchison Telecommunications (Australia) Limited/4/ Chairman, Partner Communications Company Ltd./5/ Co-Chairman, Husky Energy Inc./7/ Co-Chairman, Hutchison Harbour Ring Limited/8/ Deputy Chairman, Cheung Kong Infrastructure Holdings Limited/2/ Deputy Chairman, Hongkong Electric Holdings Limited/3/ Non-executive Director, Cheung Kong (Holdings) Limited
8 SCHEDULE III (continued) Executive Officers and Directors of Hutchison Whampoa Limited As of December 21, 2001
Present Principal Occupation or Employment, Including Name, Name and Principal Business and Address of Business Address/1a/ Citizenship Each Corporation or Organization - ---------------- ----------- --------------------------------- CHOW WOO Mo Fong, Susan British Deputy Group Managing Director and Executive Director, Hutchison Whampoa Limited Executive Director, Cheung Kong Infrastructure Holdings Limited/2/ Director, Hongkong Electric Holdings Limited3 Director, Partner Communications Company Ltd./5/ Director, Hutchison Harbour Ring Limited8 Director, Cenwell Limited Non-executive Director, TOM.COM LIMITED6 Frank John SIXT Canadian Group Finance Director and Executive Director, Hutchison Whampoa Limited Chairman, TOM.COM LIMITED/6/ Executive Director, Cheung Kong Infrastructure Holdings Limited/2/ Executive Director, Hongkong Electric Holdings Limited/3/ Director, Hutchison Telecommunications (Australia) Limited4 Director, Husky Energy Inc./7/ Director, Partner Communications Company Ltd./5/ Director, Cenwell Limited Non-executive Director, Cheung Kong (Holdings) Limited LAI Kai Ming, Dominic Canadian Executive Director, Hutchison Whampoa Limited Deputy Chairman, Hutchison Harbour Ring Limited/8/
9 SCHEDULE III (continued) Executive Officers and Directors of Hutchison Whampoa Limited As of December 21, 2001
Present Principal Occupation or Employment, Including Name, Name and Principal Business and Address of Business Address/1a/ Citizenship Each Corporation or Organization - ---------------- ----------- --------------------------------- George Colin MAGNUS British Executive Director, Hutchison Whampoa 7th Floor, Cheung Kong Center Limited 2 Queen's Road Central Chairman, Hongkong Electric Holdings Hong Kong Limited/3/ Deputy Chairman, Cheung Kong (Holdings) Limited Deputy Chairman, Cheung Kong Infrastructure Holdings Limited/2/ KAM Hing Lam Hong Kong Executive Director, Hutchison Whampoa 7th Floor, Cheung Kong Center Limited 2 Queen's Road Central Group Managing Director, Cheung Hong Kong Kong Infrastructure Holdings Limited/2/ Deputy Managing Director, Cheung Kong (Holdings) Limited Executive Director, Hongkong Electric Holdings Limited/3/ Michael David KADOORIE British Independent Non-Executive Director, 24th Floor, St. George's Hutchison Whampoa Limited Building, 2 Ice House Street Chairman, CLP Holdings Limited Central, Hong Kong (investment holding), 147 Argyle Street, Kowloon, Hong Kong Chairman, The Hongkong and Shanghai Hotels Limited (hotel catering and real estate), 8th Floor, St. George's Building, 2 Ice House Street, Central, Hong Kong Chairman, Heliservices (Hong Kong) Limited (provision of helicopter services), 2107 St. George's Building, 2 Ice House Street, Central, Hong Kong
10 SCHEDULE III (continued) Executive Officers and Directors of Hutchison Whampoa Limited As of December 21, 2001
Present Principal Occupation or Employment, Including Name, Name and Principal Business and Address of Business Address/1a/ Citizenship Each Corporation or Organization - ---------------- ----------- --------------------------------- LI Fook-wo British Independent Non-Executive Director, 1416 Prince's Building Hutchison Whampoa Limited 10 Chater Road Director, The Bank of East Asia, Hong Kong Limited (banking), No. 10 Des Voeux Road Central, Hong Kong Director, Johnson Electric Holdings Limited (micromotors), Cedar House, 41 Cedar Avenue, Hamilton HM 12, Bermuda Simon MURRAY British Non-Executive Director, Hutchison Room 2108 Gloucester Tower Whampoa Limited The Landmark Chairman, General Enterprise Management 15 Queen's Road Central Services Limited (investment fund), Hong Kong Room 2108 Gloucester Tower, The Landmark, 15 Queen's Road Central, Hong Kong Independent Non-executive Director, Cheung Kong (Holdings) Limited OR Ching Fai, Raymond British Independent Non-Executive Director, 1 Queen's Road Central Hutchison Whampoa Limited Hong Kong General Manager, The Hongkong and Shanghai Banking Corporation Limited (banking), 1 Queen's Road Central, Hong Kong
11 SCHEDULE III (continued) Executive Officers and Directors of Hutchison Whampoa Limited As of December 21, 2001
Present Principal Occupation or Employment, Including Name, Name and Principal Business and Address of Business Address/1a/ Citizenship Each Corporation or Organization - ---------------- ----------- --------------------------------- William SHURNIAK Canadian Independent Non-Executive Director, Hutchison Whampoa Limited Deputy Chairman, Husky Energy Inc./7/ Chairman, ETSA Utilities (operation of electricity distribution network in Australia), 1 Anzac Highway, Keswick, South Australia 5035, Australia Chairman, Powercor Australia Ltd. (operation of electricity distribution network in Australia), Level 9, 40 Market Street, Melbourne, Victoria 3000, Australia Peter Alan Lee VINE British Non-Executive Director, Hutchison Suite 1005 World Wide House Whampoa Limited 19 Des Voeux Road Central Director, Liu Chong Hing Investments Hong Kong Limited (investments), 24 Des Voeux Road Central, Hong Kong Director, Liu Chong Hing Bank Limited (banking), 24 Des Voeux Road Central, Hong Kong Solicitor WONG Chung Hin British Non-Executive Director, Hutchison 1225 Prince's Building Whampoa Limited 10 Chater Road Director, The Bank of East Asia, Limited Hong Kong (banking), No. 10 Des Voeux Road Central, Hong Kong Director, Hongkong Electric Holdings Limited/3/
12 SCHEDULE IV Executive Officers and Directors of Cenwell Limited As of December 21, 2001
Present Principal Occupation or Employment, Including Name, Name and Principal Business and Address of Business Address/1a/ Citizenship Each Corporation or Organization - ---------------- ----------- --------------------------------- CHOW WOO Mo Fong, Susan British Director, Cenwell Limited Deputy Group Managing Director and Executive Director, Hutchison Whampoa Limited Executive Director, Cheung Kong Infrastructure Holdings Limited/2/ Director, Hongkong Electric Holdings Limited/3/ Director, Partner Communications Company Ltd./5/ Director, Hutchison Harbour Ring Limited/8/ Non-executive Director, TOM.COM LIMITED/6/ Frank John SIXT Canadian Director, Cenwell Limited Group Finance Director and Executive Director, Hutchison Whampoa Limited Chairman, TOM.COM LIMITED/6/ Executive Director, Cheung Kong Infrastructure Holdings Limited/2/ Executive Director, Hongkong Electric Holdings Limited/3/ Director, Hutchison Telecommunications (Australia) Limited/4/ Director, Husky Energy Inc./7/ Director, Partner Communications Company Ltd./5/ Non-executive Director, Cheung Kong (Holdings) Limited
13 SCHEDULE IV (continued) Executive Officers and Directors of Cenwell Limited As of December 21, 2001
Present Principal Occupation or Employment, Including Name, Name and Principal Business and Address of Business Address/1a/ Citizenship Each Corporation or Organization - ---------------- ----------- --------------------------------- HO Wai Leung, Edmond British Director, Cenwell Limited 9 Queen Street, Mayfair, Director, Hutchison Whampoa (Europe) London W1X 7PH, Limited (consultancy services), 9 Queen United Kingdom Street, Mayfair, London W1X 7PH, United Kingdom Director, Hutchison Whampoa (UK) Limited (investment holding), 9 Queen Street, Mayfair, London W1X 7PH, United Kingdom Director, Hutchison Whampoa Properties (Europe) Limited (project management), 100 New Bridge Street, London EC4V 6JA, United Kingdom Neil Douglas McGEE Australian Director, Cenwell Limited 707-8th Avenue S.W., Box 6525, Station Vice President and Chief Financial Officer, D, Calgary, Alberta, Canada, T2P 3G7 Husky Energy Inc. /7/ Director, Campina Enterprises Limited SNG Cheng Khoong, Robin Singaporean Director, Cenwell Limited 150 Beach Road #17-06, Managing Director, Copthorne International Singapore 189720 Investment Ltd (fund management), 150 Beach Road #17-06, Singapore 189720
14 Notes:- 1a. Unless otherwise indicated, the business address of each of the named persons is 22nd Floor, Hutchison House, 10 Harcourt Road, Hong Kong. 1b. Unless otherwise indicated, the business address of each of the named persons is 7th Floor, Cheung Kong Center, 2 Queen's Road Central, Hong Kong. 2. The principal business address of Cheung Kong Infrastructure Holdings Limited is 12th Floor, Cheung Kong Center, 2 Queen's Road Central, Hong Kong. The principal business of Cheung Kong Infrastructure Holdings Limited is the development, investment and operation of infrastructure businesses in Hong Kong, the PRC and Australia. 3. The principal business address of Hongkong Electric Holdings Limited is 44 Kennedy Road, Hong Kong. The principal business of Hongkong Electric Holdings Limited is generation and supply of electricity. 4. The principal business address of Hutchison Telecommunications (Australia) Limited is Level 3, 504 Pacific Highway, St. Leonards NSW 2065, Sydney, Australia. The principal business of Hutchison Telecommunications (Australia) Limited is telecommunications. 5. The principal business address of Partner Communications Company Ltd. is 8 Amal Street, Afeq Industrial Park, Rosh Ha'ayin 48103, Israel. The principal business of Partner Communications Company Ltd. is cellular mobile telephone services. 6. The principal business address of TOM.COM LIMITED is 48/F., The Center, 99 Queen's Road Central, Hong Kong. The principal business of TOM.COM LIMITED is the development of software and computer network systems and provision of related services, events production and the operation of an Internet portal delivering Internet infotainment, contents and services. 7. The principal business address of Husky Energy Inc. is 707-8th Avenue S.W., Box 6525 Station D, Calgary, Alberta, Canada, T2P 3G7. The principal business of Husky Energy Inc. is investment in oil and gas. 8. The principal business address of Hutchison Harbour Ring Limited is 22nd Floor, Hutchison House, 10 Harcourt Road, Hong Kong. The principal business of Hutchison Harbour Ring Limited is the manufacturing and trading of toys, property investments and the Internet B2B businesses. 15 EXHIBIT INDEX
Exhibit No. Description 1. Agreement with respect to filing of Schedule 13D, dated as of December 22, 2001, among Cheung Kong (Holdings) Limited, Campina Enterprises Limited, Hutchison Whampoa Limited and Cenwell Limited. 2. Certificate of the Powers, Designations, Preferences and Rights of the Series D Cumulative Redeemable Convertible Participating Preferred Stock 3. Stock and Warrant Purchase and Exchange Agreement, dated as of November 8, 2001, among Critical Path, Inc., General Atlantic Partners 74, L.P., GAP Coinvestment Partners II, L.P., GapStar, LLC, Vectis CP Holdings, LLC, Cenwell Limited and Campina Enterprises Limited 4. Escrow Agreement, dated as of November 8, 2001, among Critical Path, Inc., General Atlantic Partners 74, L.P., GAP Coinvestment Partners II, L.P., GapStar, LLC, Vectis CP Holdings, LLC, Cenwell Limited, Campina Enterprises Limited and Pillsbury Winthrop LLP 5. Stockholders Agreement, dated as of November 8, 2001, among Critical Path, Inc., General Atlantic Partners 74, L.P., GAP Coinvestment Partners II, L.P., GapStar, LLC, Vectis CP Holdings, LLC, Cenwell Limited and Campina Enterprises Limited 6. Registration Rights Agreement, dated as of November 8, 2001, among Critical Path, Inc., General Atlantic Partners 74, L.P., GAP Coinvestment Partners II, L.P., GapStar, LLC, Vectis CP Holdings, LLC, Cenwell Limited and Campina Enterprises Limited 7. Amendment No. 1 to Stock and Warrant Purchase and Exchange Agreement, dated as of November 9, 2001, among Critical Path, Inc., General Atlantic Partners 74, L.P., GAP Coinvestment Partners II, L.P., GapStar, LLC, Vectis CP Holdings, LLC, Cenwell Limited and Campina Enterprises Limited
8. First Amendment to Escrow Agreement, dated as of November 9, 2001, among Critical Path, Inc., General Atlantic Partners 74, L.P., GAP Coinvestment Partners II, L.P., GapStar, LLC, Vectis CP Holdings, LLC, Cenwell Limited, Campina Enterprises Limited and Pillsbury Winthrop LLP
EX-1 3 dex1.txt AGREEMENT EXHIBIT 1 AGREEMENT In accordance with Rule 13d-1(k)(1) under the Securities Exchange Act of 1934, each of the undersigned hereby agrees that Cheung Kong (Holdings) Limited shall file on behalf of each of them this Schedule 13D relating to the Common Stock, $0.001 par value, of Critical Path, Inc., to which this Agreement is an Exhibit and such statements and amendments thereto as may be required to be filed with the United States Securities and Exchange Commission. Dated: December 22, 2001 FOR AND ON BEHALF OF CHEUNG KONG (HOLDINGS) LIMITED By: \s\ Ip Tak Chuen, Edmond ---------------------------------- Name: Ip Tak Chuen, Edmond Title: Director FOR AND ON BEHALF OF CAMPINA ENTERPRISES LIMITED By: \s\ Ip Tak Chuen, Edmond ---------------------------------- Name: Ip Tak Chuen, Edmond Title: Director FOR AND ON BEHALF OF HUTCHISON WHAMPOA LIMITED By: \s\ Susan Chow ---------------------------------- Name: Susan Chow Title: Director FOR AND ON BEHALF OF CENWELL LIMITED By: \s\ Susan Chow ---------------------------------- Name: Susan Chow Title: Director EX-2 4 dex2.txt CERTIFICATE OF THE POWERS EXHIBIT 2 CRITICAL PATH, INC. CERTIFICATE OF THE POWERS, DESIGNATIONS, PREFERENCES AND RIGHTS OF THE SERIES D CUMULATIVE REDEEMABLE CONVERTIBLE PARTICIPATING PREFERRED STOCK, PAR VALUE $0.001 PER SHARE Pursuant to Section 400 of the California General Corporation Law The undersigned, Michael Zuckerman, Vice President and Secretary of Critical Path, Inc., a California corporation (the "Corporation"), ----------- DOES HEREBY CERTIFY that the following resolution, creating a series of 4,000,000 shares of Preferred Stock was duly adopted by the Board of Directors, on November 6, 2001. WHEREAS, the Board of Directors is authorized, within the limitations and restrictions stated in the Articles of Incorporation of the Corporation, to provide by resolution or resolutions for the issuance of shares of Preferred Stock, par value $0.001 per share, of the Corporation, in one or more classes or series with such voting powers, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions as shall be stated and expressed in the resolution or resolutions providing for the issuance thereof adopted by the Board of Directors, and as are not stated and expressed in the Articles of Incorporation, or any amendment thereto, including (but without limiting the generality of the foregoing) such provisions as may be desired concerning voting, redemption, dividends, dissolution or the distribution of assets and such other subjects or matters as may be fixed by resolution or resolutions of the Board of Directors under the General Corporation Law of the State of California; and WHEREAS, it is the desire of the Board of Directors, pursuant to its authority as aforesaid, to authorize and fix the terms of a series of Preferred Stock and the number of shares constituting such series. NOW, THEREFORE, BE IT RESOLVED: 1. Designation and Number of Shares. There shall be hereby -------------------------------- created and established a series of Preferred Stock designated as "Series D Cumulative Redeemable Convertible Participating Preferred Stock" (the "Series D -------- Preferred Stock"). The authorized number of shares of Series D Preferred Stock - --------------- shall be 4,000,000. Capitalized terms used herein and not otherwise defined shall have the meanings set forth in Section 10 below. 2 2. Rank. ---- (a) The Series D Preferred Stock shall with respect to the payment of the Liquidation Payment in the event of Liquidation or Change of Control rank senior to (i) all classes of common stock of the Corporation (including, without limitation, the Common Stock, par value $0.001 per share, of the Corporation (the "Common Stock")), (ii) all classes of preferred stock of ------------ the Corporation (including, without limitation, the Series C Participating Preferred Stock, par value $0.001 per share) and (iii) each other class or series of Capital Stock of the Corporation hereafter created which does not expressly rank pari passu with or senior to the Series D Preferred Stock ---- ----- (clauses (i), (ii) and (iii), together, the "Junior Stock"). ------------ (b) Notwithstanding anything to the contrary contained in the Articles of Incorporation of the Corporation, the vote of the holders of a majority of the Series D Preferred Stock shall be a prerequisite to the designation or issuance of any shares of Capital Stock of the Corporation ranking pari passu with or senior to the Series D Preferred Stock in the event ---- ----- of a Liquidation or with respect to the payment of the Liquidation Payment. 3. Dividends. --------- (a) Dividend Rate. The holders of shares of Series D ------------- Preferred Stock shall receive, out of funds legally available therefor, dividends at an annual rate equal to eight percent (8%) of the Accreted Value, calculated on the basis of a 360-day year, consisting of twelve 30-day months, and shall accrue on a daily basis from the date of issuance thereof, whether or not declared by the Board of Directors. Accrued and unpaid dividends shall compound to the Accreted Value on a semi-annual basis on December 31st and June 30th of each year (each such date, the "Compounding Date") whether or not ---------------- declared by the Board of Directors. (b) Change of Control; Optional Redemption. In the event -------------------------------------- of the occurrence of a Change of Control or an optional redemption of the shares of Series D Preferred Stock pursuant to Section 5(a) below, the sum of (i) any dividends accrued at the rate and in the manner specified in Section 3(a) since the previous Compounding Date and prior to the date of the occurrence of a Change of Control or the Optional Redemption Date plus (ii) any and all dividends that would have accrued and compounded at the rate and in the manner specified in Section 3(a) from the closing date of such Change of Control or the Optional Redemption Date through and until the Automatic Redemption Date shall be added to the Accreted Value on the closing date of such Change of Control or the Optional Redemption Date, as the case may be. (c) Other Dividends. The Corporation shall not declare --------------- or pay any dividends on, or make any other distributions with respect to or redeem, purchase or otherwise acquire for consideration, any other shares of Capital Stock unless and until all accrued and unpaid dividends on the Series D Preferred Stock have been paid in full. 3 4. Liquidation and Change of Control. --------------------------------- (a) Priority Payment. Upon the occurrence of a ---------------- Liquidation, the holders of shares of Series D Preferred Stock shall be paid in cash for each share of Series D Preferred Stock held thereby, out of, but only to the extent of, the assets of the Corporation legally available for distribution to its stockholders, an amount equal to the sum of (i) the Accreted Value of such share of Series D Preferred Stock (the "Liquidation Payment") on ------------------- the date of such Liquidation plus (ii) all dividends accrued since the previous Compounding Date. If the assets of the Corporation available for distribution to the holders of shares of Series D Preferred Stock shall be insufficient to permit payment in full to such holders of the sums which such holders are entitled to receive in such case, then all of the assets available for distribution to holders of shares of Series D Preferred Stock shall be distributed among and paid to such holders ratably in proportion to the amounts that would be payable to such holders if such assets were sufficient to permit payment in full. (b) Change of Control. In the event of a Change of ----------------- Control, the holders of shares of Series D Preferred Stock shall be paid for each share of Series D Preferred Stock held thereby, an amount equal to the sum of (x) the Liquidation Payment plus (y) all dividends that accrue and compound ---- pursuant to Section 3(b). Such amount shall be paid in the form of consideration paid in such Change of Control on the closing date of such Change of Control. (c) Participating Payment. --------------------- (i) Upon the completion of the distribution required by Section 4(a) or Section 4(b) above, and any other distribution to any other class or series of Capital Stock of the Corporation ranking senior to the Common Stock, if assets remain in the Corporation, the remaining assets of the Corporation available for distribution to stockholders shall be distributed among the holders of shares of Series D Preferred Stock, the holders of shares of any series of preferred stock entitled to a participating payment and the holders of Common Stock pro rata based on the number of shares of the Common Stock held by each (assuming conversion of all such Series D Preferred Stock in accordance with Section 7(a) below). (ii) Notwithstanding anything to the contrary set forth in subsection (b) above, no Liquidation Payment shall be paid pursuant to clause (x) of subsection (b) above and no accrued dividends shall be paid pursuant to clause (y) of subsection (b) above if either (A) the price per share paid for each share of Series D Preferred Stock in such Change of Control (had each share of Series D Preferred Stock converted into Common Stock immediately prior to the consummation of such Change of Control) equals not less than the product of (i) four multiplied by (ii) the Accreted Value or (B) the average ---------- -- closing price per share of the Common Stock as reported on NASDAQ or other nationally recognized securities exchange on which the shares of Common Stock principally trade is, for at least sixty (60) consecutive trading days, not less than the product of (i) four multiplied by (ii) the Accreted Value. ---------- -- 4 (d) Notice. Written notice of a Liquidation or Change ------ of Control stating a payment or payments and the place where such payment or payments shall be payable, shall be delivered in person, mailed by certified mail, return receipt requested, mailed by overnight mail or sent by telecopier, not less than ten (10) days prior to the earliest payment date stated therein, to the holders of record of shares of Series D Preferred Stock, such notice to be addressed to each such holder at its address as shown by the records of the Corporation. 5. Redemption. ---------- (a) Optional Redemption. ------------------- (i) Optional Redemption Period. The -------------------------- Corporation shall not have any right to redeem any shares of the Series D Preferred Stock on or prior to the fourth anniversary of the Closing Date. If on any date after the fourth anniversary of the Closing Date but prior to the Automatic Redemption Date, the average closing price per share of the Common Stock, as reported on NASDAQ or other nationally recognized securities exchange on which the shares of Common Stock trade, for any sixty (60) consecutive trading days after such fourth anniversary date, equals or exceeds four hundred percent (400%) of the Accreted Value (the "Optional Redemption Measurement ------------------------------- Window"), the Corporation shall have the right, at its sole option and election, - ------ to redeem (unless otherwise prevented by law) within thirty (30) days following such Optional Redemption Measurement Window (the "Optional Redemption Period"), -------------------------- all, but not less than all, of the outstanding shares of Series D Preferred Stock in cash, at a price per share (the "Optional Redemption Price") equal to ------------------------- the sum of the Accreted Value plus all dividends that accrue, compound and are ---- payable pursuant to Section 3(b). (ii) Optional Redemption Payment. Written --------------------------- notice of any election by the Corporation to redeem the shares of Series D Preferred Stock pursuant to Section 5(a) and the closing date prior to the expiration of the Optional Redemption Period selected for such redemption (the "Optional Redemption Date") shall be delivered in person, mailed by certified ------------------------ mail, return receipt requested, mailed by overnight mail or sent by telecopier not less than ten (10), nor more than thirty (30), days prior to such Optional Redemption Date to the holders of record of the shares of Series D Preferred Stock, such notice to be addressed to each such holder at its address as shown in the records of the Corporation. The Optional Redemption Price shall be made with respect to each share of Series D Preferred Stock by wire transfer of immediately available funds as promptly as practicable and, in any event, within seven (7) days after receipt by the Corporation of the Series D Preferred Stock certificates to accounts designated in writing by the holders of such shares of Series D Preferred Stock after surrender of the Series D Preferred Stock certificates pursuant to the following sentence. Upon notice from the Corporation, each holder of shares of Series D Preferred Stock so redeemed shall promptly surrender to the Corporation, at any place where the Corporation shall maintain a transfer agent for its shares of Series D Preferred Stock, certificates representing the shares so redeemed, duly endorsed in blank or accompanied by proper instruments of transfer. Notwithstanding anything to the contrary set forth in this Certificate of Designation, any holder of Series D Preferred Stock may convert its 5 shares of Series D Preferred Stock pursuant to Section 7(a) until the Optional Redemption Price has been paid in full by the Corporation to such holder. (iii) Termination of Rights. If shares of Series D --------------------- Preferred Stock are redeemed in full on the Optional Redemption Date, then after the Optional Redemption Date, all rights of any holder of shares of Series D Preferred Stock shall cease and terminate, and such shares of Series D Preferred Stock shall no longer be deemed to be outstanding; provided, however, that, if -------- ------- the Corporation defaults in the payment in full of the Optional Redemption Price, then, subject to Section 5(b), the Corporation may not redeem the shares of Series D Preferred Stock until the next Optional Redemption Measurement Window. (b) Automatic Redemption. -------------------- (i) Automatic Redemption Date and Payment. On the fifth ------------------------------------- anniversary of the Closing Date (the "Automatic Redemption Date"), all of the ------------------------- shares of Series D Preferred Stock shall automatically, with no further action required to be taken by the Corporation or the holder thereof, be redeemed (unless otherwise prevented by law) in cash, at a redemption price per share (the "Redemption Price") equal to the sum of the Accreted Value plus, all ---------------- ---- dividends accrued since the previous Compounding Date. Written notice of the Automatic Redemption Date shall be delivered in person, mailed by certified mail, return receipt requested, mailed by overnight mail or sent by telecopier not less than thirty (30), nor more than sixty (60), days prior to the Automatic Redemption Date to the holders of record of the shares of Series D Preferred Stock, such notice to be addressed to each such holder at its address as shown in the records of the Corporation. The Redemption Price shall be made with respect to each share of Series D Preferred Stock by wire transfer of immediately available funds as promptly as practicable and, in any event, within seven (7) days after receipt by the Corporation of the Series D Preferred Stock certificates to accounts designated in writing by the holders of such shares of Series D Preferred Stock after surrender of the Series D Preferred Stock certificates pursuant to the following sentence. Upon notice from the Corporation, each holder of such shares of Series D Preferred Stock so redeemed shall promptly surrender to the Corporation, at any place where the Corporation shall maintain a transfer agent for its shares of Series D Preferred Stock, certificates representing the shares so redeemed, duly endorsed in blank or accompanied by proper instruments of transfer. Notwithstanding anything to the contrary set forth in this Certificate of Designation, any holder of Series D Preferred Stock may convert its shares of Series D Preferred Stock pursuant to Section 7(a) hereof until the Redemption Price has been paid in full by the Corporation to any such holder. (ii) Termination of Rights. If the shares of Series D --------------------- Preferred Stock are redeemed in full on the Automatic Redemption Date, then after the Automatic Redemption Date, all rights of any holder of such shares of Series D Preferred Stock shall cease and terminate, and such shares of Series D Preferred Stock shall no longer be deemed to be outstanding, whether or not the certificates representing such shares have been received by the Corporation; provided, however, that, if the Corporation - -------- ------- 6 defaults in the payment in full of the Redemption Price, the rights of the holders of shares of Series D Preferred Stock shall continue until the Corporation cures such default. (iii) Insufficient Funds for Redemption. If the --------------------------------- funds of the Corporation available for redemption of the shares of Series D Preferred Stock on the Automatic Redemption Date are insufficient to redeem in full the shares of Series D Preferred Stock, the holders of shares of Series D Preferred Stock shall share ratably in any funds available by law for redemption of such shares according to the respective amounts which would be payable with respect to the number of shares owned by them if the shares to be so redeemed on such Automatic Redemption Date were redeemed in full. Any shares of Series D Preferred Stock that the Corporation does not redeem on the Automatic Redemption Date due to insufficient funds shall continue to be outstanding until redeemed and dividends on such shares shall continue to accrue and cumulate until redeemed. The Corporation shall in good faith use all commercially reasonable efforts as expeditiously as possible to eliminate, or obtain an exception, waiver or exemption from, any and all restrictions that prevented the Corporation from paying the Redemption Price and redeeming all of the shares of Series D Preferred Stock. At any time thereafter when additional funds of the Corporation are available by law for the redemption of the shares of Series D Preferred Stock, such funds shall be used as promptly as practicable to redeem the balance of such shares, or such portion thereof for which funds are available, on the basis set forth above. 6. Voting Rights; Election of Directors. ------------------------------------ (a) General. In addition to the voting rights to ------- which the holders of Series D Preferred Stock are entitled under or granted by California law, the holders of Series D Preferred Stock shall be entitled to vote, in person or by proxy, at a special or annual meeting of stockholders on all matters entitled to be voted on by holders of shares of Common Stock voting together as a single class with the Common Stock (and with other shares entitled to vote thereon, if any). With respect to any such vote, each share of Series D Preferred Stock shall entitle the holder thereof to cast that number of votes as is equal to the number of votes that such holder would be entitled to cast had such holder converted its shares of Series D Preferred Stock into shares of Common Stock pursuant to Section 7(a) below on the record date for determining the stockholders of the Corporation eligible to vote on any such matters. (b) Directors. As long as at least 500,000 --------- shares of Series D Preferred Stock are outstanding, if General Atlantic Partners 74, L.P., GAP Coinvestment Partners II, L.P., GapStar, LLC, GAPCO GmbH & Co. KG and/or any Affiliate thereof in the aggregate own at least a majority of the outstanding shares of Series D Preferred Stock, then the holders of shares of Series D Preferred Stock, voting as a separate class, shall be entitled to elect one (1) director of the Corporation. (c) Elections. As long as at least 500,000 --------- shares of Series D Preferred Stock are outstanding, the Series D Preferred Stock shall vote together as a single class with the Common Stock (and all other classes and series of stock of the Corporation entitled to vote thereon, if any) with respect to the election of all of the other 7 directors of the Corporation. If the conditions set forth in Section 6(b) necessary for the holders of shares of Series D Preferred Stock to vote as a separate class for the election of one director are not satisfied, then the Series D Preferred Stock shall vote together as a single class with the Common Stock (and all other classes and series of stock of the Corporation entitled to vote thereon, if any) with respect to the election of all of the directors of the Corporation. At any meeting held for the purpose of electing directors pursuant to Section 6(b) at a time when the holders of shares of Series D Preferred Stock are entitled to vote as a separate class for the election of one director, the presence in person or by proxy of the holders of a majority of the shares of Series D Preferred Stock then outstanding shall constitute a quorum of the Series D Preferred Stock for the election of the director to be elected solely by the holders of shares of Series D Preferred Stock; the holders of shares of Series D Preferred Stock shall be entitled to cast one vote per share of Series D Preferred Stock in any such election; and the director to be elected exclusively by the holders of shares of Series D Preferred Stock shall be elected by the affirmative vote of the holders of a majority of the outstanding shares of Series D Preferred Stock. A vacancy in a directorship filled by the holders of the Series D Preferred Stock voting as a separate class pursuant to this Section 6(c) shall be filled only by vote or written consent of the holders of shares of Series D Preferred Stock. The director elected pursuant to Section 6(b) may not be removed without the consent of a majority of the holders of shares of Series D Preferred Stock. (d) Major Actions. Notwithstanding anything to ------------- the contrary set forth in the Articles of Incorporation or the By-laws of the Corporation, the affirmative vote of the holders of a majority of the outstanding shares of Series D Preferred Stock voting as a separate class shall be a prerequisite to: (i) any amendment, modification or restatement of the Articles of Incorporation or the By-laws of the Corporation; (ii) the issuance, reservation for issuance or authorization of any Capital Stock of the Corporation or any right or option to acquire shares of Capital Stock ranking senior to the shares of Series D Preferred Stock or any increase or decrease in the authorized number of shares of Series D Preferred Stock, provided that the Corporation may issue options or shares pursuant to the Stock Option Plans; (iii) the redemption of any Junior Stock other than the repurchase of unvested stock options or restricted stock from employees, officers, directors, or consultants of the Corporation upon termination of service; (iv) any declaration, distribution or payment of any dividend or other distribution to any Junior Stock; (v) the issuance, incurrence, assumption or guarantee by the Corporation or any Subsidiary of the Corporation of any funded Indebtedness in excess of $25 million (excluding capital leases incurred in the ordinary course of business); and 8 (vi) any amendment to this Section 6(d). 7. Conversion. ---------- (a) Optional Conversion. Any holder of shares of ------------------- Series D Preferred Stock shall have the right, at its option, at any time and from time to time, to convert, subject to the terms and provisions of this Section 7, any or all of such holder's shares of Series D Preferred Stock into such number of fully paid and non-assessable shares of Common Stock as is equal to the product of (i) the number of shares of Series D Preferred Stock being so converted multiplied by (ii) the quotient of (x) the sum of the Accreted Value ---------- -- plus all dividends accrued since the previous Compounding Date divided by (y) - ---- ------- -- the Conversion Price, subject to adjustment as provided in Section 7(c) below. Such conversion right shall be exercised by the surrender of certificate(s) representing the shares of Series D Preferred Stock to be converted to the Corporation at any time during usual business hours at its principal place of business maintained by it (or such other office or agency of the Corporation as the Corporation may designate by notice in writing to the holders of shares of Series D Preferred Stock), accompanied by written notice that the holder elects to convert such shares of Series D Preferred Stock and specifying the name or names (with address) in which a certificate or certificates for shares of Common Stock are to be issued and (if so required by the Corporation) by a written instrument or instruments of transfer in form reasonably satisfactory to the Corporation duly executed by the holder or its duly authorized legal representative and transfer tax stamps or funds therefor, if required pursuant to Section 7(i) below. All certificates representing shares of Series D Preferred Stock surrendered for conversion shall be delivered to the Corporation for cancellation and canceled by it. As promptly as practicable after the surrender of any shares of Series D Preferred Stock, in any event within 7 days of the receipt of such certificates, the Corporation shall (subject to compliance with the applicable provisions of federal and state securities laws) deliver to the holder of such shares so surrendered certificate(s) representing the number of fully paid and nonassessable shares of Common Stock into which such shares are entitled to be converted. At the time of the surrender of such certificate(s), the Person in whose name any certificate(s) for shares of Common Stock shall be issuable upon such conversion shall be deemed to be the holder of record of such shares of Common Stock on such date, notwithstanding that the share register of the Corporation shall then be closed or that the certificates representing such Common Stock shall not then be actually delivered to such Person. (b) Termination of Rights. On the date of such --------------------- optional conversion pursuant to Section 7(a) above all rights with respect to the shares of Series D Preferred Stock so converted, including the rights, if any, to receive notices and vote, shall terminate, except only the rights of holders thereof to (i) receive certificates for the number of shares of Common Stock into which such shares of Series D Preferred Stock have been converted and (ii) exercise the rights to which they are entitled as holders of Common Stock. (c) (i) Dividend, Subdivision, Combination or ------------------------------------- Reclassification of Common Stock. In the event that the Corporation shall at any - -------------------------------- time or from time to time, prior to conversion of shares of Series D Preferred Stock (w) pay a 9 dividend or make a distribution on the outstanding shares of Common Stock payable in Capital Stock of the Corporation, (x) subdivide the outstanding shares of Common Stock into a larger number of shares, (y) combine the outstanding shares of Common Stock into a smaller number of shares or (z) issue any shares of its Capital Stock in a reclassification of the Common Stock (other than any such event for which an adjustment is made pursuant to another clause of this Section 7(c)), then, and in each such case, the Conversion Price in effect immediately prior to such event shall be adjusted (and any other appropriate actions shall be taken by the Corporation) so that the holder of any share of Series D Preferred Stock thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock or other securities of the Corporation that such holder would have owned or would have been entitled to receive upon or by reason of any of the events described above, had such share of Series D Preferred Stock been converted immediately prior to the occurrence of such event. An adjustment made pursuant to this Section 7(c)(i) shall become effective retroactively (x) in the case of any such dividend or distribution, to a date immediately following the close of business on the record date for the determination of holders of Common Stock entitled to receive such dividend or distribution or (y) in the case of any such subdivision, combination or reclassification, to the close of business on the day upon which such corporate action becomes effective. (ii) Certain Distributions. In case the --------------------- Corporation shall at any time or from time to time, prior to conversion of shares of Series D Preferred Stock, distribute to all holders of shares of the Common Stock (including any such distribution made in connection with a merger or consolidation in which the Corporation is the resulting or surviving Person and the Common Stock is not changed or exchanged) cash, evidences of indebtedness of the Corporation or another issuer, securities of the Corporation or another issuer or other assets (excluding cash dividends in which holders of shares of Series D Preferred Stock participate, in the manner provided in Section 3(c), dividends payable in shares of Common Stock for which adjustment is made under another paragraph of this Section 7(c) and any distribution in connection with an Excluded Transaction) or rights or warrants to subscribe for or purchase of any of the foregoing, then, and in each such case, the Conversion ---- Price then in effect shall be adjusted (and any other appropriate actions shall be taken by the Corporation) by multiplying the Conversion Price in effect immediately prior to the date of such distribution by a fraction (x) the numerator of which shall be the Current Market Price of the Common Stock immediately prior to the date of distribution less the then fair market value (as determined by the Board of Directors in the exercise of their fiduciary duties) of the portion of the cash, evidences of indebtedness, securities or other assets so distributed or of such rights or warrants applicable to one share of Common Stock and (y) the denominator of which shall be the Current Market Price of the Common Stock immediately prior to the date of distribution (but such fraction shall not be greater than one); provided, however, that no -------- ------- adjustment shall be made with respect to any distribution of rights or warrants to subscribe for or purchase securities of the Corporation if the holder of shares of Series D Preferred Stock would otherwise be entitled to receive such rights or warrants upon conversion at any time of shares of Series D Preferred Stock into Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective retroactively to a date 10 immediately following the close of business on the record date for the determination of stockholders entitled to receive such distribution. (iii) Other Changes. In case the Corporation ------------- at any time or from time to time, prior to the conversion of shares of Series D Preferred Stock, shall take any action affecting its Common Stock similar to or having an effect similar to any of the actions described in Sections 7(c)(i) or (ii) above or Section 7(f) below (but not including any action described in any such Section) and the Board of Directors in good faith determines that it would be equitable in the circumstances to adjust the Conversion Price as a result of such action, then, and in each such case, the Conversion Price shall be adjusted in such manner and at such time as the Board of Directors in good faith determines would be equitable in the circumstances (such determination to be evidenced in a resolution, a certified copy of which shall be mailed to the holders of shares of Series D Preferred Stock). (iv) No Adjustment. Notwithstanding ------------- anything herein to the contrary, no adjustment under this Section 7(c) need be made to the Conversion Price if the Corporation receives written notice from holders of a majority of the outstanding shares of Series D Preferred Stock that no such adjustment is required. (d) Abandonment. If the Corporation shall take a ----------- record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, and shall thereafter and before the distribution to stockholders thereof legally abandon its plan to pay or deliver such dividend or distribution, then no adjustment in the Conversion Price shall be required by reason of the taking of such record. (e) Certificate as to Adjustments. Upon any ----------------------------- adjustment in the Conversion Price, the Corporation shall within a reasonable period (not to exceed ten (10) Business Days) following any of the foregoing transactions deliver to each registered holder of shares of Series D Preferred Stock a certificate, signed by (i) the Chief Executive Officer of the Corporation and (ii) the Chief Financial Officer of the Corporation, setting forth in reasonable detail the event requiring the adjustment and the method by which such adjustment was calculated and specifying the increased or decreased Conversion Price then in effect following such adjustment. (f) Reorganization, Reclassification. In case of -------------------------------- any merger or consolidation of the Corporation (other than a Change of Control) or any capital reorganization, reclassification or other change of outstanding shares of Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value) (each, a "Transaction"), the ----------- Corporation shall execute and deliver to each holder of shares of Series D Preferred Stock at least ten (10) Business Days prior to effecting such Transaction a certificate, signed by (i) the Chief Executive Officer of the Corporation and (ii) the Chief Financial Officer of the Corporation, stating that the holder of each share of Series D Preferred Stock shall have the right to receive in such Transaction, in exchange for each share of Series D Preferred Stock, a security identical to (and not less favorable than) the Series D Preferred Stock, and provision shall be made 11 therefor in the agreement, if any, relating to such Transaction. Any certificate delivered pursuant to this Section 7(f) shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 7. The provisions of this Section 7(f) and any equivalent thereof in any such certificate similarly shall apply to successive transactions. (g) Notices. In case at any time or from time to time: ------- (w) the Corporation shall declare a dividend (or any other distribution) on its shares of Common Stock; (x) the Corporation shall authorize the granting to the holders of its Common Stock rights or warrants to subscribe for or purchase any shares of Capital Stock of any class or of any other rights or warrants; or (y) there shall be any Transaction; or then the Corporation shall mail to each holder of shares of Series D Preferred Stock at such holder's address as it appears on the transfer books of the Corporation, as promptly as possible but in any event at least ten (10) days prior to the applicable date hereinafter specified, a notice stating (A) the date on which a record is to be taken for the purpose of such dividend, distribution or granting of rights or warrants or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution or granting of rights or warrants are to be determined, or (B) the date on which such Transaction is expected to become effective and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their Common Stock for shares of stock or other securities or property or cash deliverable upon such Transaction. Notwithstanding the foregoing, in the case of any event to which Section 7(f) above is applicable, the Corporation shall also deliver the certificate described in Section 7(f) above to each holder of shares of Series D Preferred Stock at least ten (10) Business Days' prior to effecting such reorganization or reclassification as aforesaid. (h) Reservation of Common Stock. The Corporation shall at --------------------------- all times reserve and keep available for issuance upon the conversion of shares of Series D Preferred Stock, such number of its authorized but unissued shares of Common Stock as will from time to time be sufficient to permit the conversion of all outstanding shares of Series D Preferred Stock, and shall take all action to increase the authorized number of shares of Common Stock if at any time there shall be insufficient authorized but unissued shares of Common Stock to permit such reservation or to permit the conversion of all outstanding shares of Series D Preferred Stock; provided that (x) the holders of shares of Series D Preferred -------- Stock shall vote such shares in favor of any such action that requires a vote of stockholders and (y) such holders shall cause any directors elected by them pursuant to Section 6(b) above to vote in favor of any such action that requires a vote of the Board of Directors. 12 (i) No Conversion Tax or Charge. The issuance or delivery of --------------------------- certificates for Common Stock upon the conversion of shares of Series D Preferred Stock shall be made without charge to the converting holder of shares of Series D Preferred Stock for such certificates or for any tax in respect of the issuance or delivery of such certificates or the securities represented thereby, and such certificates shall be issued or delivered in the respective names of, or (subject to compliance with the applicable provisions of federal and state securities laws) in such names as may be directed by, the holders of the shares of Series D Preferred Stock converted; provided, however, that the -------- ------- Corporation shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any such certificate in a name other than that of the holder of the shares of Series D Preferred Stock converted, and the Corporation shall not be required to issue or deliver such certificate unless or until the Person or Persons requesting the issuance or delivery thereof shall have paid to the Corporation the amount of such tax or shall have established to the reasonable satisfaction of the Corporation that such tax has been paid. (j) Limitations on Conversions. Each holder of the Series D -------------------------- Preferred Stock's right to convert its shares of Series D Preferred Stock into shares of Common Stock shall not be limited by any notice delivered by the Corporation of any proposed redemption, Change of Control or any other event that notwithstanding this subsection (j) shall purport to limit such conversion right. 8. Certain Remedies. Any registered holder of shares of Series ---------------- D Preferred Stock shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Certificate of Designation and to enforce specifically the terms and provisions of this Certificate of Designation in any court of the United States or any state thereof having jurisdiction, this being in addition to any other remedy to which such holder may be entitled at law or in equity. 9. Business Day. If any payment shall be required by the terms ------------ hereof to be made on a day that is not a Business Day, such payment shall be made on the immediately succeeding Business Day. 10. Definitions. As used in this Certificate of Designation, the ----------- following terms shall have the following meanings (with terms defined in the singular having comparable meanings when used in the plural and vice versa), ---- ----- unless the context otherwise requires: "Accreted Value" shall mean as of any date, with respect to each share of Series D Preferred Stock, the Price Per Share plus the amount of ---- dividends that have accrued and compounded to such date pursuant to Section 3(a) of this Certificate of Designation. "Affiliate" shall mean any Person who is an "affiliate" as defined in Rule 12b-2 of the General Rules and Regulations under the Exchange Act. 13 "Automatic Redemption Date" shall have the meaning ascribed to it in Section 5(b) hereof. "Board of Directors" means the Board of Directors of the Corporation. "Business Day" means any day except a Saturday, a Sunday, or other day on which commercial banks in the State of New York or the State of California are authorized or required by law or executive order to close. "Capital Stock" means, with respect to any Person, any and all shares, interests, participations, rights in, or other equivalents (however designated and whether voting or non-voting) of, such Person's capital stock (including, without limitation, common stock and preferred stock) and any and all rights, warrants or options exchangeable for or convertible into such capital stock. "Change of Control" means (i) any merger, consolidation or other business combination transaction (or series of related transactions) in which the stockholders owning a majority of the voting securities of the Corporation prior to such transaction do not own a majority of the voting securities of the surviving entity, (ii) any tender offer, exchange offer or other transaction whereby any person or "group" other than the Investors obtains a majority of the outstanding shares of Common Stock, (iii) any proxy contest in which a majority of the Board of Directors of the Corporation (or persons appointed by such Board of Directors) prior to such contest do not constitute a majority of the Corporation's Board of Directors after such contest or (iv) any other transaction described in any stockholder rights agreement or "poison pill", if any, to which the Corporation is party, which may permit the holders of any rights or similar certificates to exercise the rights evidenced thereby. "Closing Date" means November 8, 2001. "Commission" means the United States Securities and Exchange Commission. "Common Stock" shall have the meaning ascribed to it in Section 2(a) hereof. "Common Stock Equivalent" shall mean any security or obligation which is by its terms convertible, exchangeable or exercisable into or for shares of Common Stock, including, without limitation, the Series D Preferred Stock, and any option, warrant or other subscription or purchase right with respect to Common Stock or any Common Stock Equivalent. "Contingent Obligation" means, as applied to any Person, any direct or indirect liability of that Person with respect to any Indebtedness, lease, dividend, guaranty, letter of credit or other obligation, contractual or otherwise the "primary obligation") of another Person (the "primary obligor"), whether or not contingent, (a) to purchase, repurchase or otherwise acquire such primary obligations or any property 14 constituting direct or indirect security therefor, (b) to advance or provide funds (i) for the payment or discharge or any such primary obligor or otherwise to maintain the net worth or solvency or any balance sheet item, level of income or financial condition of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, or (d) otherwise to assure or hold harmless the owner of any such primary obligation against loss or failure or inability to perform in respect thereof. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof. "Conversion Price" shall mean $1.05, as adjusted pursuant to Section 7(c). "Corporation" shall have the meaning ascribed to it in the first paragraph of this Certificate of Designation. "Current Market Price" per share of Capital Stock of any Person shall mean, as of the date of determination, (a) the average of the daily Market Price under clause (a), (b) or (c) of the definition thereof of such Capital Stock during the immediately preceding thirty (30) trading days ending on such date, and (b) if such Capital Stock is not then listed or admitted to trading on any national securities exchange or quoted in the over-the-counter market, then the Market Price under clause (d) of the definition thereof on such date. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder. "Excluded Transaction" means (a) any issuance of shares of stock or options to purchase shares of Common Stock pursuant to the Stock Option Plans and (b) any issuance of Common Stock (i) upon the conversion of shares of Series D Preferred Stock, (ii) as a dividend on shares of Series D Preferred Stock or (iii) upon conversion or exercise of any Common Stock Equivalents, or (c) any issuance of Common Stock in connection with any Liquidation Payment, (d) Capital Stock issued in consideration of an acquisition, approved by the Board of Directors, by the Company of another Person and (e) shares of Common Stock and Common Stock Equivalents issued in strategic transactions (which may not be private equity or venture capital financing transactions) approved by the Board of Directors to Persons that are not principally engaged in financial investing. "GAAP" means United States generally accepted accounting principles in effect from time to time. "Governmental Authority" means the government of any nation, state, city, locality or other political subdivision thereof. 15 "Indebtedness" means, as to any Person, (a) all obligations of such Person for borrowed money (including, without limitation, reimbursement and all other obligations with respect to surety bonds, letters of credit and bankers' acceptances, whether or not matured), (b) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable and accrued commercial or trade liabilities arising in the ordinary course of business, (c) all interest rate and currency swaps, caps, collars and similar agreements or hedging devices under which payments are obligated to be made by such Person, whether periodically or upon the happening of a contingency, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all obligations of such Person under leases which have been or should be, in accordance with GAAP, recorded as capital leases, (f) all indebtedness secured by any Lien (other than Liens in favor of lessors under leases other than leases included in clause (e)) on any property or asset owned or held by that Person regardless of whether the indebtedness secured thereby shall have been assumed by that Person or is non-recourse to the credit of that Person, and (g) any Contingent Obligation of such Person. "Junior Stock" shall have the meaning ascribed to it in Section 2(a) hereof. "Lien" means any mortgage, deed of trust, pledge, hypothecation, assignment, encumbrance, lien (statutory or other) or preference, priority, right or other security interest or preferential arrangement of any kind or nature whatsoever (excluding preferred stock and equity related preferences). "Liquidation" shall mean the voluntary or involuntary liquidation under applicable bankruptcy or reorganization legislation, or the dissolution or winding up of the Corporation. "Liquidation Payment" shall have the meaning ascribed to it in Section 4(a) hereof. "Market Price" shall mean, with respect to the Capital Stock of any Person, as of the date of determination, (a) if such Capital Stock is listed on a national securities exchange, the closing price per share of such Capital Stock on such date published in The Wall Street Journal (National Edition) or, ------------------------------------------ if no such closing price on such date is published in The Wall Street Journal ----------------------- (National Edition), the average of the closing bid and asked prices on such - ----------------- date, as officially reported on the principal national securities exchange on which such Capital Stock is then listed or admitted to trading; or (b) if such Capital Stock is not then listed or admitted to trading on any national securities exchange but is designated as a national market system security by the National Association of Securities Dealers, Inc., the last trading price of such Capital Stock on such date; or (c) if there shall have been no trading on such date or if such Capital Stock is not designated as a national market system security by the National Association of Securities Dealers, Inc., the average of the reported closing bid and asked prices of such Capital Stock on such date as shown by the National Market System of the National 16 Association of Securities Dealers, Inc. Automated Quotations System and reported by any member firm of the New York Stock Exchange selected by the Corporation; or (d) if none of (a), (b) or (c) is applicable, a market price per share determined mutually by the Board of Directors and the holders of a majority of the shares of Series D Preferred Stock or, if the Board of Directors and the holders of a majority of the shares of Series D Preferred Stock shall fail to agree, at the Corporation's expense by an appraiser chosen by the Board of Directors and reasonably acceptable to the holders of a majority of the shares of Series D Preferred Stock. Any determination of the Market Price by an appraiser shall be based on a valuation of the Corporation as an entirety without regard to any discount for minority interests or disparate voting rights among classes of Capital Stock. "Nasdaq" shall mean The Nasdaq Stock Market, Inc. "Optional Redemption Date" shall have the meaning ascribed to it in Section 5(a)(ii) hereof. "Optional Redemption Measurement Window" shall have the meaning ascribed to it in Section 5(a)(i) hereof. "Optional Redemption Period" shall have the meaning ascribed to it in Section 5(a)(i) hereof. "Optional Redemption Price" shall have the meaning ascribed to it in Section 5(a)(i) hereof. "Person" means any individual, firm, corporation, partnership, limited liability company, trust, incorporated or unincorporated association, joint venture, joint stock company, governmental body or other entity of any kind. "Price Per Share" means $13.75. "Redemption Price" shall have the meaning ascribed to it in Section 5(b) hereof. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. "Series D Preferred Stock" shall have the meaning ascribed to it in Section 1 hereof. "Stock Option Plans" means the Company's stock option plans and employee purchase plans approved by the Board of Directors, pursuant to which shares of restricted stock and options to purchase shares of Common Stock are reserved and available for grant to officers, directors, employees and consultants of the Corporation. 17 "Transaction" shall have the meaning ascribed to it in Section 7(f) hereof. [Remainder of page intentionally left blank] 18 IN WITNESS WHEREOF, the undersigned has executed and subscribed this certificate this __ day of November, 2001. _________________________________ Vice President _________________________________ Secretary EX-3 5 dex3.txt STOCK AND WARRANT PURCHASE AND EXCHANGE AGREEMENT EXHIBIT 3 ================================================================================ STOCK AND WARRANT PURCHASE AND EXCHANGE AGREEMENT among CRITICAL PATH, INC. GENERAL ATLANTIC PARTNERS 74, L.P., GAP COINVESTMENT PARTNERS II, L.P., GAPSTAR, LLC and THE OTHER PARTIES NAMED HEREIN ------------------------------ Dated: November 8, 2001 ------------------------------ ================================================================================ Table of Contents -----------------
Page ---- ARTICLE I DEFINITIONS ................................................. 2 1.1 Definitions ................................................. 2 ARTICLE II PURCHASE AND SALE OF SERIES D PREFERRED STOCK; EXCHANGE ..... 9 2.1 Purchase and Sale of Series D Preferred Stock ............... 9 2.2 Exchange of GAP Sub Notes ................................... 9 2.3 Purchase and Sale of Warrants ............................... 9 2.4 Certificates of Designation ................................. 10 2.5 Use of Proceeds ............................................. 10 2.6 Closing ..................................................... 10 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY ............... 11 3.1 Corporate Existence and Power ............................... 11 3.2 Authorization; No Contravention ............................. 11 3.3 Governmental Authorization; Third Party Consents ............ 12 3.4 Binding Effect .............................................. 12 3.5 Litigation .................................................. 12 3.6 Compliance with Laws ........................................ 12 3.7 Capitalization .............................................. 13 3.8 No Default or Breach; Contractual Obligations ............... 14 3.9 Title to Properties ......................................... 14 3.10 Reports; Financial Statements ............................... 14 3.11 Taxes ....................................................... 15 3.12 No Material Adverse Change; Ordinary Course of Business ..... 15 3.13 Private Offering ............................................ 16 3.14 Labor Relations ............................................. 16 3.15 Employee Benefit Plans ...................................... 16 3.16 Liabilities ................................................. 17 3.17 Intellectual Property ....................................... 18 3.18 Privacy of Customer Information ............................. 19 3.19 Potential Conflicts of Interest ............................. 19 3.20 Trade Relations ............................................. 20 3.21 Outstanding Borrowing ....................................... 20 3.22 Broker's, Finder's or Similar Fees .......................... 20 3.23 CCC Section ................................................. 20 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS ............... 20 4.1 Existence and Power ......................................... 20 4.2 Authorization; No Contravention ............................. 21 4.3 Governmental Authorization; Third Party Consents ............ 21
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Page ---- 4.4 Binding Effect ........................................... 21 4.5 Purchase for Own Account ................................. 21 4.6 Restricted Securities .................................... 22 4.7 Accredited Investor ...................................... 22 4.8 Experience. .............................................. 22 4.9 Access to Information .................................... 22 4.10 General Solicitation ..................................... 23 4.11 Reliance ................................................. 23 ARTICLE V ACTIONS TO BE TAKEN BY THE COMPANY AT THE CLOSING ............ 23 5.1 Secretary's Certificate .................................. 23 5.2 Subject Shares ........................................... 23 5.3 Warrants ................................................. 24 5.4 Opinion of Counsel ....................................... 24 5.5 MOU ...................................................... 24 5.6 Amendment to Shareholder Rights Plan ..................... 24 ARTICLE VI DELIVERIES BY THE PURCHASERS ................................ 24 6.1 Payment for Subject Shares and Warrants .................. 24 ARTICLE VII INDEMNIFICATION ............................................ 24 7.1 Indemnification .......................................... 24 7.2 Notification ............................................. 25 7.3 Contribution ............................................. 26 ARTICLE VIII AFFIRMATIVE COVENANTS ..................................... 26 8.1 Financial Statements and Other Information ............... 26 8.2 FIRPTA Certificate ....................................... 27 8.3 Reservation of Common Stock .............................. 27 8.4 Books and Records ........................................ 28 8.5 Inspection ............................................... 28 8.6 Vectis Agreement ......................................... 28 8.7 NASDAQ Matters. .......................................... 28 ARTICLE IX TERMINATION OF AGREEMENT .................................... 29 9.1 Termination .............................................. 29 ARTICLE X MISCELLANEOUS ................................................ 29 10.1 Survival of Representations and Warranties ............... 29 10.2 Notices .................................................. 30 10.3 Successors and Assigns; Third Party Beneficiaries ........ 31 10.4 Amendment and Waiver ..................................... 31 10.5 Counterparts ............................................. 32 10.6 Headings ................................................. 32 10.7 GOVERNING LAW ............................................ 32 10.8 Severability ............................................. 32
ii Page ---- 10.9 Rules of Construction..................................... 32 10.10 Entire Agreement.......................................... 32 10.11 Fees...................................................... 33 10.12 Publicity; Confidentiality................................ 33 10.13 Further Assurances........................................ 33 10.14 Legal Representation...................................... 34 iii EXHIBITS A-1 Form of Escrow Agreement A Form of Warrant B Form of Articles of Incorporation C Form of By-laws D Form of Certificate of Designation E Form of Registration Rights Agreement F Form of Stockholders Agreement G Form of Pillsbury Winthrop LLP Opinion H Memorandum of Understanding SCHEDULES I Coinvestors 2.1 Purchased Shares and Purchase Price 2.2 Exchange Shares and Face Amount 2.3 Warrant Shares and Purchase Price 3.5 Litigation 3.19 Potential Conflicts of Interest 3.21 Outstanding Borrowing iv STOCK AND WARRANT PURCHASE AND EXCHANGE AGREEMENT STOCK AND WARRANT PURCHASE AND EXCHANGE AGREEMENT, dated November 8, 2001 (this "Agreement"), among Critical Path, Inc., a California --------- corporation (the "Company"), General Atlantic Partners 74, L.P., a Delaware ------- limited partnership ("GAP LP"), GAP Coinvestment Partners II, L.P., a Delaware ------ limited partnership ("GAP Coinvestment"), GapStar, LLC, a Delaware limited ---------------- liability company ("GapStar" and, collectively with GAP LP and GAP Coinvestment, ------- the "GAP Purchasers"), and the Persons listed on Schedule I hereto (the -------------- ---------- "Coinvestors" and, together with the GAP Purchasers, the "Purchasers"). - ------------ ---------- WHEREAS, upon the terms and conditions set forth in this Agreement, the Company proposes to issue and sell to (i) each of the Purchasers, the aggregate number of shares, par value $0.001 per share, of Series D Cumulative Redeemable Convertible Participating Preferred Stock of the Company (the "Series D Preferred Stock") set forth opposite the name of such Purchaser ------------------------ on Schedule 2.1 hereto, for the aggregate purchase price set forth opposite such ------------ Purchaser's name on Schedule 2.1 hereto, and (ii) each GAP Purchaser, a warrant ------------ to purchase, subject to the terms and conditions thereof, the aggregate number of shares, par value $0.001 per share, of common stock of the Company (the "Common Stock") set forth opposite such GAP Purchaser's name on Schedule 2.3 ------------ ------------ hereto (the "Warrants"), at an exercise price equal to $1.05, containing the -------- terms and conditions set forth in the form of warrant attached hereto as Exhibit ------- A, for the purchase price set forth opposite such GAP Purchaser's name on - - Schedule 2.3 hereto; and - ------------ WHEREAS, upon the terms and conditions set forth in this Agreement, the Company proposes to issue to each GAP Purchaser the aggregate number of shares of Series D Preferred Stock set forth opposite the name of such GAP Purchaser on Schedule 2.2 hereto in exchange for the surrender to the ------------ Company by such GAP Purchaser of its GAP Sub Notes (as hereinafter defined) in the face amount set forth opposite such GAP Purchaser's name on Schedule 2.2 ------------ hereto; and WHEREAS, each share of Series D Preferred Stock is convertible (subject to adjustment) into one share of Common Stock; and WHEREAS, the Company and the Purchasers are simultaneously with the execution and delivery of this Agreement at the Closing (as defined below) entering into an Escrow Agreement, dated the date hereof, and attached as Exhibit A-1 hereto (the "Escrow Agreement") among the Company, the Purchasers - ----------- ---------------- and Pillsbury Winthrop LLP, as Escrow Agent (the "Escrow Agent"), pursuant to ------------ which the parties thereto have agreed to and deposit in escrow all of the executed Transaction Documents (as defined below), the GAP Sub Notes (as defined below), the Warrants (as defined below), the Subject Shares (as defined below), the aggregate cash purchase price payable by the Purchasers pursuant to Section 2.6 of this Agreement and certain ancillary documents in escrow with 2 the Escrow Agent, to be held and released only in accordance with the Escrow Agreement. NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS ----------- 1.1 Definitions. As used in this Agreement, and unless the ----------- context requires a different meaning, the following terms have the meanings indicated: "Affiliate" shall mean any Person who is an "affiliate" as --------- defined in Rule 12b-2 of the General Rules and Regulations under the Exchange Act. "Agreement" means this Agreement as the same may be amended, --------- supplemented or modified in accordance with the terms hereof. "Articles of Incorporation" means the Articles of ------------------------- Incorporation of the Company in effect on the Closing Date and attached hereto as Exhibit B. --------- "Board of Directors" means the Board of Directors of the ------------------ Company. "Business Day" means any day other than a Saturday, Sunday or ------------ other day on which commercial banks in the State of New York or the State of California are authorized or required by law or executive order to close. "By-laws" means the by-laws of the Company in effect on the ------- Closing Date and attached hereto as Exhibit C. --------- "Certificate of Designation" means the Certificate of -------------------------- Designation with respect to the Series D Preferred Stock adopted by the Board of Directors and duly filed with the Secretary of State of the State of California on or before the Closing Date substantially in the form attached hereto as Exhibit D. - --------- "Claims" has the meaning set forth in Section 3.5 of this ------ Agreement. "Closing" has the meaning set forth in Section 2.6(a) of this ------- Agreement. "Closing Date" has the meaning set forth in Section 2.6(a) of ------------ this Agreement. "Code" means the Internal Revenue Code of 1986, as amended, or ---- any successor statute thereto. 3 "Coinvestors" has the meaning set forth in the preamble to ----------- this Agreement. "Commission" means the United States Securities and Exchange ---------- Commission or any similar agency then having jurisdiction to enforce the Securities Act and Exchange Act. "Common Stock" has the meaning set forth in the recitals to ------------ this Agreement. "Commonly Controlled Entity" means any entity which is under -------------------------- common control with the Company within the meaning of Code section 414(b), (c), (m), (o) or (t). "Company" has the meaning set forth in the preamble to this ------- Agreement. "Company Plans" has the meaning set forth in Section 3.15 of ------------- this Agreement. "Condition of the Company" means the assets, business, ------------------------ properties, operations or condition (financial or otherwise) of the Company and its Subsidiaries, taken as a whole. "Contingent Obligation" means, as applied to any Person, any --------------------- direct or indirect liability of that Person with respect to any Indebtedness, lease, dividend, guaranty, letter of credit or other obligation, contractual or otherwise (the "primary obligation") of another Person (the "primary obligor"), ------------------ --------------- whether or not contingent, (a) to purchase, repurchase or otherwise acquire such primary obligations or any property constituting direct or indirect security therefor, (b) to advance or provide funds (i) for the payment or discharge of any such primary obligation, or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet item, level of income or financial condition of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, or (d) otherwise to assure or hold harmless the owner of any such primary obligation against loss or failure or inability to perform in respect thereof. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof. "Contractual Obligations" means, as to any Person, any ----------------------- provision of any security issued by such Person or of any agreement, undertaking, contract, indenture, mortgage, deed of trust or other instrument to which such Person is a party or by which it or any of its property is bound. "Copyrights" means any foreign or United States copyright ---------- registrations and applications for registration thereof, and any non-registered copyrights. 4 "Environmental Laws" means federal, state, local and foreign ------------------ laws, principles of common laws, civil laws, regulations, and codes, as well as orders, decrees, judgments or injunctions, issued, promulgated, approved or entered thereunder relating to pollution, protection of the environment or public health and safety. "ERISA" means the Employee Retirement Income Security Act of ----- 1974, as amended. "Escrow Agent" has the meaning set forth in the recitals ------------ hereto. "Escrow Agreement" has the meaning set forth in the recitals ---------------- hereto. "Escrow Release Date" has the meaning set forth in the Escrow ------------------- Agreement. "Exchange" has the meaning set forth in Section 2.2 of this -------- Agreement. "Exchange Act" means the Securities Exchange Act of 1934, as ------------ amended, and the rules and regulations of the Commission thereunder. "Exchange Shares" has the meaning set forth in Section 2.2 of --------------- this Agreement. "Financial Statements" has the meaning set forth in Section -------------------- 3.10 of this Agreement. "GAAP" means United States generally accepted accounting ---- principles in effect from time to time. "GAP Coinvestment" has the meaning set forth in the preamble ---------------- to this Agreement. "GAP Coinvestment Warrant" means the Warrant to be issued to ------------------------ GAP Coinvestment. "GAP LLC" means General Atlantic Partners, LLC, a Delaware ------- limited liability company and the general partner of GAP LP and the managing member of GapStar, and any successor to such entity. "GAP LP" has the meaning set forth in the preamble to this ------ Agreement. "GAP LP Warrant" means the warrant to be issued to GAP LP. -------------- "GAP Purchasers" has the meaning set forth in the preamble to -------------- this Agreement. "GapStar" has the meaning set forth in the preamble to this ------- Agreement. 5 "GapStar Warrant" means the warrant to be issued to GapStar. --------------- "GAP Sub Notes" means the 5 3/4% Convertible Subordinated ------------- Notes due April 1, 2005 issued by the Company pursuant to the Company's Indenture, dated March 31, 2000, purchased by the GAP Purchasers for the purchase price set forth on Schedule 2.2 hereto and held by the GAP Purchasers ------------ as of the Closing Date in the face amounts set forth on Schedule 2.2 hereto. ------------ "Governmental Authority" means the government of any nation, ---------------------- state, city, locality or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing. "Indebtedness" means, as to any Person, (a) all obligations of ------------ such Person for borrowed money (including, without limitation, reimbursement and all other obligations with respect to surety bonds, letters of credit and bankers' acceptances, whether or not matured), (b) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable and accrued commercial or trade liabilities arising in the ordinary course of business, (c) all interest rate and currency swaps, caps, collars and similar agreements or hedging devices under which payments are obligated to be made by such Person, whether periodically or upon the happening of a contingency, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all obligations of such Person under leases which have been or should be, in accordance with GAAP, recorded as capital leases, (f) all indebtedness secured by any Lien (other than Liens in favor of lessors under leases other than leases included in clause (e)) on any property or asset owned or held by that Person regardless of whether the indebtedness secured thereby shall have been assumed by that Person or is non-recourse to the credit of that Person, and (g) any Contingent Obligation of such Person. "Indemnified Party" has the meaning set forth in Section 7.1 ----------------- of this Agreement. "Indemnifying Party" has the meaning set forth in Section 7.1 ------------------ of this Agreement. "Intellectual Property" has the meaning set forth in Section --------------------- 3.17 of this Agreement. "Internet Assets" means any Internet domain names and other --------------- computer user identifiers and any rights in and to sites on the worldwide web, including rights in and to any text, graphics, audio and video files and html or other code incorporated in such sites. 6 "Knowledge" means the knowledge of the Company and David C. --------- Hayden, Executive Chairman, William E. McGlashan, Jr., President and Chief Operating Officer, Pierre Van Beneden, President, Laureen De Buono, Chief Financial Officer, Mike Serbinis, Chief Technology Officer, Sue Barsamian, Senior Vice President Product Marketing, Kent Bridges, Senior Vice President United States Sales, Michael Zukerman, Senior Vice President, General Counsel, Larry Weber, Director, Jeffrey T. Webber, Director, Steven Richards, Director, Kevin O'Keefe, Vice President Hosted Business, Ian Goldsmith, Sales Executive after due inquiry. "Liabilities" has the meaning set forth in Section 3.16 of this ----------- Agreement. "Lien" means any mortgage, deed of trust, pledge, hypothecation, ---- assignment, encumbrance, lien (statutory or other) or preference, priority, right or other security interest or preferential arrangement of any kind or nature whatsoever (excluding preferred stock and equity related preferences). "Losses" has the meaning set forth in Section 7.1 of this ------ Agreement. "Material Contractual Obligations" has the meaning set forth in -------------------------------- Section 3.8 of this Agreement. "MOU" means that certain Memorandum of Understanding dated the --- date hereof in the form attached as Exhibit H hereto that memorializes the --------- agreement in principle of the parties therein to settle on the terms set forth therein the litigations encaptioned In Re Critical Path Inc. Securities ----------------------------------- Litigation Case (No. C-01-0551 WHO). - ---------------------------------- "Nasdaq" means The Nasdaq Stock Market, Inc. ------ "Nasdaq Escrow Approval Condition" has the meaning set forth in -------------------------------- the Escrow Agreement. "Orders" has the meaning set forth in Section 3.2 of this ------ Agreement. "Patents" means any foreign or United States patents and patent ------- applications, including any divisions, continuations, continuations-in-part, substitutions or reissues thereof, whether or not patents are issued on such applications and whether or not such applications are modified, withdrawn or resubmitted. "Person" means any individual, firm, corporation, partnership, ------ trust, incorporated or unincorporated association, joint venture, joint stock company, limited liability company, Governmental Authority or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity. "Plan" means any employee benefit plan, arrangement, policy, ---- program, agreement or commitment (whether or not an employee plan within the meaning of section 3(3) of ERISA), including, without limitation, any employment, consulting or deferred compensation agreement, executive compensation, bonus, incentive, pension, 7 profit-sharing, savings, retirement, stock option, stock purchase or severance pay plan, any life, health, disability or accident insurance plan, whether oral or written, whether or not subject to ERISA, as to which the Company or any Commonly Controlled Entity has or in the future could have any direct or indirect, actual or contingent liability. "Proxy Statement" has the meaning set forth in Section 8.7(b). --------------- "Purchased Shares" has the meaning set forth in Section 2.1 of ---------------- this Agreement. "Purchasers" has the meaning set forth in the preamble to this ---------- Agreement. "Registration Rights Agreement" means the Registration Rights ----------------------------- Agreement substantially in the form attached hereto as Exhibit E. --------- "Requirements of Law" means, as to any Person, any law (including ------------------- Environmental Laws), statute, treaty, rule, regulation, right, privilege, qualification, license or franchise or determination of an arbitrator or a court or other Governmental Authority or stock exchange, in each case applicable or binding upon such Person or any of its property or to which such Person or any of its property is subject or pertaining to any or all of the transactions contemplated or referred to herein. "Retiree Welfare Plan" means any welfare plan (as defined in -------------------- Section 3(1) of ERISA) that provides benefits to current or former employees beyond their retirement or other termination of service (other than coverage mandated by Section 4980A of the Code, commonly referred to as "COBRA," the cost ----- of which is fully paid by the current or former employee or his or her dependents). "SEC Reports" has the meaning set forth in Section 3.10 of this ----------- Agreement. "Securities" has the meaning set forth in Section 4.8 of this ---------- Agreement. "Securities Act" means the Securities Act of 1933, as amended, -------------- and the rules and regulations of the Commission thereunder. "Series D Preferred Stock" has the meaning set forth in the ------------------------ recitals to this Agreement. "Shareholder Rights Plan" means the Preferred Rights Agreement, ----------------------- dated as of March 19, 2001, between the Company and Computershare Trust Company, Inc., as Rights Agent. "Software" means any computer software programs, source code, -------- object code, data and documentation, including, without limitation, any computer software programs that incorporate and run the Company's pricing models, formulae and algorithms. 8 "Stock Equivalents" means any security or obligation which is by ----------------- its terms convertible into or exchangeable or execrable for shares of common stock or other capital stock of the Company, and any option, warrant or other subscription or purchase right with respect to common stock or such other capital stock. "Stock Option Plans" means the Company's stock option plans and ------------------ employee purchase plans pursuant to which shares of restricted stock and options to purchase shares of Common Stock are reserved and available for grant to officers, directors, employees and consultants of the Company. "Stockholders Agreement" means the Stockholders Agreement ---------------------- substantially in the form attached hereto as Exhibit F. --------- "Subject Shares" has the meaning set forth in Section 2.2 of this -------------- Agreement. "Subsidiaries" means, as of the relevant date of determination, ------------ with respect to any Person, a corporation or other Person of which 50% or more of the voting power of the outstanding voting equity securities or 50% or more of the outstanding economic equity interest is held, directly or indirectly, by such Person. Unless otherwise qualified, or the context otherwise requires, all references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer ---------- ------------ to a Subsidiary or Subsidiaries of the Company. "Taxes" means any federal, state, provincial, county, local, ----- foreign and other taxes (including, without limitation, income, profits, windfall profits, alternative, minimum, accumulated earnings, personal holding company, capital stock, premium, estimated, excise, sales, use, occupancy, gross receipts, franchise, ad valorem, severance, capital levy, production, transfer, withholding, employment, unemployment compensation, payroll and property taxes, import duties and other governmental charges and assessments), whether or not measured in whole or in part by net income, and including deficiencies, interest, additions to tax or interest, and penalties with respect thereto, and including expenses associated with contesting any proposed adjustments related to any of the foregoing. "Trade Secrets" means any trade secrets, research records, ------------- processes, procedures, manufacturing formulae, technical know-how, technology, blue prints, designs, plans, inventions (whether patentable and whether reduced to practice), invention disclosures and improvements thereto. "Trademarks" means any foreign or United States trademarks, ---------- service marks, trade dress, trade names, brand names, designs and logos, corporate names, product or service identifiers, whether registered or unregistered, and all registrations and applications for registration thereof. 9 "Transaction Documents" means, collectively, this Agreement, the --------------------- Escrow Agreement, the Stockholders Agreement, the Registration Rights Agreement and the Warrants. "Warrant Shares" has the meaning set forth in Section 2.3 of this -------------- Agreement. "Warrants" has the meaning set forth in the recitals to this -------- Agreement. "Vectis Agreement" means the following agreements between the ---------------- Company and Vectis Group, LLC: (i) Advisory Services Letter Agreement, dated as of May 30, 2001, (ii) Strategic Analysis Letter Agreement, dated March 29, 2001 and (iii) Finder and Advisory Letter Agreement, dated as of March 29, 2001. ARTICLE II PURCHASE AND SALE OF SERIES D PREFERRED STOCK; EXCHANGE ------------------------------------------------------- 2.1 Purchase and Sale of Series D Preferred Stock. On the Closing --------------------------------------------- Date, the Company agrees to deposit with the Escrow Agent, to be held in escrow in accordance with the terms of the Escrow Agreement and to be released to the Purchasers on the Escrow Release Date, and each Purchaser, severally and not jointly, agrees to purchase from the Company on the Escrow Release Date subject only to the terms and provisions of the Escrow Agreement, the aggregate number of shares of Series D Preferred Stock set forth opposite such Purchaser's name on Schedule 2.1 hereto, for the aggregate purchase price set forth opposite such ------------ Purchaser's name on Schedule 2.1 hereto which is being deposited by each such ------------ Purchaser with the Escrow Agent not later than 5:00 p.m., New York City time, on November 9, 2001, to be distributed in accordance with the terms of the Escrow Agreement (all of the shares of Series D Preferred Stock being purchased pursuant hereto being referred to herein as the "Purchased Shares"). ---------------- 2.2 Exchange of GAP Sub Notes. On the Closing Date, the Company ------------------------- agrees to deposit with the Escrow Agent, to be held in escrow in accordance with the terms of the Escrow Agreement, and to be released to the Purchasers on the Escrow Release Date, the number of shares of Series D Preferred Stock set forth opposite such GAP Purchaser's name on Schedule 2.2 hereto, in exchange for the ------------ deposit with the Escrow Agent not later than 5:00 p.m. New York City time, on November 9, 2001, to be held in escrow in accordance with the terms of the Escrow Agreement and to be released to the Company on the Escrow Release Date, by such GAP Purchaser of its GAP Sub Notes in the face amount set forth opposite such GAP Purchaser's name on Schedule 2.2 hereto (the "Exchange") (all of the ------------ -------- shares of Series D Preferred Stock being issued pursuant to the Exchange, the "Exchange Shares" and, together with the Purchased Shares, the "Subject --------------- ------- Shares"). - ------ 2.3 Purchase and Sale of Warrants. On the Closing Date, the ----------------------------- Company agrees to deposit with the Escrow Agent, to be held in escrow in accordance with the terms of the Escrow Agreement and to be released to the Purchasers on the 10 Escrow Release Date, and each GAP Purchaser, severally and not jointly, agrees to purchase from the Company on the Escrow Release Date subject only to the terms and provisions of the Escrow Agreement, the Warrant to purchase the aggregate number of shares of Common Stock set forth opposite such GAP Purchaser's name on Schedule 2.3 hereto, for the aggregate purchase price set ------------ forth opposite such GAP Purchaser's name on Schedule 2.3 hereto which is being ------------ deposited by each such Purchaser with the Escrow Agent not later than 5:00 p.m., New York City time, on November 9, 2001, to be distributed in accordance with the terms of the Escrow Agreement (all of the shares of Common Stock issuable upon the exercise of the Warrants being purchased pursuant hereto being referred to herein as the "Warrant Shares"). -------------- 2.4 Certificates of Designation. The Subject Shares shall have --------------------------- the preferences and rights set forth in the Certificate of Designation. 2.5 Use of Proceeds. The Company shall use the proceeds from the --------------- sale of the Purchased Shares and the Warrants to the Purchasers to fund the Company's working capital. 2.6 Closing. ------- (a) The closing (the "Closing") of the transactions referred to ------- in Sections 2.1, 2.2 and 2.3 shall take place at the offices of Paul, Weiss, Rifkind, Wharton & Garrison, at 10:00 a.m., local time, on the date hereof (the "Closing Date"). (b) Not later than 5:00 p.m., New York City time, on November 9, 2001, the Company shall deliver to the Escrow Agent, to be held in escrow and released only in accordance with the terms of the Escrow Agreement, an undated certificate or certificates in definitive form and registered in the name of each Purchaser, representing such Purchaser's Purchased Shares. (c) Not later than 5:00 p.m., New York City time, on November 9, 2001, each Purchaser shall deliver to the Escrow Agent, to be held in escrow and released only in accordance with the terms of the Escrow Agreement, of the aggregate purchase price for such Purchaser's Purchased Shares by wire transfer of immediately available funds. (d) Not later than 5:00 p.m., New York City time, on November 9, 2001, the Company shall deliver to the Escrow Agent to be held in escrow and released only in accordance with the terms of the Escrow Agreement an undated certificate or certificates in definitive form and registered in the name of each GAP Purchaser, representing its Exchange Shares. (e) Not later than 5:00 p.m., New York City time, on November 9, 2001, each GAP Purchaser shall deliver to the Escrow Agent to be held in escrow and released only in accordance with the terms of the Escrow Agreement its GAP Sub Notes together with duly executed and undated Note Powers for such GAP Sub Notes. 11 (f) Not later than 5:00 p.m., New York City time, on November 9, 2001, the Company shall deliver the Warrants to the Escrow Agent, to be held in escrow and released only in accordance with the terms of the Escrow Agreement. (g) Not later than 5:00 p.m., New York City time, on November 9, 2001, each GAP Purchaser shall deliver to the Escrow Agent, to be held in escrow and released only in accordance with the terms of the Escrow Agreement, the aggregate purchase price for its Warrants by wire transfer of immediately available funds. (h) In addition, at the Closing, (i) the Company shall execute and deliver to the Purchasers executed copies of each of this Agreement, the Escrow Agreement, the Stockholders Agreement and the Registration Rights Agreement, together with an executed copy of the certificate referred to in Section 5.1 of this Agreement, an executed copy of the Certificate of Designations and the executed Opinion referred to in Section 5.4 of this Agreement and (ii) each Purchaser shall execute and deliver to the Company, executed copies of each of this Agreement, the Escrow Agreement, the Stockholders Agreement and the Registration Rights Agreement. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY --------------------------------------------- The Company represents and warrants to each of the Purchasers as follows: 3.1 Corporate Existence and Power. The Company and each ----------------------------- of its Subsidiaries (a) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation; (b) has all requisite corporate power and authority to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged; (c) is duly qualified as a foreign corporation, licensed and in good standing under the laws of each jurisdiction in which its ownership, lease or operation of property or the conduct of its business requires such qualification, except where the failure to be so qualified could not reasonably be expected to have a material adverse effect on the Condition of the Company and (d) has the corporate power and authority to execute, deliver and perform its obligations under this Agreement and each of the other Transaction Documents. No jurisdiction, other than those referred to in clause (c) above, has claimed, in writing or otherwise, that the Company or any of its Subsidiaries is required to qualify as a foreign corporation or other entity therein, and the Company or any of its Subsidiaries does not file any franchise, income or other tax returns in any other jurisdiction based upon the ownership or use of property therein or the derivation of income therefrom. 3.2 Authorization; No Contravention. The execution, ------------------------------- delivery and performance by the Company of this Agreement and each of the other Transaction Documents and the transactions contemplated hereby and thereby (a) have been duly authorized by all necessary corporate action of the Company; (b) do not contravene the terms of the Articles of Incorporation or the By-laws; (c) do not violate, conflict with or 12 result in any breach, default or contravention of (or with due notice or lapse of time or both would result in any breach, default or contravention of), or the creation of any Lien under, any Contractual Obligation of the Company or any of its Subsidiaries or any Requirement of Law applicable to the Company or any of its Subsidiaries except such violations or conflicts that would not reasonably be expected to have a material adverse effect on the Condition of the Company; and (d) do not violate any judgment, injunction, writ, award, decree or order of any nature (collectively, "Orders") of any Governmental Authority against, or ------ binding upon, the Company or any of its Subsidiaries. 3.3 Governmental Authorization; Third Party Consents. No ------------------------------------------------ approval, consent, compliance, exemption, authorization or other action by, or notice to, or filing with, any Governmental Authority or any other Person, and no lapse of a waiting period under a Requirement of Law, is necessary or required in connection with the execution, delivery or performance (including, without limitation, the sale, issuance and delivery of the Subject Shares) by, or enforcement against, the Company of this Agreement and the other Transaction Documents or the transactions contemplated hereby and thereby. 3.4 Binding Effect. This Agreement has been, and as of -------------- the Closing Date each of the other Transaction Documents will have been, duly executed and delivered by the Company, and this Agreement constitutes, and as of the Closing Date each of the other Transaction Documents will constitute, the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general principles of equity relating to enforceability (regardless of whether considered in a proceeding at law or in equity). 3.5 Litigation. Except as set forth on Schedule 3.5 or as ---------- ------------ disclosed in the SEC Reports, there are no actions, suits, proceedings, claims, complaints, disputes, arbitrations or investigations (collectively, "Claims") ------ pending or, to the Knowledge of the Company, threatened, at law, in equity, in arbitration or before any Governmental Authority against the Company or any of its Subsidiaries that seeks in excess of $50,000 in damages nor is the Company aware that there is any basis for any of the foregoing. The foregoing includes, without limitation, Claims pending or, to the Knowledge of the Company, threatened or any basis therefor known by the Company involving the prior employment of any employee of the Company or any of its Subsidiaries, their use in connection with the business of the Company or any of its Subsidiaries of any information or techniques allegedly proprietary to any of their former employers or their obligations under any agreements with prior employers. No Order has been issued by any court or other Governmental Authority against the Company or any of its Subsidiaries purporting to enjoin or restrain the execution, delivery or performance of this Agreement or any of the other Transaction Documents. 3.6 Compliance with Laws. The Company and each of its -------------------- Subsidiaries is in compliance in all material respects with all Requirements of Law and all Orders issued by any court or Governmental Authority against the Company in all respects. To the Company's Knowledge, there are no Requirements of Law which could reasonably 13 be expected to prohibit or restrict the Company or any of its Subsidiaries from, or otherwise materially adversely effect the Company or any of its Subsidiaries in, conducting its business in any jurisdiction in which it now conducts its business. 3.7 Capitalization. -------------- (a) As of the date hereof, the authorized capital stock of the Company consists of (x) 500,000,000 shares of Common Stock of which (i) 75,515,871 shares are issued and outstanding and (ii) 49,775,020 shares are reserved for issuance upon exercise of stock options granted to directors, officers and other employees of the Company pursuant to the Stock Option Plans; and (y) 5,000,000 shares of preferred stock, none of which is outstanding. (b) On the Closing Date, after giving effect to the transactions contemplated by this Agreement, the authorized capital stock of the Company shall consist of (i) 500,000,000 shares of Common Stock, of which 75,515,871 shares are issued and outstanding, (ii) 75,000 shares of Series C Preferred Stock, par value $.001 per share, of the Company, of which no shares are issued and outstanding, (iii) assuming the Escrow Release Date has occurred, 4,000,000 shares of Series D Preferred Stock, of which 4,000,000 shares are issued and outstanding, and (iv) 925,000 shares of undesignated "blank check" ----------- preferred stock. As of the date of this Agreement, the aggregate number of shares of restricted stock and options to purchase shares of Common Stock which may be issued under the Stock Option Plans are 49,775,020, of which 31,690,094 have been granted. The Company has reserved an aggregate of 52,380,952 shares of Common Stock for issuance upon conversion of the Subject Shares and 2,500,000 shares of Common Stock for issuance upon exercise of the Warrants. Except as set forth on Schedule 3.7(a) and except for the Warrants, there are no options, -------------- warrants, conversion privileges, subscription or purchase rights or other rights presently outstanding to purchase or otherwise acquire (i) any authorized but unissued, unauthorized or treasury shares of the Company's capital stock, (ii) any Stock Equivalents or (iii) any other securities of the Company and there are no commitments, contracts, agreements, arrangements or understandings to which the Company is a party to issue any shares of the Company's capital stock or any Stock Equivalents or other securities of the Company. (c) The Subject Shares and the Warrants are duly authorized, and when issued and delivered to the Purchasers after payment therefor and the consummation of the Exchange on the Escrow Release Date, will be validly issued, fully paid and non-assessable, and assuming the accuracy of the representations and warranties of the Purchasers set forth in Article IV of this Agreement, will be issued in compliance with the registration and qualification requirements of all applicable federal, state and foreign securities laws and will be free and clear of all other Liens. The shares of Common Stock issuable upon conversion of the Subject Shares and exercise of the Warrants have been duly reserved for issuance and, when issued in compliance with the provisions of the Certificate of Designation and the Warrants (in the case of the Warrant Shares), will be validly issued, fully paid and non-assessable and not subject to any preemptive rights or similar rights that have not been satisfied and will be free and clear 14 of all other Liens. None of the issued and outstanding shares of Common Stock were issued in violation of any preemptive rights. 3.8 No Default or Breach; Contractual Obligations. All of --------------------------------------------- the Contractual Obligations to which the Company or any of its Subsidiaries is a party, whether written or oral, which are required by the Exchange Act to be disclosed in the SEC Reports (collectively, "Material Contractual Obligations") -------------------------------- are valid, subsisting, in full force and effect and binding upon the Company or its Subsidiary, as the case may be, and the other parties thereto, and the Company or its Subsidiary, as the case may be, has paid in full or accrued all amounts due thereunder and has satisfied in full or provided for all of its liabilities and obligations thereunder, except for such amounts as are being contested by the Company in good faith. Neither the Company nor any of its Subsidiaries has received notice of a default and is not in default under, or with respect to, any Material Contractual Obligation nor, to the Knowledge of the Company, does any condition exist that with notice or lapse of time or both would constitute a default thereunder. To the Knowledge of the Company, no other party to any such Contractual Obligation is in default thereunder, nor does any condition exist that with notice or lapse of time or both would constitute a default by such other party thereunder. 3.9 Title to Properties. The Company and each of its ------------------- Subsidiaries has good, record and marketable title in fee simple to, or holds interests as lessee under leases in full force and effect in, all real property used in connection with its business or otherwise owned or leased by it. The Company and each of its Subsidiaries owns and has good, valid and marketable title to all of its properties and assets used in its business or reflected as owned on the Financial Statements, in each case free and clear of all Liens, except for Liens that would required to be described in the notes to the Financial Statements. 3.10 Reports; Financial Statements. ----------------------------- (a) As of the respective dates of their filing with the Commission, all reports, registration statements and other filings, together with any amendments thereto, filed by the Company with the Commission since June 30, 2000 (the "SEC Reports"), complied in all material respects with the ----------- applicable requirements of the Securities Act, the Exchange Act, and the rules and regulations of the Commission promulgated thereunder, except as disclosed in the SEC Reports. Except as disclosed in the SEC Reports, the SEC Reports did not at the time they were filed with the Commission, or will not at the time they are filed with the Commission, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading. The Company has (i) delivered to the Purchasers true and complete copies of, or will make available at the Purchaser's request, (x) all correspondence relating to the Company between the Commission, Nasdaq and the United States Attorneys Office and the Company or its legal counsel and, to the Company's Knowledge, accountants since January 1, 2001 (other than routine Commission filing package cover letters) and (y) all correspondence between the Company or its counsel and the Company's auditors since January 1, 2001, relating to 15 any audit, financial review or preparation of financial statements of the Company (other than correspondence which the Company reasonably believes is subject to a privilege), and (ii) disclosed to the Purchasers the content of all material discussions between the Commission, Nasdaq and the United States Attorneys Office on the one hand and the Company or its legal counsel, on the other hand, and, to the Company's Knowledge, accountants concerning the adequacy or form of any SEC Report filed with the Commission since January 1, 2001. The Company is not aware of any issues raised by the Commission with respect to any of the SEC Reports, other than those disclosed in the SEC Reports. (b) Except as disclosed in the SEC Reports, the consolidated financial statements (including, in each case, any related schedules or notes thereto) contained in or incorporated by reference in the SEC Reports and any such reports, registration statements and other filings to be filed by the Company with the Commission prior to the Closing Date (the "Financial Statements") (i) have been or will be prepared in accordance with the -------------------- published rules and regulations of the Commission and GAAP consistently applied during the periods involved (except as may be indicated in the notes thereto) and (ii) fairly present or will fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries as of the respective dates thereof and the consolidated results of operations, statements of stockholders' equity and cash flows for the periods indicated, except that any unaudited interim financial statements were or will be subject to normal and recurring year-end adjustments and may omit footnote disclosure as permitted by regulations of the Commission. 3.11 Taxes. (a) The Company and each of its Subsidiaries ----- has paid all Taxes which have come due and are required to be paid by it through the date hereof, and all deficiencies or other additions to Tax, interest and penalties owed by it in connection with any such Taxes, other than Taxes being disputed by the Company in good faith for which adequate reserves have been made in accordance with GAAP; (b) the Company and each of its Subsidiaries has timely filed or caused to be filed all returns for Taxes that it is required to file on and through the date hereof (including all applicable extensions), and all such Tax returns are accurate and complete in all material respects; (c) with respect to all Tax returns of the Company and each of its Subsidiaries, (i) there is no unassessed Tax deficiency proposed or, to the Knowledge of the Company, threatened against the Company or any of its Subsidiaries and (ii) no audit is in progress with respect to any return for Taxes, no extension of time is in force with respect to any date on which any return for Taxes was or is to be filed and no waiver or agreement is in force for the extension of time for the assessment or payment of any Tax; (d) all provisions for Tax liabilities of the Company and each of its Subsidiaries have been disclosed in the Financial Statements and made in accordance with GAAP consistently applied, and all liabilities for Taxes of the Company and each of its Subsidiaries attributable to periods prior to or ending on the Closing Date have been adequately disclosed in the Financial Statements; and (e) there are no Liens for Taxes on the assets of the Company or any of its Subsidiaries. 3.12 No Material Adverse Change; Ordinary Course of ---------------------------------------------- Business. Since December 31, 2000, except as disclosed in or incorporate - -------- reference in the SEC 16 Reports, (a) there has not been any material adverse change, in the Condition of the Company, (b) neither the Company nor any of its Subsidiaries has participated in any transaction material to the Condition of the Company, including, without limitation, declaring or paying any dividend or declaring or making any distribution to its stockholders except out of the earnings of the Company or its Subsidiary, as the case may be, (c) neither the Company nor any of its subsidiaries has entered into any Material Contractual Obligation, other than in the ordinary course of business and (d) there has not occurred a material change in the accounting principles or practice of the Company or any of its Subsidiaries except as required by reason of a change in GAAP. 3.13 Private Offering. Neither the Company nor any authorized ---------------- Person acting on its behalf has, in connection with the offer, sale, exchange or issuance of the Subject Shares or the Warrants, engaged in (i) any form of general solicitation or general advertising (as those terms are used within the meaning of Rule 502(c) under the Securities Act), (ii) any action involving a public offering within the meaning of Section 4(2) of the Securities Act, or (iii) any action that would require the registration under the Securities Act of the offering, sale, exchange or issuance of the Subject Shares and the Warrants pursuant to this Agreement or that would violate applicable state securities or "blue sky" laws. The Company has not made and will not prior to the Closing Date -------- make, directly or indirectly, any offer or sale of the Subject Shares or Warrants or of securities of the same or similar class as the Subject Shares or Warrants if, as a result, the offer and sale contemplated hereby would fail to ----- ---- be entitled to exemption from the registration requirements of the Securities Act. As used herein, the terms "offer" and "sale" have the meanings specified in Section 2(3) of the Securities Act. 3.14 Labor Relations. Except as could not reasonably be --------------- expected to have a material adverse effect on the Condition of the Company: (a) neither the Company nor any of its Subsidiaries is engaged in any unfair labor practice; (b) there is no strike, labor dispute, slowdown or stoppage pending or, to the Knowledge of the Company, threatened against the Company or any of its Subsidiaries ; (c) neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or contract; and (d) no union organizing activities are taking place. To the Knowledge of the Company, no officer or key employee, or any group of key employees, intends to terminate their employment with the Company or any of its Subsidiaries. To the Knowledge of the Company, each of the officers and key employees of the Company and each of its Subsidiaries spends all, or substantially all, of his business time on the business of the Company or its Subsidiary, as the case may be. To the Knowledge of the Company, none of the employees of the Company or any of its Subsidiaries is resident in the United States in violation of any Requirement of Law. 3.15 Employee Benefit Plans. ---------------------- (a) The SEC Reports list or describe each Plan that the Company or any of its Subsidiaries maintains or to which the Company or any of its Subsidiaries contributes (the "Company Plans"). Neither the Company nor any of its ------------- Subsidiaries has any liability under any Plans other than the Company Plans. Except as described in or incorporated by reference in the SEC Reports, neither the Company nor any Commonly 17 Controlled Entity maintains or contributes to, or has within the preceding six years maintained or contributed to, or may have any liability with respect to any Plan subject to Title IV of ERISA or Section 412 of the Code or any "multiple employer plan" within the meaning of the Code or ERISA. Each Company ---------------------- Plan (and related trust, insurance contract or fund) has been established and administered in accordance with its terms, and complies in form and in operation with the applicable requirements of ERISA and the Code and other applicable Requirements of Law. All contributions (including all employer contributions and employee salary reduction contributions) which are due have been paid to each Company Plan. (b) No Claim with respect to the administration or the investment of the assets of any Company Plan (other than routine claims for benefits) is pending. (c) Except as could not reasonably be expected to have a material adverse effect on the Condition of the Company, each Company Plan that is intended to be qualified under Section 401(a) of the Code is so qualified and has been so qualified during the period since its adoption; each trust created under any such Plan is exempt from tax under Section 501(a) of the Code and has been so exempt since its creation. (d) No Company Plan is a Retiree Welfare Plan. (e) Neither the consummation of the transactions contemplated by this Agreement nor any termination of employment following such transactions will accelerate the time of the payment or vesting of, or increase the amount of, compensation due to any employee or former employee whether or not such payment would constitute an "excess parachute payment" under section ------------------------ 280G of the Code. (f) There are no unfunded obligations under any Company Plan which are not fully reflected in the Financial Statements. (g) Except as could not reasonably be expected to have a material adverse effect on the Condition of the Company, the Company has no liability, whether absolute or contingent, including any obligations under any Company Plan, with respect to any misclassification of any person as an independent contractor rather than as an employee. 3.16 Liabilities. Neither the Company nor any of its ----------- Subsidiaries has any direct or indirect obligation or liability (the "Liabilities") which are not fully reflected or reserved against in the ----------- Financial Statements, other than Liabilities not exceeding $1,000,000 in the aggregate incurred since September 30, 2001 in the ordinary course of business. The Company has no Knowledge of any circumstance, condition, event or arrangement that could reasonably be expected to give rise hereafter to any Liabilities of the Company or any of its Subsidiaries that, individually or in the aggregate, could have a material adverse effect on the Condition of the Company. 18 3.17 Intellectual Property. --------------------- (a) (i) The Company and each of its Subsidiaries is the owner of all, or has the license or right to use, sell and license all of, the Copyrights, Patents, Trade Secrets, Trademarks, Internet Assets, Software and other proprietary rights (collectively, "Intellectual Property") that are used --------------------- in connection with its business as presently conducted, free and clear of all Liens. (ii) None of the Intellectual Property is subject to any outstanding Order, and no action, suit, proceeding, hearing, investigation, charge, complaint, claim or demand is pending or, to the Knowledge of the Company, threatened, which challenges the validity, enforceability, use or ownership of the item. (iii) The Company and each of its Subsidiaries has substantially performed all obligations imposed upon it under all Intellectual Property licenses, sublicenses, distributor agreements and other agreements under which the Company or any of its Subsidiaries is either a licensor, licensee or distributor, except such licenses, sublicenses and other agreements relating to off-the-shelf software which is commercially available on a retail basis and used solely on the computers of the Company or its Subsidiaries (collectively, the "IP Agreements"). The Company and each of its Subsidiaries is ------------- not, nor to the Knowledge of the Company is any other party thereto, in breach of or default thereunder in any respect, nor is there any event which with notice or lapse of time or both would constitute a default thereunder. All of the IP Agreements are valid, enforceable and in full force and effect, and will continue to be so on identical terms immediately following the Closing except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general principles of equity relating to enforceability (regardless of whether considered in a proceeding at law or in equity). (iv) None of the Intellectual Property currently sold or licensed by the Company or any of its Subsidiaries to any Person or used by or licensed to the Company or any of its Subsidiaries by any Person infringes upon or otherwise violates any Intellectual Property rights of others, except as could not reasonably be expected to have a material adverse effect on the Condition of the Company. (b) No litigation is pending and no Claim has been made against the Company or any of its Subsidiaries or, to the Knowledge of the Company, is threatened, contesting the right of the Company or any of its Subsidiaries to sell or license to any Person or use the Intellectual Property presently sold or licensed to such Person or used by the Company or any of its Subsidiaries. To the Knowledge of the Company, no Person is infringing upon or otherwise violating the Intellectual Property rights of the Company or any of its Subsidiaries. (c) No former employer of any employee of the Company or any of its Subsidiaries has made a claim against the Company or any of its Subsidiaries or, to the 19 Knowledge of the Company, against any other Person, that such employee or such consultant is utilizing Intellectual Property of such former employer. (d) To the Knowledge of the Company, none of the Trade Secrets, wherever located, the value of which is contingent upon maintenance of confidentiality thereof, has been disclosed to any Person other than employees, representatives and agents of the Company or any of its Subsidiaries, except as required pursuant to the filing of a patent application by the Company or any of its Subsidiaries. (e) It is not necessary for the business of the Company or any of its Subsidiaries to use any Intellectual Property owned by any director, officer, employee or consultant of the Company or any of its Subsidiaries (or persons the Company or any of its Subsidiaries presently intends to hire). To the Company's Knowledge, at no time during the conception or reduction to practice of any of the Intellectual Property of the Company or any of its Subsidiaries was any developer, inventor or other contributor to such Intellectual Property operating under any grants from any Governmental Authority or subject to any employment agreement, invention assignment, nondisclosure agreement or other Contractual Obligation with any Person that could materially adversely affect the rights of the Company or any of its Subsidiaries to its Intellectual Property. 3.18 Privacy of Customer Information. Neither the Company nor ------------------------------- any of its Subsidiaries use any of the customer information it receives through its website or otherwise in an unlawful manner, or in a manner violative of the privacy policy of the Company or its Subsidiary, as the case may be, or the privacy rights of its customers. Neither the Company nor any of its Subsidiaries has collected any customer information through its website in an unlawful manner or in violation of its privacy policy. The Company and each of its Subsidiaries has adequate security measures in place to protect the customer information it receives through its website and which it stores in its computer systems from illegal use by third parties or use by third parties in a manner violative of the rights of privacy of its customers. The Company and each of its Subsidiaries represents to its customers that it assures complete security as to the customer information it receives through its website. 3.19 Potential Conflicts of Interest. Except as set forth on ------------------------------- Schedule 3.19 and except for Vectis employees at the Company, no officer, - ------------- director or stockholder beneficially owning more than 5% of the outstanding shares of Common Stock, to the Knowledge of the Company, no spouse of any such officer, director or stockholder, and, to the Knowledge of the Company, no Affiliate of any of the foregoing (a) owns, directly or indirectly, any interest in (excepting less than one percent (1%) stock holdings for investment purposes in securities of publicly held and traded companies), or is an officer, director, employee or consultant of, any Person which is, or is engaged in business as, a competitor, lessor, lessee, supplier, distributor, or customer of, or lender to or borrower from, the Company or any of its Subsidiaries; (b) owns, directly or indirectly, in whole or in part, any tangible or intangible property that the Company or any of its Subsidiaries use, in the conduct of business; or (c) has any cause of action or other claim whatsoever against, or owes or has advanced any amount to, the Company or any of its Subsidiaries, except for claims in the ordinary course of business 20 such as for accrued vacation pay, accrued benefits under employee benefit plans, and similar matters and agreements existing on the date hereof. 3.20 Trade Relations. There exists no actual or, to the --------------- Knowledge of the Company, threatened termination, cancellation or limitation of, or any material adverse modification or change in, the business relationship of the Company or any of its Subsidiaries, or the business of the Company or any of its Subsidiaries, with any customer or supplier or any group of customers or suppliers whose purchases or inventories provided to the business of the Company or any of its Subsidiaries are individually or in the aggregate material to the Condition of the Company. 3.21 Outstanding Borrowing. Schedule 3.21 sets forth the --------------------- ------------- amount of all Indebtedness of the Company and each of its Subsidiaries as of the date hereof, the Liens that relate to such Indebtedness and that encumber the Assets and the name of each lender thereof. No Indebtedness is entitled to any voting rights in any matters voted upon by the holders of the Common Stock. 3.22 Broker's, Finder's or Similar Fees. Except for fees ---------------------------------- payable to Vectis, there are no brokerage commissions, finder's fees or similar fees or commissions payable by the Company or any of its Subsidiaries in connection with the transactions contemplated hereby based on any agreement, arrangement or understanding with the Company or any of its Subsidiaries or any action taken by any such Person. 3.23 CCC Section. The Board of Directors has taken all action ----------- necessary to exempt from the provisions of Section 1203 of the California Corporations Code, to the extent applicable, this Agreement, any acquisition by the Purchasers of Subject Shares and Warrants pursuant to this Agreement and the Certificate of Designation and any conversion by the Purchasers of Subject Shares into shares of Common Stock and any exercise by the GAP Purchasers of the Warrants for the Warrant Shares. 3.24 Disclosure. This Agreement and the documents and ---------- certificates furnished to the Purchasers by the Company do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained herein or therein, in the light of the circumstances under which they were made, not misleading. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS ------------------------------------------------ Each of the Purchasers hereby represents and warrants, severally and not jointly, to the Company as follows: 4.1 Existence and Power. Such Purchaser (a) is a limited ------------------- partnership, corporation, partnership or limited liability company duly organized and validly existing under the laws of the jurisdiction of its formation and (b) has the requisite partnership, corporate or limited liability company, as the case may be, power and authority to 21 execute, deliver and perform its obligations under this Agreement and each of the other Transaction Documents to which it is a party. 4.2 Authorization; No Contravention. The execution, delivery ------------------------------- and performance by such Purchaser of this Agreement and each of the other Transaction Documents to which it is a party and the transactions contemplated hereby and thereby, (a) have been duly authorized by all necessary partnership, corporate or limited liability company, as the case may be, action, (b) do not contravene the terms of such Purchaser's organizational documents, or any amendment thereof, and (c) do not violate, conflict with or result in any breach or contravention of, or the creation of any Lien under, any Contractual Obligation of such Purchaser or any Requirement of Law applicable to such Purchaser, and (d) do not violate any Orders of any Governmental Authority against, or binding upon, such Purchaser. 4.3 Governmental Authorization; Third Party Consents. No ------------------------------------------------ approval, consent, compliance, exemption, authorization or other action by, or notice to, or filing with, any Governmental Authority or any other Person, and no lapse of a waiting period under any Requirement of Law, is necessary or required in connection with the execution, delivery or performance by, or enforcement against, such Purchaser of this Agreement and each of the other Transaction Documents to which it is a party or the transactions contemplated hereby and thereby. 4.4 Binding Effect. This Agreement has been, and as of the -------------- Closing Date each of the other Transaction Documents will have been, duly executed and delivered by such Purchaser and this Agreement constitutes and, as of the Closing Date each of the other Transaction Documents will constitute, the legal, valid and binding obligations of such Purchaser, enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability (regardless of whether considered in a proceeding at law or in equity). 4.5 Purchase for Own Account. The Subject Shares and the ------------------------ Warrants to be acquired by such Purchaser pursuant to this Agreement are being or will be acquired for its own account and with no intention of distributing or reselling such Subject Shares or Warrants or any part thereof in any transaction that would be in violation of the securities laws of the United States of America, any state of the United States or any foreign jurisdiction, without prejudice, however, to the rights of such Purchaser at all times to sell or otherwise dispose of all or any part of such Subject Shares or Warrants under an effective registration statement under the Securities Act, or under an exemption from such registration available under the Securities Act, and subject, nevertheless, to the disposition of such Purchaser's property being at all times within its control. If such Purchaser should in the future decide to dispose of any of such Subject Shares, such Purchaser understands and agrees that it may do so only in compliance with the Securities Act and applicable state and foreign securities laws, as then in effect. Such Purchaser agrees to the imprinting at Closing and for so long as required by law, of a legend on certificates representing all of its Subject Shares, shares of Common Stock 22 issuable upon conversion of its Subject Shares and the Warrant Shares to the following effect: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED --- STATES OR ANY FOREIGN JURISDICTION. THE SECURITIES MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE AND FOREIGN SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. 4.6 Restricted Securities. Such Purchaser understands that --------------------- the Subject Shares and the Warrants will not be registered at the time of their issuance under the Securities Act for the reason that the sale provided for in this Agreement is exempt pursuant to Section 4(2) of the Securities Act and that the reliance of the Company on such exemption is predicated in part on such Purchaser's representations set forth herein. 4.7 Accredited Investor. Such Purchaser is an "Accredited ------------------- ---------- Investor" within the meaning of Rule 501 of Regulation D under the Securities - -------- Act, as presently in effect. 4.8 Experience. Such Purchaser, either alone or together ---------- with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in its Subject Shares and Warrants (the "Securities"), and has so evaluated the merits and risks of such investment. ---------- Such Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment. 4.9 Access to Information. Such Purchaser acknowledges that --------------------- it has reviewed the SEC Reports and has been afforded: (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Securities and the merits and risks of investing in the Securities; (ii) access to publicly available information about the Company and the Subsidiaries and the Condition of the Company sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional publicly available information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. Neither such inquiries nor any other investigation conducted by or on behalf of such Purchaser or its representatives or counsel shall modify, amend or affect such Purchaser's right to rely on the truth, accuracy 23 and completeness of the SEC Reports and the Company's representations and warranties contained in the Transaction Documents. 4.10 General Solicitation. Such Purchaser is not purchasing -------------------- the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement. 4.11 Reliance. Such Purchaser understands and acknowledges -------- that: (i) the Securities are being offered and sold to it without registration under the Securities Act in a private placement that is exempt from the registration provisions of the Securities Act and (ii) the availability of such exemption depends in part on, and the Company will rely upon the accuracy and truthfulness of, the foregoing representations and such Purchaser hereby consents to such reliance. ARTICLE V ACTIONS TO BE TAKEN BY THE -------------------------- COMPANY AT THE CLOSING ---------------------- At the Closing, the Company shall take the actions and deliver the documents described in Sections 5.1, 5.4, 5.5 and 5.6 and not later than 5:00 p.m., New York City time, on November 9, 2001, the Company shall take the actions and deliver the documents described in Sections 5.2 and 5.3. 5.1 Secretary's Certificate. The Company shall have ----------------------- delivered to the Purchasers a certificate from the Company, in form and substance satisfactory to the Purchasers, dated as of the Closing Date and signed by the Secretary or an Assistant Secretary of the Company, certifying (a) that the Company is in good standing with the Secretary of State of the State of California, (b) that the attached copies of the Articles of Incorporation, the By-laws, and resolutions of the Board of Directors of the Company approving this Agreement and each of the other Transaction Documents and the transactions contemplated hereby and thereby, are all true, complete and correct and remain unamended and in full force and effect and (c) that the attached copies of the resolutions of the Board of Directors electing, subject only to the satisfaction of the Escrow Release Condition (as defined in the Escrow Agreement), the one director designated by the holders of a majority of the shares of Series D Preferred Stock are true, complete and correct and remain unamended and in full force and effect. 5.2 Subject Shares. The Company shall have delivered to the -------------- Escrow Agent certificates in definitive form representing the number of Purchased Shares set forth opposite such Purchaser's name on Schedule 2.1 hereto ------------ and, with respect to the GAP Purchasers, the number of Exchange Shares set forth opposite such GAP Purchaser's name on Schedule 2.2 hereto, registered in the ------------ name of such Purchaser. 24 5.3 Warrants. The Company shall have duly executed and -------- delivered to the Escrow Agent, in substantially the form attached hereto as Exhibit A, and registered in the name of GAP LP, GAP Coinvestment and GapStar, - --------- respectively. 5.4 Opinion of Counsel. The Company shall have caused the ------------------ opinion of Pillsbury Winthrop LLP, dated November 8, 2001, relating to the transactions contemplated by or referred to herein, substantially in the form attached hereto as Exhibit G to be delivered to the Purchasers. --------- 5.5 MOU. The Company shall have delivered to the Purchasers --- the fully executed MOU. 5.6 Amendment to Shareholder Rights Plan. The Company shall ------------------------------------ have delivered to the Purchasers evidence that the Shareholder Rights Plan has been amended, in form and substance satisfactory to the Purchasers, to permit each Purchaser and its Affiliates to consummate the transactions contemplated by this Agreement and each of the other Transaction Documents. ARTICLE VI DELIVERIES BY THE PURCHASERS ---------------------------- Not later than 5:00 p.m., New York City time, on November 9, 2001, the Purchasers shall take the following actions and deliver the following. 6.1 Payment for Subject Shares and Warrants. Each Purchaser --------------------------------------- shall have deposited with the Escrow Agent the aggregate purchase price for the Purchased Shares to be purchased by such Purchaser and each GAP Purchaser shall have deposited with the Escrow Agent (i) its GAP Sub Notes, with duly executed undated Note Powers attached and (ii) the aggregate purchase price for the Warrants to be purchased by such Purchaser. ARTICLE VII INDEMNIFICATION --------------- 7.1 Indemnification. Except as otherwise provided in this --------------- Article VII, the Company (the "Indemnifying Party") agrees to indemnify, defend ------------------ and hold harmless each of the Purchasers and its Affiliates and their respective officers, directors, agents, employees, subsidiaries, partners, members and controlling persons (each, an "Indemnified Party") to the fullest extent ----------------- permitted by law from and against any and all losses, Claims, or written threats thereof (including, without limitation, any Claim by a third party), damages, expenses (including reasonable fees, disbursements and other charges of counsel incurred by the Indemnified Party in any action between the Indemnifying Party and the Indemnified Party or between the Indemnified Party and any third party or otherwise) or other liabilities (collectively, "Losses") resulting from or ------ arising out of any breach of any representation or warranty, covenant or agreement by the Company in this Agreement, the Stockholders Agreement, the Escrow Agreement or the 25 Warrants. The amount of any payment to any Indemnified Party herewith in respect of any Loss shall be of sufficient amount to make such Indemnified Party whole for any diminution in value of the Subject Shares directly caused by such breach. In connection with the obligation of the Indemnifying Party to indemnify for expenses as set forth above, the Indemnifying Party shall, upon presentation of appropriate invoices containing reasonable detail, reimburse each Indemnified Party for all such expenses (including reasonable fees, disbursements and other charges of counsel incurred by the Indemnified Party in any action between the Indemnifying Party and the Indemnified Party or between the Indemnified Party and any third party) as they are incurred by such Indemnified Party; provided, -------- however, that if an Indemnified Party is reimbursed under this Article VII for - ------- any expenses, such reimbursement of expenses shall be refunded to the extent it is finally judicially determined that the Losses in question resulted primarily from the willful misconduct or gross negligence of such Indemnified Party. 7.2 Notification. Each Indemnified Party under this Article ------------ VII shall, promptly after the receipt of notice of the commencement of any Claim against such Indemnified Party in respect of which indemnity may be sought from the Indemnifying Party under this Article VII, notify the Indemnifying Party in writing of the commencement thereof. The omission of any Indemnified Party to so notify the Indemnifying Party of any such action shall not relieve the Indemnifying Party from any liability which it may have to such Indemnified Party (a) other than pursuant to this Article VII or (b) under this Article VII unless, and only to the extent that, such omission results in the Indemnifying Party's forfeiture of substantive rights or defenses. In case any such Claim shall be brought against any Indemnified Party, and it shall notify the Indemnifying Party of the commencement thereof, the Indemnifying Party shall be entitled to assume the defense thereof at its own expense, with counsel satisfactory to such Indemnified Party in its reasonable judgment; provided, however, that any Indemnified Party may, at its own expense, retain separate counsel to participate in such defense at its own expense. Notwithstanding the foregoing, in any Claim in which both the Indemnifying Party, on the one hand, and an Indemnified Party, on the other hand, are, or are reasonably likely to become, a party, such Indemnified Party shall have the right to employ separate counsel and to control its own defense of such Claim if, in the reasonable opinion of counsel to such Indemnified Party, either (x) one or more defenses are available to the Indemnified Party that are not available to the Indemnifying Party or (y) a conflict or potential conflict exists between the Indemnifying Party, on the one hand, and such Indemnified Party, on the other hand, that would make such separate representation advisable; provided, however, that the Indemnifying Party (i) shall not be liable for the fees and expenses of more than one counsel to all Indemnified Parties and (ii) shall reimburse the Indemnified Parties for all of such fees and expenses of such counsel incurred in any action between the Indemnifying Party and the Indemnified Parties or between the Indemnified Parties and any third party, as such expenses are incurred; provided, however, that if an Indemnified Party is reimbursed under -------- ------- this Article VII for any expenses, such reimbursement of expenses shall be refunded to the extent it is finally judicially determined that the Losses in question resulted primarily from the willful misconduct or gross negligence of such Indemnified Party. The Indemnifying Party agrees that it will not, without the prior written consent of the Indemnified Party, settle, compromise or consent to the entry of any judgment in any pending or threatened 26 Claim relating to the matters contemplated hereby (if any Indemnified Party is a party thereto or has been actually threatened to be made a party thereto) unless such settlement, compromise or consent includes an unconditional release of each Indemnified Party from all liability arising or that may arise out of such Claim. The Indemnifying Party shall not be liable for any settlement of any Claim effected against an Indemnified Party without the Indemnifying Party's written consent, which consent shall not be unreasonably withheld. The rights accorded to an Indemnified Party hereunder shall be in addition to any rights that any Indemnified Party may have at common law, by separate agreement or otherwise; provided, however, that notwithstanding the foregoing or anything to -------- ------- the contrary contained in this Agreement, nothing in this Article VII shall restrict or limit any rights that any Indemnified Party may have to seek equitable relief. 7.3 Contribution. If the indemnification provided for in this ------------ Article VII from the Indemnifying Party is unavailable to an Indemnified Party hereunder in respect of any Losses referred to herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions which resulted in such Losses, as well as any other relevant equitable considerations. The relative faults of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the Losses referred to above shall be deemed to include, subject to the limitations set forth in Sections 7.1 and 7.2, any reasonable legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding. ARTICLE VIII AFFIRMATIVE COVENANTS --------------------- The Company hereby covenants and agrees with the Purchasers as follows: 8.1 Financial Statements and Other Information. If any time the ------------------------------------------ Company is not subject to the periodic disclosure obligations of the Exchange Act, the Company shall deliver to such Purchasers, in form and substance satisfactory to such Purchaser: (a) as soon as available, but not later than ninety (90) days after the end of each fiscal year of the Company, a copy of the audited consolidated balance sheet of the Company and its Subsidiaries as of the end of such fiscal year and the related statements of operations and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous year, all in reasonable detail and 27 accompanied by a management summary and analysis of the operations of the Company for such fiscal year and by the opinion of a nationally recognized independent certified public accounting firm which report shall state without qualification that such financial statements present fairly the financial condition as of such date and results of operations and cash flows for the periods indicated in conformity with GAAP applied on a consistent basis; (b) as soon as available, but in any event not later than forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year, the unaudited consolidated balance sheet of the Company and its Subsidiaries, and the related statements of operations and cash flows for such quarter and for the period commencing on the first day of the fiscal year and ending on the last day of such quarter, all certified by an appropriate officer of the Company as presenting fairly the consolidated financial condition as of such date and results of operations and cash flows for the periods indicated in conformity with GAAP applied on a consistent basis, subject to normal year-end adjustments and the absence of footnotes required by GAAP; (c) as soon as available, but in any event not later than ten (10) days after the end of each month of each fiscal year, the unaudited consolidated balance sheet of the Company and its Subsidiaries, and the related statements of operations and cash flows for such month and for the period commencing on the first day of the fiscal year and ending on the last day of such month, all certified by an appropriate officer of the Company as presenting fairly the consolidated financial condition as of such date and results of operations and cash flows for the periods indicated in conformity with GAAP applied on a consistent basis, subject to normal year-end adjustments and the absence of footnotes required by GAAP; and 8.2 FIRPTA Certificate. If requested by any of the Purchasers, as ------------------ promptly as practicable, but not later than five (5) days after the end of each fiscal year of the Company, the Company shall deliver to each Purchaser, in form and substance satisfactory to such Purchaser, a certificate signed by the Chief Executive Officer of the Company in customary form certifying that the Company is not a "foreign person" within the meaning of Section 1445 of the Code; and -------------- 8.3 Reservation of Common Stock. The Company shall at all times --------------------------- reserve and keep available out of its authorized shares of Common Stock, solely for the purpose of issue or delivery upon conversion of the Subject Shares and exercise of the Warrants, as provided in the Certificate of Designation and Warrants respectively, the maximum number of shares of Common Stock that may be issuable or deliverable upon such conversion or exercise. Such shares of Common Stock are duly authorized and, when issued or delivered in accordance with the Certificate of Designation and Warrants, shall be validly issued, fully paid and non-assessable. The Company shall issue such shares of Common Stock, in accordance with the terms of the Certificate of Designation and Warrants, and otherwise comply with the terms hereof and thereof. 8.4 Books and Records. The Company shall keep proper books of ----------------- record and account, in which full and correct entries shall be made of all financial 28 transactions and the assets and business of the Company in accordance with GAAP consistently applied. 8.5 Inspection. The Company shall permit representatives of the ---------- Purchasers to visit and inspect any of its properties, to examine its corporate, financial and operating records and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with their respective directors, officers and independent public accountants, all at such reasonable times during normal business hours and as often as may be reasonably requested upon reasonable advance notice to the Company. 8.6 Vectis Agreement. The Company shall as soon as practicable ---------------- after the date hereof, but not later than the date the Escrow Release Condition is satisfied, terminate the Vectis Agreement. 8.7 NASDAQ Matters. -------------- (a) The Company shall take all action required and shall make all submissions that are reasonably necessary to obtain written confirmation reasonably satisfactory to the GAP Purchasers from the Nasdaq that the approval of a majority of the Company's stockholders, present in person or proxy at a properly convened meeting of the Company's stockholders ("Stockholder Approval") -------------------- to the issuance of the shares of Series D Preferred Stock to the GAP Purchasers is not required under the applicable Nasdaq rules and regulations in order to satisfy the Nasdaq Escrow Approval Condition. If the Company cannot obtain such written confirmation by January 31, 2001, it shall take all action required by the Nasdaq and applicable California law (including the actions referred to in Section 8.7(b)) to obtain Stockholder Approval for the issuance to the GAP Purchasers of the portion of the shares of Series D Preferred Stock that constitute the amount of shares of Series D Preferred Stock (determined assuming conversion of all of the shares of Series D Preferred Stock) in excess of 19.9% of the outstanding shares of the Common Stock on the date hereof (the "Applicable Stockholder Approval"). The Board of Directors shall recommend that ------------------------------- the Company's stockholders vote in favor of the Applicable Stockholder Approval. (b) If required pursuant to Section 8.7(a) of this Agreement, promptly after November 30, 2001, the Company will prepare and file with the Commission a proxy statement to be distributed to the Company's stockholders in connection with the solicitation of votes in favor of the Applicable Stockholder Approval, including any amendments or supplements thereto (the "Proxy ----- Statement"). The Company will use all reasonable commercial efforts to have or - --------- cause the Proxy Statement to be cleared by the Commission as promptly as practicable. The Company agrees to provide the Purchasers and their respective counsel with any written comments the Company or its counsel may receive from the Commission with respect to the Proxy Statement promptly after the receipt of such comments. The Company will use all reasonable commercial efforts to cause the Proxy Statement (i) not to contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading and (ii) to comply as to form in all material respects with the applicable 29 provisions of the Exchange Act and the rules and regulations thereunder. Following clearance by the Commission of the Proxy Statement, the Company shall promptly distribute the Proxy Statement to its stockholders and call and arrange for a special meeting of stockholders and take such other actions as are required or necessary in order to obtain the Applicable Stockholder Approval as promptly as practicable. ARTICLE IX TERMINATION OF AGREEMENT ------------------------ 9.1 Termination. This Agreement shall be terminated and be of ----------- no further force or effect on the Escrow Termination Date (as defined in the Escrow Agreement). If this Agreement so terminates, it shall become null and void and have no further force or effect. ARTICLE X MISCELLANEOUS ------------- 10.1 Survival of Representations and Warranties. All of the ------------------------------------------ representations and warranties made herein shall survive the execution and delivery of this Agreement until the date that is ninety (90) days after the receipt by the Purchasers of audited financial statements of the Company for the fiscal year ending December 31, 2002 (or, if such fiscal year changes and no such audited consolidated financial statements are available, then the successor fiscal year), except for (a) Sections 3.1, 3.2, 3.4, 3.7, 3.13 and 3.22, which representations and warranties shall survive until the third anniversary of the Closing Date, and (b) Section 3.11, which shall survive until the later to occur of (i) the lapse of the statute of limitations with respect to the assessment of any Tax to which such representation and warranty relates (including any extensions or waivers thereof) and (ii) sixty (60) days after the final administrative or judicial determination of the Taxes to which such representation and warranty relates, and no claim with respect to Section 3.11 may be asserted thereafter with the exception of claims arising out of any fact, circumstance, action or proceeding to which the party asserting such claim shall have given notice to the other parties to this Agreement prior to the termination of such period of reasonable belief that a tax liability will subsequently arise therefrom. 30 10.2 Notices. All notices, demands and other communications ------- provided for or permitted hereunder shall be made in writing and shall be by registered or certified first-class mail, return receipt requested, telecopier, courier service or personal delivery: if to the Company: Critical Path, Inc. 532 Folsom Street San Francisco, CA 94105 Telecopy: (415) 808-8898 Attention: Chief Financial Officer with a copy to, which shall not constitute notice to the Company: Pillsbury Winthrop LLP 50 Fremont Street San Francisco, CA 94105 Telecopy: (415) 983-1200 Attention: Gregg F. Vignos, Esq. if to GAP LP, GAP Coinvestment or GapStar: c/o General Atlantic Service Corporation 3 Pickwick Plaza Greenwich, CT 06830 Telecopy: (203) 622-8818 Attention: Matthew Nimetz with a copy to, which shall not constitute notice: Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, NY 10019-6064 Telecopy: (212) 757-3990 Attention: Douglas A. Cifu, Esq. if to Vectis CP Holdings, LLC: c/o Vectis Group 117 Greenwich Street San Francisco, CA 94111 Telecopy: 415-352-5310 Attention: Matthew Hobart 31 with a copy to: Kirkland & Ellis 153 East 53/rd/ Street New York, NY 10022-4675 Telecopy: 212-446-4900 Attention: Michael Movsovich, Esq. if to Cenwell Limited: c/o 22/nd/ Floor Hutchison House 10 Harcourt Road Hong Kong Telecopy: (852) 2128-1778 Attention: Company Secretary if to Campina Enterprises Limited c/o 7/th/ Floor Cheung Kong Center 2 Queen's Road Central Hong Kong Telecopy: (852) 2845-2057 Attention: Mr. Edmond lp All such notices, demands and other communications shall be deemed to have been duly given when delivered by hand, if personally delivered; when delivered by courier, if delivered by commercial courier service; five (5) Business Days after being deposited in the mail, postage prepaid, if mailed; and when receipt is mechanically acknowledged, if telecopied. Any party may by notice given in accordance with this Section 10.2 designate another address or Person for receipt of notices hereunder. 10.3 Successors and Assigns; Third Party Beneficiaries. This ------------------------------------------------- Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of the parties hereto. Subject to applicable securities laws and the terms and conditions thereof, the Purchasers may assign any of their rights under this Agreement or the other Transaction Documents to any of their respective Affiliates. The Company may not assign any of its rights under this Agreement without the written consent of the GAP Purchasers. Except as provided in Article VII, no Person other than the parties hereto and their successors and permitted assigns is intended to be a beneficiary of this Agreement. 10.4 Amendment and Waiver. -------------------- (a) No failure or delay on the part of the Company or the Purchasers in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor 32 shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided for herein are cumulative and are not exclusive of any remedies that may be available to the Company or the Purchasers at law, in equity or otherwise. (b) Any amendment, supplement or modification of or to any provision of this Agreement, any waiver of any provision of this Agreement, and any consent to any departure by the Company or the Purchasers from the terms of any provision of this Agreement, shall be effective (i) only if it is made or given in writing and signed by the Company and the Purchasers acquiring a majority of the Subject Shares, and (ii) only in the specific instance and for the specific purpose for which made or given; provided; however, that to the -------- ------- extent any amendment or waiver adversely affects any of the Purchasers, such amendment or waiver shall require the prior written consent of each Purchaser so adversely affected. Except where notice is specifically required by this Agreement, no notice to or demand on the Company in any case shall entitle the Company to any other or further notice or demand in similar or other circumstances. 10.5 Counterparts. This Agreement may be executed in any ------------ number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 10.6 Headings. The headings in this Agreement are for -------- convenience of reference only and shall not limit or otherwise affect the meaning hereof. 10.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND ------------- CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. 10.8 Severability. If any one or more of the provisions ------------ contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired, unless the provisions held invalid, illegal or unenforceable shall substantially impair the benefits of the remaining provisions hereof. 10.9 Rules of Construction. Unless the context otherwise --------------------- requires, references to sections or subsections refer to sections or subsections of this Agreement. 10.10 Entire Agreement. This Agreement, together with the ---------------- exhibits and schedules hereto, and the other Transaction Documents are intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein. There are no restrictions, promises, representations, warranties or undertakings, other than those set forth or referred to herein or therein. 33 This Agreement, together with the exhibits and schedules hereto, and the other Transaction Documents supersede all prior agreements and understandings between the parties with respect to such subject matter. 10.11 Fees. Upon the Closing, the Company shall reimburse each ---- of the Purchasers for their fees, disbursements and other charges of counsel incurred in connection with the transactions contemplated by this Agreement, provided that the aggregate amount of all such reimbursements shall not exceed $75,000 and, provided, further, that each of the Coinvestors hereby acknowledge and agree that the fees and expenses of the GAP Purchasers shall be reimbursed first and that the cap of $75,000 applies to the fees and expenses of all of the Purchasers. If this Agreement terminates pursuant to Article IX, each of the Company and the Purchasers shall bear its own fees, disbursements and other charges of counsel incurred in connection with the transactions contemplated by this Agreement. 10.12 Publicity; Confidentiality. Except as may be required by -------------------------- applicable Requirements of Law, none of the parties hereto shall issue a publicity release or public announcement or otherwise make any disclosure concerning this Agreement, the transactions contemplated hereby, the Purchasers or the business, technology and financial affairs of the Company, without prior approval by the other parties hereto; provided, however, that nothing in this Agreement shall restrict any of the Purchasers from disclosing information (a) that is already publicly available, (b) that was known to such Purchaser on a non-confidential basis prior to its disclosure by the Company, (c) that may be required or appropriate in response to any summons or subpoena or in connection with any litigation, provided that such Purchaser will use reasonable efforts to notify the Company in advance of such disclosure so as to permit the Company to seek a protective order or otherwise contest such disclosure, and such Purchaser will use reasonable efforts to cooperate, at the expense of the Company, with the Company in pursuing any such protective order, (d) to the extent that such Purchaser reasonably believes it appropriate in order to comply with any Requirement of Law, (e) to such Purchaser's or the Company's officers, directors, shareholders, advisors, employees, members, partners, controlling persons, auditors or counsel or (f) to Persons from whom releases, consents or approvals are required, or to whom notice is required to be provided, pursuant to the transactions contemplated by the Transaction Documents; and provided further, that after the Closing, GAP LLC may disclose on its worldwide web page, www.gapartners.com, the name of the Company, the name of the Chief Executive Officer of the Company, a brief description of the business of the Company, the Company's logo and the aggregate amount of the Purchasers' investment in the Company. If any announcement is required by any Requirement of Law to be made by any party hereto, prior to making such announcement such party will deliver a draft of such announcement to the other parties and shall give the other parties reasonable opportunity to comment thereon. 10.13 Further Assurances. Each of the parties shall execute ------------------ such documents and perform such further acts (including, without limitation, obtaining any consents, exemptions, authorizations or other actions by, or giving any notices to, or making any filings with, any Governmental Authority or any other Person) as may be 34 reasonably required or desirable to carry out or to perform the provisions of this Agreement. 10.14 Legal Representation. It is acknowledged by each of the -------------------- Coinvestors that the GAP Purchasers have retained Paul, Weiss, Rifkind, Wharton & Garrison to act as their counsel in connection with the transactions contemplated by the Transaction Documents and that Paul, Weiss, Rifkind, Wharton & Garrison has not acted as counsel for any of the Coinvestors in connection with the transaction contemplated by the Transaction Documents and that none of the Coinvestors has the status of a client of Paul, Weiss, Rifkind, Wharton & Garrison for conflict of interest or any other purposes as a result thereof. [Remainder of page intentionally left blank] IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Stock and Warrant Purchase and Exchange Agreement on the date first written above. CRITICAL PATH, INC. By:______________________________ Name: Title: GENERAL ATLANTIC PARTNERS 74, L.P. By: GENERAL ATLANTIC PARTNERS, LLC, its General Partner By:______________________________ Name: Title: A Managing Member GAP COINVESTMENT PARTNERS II, L.P. By:______________________________ Name: Title: A General Partner GAPSTAR, LLC By: GENERAL ATLANTIC PARTNERS, LLC, its Managing Member By:______________________________ Name: Title: A Managing Member Signature Page to Stock and Warrant Purchase and Exchange Agreement VECTIS CP HOLDINGS, LLC a Delaware limited liability company By: VECTIS GROUP, LLC, its Managing Member By:___________________________________ Name: Title: Signature Page to Stock and Warrant Purchase and Exchange Agreement CENWELL LIMITED By:____________________________ Name: Title: CAMPINA ENTERPRISES LIMITED By:____________________________ Name: Title: Signature Page to Stock and Warrant Purchase and Exchange Agreement Schedule I ---------- Coinvestors ----------- Vectis CP Holdings, LLC Cenwell Limited Campina Enterprises Limited Schedule 2.1 ------------ Purchased Shares and Purchase Price -----------------------------------
- ----------------------------------------------------------------------------------------------------- Purchaser Purchased Shares Purchase Price --------- ---------------- -------------- - ----------------------------------------------------------------------------------------------------- GAP LP 581,688 $ 7,998,210.00 - ----------------------------------------------------------------------------------------------------- GAP Coinvestment 82,097 $ 1,128,833.75 - ----------------------------------------------------------------------------------------------------- GapStar 44,252 $ 608,465.00 - ----------------------------------------------------------------------------------------------------- Vectis CP Holdings, LLC 581,818 $ 7,999,997.50 - ----------------------------------------------------------------------------------------------------- Cenwell Limited 436,364 $ 5,999,998.13 - ----------------------------------------------------------------------------------------------------- Campina Enterprises Limited 436,363 $ 5,999,998.12 - ----------------------------------------------------------------------------------------------------- Total: 2,162,582 $29,735,502.50 - -----------------------------------------------------------------------------------------------------
Schedule 2.2 ------------ Exchange Shares, Purchase Price of GAP SubNotes and Face Amount ---------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------- Purchase Price of GAP Face Amount of GAP Purchaser Exchange Shares Sub Notes GAP Sub Notes ------------- --------------- --------- ------------- - --------------------------------------------------------------------------------------------------------- GAP LP 1,509,530 $20,756,133.52 $53,097,000.00 - --------------------------------------------------------------------------------------------------------- GAP Coinvestment 213,049 $ 2,929,477.46 $ 7,494,000.00 - --------------------------------------------------------------------------------------------------------- GapStar 114,839 $ 1,578,884.37 $ 4,039,000.00 - --------------------------------------------------------------------------------------------------------- Total: 1,837,418 $25,264,495.35 $64,630,000.00 - ---------------------------------------------------------------------------------------------------------
Schedule 2.3 ------------ Warrant Shares and Purchase Price ---------------------------------
- --------------------------------------------------------------------------------------------- GAP Purchaser Warrant Shares Purchase Price ------------- -------------- -------------- - --------------------------------------------------------------------------------------------- GAP LP 2,053,874 $ 821.55 - --------------------------------------------------------------------------------------------- GAP Coinvestment 289,876 $ 115.95 - --------------------------------------------------------------------------------------------- GapStar 156,250 $ 62.50 - --------------------------------------------------------------------------------------------- Total: 2,500,000 $1,000.00 - ---------------------------------------------------------------------------------------------
EX-4 6 dex4.txt ESCROW AGREEMENT EXHIBIT 4 ESCROW AGREEMENT ESCROW AGREEMENT, dated November 8, 2001 (this "Escrow Agreement"), by ---------------- and among General Atlantic Partners 74, L.P., a Delaware limited partnership, GAP Coinvestment Partners II, L.P., a Delaware limited partnership, GapStar, LLC, a Delaware limited liability company, Vectis CP Holdings, LLC , a Delaware limited liability company, Cenwell Limited and Campina Enterprises Limited (collectively, the "Purchasers"), Critical Path, Inc., a California Corporation ---------- ("Seller"), and Pillsbury Winthrop, LLP, as Escrow Agent (the "Escrow Agent"). ------ ------------ WHEREAS, the Purchasers and Seller are parties to the Stock and Warrant Purchase and Exchange Agreement, dated the date hereof (the "Purchase -------- Agreement"), pursuant to which the (i) Purchasers are acquiring from Seller an - --------- aggregate of 4,000,000 shares of Series D Cumulative Redeemable Convertible Participating Preferred Stock, par value $0.001 per share, of Seller (the "Series D Preferred Stock") and (ii) the GAP Purchasers (as defined in the ------------------------ Purchase Agreement) are acquiring from the Seller warrants (the "Warrants"), to -------- purchase, at an exercise price of $1.05 per share, an aggregate of 2,500,000 shares of common stock, par value $0.001 per share, of Seller (the "Common ------ Stock"); - ----- WHEREAS, the Purchase Agreement provides for the escrow hereby established to be held by the Escrow Agent; and WHEREAS, capitalized terms used herein, unless otherwise indicated, have the respective meanings ascribed to them in the Purchase Agreement. Accordingly, the parties agree as follows: 1. Establishment of Escrow. ----------------------- 1.1 Escrow Deposit. -------------- 1.1.1 On November 9, 2001, pursuant to (i) Section 2.1 of the Purchase Agreement, the Purchasers will deposit with the Escrow Agent $29,735,502.50 representing the entire purchase price payable pursuant to Section 2.1 for the Purchased Shares, (ii) Section 2.2 of the Purchase Agreement, the GAP Purchasers will deposit with the Escrow Agent the GAP Sub Notes in the aggregate face amount of $64,630,000 together with signed and undated Note Powers for such GAP Sub Notes, and (iii) Section 2.3 of the Purchase Agreement, the GAP Purchasers will deposit with the Escrow Agent $1,000.00 representing the entire purchase price for the Warrants and (the items in clause (i)-(iii) referred to collectively, as the "Purchasers' Deposit") to ------------------- be held and disbursed in accordance with the terms hereof. 1.1.2 On November 9, 2001, pursuant to Sections 2.1, 2.2 and 2.3 of the Purchase Agreement, Seller is depositing with the Escrow Agent (i) stock 2 certificates in definitive form representing the number of Purchased Shares set forth opposite each Purchaser's name on Schedule 2.1 to the Purchase Agreement, ------------ updated, but registered in the name of such Purchasers, (ii) stock certificates in definitive form representing the number of Exchange Shares set forth opposite each GAP Purchaser's name on Schedule 2.2 to the Purchase Agreement, undated but ------------ registered in the name of such GAP Purchaser, (iii) the GAP LP Warrant , (iv) the GAP Coinvestment Warrant, and (v) the GapStar Warrant, (collectively, the "Seller's Deposit" and, together with the Purchasers' Deposit, the "Deposit"). ---------------- ------- 1.1.3 The Escrow Agent acknowledges receipt of and agrees to accept the Deposit and establish and maintain a separate account for each Purchaser's cash portion of the Deposit as provided herein (the "Escrow ------ Account"). - ------- 1.2 Escrow Fund. The cash portion of the Deposit, as from time ----------- to time invested and reinvested as herein provided, less any distributions pursuant hereto, is hereinafter referred to as the "Escrow Fund." ----------- 2. Investment of Escrow Fund. ------------------------- 2.1 Investment. The Escrow Agent shall invest any or all of the ---------- Escrow Fund and any income or interest earned or accrued with respect thereto only in time deposits and certificates of deposit of any commercial bank incorporated in the United States of America of recognized standing having capital and surplus in excess of $50,000,000. Except as otherwise provided in Section 5.3, in no event shall the Escrow Agent have any liability for any investment hereunder, including, without limitation, any loss of the principal amount of any investment or in connection with the rate of return on any investment. 2.2 Distribution of Interest. All interest accrued from the ------------------------ date hereof to and including the Escrow Release Date (as defined below) on investments made pursuant to Section 2.1 shall be for the account of each of the Purchasers. On the Escrow Release Date, the Escrow Agent shall distribute to each of the Purchasers all interest then accrued for the account of each of the Purchasers pursuant to this Section 2.2 and not theretofore distributed hereunder. 3. Distributions from the Escrow. ----------------------------- 3.1 Distributions. ------------- 3.1.1 Upon the satisfaction of the Escrow Release Condition (as hereinafter defined) and the Nasdaq Escrow Approval Condition (as hereinafter defined), the Purchasers shall execute and deliver to the Escrow Agent a Certificate directing the Escrow Agent to take the action specified in Section 3.1.2(a). Upon the satisfaction of the Escrow Release Condition, but not the Nasdaq Escrow Approval Condition, Purchasers shall execute and deliver to the Escrow Agent a Certificate directing the Escrow Agent to take the action specified in Section 3.1.2(b). If subsequent to the delivery of the Certificate referred to in the previous sentence and on or prior to March 31, 2002, the Nasdaq Escrow Approval Condition is satisfied, the GAP 3 Purchasers shall execute and deliver to the Escrow Agent a Certificate directing the Escrow Agent to take the action specified in Section 3.1.2(c). 3.1.2 (a) Upon receipt by the Escrow Agent of a Certificate signed by the GAP Purchasers stating that the Escrow Release Condition and the Nasdaq Escrow Approval Condition have occurred, the Escrow Agent shall promptly, but in any case within 24 hours of receipt, (i) distribute to Seller the Purchasers' Deposit and (ii) deliver to the Purchasers the Seller's Deposit and the interest on the Escrow Fund payable pursuant to Section 2.2 of this Agreement. (b) Upon receipt by the Escrow Agent of a Certificate signed by the GAP Purchasers stating that the Escrow Release Condition has occurred but the Nasdaq Escrow Approval Condition has not occurred, the Escrow Agent shall promptly, but in any case within 24 hours, (i) distribute to the Seller the Purchasers' Deposit, less the Consideration Holdback Amount (as ---- defined below) and (ii) deliver to the Purchasers the Seller's Deposit, less the ---- Purchased Shares Holdback (as defined below) and the interest on the Escrow Fund payable pursuant to Section 2.2 of this Agreement. (c) Upon receipt by the Escrow Agent of a Certificate signed by the GAP Purchasers stating that the Nasdaq Escrow Approval Condition has occurred, the Escrow Agent shall promptly, but in any case within 24 hours, (i) distribute to the Seller the Consideration Holdback Amount and (ii) deliver to the GAP Purchasers the Purchased Shares Holdback. 3.1.3 For purposes of this Agreement, the "Escrow Release -------------- Condition" shall mean the entry on or before January 31, 2002 of a final order - --------- by District Court Judge William H. Orrick, not subject to further review, approving an executed, final, Stipulation and Agreement of Settlement in the litigation entitled In Re Critical Path Inc. Securities Litigation (the ---------------------------------------------- "Actions") and that (A) provides for the certification of the "Class" (as ------- defined in paragraph 1 of the MOU), (B) contains terms and conditions for the payment of cash and warrants to purchase the Common Stock to the Class that do not differ from the amounts set forth in paragraph 2 of the MOU and (C) dismisses the Action with prejudice as set forth in paragraph 3 of the MOU and provides for a broad form general release for the Defendants and the other parties as provided in paragraph 3 of the MOU. 3.1.4 "Escrow Release Date" shall mean the date upon which ------------------- the notice specified in the first sentence of Section 3.1.1 is delivered by the GAP Purchasers. 3.1.5 "Nasdaq Escrow Approval Condition" means the earlier -------------------------------- to occur of (i) the date upon which the Company obtains written confirmation from Nasdaq that the approval of a majority of the Company's stockholders, present in person or proxy at a properly convened meeting of the Company's stockholders ("Stockholder Approval") to the issuance of the shares of Preferred -------------------- Stock to the GAP Purchasers is not required under the applicable Nasdaq rules and regulations and (ii) the 4 date upon which the Company consummates all action required by the Nasdaq and applicable California law to obtain Stockholder Approval for the issuance to the GAP Purchasers of the portion of the shares of Series D Preferred Stock that constitute the amount of shares of Series D Preferred Stock (determined assuming conversion of all of the shares of Series D Preferred Stock) in excess of 19.9% of the outstanding shares of the Common Stock on the date hereof. 3.1.6 "Consideration Holdback Amount" shall mean a total of ----------------------------- $19,220,960, consisting of $9,485,464 aggregate purchase price amount (and $24,265,101 aggregate face amount) of GAP Sub Notes and $9,735,496 of cash. 3.1.7 "Purchased Shares Holdback" shall mean a total of ------------------------- 1,397,888 shares of Preferred Stock. 3.1.8 On the earlier of (i) receipt of a joint notice executed by all of the Purchasers and Seller or (ii) January 31, 2002 (the "Escrow Termination Date"), the Escrow Agent shall return the Purchaser's ----------------------- Deposit to the Purchasers and the Seller's Deposit to Seller. 3.1.9 If the Nasdaq Escrow Approval Condition has not been satisfied by April 30, 2002, the Escrow Agent shall return the Consideration Holdback Amount to the GAP Purchasers, together with any remaining interest in the Escrow Account and return the Purchased Shares Holdback to the Seller. 3.2 Tax Reporting. Seller and each of the Purchasers shall ------------- provide the Escrow Agent with its Tax Identification Number (TIN) as assigned by the Internal Revenue Service. All interest or other income earned under this Escrow Agreement shall be allocated and paid as provided herein and reported by the recipient to the Internal Revenue Service as having been so allocated and paid. 4. Termination of this Escrow Agreement. This Escrow Agreement shall ------------------------------------ terminate upon the distribution or return of all of the Purchasers' Deposit, all of Seller's Deposit and all other sums and documents held by the Escrow Agent pursuant to this Escrow Agreement. 5. Duties of Escrow Agent. ---------------------- 5.1 Duties Limited. The Escrow Agent shall perform only the -------------- duties expressly set forth herein, and shall not have any liability under, or duty to inquire into, the terms and provisions of any other agreement, including but not limited to the Purchase Agreement, except as expressly set forth herein, in performing its duties hereunder. Except as to the due execution and delivery of this Escrow Agreement by a duly authorized officer, the Escrow Agent has no responsibility as to the validity of this Escrow Agreement or any document related thereto. 5.2 Reliance. The Escrow Agent may rely upon, and shall incur no -------- liability for acting or refraining from acting upon, any written notice, instruction, request, consent, certificate, statement or other document furnished to it pursuant to this Escrow 5 Agreement and believed by it to be genuine and to have been signed or presented by the proper party or parties, and the Escrow Agent shall be under no duty to inquire into or investigate the validity, accuracy or content of any such document. 5.3 Good Faith. In no event shall the Escrow Agent have any ---------- liability for any error of judgment or for any act done or omitted by it in good faith, or for any mistake of fact or law, or for anything which it may do or refrain from doing hereunder, except for its own gross negligence or willful misconduct arising out of or in connection with this Escrow Agreement. The Purchasers and Seller agree to indemnify the Escrow Agent for, and defend and hold it harmless against, any loss, liability or expense arising out of or in connection with its actions as Escrow Agent hereunder, including the reasonable costs and expenses incurred in defending any such claim of liability, except that none of the Purchasers or the Seller shall be liable for any loss, liability or expense incurred on account of the gross negligence or willful misconduct on the part of the Escrow Agent. The Escrow Agent may consult with counsel from time to time and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or omitted to be taken by the Escrow Agent hereunder or in good faith and in accordance with the opinion of such counsel. The reasonable fees and disbursements of such counsel shall be promptly paid one half by the Purchasers and one half by Seller pursuant to the provisions of Section 7 hereof. 5.4 Limited Notice. The Escrow Agent shall be deemed to have no -------------- notice of, or duties with respect to, any agreement or agreements (whether or not a copy thereof is delivered to the Escrow Agent), other than as expressly set forth herein. 5.5 Limited Actions. The Escrow Agent shall not take any action --------------- by reason of any notice or instruction given by any of the parties or by any other person, firm or corporation, except only (i) such notices or instructions as are herein specifically provided for and (ii) orders or process of any court entered or issued with competent jurisdiction. In the event that the Escrow Agent shall be uncertain as to its duties or rights hereunder, it shall be entitled to refrain from taking any action until it shall be directed otherwise in writing by each of the Purchasers and Seller or by an order of a court of competent jurisdiction. 5.6 Conflicts. --------- 5.6.1 In the event that any of the terms and provisions of any other agreement between any of the parties conflict or are inconsistent with any of the terms and provisions of this Escrow Agreement, the terms and provisions of this Escrow Agreement shall govern and control in all respects the duties and liabilities of the Escrow Agent. 5.6.2 In the event that the Escrow Agent shall be uncertain as to its duties or rights hereunder or shall receive instructions, claims or demands from any party hereto which, in its opinion, conflict with any of the provisions of this Agreement, it shall be entitled to refrain from taking any action and its sole obligation shall be to keep safely all property held in escrow until it shall be directed 6 otherwise in writing by all of the other parties hereto or by a final order or judgment of a court of competent jurisdiction. 6. Resignation; Successor Escrow Agent. ----------------------------------- 6.1 Resignation. The Escrow Agent may resign at any time by ----------- giving 30 days' prior written notice of such resignation to the Purchasers and Seller. On the 30th day following delivery of such notice, the Escrow Agent shall have no further obligation hereunder except to hold the Escrow Fund and any other amounts and documents held by it pursuant to this Escrow Agreement as depositary. After resignation, the Escrow Agent shall have no further obligation to invest amounts then in the Escrow Fund (absent written instructions with respect thereto executed by the Seller and the Purchasers) and shall not take any action until the Purchasers and Seller have jointly designated a successor escrow agent. If the Purchasers and Seller are unable to agree upon a successor escrow agent within 30 days of receipt of notice from the Escrow Agent, the Escrow Agent may designate its successor, and if the Escrow Agent declines to designate its successor, the Purchasers shall designate the successor escrow agent. The Escrow Agent shall promptly deliver the Escrow Fund and any other amounts and documents held by it pursuant to this Escrow Agreement to such successor escrow agent and shall thereafter have no further obligations hereunder. Upon receipt of the Escrow Fund and other amounts and documents, the successor escrow agent shall thereupon be bound by all of the provisions hereof. 6.2 Termination. The Purchasers and Seller acting jointly ----------- may terminate the appointment of the Escrow Agent hereunder upon notice specifying the date upon which such termination shall take effect. In the event of such termination, the Purchasers and Seller shall jointly appoint and designate in such termination notice a successor escrow agent and the Escrow Agent shall turn over to such successor escrow agent the Escrow Fund and any other amounts and documents held by it pursuant to this Escrow Agreement. Upon receipt of the Escrow Fund and other amounts and documents, the successor escrow agent shall thereupon be bound by all of the provisions hereof, and the Escrow Agent shall have no further obligations hereunder. 7. Fees and Expenses of Escrow Agent. The Purchasers and Seller --------------------------------- shall each pay directly to the Escrow Agent one half of the Escrow Agent's reasonable fees for the Escrow Agent's services hereunder and all expenses, disbursements and advances (including reasonable attorneys' fees) incurred in carrying out the Escrow Agent's duties hereunder (the "Escrow Agent's Fees"). ------------------- 8. Miscellaneous. ------------- 8.1 Notices. Any notice or other communication required or ------- permitted hereunder shall be in writing and shall be delivered personally, telegraphed, sent by facsimile transmission, overnight delivery service or certified, registered or express mail, postage prepaid. Any such notice shall be deemed given when so delivered personally, telegraphed or sent by facsimile transmission, or by overnight delivery 7 service, one day after the date of deposit to such overnight delivery service or, if mailed, three days after the date of deposit in the United States mail, as follows: 8 if to Seller: Critical Path, Inc. 532 Folsom Street San Francisco, CA 94105 Attention: Chief Financial Officer Telecopy: (415) 808-8898 with a copy to: Pillsbury Winthrop LLP P.O. Box 7880 San Francisco, CA 94105-7880 Attention: Gregg F. Vignos, Esq. Telecopy: (415) 983-1200 if to the GAP Purchasers: c/o General Atlantic Service Corporation 3 Pickwick Plaza Greenwich, CT 06830 Telecopy: (203) 622-8818 Attention: Matthew Nimetz with a copy to: Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, New York 10019-6064 Attention: Douglas A. Cifu, Esq. Telecopy: (212) 757-3990 if to Vectis CP Holdings, LLC: c/o Vectis Group 117 Greenwich Street San Francisco, CA 94111 Telecopy: (415) 352-5310 Attention: Matthew Hobart with a copy to: Kirkland & Ellis 153 East 53/rd/ Street New York, NY 10022-4675 Telecopy: (212) 446-4900 Attention: Michael Movsovich, Esq. 9 if to Cenwell Limited: c/o 22/nd/ Floor Hutchison House 10 Harcourt Road Hong Kong Telecopy: 852-2128-1778 Attention: Company Secretary if to Campina Enterprises Limited: c/o 7/th/ Floor Cheung Kong Center 2 Queen's Road Central Hong Kong Telecopy: 852-2485-2057 Attention: Mr. Edmond lp if to the Escrow Agent: Pillsbury Winthrop LLP 50 Fremont Street San Francisco, CA 94104 Attention: Gregg F. Vignos, Esq. Telecopy: 415-983-1200 Any party may by notice given in accordance with this Section 8.1 to the other parties designate another address for receipt of notices hereunder. In the event that the Escrow Agent, in its sole discretion, shall determine that an emergency exists, the Escrow Agent may use such other means of communication as the Escrow Agent deems advisable. If any notice is required to be given to both the Escrow Agent and another party, such notice shall be given in a manner that results in the same effective date for each such notice. 8.1.1 In the event funds transfer instructions are given (other than in writing at the time of execution of this Escrow Agreement), whether in writing, by telecopier or otherwise, the Escrow Agent is authorized to seek confirmation of such instructions by telephone call-back to the person or persons designated on Schedule II hereto, and the Escrow Agent may rely upon ----------- the confirmations of anyone purporting to be the person or persons so designated. The persons and telephone numbers for call-backs may be changed only in a writing actually received and acknowledged by the Escrow Agent. The parties to this Agreement acknowledge that such security procedure is commercially reasonable. 8.1.2 It is understood that the Escrow Agent and the beneficiary's bank in any funds transfer may rely solely upon any account numbers or 10 similar identifying number provided either of the other parties hereto to identify (i) the beneficiary, (ii) the beneficiary's bank, or (iii) an intermediary bank. The Escrow Agent may apply any of the escrowed funds for any payment order it executes using any such identifying number, even where its use may result in a person other than the beneficiary being paid, or transfer of funds to a bank other than the beneficiary's bank, or an intermediary bank designated. 8.2 Entire Agreement. This Escrow Agreement is entered into and ---------------- delivered pursuant to the Purchase Agreement and sets forth the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements, written or oral, with respect thereto. 8.3 Governing Law. This Escrow Agreement shall be governed and ------------- construed in accordance with the laws of the State of New York without regard to its principles of conflicts of laws. 8.4 Jurisdiction; Venue. Each of the parties hereto by its ------------------- execution hereof: 8.4.1 irrevocably submits to the jurisdiction of the state courts of the State of New York and to the jurisdiction of the United States District Court for the Southern District of New York, for the purpose of any suit, action or other proceeding arising out of or based on this Agreement or the subject matter hereof; and 8.4.2 waives to the extent not prohibited by applicable law, and agrees not to assert, by way of motion, as a defense or otherwise, in any such proceeding brought in any of the above-named courts, any claim that it is not subject personally to the jurisdiction of such courts, that its property is exempt or immune from attachment or execution, that any such proceeding brought in an inconvenient forum, that the venue of such proceeding is improper, or that this Agreement, or the subject matter hereof, may not be enforced in or by such court. The parties hereto hereby agree that any action brought under this Agreement shall be brought in one of the above-mentioned courts. The parties hereto hereby consent to service of process in any such proceeding in any manner permitted by the laws of the State of New York, and agree that service of process by registered or certified mail, return receipt requested, at its address specified in or pursuant to Section 8.5 is reasonably calculated to give actual notice. 8.5 Binding Effect. This Escrow Agreement shall be binding upon -------------- and inure to the benefit of the parties and their respective heirs, legal representatives, successors and assigns. 8.6 Waivers and Amendments. This Escrow Agreement may be amended, ---------------------- modified, superseded, cancelled, renewed or extended, and the terms or conditions hereof may be waived, only by a written instrument signed by the parties, or, in the case of a waiver, by the party waiving compliance. No delay on the part of any 11 party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any right, power or privilege hereunder, nor any single or partial exercise of any right, power or privilege hereunder, preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. 8.7 Counterparts. This Escrow Agreement may be ------------ executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 8.8 Further Assurances. Each of the parties shall ------------------ execute such documents and other papers and take such further actions as may be reasonably required or desirable to carry out the provisions hereof and the transactions contemplated hereby. 8.9 Variations in Pronouns. All pronouns and any ---------------------- variations thereof refer to the masculine, feminine or neuter, singular or plural, as the identity of the person or persons may require. 8.10 Headings. The headings in this Escrow Agreement -------- are for reference purposes only and shall not in any way affect the meaning or interpretation of this Escrow Agreement. 8.11 Conflict Waiver. Each party to this Escrow --------------- Agreement acknowledges that the Escrow Agent is counsel for the Seller and has in the past and will in the future perform legal services for Seller in matters related to and unrelated to this Escrow Agreement and the parties hereto hereby (i) acknowledge that they have had an opportunity to ask for information relevant to this disclosure; (ii) acknowledge that the Escrow Agent represented the Seller in the transaction contemplated by this Escrow Agreement and has not represented any Purchaser in connection with such transaction; and (iii) give its informed written consent to the representation of the Seller in connection with the Purchase Agreement; and the transactions contemplated thereby, including litigation arising thereunder. 12 IN WITNESS WHEREOF, the parties have caused this Escrow Agreement to be executed on the date first written above. GENERAL ATLANTIC PARTNERS 74, L.P. By: GENERAL ATLANTIC PARTNERS, LLC, its General Partner By:______________________________ Name: Title: A Managing Member Address for Notice to General Atlantic Partners 74, L.P., GAPp Coinvestment Partners II, L.P. and GapStar, LLC: c/o General Atlantic Service Corporation 3 Pickwick Plaza Greenwich, CT 06830 Attn: Matthew Nimetz Tel: 203-629-8600 Fax: 203-622-8818 With copies to: Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, NY 10019-60064 Attn: Douglas A. Cifu, Esq. Tel: 212-373-3426 Fax: 212-757-3990 GAP COINVESTMENT PARTNERS II, L.P. By:_____________________________ Name: Title: A General Partner GAPSTAR, LLC By: GENERAL ATLANTIC PARTNERS, LLC, its Managing Member By:______________________________ Name: Title: A Managing Member 13 CENWELL LIMITED By:_______________________________ Name: Title: Address for Notice to Cenwell Limited: c/o 22/nd/ Floor Hutchison House 10 Harcourt Road Hong Kong Attn: Company Secretary Fax: 852-2128-1778 CAMPINA ENTERPRISES LIMITED By:_______________________________ Name: Title: c/o 7/th/ Floor Cheung Kong Center 2 Queen's Road Central Hong Kong Attn: Mr. Edmond lp. Fax: 852-2845-2057 VECTIS CP HOLDINGS, LLC, a Delaware limited liability company By: VECTIS GROUP LLC, its Managing Member By:_______________________________ Name: Title: Address for Notice to Vectis CP Holdings, LLC: 117 Greenwich Street San Francisco, CA 94111 Attn: Matthew Hobart Fax: 415-352-5310 14 CRITICAL PATH, INC. By:___________________________________ Name: Title: Address for Notice to Critical Path, Inc.: 532 Folsom Street San Francisco, CA 94105 Attn: Chief Financial Officer Fax: (415) 808-8898 With copies to: Pillsbury Winthrop LLP P.O. Box 7880 San Francisco, CA 94120-7880 Attention: Gregg F. Vignos Tel: 415-983-1000 |Fax: 415-983-1200 PILLSBURY WINTHROP LLP, Escrow Agent By:___________________________________ Name: Title: Address for Notice to the Escrow Agent: Pillsbury Winthrop LLP P.O. Box 7880 San Francisco, CA 94120-7880 Attention: Gregg F. Vignos Tel: 415-983-1000 |Fax: 415-983-1200 EX-5 7 dex5.txt STOCKHOLDER'S AGREEMENT EXHIBIT 5 ================================================================================ STOCKHOLDERS AGREEMENT among CRITICAL PATH, INC., GENERAL ATLANTIC PARTNERS 74, L.P., GAP COINVESTMENT PARTNERS II, L.P., GAPSTAR, LLC and THE STOCKHOLDERS NAMED HEREIN Dated: November 8, 2001 ================================================================================ Table of Contents ----------------- Page ---- 1. Definitions ...................................................... 1 2. Future Issuance of Shares; Preemptive Rights ..................... 5 2.1 Offering Notice ......................................... 5 2.2 Preemptive Rights; Exercise ............................. 5 2.3 Closing ................................................. 6 2.4 Sale to Subject Purchaser ............................... 7 3. Corporate Governance ............................................. 7 3.1 Board of Directors; Number and Composition .............. 7 3.2 Reimbursement of Expenses; D&O Insurance ................ 8 3.3 Meetings of the Board of Directors ...................... 8 3.4 Annual Budget ........................................... 8 4. Standstill; Nasdaq Matters ....................................... 8 4.1 Standstill. ............................................. 8 4.2 Nasdaq Matters. ......................................... 9 5. Miscellaneous .................................................... 10 5.1 Notices ................................................. 10 5.2 Successors and Assigns; Third Party Beneficiary ......... 11 5.3 Amendment and Waiver .................................... 12 5.4 Counterparts ............................................ 12 5.5 Specific Performance .................................... 12 5.6 Headings ................................................ 12 5.7 GOVERNING LAW ........................................... 12 5.8 Severability ............................................ 12 5.9 Rules of Construction ................................... 13 5.10 Entire Agreement ........................................ 13 5.11 Term of Agreement ....................................... 13 5.12 Further Assurances ...................................... 13 EXHIBITS A Articles of Incorporation B By-laws i 1 STOCKHOLDERS AGREEMENT STOCKHOLDERS AGREEMENT (this "Agreement"), dated November 8, 2001, --------- among Critical Path, Inc., a California corporation (the "Company"), General ------- Atlantic Partners 74, L.P., a Delaware limited partnership ("GAP LP"), GAP ------ Coinvestment Partners II, L.P., a Delaware limited partnership ("GAP --- Coinvestment"), GapStar, LLC, a Delaware limited liability company ("GapStar"), - ------------ ------- and the Persons listed on Schedule 1 hereto (the "Coinvestors"). -------- ----------- WHEREAS, pursuant to the Stock and Warrant Purchase and Exchange Agreement, dated November 8, 2001 (the "Stock Purchase Agreement"), among the ------------------------ Company, GAP LP, GAP Coinvestment, GapStar and the Coinvestors, the Company has agreed to (i) issue and sell to GAP LP, GAP Coinvestment, GapStar and the Coinvestors an aggregate of 708,037 shares of Series D Cumulative Redeemable Convertible Participating Preferred Stock, par value $0.001 per share, of the Company (the "Series D Preferred Stock"), (ii) issue and deliver to GAP LP, GAP ------------------------ Coinvestment and GapStar an aggregate of 1,837,418 shares of Series D Preferred Stock in exchange for a certain amount of convertible subordinated notes of the Company and (iii) issue and sell to GAP LP, GAP Coinvestment and GapStar warrants (the "Warrants") to purchase, at an exercise price of $1.05 per share, -------- an aggregate of 2,500,000 shares of Common Stock; and WHEREAS, pursuant to an Escrow Agreement, dated the date hereof, among the Company, GAP LP, GAP Coinvestment, GapStar, the Coinvestors and Pillsbury Winthrop LLP, as Escrow Agent (the "Escrow Agreement"), the parties have agreed to consummate the transactions contemplated by the Stock Purchase Agreement in escrow, including the execution and delivery of this Agreement; and WHEREAS, the parties hereto wish to provide for, among other things, preemptive rights, corporate governance rights and standstill obligations and certain other rights under certain conditions. NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: 1. Definitions. As used in this Agreement, and unless the context ----------- requires a different meaning, the following terms have the meanings indicated: "Affiliate" shall mean any Person who is an "affiliate" as defined in --------- Rule 12b-2 of the General Rules and Regulations under the Exchange Act. "Agreement" means this Agreement as the same may be amended, --------- supplemented or modified in accordance with the terms hereof. "Board of Directors" means the Board of Directors of the Company. ------------------ 2 "Business Day" means any day other than a Saturday, Sunday or other day ------------ on which commercial banks in the State of New York or the State of California are authorized or required by law or executive order to close. "Cenwell Stockholders" has the meaning set forth in Section 4.1(c) of -------------------- this Agreement. "Charter Documents" means the Articles of Incorporation and the By-laws ----------------- of the Company as in effect on the date hereof after giving effect to the filing of the Certificate of Designation with respect to the Series D Preferred Stock with the Secretary of State of the State of California, copies of which are attached hereto as Exhibits A and B, respectively. "Coinvestors" has the meaning set forth in the preamble to this ----------- Agreement. "Coinvestor Stockholders" means the Coinvestors and any Affiliate of a ----------------------- Coinvestor that, after the date hereof, acquires Shares, and the term "Coinvestor Stockholder" shall mean any such person. "Commission" means the Securities and Exchange Commission or any ---------- similar agency then having jurisdiction to enforce the Securities Act. "Common Stock" means the Common Stock, par value $.001 per share, of ------------ the Company and any other capital stock of the Company into which such stock is reclassified or reconstituted and any other common stock of the Company. "Common Stock Equivalents" means any security or obligation which is by ------------------------ its terms convertible, exchangeable or exercisable into or for shares of Common Stock, including, without limitation the Series D Preferred Stock, and any option, warrant or other subscription or purchase right with respect to Common Stock or any Common Stock Equivalent. "Company" has the meaning set forth in the preamble to this ------- Agreement. "Escrow Agreement" has the meaning set forth in the recitals to this ---------------- Agreement. "Excess New Securities" has the meaning set forth in Section 2.2(a) of --------------------- this Agreement. "Exchange Act" means the Securities Exchange Act of 1934, as amended, ------------ and the rules and regulations of the Commission thereunder. "Exempt Issuances" has the meaning set forth in Section 2.1 of this ---------------- Agreement. 3 "GAP Coinvestment" has the meaning set forth in the preamble to this ---------------- Agreement. "GAP LLC" means General Atlantic Partners, LLC, a Delaware limited ------- liability company and the general partner of GAP LP and the managing member of GapStar, and any successor to such entity. "GAP LP" has the meaning set forth in the preamble to this Agreement. ------ "GapStar" has the meaning set forth in the preamble to this Agreement. ------- "General Atlantic Director" has the meaning set forth in Section 3.2(a) ------------------------- of this Agreement. "General Atlantic Stockholders" means GAP LP, GAP Coinvestment, ----------------------------- GapStar, GmbH Coinvestment and any Affiliate of GAP LLC that, after the date hereof, acquires Shares, and the term "General Atlantic Stockholder" shall mean any such Person. "GmbH Coinvestment" means GAPCO GmbH & Co. KG, a German limited ----------------- partnership. "Governmental Authority" means the government of any nation, state, ---------------------- city, locality or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing. "Independent Director" means a director of the Company who is -------------------- considered an independent director for purposes of the Nasdaq Marketplace Rules in effect from time to time. "Lien" means any mortgage, deed of trust, pledge, hypothecation, ---- assignment, encumbrance, lien (statutory or other) or preference, priority, right or other security interest or preferential arrangement of any kind or nature whatsoever (excluding preferred stock and equity related preferences). "Nasdaq" means The Nasdaq Stock Market, Inc. ------ "New Issuance Notice" has the meaning set forth in Section 2.1 of this ------------------- Agreement. "New Securities" has the meaning set forth in Section 2.1 of this -------------- Agreement. "Person" means any individual, firm, corporation, partnership, trust, ------ incorporated or unincorporated association, joint venture, joint stock company, limited 4 liability company, Governmental Authority or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity. "Preemptive Rightholder(s)" has the meaning set forth in Section 2.1 of ------------------------- this Agreement. "Proportionate Percentage" has the meaning set forth in Section 2.2(a) ------------------------ of this Agreement. "Proposed Price" has the meaning set forth in Section 2.1 of this -------------- Agreement. "Requirement of Law" means, as to any Person, any law, statute, treaty, ------------------ rule, regulation, right, privilege, qualification, license or franchise or determination of an arbitrator or a court or other governmental authority or stock exchange, in each case applicable or binding upon such Person or any of its property or to which such Person or any of its property is subject or pertaining to any or all of the transactions contemplated or referred to herein. "Securities Act" means the Securities Act of 1933, as amended, and the -------------- rules and regulations of the Commission promulgated thereunder. "Series D Preferred Stock" has the meaning set forth in the recitals to ------------------------ this Agreement. "Shares" means, with respect to each Stockholder, all shares, whether ------ now owned or hereafter acquired, of Common Stock and Series D Preferred Stock, and any other Common Stock Equivalents owned thereby; provided, however, for the -------- ------- purposes of any computation of the number of Shares pursuant to Sections 2.2 and 5.3, all outstanding Common Stock Equivalents shall be deemed converted, exercised or exchanged as applicable and the shares of Common Stock issuable upon such conversion, exercise or exchange shall be deemed outstanding, whether or not such conversion, exercise or exchange has actually been effected. "Standstill Ceiling" has the meaning set forth in Section 4.1(a) of ------------------ this Agreement. "Standstill Expiration Date" means November 8, 2008. -------------------------- "Stock Option Plans" means the Company's stock option plans and ------------------ employee purchase plans pursuant to which shares of restricted stock and options to purchase shares of Common Stock are reserved and available for grant to officers, directors, employees and consultants of the Company. "Stock Purchase Agreement" has the meaning set forth in the recitals to ------------------------ this Agreement. 5 "Stockholders" means the General Atlantic Stockholders and the ------------ Coinvestor Stockholders. "Stockholders Meeting" has the meaning set forth in Section 4.2 of this -------------------- Agreement. "Subject Purchaser" has the meaning set forth in Section 2.1 of this ----------------- Agreement. "Vectis Stockholders" has the meaning set forth in Section 4.1(c) of ------------------- this Agreement. "Warrants" has the meaning set forth in the recitals to this Agreement. -------- "Written Consent" has the meaning set forth in Section 4.2 of this --------------- Agreement. 2. Future Issuance of Shares; Preemptive Rights. -------------------------------------------- 2.1 Offering Notice. Except for (a) options to purchase Common --------------- Stock or restricted stock which may be issued pursuant to the Stock Option Plans, (b) a subdivision of the outstanding shares of Common Stock into a larger number of shares of Common Stock, (c) capital stock issued upon exercise, conversion or exchange of any Common Stock Equivalent either (x) previously issued or (y) issued in accordance with the terms of this Agreement, (d) capital stock of the Company issued in consideration of an acquisition, approved by the Board of Directors, by the Company of another Person, (e) shares of Common Stock issued as a dividend on the Series D Preferred Stock and (f) shares of Common Stock or Common Stock Equivalents issued in strategic transactions (which may not be private equity or venture capital financing transactions) approved by the Board of Directors to Persons that are not principally engaged in financial investing ((a)-(f) being referred to collectively as "Exempt Issuances"), if the ---------------- Company wishes to issue any capital stock or any other securities convertible into or exchangeable for capital stock of the Company pursuant to a private placement exempt from registration under the Securities Act, other than any such private placement that is made solely to Qualified Institutional Buyers (as defined in the Securities Act) in reliance on Rule 144A promulgated under the Securities Act (collectively, "New Securities") to any Person (the "Subject -------------- ------- Purchaser"), then the Company shall offer such New Securities first to each of - --------- the General Atlantic Stockholders and the Coinvestor Stockholders (each, a "Preemptive Rightholder" and collectively, the "Preemptive Rightholders") by ---------------------- ----------------------- sending written notice (the "New Issuance Notice") to the Preemptive ------------------- Rightholders, which New Issuance Notice shall state (x) the number of New Securities proposed to be issued and (y) the proposed purchase price per security of the New Securities (the "Proposed Price"). Upon delivery of the New -------------- Issuance Notice, such offer shall be irrevocable unless and until the rights provided for in Section 2.2 shall have been waived or shall have expired. 2.2 Preemptive Rights; Exercise. --------------------------- 6 (a) For a period of twenty (20) days after the giving of the New Issuance Notice pursuant to Section 2.1, each of the Preemptive Rightholders shall have the right to purchase its Proportionate Percentage (as hereinafter defined) of the New Securities at a purchase price equal to the Proposed Price and upon the same terms and conditions set forth in the New Issuance Notice. Each Preemptive Rightholder shall have the right to purchase that percentage of the New Securities determined by dividing (x) the total number of Shares then owned by such Preemptive Rightholder by (y) the total number of Shares owned by all of the Preemptive Rightholders (the "Proportionate ------------- Percentage"). If any Preemptive Rightholder does not fully subscribe for the - ---------- number or amount of New Securities that it or he is entitled to purchase pursuant to the preceding sentence, then each Preemptive Rightholder which elected to purchase New Securities shall have the right for a five (5) day period to purchase that percentage of the remaining New Securities not so subscribed for (for the purposes of this Section 2.2(a), the "Excess New ---------- Securities") determined by dividing (x) the total number of Shares then owned by - ---------- such fully participating Preemptive Rightholder by (y) the total number of Shares then owned by all fully participating Preemptive Rightholders who elected to purchase Excess New Securities. Each of the Stockholders may transfer all or any portion of its rights to purchase New Securities under this Section 2 to any of its Affiliates. (b) The right of each Preemptive Rightholder to purchase the New Securities or Excess New Securities, as the case may be, under subsection (a) above shall be exercisable by delivering written notice of the exercise thereof, prior to the expiration of the 20-day period referred to in subsection (a) above with respect to New Securities or prior to the expiration of the 5-day period referred to in subsection (a) above with respect to Excess New Securities, to the Company, which notice shall state the amount of New Securities that such Preemptive Rightholder elects to purchase pursuant to Section 2.2(a). The failure of a Preemptive Rightholder to respond within such 20-day or 5-day period shall be deemed to be a waiver of such Preemptive Rightholder's rights under Section 2.2(a), provided that each Preemptive -------- Rightholder may waive its rights under Section 2.2(a) prior to the expiration of such 20-day or 5-day period by giving written notice to the Company. 2.3 Closing. The closing of the purchase of New Securities ------- or Excess New Securities subscribed for by the Preemptive Rightholders under Section 2.2 shall be held at the executive office of the Company at 11:00 a.m., local time, on (a) the 30th day after the giving of the New Issuance Notice pursuant to Section 2.1, if the Preemptive Rightholders elect to purchase all of the New Securities under Section 2.2, (b) the date of the closing of the sale to the Subject Purchaser made pursuant to Section 2.4 if the Preemptive Rightholders elect to purchase some, but not all, of the New Securities under Section 2.2 or (c) at such other time and place as the parties to the transaction may agree. At such closing, the Company shall deliver certificates representing the New Securities, and such New Securities shall be issued free and clear of all Liens (other than those attributable to actions by the purchasers thereof) and the Company shall so represent and warrant, and further represent and warrant (in addition to other customary representations and warranties) that such New Securities shall be, upon 7 issuance thereof to the Preemptive Rightholders and after payment therefor, duly authorized, validly issued, fully paid and non-assessable. Each Preemptive Rightholder purchasing the New Securities shall deliver at the closing payment in full in immediately available funds for the New Securities purchased by him or it. At such closing all of the parties to the transaction shall execute such additional documents as are customary for transactions of this type. 2.4 Sale to Subject Purchaser. The Company may sell to ------------------------- the Subject Purchaser all of the New Securities not purchased by the Preemptive Rightholders pursuant to Section 2.2 on terms and conditions that are no more favorable to the Subject Purchaser than those set forth in the New Issuance Notice; provided, however, that such sale is bona fide and made pursuant to a -------- ------- contract entered into within ninety (90) days following the earlier to occur of (i) the waiver by the Preemptive Rightholders of their option to purchase New Securities or Excess New Securities pursuant to Section 2.2, or (ii) the expiration of the 20-day or 5-day period referred to in Section 2.2. If such sale is not consummated within such 90-day period for any reason, then the restrictions provided for herein shall again become effective, and no issuance and sale of New Securities may be made thereafter by the Company without again offering the same in accordance with this Section 2. The closing of any issuance and sale pursuant to this Section 2.4 shall be held at a time and place as the parties to the transaction may agree within such 90-day period. 3. Corporate Governance. -------------------- 3.1 Board of Directors; Number and Composition. ------------------------------------------ (a) The Company shall take all actions reasonably necessary to cause the nomination to the Board of Directors of one (1) individual designated by the General Atlantic Stockholders but only if the General Atlantic Stockholders are not entitled to elect one director of the Company by virtue of their rights as the holders of a majority of the shares of Series D Preferred Stock (the "General Atlantic Director"). ------------------------- (b) In addition, the Company shall cause each committee of the Board of Directors to include at least one General Atlantic Director, whether elected pursuant to this Agreement or by virtue of the rights of the General Atlantic Stockholders as holders of Series D Preferred Stock. (c) In addition, the Company shall cause one additional Independent Director to be appointed to the Board of Directors within six (6) months of the date hereof. The initial appointment of the Independent Director shall be approved by a majority of the Board of Directors. (d) In addition, the Company shall cause, as long as Cenwell Stockholders continues to own at least 750,000 shares of Series D Preferred Stock (subject to adjustment for stock splits, stock dividends in similar transactions) one 8 (1) individual designated by the Cenwell Stockholders to serve as a non-voting observer on the Board of Directors. 3.2 Reimbursement of Expenses; D&O Insurance. The Company ---------------------------------------- shall reimburse the General Atlantic Director for all reasonable travel and accommodation expenses incurred by him in connection with the performance of his duties as director of the Company upon presentation of appropriate documentation therefor. The Company shall use reasonable commercial efforts to maintain a directors' liability insurance policy that is reasonably acceptable to the Board of Directors. 3.3 Meetings of the Board of Directors. The Company agrees to ---------------------------------- take such actions as are necessary to cause the Board of Directors to meet in person or telephonically not less frequently than once during each calendar month. 3.4 Annual Budget. Not less than thirty (30) days prior to the ------------- end of each fiscal year, the Company shall prepare and submit to the Board of Directors for its approval an annual operating budget of the Company for the next succeeding fiscal year in reasonable detail. 4. Standstill; Nasdaq Matters. -------------------------- 4.1 Standstill. Without the approval or written consent of the ---------- Board of Directors, none of the General Atlantic Stockholders or any of their Affiliates, and none of the Coinvestor Stockholders or any of their respective Affiliates shall, severally and not jointly, at any time prior to the Standstill Expiration Date: (a) purchase or otherwise acquire, or propose or offer to purchase or acquire, any shares of the Company's capital stock, whether by tender offer, market purchase, privately negotiated purchase, merger or otherwise, any shares of the Company's capital stock or any Common Stock Equivalents in excess of the number of shares of the Company's capital stock and Common Stock Equivalents purchased pursuant to the Stock Purchase Agreement (subject to adjustments and issuances of additional Common Stock Equivalents pursuant to the Series D Preferred Stock Certificate of Designation) with respect to each such Stockholder and its Affiliates considered severally and not jointly with any other Stockholder and its Affiliates (the "Standstill ---------- Ceiling"); provided, however, that in no event shall any such Stockholder - ------- -------- ------- acquire any Shares in a transaction in such an amount that when aggregated with the shares of the Company's capital stock already owned by such Stockholder, the acquisition of such shares of the Company's capital stock would require stockholder approval under applicable Nasdaq rules and policies; and provided, -------- further, that the dividends that accrue on the shares of Series D Preferred - ------- Stock pursuant to the terms thereof shall be excluded for purposes of calculating whether or not a Stockholder and its Affiliates have exceeded the Standstill Ceiling; (b) except as specified in this Agreement, make, or in any way participate, directly or indirectly, in any "solicitation" of "proxy" (as such terms are defined or used in Regulation 14A of the Exchange Act) to vote, or seek to advise or 9 influence any Person with respect to the voting of, any shares of the Company's capital stock, or become a "participant" in any "election contest" (as such terms are used or defined in Regulation 14A of the Exchange Act) relating to the election of directors of the Company; provided, however, that none of the -------- ------- General Atlantic Stockholders, the Coinvestor Stockholders or any of their respective Affiliates shall be deemed to have engaged in a "solicitation" or to have become a "participant" by reason of the membership of designees of the General Atlantic Stockholders, the Coinvestor Stockholders or any of their respective Affiliates on the Board of Directors; (c) form, join or in any way participate in a "group" (within the meaning of Section 13(d)(3) of the Exchange Act) or otherwise act in concert with any Person for the purpose of acquiring, holding, voting or disposing of any shares of the Company's capital stock; provided, however, that -------- ------- (i) the General Atlantic Stockholders may act as a group for the purpose of acquiring, holding, voting or disposing of any shares of the Company's capital stock, (ii) Vectis CP Holdings, LLC and any Affiliate thereof that acquires shares of the Company's capital stock (the "Vectis Stockholders") may act as a group for the purpose of acquiring, holding, voting or disposing of any shares of the Company's capital stock and (iii) Cenwell Limited, Campina Enterprises Limited and any Affiliate thereof that acquires shares of the Company's capital stock (the "Cenwell Stockholders") may act as a group for the purpose of acquiring, holding, voting or disposing of any shares of the Company's capital stock; and provided further, that, for the avoidance of doubt, the General -------- ------- Atlantic Stockholders, the Vectis Stockholders and the Cenwell Stockholders may not together act as a group for all purpose of acquiring, holding, voting or disposing of any shares of the Company's capital stock; or (d) request the Company (or its directors, officers, employees or agents), to take any action which would reasonably be expected to require pursuant to law the Company to make a public announcement or proposal or offer with respect to (i) any form of business combination or transaction involving the Company including, without limitation, a merger, consolidation, tender or exchange offer, sale or purchase of assets, or dissolution or liquidation of the Company or (ii) instigate, encourage or assist any Person to do any of the foregoing. 4.2 Nasdaq Matters. The Company shall use all commercially -------------- reasonable efforts to maintain the quotation and listing on Nasdaq of all of the shares of Common Stock issuable upon conversion of the Series D Preferred Stock and all of the shares of Common Stock issuable upon exercise of the Warrants. In addition, each of the General Atlantic Stockholders agree that as long as it is required to do so by Nasdaq, at any regular or special meeting of shareholders of the Company ("Stockholders Meeting") or in any written consent executed in -------------------- lieu of such a Stockholders Meeting (a "Written Consent"), it will cause all --------------- voting securities owned in the aggregate by the General Atlantic Stockholders that would at any such Stockholders Meeting or in connection with any Written Consent constitute more than 19.99% of the outstanding voting power of the Company entitled to vote at such Stockholders Meeting or via such Written Consent to be 10 4.2 voted in the same proportion as the other shares of the Company's Common Stock (other than any held by the General Atlantic Stockholder) are voted. 5. Miscellaneous. ------------- 5.1 Notices. All notices, demands or other communications ------- provided for or permitted hereunder shall be made in writing and shall be by registered or certified first class mail, return receipt requested, telecopier, courier service or personal delivery: (a) if to the Company: Critical Path, Inc. 532 Folsom Street San Francisco, CA 94105 Telecopy: (415) 808-8898 Attention: Chief Financial Officer with a copy to, which shall not constitute notice: Pillsbury Winthrop LLP 50 Fremont Street San Francisco, CA 94105 Telecopy: 415-983-1200 Attention: Gregg F. Vingos, Esq. (b) if to any of the General Atlantic Stockholders: c/o General Atlantic Service Corporation 3 Pickwick Plaza Greenwich, CT 06830 Telecopy: (203) 622-8818 Attention: Matthew Nimetz with a copy to, which shall not constitute notice: Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, NY 10019-6064 Telecopy: (212) 757-3990 Attention: Douglas A. Cifu, Esq. 11 (c) if to the Coinvestor Stockholders: (i) if to Vectis CP Holdings, LLC: c/o Vectis Group, LLC 117 Greenwich Street San Francisco, CA 94111 Telecopy: 415-352-5310 Attention: Matthew Hobart with a copy to, which shall not constitute notice: Kirkland & Ellis 153 East 53/rd/ Street New York, NY 10022-4675 Telecopy: 212-446-4900 Attention: Michael Movsovich, Esq. (ii) if to Cenwell Limited c/o 22/nd/ Floor Hutchison House 10 Harcourt Road Hong Kong Telecopy: (852) 2128-1778 Attention: Company Secretary (iii) if to Campina Enterprises Limited c/o 7/th/ Floor Cheung Kong Center 2 Queen's Road Central Hong Kong Telecopy: (852) 2845-2057 Attention: Mr. Edmond lp All such notices, demands and other communications shall be deemed to have been duly given when delivered by hand, if personally delivered; when delivered by courier, if delivered by commercial courier service; five (5) Business Days after being deposited in the mail, postage prepaid, if mailed; and when receipt is mechanically acknowledged, if telecopied. Any party may by notice given in accordance with this Section 5.1 designate another address or Person for receipt of notices hereunder. 5.2 Successors and Assigns; Third Party Beneficiary. This ----------------------------------------------- Agreement shall inure to the benefit of and be binding upon successors and permitted 12 assigns of the parties hereto. No person other than the parties hereto and their successors and permitted assigns is intended to be a beneficiary of this Agreement. 5.3 Amendment and Waiver. -------------------- (a) No failure or delay on the part of any party hereto in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided for herein are cumulative and are not exclusive of any remedies that may be available to the parties hereto at law, in equity or otherwise. (b) Any amendment, supplement or modification of or to any provision of this Agreement, any waiver of any provision of this Agreement, and any consent to any departure by any party from the terms of any provision of this Agreement, shall be effective only if it is made or given in writing and signed by (i) the Company, (ii) the General Atlantic Stockholders and (iii) the Coinvestor Stockholders holding a majority of the voting power of the Shares held by the Coinvestor Stockholders; provided, however, that to the extent that -------- ------- any such amendment or waiver adversely affects any of the Stockholders, such amendment or waiver shall require the prior written consent of each Stockholder so adversely affected; provided further, that any Stockholder may waive in -------- ------- writing any right that inures to such Stockholder. Any such amendment, supplement, modification, waiver or consent shall be binding upon the Company and all of the Stockholders. 5.4 Counterparts. This Agreement may be executed in any ------------ number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 5.5 Specific Performance. The parties hereto intend that -------------------- each of the parties have the right to seek damages or specific performance in the event that any other party hereto fails to perform such party's obligations hereunder. Therefore, if any party shall institute any action or proceeding to enforce the provisions hereof, any party against whom such action or proceeding is brought hereby waives any claim or defense therein that the plaintiff party has an adequate remedy at law. 5.6 Headings. The headings in this Agreement are for -------- convenience of reference only and shall not limit or otherwise affect the meaning hereof. 5.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND ------------- CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. 5.8 Severability. If any one or more of the provisions ------------ contained herein, or the application thereof in any circumstance, is held invalid, illegal or 13 unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired, unless the provisions held invalid, illegal or unenforceable shall substantially impair the benefits of the remaining provisions hereof. 5.9 Rules of Construction. Unless the context otherwise --------------------- requires, references to sections or subsections refer to sections or subsections of this Agreement. 5.10 Entire Agreement. This Agreement, together with the ---------------- exhibits hereto, is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein. There are no restrictions, promises, representations, warranties or undertakings, other than those set forth herein or therein or set forth in the Stock Purchase Agreement. This Agreement, together with the exhibits hereto, supersedes all prior agreements and understandings among the parties with respect to such subject matter. 5.11 Term of Agreement. Unless the Escrow Termination Date ----------------- (as defined in the Escrow Agreement) shall have occurred, in which case this Agreement shall terminate and be void and of no further force or effect, this Agreement shall become effective upon the Escrow Release Date (as defined in the Escrow Agreement) and shall thereafter terminate upon the earlier of (a) with respect to a particular Stockholder, on the date that such Stockholder and its Affiliates beneficially own less than 5% of the actual outstanding shares of Common Stock (assuming conversion of the shares of Series D Preferred Stock) or (b) the twentieth anniversary of the date hereof. 5.12 Further Assurances. Each of the parties shall, and shall ------------------ cause their respective Affiliates to, execute such documents and perform such further acts as may be reasonably required or desirable to carry out or to perform the provisions of this Agreement. [Remainder of page intentionally left blank] IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Stockholders Agreement on the date first written above. CRITICAL PATH, INC. By: _____________________________ Name: Title: GENERAL ATLANTIC PARTNERS 74, L.P. By: GENERAL ATLANTIC PARTNERS, LLC, its General Partner By: _____________________________ Name: Title: A Managing Member GAP COINVESTMENT PARTNERS II, L.P. By: _____________________________ Name: Title: A General Partner GAPSTAR, LLC By: GENERAL ATLANTIC PARTNERS, LLC, its Managing Member By: _____________________________ Name: Title: A Managing Member VECTIS CP HOLDINGS, LLC, a Delaware limited liability company By: VECTIS GROUP, LLC, its Managing Member By: ________________________________ Name: Title: CENWELL LIMITED By: _________________________________ Name: Title: CAMPINA ENTERPRISES LIMITED By: _________________________________ Name: Title: Schedule I ---------- Coinvestors ----------- Vectis CP Holdings, LLC Cenwell Limited Campina Enterprises Limited 17 EX-6 8 dex6.txt REGISTRATION RIGHTS AGREEMENT EXHIBIT 6 REGISTRATION RIGHTS AGREEMENT among CRITICAL PATH, INC. GENERAL ATLANTIC PARTNERS 74, L.P., GAP COINVESTMENT PARTNERS II, L.P., GAPSTAR, LLC and THE OTHER PARTIES LISTED HEREIN _________________________________________ Dated: November 8, 2001 _________________________________________ TABLE OF CONTENTS -----------------
Page ---- 1. Definitions.......................................................................... 1 2. General; Securities Subject to this Agreement ....................................... 4 (a) Grant of Rights ................................................................ 4 (b) Registrable Securities ......................................................... 5 (c) Holders of Registrable Securities .............................................. 5 3. Demand Registration ................................................................. 5 (a) Request for Demand Registration ................................................ 5 (b) Incidental or "Piggy-Back" Rights with Respect to a Demand Registration ........ 6 (c) Effective Demand Registration .................................................. 6 (d) Expenses ....................................................................... 7 (e) Underwriting Procedures ........................................................ 7 (f) Selection of Underwriters ...................................................... 8 4. Incidental or "Piggy-Back" Registration ............................................. 8 (a) Request for Incidental Registration ............................................ 8 (b) Expenses ....................................................................... 8 5. Holdback Agreements ................................................................. 9 (a) Restrictions on Public Sale by Designated Holders .............................. 9 (b) Restrictions on Public Sale by the Company ..................................... 9 6. Registration Procedures ............................................................. 9 (a) Obligations of the Company ..................................................... 9 (b) Seller Information ............................................................. 12 (c) Notice to Discontinue .......................................................... 12 (d) Registration Expenses .......................................................... 13 7. Indemnification; Contribution ....................................................... 13 (a) Indemnification by the Company ................................................. 13 (b) Indemnification by Designated Holders .......................................... 14 (c) Conduct of Indemnification Proceedings ......................................... 14 (d) Contribution ................................................................... 15 8. Rule 144 ............................................................................ 16 9. Miscellaneous ....................................................................... 16 (a) Recapitalizations, Exchanges, etc. ............................................. 16 (b) No Inconsistent Agreements ..................................................... 16 (c) Remedies ....................................................................... 16 (d) Amendments and Waivers ......................................................... 17 (e) Notices ........................................................................ 17
i (f) Successors and Assigns; Third Party Beneficiaries.................. 19 (g) Counterparts ...................................................... 19 (h) Headings .......................................................... 19 (i) GOVERNING LAW ..................................................... 19 (j) Severability ...................................................... 19 (k) Rules of Construction ............................................. 20 (l) Entire Agreement .................................................. 20 (m) Further Assurances ................................................ 20 (n) Other Agreements .................................................. 20
ii 1 REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT, dated November 8, 2001 (this "Agreement"), among Critical Path, Inc., a California corporation (the --------- "Company"), General Atlantic Partners 74, L.P., a Delaware limited partnership ------- ("GAP LP"), GAP Coinvestment Partners II, L.P., a Delaware limited partnership ------ ("GAP Coinvestment"), GapStar, LLC, a Delaware limited liability company ---------------- ("GapStar"), Cenwell Limited ("Cenwell"), Campina Enterprises Limited ------- ------- ("Campina") and Vectis CP Holdings, LLC, a Delaware limited liability company ------- ("Vectis"). ------ WHEREAS, pursuant to the Stock and Warrant Purchase Agreement, dated November 8, 2001 (the "Stock Purchase Agreement"), among the Company, GAP ------------------------ LP, GAP Coinvestment, GapStar, Cenwell, Campina and Vectis, the Company has agreed to (i) issue and sell to GAP LP, GAP Coinvestment, GapStar, Cenwell, Campina and Vectis, an aggregate of 2,162,582 shares of Series D Cumulative Redeemable Convertible Participating Series D Preferred Stock, par value $0.001 per share, of the Company (the "Series D Preferred Stock"), (ii) issue and ------------------------ deliver to GAP LP, GAP Coinvestment and GapStar an aggregate of 1,837,418 shares of Series D Preferred Stock in exchange for a certain amount of convertible subordinated notes of the Company and (iii) issue and sell to GAP LP, GAP Coinvestment and GapStar warrants to purchase, at an exercise price of $1.05 per share, an aggregate of 2,500,000 shares of Common Stock (as hereinafter defined) (the "Warrants"); -------- WHEREAS, pursuant to an Escrow Agreement, dated the date hereof, among the Company, GAP LP, GAP Coinvestment, GapStar, Cenwell, Campina, Vectis and Pillsbury Winthrop, LLP, as Escrow Agent (the "Escrow Agreement"), ---------------- the parties have agreed to consummate the transaction contemplated by the Stock Purchase Agreement in escrow, including the execution and delivery of this Agreement; and WHEREAS, in order to induce (i) each of GAP LP, GAP Coinvestment, GapStar, Cenwell, Campina and Vectis to purchase shares of Series D Preferred Stock and (ii) each of GAP LP, GAP Coinvestment and GapStar to purchase the Warrants, the Company has agreed to grant registration rights with respect to the Registrable Securities (as hereinafter defined) as set forth in this Agreement. NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: 1. Definitions. As used in this Agreement, and unless the ----------- context requires a different meaning, the following terms have the meanings indicated: "Affiliate" shall mean any Person who is an "affiliate" as --------- defined in Rule 12b-2 of the General Rules and Regulations under the Exchange Act. "Agreement" mean this Agreement as the same may be amended, --------- supplemented or modified in accordance with the terms hereof. 2 "Approved Underwriter" has the meaning set forth in Section -------------------- 3(f) of this Agreement. "Board of Directors" means the Board of Directors of the ------------------ Company. "Business Day" means any day other than a Saturday, Sunday or ------------ other day on which commercial banks in the State of New York are authorized or required by law or executive order to close. "Campina" has the meaning set forth in the preamble to this ------- Agreement. "Cenwell" has the meaning set forth in the preamble to this ------- Agreement. "Cenwell Stockholders" means Cenwell, Campina and any -------------------- Affiliates thereof that, after the date hereof, acquires Registrable Securities. "Commission" means the Securities and Exchange Commission or ---------- any similar agency then having jurisdiction to enforce the Securities Act. "Common Stock" means the Common Stock, par value $0.001 per ------------ share, of the Company or any other capital stock of the Company into which such stock is reclassified or reconstituted and any other common stock of the Company. "Company" has the meaning set forth in the preamble to this ------- Agreement. "Company Underwriter" has the meaning set forth in Section ------------------- 4(a) of this Agreement. "Demand Registration" has the meaning set forth in Section ------------------- 3(a) of this Agreement. "Designated Holder" means each of the General Atlantic ----------------- Stockholders, the Cenwell Stockholders, the Vectis Stockholders and any transferee of any of them to whom Registrable Securities have been transferred in accordance with Section 9(f) of this Agreement, other than a transferee to whom Registrable Securities have been transferred pursuant to a Registration Statement under the Securities Act or Rule 144 (or any successor rule thereto). "Escrow Agreement" has the meaning set forth in the recitals ---------------- to this Agreement. "Escrow Release Date" has the meaning set forth in the Escrow ------------------- Agreement. "Escrow Termination Date" has the meaning set forth in the ----------------------- Escrow Agreement. 3 "Exchange Act" means the Securities Exchange Act of 1934, as ------------ amended, and the rules and regulations of the Commission thereunder. "GAP Coinvestment" has the meaning set forth in the preamble ---------------- to this Agreement. "GAP LLC" means General Atlantic Partners, LLC, a Delaware ------- limited liability company and the general partner of GAP LP and the managing member of GapStar, and any successor to such entity. "GAP LP" has the meaning set forth in the preamble to this ------ Agreement. "GapStar" has the meaning set forth in the preamble to this ------- Agreement. "General Atlantic Stockholders" means GAP LP, GAP ----------------------------- Coinvestment, GapStar, GmbH Coinvestment and any Affiliate of GAP LLC that, after the date hereof, acquires Registrable Securities. "GmbH Coinvestment" means GAPCO GmbH & Co. KG, a German ----------------- limited partnership. "Holders' Counsel" has the meaning set forth in Section ---------------- 6(a)(i) of this Agreement. "Incidental Registration" has the meaning set forth in Section ----------------------- 4(a) of this Agreement. "Indemnified Party" has the meaning set forth in Section 7(c) ----------------- of this Agreement. "Indemnifying Party" has the meaning set forth in Section 7(c) ------------------ of this Agreement. "Initiating Holders" has the meaning set forth in Section 3(a) ------------------ of this Agreement. "Inspector" has the meaning set forth in Section 6(a)(vii) of --------- this Agreement. "Liability" has the meaning set forth in Section 7(a) of this --------- Agreement. "NASD" means the National Association of Securities Dealers, ---- Inc. "Person" means any individual, firm, corporation, partnership, ------ limited liability company, trust, incorporated or unincorporated association, joint venture, joint stock company, limited liability company, government (or an agency or political subdivision thereof) or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity. 4 "Public Offering" means any public offering of the shares of --------------- Common Stock of the Company pursuant to an effective Registration Statement filed under the Securities Act. "Records" has the meaning set forth in Section 6(a)(vii) of ------- this Agreement. "Registrable Securities" means each of the following: (a) any ---------------------- and all shares of Common Stock issued or issuable upon conversion of shares of Series D Preferred Stock or exercise of the Warrants, (b) any other shares of Common Stock acquired or owned by any of the Designated Holders after the date hereof if such Designated Holder is an Affiliate of the Company and (c) any shares of Common Stock issued or issuable to any of the Designated Holders with respect to the Registrable Securities by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise and any shares of Common Stock or voting common stock issuable upon conversion, exercise or exchange thereof. "Registration Expenses" has the meaning set forth in Section --------------------- 6(d) of this Agreement. "Registration Statement" means a Registration Statement filed ---------------------- pursuant to the Securities Act. "Securities Act" means the Securities Act of 1933, as amended, -------------- and the rules and regulations of the Commission promulgated thereunder. "Series D Preferred Stock" has the meaning set forth in the ------------------------ recitals to this Agreement. "Stock Purchase Agreement" has the meaning set forth in the ------------------------ recitals to this Agreement. "Valid Business Reason" has the meaning set forth in Section --------------------- 3(a) of this Agreement. "Vectis" has the meaning set forth in the preamble of this ------ Agreement. "Vectis Stockholders" means Vectis and any Affiliate thereof ------------------- that, after the date hereof, acquires Registrable Securities. "Warrants" has the meaning set forth in the recitals to this -------- Agreement. 2. General; Securities Subject to this Agreement. --------------------------------------------- (a) Grant of Rights. Unless the Escrow Termination Date --------------- shall have occurred, in which case this Agreement shall terminate and be void and of no further force or effect, then effective upon the Escrow Release Date, the Company hereby 5 grants registration rights to the Designated Holders upon the terms and conditions set forth in this Agreement. (b) Registrable Securities. For the purposes of this ---------------------- Agreement, Registrable Securities will cease to be Registrable Securities, when (i) a Registration Statement covering such Registrable Securities has been declared effective under the Securities Act by the Commission and such Registrable Securities have been disposed of pursuant to such effective Registration Statement, (ii) (x) the entire amount of the Registrable Securities owned by a Designated Holder may be sold in a single sale, in the opinion of counsel satisfactory to the Company and such Designated Holder, each in their reasonable judgment, without any limitation as to volume pursuant to Rule 144 (or any successor provision then in effect) under the Securities Act and (y) such Designated Holder owning such Registrable Securities owns less than one percent (1%) of the outstanding shares of Common Stock on a fully diluted basis, or (iii) the Registrable Securities are proposed to be sold or distributed by a Person not entitled to the registration rights granted by this Agreement. (c) Holders of Registrable Securities. A Person is deemed to --------------------------------- be a holder of Registrable Securities whenever such Person owns of record Registrable Securities, or holds an option to purchase, or a security convertible into or exercisable or exchangeable for, Registrable Securities whether or not such acquisition or conversion has actually been effected. If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Securities, the Company may act upon the basis of the instructions, notice or election received from the registered owner of such Registrable Securities. Registrable Securities issuable upon exercise of an option or upon conversion of another security shall be deemed outstanding for the purposes of this Agreement 3. Demand Registration. ------------------- (a) Request for Demand Registration. At any time commencing ------------------------------- one year after the date hereof, either the General Atlantic Stockholders or the Cenwell Stockholders (the "Initiating Holders"), may each make a written request ------------------ to the Company to register, and the Company shall register, under the Securities Act and on an appropriate registration statement form as reasonably determined by the Company and approved by the Initiating Holders (a "Demand Registration"), ------------------- the number of Registrable Securities stated in such request; provided, however, -------- ------- that the Company shall not be obligated to effect more than one such Demand Registration for the General Atlantic Stockholders (subject to Section 3(e)(ii) below) and more than one such Demand Registration for the Cenwell Stockholders (subject to Section 3(e)(ii) below). If following receipt of a written request for a Demand Registration the Board of Directors, in its good faith judgment, determines that any registration of Registrable Securities should not be made or continued because it would materially interfere with any material financing, acquisition, corporate reorganization or merger or other material transaction involving the Company (a "Valid Business Reason"), the Company may (x) postpone --------------------- filing a Registration Statement relating to a Demand Registration until such Valid Business Reason no longer exists, but in no event for more than ninety (90) days, and 6 (y) in case a Registration Statement has been filed relating to a Demand Registration, if the Valid Business Reason has not resulted from actions taken by the Company, the Company, upon the approval of a majority of the Board of Directors, such majority to include at least one Director appointed by the General Atlantic Stockholders, may cause such Registration Statement to be withdrawn and its effectiveness terminated or may postpone amending or supplementing such Registration Statement. The Company shall give written notice of its determination to postpone or withdraw a Registration Statement and of the fact that the Valid Business Reason for such postponement or withdrawal no longer exists, in each case, promptly after the occurrence thereof. Notwithstanding anything to the contrary contained herein, the Company may not postpone or withdraw a filing under this Section 3(a) more than once in any twelve (12) month period. Each request for a Demand Registration by the Initiating Holders shall state the amount of the Registrable Securities proposed to be sold and the intended method of disposition thereof. (b) Incidental or "Piggy-Back" Rights with Respect to a Demand ---------------------------------------------------------- Registration. Each of the Designated Holders (other than Initiating Holders - ------------ which have requested a registration under Section 3(a)) may offer its or his Registrable Securities under any Demand Registration pursuant to this Section 3(b). Within five (5) days after the receipt of a request for a Demand Registration from an Initiating Holder, the Company shall (i) give written notice thereof to all of the Designated Holders (other than Initiating Holders which have requested a registration under Section 3(a)) and (ii) subject to Section 3(e), include in such registration all of the Registrable Securities held by such Designated Holders from whom the Company has received a written request for inclusion therein within ten (10) days of the receipt by such Designated Holders of such written notice referred to in clause (i) above. Each such request by such Designated Holders shall specify the number of Registrable Securities proposed to be registered. The failure of any Designated Holder to respond within such 10 day period referred to in clause (ii) above shall be deemed to be a waiver of such Designated Holder's rights under this Section 3 with respect to such Demand Registration. Any Designated Holder may waive its rights under this Section 3 prior to the expiration of such 10-day period by giving written notice to the Company, with a copy to the Initiating Holders. If a Designated Holder sends the Company a written request for inclusion of part or all of such Designated Holder's Registrable Securities in a registration, such Designated Holder shall not be entitled to withdraw or revoke such request without the prior written consent of the Company in its sole discretion unless, as a result of facts or circumstances arising after the date on which such request was made relating to the Company or to market conditions, such Designated Holder reasonably determines that participation in such registration would have a material adverse effect on such Designated Holder. (c) Effective Demand Registration. The Company shall use all ----------------------------- commercially reasonable efforts to cause any such Demand Registration to be filed not later than thirty (30) days after it receives a request under Section 3(a) hereof and to become and remain effective as soon as practicable thereafter but, in any event, not later than ninety (90) days after such filing. A registration shall not constitute a Demand Registration until it has become effective and remains continuously effective for the lesser of (i) the period during which all Registrable Securities registered in the Demand Registration are sold and (ii) 120 days; provided, however, that a registration shall not -------- ------- 7 constitute a Demand Registration if (x) after such Demand Registration has become effective, such registration or the related offer, sale or distribution of Registrable Securities thereunder is interfered with by any stop order, injunction or other order or requirement of the Commission or other governmental agency or court for any reason not attributable to the Initiating Holders and such interference is not thereafter eliminated or (y) the conditions specified in the underwriting agreement, if any, entered into in connection with such Demand Registration are not satisfied or waived, other than by reason of a failure by the Initiating Holder. (d) Expenses. The Company shall pay all Registration Expenses in -------- connection with a Demand Registration, whether or not such Demand Registration becomes effective. (e) Underwriting Procedures. ----------------------- (i) If the Company or the Initiating Holders holding a majority of the Registrable Securities held by all of the Initiating Holders so elect, the Company shall use all commercially reasonable efforts to cause such Demand Registration to be in the form of a firm commitment underwritten offering and the managing underwriter or underwriters selected for such offering shall be the Approved Underwriter selected in accordance with Section 3(f). In connection with any Demand Registration under this Section 3 involving an underwritten offering, none of the Registrable Securities held by any Designated Holder making a request for inclusion of such Registrable Securities pursuant to Section 3(b) hereof shall be included in such underwritten offering unless such Designated Holder accepts the terms of the offering as agreed upon by the Company, the Initiating Holders and the Approved Underwriter, and then only in such quantity as will not, in the opinion of the Approved Underwriter, jeopardize the success of such offering by the Initiating Holders. If the Approved Underwriter advises the Company in its reasonable opinion that the aggregate amount of such Registrable Securities requested to be included in such offering is sufficiently large to have a material adverse effect on the success of such offering, then the Company shall include in such registration only the aggregate amount of Registrable Securities that the Approved Underwriter believes may be sold without any such material adverse effect and shall reduce the amount of Registrable Securities to be included in such registration by removing from such registration securities owned, first by the Company and ----- second by the Designated Holders (including the Initiating Holders) pro rata - ------ based on the number of Registrable Securities owned by each such Designated Holder. (ii) If an Initiating Holder makes a request for a Demand Registration and, pursuant to Section 3(e)(i) above, the Approved Underwriter advises the Company to reduce the aggregate amount of Registrable Securities requested to be included in such offering such that less than seventy-five percent (75%) of the Registrable Securities requested to be included by any Initiating Holder are ultimately included in and sold pursuant to such Demand Registration, the Initiating Holder shall have the right to require the Company to effect an additional Demand Registration; provided, however, that in no event -------- ------- shall the aggregate number of Demand Registrations to be effected by the Company for any one Initiating Holder exceed two (2). 8 (f) Selection of Underwriters. If any Demand Registration of ------------------------- Registrable Securities is in the form of an underwritten offering, the Company shall select and obtain an investment banking firm of national reputation to act as the managing underwriter of the offering (the "Approved Underwriter"); -------------------- provided, however, that the Approved Underwriter shall, in any case, also be - -------- ------- approved by the Initiating Holders. 4. Incidental or "Piggy-Back" Registration. --------------------------------------- (a) Request for Incidental Registration. If at any time the ----------------------------------- Company proposes to file a Registration Statement under the Securities Act with respect to an offering by the Company for its own account (other than a Registration Statement on Form S-4 or S-8 or any successor thereto) or for the account of any stockholder of the Company other than the Designated Holders, then the Company shall give written notice of such proposed filing to each of the Designated Holders at least twenty (20) days before the anticipated filing date, and such notice shall describe the proposed registration and distribution and offer such Designated Holders the opportunity to register the number of Registrable Securities as each such Designated Holder may request (an "Incidental Registration"). The Company shall use all commercially reasonable ----------------------- efforts (within twenty (20) days of the notice provided for in the preceding sentence) to cause the managing underwriter or underwriters in the case of a proposed underwritten offering (the "Company Underwriter") to permit each of the ------------------- Designated Holders who have requested in writing to participate in the Incidental Registration to include its or his Registrable Securities in such offering on the same terms and conditions as the securities of the Company or the account of such other stockholder, as the case may be, included therein. In connection with any Incidental Registration under this Section 4(a) involving an underwritten offering, the Company shall not be required to include any Registrable Securities in such underwritten offering unless the Designated Holders thereof accept the terms of the underwritten offering as agreed upon between the Company, such other stockholders, if any, and the Company Underwriter, and then only in such quantity as the Company Underwriter believes will not jeopardize the success of the offering by the Company. If the Company Underwriter determines that the registration of all or part of the Registrable Securities which the Designated Holders have requested to be included would materially adversely affect the success of such offering, then the Company shall be required to include in such Incidental Registration, to the extent of the amount that the Company Underwriter believes may be sold without causing such adverse effect, first, all of the securities to be offered for the account of ----- the Company or on the account of the selling stockholder that caused the registration statement that has triggered the Incidental Registration to be filed, as the case may be; second, the Registrable Securities to be offered for ------ the account of the Designated Holders pursuant to this Section 4, pro rata based on the number of Registrable Securities owned by each such Designated Holder; and third, any other securities requested to be included in such offering. ----- (b) Expenses. The Company shall bear all Registration Expenses -------- in connection with any Incidental Registration pursuant to this Section 4, whether or not such Incidental Registration becomes effective. 9 5. Holdback Agreements. ------------------- (a) Restrictions on Public Sale by Designated Holders. To the ------------------------------------------------- extent (i) requested (A) by the Company or the Initiating Holders, as the case may be, in the case of a non-underwritten public offering and (B) by the Approved Underwriter or the Company Underwriter, as the case may be, in the case of an underwritten public offering and (ii) all of the Company's officers, directors and holders in excess of one percent (1%) of its outstanding capital stock execute agreements identical to those referred to in this Section 5(a), each Designated Holder agrees (x) not to effect any public sale or distribution of any Registrable Securities or of any securities convertible into or exchangeable or exercisable for such Registrable Securities, including a sale pursuant to Rule 144 under the Securities Act, or offer to sell, contract to sell (including without limitation any short sale), grant any option to purchase or enter into any hedging or similar transaction with the same economic effect as a public sale any Registrable Securities and (y) not to make any request for a Demand Registration under this Agreement, during the ninety (90) day period or such shorter period, if any, mutually agreed upon by such Designated Holder and the requesting party beginning on the effective date of the Registration Statement (except as part of such registration) for such public offering. No Designated Holder of Registrable Securities subject to this Section 5(a) shall be released from any obligation under any agreement, arrangement or understanding entered into pursuant to this Section 5(a) unless all other Designated Holders of Registrable Securities subject to the same obligation are also released. All Designated Holders of Registrable Securities shall be automatically released from any obligations under any agreement, arrangement or understanding entered into pursuant to this Section 5(a) immediately upon the expiration of the 90 day period. (b) Restrictions on Public Sale by the Company. The Company ------------------------------------------ agrees not to effect any public sale or distribution of any of its securities, or any securities convertible into or exchangeable or exercisable for such securities (except pursuant to registrations on Form S-4 or S-8 or any successor thereto), during the period beginning on the effective date of any Registration Statement in which the Designated Holders of Registrable Securities are participating and ending on the earlier of (i) the date on which all Registrable Securities registered on such Registration Statement are sold and (ii) 120 days after the effective date of such Registration Statement (except as part of such registration). 6. Registration Procedures. ----------------------- (a) Obligations of the Company. Whenever registration of -------------------------- Registrable Securities has been requested pursuant to Section 3 or Section 4 of this Agreement, the Company shall use all commercially reasonable efforts to effect the registration and sale of such Registrable Securities in accordance with the intended method of distribution thereof as quickly as practicable, and in connection with any such request, the Company shall, as expeditiously as possible: (i) prepare and file with the Commission a Registration Statement on any form for which the Company then qualifies or which counsel for the 10 Company shall deem appropriate and which form shall be available for the sale of such Registrable Securities in accordance with the intended method of distribution thereof, and cause such Registration Statement to become effective; provided, however, that (x) before filing a Registration Statement or prospectus - -------- ------- or any amendments or supplements thereto, the Company shall provide counsel selected by the Designated Holders holding a majority of the Registrable Securities being registered in such registration ("Holders' Counsel") with an ---------------- adequate opportunity to review and comment on such Registration Statement and each prospectus included therein (and each amendment or supplement thereto) to be filed with the Commission, subject to such documents being under the Company's control, and (y) the Company shall notify the Holders' Counsel and each seller of Registrable Securities of any stop order issued or threatened by the Commission and take all action required to prevent the entry of such stop order or to remove it if entered; (ii) prepare and file with the Commission such amendments and supplements to such Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective for the lesser of (x) 120 days and (y) such shorter period which will terminate when all Registrable Securities covered by such Registration Statement have been sold, and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such Registration Statement; (iii) furnish to each seller of Registrable Securities, prior to filing a Registration Statement, at least one copy of such Registration Statement as is proposed to be filed, and thereafter such number of copies of such Registration Statement, each amendment and supplement thereto (in each case including all exhibits thereto), and the prospectus included in such Registration Statement (including each preliminary prospectus) and any prospectus filed under Rule 424 under the Securities Act as each such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller; (iv) register or qualify such Registrable Securities under such other securities or "blue sky" laws of such jurisdictions as any seller of Registrable Securities may request, and to continue such qualification in effect in such jurisdiction for as long as permissible pursuant to the laws of such jurisdiction, or for as long as any such seller requests or until all of such Registrable Securities are sold, whichever is shortest, and do any and all other acts and things which may be reasonably necessary or advisable to enable any such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller; provided, however, that the Company -------- ------- shall not be required to (x) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 6(a)(iv), (y) subject itself to taxation in any such jurisdiction or (z) consent to general service of process in any such jurisdiction; 11 (v) notify each seller of Registrable Securities at any time when a prospectus relating thereto is required to be delivered under the Securities Act, upon discovery that, or upon the happening of any event as a result of which, the prospectus included in such Registration Statement contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and the Company shall promptly prepare a supplement or amendment to such prospectus and furnish to each seller of Registrable Securities a reasonable number of copies of such supplement to or an amendment of such prospectus as may be necessary so that, after delivery to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (vi) enter into and perform customary agreements (including an underwriting agreement containing representations, warranties, covenants and indemnities for securities law matters and otherwise in customary form with the Approved Underwriter or Company Underwriter, if any, selected as provided in Section 3 or Section 4, as the case may be) and take such other actions as are prudent and reasonably required in order to expedite or facilitate the disposition of such Registrable Securities, including causing its officers to participate in "road shows" and other information meetings organized by the Approved Underwriter or Company Underwriter; (vii) make available at reasonable times for inspection by any seller of Registrable Securities, any managing underwriter participating in any disposition of such Registrable Securities pursuant to a Registration Statement, Holders' Counsel and any attorney, accountant or other agent retained by any such seller or any managing underwriter (each, an "Inspector" and --------- collectively, the "Inspectors"), all financial and other records, pertinent ---------- corporate documents and properties of the Company and its subsidiaries (collectively, the "Records") as shall be reasonably necessary to enable them to ------- exercise their due diligence responsibility, and cause the Company's and its subsidiaries' officers, directors and employees, and the independent public accountants of the Company, to supply all information reasonably requested by any such Inspector in connection with such Registration Statement. Records that the Company determines, in good faith, to be confidential and which it notifies the Inspectors are confidential shall not be disclosed by the Inspectors (and the Inspectors shall confirm their agreement in writing in advance to the Company if the Company shall so request) unless (x) the disclosure of such Records is necessary, in the Company's judgment, to avoid or correct a misstatement or omission in the Registration Statement, (y) the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction after exhaustion of all appeals therefrom or (z) the information in such Records was known to the Inspectors on a non-confidential basis prior to its disclosure by the Company or has been made generally available to the public. Each seller of Registrable Securities agrees that it shall, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, give notice to the Company and allow the Company, at the Company's expense, to undertake appropriate action to prevent disclosure of the Records deemed confidential; 12 (viii) if such sale is pursuant to an underwritten offering, obtain a "cold comfort" letters dated the effective date of the Registration Statement and the date of the closing under the underwriting agreement from the Company's independent public accountants in customary form and covering such matters of the type customarily covered by "cold comfort" letters as the managing underwriter reasonably requests; (ix) furnish, at the request of any seller of Registrable Securities on the date such securities are delivered to the underwriters for sale pursuant to such registration or, if such securities are not being sold through underwriters, on the date the Registration Statement with respect to such securities becomes effective, an opinion, if reasonably available, dated such date, of counsel representing the Company for the purposes of such registration, addressed to the underwriters, if any, and to the seller making such request, covering such legal matters with respect to the registration in respect of which such opinion is being given as the underwriters, if any, and such seller may reasonably request and are customarily included in such opinions; (x) comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable but no later than fifteen (15) months after the effective date of the Registration Statement, an earnings statement covering a period of twelve (12) months beginning after the effective date of the Registration Statement, in a manner which satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder; (xi) cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed, provided that the applicable listing requirements are -------- satisfied; (xii) cooperate with each seller of Registrable Securities and each underwriter participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with the NASD; and (xiii) take all other steps reasonably necessary to effect the registration of the Registrable Securities contemplated hereby. (b) Seller Information. The Company may require each seller of ------------------ Registrable Securities as to which any registration is being effected to furnish, and such seller shall furnish, to the Company such information regarding the distribution of such securities as the Company may from time to time reasonably request in writing. (c) Notice to Discontinue. Each Designated Holder agrees that, --------------------- upon receipt of any notice from the Company of the happening of any event of the kind described in Section 6(a)(v), such Designated Holder shall forthwith discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until such Designated Holder's receipt of the copies of the supplemented or amended prospectus contemplated by Section 6(a)(v) and, if so directed 13 by the Company, such Designated Holder shall deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such Designated Holder's possession, of the prospectus covering such Registrable Securities which is current at the time of receipt of such notice. If the Company shall give any such notice, the Company shall extend the period during which such Registration Statement shall be maintained effective pursuant to this Agreement (including, without limitation, the period referred to in Section 6(a)(ii)) by the number of days during the period from and including the date of the giving of such notice pursuant to Section 6(a)(v) to and including the date when sellers of such Registrable Securities under such Registration Statement shall have received the copies of the supplemented or amended prospectus contemplated by and meeting the requirements of Section 6(a)(v). (d) Registration Expenses. The Company shall pay all expenses --------------------- arising from or incident to its performance of, or compliance with, this Agreement, including, without limitation, (i) Commission, stock exchange and NASD registration and filing fees, (ii) all fees and expenses incurred in complying with securities or "blue sky" laws (including reasonable fees, charges and disbursements of counsel to any underwriter incurred in connection with "blue sky" qualifications of the Registrable Securities as may be set forth in any underwriting agreement), (iii) all printing, messenger and delivery expenses and (iv) the fees, charges and expenses of counsel to the Company and of its independent public accountants and any other accounting fees, charges and expenses incurred by the Company (including, without limitation, any expenses arising from any "cold comfort" letters or any special audits incident to or required by any registration or qualification) and any reasonable legal fees, charges and expenses incurred by one counsel for the General Atlantic Stockholders. All of the expenses described in the preceding sentence of this Section 6(d) are referred to herein as "Registration Expenses." The Designated --------------------- Holders of Registrable Securities sold pursuant to a Registration Statement shall bear the expense of any underwriter's discount or commission relating to registration and sale of such Designated Holders' Registrable Securities. 7. Indemnification; Contribution. ----------------------------- (a) Indemnification by the Company. The Company agrees to ------------------------------ indemnify and hold harmless each Designated Holder, its partners, directors, officers, affiliates and each Person who controls (within the meaning of Section 15 of the Securities Act) such Designated Holder from and against any and all losses, claims, damages, liabilities and expenses (including reasonable costs of investigation) (each, a "Liability" and collectively, "Liabilities"), arising --------- ----------- out of or based upon any untrue, or allegedly untrue, statement of a material fact contained in any Registration Statement, prospectus or preliminary prospectus (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or arising out of or based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which such statements were made, except insofar as such Liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission contained in such Registration Statement, preliminary 14 prospectus or final prospectus in reliance and in conformity with information concerning such Designated Holder furnished in writing to the Company by such Designated Holder expressly for use therein, including, without limitation, the information furnished to the Company pursuant to Section 7(b). The Company shall also provide customary indemnities to any underwriters of the Registrable Securities, their officers, directors and employees and each Person who controls such underwriters (within the meaning of Section 15 of the Securities Act) to the same extent as provided above with respect to the indemnification of the Designated Holders of Registrable Securities. (b) Indemnification by Designated Holders. In connection with any ------------------------------------- Registration Statement in which a Designated Holder is participating pursuant to Section 3 or Section 4 hereof, each such Designated Holder shall promptly furnish to the Company in writing such information with respect to such Designated Holder as the Company may reasonably request or as may be required by law for use in connection with any such Registration Statement or prospectus and all information required to be disclosed in order to make the information previously furnished to the Company by such Designated Holder not materially misleading or necessary to cause such Registration Statement not to omit a material fact with respect to such Designated Holder necessary in order to make the statements therein not misleading. Each Designated Holder agrees to indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the Registration Statement, any underwriter retained by the Company and each Person who controls the Company or such underwriter (within the meaning of Section 15 of the Securities Act) to the same extent as the foregoing indemnity from the Company to the Designated Holders, but only if such statement or alleged statement or omission or alleged omission was made in reliance upon and in conformity with information with respect to such Designated Holder furnished in writing to the Company by such Designated Holder expressly for use in such Registration Statement or prospectus, including, without limitation, the information furnished to the Company pursuant to this Section 7(b); provided, however, that the total amount to be indemnified by such -------- ------- Designated Holder pursuant to this Section 7(b) shall be limited to the net proceeds (after deducting the underwriters' discounts and commissions) received by such Designated Holder in the offering to which the Registration Statement or prospectus relates. (c) Conduct of Indemnification Proceedings. Any Person entitled -------------------------------------- to indemnification hereunder (the "Indemnified Party") agrees to give prompt ----------------- written notice to the indemnifying party (the "Indemnifying Party") after the ------------------ receipt by the Indemnified Party of any written notice of the commencement of any action, suit, proceeding or investigation or threat thereof made in writing for which the Indemnified Party intends to claim indemnification or contribution pursuant to this Agreement; provided, however, that the failure so to notify the -------- ------- Indemnifying Party shall not relieve the Indemnifying Party of any Liability that it may have to the Indemnified Party hereunder (except to the extent that the Indemnifying Party is materially prejudiced or otherwise forfeits substantive rights or defenses by reason of such failure). If notice of commencement of any such action is given to the Indemnifying Party as above provided, the Indemnifying Party shall be entitled to participate in and, to the extent it may wish, jointly with any other Indemnifying Party similarly notified, to assume the defense of 15 such action at its own expense, with counsel chosen by it and reasonably satisfactory to such Indemnified Party. The Indemnified Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be paid by the Indemnified Party unless (i) the Indemnifying Party agrees to pay the same, (ii) the Indemnifying Party fails to assume the defense of such action with counsel reasonably satisfactory to the Indemnified Party or (iii) the named parties to any such action (including any impleaded parties) include both the Indemnifying Party and the Indemnified Party and such parties have been advised by such counsel that either (x) representation of such Indemnified Party and the Indemnifying Party by the same counsel would be inappropriate under applicable standards of professional conduct or (y) there may be one or more legal defenses available to the Indemnified Party which are different from or additional to those available to the Indemnifying Party. In any of such cases, the Indemnifying Party shall not have the right to assume the defense of such action on behalf of such Indemnified Party, it being understood, however, that the Indemnifying Party shall not be liable for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for all Indemnified Parties. No Indemnifying Party shall be liable for any settlement entered into without its written consent, which consent shall not be unreasonably withheld. No Indemnifying Party shall, without the consent of such Indemnified Party, effect any settlement of any pending or threatened proceeding in respect of which such Indemnified Party is a party and indemnity has been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability for claims that are the subject matter of such proceeding. (d) Contribution. If the indemnification provided for in this ------------ Section 7 from the Indemnifying Party is unavailable to an Indemnified Party hereunder in respect of any Liabilities referred to herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Liabilities in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions which resulted in such Liabilities, as well as any other relevant equitable considerations. The relative faults of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the Liabilities referred to above shall be deemed to include, subject to the limitations set forth in Sections 7(a), 7(b) and 7(c), any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding; provided that the -------- total amount to be contributed by such Designated Holder shall be limited to the net proceeds (after deducting the underwriters' discounts and commissions) received by such Designated Holder in the offering. 16 The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 7(d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. 8. Rule 144. The Company covenants that it shall (a) file any -------- reports required to be filed by it under the Exchange Act and (b) take such further action as each Designated Holder may reasonably request (including providing any information necessary to comply with Rule 144 under the Securities Act), all to the extent required from time to time to enable such Designated Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such rule may be amended from time to time or (ii) any similar rules or regulations hereafter adopted by the Commission. The Company shall, upon the request of any Designated Holder, deliver to such Designated Holder a written statement as to whether it has complied with such requirements. 9. Miscellaneous. ------------- (a) Recapitalizations, Exchanges, etc. The provisions of --------------------------------- this Agreement shall apply to the full extent set forth herein with respect to (i) the shares of Common Stock, (ii) any and all shares of voting common stock of the Company into which the shares of Common Stock are converted, exchanged or substituted in any recapitalization or other capital reorganization by the Company and (iii) any and all equity securities of the Company or any successor or assign of the Company (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect of, in conversion of, in exchange for or in substitution of, the shares of Common Stock and shall be appropriately adjusted for any stock dividends, splits, reverse splits, combinations, recapitalizations and the like occurring after the date hereof. The Company shall use all commercially reasonable efforts to cause any successor or assign (whether by merger, consolidation, sale of assets or otherwise) to enter into a new registration rights agreement with the Designated Holders on terms substantially the same as this Agreement as a condition of any such transaction. (b) No Inconsistent Agreements. The Company shall not enter -------------------------- into any agreement with respect to its securities that is inconsistent with the rights granted to the Designated Holders in this Agreement or grant any additional registration rights to any Person or with respect to any securities which are not Registrable Securities which are prior in right to or inconsistent with the rights granted in this Agreement. (c) Remedies. The Designated Holders, in addition to being -------- entitled to exercise all rights granted by law, including recovery of damages, shall be entitled to specific performance of their rights under this Agreement. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agrees to 17 waive in any action for specific performance the defense that a remedy at law would be adequate. (d) Amendments and Waivers. Except as otherwise provided ---------------------- herein, the provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given unless consented to in writing by (i) the Company and (ii) the General Atlantic Stockholders, Cenwell Stockholders and Vectis Stockholders holding Registrable Securities representing (after giving effect to any adjustments) at least a majority of the aggregate number of Registrable Securities owned by all of the General Atlantic Stockholders, Cenwell Stockholders and Vectis Stockholders; provided, however, that to the extent any -------- ------- amendment or waiver shall adversely affect any of the Stockholders, such amendment or waiver shall require the prior written consent of each Stockholder so adversely affected. Any such written consent shall be binding upon the Company and all of the Designated Holders. (e) Notices. All notices, demands and other communications ------- provided for or permitted hereunder shall be made in writing and shall be made by registered or certified first-class mail, return receipt requested, telecopier, courier service or personal delivery: (i) if to the Company: Critical Path, Inc. 532 Folsom Street San Francisco, CA 94105 Telecopy: (415) 808-8898 Attention: Chief Financial Officer with a copy to: Pillsbury Winthrop LLP 50 Fremont Street San Francisco, CA 94105 Telecopy: (415) 983-1200 Attention: Gregg F. Vignos, Esq. (ii) if to GAP LP, GapStar or GAP Coinvestment: c/o General Atlantic Service Company 3 Pickwick Plaza Greenwich, CT 06830 Telecopy: (203) 622-8818 Attention: Matthew Nimetz 18 with a copy to: Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, NY 10019-6064 Telecopy: (212) 757-3990 Attention: Douglas A. Cifu, Esq. (iii) if to Cenwell: c/o 22/nd/ Floor Hutchison House 10 Harcourt Road Hong Kong Telecopy: (852) 2128-1778 Attention: Company Secretary (iv) if to Campina: c/o 7/th/ Floor Cheung Kong Center 2 Queens Road Central Hong Kong Telecopy: (852) 2845-2057 Attention: Mr. Edmond lp (v) if to Vectis: c/o Vectis Group, LLC 117 Greenwich Street San Francisco, CA 94111 Telecopy: 415-352-5310 Attention: Matthew Hobart with a copy to: Kirkland & Ellis 153 East 53/rd/ Street New York, NY 10022-4675 Telecopy: 212-446-4900 Attention: Michael Movsovich, Esq. (vi) if to any other Designated Holder, at its address as it appears on the record books of the Company. 19 All such notices, demands and other communications shall be deemed to have been duly given when delivered by hand, if personally delivered; when delivered by courier, if delivered by commercial courier service; five (5) Business Days after being deposited in the mail, postage prepaid, if mailed; and when receipt is mechanically acknowledged, if telecopied. Any party may by notice given in accordance with this Section 9(e) designate another address or Person for receipt of notices hereunder. (f) Successors and Assigns; Third Party Beneficiaries. ------------------------------------------------- This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of the parties hereto as hereinafter provided. The Demand Registration rights and related rights of the General Atlantic Stockholders or the Cenwell Stockholders contained in Section 3 hereof shall be (i) with respect to any Registrable Security that is transferred to an Affiliate of a General Atlantic Stockholder or a Cenwell Stockholder, automatically transferred to such Affiliate and (ii) with respect to any Registrable Security that is transferred in all cases to a non-Affiliate, transferred only with the consent of the Company which consent shall not be unreasonably withheld, conditioned or delayed. The incidental or "piggy-back" registration rights of the Designated Holders contained in Sections 3(b) and 4 hereof and the other rights of each of the Designated Holders with respect thereto shall be, with respect to any Registrable Security, automatically transferred to any Person who is the transferee of such Registrable Security so long as such transferee agrees to be bound by this Agreement. All of the obligations of the Company hereunder shall survive any such transfer. Except as provided in Section 7, no Person other than the parties hereto and their successors and permitted assigns is intended to be a beneficiary of this Agreement. (g) Counterparts. This Agreement may be executed in any ------------ number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (h) Headings. The headings in this Agreement are for -------- convenience of reference only and shall not limit or otherwise affect the meaning hereof. (i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY ------------- AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. (j) Severability. If any one or more of the provisions ------------ contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired, unless the provisions held invalid, illegal or unenforceable shall substantially impair the benefits of the remaining provisions hereof. 20 (k) Rules of Construction. Unless the context otherwise --------------------- requires, references to sections or subsections refer to sections or subsections of this Agreement. (l) Entire Agreement. This Agreement is intended by the ---------------- parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto with respect to the subject matter contained herein. There are no restrictions, promises, representations, warranties or undertakings with respect to the subject matter contained herein, other than those set forth or referred to herein. This Agreement supersedes all prior agreements and understandings among the parties with respect to such subject matter. (m) Further Assurances. Each of the parties shall ------------------ execute such documents and perform such further acts as may be reasonably required or desirable to carry out or to perform the provisions of this Agreement. (n) Other Agreements. Nothing contained in this ---------------- Agreement shall be deemed to be a waiver of, or release from, any obligations any party hereto may have under, or any restrictions on the transfer of Registrable Securities or other securities of the Company imposed by, any other agreement including, but not limited to, the Stock Purchase Agreement or the Stockholders Agreement. [Remainder of page intentionally left blank] IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Registration Rights Agreement on the date first written above. CRITICAL PATH, INC. By: _____________________________________ Name: Title: GENERAL ATLANTIC PARTNERS 74, L.P. By: GENERAL ATLANTIC PARTNERS, LLC, its General Partner By: _________________________________ Name: Title: GAP COINVESTMENT PARTNERS II, L.P. By: _____________________________________ Name: Title: GAPSTAR, LLC By: GENERAL ATLANTIC PARTNERS, LLC, its Managing Member By: _________________________________ Name: Title: VECTIS CP HOLDINGS, LLC, a Delaware limited liability company By: VECTIS GROUP, LLC its Managing Member By: _____________________________________ Name: Title: CENWELL LIMITED By: _____________________________________ Name: Title: CAMPINA ENTERPRISES LIMITED By: _____________________________________ Name: Title: EX-7 9 dex7.txt AMENDMENT NO.1 TO STOCK AND WARRANT PURCHASE AND E EXHIBIT 7 AMENDMENT NO. 1 TO STOCK AND WARRANT PURCHASE AND EXCHANGE AGREEMENT THIS AMENDMENT NO. 1 TO STOCK AND WARRANT PURCHASE AND EXCHANGE AGREEMENT, dated as of November 9, 2001 (this "Amendment"), is entered into by --------- and among Critical Path, Inc., a California corporation (the "Seller"), General ------ Atlantic Partners 74 L.P., a Delaware limited partnership, GAP Coinvestment Partners II, L.P., a Delaware limited partnership, GapStar, LLC, a Delaware limited liability company, Vectis CP Holdings, LLC, Cenwell Limited and Campina Enterprises Limited (collectively, the "Purchasers") and amends the Stock and ---------- Warrant Purchase and Exchange Agreement, dated November 8, 2001 (the "Purchase -------- Agreement"), among the Seller and the Purchasers. - --------- WHEREAS, pursuant to the terms of the Purchase (i) the Company agreed to issue and sell to the Purchasers an aggregate of 4,000,000 shares, par value $0.001 per share, of Series D Cumulative Redeemable Convertible Participating Preferred Stock of the Company and (ii) the GAP Purchasers (as defined in the Purchase Agreement) are acquiring from the Seller warrants to purchase, at an exercise price of $1.05 per share, an aggregate of 2,500,000 shares of common stock, par value $0.001 per share, of Seller; and WHEREAS, the parties wish to amend the Purchase Agreement pursuant to Section 10.4 thereof. NOW, THEREFORE, the parties hereto hereby agree as follows: 1. Schedule 2.1. Schedule 2.1. of the Purchase Agreement is hereby ------------ ------------ amended and restated in its entirety as set forth on Schedule 2.1 attached ------------ hereto. 2. Except as otherwise expressly provided in this Amendment, all of the terms and conditions of the Purchase Agreement are hereby ratified and shall remain unchanged and continue in full force and effect. 2 3. This Amendment may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 4. This Amendment shall be governed by and construed in accordance with the laws of the state of New York, without regard to the principles of conflicts of law of any jurisdiction. 3 IN WITNESS WHEREOF, the undersigned have duly executed and delivered this Amendment as of the day and year first above written. CRITICAL PATH, INC. By:____________________________________ Name: Title: GENERAL ATLANTIC PARTNERS 74, L.P. By: GENERAL ATLANTIC PARTNERS, LLC, its General Partner By:____________________________________ Name: Title: A Managing Member GAP COINVESTMENT PARTNERS II, L.P. By:____________________________________ Name: Title: A General Partner GAPSTAR, LLC By: GENERAL ATLANTIC PARTNERS, LLC, its Managing Member By:____________________________________ Name: Title: 4 VECTIS CP HOLDINGS, LLC By: VECTIS GROUP, LLC, its Managing Member By:______________________________________ Name: Title: CENWELL LIMITED By:______________________________________ Name: Title: CAMPINA ENTERPRISES LIMITED By:______________________________________ Name: Title: 5 Schedule 2.1 ------------ Purchased Shares and Purchase Price -----------------------------------
- ------------------------------------------------------------------------------------------------------------- Purchaser Purchased Shares Purchase Price --------- ---------------- -------------- - ------------------------------------------------------------------------------------------------------------- GAP LP 581,688 $ 7,998,210.00 - ------------------------------------------------------------------------------------------------------------- GAP Coinvestment 82,097 $ 1,128,833.75 - ------------------------------------------------------------------------------------------------------------ GapStar 44,252 $ 608,465.00 - ------------------------------------------------------------------------------------------------------------- Vectis CP Holdings, LLC 581,818 $ 7,999,997.50/1/ - ------------------------------------------------------------------------------------------------------------- Cenwell Limited 436,364 $ 5,999,998.13 - ------------------------------------------------------------------------------------------------------------- Campina Enterprises Limited 436,363 $ 5,999,998.12 - ------------------------------------------------------------------------------------------------------------- Total: 2,162,582 $29,735,502.50 - -------------------------------------------------------------------------------------------------------------
_______________________ /1/ This amount is comprised of (i) cash in the amount of $5,250,000 and (ii) value for services provided by Vectis to the Company under the Vectis Agreement in the amount of $2,749,997.50. EX-8 10 dex8.txt FIRST AMENDMENT TO ESCROW AGREEMENT EXHIBIT 8 FIRST AMENDMENT TO ESCROW AGREEMENT THIS FIRST AMENDMENT TO ESCROW AGREEMENT, dated as of November 9, 2001 (this "Amendment"), is entered into by and among Critical Path, Inc., a --------- California corporation (the "Seller"), General Atlantic Partners 74 L.P., a ------ Delaware limited partnership, GAP Coinvestment Partners II, L.P., a Delaware limited partnership, GapStar, LLC, a Delaware limited liability company, Vectis CP Holdings, LLC, Cenwell Limited and Campina Enterprises Limited (collectively, the "Purchasers") and Pillsbury Winthrop, LLP, as Escrow Agent (the "Escrow ---------- ------ Agent") and amends the Escrow Agreement, dated November 8, 2001 (the "Escrow - ----- ------ Agreement"), among the Seller, the Purchasers and the Escrow Agent. - --------- WHEREAS, pursuant to the terms of the Stock and Warrant Purchase and Exchange Agreement, dated November 8, 2001 (the "Purchase Agreement"), among the ------------------ Seller and the Purchasers, (i) the Company agreed to issue and sell to the Purchasers an aggregate of 4,000,000 shares, par value $0.001 per share, of Series D Cumulative Redeemable Convertible Participating Preferred Stock of the Company and (ii) the GAP Purchasers (as defined in the Purchase Agreement) are acquiring from the Seller warrants to purchase, at an exercise price of $1.05 per share, an aggregate of 2,500,000 shares of common stock, par value $0.001 per share, of Seller; WHEREAS, the Purchase Agreement provided for the establishment of an escrow account pursuant to the Escrow Agreement; and WHEREAS, the parties wish to amend the Escrow Agreement pursuant to Section 8.6 thereof. NOW, THEREFORE, the parties hereto hereby agree as follows: 1. Section 1.1.1. Section 1.1.1(i) of the Escrow Agreement is hereby ------------- amended and restated in its entirety to read as follows: "(i) Section 2.1 of the Purchase Agreement, the Purchasers will deposit with the Escrow Agent $29,735,502.50 comprised of (A) $26,985,505.00 of cash and (B) foregone fees for services provided to the Seller under the Vectis Agreement (as such term is defined in the Purchase Agreement) having a value of $2,749,997.50," 2 2. Section 3.1.3. Section 3.1.3 of the Escrow Agreement is hereby ------------- amended and restated in its entirety to read as follow: "For purposes of this Agreement, the "Escrow Release Condition" shall ------------------------ mean the execution and delivery by the parties thereto on or before January 31, 2002 of a Stipulation and Agreement of Settlement in the litigation entitled In Re Critical Path Inc. Securities Litigation ---------------------------------------------- (the "Actions") that (A) provides for the payment of cash by the ------- Company and the issuance of warrants to purchase the Common Stock to the "Class" (as defined in paragraph 1 of the MOU) in amounts that do not differ and otherwise contains such terms and conditions that do not materially differ from the terms set forth in paragraph 2 of the MOU and provides for dismissal of the Action with prejudice as set forth in paragraph 3 of the MOU and (B) provides for a broad form general release for the Defendants and the other parties as provided in paragraph 3 of the MOU." 3. Section 3.1.6. Section 3.1.6 of the Escrow Agreement is hereby ------------- amended and restated in its entirety to read as follows: "3.1.6. "Consideration Holdback Amount" shall mean a total of ----------------------------- $19,220,963.20, consisting of GAP Sub Notes having a $49,169,828.75 aggregate face amount and purchased for an aggregate purchase price of $19,220,963.20. The Consideration Holdback Amount shall be allocated pro rata among the GAP Purchasers calculated based on the allocations set forth on Schedule 2.2 to the Purchase Agreement." 4. Section 3.1.7. Section 3.1.7 of the Escrow Agreement is hereby ------------- amended and restated in its entirety to read as follows: "3.1.7. "Purchased Shares Holdback" shall mean a total of 1,397,888 ------------------------- shares of Series D Preferred Stock. The Purchased Shares Holdback shall be allocated pro rata among the GAP Purchasers calculated based on the allocations set forth on Schedule 2.2 to the Purchase Agreement." 3 5. Except as otherwise expressly provided in this Amendment, all of the terms and conditions of the Escrow Agreement are hereby ratified and shall remain unchanged and continue in full force and effect. 6. This Amendment may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 7. This Amendment shall be governed by and construed in accordance with the laws of the state of New York, without regard to the principles of conflicts of law of any jurisdiction. 4 IN WITNESS WHEREOF, the undersigned have duly executed and delivered this Amendment as of the day and year first above written. CRITICAL PATH, INC. By:____________________________________ Name: Title: GENERAL ATLANTIC PARTNERS 74, L.P. By: GENERAL ATLANTIC PARTNERS, LLC, its General Partner By:____________________________________ Name: Title: A Managing Member GAP COINVESTMENT PARTNERS II, L.P. By:____________________________________ Name: Title: A General Partner GAPSTAR, LLC By: GENERAL ATLANTIC PARTNERS, LLC, its Managing Member By:____________________________________ Name: Title: 5 VECTIS CP HOLDINGS, LLC By: VECTIS GROUP, LLC, its Managing Member By:____________________________________ Name: Title: CENWELL LIMITED By:____________________________________ Name: Title: CAMPINA ENTERPRISES LIMITED By:____________________________________ Name: Title: PILLSBURY WINTHROP LLP, Escrow Agent By:____________________________________ Name: Title: -----END PRIVACY-ENHANCED MESSAGE-----