-----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, S1kFrxoYwlg7bKqSJqKtodOd0E42DizpszQ7Hb1PUsuNu6zLlEdHuWI6aEqBlMMh UVCjb+mLkk5sT77pXUtw4w== 0000950149-99-002245.txt : 19991220 0000950149-99-002245.hdr.sgml : 19991220 ACCESSION NUMBER: 0000950149-99-002245 CONFORMED SUBMISSION TYPE: POS EX PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19991217 EFFECTIVENESS DATE: 19991217 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EGREETINGS NETWORK INC CENTRAL INDEX KEY: 0001083992 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 943207092 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: POS EX SEC ACT: SEC FILE NUMBER: 333-88595 FILM NUMBER: 99776226 BUSINESS ADDRESS: STREET 1: 501 SECOND ST STE 114 STREET 2: 416-536-1870 CITY: SAN FRANCISCO STATE: CA ZIP: 94107 BUSINESS PHONE: 4155361870 MAIL ADDRESS: STREET 1: 501 SECOND ST STREET 2: STE 114 CITY: SAN FRANCISCO STATE: CA ZIP: 94107 FORMER COMPANY: FORMER CONFORMED NAME: E GREETINGS NETWORK DATE OF NAME CHANGE: 19991012 POS EX 1 FORM 462D FILING 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 17, 1999 REGISTRATION NO. 333-88595 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ POST-EFFECTIVE AMENDMENT NO. 1 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 EGREETINGS NETWORK, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 5947 94-3207092 (STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
149 NEW MONTGOMERY STREET SAN FRANCISCO, CA 94105 (415) 375-4100 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) GORDON M. TUCKER CHIEF EXECUTIVE OFFICER EGREETINGS NETWORK, INC. 149 NEW MONTGOMERY STREET SAN FRANCISCO, CA 94105 (415) 375-4100 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) COPIES TO: KENNETH L. GUERNSEY JOSE F. MACIAS KARYN S. TUCKER BURKE F. NORTON ANGELIQUE C. TREMBLE PABLO L. CHAVEZ EDWARD A. KLEINHANS BROOKE D. COLEMAN COOLEY GODWARD LLP WILSON SONSINI GOODRICH & ROSATI ONE MARITIME PLAZA, 20TH FLOOR PROFESSIONAL CORPORATION SAN FRANCISCO, CA 94111 650 PAGE MILL ROAD (415) 693-2000 PALO ALTO, CA 94304 (650) 493-9300
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box: [ ] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement number for the same offering: [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: [X] If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box: [ ] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 EXPLANATORY NOTE The sole purpose of this post-effective Amendment No. 1 is to refile Exhibits 10.10 and 10.11 to the Registration Statement. No changes have been made to the Registration Statement other than to Item 16 (Exhibits and Financial Statement Schedules) of Part II. PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) The Registrant hereby modifies Item 16 of Part II of the Registration Statement for the purpose of refiling the following exhibits:
EXHIBIT NUMBER EXHIBIT TITLE - ------- ------------- 10.10** Content Provider and Distribution Agreement between Egreetings and Gibson Greetings, Inc., as amended on September 30, 1999. 10.11** Agreement between Hotmail Corporation and Egreetings, as amended through August 1998.
- ------------------------- ** Confidential treatment has been requested for portions of this document. The information omitted pursuant to such confidential treatment request has been filed separately with the Securities and Exchange Commission. II-1 3 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Amendment to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City and County of San Francisco, State of California, on the 16th day of December, 1999. Egreetings Network, Inc. By: /s/ ANDREW J. MOLEY -------------------------------------- Andrew J. Moley Chief Financial Officer
SIGNATURES TITLE DATE ---------- ----- ---- * Chief Executive Officer, December 16, 1999 - ----------------------------- Principal Executive Officer Gordon M. Tucker and Director /s/ ANDREW J. MOLEY Senior Vice President and December 16, 1999 - ----------------------------- Chief Financial Officer, Andrew J. Moley Principal Financial Officer and Principal Accounting Officer * Director December 16, 1999 - ----------------------------- Stewart Alsop * Director December 16, 1999 - ----------------------------- Charles A. Holloway * Director December 16, 1999 - ----------------------------- Brendon S. Kim * Director December 16, 1999 - ----------------------------- Peter Nieh * Director December 16, 1999 - ----------------------------- Frank J. O'Connell * Director December 16, 1999 - ----------------------------- Lee Rosenberg *By: /s/ ANDREW J. MOLEY - ----------------------------- Andrew J. Moley Attorney-in-fact
II-2 4 EXHIBIT INDEX
EXHIBIT NUMBER EXHIBIT TITLE - ------- ------------- 10.10** Content Provider and Distribution Agreement between Egreetings and Gibson Greetings, Inc., as amended on September 30, 1999. 10.11** Agreement between Hotmail Corporation and Egreetings, as amended through August 1998.
- ------------------------- ** Confidential treatment has been requested for portions of this document. The information omitted pursuant to such confidential treatment order has been filed separately with the Securities and Exchange Commission. EX-10.10 2 CONTENT PROVIDER AND DISTRIBUTION AGREEMENT 1 EXHIBIT 10.10 CONTENT PROVIDER AND DISTRIBUTION AGREEMENT THIS AGREEMENT (hereinafter "Agreement") is entered into as of December 4, 1997 (the "Effective Date"), by and between THE VIRTUAL MALL, INC., a California corporation doing business as "Greet Street" ("Greet Street"), and GIBSON GREETINGS, INC., a Delaware corporation ("Gibson"), (together the "Parties"), with reference to the following: A. Greet Street is engaged in the business of developing and distributing multimedia communication and messaging products that are sent by electronic means such as E-mail. These products, which may be thought of as an electronic version of a greeting card, typically combine media elements, such as professionally produced layouts, characters, animation, sound and storylines together with the sender's personal greeting or message (which itself may be comprised of text, a sound or an image, or a combination thereof), and are generally referred to in this Agreement as "Digital Greeting Products." Greet Street distributes Digital Greeting Products through a variety of online distribution channels operated by or secured by Greet Street including its own worldwide web site (www.greetst.com) (collectively, the "Store"). B. Gibson is engaged in the business of developing and distributing printed greeting cards and desires to utilize its greeting card development capabilities and its licensed rights to provide content for Digital Greeting Products. C. Greet Street and Gibson have entered into that certain Series D Preferred Stock Purchase Agreement, dated December 4, 1997, pursuant to which Gibson will make an equity investment in Greet Street (the "Purchase Agreement"). NOW THEREFORE, in consideration of the foregoing, and the mutual promises and covenants contained herein, the Parties agree as follows: 1. GENERAL RELATIONSHIP. 1.1 MANAGEMENT. Gibson and Greet Street will appoint a senior level manager from each company who will have the overall authority and responsibility - -to manage the strategic relationship between the Parties. Initially, these roles will be filled by George White from Gibson and Tony Levitan from Greet Street. In addition, each company will designate the individual(s) to be responsible for managing and coordinating the following key areas of the relationship: (a) overall Business Plan, including market research, (b) Licensing, (c) Production, and (d) Merchandising & Marketing. Gibson and Greet Street agree to designate such individual(s) within one week after the Effective Date. The goals and responsibilities of the various key areas of the relationship are defined in the following paragraphs. These goals and responsibilities refer to Digital Greeting Products only. Within the reasonable parameters established by [*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS. -1- 2 this Agreement, Gibson will control the areas of the Gibson business plan, Gibson licensing, Gibson content, and marketing and merchandising of Gibson-branded, separate areas within the Store, analogous to a particular brands aisle in a supermarket (the "Gibson Areas"). 1.2 BUSINESS PLAN. 1.2.1 The Parties will cooperate as provided below for the overall goal of gathering the information necessary to develop a business plan (the "Business Plan"), with specific strategy and implementation plans for Licensing, Production and Merchandising & Marketing. This initial business planning process will specify the initial activities of the Parties and lay out a general idea of their resource requirements moving forward. The members of the Business Planning team will obtain market research and conduct other activities reasonably necessary to develop the Business Plan, including, without limitation, primary and secondary research in the following areas: (a) market segments, e.g., consumer and business, with respect to size, growth, characteristics, demographics, where/access points; (b) product segments, including technology adoption; (c) competitive environment; and (d) consumer habits and needs. Based upon the findings of this research, as well as feedback from the appropriate areas of both companies, the team will draft and circulate a Business Plan outlining the specific goals to provide a roadmap for calendar year 1998 for each of the key areas. The Business Plan will also provide specific deliverables for each of the key areas of the relationship as described below. 1.2.2 The Parties will use commercially reasonable efforts to complete the initial market research in connection with the development of the Business Plan within 45 days after the Effective Date and to complete the initial Business Plan within 60 days after the Effective Date. 1.2.3 Subsequent to completion of the initial business planning process outlined above, the Business Planning team will continue market research activities on an on-going basis, and based on such research, together with feedback from the various teams described in Sections 1.3-1.5 below as well as other relevant information from Gibson and Greet Street, will update the Business Plan outlining the specific goals in order to provide a roadmap for each of the key areas on a quarterly basis thereafter. In addition to such quarterly updates, the Business Planning team will develop an annual Business Plan for each calendar year during the term of this Agreement. 1.3 LICENSING. The Licensing team will identify and prioritize desirable licensors for the non-musical content of Digital Greeting Products. The members of this team will help develop licensing agreement terms and formats which Gibson will attempt to incorporate into licensing agreements with the potential licensors. After an initial annual plan for this area of the strategic relationship has been developed, the Licensing team will meet on a quarterly basis to evaluate and provide updates for the following quarters. In addition, this team will provide -2- 3 budget proposals and general feedback for the Business Planning team. 1.4 PRODUCTION. The Production team will be responsible for selecting design criteria and product form/type, setting production goals and deliverables, setting up a production schedule, and coordinating production resources on a quarterly basis. They will receive input from the Merchandising & Marketing team on what type of content is needed. In addition, this team will provide budget proposals and general feedback for the Business Planning team. 1.5 MERCHANDISING & MARKETING. The Merchandising & Marketing team will advise Gibson regarding merchandising in the Gibson Areas, including the mix and amount of Gibson content type reflective of overall market demand, e.g., birthday, holidays, business, etc., the scope and range of licensed properties reflected in the SKUs offered, as well as displaying content in the Gibson Areas, subject to Gibson's reasonable approval. The team will also be responsible for devising and implementing an ongoing marketing strategy and promotional events and products for the Gibson Areas. The members of the team will meet on a quarterly basis to provide a roadmap for the merchandising and marketing activities for the Gibson Areas for the following quarter. In addition, this team will provide budget proposals and general feedback for the Business Planning team. 2. CONTENT ACQUISITION. Gibson will use reasonable efforts to obtain licenses to use name brand and other creative assets desirable in the development of Digital Greeting Products and to secure the electronic rights necessary for the development and distribution of Digital Greeting Products under all current and future licenses entered into by Gibson. Greet Street will assist Gibson in determining which content would be desirable to license from the third party owners of such content (collectively, "Content Licensors"). Gibson will use reasonable efforts to facilitate a direct relationship between Greet Street and each Content Licensor whenever such a relationship would ensure improved implementation of a particular license or would facilitate incorporation of particular content into Digital Greeting Products. In addition, Gibson will provide Greet Street with copies of the relevant sections of all of its licenses and similar agreements that are relevant to the development or distribution of Digital Greeting Products, to the extent allowed by the terms of such agreements and subject to Greet Street's execution of a non-disclosure agreement in substantially the form of the NDA referenced in Section 14.3 below. 3. WEB SITE LINKS. Gibson will use reasonable efforts to ensure that each Content Licensor with a site on the Worldwide Web provides a link from such site to the relevant area of the Store and makes reference to the Store in its conventional marketing activities. 4. PRODUCTION VOLUME. Gibson agrees to produce Digital Greeting Products based on either original Gibson content or content acquired by Gibson from Content Licensors through licensing or similar transactions ("Gibson Greeting Products") in the quantities set forth below: - - A minimum of [*********] by December 31, 1998, with a minimum of ********** per quarter thereafter; and - - A minimum of [*************************************] combined, such designs to be made available to Greet Street [**********] before the applicable holiday. [*] - Indicates confidential information that has been omitted and filed separately with the Securities and Exchange Commission. -3- 4 5. APPROVAL RIGHTS. Greet Street may reject any Gibson Digital Greeting Product SKU for the Store which it in good faith believes contains inappropriate content (e.g., content which is generally accepted as being of bad taste or offensive to ordinary sensibilities), fails to meet Greet Street's technical specifications or fails to be merchantable within the meaning of the Uniform Commercial Code, and such rejected SKU will not be counted toward the production volume set forth in Section 4 above. 6. TRAINING. Greet Street will provide at its own expense up to [***] hours of initial training for Gibson employees or representatives in the areas of digital production, licensing, and merchandising, and will provide [****************] hours of production training for each new Digital Greeting Product technology, such as its proposed Flix(TM) product. In addition, at Gibson's option, Gibson may temporarily position at Greet Street's facilities one or more individual(s) in the areas of creative and digital production for initial training. 7. COMPENSATION AND PAYMENT. 7.1 ROYALTY. Greet Street will pay Gibson a quarterly royalty payment based on the higher of the following two aggregate royalty calculations: (a) (i) with respect to sales of Digital Greeting Products incorporating content for which royalties are owed by Gibson to one or more Content Licensor(s), [********************] (as defined below), and (ii) with respect to sales of Digital Greeting Products incorporating content for which royalties or similar amounts are owed by Gibson to one or more Content Licensor(s), a percentage of Net Revenues (as defined below) equal to [******************************************************************************] provided that in no case will the total amount owing to Gibson exceed [******************]; or (b) [***********************] (as defined below) from sales of Gibson Digital Greeting Products, regardless of whether the content incorporated therein is licensed from a Content Licensor. [*] - Indicates confidential information that has been omitted and filed separately with the Securities and Exchange Commission. -4- 5 [******************************************************************************* ******************************************************************************** ******************************************************************************** ****************************************************************************** **************************************************************************** **************************************************************************** ************************************************] 7.2 FREE GOODS. Gibson acknowledges that Greet Street may offer certain Digital Greeting Products, including Gibson Digital Greeting Products, as non-revenue generating premiums (for example to promote the sale of Gibson Digital Greeting Products or to promote the use or sale of Digital Greeting Products in general), and that such distributions shall not require any royalty payment to Gibson. Notwithstanding the foregoing, Greet Street will not utilize Gibson Digital Greeting Products in any such non-revenue-generating manner without the prior written consent of Gibson, which consent will not be unreasonably withheld or delayed. 7.3 REPORTS AND PAYMENT TO GIBSON. Within 45 days of the end of each calendar quarter during the term of this Agreement, beginning with the calendar quarter in which Greet Street first actually receives-any revenues from the sale of Gibson Digital Greeting Products, Greet Street shall submit a report to Gibson setting forth all of the information reasonably necessary to calculate the payments due to Gibson for such month, including the amount of any allowable adjustments in connection therewith. Such report shall include the calculation of royalties due under Section 7.1 above, and shall include the appropriate payment based on the higher of the two calculations. 8. CONTENT EXCLUSIVITY. All Gibson Digital Greeting Products will be provided to Greet Street for distribution (whether paid, sponsored or free) on an exclusive basis for as long as Greet Street maintains the "Impressions" (as defined below) levels set forth below. Notwithstanding the foregoing, Gibson will retain the right to (i) sell Gibson Digital Greeting Products on its own Web site, and (ii) sell or license Gibson Digital Greeting Products either directly, or indirectly through a third party, solely in connection with a CD-ROM or similar disk-based product sold through retail channels (a "Retail Product") which includes a compilation of Gibson Digital Greeting Products but does not provide the end-user with the capability of directly or indirectly connecting to a third party's Web site (i.e., a site other than the Store or Gibson's Web site) for the purpose of either updating the Retail Product or downloading any additional Gibson Digital Greeting Products or entering into any transaction with respect to the sending of any Gibson Digital Greeting Products by e-mail or other electronic means, other than the Gibson Digital Greeting Products that are included in the original compilation that forms a part of the Retail Product; provided that Gibson shall make reasonable efforts to ensure that the Retail Product provides the end-user with the capability of connecting to the Store. Gibson may revoke the foregoing exclusivity rights of Greet Street with respect to Gibson Digital Greeting Products, and such rights will become non-exclusive, in the event that Greet Street fails to achieve [*****] Impressions (as defined below) during calendar year 1998, and [*****] Impressions during each calendar quarter thereafter, provided that Greet Street will have a period of [*****] after any such measurement period to provide reasonable assurances (e.g., through executed distribution contracts or otherwise) to Gibson that Greet Street will achieve cumulative Impressions over a period consisting of the measurement period during which it failed to achieve the required Impressions plus a [*****] period thereafter, that equal or exceed the product of (a) [*****] Impressions and (b) the total number of calendar quarters covered thereby. For purposes hereof, an "Impression" means any graphic and/or textual message delivered by or on behalf of Greet Street or the Store to an on-line user over (i) the internet, whether through the Store or any other internet site resulting from existing or future distribution arrangements, or (ii) any other similar electronic distribution channel, including America Online or other proprietary network, based on distribution arrangements entered into after the Effective Date. The exclusivity rights provided by this Section shall apply only to products in digital form and nothing herein shall prevent Gibson from manufacturing or distributing printed products consisting of the same of similar designs and/or editorial as may be contained in the Gibson Digital Greeting Products. [*] - Indicates confidential information that has been omitted and filed separately with the Securities and Exchange Commission. -5- 6 9. ANCHOR TENANCY. 9.1 ANCHOR TENANT STATUS. Subject to Section 9.2 below, during the term of this Agreement, Gibson shall be an Anchor Tenant of the Store, and Greet Street will provide positioning, promotion and level of exposure for the Gibson brand and Gibson properties [****************************************** ****************************************************************************** ****************************************************************************** ************************************************************************ ************************************************************************ ******************************************************************************* ***********************************************] 9.2 TERMINATION OF ANCHOR TENANT STATUS. Greet Street reserves the right to revoke Gibson's Anchor Tenant status in the event that Gibson fails to provide either (a) the number of SKUs of Gibson Digital Greeting Products specified in Section 4 above, or (b) sufficient SKUs of Gibson Digital Greeting Products to be among the top three (3) providers of Digital Greeting Products to Greet Street as measured by the number of Digital Greeting Product SKUs offered by Greet Street at the end of each calendar quarter. Notwithstanding the foregoing, if Gibson has achieved at least 75% of the required production volume of Gibson Digital Greeting Product SKUs during the applicable period, then prior to revocation of Gibson's Anchor Tenant status, Gibson will have a period of 90 days to remedy such deficiency by providing Greet Street with a sufficient number of SKUs of Gibson Digital Greeting Products so that at the end of such 90-day period, both (a) the total production volume for the applicable period, plus such 90-day period, will equal the cumulative production volume that Gibson was required to produce over such combined period of time, and (b) the number of Gibson Digital Greeting Products provided to Greet Street will then place Gibson among the top three (3) providers of Digital Greeting Products to Greet Street as measured by the number of Digital Greeting Product SKUs at the end of such 90-day period. [*] - Indicates confidential information that has been omitted and filed separately with the Securities and Exchange Commission. -6- 7 9.3 Gibson Store. Gibson acknowledges that Greet Street's standard package for Anchor Tenants may be modified by Greet Street from time-to-time. Notwithstanding the foregoing, for so long as Gibson remains an Anchor Tenant, Greet Street will maintain a "vendor-store" that will feature only Gibson Digital Greeting Products. Costs of production for such store, if any, will be borne by Gibson. Gibson will have merchandising control within the Gibson "vendor-store" as specified in the then current Greet Street guidelines for Anchor Tenants, including number of SKUs, frequency of rotation, etc., provided that in the event that any conflict exists between such guidelines and the terms of this Agreement (including specifically, but not limited to, commitments as to the minimum number of SKUs to be provided by Gibson or maintained in such store) the terms of this Agreement shall prevail. 9.4 [*************] Regardless of Gibson's participation as an Anchor Tenant, during the term of this Agreement, Gibson Digital Greeting Products will be [**************************************************] 10. DEVELOPMENT OF CONTENT PROVIDER TOOLS.**************************** ************************************************************************ ************************************************************************* ************************************************************************* 11. TERM OF AGREEMENT. 11.1 INITIAL TERM; RENEWALS. The term of this Agreement will commence on the Effective Date and expire five (5) years thereafter, subject to early termination as specifically provided in this Agreement. At Gibson's election, after the expiration of the initial five-year term, this Agreement may be extended for additional serial one-year renewal periods, provided that (a) Gibson is not then in breach of this Agreement, and (b) Gibson makes a firm offer on terms that are acceptable to Great Street, including a commitment to maintain Gibson's status as an Anchor Tenant throughout the renewal period, which commitment shall include continuing to satisfy the requirements of Section 9.2(b) above (but measured as of the commencement of each such renewal period), and during such renewal period either matching or exceeding (i) the payment and other terms (including providing similar non-cash benefits' if any) or any third party that is both an Anchor Tenant and one of the three largest providers of Digital Greeting Products to Greet Street, or (ii) the minimum payment and other terms then in effect for a party to become an Anchor Tenant, if at the commencement of the renewal period there are only two such Anchor Tenants. [*] - Indicates confidential information that has been omitted and filed separately with the Securities and Exchange Commission. -7- 8 11.2 TERMINATION FOR BREACH. Either Party may terminate this Agreement upon 30 days' prior written notice for breach by the other Party of a material obligation if the breach is not remedied during such notice period. 11.3 TERMINATION PURSUANT TO PURCHASE AGREEMENT. Greet Street may terminate this Agreement upon the occurrence of an event that would entitle Greet Street (or its assignee) to repurchase Gibson's shares of capital stock in Greet Street pursuant to the Purchase Agreement. 11.4 RESIDUAL RIGHTS. Greet Street will retain the right to continue to distribute all Gibson Digital Greeting Products then in the Store's product database for a period of six (6) months after any termination or expiration of this Agreement. Gibson acknowledges that Greet Street's service allows customers to re-send Digital Greeting Products that they previously have sent through Greet Street. For example, by way of illustration only, if a recipient were to accidentally delete their greeting, the sender would be able to use this service to re-send the original personalized greeting to that recipient. Accordingly, following the expiration or termination of this Agreement, Greet Street will be allowed to continue to enable customers to re-send through Greet Street's infrastructure, Gibson Digital Greeting Products previously purchased by such customers. 12. INDEMNIFICATION. 12.1 BY GREET STREET. Greet Street will defend, hold harmless and indemnify Greet Street and its affiliates and their shareholders, officers, directors and agents (each, a "Gibson Party"), and each of their respective successors and assigns, from and against any and all losses, damages, claims, costs, expenses or liabilities (including reasonable attorneys' fees) incurred by Gibson or any Gibson Party arising out of or related to any claims that any portion of a Gibson Digital Greeting Product provided by Greet Street infringes any copyright, trademark, patent, trade secret or other right of a third party. 12.2 BY GIBSON. Gibson will defend, hold harmless and indemnify Greet Street and its affiliates and their shareholders, officers, directors and agents (each, a "Greet Street Party"), and each of their respective successors and assigns, from and against any and all losses, damages, claims, costs, expenses or liabilities (including reasonable attorneys' fees) incurred by Greet Street or any Greet Street Party arising out of or related to any claims that any content provided by Gibson or a licensor of Gibson and incorporated into a Digital Greeting Product infringes any copyright, trademark, patent, trade secret or other right of a third party. 12.3 GENERAL. A Party seeking indemnification hereunder shall: (i) promptly notify the indemnifying Party of the claim or action and furnish the indemnified Party a copy of each communication, notice or other action relating to such claim or action; (ii) permit the indemnifying Party to assume sole authority to conduct the trial or settlement of such claim or action and any negotiations related -8- 9 thereto; and (iii) provide such information and assistance as may be reasonably requested by the indemnifying Party in connection with such claim or action. 13. PRESS RELEASES. Neither Party shall make any public announcement or issue any press release concerning this Agreement except with the consent of the other Party or insofar as the disclosing Party in good faith believes such announcement is required by law. 14. GENERAL. 14.1 FORCE MAJEURE. Neither Party shall be liable or deemed to be in default for any delay or failure in performance under this Agreement resulting directly or indirectly by reason of fire, flood, earthquake, explosion or other casualty, strikes or labor disputes, inability to obtain supplies or power, war or other violence, any law, order, proclamation, regulation, ordinance, demand or requirement of any government agency, or any other act or condition whatsoever beyond the reasonable control of the affected Party, provided that the Party so affected shall take all reasonable steps to avoid or remove such cause of nonperformance and shall resume performance hereunder with dispatch whenever such causes are removed. Notwithstanding the above, a Party materially adversely affected by said delay, failure or interruption may terminate this Agreement if said delay, failure or interruption should exceed 90 days, but the terminating Party shall not be entitled to any damages or other relief except termination. 14.2 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of California, United States of America, as applied to agreements signed and performed entirely in California. 14.3 ARBITRATION. Any controversy or claim, whether based on contract, tort, statute or other legal theory (including but not limited to any claim of fraud or misrepresentation), arising out of or related to this Agreement or the Mutual Nondisclosure Agreement dated October 20, 1997 (the "ISIDA"), or the breach thereof, except for a dispute concerning the ownership by a Party of any patent, copyright, trade secret or other proprietary right, shall be resolved by arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules, modified as follows: (a) the arbitration shall be held in a mutually agreeable location other than San Francisco, California or Cincinnati, Ohio, before three arbitrators; (b) the arbitrators shall not have the power to award any damages excluded by, or in excess of any damage limitations expressed in, this Agreement; (c) in order to prevent irreparable harm, the arbitrators may grant temporary or permanent injunctive or other equitable relief; -9- 10 (d) subject to Section 14.10 below, costs and expenses of the arbitration shall be borne as provided by the rules of the American Arbitration Association; (e) the arbitrators may order discovery to the extent the arbitrators deem it appropriate; (f) the decisions and awards of the arbitrators, including temporary or permanent injunctive or other relief, shall be final and binding on the Parties and may be enforced in any court having jurisdiction; and (g) notwithstanding anything to the contrary in this Section 14.3, in the event of alleged violation of a Party's intellectual property rights (including but not limited to unauthorized disclosure of confidential information), that Party may seek temporary injunctive relief from any court of competent jurisdiction pending appointment of the arbitrators. The Party requesting such relief shall simultaneously file a demand for arbitration of the dispute, and shall request the American Arbitration Association to proceed under its rules for expedited hearing. In no event shall any such temporary injunctive relief continue for more than 60 days. 14.4 INDEPENDENT CONTRACTORS. It is expressly agreed that Greet Street and Gibson are acting hereunder as independent contractors, and under no circumstances shall any of the employees of one Party be deemed the employees of the other for any purpose. This Agreement shall not be construed -as authority for either Party to act for the other Party in any agency or other capacity, or to make commitments of any kind for the account of or on the behalf of the other. This Agreement shall not be construed as establishing any joint venture between the Parties and any actions, proposed actions, plans, budgets, or projections made or proposed to be made by any team created pursuant to this Agreement (including specifically, but not limited to, Sections 1.2, 1.3, 1.4 and 1.5 hereof) shall be subject to approval by both Greet Street and Gibson. 14.5 NOTICE. Any notice required to be given by either Party to the other shall be deemed given five (5) business days after being deposited in the postal system in registered or certified form with return receipt requested, postage paid, addressed to the notified Party at the address for notices set forth in the Purchase Agreement, but only if the Party giving notice receives a return receipt within 10 business days after the notice is mailed; (ii) on the next business day if dispatched to the notified Party at the address set forth in the Purchase Agreement via a courier service that guarantees next business day delivery, but only if the records of such courier service confirm that such delivery was in fact made the next business day; or (iii) immediately upon dispatch if dispatched by facsimile transmission to the notified Party at the facsimile telephone number set forth in the Purchase Agreement, the dispatching Party receives an electronic confirmation of receipt, and the dispatching Party also promptly gives notice as provided in clause W or (ii) of this Section 14.5. Either Party may change the -10- 11 postal address or facsimile telephone number to which notice is sent by written notice to the other Party. 14.6 ASSIGNMENT. This Agreement is not assignable by either Party hereto without the prior written consent of the other, except that this Agreement shall be assignable by Greet Street in connection with the sale of substantially all of its assets, or by Greet Street to a successor corporation in the event of a merger or a consolidation, provided that Greet Street first provides Gibson with written notice of such assignment. This Agreement shall be binding upon and inure to the benefits of the Parties and their respective successors and permitted assigns. 14.7 SEVERABILITY. If any provision of this Agreement is determined by a court of competent jurisdiction to be invalid or unenforceable, such determination shall not affect the validity or enforceability of any other part or provision of this Agreement unless as a result the rights of either Party are materially diminished or the obligations and burdens of either Party are materially increased so as to be unjust or inequitable. 14.8 WAIVER. No waiver by any Party of any breach of any provision hereof shall constitute a waiver of any other breach of that or any other provision hereof. 14.9 ENTIRE AGREEMENT; HEADINGS. This Agreement and the NDA, as well as the Purchase Agreement (including all of the agreements referred to therein to which Greet Street and Gibson are both parties), together constitute the entire agreement between the Parties with respect to the subject matter hereof and supersedes all previous proposals, both oral and written, negotiations, representations, commitments, writings and other communications between the Parties. This Agreement may not be modified except by an instrument in writing signed by a duly authorized representative of each of the Parties. The section headings and captions in this Agreement are for convenience of reference only and shall not be considered in interpreting this Agreement. 14.10 ATTORNEYS' FEES. If any legal action at law or in equity, arbitration or other action or proceeding is necessary to enforce the terms of this Agreement, the prevailing Party shall be entitled to reasonable attorneys' fees in addition to costs of suit and to any other relief which that Party may be entitled. This provision shall be construed as applicable to the entire Agreement. 14.11 CUMULATIVE REMEDIES. Except as may be provided herein, the rights and remedies provided herein shall be cumulative and in addition to any other remedies available at law or equity. -11- 12 14.12 COUNTERPARTS. This Agreement may be executed in one or more Counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. IN WITNESS WHEREOF, the Parties have executed this Agreement by their duly authorized representatives as of the date first set forth above. THE VIRTUAL MALL, INC. GIBSON GREETINGS, INC. (DBA GREET STREET) By: /s/ FREDRICK L. CAMPBELL By: /s/ J.T. WILSON -------------------------------- --------------------------------- Print Name: FREDRICK L. CAMPBELL Print Name: J.T. WILSON ------------------------ ------------------------- Title: CEO Title: CHIEF FINANCIAL OFFICER ----------------------------- ------------------------------ -12- 13 FIRST AMENDMENT TO CONTENT PROVIDER AND DISTRIBUTION AGREEMENT BETWEEN EGREETINGS NETWORK AND GIBSON GREETINGS, INC. THIS FIRST AMENDMENT TO CONTENT PROVIDER AND DISTRIBUTION AGREEMENT (this "Amendment") is made and entered into as of September 30, 1999, by and between Egreetings Network ("EGN"), formerly known as The Virtual Mall d/b/a "Greet Street", a California corporation with principal offices at 501 Second Street, Suite 114, San Francisco, California 94107 and Gibson Greetings, Inc. ("Gibson"), a Delaware corporation with principal offices at 2100 Section Road Cincinnati, Ohio 45237. WHEREAS, the parties have entered into that certain Content Provider and Distribution Agreement dated as of December 4, 1997 (the "Agreement"), under which Gibson granted to EGN certain rights to use content owned or licensed by Gibson in Digital Greeting Products; and WHEREAS, the parties wish to amend the Agreement. NOW, THEREFORE, in consideration of the mutual covenants and representations contained herein and in the Agreement, the parties hereby agree to amend the Agreement as follows: 1. All capitalized terms used herein and not otherwise defined in this Amendment shall have the meanings ascribed to them in the Agreement. All references to "Greet Street" in the Agreement shall be deemed to be references to EGN. The defined term the "Store" in the last sentence of Paragraph "A" of the Recitals to the Agreement is hereby deleted and replaced with the new defined term the "EGN Web Site". 2. Paragraph "A" of the Recitals to the Agreement is hereby amended by adding the following two sentences after the second sentence thereof: "For the avoidance of doubt, products that cannot be sent electronically and personalized by the addition of a message from the sender (e.g., so-called "Webisodes" that are intended solely for viewing on a Web site) shall not be deemed Digital Greeting Products under the Agreement. Products that are not Digital Greeting Products are sometimes referred to herein as "Non-Digital Greeting Products". 3. Paragraph 1.3 of the Agreement and the third and fourth sentences of Paragraph 2 of the Agreement are hereby deleted in their entirety. 4. Paragraph 4 of the Agreement is hereby deleted and replaced with the following: "4. Production Volume. During each calendar quarter of the term of this Agreement, Gibson agrees to produce and deliver to EGN an aggregate of no less than [*************************] Digital Greeting Products ("Gibson Digital Greeting Products") based on either original Gibson content ("Original Content") or content acquired by Gibson from Content Licensors through licensing or similar transactions ("Licensed Content"). For purposes of determining whether Gibson has satisfied the foregoing minimum delivery obligation in any calendar quarter, [**** ******** ******* ******** ******* ********* ** *** **** ** ******* [*] - Indicates confidential information that has been omitted and filed separately with the Securities and Exchange Commission. 1. 14 *************************************************************** ************************************************************ ************************************************************** *********************************************************** ***************************************************************** **************************************************] If the parties mutually agree, any Digital Greetings Products provided by Gibson to EGN in any calendar quarter in excess of [********** **************] shall be applied to the delivery requirement for the next quarter." 5. Paragraph 7.1 of the Agreement is hereby deleted and replaced with the following new paragraph 7.1: "7.1. Royalty. (a) In consideration of the rights granted herein, EGN will pay Gibson within forty-five (45) days following the end of each calendar quarter of the term a royalty in the amount of: (i) [**************] in respect of each Gibson Digital Greeting Product derived from Original Content that is sent from the EGN Web Site during such quarter; and (ii) [****************] in respect of each Gibson Digital Greeting Product that is derived from Licensed Content or contains at least five frames of animation and that is sent from the EGN Web Site during such quarter. (b) [**************************************************** *********************************************************** *********************************************************** ********************************************************* ************************************************************* ***************************************************************** ************************************************************** ********************************************] The royalty rates payable by EGN to major content archives, publishers, or media companies, or to any third party that provides consideration to EGN in addition to content licenses (e.g., marketing or promotional exposure, or placement fees or other monetary consideration) shall not be considered in determining the Standard Royalty Rate." 6. The first sentence of Paragraph 8 of the Agreement is hereby deleted and replaced with the following text: "Gibson hereby grants to EGN, during the term, the exclusive right and license, throughout the world, to reproduce, distribute, publicly perform and display, market and commercialize the Gibson Digital Greeting Product delivered to EGN hereunder on and in connection with Digital Greeting Products, and to utilize the Gibson Digital Greeting Product in connection with the marketing and promotion of Digital Greeting Product. Prior to public distribution, EGN will provide Gibson with a pre-release copy of each Gibson Digital Greeting Product. EGN will not publicly release the applicable Gibson Digital Greeting Product until such time as Gibson has approved (or has been deemed to have approved) such Gibson [*] - Indicates confidential information that has been omitted and filed separately with the Securities and Exchange Commission. 2. 15 Digital Greeting Product as set forth in the next sentence. Gibson will have five (5) business days, from date of receipt, to approve the applicable Digital Greeting Product (which approval shall not be unreasonably withheld), at which time, in the absence of notice of disapproval, approval shall be deemed received. EGN shall have no right to edit, adapt, alter or otherwise change the appearance or content of any Gibson Digital Greetings Product with the prior written consent of Gibson, which shall not be unreasonably delayed or withheld, provided, however, that, EGN shall have the right to alter, modify, or adapt such content in order to meet EGN's technical and production specifications. Without limitation of the foregoing, during the term, Gibson will not authorize or license any third party to display, perform, publish, reproduce, transmit or distribute Digital Greeting Product embodying any work owned, created, or licensed by Gibson." 7. The third and fourth sentences of Paragraph 8 of the Agreement are hereby deleted and replaced with the following sentence: "Gibson may revoke the foregoing exclusivity rights granted to EGN pursuant to this Paragraph 8 in the event that (i) the total number of Digital Greeting Products sent from the EGN Web Site during any month of the term is less than the total number of Digital Greeting Products sent from the EGN Web Site during the month of August, 1999 (the "Target Amount"); and (ii) the number of Digital Greeting Products sent from the EGN Web Site in any of the three (3) months following the month in which the initial shortfall occurred does not exceed the Target Amount." 8. The following paragraph shall be deemed added as a new Paragraph 8A to the Agreement: "8A. Non-Digital Greeting Product. (a) During the period commencing on the earlier of January 1, 2000 or the date EGN launches Non-Digital Greeting Product on the EGN Web Site and continuing until the end of the term of this Agreement, no party other than EGN shall be authorized to reproduce, use, or distribute a Non-Digital Greeting Product through any means of online or electronic distribution, including, but not limited to, electronic mail, the Internet and/or the World Wide Web ("Non-Digital Greeting Product Rights") unless: (a) Gibson first notifies EGN of all of the material terms and conditions of the proposed agreement pursuant to which such Non-Digital Greeting Product Right is to be granted and (b) Gibson offers to enter into an agreement with EGN on the same terms and conditions described in Gibson's notice. If EGN does not accept Gibson's offer within fifteen (15) days after its receipt, Gibson may then enter into the proposed agreement with the third party concerned upon terms not less favorable to Gibson than the terms set forth in the notice and offer to EGN. (b)[*************************************************** ************************************************************* *********************************** [*] - Indicates confidential information that has been omitted and filed separately with the Securities and Exchange Commission. 3. 16 ************************************************************** **************************************************************** **************************************************************** ************************************************************** *************************************************************** *******************************************] (c) Gibson shall use best efforts to cause any licensee of Non-Digital Greeting Products other than EGN to [********** *************************************************************** *************************************************************** *******************************************] 9. Paragraph 9 of the Agreement is hereby deleted and replaced with the following new Paragraph 9: "9. Placement of Gibson Digital Greeting Product. Provided that Gibson has fulfilled the delivery requirements set forth in Paragraph 4 above: (a) EGN will provide [**************************************** ********************************************************************** ********************************************************************* ********] (b) EGN will provide Gibson with up to five (5) sub-channel placements on the EGN Web Site featuring certain branded Gibson properties mutually agreed to by the parties, which list of properties may by revised by Gibson once per quarter; and (c) [******************************************************** *********************************************************************** ******************************************************************** *********************************************************************** ********************************************************************** *********************************************************************** **********************************************************************]" 10. The second sentence of Paragraph 11.1 of the Agreement is hereby deleted. 11. The parties agree that except as and to the extent specifically modified by this Amendment, all terms and conditions of the Agreement shall be unaffected and shall remain in full force and effect. IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be duly executed as of the date first set forth above. EGREETINGS NETWORK GIBSON GREETINGS, INC. By: /s/ ANDREW P. MISSAN By: /s/ JAMES E. THAXTON -------------------------- -------------------------- (signature) (signature) Name: ANDREW P. MISSAN Name: JAMES E. THAXTON ------------------------ ------------------------ (print) (print) [*] - Indicates confidential information that has been omitted and filed separately with the Securities and Exchange Commission. 4. EX-10.11 3 AGREEMENT BETWEEN HOTMAIL CORP. AND EGREETINGS 1 EXHIBIT 10.11 [GREET STREET LETTERHEAD] August 21, 1997 Scott Weiss Director, Business Development Hotmail Corporation 1290 Oakmead Parkway, Suite 218 Sunnyvale, CA 94086 AGREEMENT BETWEEN HOTMAIL CORPORATION AND GREET STREET Dear Scott: This Agreement is entered into as of August 21, 1997, by and between THE VIRTUAL MALL, INC., d.b.a. GREET STREET, a California corporation with its principal office at 123 Townsend Street, San Francisco, California 94107 ("Greet Street") and HOTMAIL CORPORATION, a California corporation with its principal office at 1290 Oakmead Parkway, Sunnyvale, California 94086, ("Hotmail") concerning Greet Street's provision of social expression and electronic greeting products and services to Hotmail's users. 1. Background Hotmail is the leading Web-based free E-mail service. Greet Street is the leading provider of online digital greetings and social expression products (also referred to as Dynamic E-mail). Greet Street's service allows customers to personalize digital postcards and animated E-greetings(R) products and have them delivered by E-mail or via the Internet to the recipient(s) of their choice. Animated E-greetings(R) products are currently scheduled for launch later this year. 2. Greet Street Responsibilities Greet Street agrees to undertake the following responsibilities: a) Store creation Greet Street will create and host a co-branded Web site (hereafter referred to as "the Store"). The Store will be based upon Greet Street's current Web site, but will include the Hotmail logo in the main category frame. Such logo will be prominently positioned and displayed according to Greet Street's standards for partner logos. The Store homepage will incorporate more extensive co-branding, with the Hotmail logo displayed at least as prominently as the Greet Street logo. Greet Street will provide Hotmail with specifications for any Hotmail-specific copy or artwork required for inclusion in the Store. It is anticipated that Hotmail will implement a frame at the top of the Store to allow for easy return back to. Hotmail. The Store will offer a wide array of digital greeting products, appropriate for a broad consumer audience in addition to specific community niches. For the purposes of rating the content of these [*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS. 1 2 products, Greet Street's product database is segmented into categories that roughly correspond to the commonly accepted G, PG and R ratings of motion pictures. Greet Street agrees that it will not offer products within the Store in those categories which Hotmail instructs Greet Street in writing not to offer. Hotmail understands that the design and structure of the Store is subject to modification by Greet Street from time to time. However, Hotmail shall have the right to review and approve the introduction of new product types that are materially different from Greet Street's current offerings (Animated Greetings will be considered part of Greet Street's current offerings. Hotmail will not withhold such approval so long as the new offering (a) is demonstrably similar in nature or an enhancement to existing digital greeting products, (b) does not adversely impact Hotmail's operating resources and (c) does not violate or conflict with any agreement to which Hotmail is a party or by which the Hotmail service is bound. b) Store management Greet Street will be responsible for all management and operation of the Store, including, for example, all customer service, content management and product loading. Greet Street will (a) provide and manage all servers, telecommunications, facilities maintenance, operations and technical support related to the delivery of the Store, and (b) provide all technical, support, sales, administrative and management personnel, facilities, equipment, supplies and services as are necessary to develop, launch and maintain the Store as contemplated by this Agreement. Hotmail will make commercially reasonable efforts to ensure that Greet Street's products may be received and displayed by users of the Hotmail service. Greet Street will make commercially reasonable efforts to operate the Store in compliance with commonly accepted technical performance standards and will make commercially reasonable efforts to ensure that the technical performance standards for the Store will meet or exceed the measured performance of Greet Street's other commercially available Web sites. c) Technical integration Hotmail and Greet Street agree to mutually determine a minimum level of integration between Hotmail's E-mail service and the Store's product ordering and personalization process. For example, by way of illustration only, Hotmail may choose to pass Greet Street the E-mail addresses of each user so that Greet Street may automatically populate the "From" field of Dynamic E-mail products purchased by that customer. Greet Street and Hotmail agree to mutually explore further options for integrating the Store with Hotmail's service. d) Order tracking Greet Street's server software will record every purchase that originates from the Store. This includes purchases from customers who have clicked through to the Store directly from Hotmail and from those who have "bookmarked" the Store and returned there to make a purchase independently of Hotmail. Greet Street's reporting requirements are detailed in Section 7. 2 3 e) Restrictions on usage Greet Street will implement terms and conditions of sale that are at least as restrictive as those implemented from time to time by Hotmail in connection with `spamming' and harassment by users of its Email service, and such terms and conditions of sale shall specifically prohibit the use of the Store for the purposes of `spamming' or harassment. Furthermore, Greet Street will make commercially reasonable efforts to prevent usage of the Store for such purposes and will reasonably cooperate with Hotmail to respond to any such `spamming' or harassment that is determined to have originated from the Store. 3. Hotmail Responsibilities a) Integration of the Store with Hotmail The Store will be, accessed through each of the main communication areas of Hotmail, including: o E-mail Compose page; o Compose Reply-Mail page; o Address Book; o Address QuickList. In the event that Hotmail introduces additional communication utilities and areas (for example, "buddy" lists and chat functionality), the parties will mutually determine whether to link to the Store from these areas. Hotmail will give reasonable consideration to Greet Street's request for such links but will not be obligated to include them. Any new areas on the Hotmail site (www.Hotmail.com) will be covered by Section 5 on exclusivity. Hotmail agrees that the Store will be accessible with no more than one click from each of the communication areas listed above and will be clearly and prominently available to every Hotmail customer during every session in which the communication areas are accessed: o Hotmail users will access the Store via a "button" on each of the communication areas that are hyperlinked to the Store. Such buttons will be presented in such a manner as to make them appear an integral extension of the Hotmail service and will be provided with the same level of prominence as the other integral functions of those areas. For example, the button on the E-mail Compose page will have the same level of prominence as the current "E-mail Lookup" button. o Greet Street and Hotmail will mutually determine the wording and/or artwork to be placed on these buttons. If, at any time, Hotmail allows or enables other third parties to display their trademarks and/or trademark notices on those pages within the Hotmail service containing buttons linking to the Store, then Hotmail shall enable Greet Street to display its trademark "E-greetings(R)," and associated trademark notices, provided that all use of Greet Street's trademarks shall be subject to Greet Street's trademark usage guidelines and quality control 3 4 standards. Where necessary, Hotmail will provide Greet Street with specifications for any artwork or copy to be provided by Greet Street. Greet Street understands that the design and overall structure of the Hotmail service is subject to modification and that such modification may affect the placement and size of certain elements of the interface. However, Hotmail agrees that such modifications will not materially and adversely affect the overall prominence and accessibility of the buttons and links to the Store. b) Promotion Hotmail will make commercially reasonable efforts to promote the use of Greet Street' services on an on-going basis. Specifically, Hotmail undertakes the following promotions as no cost to Greet Street: i. "Welcome" page promotion Hotmail is planning to introduce a "Welcome" page that will be displayed to every user immediately after they have logged in to the Hotmail service. It is currently anticipated that the Welcome page will be available on or before the Launch Date of the Store. The purpose of the Welcome page is to provide Hotmail with a premium area on which to communicate with customers and sell advertising. For the purposes of this Agreement, the "Launch Date" is the earlier of (a) date upon which the Store is first made publicly accessible from Hotmail via such links as detailed above and (b) October 1, 1997. Hotmail agrees to provide Greet Street with a total of [********************] of promotion on the welcome page with a limited frequency of [*******] impressions per user per consecutive running promotion. The days of promotion must be used in increments of at least [**************] each and are limited to [*********] different runs in total. Only [*************************************] will be allowed in the first [********************] following the Launch Date, unless the Welcome page is not available on or before the Launch Date. Such promotion will be at the same level of prominence offered to most other third parties. Hotmail will enable `pacing' of such impressions at such time as pacing is readily available as part of Hotmail's course of normal business operations. ii. Banner impressions Hotmail will provide Greet Street with [***********************] banner impressions each [*****] during the first [**************] following the Launch Date. For the second [********************] following the Launch Date, Hotmail will provide Greet Street with monthly advertising impressions equal to [*** ******************************************************************************* ************************************************************] (this royalty is described in Section 7 - Royalty Payments). By way of example only, if the advance royalty guarantee payable for the [***************************] were to equal [********], then Hotmail would provide Greet Street with [*********** ***********] free impressions each month. iii. Targeting of promotion and banner impressions [*] - Indicates confidential information that has been omitted and filed separately with the Securities and Exchange Commission. 4 5 The banner impressions to be provided to Greet Street by Hotmail. as described above may be used by Greet Street at its discretion, provided that Hotmail is given reasonable advance notice of Greet Street's requirements and that the necessary impressions inventory has not already been pre-sold to another third party. Hotmail further agrees that: o Greet Street may elect to target advertising impressions to any of the specific areas of the Hotmail service and demographic splits offered to other Hotmail advertisers. Hotmail agrees that Greet Street may target at least [******************] of its free advertising impressions to the E-mail compose pages. o After [********] days from the Launch Date, Greet Street may provide Hotmail with the E-mail addresses of specific Store customers for exposure to certain advertising and promotion impressions on Hotmail. For example, Greet Street may elect to compile a list of frequent Store customers, infrequent Store customers, etc. Greet Street will provide this information to Hotmail on a timely basis, no more frequently than is mutually deemed acceptable, in the format specified by Hotmail. o Greet Street may elect to target promotions and banners to Hotmail users who have never purchased from the Store. If any component of Greet Street's marketing activities requires Hotmail's assistance for implementation, Hotmail will have the option (but not the obligation) to participate at its discretion. Hotmail will give reasonable consideration to such participation. Greet Street agrees to share the learning from any such marketing activities or testing in which Hotmail participates. iv. Future Promotional Opportunities If Hotmail creates event or holiday-specific areas within its service (for example, Christmas promotional area, Valentine's Day promotional area, Mother's Day promotional area, etc.), then Hotmail and Greet Street shall mutually determine whether to establish a link to the Store from such areas. Hotmail will give reasonable consideration to Greet Street's request for such links, but, will not be obligated to include them v. Reporting Hotmail will create a monthly report detailing, for each calendar month following the Launch Date: o The number of page views for each promotional banner or button that is hyperlinked to the Store; o The number of transfers from each promotional banner or button that is hyperlinked the Store; o The total number of active Hotmail users (defined as those who access the Hotmail service a minimum of once per week during such month); o The total number of E-mail messages sent by Hotmail customers during such month. [*] - Indicates confidential information that has been omitted and filed separately with the Securities and Exchange Commission. 5 6 Hotmail will send this report to Greet Street no later than twenty (20) days after the end of each month during the term of this Agreement following the Launch Date. Hotmail will make commercially reasonable efforts to provide Greet Street with page view and other reports on a more timely basis (e.g. daily or weekly) if the reports are readily available as part of Hotmail's course of normal business operations. 4. Other Promotional Undertakings a) Promotional mailing to Hotmail users Hotmail will work with Greet Street to send one promotional product (for example, a digital postcard) to the entire Hotmail user base. This promotional mailing may be divided into no more than [*******] distributions to take place throughout the term of this Agreement. The first of these distributions shall occur no later than [***********] after the Launch Date. [********************** ****************************************************************************** ****************************************************************************** *****************************************************************************] It is anticipated that the mailing will take the form of a personalized communication from Hotmail to its users (e.g. "Dear Joe, The Hotmail Staff wishes you a Happy Holidays) and will serve to promote the use of the Store through Hotmail. Greet Street agrees that all marketing to Hotmail users will be conducted within the bounds of commonly accepted ethical marketing practices. Furthermore, Greet Street will provide a clear method for Hotmail users within the Store to opt out of receiving promotional mailings and agrees that any promotional E-mail sent by Greet Street to Hotmail users will clearly describe how such users may opt-out of receiving any further E-mail communication from Greet Street. b) Greet Street advertising commitment Greet Street agrees to spend no less than [********] to purchase additional advertising on Hotmail over the term of this Agreement, beyond the free advertising and promotion to be provided by Hotmail pursuant to Section 3(b) (Promotion) above. [********************************************************* ****************************************************************] At least [*******] of the total commitment must be spent within the [************** ******] following the Launch Date and an additional [*******] within the first [******** ******] following the Launch Date. 5. Exclusivity The Store represents an important new channel of distribution for Greet Street's Dynamic E-mail products, and Greet Street is willing to undertake the necessary investment to develop this distribution channel, conditioned upon Hotmail's agreement as follows: [************************************************************************** ******************************************************************************** ****************************************************************************** ****************************************************************************** *******************************************************] [*] - Indicates confidential information that has been omitted and filed separately with the Securities and Exchange Commission. 6 7 [****************************************************************************** ***************************************************************************** ******************************************************************************* ******************************************************************************* ******************************************************************* ******************************************************************************** **************************************************************************** ************************************************************************ ************************************************************************* ******************************************************************************** *******************************************************************************] 6. Customer Information and Marketing Greet Street will provide Hotmail, on a quarterly basis, an electronic report which includes the E- mail addresses of all Hotmail users who have (a) made purchases or (b) sent free cards in the Store. In addition, after 120 days from the Launch Date, Greet Street will provide on a quarterly basis Greet Street's standard aggregate report on all Hotmail user information collected that will include a card category, purchase volumes by date, average purchase frequency and a report of other services used (e.g. reminders for Holidays, birthdays etc.). However, due to privacy considerations, this report will not include the details of specific customer orders, purchase volumes or order history. Greet Street will provide Hotmail with such reports on a more timely basis (e.g., monthly, weekly or daily), if the reports are readily available as part of Greet Street's course of normal business operations. Any personal information collected by Greet Street from Hotmail customers who purchase from the Store will remain confidential to Greet Street. For example, by way of illustration only, credit card details, birthdays, details of friends & relatives and other personal information are provided by customers to the Store on a confidential basis and will not be provided to Hotmail. Hotmail warrants that it shall keep all customer information provided by Greet Street confidential and will not share such information with any third party, nor sell advertising to any party engaged in the Dynamic E-mail business based upon such information both during the term of and for [*************] following the expiration of this agreement. However, Hotmail may, on a confidential basis, share aggregate information (as described above) provided by Greet Street with parties who are not engaged in the Dynamic E-mail business. In addition, Hotmail shall not engage, nor shall it permit or enable any third party to engage, in direct promotion, advertising or other forms of marketing, which (i) is based upon the customer information provided to it by Greet Street, that would be reasonably likely to jeopardize Greet Street's relationships with its customers, or (ii) includes, mentions or refers to, either directly or indirectly, Greet Street, or any of Greet Street's other trademarks, without the prior written approval of Greet Street, which approval will not be withheld unreasonably. 7. Royalty Payments [****************] [*] - Indicates confidential information that has been omitted and filed separately with the Securities and Exchange Commission. 7 8 [************************************************************************** ********************************************* * ****************************** ******** * ************************** ******* * ***************************** ********] [******************************************************************************* ************************************************************************** ***************************************************************************** ****************************************************************************** *************************************************************************** **************************************************************************** ****************************************************************************** ***************************************************************************** ******************************************************************************* ******************************************************************************* ***************************************************************************** ***************************************************************************** ***************************************************************************** ****************************************************************************** ******************************************************************************** ************************************************************************** **************************************************************************** ****************************************************************************** **************************************************************************** ***************************************************************************** ****************************************] b) Royalties As consideration for the performance by Hotmail of its obligations under this Agreement, Greet Street will pay a royalty to Hotmail equal to [************* ******************************************************************************** ******************************************************************************* ******************************************************************************* *************************************************************************** ******************************************************] Greet Street will provide Hotmail with a monthly report with the following information: - - The total number of transfers received from Hotmail and total number of unique visits to the Store; - - The total number of completed transactions within the Store; - - The total gross revenues booked from these completed transactions, and; - - Such other information as may be necessary to calculate the royalties payable (or credited against advances paid) to Hotmail under this Agreement. [*] - Indicates confidential information that has been omitted and filed separately with the Securities and Exchange Commission. 8 9 Greet Street will send this report to Hotmail, together with a check payable to Hotmail for the amount equal to any royalties due on such revenue as specified above, no later than thirty (30) days after the end of each calendar quarter following the Launch Date. Hotmail will have the right, at its own expense, to direct an independent certified public accounting firm to inspect and audit of all the accounting and sales books and records of Greet Street that are relevant to gross revenues booked by Greet Street from the sale of product in the Store; provided that (a) any such inspection and audit will be conducted during regular business hours in such a manner as not to interfere with normal business activities; (b) in no event will audits be made hereunder more frequently than once each calendar year; (c) if any audit should disclose an underpayment, Greet Street will immediately pay such amount to Hotmail; and (d) the reasonable fees and expenses relating to any audit which reveals an underpayment in excess of five percent (5%) of the amount owing will be borne entirely by Greet Street. 8. Term, Termination and Renewal This Agreement shall commence on August 21, 1997 and terminate one year after the termination date. In the event of any material breach hereof by a party, the other party will have the right to terminate this Agreement following thirty (30)-days' written notice and opportunity to cure. Termination will not affect accrued payment obligations, but no further advance royalty payments shall be due following termination. In the event Greet Street terminates this Agreement as a result of an uncured breach by Hotmail, Hotmail shall refund all advances paid to it by Greet Street, less the amount of royalties, if any, that shall have been credited or recouped against such amounts as of the effective date of termination. If, other than under Title 11 of the United States Code, either party becomes subject to any voluntary or involuntary insolvency, cession, bankruptcy, or similar proceedings, then the other party shall have the right to immediately terminate this Agreement. At the expiration of this Agreement, Greet Street shall have the right to notice of, and to bid for a renewal term to this Agreement or for any Dynamic E-mail or other electronic greetings service transaction that Hotmail offers to any third party. Hotmail agrees that it will not enter into a binding contract or commitment with any third party that prevents or otherwise excludes, Greet Street from bidding for the right to operation such a service on Hotmail. 9. Confidentiality Both parties shall treat as confidential and proprietary all confidential information provided by one party to the other in connection with this Agreement and the party receiving such information shall not use or disclose such information to any third parties (except to the extent otherwise permitted by this Agreement) without the prior written consent of the disclosing party, unless such information is or becomes generally known to the public or is independently [*] - Indicates confidential information that has been omitted and filed separately with the Securities and Exchange Commission. 9 10 developed or generated by the receiving party by personnel who have no access to the information disclosed to the receiving party or as otherwise required by law. In addition, neither party will reveal the specific financial terms of this Agreement to a third party, with limited exceptions to allow the party to reveal such information to its legal and financial advisers, accountants, and actual or prospective investors and lenders, to permit a party to enforce its rights hereunder, and otherwise as required by law. 10. Licenses If at any time, Hotmail grants Greet Street the right to include its trademark notices within the Hotmail, service as contemplated in Section 3a, then Greet Street will grant Hotmail an appropriate trademark usage license. Hotmail hereby grants to Greet Street a nonexclusive, royalty-free, worldwide license under all of Hotmail's intellectual property rights to use, modify, reproduce, publicly display, publicly perform, distribute and transmit the Hotmail trademark and logo in the Store, and connection with the distribution, marketing and promotion of the Store, subject in each case to compliance with Hotmail brand guidelines as disclosed to Greet Street in writing from time to time. 11. Representations and Warranties Each party represents and warrants to the other party that such party has the full corporate right, power and authority to enter into this Agreement and to perform the acts required of it hereunder; and the execution of this Agreement by such party, and the performance by such party of its obligations and duties hereunder, do not and will not violate any agreement, binding obligation or commitment to which such party is a party or by which it is otherwise bound; and when executed and delivered by such party, this Agreement will constitute the legal, valid and binding obligation of such party, enforceable against such party in accordance with its terms, except to the extent that such enforcement may be subject to applicable federal or state bankruptcy, insolvency, reorganization, fraudulent conveyance or other laws or court decisions relating to or affecting the rights of creditors generally, and such enforcement may be limited by equitable principles of general applicability. In addition, Greet Street represents and warrants to Hotmail that it is the owner of all right, title and interest in and to, or is the licensee with the right to use, reproduce, distribute and sell as contemplated in this Agreement, the Dynamic Email products to be marketed and sold in the Store, and that the Dynamic Email products (prior to their modification or customization by Hotmail customers) do not and will not (x) infringe on or violate any intellectual property right of any third party or (y) violate any applicable law, regulation or third party right when used in a manner consistent with this Agreement. In the event that any party becomes aware of any such infringement (or alleged infringement) or violation, such party will promptly notify the other party and shall provide all information relating to such matters as such other party may reasonably request. EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 11, NEITHER PARTY MAKES, AND EACH PARTY HEREBY SPECIFICALLY DISCLAIMS, ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE PRODUCTS AND SERVICES CONTEMPLATED BY THIS AGREEMENT, INCLUDING ANY IMPLIED [*] - Indicates confidential information that has been omitted and filed separately with the Securities and Exchange Commission. 10 11 WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT AND IMPLIED WARRANTIES ARISING FROM COURSE OF DEALING OR COURSE OF PERFORMANCE. UNDER NO CIRCUMSTANCES WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES (EVEN IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES), ARISING FROM ANY PROVISION OF THIS AGREEMENT, SUCH AS, BUT NOT LIMITED TO, LOSS OF REVENUE OR ANTICIPATED PROFITS OR LOST BUSINESS. 12. Indemnification Subject to the limitations set forth below, Greet Street, at its own expense, will defend, or at its option settle, any claim, suit or proceeding against Hotmail and pay any final judgment entered or settlement against Hotmail in any such claim, suit or proceeding, to the extent that such claim, suit or proceeding is based upon (a) the infringement of any trademark or service mark rights by the E-greetings trademark or the Greet Street logo; (b) the infringement or misappropriation of any patent, copyright or trade secret, or violation of any other third party right, in connection with the operation of the Store; or (c) any other third party claim arising out of, relating to or resulting from the operation of the Store, except to the extent such claim arises out of or results from the negligence or willful misconduct of Hotmail, including any breach by Hotmail of its obligations under this Agreement. Greet Street will have no obligation to Hotmail pursuant to this Section 12 unless: (x) Hotmail gives Greet Street prompt written notice of the claim, suit or proceeding and cooperates reasonably with Greet Street; and (y) Greet Street is given the right to control and direct the investigation, preparation, defense and settlement of the claim, suit or proceeding. Subject to the limitations set forth below, Hotmail, at its own expense, will defend, or at its option settle, any claim, suit or proceeding against Greet Street and pay any final judgment entered or settlement against Greet Street in any-such claim, suit or proceeding, to the extent that such claim, suit or proceeding is based upon (a) the infringement of any trademark or service mark rights by the Hotmail trademark or logo; (b) the infringement or misappropriation of any patent, copyright or trade secret or the violation of any other third party right; or (c) any third party claim arising out of, relating to or resulting from the operation of Hotmail's service (excluding the Store), except to the extent such claim arises out of or results from the negligence or willful misconduct of Greet Street including any breach by Greet Street of its obligations under this Agreement. Hotmail will have no obligation to Greet Street pursuant to this Section 12 unless: (x) Greet Street gives Hotmail prompt written notice of the claim, suit or proceeding and cooperates reasonably with Hotmail; and (y) Hotmail is given the right to control and direct the investigation, preparation, defense and settlement of the claim, suit or proceeding. 13. Press Release Upon the execution of this Agreement the parties will work together to write a joint press release, describing the relationship created by this Agreement. The parties agree to collaborate to write additional joint press releases on an on-going basis. [*] - Indicates confidential information that has been omitted and filed separately with the Securities and Exchange Commission. 11 12 14. Miscellaneous Provisions a) Intellectual Property Except as expressly provided in Section 11 of this Agreement, Greet Street will acquire no title to or interest in any of Hotmail's copyrights, trademarks or other intellectual property rights and Hotmail shall acquire no title to or interest in any of Greet Street's copyrights, trademarks or other intellectual property rights. b) Parties not Joint Venturers This Agreement is intended as a distribution agreement between the parties, and nothing contained herein shall be construed so as to make the parties partners or joint venturers or agents of one another. c) Modifications and Waivers No waiver or modification of any of the terms of this Agreement shall be valid unless in writing, signed by both parties. Failure by either party to enforce any rights under this Agreement shall not be construed as a waiver of such rights. d) Invalidity of Separable Provisions If any provision of this Agreement is for any reason held to be invalid, such provision shall be enforced to the maximum extent permissible and the remaining provisions of this Agreement will remain in full force and effect, provided that the essential purposes of this Agreement may be maintained. e) Entire Understanding; Amendments This Agreement contains the entire understanding of the parties with respect to its subject matter, and supersedes all prior or contemporaneous understandings and communications between the parties on that subject matter. No provision of this Agreement may be changed or modified except as provided in a separate writing, signed by the parties. There are no representations, warranties, promises, or undertakings between the parties other than those contained in this Agreement. f) Choice of Law and Jurisdiction This Agreement shall be construed and governed in accordance with the laws of the State of California as applied to contracts made and performed therein, without reference to its conflict of laws principles. Both parties hereby submit to jurisdiction in State and Federal Courts in California. g) Attorneys' Fees 12 13 If any legal action at law or in equity, arbitration or other action or proceeding is necessary to enforce the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees in addition to costs of suit and to any other relief which that party may be entitled. h) Force Majeure Neither party shall be liable for any failure or delay in the performance of obligations due to force majeure, namely any cause or matter not within its reasonable control and not reasonably foreseeable by the party. Such a party shall be entitled to suspend performance of its obligations under this Agreement to the extent that and for so long as effected by the force majeure. i) Construction The captions and section headings of this Agreement are intended for ease of reference only and shall not be used in the interpretation or construction of this Agreement. This Agreement shall be construed as a whole, according to its fair meaning, and not in favor of or against any party. By way of example and not in limitation, this Agreement shall not be construed in favor of the party receiving a benefit nor against the party responsible for the drafting of any particular language in this Agreement. j) Counterparts This Agreement may be executed in one or more counterparts, each of which will be deemed an original but all of which together will constitute one and the same instrument. k) Changes over Time The parties acknowledge that because of the rapid pace of technological change and evolution in the industries associated with the Internet and software related thereto, many of the underlying facts and circumstances (including assumptions regarding the facts and circumstances) that were the basis for the allocation of various rights and obligations pursuant to this Agreement are likely to change over time. In drafting this Agreement, the parties have addressed relevant facts and issues as they exist with current technologies and today's business models; however, the parties also intend for this Agreement to remain in force throughout the term as such technologies and business models change over time, with appropriate modifications to reflect such equitable adjustments as are required to maintain a substantially comparable allocation of rights and obligations in light of changed circumstances. The parties do not intend for this Agreement to be effectively nullified or abrogated because of changed circumstances, but rather intend that the intent and purpose of this Agreement be preserved as circumstances change. To such end, the parties agree that certain provisions regarding the parties' respective rights and obligations under this Agreement, while drafted to address current circumstances, are also intended to reflect general principles to be implemented by the parties in a pragmatic and meaningful way as such circumstances change. Notwithstanding the foregoing, the provisions of this Section 14(i) shall not apply to those rights and/or obligations that should not be affected by changes in technology and/or business models. 13 14 IN WITNESS HEREOF, the parties have executed this Agreement as of the date set forth above. Hotmail Corporation The Virtual Mall, Inc. (d/b/a Greet Street) By: /s/ Scott Wiseman By: /s/ Paul Lipman --------------------------------- -------------------------- Paul Lipman, Its: Director, Business Development Director of Business Development 14 15 ADDENDUM TO AGREEMENT BETWEEN HOTMAIL CORPORATION AND GREET STREET As permitted by section 14e. of the Agreement Between Hotmail Corporation and Greet Street, that became effective on August 21st, 1997, the parties hereby agree to amend the Agreement as of August 1, 1998 (Addendum Effective Date) as follows: Modifications and Amendments The following paragraph will be added at the end of Section 3bi: The current promotion of an "Email greetings" button on Hotmail's "Centerpoint" page will be deemed (acceptable as a "welcome" page promotion each day of Centerpoint promotion will count towards Greet Street's aforementioned [*******] of promotion. This button will remain in effect until October 1998. As of the effective date of this addendum, Greet will have a total of [*********] Mail-me banner campaigns consisting of a minimum of [********] impressions per campaign. The following paragraph will be added at the end of Section 3bii: Hotmail agrees to bonus Greet Street an additional 1 million banner impressions per month as of the Addendum Effective Date for the term of the agreement. Greet Street may elect to accrue these additional impressions and use them all in one month during the contract term. Section 4a shall be deleted. The following paragraph will be added at the end of Section 7a: Greet Street will make an additional payment to Hotmail in the amount of [*******] on October 1, 1998. The following paragraph will be added at the end of Section 8 paragraph 1: "This Agreement Shall commence on August 21 and terminate one (1) year after the Launch Date" Shall be modified as follows: This Agreement shall commence on August 21 and will expire on November 1, 1998. The agreement will renew automatically on November 1, 1998 for successive thirty (30) day periods unless one party serves written notice to the other party of its intention not to renew at least ten (10) days. prior to the end of the period. The additional renewal periods are subject to the following contractual modifications: Substitute Section 7 with: Greet Street agrees to pay Hotmail a fixed fee of [*******] per month ([*******] for the month of October, as specified above). [*] - Indicates confidential information that has been omitted and filed separately with the Securities and Exchange Commission. 16 IN WITNESS WHEREOF, each of the parties hereto have executed this Addendum as of the Addendum effective date. Hotmail Corporation Greet Street By: /s/ Sabeer Bhatia By: /s/ Paul Lipman ---------------------------------- ------------------------- Name: Sabeer Bhatia Name: Paul Lipman ---------------------------------- ------------------------- Title: GM, Hotmail - MS Title: VP, Consumer Business --------------------------------- ----------------------- Date: 8/11/98 Date: 8/7/98 ---------------------------------- ------------------------- -----END PRIVACY-ENHANCED MESSAGE-----