EXHIBIT 10.17
CONFIDENTIAL TREATMENT **Confidential treatment has been
HAS BEEN REQUESTED FOR requested with respect to the
CERTAIN PORTIONS OF THIS information contained within the
DOCUMENT "[**]" marking. Such marked
portions have been omitted from
this filing and have been filed
separately with the Securities and
Exchange Commission.
15 FEBRUARY 2000
TRANSCEPTGATE LIMITED
and
LOOKSMART LTD
and
LOOKSMART (BARBADOS) INC
and
BT LOOKSMART LTD
and
BRITISH TELECOMMUNICATIONS PLC
JOINT VENTURE AGREEMENT
[* * *] - Confidential Treatment Requested
THIS JOINT VENTURE AGREEMENT is made on 15 February 2000
BETWEEN
(1) TRANSCEPTGATE LIMITED whose registered office is at Queen Victoria House,
Queen Victoria Street, Xxxxxxx, Isle of Man ("BTH");
(2) LOOKSMART LTD with its principal place of business at 000 Xxxxxx Xxxxxx,
Xxx Xxxxxxxxx, XX 00000, XXX ("LOOK");
(3) LOOKSMART (BARBADOS) INC. with its principal place of business at Hastings
Business Services Limited, Hastings, Xxxxxx Church, Barbados ("LOOK
BARBADOS");
(4) BT LOOKSMART LTD, a Bermuda exempted company, whose registered office is at
Clarendon House, 0 Xxxxxx Xxxxxx, Xxxxxxxx XX XX, Xxxxxxx ("XX
LOOKSMART"); and
(5) BRITISH TELECOMMUNICATIONS plc whose registered office is at 00 Xxxxxxx
Xxxxxx, Xxxxxx, XX0X 0XX ("BT").
WHEREAS
(A) LOOK BARBADOS and BTH wish to agree terms for the formation of a business
venture for the purpose of making available and exploiting the revenue and
profit opportunities available from portal web sites and supply of
component parts of those portal web sites, with a brand agreed with equal
prominence given to each party's brand, with regional or country-specific
appellations. These sites will provide category-based Internet directory
services and associated "portal" functionality similar to existing LOOK
sites and other Web portals but will be targeted at Internet users residing
in or carrying on business in the Territory.
(B) LOOK wishes to expand its consumer internet business and content service
provision outside its current core territories, the United States of
America, Canada and Australia and is seeking a partner to increase the
speed to market of its portal proposition through distribution and
territory know-how.
(C) BTH wishes to increase its presence outside the United Kingdom in the
portal business and to provide content and a portal platform for the ISPs
of its joint ventures.
(D) LOOK BARBADOS is the owner of the existing Territory Databases. The parties
wish to combine LOOK's Databases, associated with the existing LOOK sites
and any Territory Databases developed by LOOK, or to be developed by the
joint venture and LOOK BARBADOS, and LOOK's other technical and software
experience, market knowledge, content, Internet culture and reputation with
BTH's knowledge, contacts, ability to generate users through its ISP and
other access businesses, applications and reputation.
(E) LOOK BARBADOS and BTH have formed BT LOOKSMART which will develop, market
and sell products and/or services in the Territory pursuant to licensing
arrangements between LOOK, LOOK BARBADOS and BT LOOKSMART and utilising
other third party products and/or services.
(F) LOOK BARBADOS and BTH are entering into this Agreement to establish the
manner in which BT LOOKSMART is to be established and to set out the terms
governing the relationship of BTH and LOOK BARBADOS as shareholders of BT
LOOKSMART.
(G) The parties intend to utilise their complementary skills to secure this
venture as a successful business venture. BTH and LOOK BARBADOS desire to
have BT LOOKSMART act and BT LOOKSMART desires to act as an independent
vehicle for the BT LOOKSMART activities described in this Agreement.
IT IS AGREED as follows:
1. INTERPRETATION
Definitions
1.1 In this Agreement, the following terms shall (unless the context requires
otherwise) have the following respective meanings:
"Accounting Principles" is defined in Clause 12;
"affiliate" means a company in which a party holds directly or indirectly
20 per cent or more of the equity share capital or controls directly or
indirectly, 20 percent or more of the voting rights;
"Agreed Form" means in relation to any document (or the draft of it) the
form which BTH and LOOK BARBADOS have initialled for the purposes of
identification;
"Ancillary Agreements" means the list of agreements set out in Schedule 1;
"Best Market Terms" means terms equivalent to the best available terms
(taking into account price, quality of service, volume, performance and
other relevant criteria) which the relevant party offers to a third party
and which in the context of regulated services will mean the applicable
published tariffs and terms and conditions;
"Board" means the board of directors of BT LOOKSMART;
"BTAP" means a company within the Territory in which BT holds directly or
indirectly an interest in the equity share capital or with whom BT has a
strategic relationship;
"BT Directors" means the directors of BT LOOKSMART from time to time
appointed by the BT Shareholder pursuant to Clause 9.2;
"BT Group" means all companies which control or are controlled by BT,
either directly or indirectly, through one or more companies, control being
defined as the holding of 50 per cent or more of the equity share capital
or of the voting rights of the controlled company;
"BT LOOKSMART Group" means all companies which are controlled by BT
LOOKSMART, either directly or indirectly, through one or more companies,
control being defined as the holding of 50 per cent or more of the equity
share capital or of the voting rights of the controlled company;
"BT Shares" means Shares with nominal value of US$.01 each of BT LOOKSMART,
held from time to time by BTH or other members of the BT Group;
"BT Shareholder" means BTH and its successors and/or such member of the BT
Group which is the holder(s) for the time being of BT Shares;
"BT Trade Xxxx Licence Agreement" means the agreement set out in Schedule
3;
"Budget" means a budget for BT LOOKSMART for a particular Financial Year
(in a format approved from time to time by the Board);
"Business Day" means a day on which banks generally are open in Sydney for
a full range of business;
"Business Plan" means a 5 year rolling business plan for BT LOOKSMART (in a
format approved from time to time by the Board) to be updated annually
having its origins in the Initial Business Plan;
"Bye-laws" means the Bye-laws of BT LOOKSMART to be adopted pursuant to
Clause 5.3, in the form to be agreed between BTH and LOOK BARBADOS (as they
may subsequently be altered from time to time);
"CEO" means the chief executive officer from time to time of BT LOOKSMART;
"CFO" means the chief financial officer from time to time of BT LOOKSMART;
"Chairman" means the chairman from time to time of the Board;
"Company" includes any body corporate, wherever incorporated;
"Completion" means completion of the matters set out in Clause 5.1;
"Directors" means directors of BT LOOKSMART;
"Fair Price" means the fair value, having regard to all relevant factors,
of the relevant Shares between a willing seller and a willing third party
buyer without any premium or discount being attributable to the percentage
of the issued share capital of BT LOOKSMART constituted by the relevant
Shares;
"free access portal" means the combination of portal and Internet access,
for which the only charges to the end user are local rate telephony
charges;
"Financial Year" means each financial year of BT LOOKSMART beginning on 1
January and ending on 31 December;
"holding company" shall be construed in accordance with sections 736 and
736A of the UK Companies Xxx 0000, as amended;
"Initial Business Plan" means the first Business Plan as set out in
Schedule 4;
"Initial Period" means the period from the date of signing of this
Agreement to and including 31 March 2001;
"Insolvency Event" is defined in Clause 21;
"Intellectual Property Rights" means registered designs, copyright of any
kind, database rights, rights (contractual or otherwise) to prevent
disclosure or use of confidential information, and any other similar form
of intellectual property or proprietary rights, statutory or otherwise,
whether registrable or not and shall include applications for any of them;
"ISP" means internet service provider;
"Loan Agreement" means the loan agreement referred to in Clause 5.2;
"Loco" means an operating subsidiary or a local presence of BT LOOKSMART in
a country within the Territory;
"LOOK Databases" means web directory databases, created and owned by LOOK,
of web sites for countries and/or languages not in the Territory;
"LOOK Directors" means the directors of BT LOOKSMART from time to time
appointed by the LOOK Shareholder pursuant to Clause 9.2;
"LOOK Group" means all companies which control or are controlled by LOOK,
either directly or indirectly, through one or more companies, control being
defined as the holding of 50 per cent or more of the equity share capital
or of the voting rights of the controlled company;
"LOOK Licensing Agreement" means the agreement in the form set out in
Schedule 5, pursuant to which LOOK grants BT LOOKSMART exclusive rights to
the LOOK Databases and LOOK BARBADOS grants BT LOOKSMART exclusive rights
to the Territory Databases;
"LOOK Services Agreement" means the agreement to be entered into between
LOOK BARBADOS and BT LOOKSMART containing the principles set out in
Schedule 6 pursuant to which LOOK BARBADOS shall provide certain services
to BT LOOKSMART, including the creation of Territory Databases;
"LOOK Shares" means Shares with nominal value of US$.01 each of BT
LOOKSMART, held from time to time by LOOK BARBADOS or other members of the
LOOK Group;
"LOOK Shareholder" means LOOK BARBADOS and its successors and/or such
member of the LOOK Group which is the holder(s) for the time being of LOOK
Shares;
"LOOK Trade Xxxx Licence Agreement" means the agreement in the form set out
in Schedule 14;
"LOOK Transfer Agreement" means the agreement, in the form set out in
Schedule 15, to be entered into for the transfer to a member of the BT
LOOKSMART Group of LOOK's business and assets in the Territory;
"Memorandum" means the Memorandum of Association of BT LOOKSMART, a copy of
which is set out in Schedule 2 (as it may subsequently be altered from
time to time);
"BT LOOKSMART Business" has the meaning set out in Clause 3.1;
"parties" means LOOK, LOOK BARBADOS, BTH, BT and BT LOOKSMART, and party
shall be construed accordingly;
"Peak Funding Requirement" means the maximum aggregate amount of cash
required to implement and build a successful BT LOOKSMART Business in
accordance with the plans set out in the Initial Business Plan, as may be
amended from time to time;
"Performance Objectives" means the Year One Performance Objectives and/or
the Year Two Performance Objectives, as appropriate;
"portal" means an internet site, based on current and future Territory
Databases and LOOK's and BT LOOKSMART's Intellectual Property Rights, which
aggregates general content and services designed for users in the
Territory;
"Regulatory Action" means any order of a court of competent jurisdiction or
any order, decision or view made, given or expressed by a competent
governmental or regulatory authority or agency or an enhancement of a
legislative body:
(a) which after Completion would materially prohibit or restrict the
carrying on of BT LOOKSMART Business as contemplated by this
Agreement; or
(b) in consequence of which, any of the Parties would incur fines or
a liability in damages were this Agreement to be performed in
accordance with its terms;
"Shareholders" means the LOOK Shareholder and the BT Shareholder (and
Shareholder shall be construed accordingly);
"Shareholder Matters" means the matters so defined in Clause 11.2;
"Shares" means shares in BT LOOKSMART with voting rights;
"subsidiary" shall be construed in accordance with sections 736 and 736A of
the UK Companies Xxx 0000 (as amended);
"Territory Databases" means existing web directory databases created and/or
owned by LOOK or LOOK BARBADOS for the Territory at the date of this
Agreement and any web directory databases created by LOOK BARBADOS on
behalf of BT LOOKSMART after the date of this Agreement, ownership of which
shall vest in LOOK BARBADOS until such time as the Performance Objectives
are met, at which time ownership shall thereafter vest in BT LOOKSMART;
"Territory" means the countries comprising (i) all of Europe and (ii) Asia
Pacific but excluding Australia and China but including Hong Kong and
Taiwan, as identified in Schedule 7;
"URL" means Uniform Resource Locator;
"USA" means United States of America;
"VISP" means virtual internet service provider;
"WAP" means wireless application protocol;
"wholesale services" means any services offered to third parties by BT
LOOKSMART including, without limitation, homepage programming, search,
licensing and syndication;
"Year One Performance Objectives" means the performance objectives set out
in Paragraph 1.1 of Schedule 8;
"Year Two Performance Objectives" means the performance objectives set out
in Paragraph 1.2 of Schedule 8.
Clauses and Schedules
1.2 Except where the context requires otherwise, references to Clauses and
Schedules are to Clauses of or Schedules to this Agreement.
Headings
1.3 Headings are inserted for convenience only and shall not affect the
construction of this Agreement or the Schedules.
1.4 In this Agreement, words and terms shall be read and construed in
accordance with trade, custom and usage in the Internet and e-commerce
business in the United Kingdom.
2. CHARACTERISTICS OF BT LOOKSMART
2.1 BT LOOKSMART is a company incorporated on 27 January 2000 in Bermuda as an
exempted company with an authorised share capital of US$12,000 consisting of
12,000 shares with a par value of US$1.00 with 6,000 shares issued to BTH and
6,000 shares issued to LOOK BARBADOS. The share capital was subsequently
subdivided into 1,200,000 shares with a par value of US$0.01. On 7 February
2000, or such later date as BTH and LOOK BARBADOS shall agree, the authorised
share capital of BT LOOKSMART shall be increased from US$12,000 to US$2,000,000
by the creation of 198,800,000 new shares with a par value of US$.01. Fifteen
million (15,000,000) of such new shares shall be set aside for the BT LOOKSMART
stock plan to be established pursuant to Clause 15.2.
2.2 The directors of BT LOOKSMART on the date hereof are Xxxx Xxxxxxxx, Xxxxxx
Xxxxx, Xxxxxxx Xxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxxx Xxxxxxx and a Chief Financial
Officer to be appointed pursuant to Clause 9.10.
3. BUSINESS OF BT LOOKSMART
BT LOOKSMART Business
3.1 The business of BT LOOKSMART ("BT LOOKSMART Business") is:
(a) To be a leading Internet media company which offers content-rich free
Internet based services, based on the Territory Databases and the LOOK
Databases and other services, to users resident in the Territory by
building and maintaining a portal in each country in the Territory,
the aim of which is for BT LOOKSMART to be one of the top three
amongst its competitors in the relevant country as measured by page
views, visitors, registered users, revenues and applications.
(b) To be a leading Internet media company which offers wholesale Internet
based services in the Territory by:
(i) offering wholesale services in each country in the Territory;
(ii) working with BT or a BTAP, if any, or a third party in each
country in the Territory to offer packaged wholesale access and
wholesale services.
3.2 BT LOOKSMART's initial business shall be narrowband and BT LOOKSMART shall
develop services to be delivered over other means including broadband and
mobile. Subject to the agreement of BTH, BT LOOKSMART will be given the
opportunity to participate in any emerging distribution channels offered by
BT or a BTAP including but not limited to WAP.
3.3 BT LOOKSMART shall be responsible for the development or acquisition of
specific Territory content and applications, for the operation, support and
maintenance of any Territory file servers, applications and technologies,
for marketing in the Territory, ad sales, business development, additional
content licensing and developing Intellectual Property Rights.
3.4 BT LOOKSMART shall commence business in those countries as set out in the
Initial Business Plan. BT LOOKSMART may set up a Loco to conduct its
business in a particular country within the Territory. A BTAP or other
third party may be offered a shareholding in Loco with the consent of the
Shareholders.
3.5 The parties shall consider on a country by country basis whether BT
LOOKSMART shall offer a free access portal.
Commercial principles
3.6 The activities of BT LOOKSMART shall be conducted in the best interests of
BT LOOKSMART in accordance with the general principles of the then current
Business Plan approved by the Board and on sound commercial basis and in
compliance with applicable local laws and regulations.
4. REPRESENTATIONS AND WARRANTIES ON SIGNATURE
LOOK, LOOK BARBADOS, BTH and BT each warrant and represent to each other
that:
(a) it has obtained all necessary corporate authorisations to enter into
this Agreement and the Ancillary Agreements; and
(b) nothing in its Bye-laws or internal regulations prevents the full
performance of its obligations under this Agreement and the Ancillary
Agreements.
5. COMPLETION
Completion
5.1 Completion shall take place at Xxxxxxxxx Xxxxx, 0 Xxxxxx Xxxxxx, Xxxxxxxx
XX CX, Bermuda on 16 February 2000 or such later date as BTH and LOOK
BARBADOS shall agree but in any event no later than 28 February 2000, when
the events set out below shall take place:
(a) LOOK BARBADOS shall subscribe unconditionally for 41,900,000 Shares at
an issue price of US$.0238 per share, payment for which shall be made
in accordance with Clause 8.2;
(b) BTH shall subscribe unconditionally for 41,900,000 Shares at an issue
price of US$.0238 per share, payment for which shall be made in
accordance with Clause 8.3;
(c) LOOK BARBADOS and BTH shall procure that BT LOOKSMART allots and
issues and BT LOOKSMART shall allot and issue:
(A) 41,900,000 Shares to LOOK BARBADOS credited as fully paid; and
(B) 41,900,000 Shares to BTH credited as fully paid;
and BT LOOKSMART shall cause the names of LOOK BARBADOS and BTH to be
entered in the register of members of BT LOOKSMART as the respective
holders of the Shares subscribed by them and that share certificates
are issued to LOOK BARBADOS and BTH in respect of such Shares;
(d) LOOK BARBADOS and BTH shall procure that Xxxx Xxxxxxxx, Xxxxxxx
Xxxxxxxx, Xxxxxxx Xxxxxxx, Xxxxxx Xxxxx and Xxxxxxx Xxxxxx are
appointed to the Board of Directors of BT LOOKSMART with Xxxx Xxxxxxxx
being appointed Chairman of BT LOOKSMART and that Xxxxxxx Xxxxxx of
Codan Services Limited in Hamilton, Bermuda be appointed Secretary of
BT LOOKSMART.
(e) LOOK, LOOK BARBADOS and BT LOOKSMART shall execute and deliver the
LOOK Licensing Agreement and LOOK and BT LOOKSMART shall execute and
deliver the LOOK Trade Xxxx License Agreement;
(f) BT LOOKSMART shall adopt and LOOK BARBADOS and BTH shall approve the
Initial Business Plan;
(g) BT and BT LOOKSMART shall execute and deliver the BT Trade Xxxx
Licence Agreement;
(h) LOOK and BTH shall enter into the Loan Agreement.
5.2 LOOK undertakes to enter into the LOOK Transfer Agreement and LOOK
BARBADOS, BTH and BT LOOKSMART shall procure that an appropriate company
from a tax perspective within the BT LOOKSMART Group shall enter into the
LOOK Transfer Agreement on the date specified in a written notice from BT
LOOKSMART to LOOK that the transfer is to take place, such date to be no
earlier than the third Business Day after the date of such notice.
5.3 Within 30 days after the date of this Agreement, BTH and LOOK BARBADOS
shall agree the form of Memorandum and Byelaws and BT LOOKSMART shall and
BTH and LOOK BARBADOS shall procure that BT LOOKSMART shall adopt such
Memorandum and Byelaws.
5.4 No party shall be obliged to complete any of the transactions or do any of
the things referred to in subclause 5.1(a) to (g) unless all other
transactions and things referred to in those subclauses are completed in
accordance with subclauses 5.1(a) to (g).
Rescission
5.5 If a party shall fail or be unable to comply with any of its obligations
under subclause 5.1(a) to (g), the parties not in default may together:
5.5.1 defer Completion to a date not more than 28 days after the date set
by Clause 5.1; or
5.5.2 agree to proceed to Completion so far as practicable (without
prejudice to its rights hereunder); or
5.5.3 rescind this Agreement.
6. RELATIONSHIP BETWEEN BT LOOKSMART, THE LOOK GROUP AND THE BT GROUP
6.1 LOOK BARBADOS, BTH and BT LOOKSMART hereby agree that BT LOOKSMART shall
and BT LOOKSMART shall procure that Locos shall acquire telecommunications
products and services from the BT Group or a BTAP provided that their Best
Market Terms for providing the same are as favourable as a third party's
Best Market Terms (or, if not available, arm's length terms) for providing
the same.
6.2 BT and BT LOOKSMART shall use their respective reasonable endeavours to
procure that a BTAP located in a country in which BT LOOKSMART is
conducting or is about to conduct business, enters into a commercial
relationship with BT LOOKSMART for the provision of services by BT
LOOKSMART which may include BT LOOKSMART programming the BTAP's ISP home
page provided that BT LOOKSMART's Best Market Terms for providing the same
are as favourable as a
third party's Best Market Terms (or, if not available, arm's length terms)
for providing the same.
6.3 Subject to agreeing commercial terms and to applicable law and regulation,
BT shall provide on- and off-web marketing of BT LOOKSMART and Loco
services and, if possible, shall promote the business of BT LOOKSMART and
the relevant Loco through its BTAP in a relevant country and the partners
of the BTAP (including but not limited to BTAPs and their partners that are
providers of mobile services), to the customers of such BTAP and partners.
6.4 LOOK BARBADOS, BTH and BT LOOKSMART agree that BT LOOKSMART shall and BT
LOOKSMART shall procure that Locos shall acquire applications, including
email and IP communications services from the BT Group, a BTAP or the LOOK
Group provided that their Best Market Terms for providing the same are as
favourable as a third party's Best Market Terms (or, if not available,
arm's length terms) for providing the same. If more than one of the BT
Group, a BTAP and the LOOK Group could provide the application, then
whichever provides the Best Market Terms shall provide the application
subject to its Best Market Terms for providing the same being as favourable
as a third party's Best Market Terms (or, if not available, arm's length
terms) for providing the same.
6.5 LOOK BARBADOS, BTH and BT LOOKSMART agree that BT LOOKSMART shall and BT
LOOKSMART shall procure that Locos shall acquire wholesale access, network
and hosting platforms from the BT Group or a BTAP, provided that their Best
Market Terms for providing the same are as favourable as a third party's
Best Market Terms (or, if not available, arm's length terms) for providing
the same.
6.6 Subject to agreeing commercial terms and to applicable law and regulation,
LOOK shall provide on-and-off-web marketing of BT LOOKSMART`s services and
shall promote the business of BT LOOKSMART.
6.7 BT LOOKSMART and LOOK BARBADOS shall enter into the LOOK Services Agreement
within three months after the date of this Agreement. Until the LOOK
Services Agreement is entered into, LOOK BARBADOS shall use its best
endeavours to create new Territory Databases in accordance with the
principles set out in Schedule 6 as requested by BT LOOKSMART and BT
LOOKSMART shall pay for the creation of such new Territory Databases at
cost as set out in Schedule 6. BT LOOKSMART shall reimburse LOOK at LOOK's
cost as set out in Schedule 17 for the creation of any Territory Databases
which BT LOOKSMART has requested LOOK or LOOK BARBADOS to develop and the
databases developed by LOOK or LOOK BARBADOS for the Territory since 3
December 1999.
The parties agree that ownership of any new Territory Databases created by
LOOK BARBADOS on behalf of BT LOOKSMART after the date of this Agreement
shall vest in LOOK BARBADOS until such time as BT LOOKSMART shall have met
the Performance Objectives, at which time any new Territory Databases
thereafter created by LOOK BARBADOS on behalf of BT LOOKSMART shall vest in
BT LOOKSMART. All such new Territory Databases owned by LOOK BARBADOS shall
be licensed to BT LOOKSMART pursuant to the terms of the LOOK Licensing
Agreement.
6.8 BT LOOKSMART and LOOK BARBADOS shall agree a staffing plan each year that
the LOOK Services Agreement is in effect for the staffing of offices
established by the
LOOK Group to work on the Territory Databases. Provided the Performance
Objectives have been met, the parties agree that BT LOOKSMART shall have an
option to acquire all (but not some only unless agreed by the parties) of
the editorial staff identified on the agreed staffing plan referred to in
this Clause 6.8 of one or more of the offices established by the LOOK Group
to work on the Territory Databases under the LOOK Services Agreement which
may be by way of acquisition of the subsidiary of LOOK which employs such
staff and/or by way of transfer of the relevant staff. The option to
acquire such staff may be exercised by BT LOOKSMART by giving written
notice to LOOK at any time after [* * *]. The consideration for the
acquisition of such staff shall be [* * *]. The transfer shall be
effected within six months after the date of the written notice by BT
LOOKSMART referred to in this Clause 6.8. LOOK BARBADOS shall indemnify BT
LOOKSMART in respect of any losses, claims, proceedings, liabilities, costs
and expenses arising out of or in connection with any claim by a member of
such staff, including without limitation, for unfair dismissal, breach of
employment regulations, breach of contract of employment or similar
employment issue which arises or relates to a period prior to the date that
such staff are transferred to BT LOOKSMART. BT LOOKSMART shall indemnify
LOOK BARBADOS in respect of any losses, claims, proceedings, liabilities,
costs and expenses arising out of or in connection with any member of such
staff which arises or relates to a date after the date that such staff are
transferred to BT LOOKSMART.
6.9 LOOK shall grant the licences to the LOOKSMART Technology (as defined in
the LOOK Licensing Agreement) pursuant to the terms of the LOOK Licensing
Agreement.
6.10 Other than services provided under any Ancillary Agreement or pursuant to
Clause 6.1 to 6.6 above, LOOK BARBADOS, BTH and BT LOOKSMART hereby agree
that BT LOOKSMART shall and BT LOOKSMART shall procure that Locos shall
acquire products and services from the BT Group, a BTAP or the LOOK Group
where such products and services are available from the BT Group and/or a
BTAP and/or the LOOK Group provided, in each case, that the BT Group's or a
BTAP's or the LOOK Group's Best Market Terms for providing the same are as
favourable as a third party's Best Market Terms (or, if not available,
arm's length terms) for providing the same. If each of the BT Group, a BTAP
and the LOOK Group could provide the product or service, then whichever
provides the Best Market Terms shall provide the product or service subject
to its Best Market Terms for providing the same being as favourable as a
third party's Best Market Terms (or, if not available, arm's length terms)
for providing the same.
7. TERRITORY DATABASES AND TECHNOLOGY
7.1 If the Year One Performance Objectives are met during the Initial Period:
7.1.1 LOOK BARBADOS shall transfer to BT LOOKSMART at no cost the legal
and beneficial ownership with full title guarantee and shall assign
with full title guarantee all of LOOK BARBADOS' Intellectual
Property Rights in the Territory Databases existing at the date of
such transfer. Such transfer shall be subject to LOOK's retention of
ownership and Intellectual Property Rights to the LOOK trademarks
which are licensed to BT LOOKSMART pursuant to
the LOOK Trade Xxxx License Agreement; and shall be subject to
Clauses 7.4 and 7.8 below, subject to the non-exclusive, non
perpetual license granted to the Inktomi Corporation ("Inktomi")
pursuant to the Portal Services Agreement dated 6 November 1999
between LOOK and Inktomi, and subject to the non-exclusive, non
perpetual syndication and license agreements identified as exhibits
to the LOOK Transfer Agreement. Such transfer to BT LOOKSMART shall
take place on the tenth Business Day after the date on which LOOK or
LOOK BARBADOS receives notice that the Performance Objectives are
met;
7.1.2 Pursuant to the terms of the LOOK License Agreement, LOOK shall
continue to license to BT LOOKSMART the LOOK Databases on an
exclusive (in the Territory), non-transferable basis; and
7.1.3 The Year Two Performance Objectives shall not apply.
7.2 If the Year One Performance Objectives have not been met at the end of the
Initial Period, the licenses to the LOOK Database and the Territory
Databases in the LOOK Licensing Agreement shall be extended pursuant to the
terms of the LOOK Licensing Agreement on the same terms for an additional
twelve (12) month period to 31 March 2002 and the Year Two Performance
Objectives shall apply.
7.3 If the Year Two Performance Objectives are met during the period commencing
on 1 April 2001 and ending on 31 March 2002:
7.3.1 LOOK BARBADOS shall transfer to BT LOOKSMART at no cost the legal
and beneficial ownership with full title guarantee and shall assign
with full title guarantee all of LOOK BARBADOS' Intellectual
Property Rights in the Territory Databases existing at the date of
such transfer. Such transfer shall be subject to LOOK's retention of
ownership and Intellectual Property Rights to the LOOK trademarks
which are licensed to BT LOOKSMART pursuant to the LOOK Trade Xxxx
License Agreement; and shall be subject to Clauses 7.4 and 7.8
below, subject to the non-exclusive, non perpetual license granted
to the Inktomi Corporation ("Inktomi") pursuant to the Portal
Services Agreement dated 6 November 1999 between LOOK and Inktomi,
and subject to the non-exclusive, non perpetual syndication and
license agreements identified as exhibits to the LOOK Transfer
Agreement. Such transfer to BT LOOKSMART shall take place on the
tenth Business Day after the date on which LOOK or LOOK BARBADOS
receives notice that the Performance Objectives have been met; and
7.3.2 Pursuant to the terms of the LOOK Licensing Agreement, LOOK shall
continue to license to BT LOOKSMART the LOOK Databases on an
exclusive (in the Territory), non-transferable basis.
7.4 The parties acknowledge that the Territory Databases contain URL Content
which LOOK does not own and that LOOK does not transfer ownership of
Intellectual Property Rights in such URL Content. As used herein, "URL
Content" means the words or symbols which together make up an individual
URL and the content of any web pages which a customer may see after
clicking on any URL listed in the Territory Databases.
7.5 If the Year Two Performance Objectives have not been met by 31 March 2002,
the licence(s) by LOOK and LOOK BARBADOS to BT LOOKSMART of the LOOK
Databases and the Territory Databases shall continue on the same terms
except that it or they shall become perpetual and non-exclusive as set
forth in the LOOK Licensing Agreement and BT LOOKSMART shall cease to fund
the creation of the Territory Databases and shall pay to LOOK a royalty as
set forth in the LOOK Licensing Agreement.
7.6 If the Shareholders decide to wind-up BT LOOKSMART, BTH and LOOK BARBADOS
shall each be entitled to a copy, without any restrictions on use, of any
Territory Databases which are owned by BT LOOKSMART and to any other
Intellectual Property Rights of BT LOOKSMART.
7.7 During the Initial Period and, if the Year One Performance Objectives have
not been met at the end of the Initial Period, during the period from 1
April 2001 to 31 March 2002, LOOK and LOOK BARBADOS each undertake not to
transfer, assign or grant any licence in (save for the transfer or licence
agreed to in this Agreement or the LOOK Licensing Agreement, and subject to
Section 7.8 below) or in any way encumber the Territory Databases or any
Intellectual Property Rights in the Territory Databases.
7.8 The parties understand and agree that the LOOK Licensing Agreement and the
transfer of the Territory Databases referred to in this Clause 7 are
subject to LOOK's obligations as set out in Schedule 9 to Microsoft
Corporation pursuant to an agreement between LOOK and Microsoft dated 4
December 1998 (the "Microsoft Agreement"). Save as set out in Schedule 9,
LOOK represents and warrants to BTH and BT LOOKSMART that there are no
obligations in the Microsoft Agreement that have not been disclosed to BTH
and BT LOOKSMART which will limit or impair any of the rights of BT
LOOKSMART, under this Agreement or the LOOK Licensing Agreement, to the use
of the LOOK Database and/or the Territory Databases.
7.9 Within 10 Business Days after the date upon which the Performance
Objectives are met, BTH shall nominate a person at BT's Adastral Park to
liaise with BT LOOKSMART.
7.10 LOOK agrees to provide a link (which shall have equal prominence with other
non US databases, and if such other non US databases appear above the fold,
shall appear above the fold) on the xxxxxxxxx.xxx website to the URLs of BT
LOOKSMART at which the Territory Databases are displayed.
8. FUNDING
Shareholder Funding
8.1 The Peak Funding Requirement for the BT LOOKSMART Business as set out in
the Initial Business Plan is US$216,000,000.
8.2 LOOK BARBADOS shall pay US$997,220 by subscribing for 41,900,000 Shares in
accordance with Clause 5.1 which shall be credited as fully paid. The
balance of
$107,000,000 (or such lesser amount as provided in any approved revised
Business Plan) payable by LOOK BARBADOS shall be paid in cash by LOOK
BARBADOS by subscribing for Shares at the then current valuation as
determined by the Board in the amounts as provided in Clause 8.10.
8.3 BTH shall pay US$997,220 by subscribing for 41,900,000 Shares in accordance
with Clause 5.1 which shall be credited as fully paid. The balance of
$107,000,000 (or such lesser amount as provided in any approved revised
Business Plan) payable by BTH shall be paid in cash by BTH by subscribing
for Shares at the then current valuation as determined by the Board in the
amounts as provided in Clause 8.10.
8.4 Each Shareholder shall be liable only for 50 per cent of the Peak Funding
Requirement and shall not be jointly and severally liable in respect of the
Peak Funding Requirement. If a Shareholder shall not subscribe for Shares
as set out in Clauses 8.2 and 8.3 on the due date for subscription, that
Shareholder shall be diluted.
8.5 Subject to LOOK BARBADOS subscribing for shares up to the maximum amounts
set out in Schedule 10, if required by LOOK BARBADOS, BT shall provide or
shall procure that a member of the BT Group shall provide to BT LOOKSMART
or to LOOK BARBADOS or the designated member of the LOOK Group, at LOOK
BARBADOS'S option, funds up to US$50 million principal amount for the
payment of part of LOOK BARBADOS'S Funding Commitment on the following
terms:
a) the instrument will be non-recourse except as specifically provided in this
Clause 8.5, and will yield a compound rate of return of twenty per cent per
annum on the funds made available by BT;
b) capital and interest will be rolled up;
c) repayment of each drawdown will be made on the third anniversary of the
date of that drawdown;
d) BT shall have a lien on the LOOK Shareholder's interest in BT LOOKSMART on
a prorated percentage basis determined by dividing the total amount of
drawdowns by LOOK pursuant to this Clause 8.5 by the total amount
contributed to BT LOOKSMART by the LOOK Shareholder including the
drawdowns;
e) BT shall have the option at any time upon thirty (30) days prior written
notice to LOOK to convert the instrument into shares in the share capital
of LOOK or its successor at a price of US$35 per share;
f) BTH shall pay to LOOK US$50 million in accordance with the terms of the
Loan Agreement. If the funds are not paid into BT LOOKSMART, BT may demand
instant repayment of the total funds loaned to LOOK BARBADOS under this
Clause 8.5, or BT may require that the funds be converted immediately into
the ordinary share capital of LOOK at US$35 per share. In such a situation,
BT is immediately relieved of its obligation to provide any of the
remaining balance of the US$50 million debt commitment. Unless otherwise
agreed by the parties, the amounts of the drawdowns shall be as provided in
Schedule 10; provided however, that LOOK may defer some or all of the
amount of a drawdown to a subsequent drawdown.
g) Upon a transfer of the LOOK Shareholder's Shares, the instrument described
in Clause 8.5(a) may be assigned subject to (i) BT's consent and (ii) the
successor entity providing appropriate security for its obligations under
the instrument. If BT does not consent to such an assignment, BT may
convert the instrument to the ordinary share capital of LookSmart, Ltd. at
US$35 per share or demand repayment from LOOK BARBADOS.
h) Upon a change of control of LOOK, the instrument described in Clause 8.5(a)
may be assigned provided the entity that becomes the controlling entity
offers to guarantee the debt. LOOK undertakes that it will give written
notice to BTH as soon as it makes a public announcement of or files a
notice with the SEC in relation to a change of control of LOOK.
External Funding
8.6 The Board may approve the raising of funds by BT LOOKSMART from third party
lenders on a non-recourse (to the Shareholders) basis provided that BT
LOOKSMART's maximum external debt does not exceed fifty per cent (50%) of
BT LOOKSMART's equity (aggregate Shareholder funding pursuant to Clause 8.2
and 8.3, plus BT LOOKSMART's accumulated reserves per the last signed
audited annual accounts).
8.7 Any incremental funding ("Incremental Funding") of BT LOOKSMART over and
above the Peak Funding Requirement that is required by cash flow forecasts
prepared by the CFO and approved by the CEO and which is approved by both
of the Shareholders and which is not obtained from a third party shall be
provided as follows:
(a) equally by way of equity if both Shareholders agree to fund the
Incremental Funding;
(b) if both Shareholders approve the Incremental Funding but one wishes to
fund less than its pro-rata proportion of such amount, it shall be
diluted on the basis of the amount of Incremental Funding provided by
the other Shareholder divided by the then current valuation price per
share.
IPO
8.8 LOOK BARBADOS and BTH agree that a public offering of shares in BT
LOOKSMART is the preferred method for BT LOOKSMART to raise funds. LOOK
BARBADOS and BTH intend to have an initial public offering of shares in BT
LOOKSMART at the earliest possible time subject to favourable market
conditions and the consent of the LOOK Shareholder and the BT Shareholder.
Dilution
8.9 If, as a result of a dilution in accordance with this Clause 8, the non-
funding Shareholder holds a percentage interest in the share capital of BT
LOOKSMART of 40 per cent or less, it will lose the right, in the case of
the LOOK Shareholder, to nominate the CEO and, in the case of the BT
Shareholder, to nominate the CFO. If, as a result of such dilution, the
non-funding Shareholder holds a percentage interest in the share capital of
BT LOOKSMART of 30 per cent or less, it will lose the right to
appoint one out of the three people it is entitled to appoint to the Board
of BT LOOKSMART and the size of the Board will be reduced accordingly. If,
as a result of such dilution, the non-funding Shareholder holds a
percentage interest in the share capital of BT LOOKSMART of 20 per cent or
less, it will lose the right to appoint one out of the two people it is
entitled to appoint to the Board of BT LOOKSMART and the size of the Board
will be reduced accordingly. If, as a result of such dilution, the non-
funding Shareholder holds a percentage interest in the share capital of 10
per cent or less, it will lose all rights to appoint any person to the
Board of BT LOOKSMART, and the size of the Board will be reduced
accordingly.
8.10 The Board shall determine when additional subscriptions for Shares will
occur and shall do so consistent with the Initial Business Plan or approved
revised Business Plan. The parties agree that BT LOOKSMART shall not hold
cash reserves in excess of those required for a 5 week operating period.
The Shareholders shall receive a minimum of thirty (30) days prior written
notice of a subscription date and the amounts due. The Board shall set a
fair market value of BT LOOKSMART at each issuance of additional Shares to
the Shareholders or grant of stock options pursuant to the BT LOOKSMART
stock option plan to be established pursuant to Clause 15.2.
9. DIRECTORS AND MANAGEMENT
Supervision by the Board
9.1 The Board shall have the authority vested in it by this Agreement, the Bye-
laws and the relevant provisions of Bermuda law. Therefore, the Board
shall have the overall responsibility for the general course of the BT
LOOKSMART Business. The Board may form committees by a decision of the
Directors which committees shall consist of at least 1 LOOK Director and 1
BT Director (subject to one of the Shareholders having lost its right to
appoint one or all of its Directors, as the case may be, as a result of
dilution in accordance with Clause 8 in which case the composition of
committees shall be amended accordingly) and delegate certain functions to
them as the Board may from time to time decide. All committees formed by
the Board shall meet at such intervals as directed by the Board and shall
have such powers and responsibilities as the Board shall delegate to them.
Board of Directors
9.2 The Board shall be comprised of an equal number of LOOK Directors and BT
Directors (subject to one of the Shareholders having lost its right to
appoint one or all of its Directors as the case may be, as a result of
dilution in accordance with Clause 8) and the CEO and CFO. Until otherwise
agreed by the Shareholders or until dilution occurs pursuant to Clause 8,
there shall be 3 LOOK Directors and 3 BT Directors. The initial
appointments to the Board are as follows:
LOOK Directors BT Directors CEO CFO
-------------- ------------- --- ---
Xxxx Xxxxxxxx Xxxxxx Xxxxx Xxxxxxx Xxxxxxx To be nominated by
the BT Shareholder
Xxxxxxx Xxxxxxxx Xxxxxxx Xxxxxx
Xxxxxx Xxxxxx To be nominated by the
BT Shareholder
Board meetings shall take place once each month or less frequently as the
Board shall agree unless by exception the Board agrees otherwise. Each
Shareholder shall bear the costs of the Directors appointed by it attending
Board meetings. Directors may participate in Board meetings by telephone or
video conference, except from the UK or Australia, and shall be counted as
present for quorum and voting purposes.
Appointment and removal of Directors
9.3 Any appointment or removal of a Director appointed by a Shareholder shall
be effected by notice in writing to BT LOOKSMART signed by or on behalf of
the Shareholder in question and shall take effect, subject to any contrary
intention expressed in the notice, when the notice effecting the same is
delivered to BT LOOKSMART.
If one of the Shareholders loses its right to appoint one or all of its
Directors, as the case may be, as a result of dilution in accordance with
Clause 8, it shall forthwith procure the resignation of the relevant number
of Directors and obtain from each resigning Director a waiver of any and
all rights for compensation for loss of office that they might have.
Quorum
9.4 The quorum for the transaction of business at any meeting of the Board
(including any adjourned meeting) shall be at least one (1) LOOK Director
(or his alternate) and at least one (1) BT Director (or his alternate)
present at the time when the relevant business is transacted. If such a
quorum is not present within 30 minutes from the time appointed for the
meeting or if during the meeting such a quorum ceases to be present, the
meeting shall be adjourned for 7 Business Days and the same quorum
requirements shall than apply. A Director shall be regarded as present for
the purposes of a quorum if represented by an alternate Director in
accordance with Clause 9.6. If, as a result of dilution in accordance with
Clause 8, either Shareholder has lost the right to appoint any Directors to
the Board, the quorum shall be simply any two (including at least one
Director appointed by the Shareholder that has the right to appoint one or
more Directors) Directors present at the time when the relevant business is
transacted.
Notice and Agenda
9.5 At least 14 days written notice shall be given to each of the members of
the Board of any meeting of the Board, provided always that a shorter
period of notice may be given with the written approval of at least one (1)
LOOK Director (or his alternate) and at least one (1) BT Director (or his
alternate). If, as a result of dilution in accordance with clause 8, either
Shareholder has lost the right to appoint any Directors to the Board, such
shorter period of notice may be given with the written approval of any two
Directors. Any such notice shall contain, inter alia, an agenda identifying
in reasonable detail the matters to be discussed at the meeting and shall
be accompanied by copies of any relevant papers to be discussed at the
meeting. Any matter which is to be submitted to the Board for a decision
which is not identified in reasonable detail as aforesaid shall not be
decided upon, unless otherwise agreed in writing by all of the members of
the Board.
Board voting
9.6 Except as otherwise agreed by the LOOK Shareholder and the BT Shareholder,
if no dilution has occurred pursuant to Clause 8 resulting in one
Shareholder losing the right to appoint one or all of its Directors, all
decisions of the Board shall require the
positive vote of at least 95 per cent of all the Directors. If dilution has
occurred pursuant to Clause 8 resulting in one Shareholder losing the right
to appoint one or all of its Directors, all decisions of the Board shall be
by simple majority vote. Each Director shall have one vote. Any Director
who is absent from any meeting may nominate any other person to act as his
alternate and to vote in his place at the meeting. If any of the Directors
appointed by a Shareholder is not present at any Board meeting (whether
present in person or by alternate), then one of the Directors appointed by
such Shareholder so present shall be entitled at that meeting to such
additional vote or votes as shall result in the Directors so present
appointed by each Shareholder having in aggregate an equal number of votes.
9.7 It is recognised that the subsidiaries of BT LOOKSMART may operate
independently of the Board. However, the Board reserves the right to take
responsibility for the following matters on giving notice to BT LOOKSMART's
subsidiaries:
(a) capital expenditure by any member of the BT LOOKSMART Group in respect
of any item or project in excess of $1,000,000 not contained in the
then current Business Plan or such other sum as may be approved by the
Board from time to time;
(b) annual updates, extensions and variations of the Business Plan and
Budgets;
(c) the adoption of (or variation to) share option plans and the
remuneration package of the CEO and his direct reports;
(d) the formation of policies for any member of the BT LOOKSMART Group in
respect of business conduct, the environment and health and safety
issues;
(e) the entry into by any member of the BT LOOKSMART Group of any
contract, liability or commitment which could involve an obligation of
a material magnitude or nature (a liability for expenditure in excess
of $2,000,000 being regarded as material for this purpose);
(f) any change in any member of the BT LOOKSMART Group Accounting
Principles:
(g) appointment and removal of the CEO and the CFO;
(h) major decisions relating to the conduct or settlement of material
legal proceedings (potential liability or claim in excess of $750,000
being regarded as material for these purposes) or the conduct of any
competition or regulatory proceedings;
(i) contracts between any member of the BT LOOKSMART Group and a member of
the BT Group or the LOOK Group;
(j) any acquisition or disposal (whether in a single transaction or series
of transactions) by any member of the BT LOOKSMART Group of any
business (or any material part of any business) or of any shares in
any company;
(k) (except for contracts which satisfy such criteria as the Board may
from time to time approve as part of the procedures for the entry into
of contracts by any member of the BT LOOKSMART Group) the entry into
by any member of the
BT LOOKSMART Group of any contract, liability or commitment which is
outside the ordinary course of business of the BT LOOKSMART Group;
(l) the entry into (or termination) by any member of the BT LOOKSMART
Group of any material partnership or joint venture.
9.8 The Chairman of the Board shall be appointed immediately following each
annual general meeting. The office of Chairman shall rotate between a BT
Director and a LOOK Director, with the first Chairman being a LOOK
Director. The Chairman shall not have a casting vote.
Management
9.9 The CEO who shall be responsible to the Board for:
(a) the successful implementation of the Business Plan;
(b) BT LOOKSMART's efficient and cost effective management; and
(c) submission of monthly reports to the Board in a form agreed by the
Board.
These responsibilities shall be reflected in the CEO's terms and conditions
of appointment with BT LOOKSMART which shall contain performance related
targets. The CEO shall be a member of the Board. The LOOK Shareholder shall
nominate each CEO whose appointment shall be subject to a positive vote of
at least 95 per cent of all the Directors (excluding the votes of the CEO
and the CFO) if no dilution has occurred pursuant to Clause 8 resulting in
a Shareholder losing its right to appoint one or more Directors and by
simple majority vote of the Board if dilution has occurred resulting in a
Shareholder losing its right to appoint one or more Directors. If the LOOK
Shareholder has lost the right to nominate the CEO pursuant to Clause 8,
the Board shall nominate the CEO. The first CEO shall be Xxxxxxx Xxxxxxx.
9.10 The CFO shall be a member of the Board. The CFO will undertake BT
LOOKSMART's day-to-day financial control, report to the CEO and be
responsible to the Board for keeping BT LOOKSMART's financial books and
records in accordance with appropriate accounting principles and for
preparing and submitting monthly financial reports to the Board and the
Shareholders and as may be required by relevant law. The BT Shareholder
shall nominate each CFO whose appointment shall be subject to a positive
vote of at least 95 per cent of all the Directors (excluding the votes of
the CEO and the CFO) if no dilution has occurred pursuant to Clause 8
resulting in a Shareholder losing the right to appoint one or more
Directors and by simple majority vote of the Board if dilution has occurred
resulting in a Shareholder losing the right to appoint one or more
Directors. If the BT Shareholder has lost the right to nominate the CFO
pursuant to Clause 8, the Board shall nominate the CFO.
10. BUSINESS PLAN
10.1 The Initial Business Plan and any subsequent approved revised Business Plan
constitute the blue print for the development of the BT LOOKSMART Business.
The parties agree that the Board shall meet within thirty (30) days of
Completion to discuss and agree a revised Business Plan. The Initial
Business Plan shall be updated annually by the unanimous approval by the
Board if no dilution has occurred pursuant to Clause 8 resulting in a
Shareholder losing its right to appoint one or more
Directors and by simple majority vote of the Board if dilution has occurred
resulting in a Shareholder losing its right to appoint one or more
Directors and shall form the rolling 5 year Business Plan. Reviews,
updates, modifications and extensions to the Business Plan shall follow the
content, timing and procedures determined by the Board.
10.2 The Board shall procure that BT LOOKSMART's management prepare, 30 days
prior to the end of a Financial Year, a draft annual update for approval by
the Board on the basis of BT LOOKSMART's existing activities and services.
If the Board shall fail to approve an update, the last agreed Business Plan
or update shall continue to apply for the Financial Year in question until
such time as an update is duly approved. Annual updates shall be in the
same format as the Initial Business Plan and shall consist of a forecast of
the next 5 subsequent Financial Years. The CEO's prime responsibility shall
be to implement the Business Plan and he/she shall be required to provide
the Board with regular reports of performance against Business Plan
targets.
11. SHAREHOLDER MATTERS
Use of powers
11.1 The Shareholders shall use their respective powers to procure, so far as
they are legally able, that no decision relating to any of the matters
specified in Clause 11.2 ("Shareholder Matters") shall be taken (whether by
the Board, BT LOOKSMART or any subsidiary of BT LOOKSMART or any of the
committees, officers or managers of BT LOOKSMART) unless prior approval has
been given (i) by at least 95 per cent of the Shareholders if no dilution
has occurred pursuant to Clause 8 resulting in one of the Shareholders
holding a percentage interest in the share capital of BT LOOKSMART of 40
per cent or less or (ii) subject to Clause 11.4(f), by simple majority of
the votes cast if dilution has occurred pursuant to Clause 8 resulting in
one of the Shareholders holding a percentage interest in the share capital
of BT LOOKSMART of 40 per cent or less.
Shareholder Matters
11.2 The Shareholder Matters are the following:
(a) adoption of or any alteration to the Memorandum of Association or the
Bye-laws or other constitutional documents of BT LOOKSMART;
(b) any change in the authorised or issued share capital of BT LOOKSMART
or any increase (or reduction) by BT LOOKSMART in its shareholding in
any other company;
(c) any material change in the nature or scope of BT LOOKSMART's
activities, including without limitation any decision referred to in
sub-clause (o) below;
(d) the declaration or payment of any dividend or distribution by BT
LOOKSMART;
(e) the creation of any mortgage, charge, encumbrance or other security
interest of whatsoever nature in respect of all or any material part
of the undertaking, property or assets of BT LOOKSMART;
(f) the appointment or removal of the auditors of BT LOOKSMART;
(g) the approval of the statutory accounts of BT LOOKSMART;
(h) any proposal that BT LOOKSMART be wound-up;
(i) the introduction of any third party to BT LOOKSMART or a Loco;
(j) contracts between BT LOOKSMART or a Loco and a member of the LOOK
Group or the BT Group which is for an amount in aggregate exceeding
$1.5 million;
(k) approval of the corporate xxxx and URLs of BT LOOKSMART and Locos and
any changes to such marks or URLs;
(l) any decision to conduct business in a country which is outside the
Territory;
(m) any decision for BT LOOKSMART or a Loco to offer a free access portal;
(n) any decision for BT LOOKSMART or a Loco to provide any
telecommunications services.
Method of approval by Shareholders
11.3 The approval of the Shareholders to any of the Shareholder Matters (or to
any variation thereof) shall be given by the Shareholders either by
unanimous written resolution or at a general meeting of BT LOOKSMART.
Meetings of Shareholders
11.4 General meetings of Shareholders shall take place in accordance with the
applicable provisions of the Bye-laws on the basis (inter alia) that:
(a) if no dilution has occurred pursuant to Clause 8 resulting in one of
the Shareholders holding a percentage interest in the share capital of
BT LOOKSMART of 40 per cent or less, a quorum shall be one (1) duly
authorised representative of the LOOK Shareholder and one (1) duly
authorised representative of the BT Shareholder;
(b) if a dilution has occurred pursuant to Clause 8 resulting in one of
the Shareholders holding a percentage interest in the share capital of
BT LOOKSMART of 40 per cent or less, a quorum shall be two (2) duly
authorised representatives of the Shareholder holding 50 per cent plus
one vote or more of the issued share capital of BT LOOKSMART;
(c) the notice of meeting shall (unless otherwise agreed by each of the
Shareholders) set out an agenda identifying in reasonable detail the
matters to be discussed;
(d) the chairman of any such meeting shall not have a casting vote;
(e) subject to Clause 11.4 (f), a decision to approve any of the
Shareholder Matters shall require (i) a positive vote of at least 95
per cent of the Shareholders present or (ii) a simple majority vote of
the Shareholders present, if a dilution has occurred pursuant to
Clause 8 resulting in one of the
Shareholders holding a percentage interest in the share capital of BT
LOOKSMART of 40 per cent or less.
(f) if a dilution has occurred pursuant to Clause 8 resulting in one of
the Shareholders holding a percentage interest in the share capital of
BT LOOKSMART of 40 per cent or less, a decision to approve the
Shareholder Matters set out in sub-clauses 11.2 (a), (b), (c), (e),
(j) and (l) shall require a simple majority vote of the Shareholders
present, which majority shall include all Shareholders holding a
percentage interest in the share capital of BT LOOKSMART of 30 per
cent or more.
11.5 Any matters requiring a general meeting of or approval by the Shareholders
under relevant corporate laws, but not covered by the Shareholder Matters,
shall be dealt with in accordance with the Bye-laws.
Deadlock
11.6 If a deadlock arises by reason of a failure by the Shareholders to reach
agreement on any of the Shareholder Matters or any management matter
requiring decision by the Board, either Shareholder may serve formal
written notice on the other Shareholder that a deadlock has arisen. If the
Shareholders are unable to resolve the matter within a 3 week period after
the service of such notice, then the matter shall be referred to the Chief
Executive Officer of LOOK and the President and CEO of the BT Worldwide
division (or similar senior executive) of BT with a view to the matter
being resolved within fifteen (15) days of the date on such referral.
12. FINANCIAL MATTERS
Accounting Principles
12.1 BT LOOKSMART shall, in relation to its financial statements, adopt
accounting principles in accordance with US GAAP and approved by the Board
(the "Accounting Principles").
Auditors
12.2 BT LOOKSMART's auditors shall be such firm of chartered accountants of
recognised international standing as may be recommended by the Board and
approved by the Shareholders from time to time.
Dividend policy
12.3 The Board shall decide how much to distribute of the consolidated profit
(after taxation and extraordinary items) of BT LOOKSMART as shown by the
financial statements of BT LOOKSMART for that Financial Year and available
for distribution in accordance with applicable law. The constitutional
documents of BT LOOKSMART shall, wherever legally permitted, make provision
for the payment of interim dividends.
13. INFORMATION AND REPORTING
Inspection and information
13.1 Each Shareholder (and its auditors and other representatives) shall be
entitled to and shall at its request be supplied with:
(a) full access (including copying facilities), at reasonable times and on
reasonable notice, to the separate books, records, accounts,
regulatory filings, documents, premises, processes, systems, business
activities, management and auditors of BT LOOKSMART and its
subsidiaries and affiliates, whether in connection with such
Shareholder's own internal audit of BT LOOKSMART or otherwise; and
(b) all information, including, but not limited to, monthly management
accounts, operating statistics (including, but not limited to, the
number of users, subscribers and advertising sales), details of tax
payments and other trading and financial information, in such form and
at such times as such Shareholder may reasonably require to keep it
properly informed about the business and affairs of BT LOOKSMART and
to fulfil such Shareholder's own group reporting requirements.
Accounts, Business Plan and Budgets
13.2 The LOOK Shareholder and the BT Shareholder shall, in any event and
without prejudice to the generality of Clause 13.1, be supplied by BT
LOOKSMART with copies of:
(a) audited accounts for BT LOOKSMART (complying with all relevant legal
requirements);
(b) a Business Plan and itemised revenue and capital Budgets for each
Financial Year showing proposed trading and cash flow figures,
staffing levels and all material proposed acquisitions, disposals and
other commitments for such Financial Year; and
(c) within 12 days of the end of each month, monthly/quarterly management
accounts of BT LOOKSMART including a statement of progress against the
relevant Business Plan, a statement of any variation from the
quarterly revenue Budget and up-to-date rolling forecasts for the
balance of the relevant Financial Year and an itemised account of all
transactions referred to in the capital Budget entered into by BT
LOOKSMART during that period. BT LOOKSMART shall maintain a sufficient
level of oversight from its auditors to ensure that any publicly-
disclosed accounting information is accurate.
14. BUDGETARY PROCEDURES
14.1 The Shareholders shall procure that the Board endeavours to agree the
Budget no less than 30 days prior to the commencement of the relevant
Financial Year. The Budget (unless otherwise agreed among the Directors)
shall include the following items:
(a) strategic plan;
(b) traffic, yield and reach assumptions for ad sales revenue projections;
(c) customer count and transaction size assumptions for eCommerce revenue
projections;
(d) cost of sales assumptions and projections;
(e) marketing plan and budget;
(f) sales and marketing budget including ad sales, business development,
distribution fees, customer service, and marketing department costs;
(g) product development budget including editorial, product development
and engineering costs;
(h) administration budget including finance, executive, human resources
and facilities expenses;
(i) customer services budget;
(j) resource budget, including:
(i) procurement budget and transfer prices from parent companies;
(ii) investment budget (capital expenditure); and
(k) financial forecasts analysed into monthly elements including:
(i) cash flow;
(ii) profit and loss statement;
(iii) balance sheet; and
(iv) financial and economic assumptions on which they are based; and
(l) analysis of forecast receipts and payments between BT LOOKSMART and
the LOOK Shareholder and the BT Shareholder and their respective
affiliates.
14.2 A variance analysis of Budget figures compared with actual figures and the
updated forecasts of "year-end" figures will be submitted to the Directors
on a quarterly basis.
15. EMPLOYEES
15.1 The Shareholders will at the request of BT LOOKSMART's management exercise
reasonable endeavours in order to make appropriately qualified personnel
available to BT LOOKSMART on a temporary basis to enable its early and
efficient start-up. The cost of the secondments will be met by BT LOOKSMART
unless otherwise agreed. The Shareholders intend that as soon as
practicable BT LOOKSMART will be autonomous in the employees required in
the ordinary course of its business although as Shareholders they shall
continue to co-operate fully in the development of BT LOOKSMART's skills
and expertise and in meeting its special needs. For the avoidance of doubt,
the terms of any such secondment arrangements shall be treated as a
Shareholder related contract for the purpose of this Agreement.
15.2 Subject to applicable law and regulation, BT LOOKSMART shall establish a
stock plan substantially in the form set out in Schedule 11.
16. CONFIDENTIALITY
Confidentiality obligation
16.1 Each party undertakes with the other that it shall use (and shall procure
that each member of its Group uses) all reasonable endeavours to keep
confidential any information:
(a) which it may have or acquire (whether before or after the date of this
Agreement) in relation to BT LOOKSMART's customers, business, assets
or affairs (including, without limitation, any information provided
pursuant to Clause 13);
(b) which, in consequence of the negotiations relating to this Agreement
or being a Shareholder or having appointees on the Board or the
exercise of its rights or performance of its obligations under this
Agreement, it may have or acquire (whether before or after the date of
this Agreement) in relation to the customers, business, assets or
affairs of any member of the LOOK Group (if the party is BTH) or of
any member of the BT Group (if the party is LOOK BARBADOS); or
(c) which relates to the contents of this Agreement or any Ancillary
Agreement (or any agreement or arrangement entered into pursuant to
this Agreement).
No party shall use for its own business purposes or disclose to any third
party any such information (collectively, "Confidential Information")
without the consent of the other Parties. In performing its obligations
under this Clause 16, each party shall apply such confidentiality standards
and procedures as it applies generally in relation to its own confidential
information.
Exceptions from confidentiality
16.2 The obligation of confidentiality under Clause 16. 1 shall not apply to :
(a) the disclosure (subject to Clause 16.3) on a "need to know" basis to a
company which is another member of the LOOK Group or BT Group (as the
case may be) where such disclosure is for a purpose reasonably
incidental to this Agreement; provided that such disclosure is made
subject to confidentiality obligations at least as protective as set
forth in this Clause 16;
(b) information which is independently developed by the relevant party or
acquired from a third party to the extent that it is acquired with the
right to disclose the same;
(c) the disclosure of information to the extent required to be disclosed
by law, any stock exchange regulation or any binding judgement, order
or requirement of any court or other competent authority, including
any regulatory or competition authority, provided that to the extent
possible prior to making such disclosure the disclosing party provides
advance written notice to the other party and reasonable assistance in
seeking confidential treatment or a protective order;
(d) the disclosure of information to any tax authority to the extent
reasonably required for the purposes of the tax affairs of the party
concerned or any member of its Group;
(e) the disclosure (subject to Clause 16.3) in confidence on a "need to
know" basis to a party's or a party's Group Officers, employees,
representatives or advisers of information reasonably required to be
disclosed for a purpose reasonably incidental to this Agreement;
provided that such disclosure is made subject to confidentiality
obligations at least as protective as set forth in this Clause 16;
(f) information which becomes within the public domain (otherwise than as
a result of a breach of this Clause 16); or
(g) any announcement or disclosure made in accordance with the terms of
Clause 28.
Employees, advisers etc.
16.3 Each party shall inform its officers, employees (including those of its
Group), representatives or any adviser advising it (or any member of its
Group) in relation to the matters referred to in this Agreement, or to whom
it provides Confidential Information, that such information is confidential
and shall instruct them:
(a) to keep it as confidential; and
(b) not to disclose it to any third party (other than those persons to
whom it has already been disclosed in accordance with the terms of
this Agreement).
The disclosing party shall remain responsible for any breach of this Clause
16 by the person to whom it is disclosed.
Survival after termination
16.4 The provisions of this Clause 16 shall survive any termination of this
Agreement.
17. REGULATORY MATTERS
Co-operation
17.1 The parties shall co-operate with each other to ensure that all
information necessary or desirable for the making of (or responding to any
requests for further information consequent upon) any notifications or
filings made in respect of this Agreement, or the transactions contemplated
hereunder, is supplied to the party dealing with such notification and
filings and that they are properly, accurately and promptly made. BTH shall
lead on the making of any appropriate regulatory filings but both parties
shall use all reasonable endeavours to ensure these can be promptly and
effectively made.
UK Restrictive Trade Practices Act
17.2 No restriction in this Agreement or any document to be executed pursuant
to this Agreement which renders this Agreement or such document registrable
under the Restrictive Trade Practices Act 1976 shall have effect until
immediately after particulars have been furnished to the Office of Fair
Trading of the United Kingdom as required by the Act.
Regulatory Action
17.3 If any Regulatory Action is to be taken or is threatened, the parties
shall promptly meet to discuss the situation and the action to be taken as
a result and whether any
modification to the terms of this Agreement (or any Ancillary Agreement or
other agreement entered into pursuant to this Agreement) should be made, in
order that any requirements (whether as a condition of giving any approval,
exemption, clearance or consent or otherwise) of the Commission of the
European Communities or other regulatory authority may be reconciled with,
and within the intended scope of, the business arrangement contemplated by
this Agreement. The parties shall co-operate in giving effect to any
modifications so agreed upon.
Material regulatory objection
17.4 If under relevant European Union law or other relevant laws applicable to
the joint venture, the Commission of the European Communities or other
regulatory authority (after all appropriate notifications and hearings have
been made and held) makes a decision or order or expresses a conclusive
view that effect should not be given to the basic principles of the joint
venture to be established pursuant to this Agreement or which would negate
the original commercial imperatives of the individual parties in entering
into this Agreement, then the parties shall:
(a) promptly meet to decide the appropriate course in the mutual interests
of the parties to give effect to the requirements of the Commission of
the European Communities and/or other regulatory authority; and
(b) in the absence of agreement to any other course, take appropriate
steps to reinstate, as fully as may be possible, the legal position of
the parties which prevailed in relation to the LOOK business and the
BT business respectively prior to the signing of this Agreement.
18. INTELLECTUAL PROPERTY AND BRANDING
Intellectual Property Rights
18.1 Subject to the terms of the LOOK Licensing Agreement and the LOOK Services
Agreement, the parties acknowledge that all Intellectual Property Rights
created and/or commissioned by BT LOOKSMART during the term of this
Agreement shall vest in BT LOOKSMART. Any Intellectual Property Rights
acquired or licensed by BT LOOKSMART from LOOK or BT shall be dealt with by
specific licence or purchase agreements and be subject to the specific
terms of those agreements.
Branding
18.2 BTH and LOOK BARBADOS shall agree a brand for BT LOOKSMART and any Locos.
Such brand shall give equal prominence to BT's brand and to LOOK's brand.
The parties agree that the "look and feel" of any BT LOOKSMART site shall
be substantially similar to the current user interface at the site at
xxx.xxxxxxxxx.xxx. The parties acknowledge that use of the LOOK brand and
-----------------
LOOK "look and feel" shall be subject to the terms of the LOOK Trade Xxxx
License Agreement, and use of the BT brand shall be subject to the terms of
the BT Trade Xxxx License Agreement.
18.3 Each of BT LOOKSMART's portals and each Loco portal (except for wholesale
services) shall be branded with a BT LOOKSMART brand and shall have a BT
LOOKSMART or a LOOKSMART URL.
18.4 The homepage of each portal shall contain a "Communications Centre" section
which shall be branded with such elements of the BT trade xxxx as BTH shall
decide and which shall provide links to and promote BT IP communications
services and other
BT or BTAP services (except for wholesale services). The homepage of each
portal shall also have links to other sites of LOOK.
19. TAX MATTERS
19.1 BT LOOKSMART shall comply with the following provisions:
(a) all business decisions shall be made in Bermuda;
(b) it shall not maintain a bank account outside of Bermuda;
(c) it shall not hold any assets (save for shares in companies) outside of
Bermuda;
(d) it shall not employ any individuals who reside or perform services on
behalf of BT LOOKSMART outside of Bermuda except for members of the board
of Directors, provided that, in the case of members of the Board of
Directors who reside outside of Bermuda, they do not perform such functions
on behalf of BT LOOKSMART whilst outside of Bermuda;
(e) it shall not have an office or fixed place of business outside of
Bermuda;
(g) it shall not directly or indirectly acquire a USA real property
interest as defined under the US Internal Revenue Code section 897;
(h) it shall not enter into any contract or sign any contract outside of
Bermuda;
(j) no person acting as agent of BT LOOKSMART shall reside or perform
services for them outside of Bermuda.
19.2 References in clause 19.1 above to Bermuda shall include such other
territories as the Board may agree with due regard to any possible tax
consequences.
20 TRANSFER OF SHARES
General
20.1 The provisions of this Clause 20 shall apply in relation to any transfer,
or proposed transfer, of Shares in BT LOOKSMART or any interest in such
Shares. With regard to the provisions of this Clause 20, time is of the
essence.
Restrictions on transfer
20.2 Each party shall procure that, unless LOOK BARBADOS (in the case of a
proposed transfer of BT Shares) or BTH (in the case of a proposed transfer
of LOOK Shares) has given its prior consent in writing, no Shareholder
shall:
(a) transfer any Shares (otherwise than in accordance with Clauses 20.3 to
20.11); or
(b) grant, declare, create or dispose of any right or interest in any
Shares; or
(c) create or permit to exist any pledge, lien, charge (whether fixed or
floating) or other encumbrance over any Shares.
Initial period
20.3 No Shareholder shall transfer any Shares during the period from the date
of Completion of this Agreement to the later of 31 March 2001 and the date
the Performance Objectives are met (save for intra-Group transfers
permitted under Clause (20.10).
Transfer Notice
20.4 After the expiry of the period mentioned in Clause 20.3 and before a
transferring Shareholder (the "Seller") (and/or any Shareholder in its
Group) makes any transfer of its Shares (the "Seller's Shares"), the Seller
shall first give to the other Shareholder(s) ( the "Continuing Party")
notice in writing (a "Transfer Notice") of any proposed transfer together
with details of the proposed third party purchaser thereof (the "Third
Party Purchaser"), the purchase price and other material terms agreed
between the Seller and the Third Party Purchaser. A Transfer Notice shall,
except as hereinafter provided, be irrevocable. The Seller may give notice
to transfer all but not some only of the Seller's Shares.
Right of Continuing party to purchase
20.5 On receipt of the Transfer Notice, the Continuing Party shall have the
right to purchase all (but not some only) of the Seller's Shares at the
purchase price specified in the Transfer Notice (or at such other price as
shall be agreed between the Seller and the Continuing Party) by giving
written notice to the Seller within thirty (30) days of receipt of the
Transfer Notice ("Acceptance Period"). The obligations of the parties to
complete such purchase shall be subject to the provisions of Clause 20.6.
Obligation to complete
20.6 The Continuing Party shall become bound (subject only to any necessary
approvals of its shareholders in general meeting and of any competent
regulatory authorities) to purchase the Seller's Shares on giving written
notice to the Seller to exercise its rights under Clause 20.5. In such
event, completion of the sale and purchase of the Seller's Shares shall
take place within thirty (30) days after the giving of such notice or, if
later, the obtaining of all necessary approvals of any competent regulatory
authorities which the Continuing Party undertakes to use reasonable
endeavours to obtain. Notwithstanding the foregoing, such notice and right
of the Continuing Party to acquire the Seller's Shares shall cease to have
effect if (i) any necessary approval of the Continuing Party's shareholders
in general meeting has not been obtained with the said period of thirty
(30) days or (ii) any necessary Regulatory Approval has not been obtained
within sixty (60) days after the giving of such notice or (iii) if earlier
than the expiry of such latter period, any such authority has conclusively
refused to grant any such regulatory approval.
Seller's right to sell to Third Party Purchaser
20.7 If the Continuing Party does not exercise its rights of purchase under
Clause 20.5 or any notice given thereunder ceases to have effect pursuant
to Clause 20.6, the Seller shall (subject to Clause 20.9 below) be entitled
to transfer the Seller's Shares on a bona fide arm's length sale to a Third
Party Purchaser at a price being not less than the purchase price and upon
terms no more favourable than the terms specified in the Transfer Notice,
provided that:
(a) such transfer shall have been completed within a period of one
hundred and twenty (120) days after (i) the date of receipt of the
Transfer Notice or (ii) if any notice given by the Continuing Party
shall have ceased to have effect pursuant to Clause 20.6, the date on
which such notice ceased to have effect;
(b) the Third Party Purchaser is financially sound.
20.8 The parties undertake to procure that the Shareholders shall give their
approval, if and to the extent required under the provisions of the Bye-
laws, to any transfer of Shares to a Third Party Purchaser permitted by
the terms of this Paragraph.
Conditions applicable to the Third Party Purchaser
20.9 Completion of any transfer of Shares to a Third Party Purchaser shall be
subject to the conditions that:
(a) the Third Party Purchaser shall first have entered into an agreement
with the Continuing Party whereby it agrees to be bound (in terms
reasonably satisfactory to the Continuing Party) by provisions of
this Agreement and any related agreements binding upon the Seller;
(b) any loans, loan capital, borrowings and indebtedness in the nature of
borrowing (but excluding, for the avoidance of doubt, any debts
incurred in the ordinary course of trade which are at the relevant
time outstanding on inter-company account) owing at that time from BT
LOOKSMART to the Seller or any member of its Group shall first have
been assigned to, or equivalent finance made available by, the Third
Party Purchaser; and
(c) In no event may BTH transfer its Shares to one of the direct
competitors of LOOK listed in Schedule 12.
Intra-Group Transfers
20.10 Each Shareholder shall be entitled at any time to transfer all but not
part only of its Shares to a company in which it holds not less than 50
per cent of the voting share capital of the company or in which it has
joint control provided that completion of any transfer of shares as
contemplated by this Clause 20.10 shall be subject to the condition that
the transferee shall first have entered into an agreement with the
Continuing Party whereby it agrees to be bound (in terms reasonably
satisfactory to the Continuing Party) by the provisions of this Agreement
binding upon the Seller and provided further that the transferor shall
have undertaken to procure that such Shares shall at no time be held by a
company which ceases to satisfy the requirements of this Clause 20.10 and
provided that BTH or LOOK BARBADOS, as applicable, shall be fully
responsible for the obligations of the transferee under this Agreement
and if the transferee ceases to satisfy the requirements of this Clause,
the Shares shall be transferred to a member of the BT Group or the LOOK
Group, as appropriate, which does satisfy such requirements. Prior to the
proposed transfer, the transferor shall satisfy BT LOOKSMART that the
transferee does satisfy the requirements of this Clause. In no event may
the BT Shareholder transfer its Shares to an entity which is controlled
by one of the direct competitors of LOOK listed in Schedule 12.
Change of Control of LOOK
20.11 In the event that there is a change of control of LOOK, the BT
Shareholder and the LOOK Shareholder shall enter into good faith
negotiations for a period of 45 days from the earlier of the date that
the BT Shareholder is aware of a potential change of control of LOOK and
the date of the change of control to consider how to address any concerns
that the BT Shareholder may have as a result of such change of control.
Such discussions may include possible restructuring of BT LOOKSMART. If
the BT Shareholder and the LOOK Shareholder fail to agree within the 45
day period how to deal with the BTShareholder's concerns, the BT
Shareholder shall have the right to require the LOOK Shareholder to
acquire its Shares at the fair market value as agreed between the parties
or in the absence of agreement as determined by an independent expert
appointed by agreement of the parties or in the absence of agreement by
the President of the Institute of Chartered Accountants in England and
Wales. The fair market value shall be determined as between a willing
vendor and a willing purchaser on an arm's length basis. The
determination of the expert shall be final and binding save in the case
of manifest error. BTH recognises that the LOOK Shareholder may not be
able to provide the fair market value entirely in cash. If cash is not
paid, the LOOK Shareholder will ensure that BTH has a liquid form of
exit, such liquid form of exit to be to the BTShareholder's satisfaction.
A change of control for the purpose of this Clause 20.11 means any change
in control of 50 per cent or more of the voting stock of LOOK at the time
in question.
21. Insolvency
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Insolvency Events
21.1 It shall be an Insolvency Event in relation to a Shareholder if:
(a) an order is made by a court of competent jurisdiction, or a
resolution is passed, for the dissolution or administration of that
Shareholder (otherwise than in the course of a reorganisation or
restructuring);or
(b) any step is taken (and not withdrawn within ninety (90) days) to
appoint a liquidator, manager, receiver, administrator, trustee or
other similar officer in respect of any assets which include either
(i) the Shares held by that Shareholder or (ii) shares in that
Shareholder or any Holding Company thereof; or
(c) that Shareholder convenes a meeting of its creditors or makes or
proposes any arrangement or composition with, or any assignment for
the benefit of, its creditors;
and reference to a "Shareholder" in this Paragraph (other than reference
to the other Shareholder) shall include any Holding Company of that
Shareholder.
Action following an Insolvency Event
21.2 If an Insolvency Event shall occur in relation to a Shareholder (the
"Affected Shareholder"), the Affected Shareholder shall be deemed to be a
Seller which has given a Transfer Notice under Clause 20.4 and the other
Shareholder shall have the right, as therein provided, to purchase the
Affected Shareholder's investment at such
price as shall be agreed between the Affected Shareholder and the other
Shareholder or, in the absence of agreement, the Fair Price as determined
by an independent expert whose decision shall be binding on the parties.
22. SHAREHOLDER ASSURANCES
Each Shareholder undertakes with the other that (so far as it is legally
able) it will exercise all voting rights and powers, direct and indirect,
available to it in relation to BT LOOKSMART (and its subsidiaries) so as to
ensure the complete and punctual fulfilment, observance and performance of
the provisions of this Agreement (and the other agreements referred to in
this Agreement) and generally that full effect is given to the principles
set out in this Agreement.
23. NON-ASSIGNMENT
Except as expressly permitted herein, no party may assign any of its rights
or obligations under this Agreement in whole or in part.
24. WAIVER OF RIGHTS
No waiver by a party of a failure by any other party to perform any
provision of this Agreement shall operate or be construed as a waiver in
respect of any other or further failure whether of a similar or different
character.
25. AMENDMENTS
This Agreement may be amended only in writing by an instrument signed by
duly authorised representatives of each party.
26. INVALIDITY
If any of the provisions of this Agreement is or becomes invalid, illegal
or unenforceable, the validity, legality or enforceability of the remaining
provisions shall not in any way be affected or impaired. The parties shall
nevertheless negotiate in good faith in order to agree the terms of a
mutually satisfactory provision, achieving as nearly as possible the same
commercial effect, to be substituted for the provision found to be void or
unenforceable.
27. NO PARTNERSHIP OR AGENCY
27.1 Nothing in this Agreement (or any of the arrangements contemplated
hereby) shall be deemed to constitute a partnership between the parties
nor, save as may be expressly set out herein, constitute either party the
agent of the other party for any purpose.
27.2 In addition, unless otherwise agreed in writing between the Parties, no
party shall enter into contracts with any third party as agent for BT
LOOKSMART or for the other parties nor shall any party describe itself as
agent or in any way hold itself out as being an agent.
28. ANNOUNCEMENTS
28.1 No public announcement or press release on the signature or subject
matter of this Agreement shall (subject to Clause 28.2 and 28.3) be made or
issued by or on behalf of any party or any member of its Group without the
prior written approval of the other parties (such approval not to be
unreasonably withheld or delayed).
28.2 No party shall discuss any provision of this Agreement or any other
agreement referred to herein with any competition or regulatory body
without obtaining the prior written approval of the other parties.
28.3 If a party has an obligation to make or issue any announcement required
by law or by any stock exchange or by any governmental or regulatory
authority, the relevant party shall give the other parties every reasonable
opportunity to comment on any such announcement or release before it is
made or issued and the approval of that other parties shall be required to
any specific references therein to that party, its affairs or to BT
LOOKSMART including its management (provided always that this shall not
have the effect of preventing the party making the announcement or release
from complying with its legal and stock exchange obligations, from making
its quarterly or annual earnings releases, or from disclosing operating
statistics and financial information including but not limited to forward-
looking information regarding the business of the BT LOOKSMART Group to
investors, potential investors and securities analysts).
29. COSTS
Subject to the terms of a Cost Sharing Agreement dated 19 January 2000
between LOOK and BT, each of the parties shall pay its own costs, charges
and expenses incurred in connection with the preparation and implementation
of this Agreement and the transactions contemplated by it. The costs of and
incidental to the incorporation and establishment of BT LOOKSMART shall be
borne and paid by BT LOOKSMART.
30. LOOK Guarantee
30.1 In consideration of the payment to LOOK of the sum of US$1.00, receipt of
which is hereby acknowledged, LOOK as primary obligor, irrevocably and
unconditionally guarantees to the BT Shareholder due performance by LOOK
BARBADOS or the LOOK Shareholder, as applicable, of all LOOK BARBADOS's (or
the LOOK Shareholder's as applicable) obligations contained in this
Agreement, the LOOK Licensing Agreement and the loan agreement to be
entered into pursuant to the provisions of Clause 8.5.
30.2 The guarantee contained in this Clause 30 is a continuing guarantee and
shall remain in full force and effect so long as any of the obligations of
LOOK BARBADOS or the LOOK Shareholder remain to be fully performed or
satisfied.
30.3 LOOK's liability under the guarantee contained in this Clause 30 shall not
be discharged or impaired by:
(a) anything which would not discharge it or affect its liability if it
were the sole principal obligor;
(b) the release of or granting of any time or any other indulgence to LOOK
BARBADOS, the LOOK Shareholder or any third party; and
(c) any other act, event or omission which would or might, but for this
Clause 30 operate to impair or discharge LOOK's liability hereunder,
other than a release in writing, under the hand of an authorised
representative of BTH or the BT Shareholder as applicable or a
deferral of all or part of such liability.
30.4 The BT Shareholder shall be entitled to take action against LOOK under
this Clause 30 without first being obliged to take any action of any sort
against LOOK BARBADOS or the LOOK Shareholder in connection with any
failure to perform any obligation hereunder.
30.5 All payments to be made by LOOK shall be made in full without set-off or
counterclaim and free and clear of any deduction whatsoever except to the
extent permitted by law or where such a set-off, counterclaim or deduction
would also have been available to LOOK BARBADOS (or the LOOK Shareholder,
as applicable).
31. BT Guarantee
31.1 In consideration of the payment to BT of the sum of US$1.00, receipt of
which is hereby acknowledged, BT as primary obligor, irrevocably and
unconditionally guarantees to the LOOK Shareholder due performance by BTH
or the BT Shareholder, as applicable, of all BTH's (or the BT Shareholder's
as applicable) obligations contained in this Agreement.
31.2 The guarantee contained in this Clause 31 is a continuing guarantee and
shall remain in full force and effect so long as any of the obligations of
BTH or the BT Shareholder remain to be fully performed or satisfied.
31.3 BT's liability under the guarantee contained in this Clause 31 shall not
be discharged or impaired by:
(a) anything which would not discharge it or affect its liability if it
were the sole principal obligor;
(b) the release of or granting of any time or any other indulgence to BTH,
the BT Shareholder or any third party; and
(c) any other act, event or omission which would or might, but for this
Clause 31 operate to impair or discharge BT's liability hereunder,
other than a release in writing, under the hand of an authorised
representative of LOOK BARBADOS or the LOOK Shareholder as applicable
or a deferral of all or part of such liability.
31.4 The LOOK Shareholder shall be entitled to take action against BT under
this Clause 31 without first being obliged to take any action of any sort
against BTH or the BT Shareholder in connection with any failure to perform
any obligation hereunder.
31.5 All payments to be made by BT shall be made in full without set-off or
counterclaim and free and clear of any deduction whatsoever except to the
extent permitted by law
or where such a set-off, counterclaim or deduction would also have been
available to BTH (or the BT Shareholder, as applicable).
32. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements with respect thereto, including without
limitation that certain agreement between LOOK and BT dated 08 November
1999. Notwithstanding the foregoing, this Agreement does not supersede any
of the Ancillary Agreements or the Cost Sharing Agreement between BT and
LOOK dated 19 January 2000. It is agreed that:
(a) no party has entered into this Agreement in reliance upon any
representation, warranty or undertaking of the other parties which is
not expressly set out or referred to in this Agreement;
(b) a party may claim in contract for breach of warranty under this
Agreement but otherwise shall have no claim or remedy in respect of
misrepresentation (whether negligent or otherwise) or untrue statement
made by the other parties;
(c) this Clause shall not exclude any liability for fraudulent
misrepresentation.
33. CONFLICT WITH CONSTITUTIONAL DOCUMENTS
In the event of any conflict between the provisions of this Agreement and
the Memorandum of Association or the Bye-laws or other constitutional
document of BT LOOKSMART, the provisions of this Agreement shall prevail as
between the parties. The parties shall exercise all voting and other rights
and powers available to them so as to give effect to the provisions of this
Agreement and shall further (if necessary) procure any required amendment
to the Memorandum of Association or the Bye-laws or other constitutional
document of BT LOOKSMART.
34. TERMINATION OF AGREEMENT
This Agreement shall continue in full force and effect unless and until
terminated with the written agreement of the parties.
35. NOTICES
Address of notices
35.1 Any notice or other communication to be given hereunder shall either be
delivered by hand or sent by first class post or facsimile transmission
(provided that, in the case of facsimile transmission, the notice is
confirmed by being delivered by hand or sent by first class post within 48
hours thereafter) as follows:
(a) LOOK
Address: 000 Xxxxxx Xxxxxx, Xxx Xxxxxxxxx, XX 00000, XXX
Fax No: (000) 000-0000
Addressed for the personal attention of : Chief Executive Officer
(with a copy to the General Counsel at the same address)
(b) LOOK BARBADOS
Address: Hastings Business Services Limited, Hastings, Xxxxxx Church,
Barbados
Fax No: (000) 000-0000
Addressed for the personal attention of: Chief Executive Officer
(c) BTH
Address: Celtic House, Victoria Street, Xxxxxxx, Isle of Man
Fax No: x00 0000 000000
Addressed for the personal attention of: Chief Executive Officer
With a copy to BT as set out below
(d) BT LOOKSMART
Address: Xxxxxxxxx Xxxxx, 0 Xxxxxx Xxxxxx, Xxxxxxxx, XX XX, Xxxxxxx
Fax No: (000) 000-0000
Addressed for the personal attention of: Chief Executive Officer (with
a copy to the General Counsel at the same address)
(e) BT
Address: 00 Xxxxxxx Xxxxxx, Xxxxxx, XX0X 0XX
Fax No: + 00 000 000 0000
Addressed for the personal attention of: The Group General Counsel
Changes
35.2 LOOK, LOOK BARBADOS, BTH, BT LOOKSMART or BT may change the address, fax
number or the name of the person for whose attention notices are to be
addressed by serving a notice on the other in accordance with this Clause.
Deemed Service
35.3 All notices given in accordance with Clause 34.1 shall be deemed to have
been served as follows:
(a) if delivered by hand, at the time of delivery;
(b) if posted, at the expiration of 5 Business Days after the envelope
containing the same was delivered into the custody of the postal
authorities;
(c) if communicated by facsimile, at the time of transmission;
PROVIDED that where, in the case of delivery by hand or transmission
by telex or facsimile, such delivery or transmission occurs after 6 p.m. on
a Business Day or on a day which is not a Business Day, service shall be
deemed to occur at 9 a.m. on the next following Business Day. References to
time in this Clause are to local time in the country of the addressee.
Proof of service
In providing service it shall be sufficient to prove that the envelope
containing notice was properly addressed and delivered either to the address
shown thereon or into the custody of the postal authorities as a pre-paid first
class letter, or that the telex transmission was made and the recipient's
answerback received or that the facsimile transmission was made after
obtaining in person or by telephone appropriate evidence of the capacity of the
addressee to receive the same, as the case may be.
36. COUNTERPARTS
This Agreement may be executed in one or more counterparts each signed by one of
the parties and such counterparts shall together constitute one agreement.
37. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the laws of
England. The Courts of England shall have non-exclusive jurisdiction to settle
any disputes which may arise in connection with this Agreement.
AS WITNESS this Agreement has been signed by the duly authorised representatives
of the parties the day and year first before written.
