EXHIBIT 10.3
(Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.)
ADVERTISING AND PROMOTION AGREEMENT
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AGREEMENT made as of the 30th day of June, 1999 (the "Effective Date"), by
and among CBS Corporation, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (herein
called "CBS"), Banyan Systems Incorporated, 000 Xxxxxxxx Xxxx, Xxxxxxxx,
Xxxxxxxxxxxxx 00000-0000 (herein called "Banyan") and Switchboard Incorporated,
000 Xxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxxxx 00000-0000 (herein called
"Switchboard" or the "Company").
1. GENERAL DEFINITIONS
1.1 "Above the Fold" shall mean that portion of any web page that is
designed to be visible by users upon first accessing such page, without
requiring users with standard configurations to scroll lower or horizontally
through such page.
1.2 "CBS Associated Sites" means any web sites other than CBS Sites in
which CBS holds an equity, but not controlling, interest. A list of CBS
Associated Sites current as of the Effective Date is set forth in Exhibit B.
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1.3 "CBS Competitor" shall mean any Person, other than CBS or an Affiliate
of CBS, who/which is engaged either directly, or indirectly through an
Affiliate, in radio or television programming or radio or television program
distribution (whether free over-the-air, cable, telephone, local, microwave,
direct broadcast satellite, via the Internet or otherwise) or billboard
advertising in North America. An "Affiliate" of the Person concerned in the
preceding sentence, means a Person that directly or indirectly (through one or
more intermediaries) controls, is controlled by, or is under common control
with, such Person concerned. A CBS Competitor shall not include any Person
engaged in television or radio program transmission or streaming through an
Internet web site, provided such Person or any Affiliate of such Person does not
represent more than five percent (5%) market share (based upon revenues,
viewership or reach) of the Internet television or radio business or television
or radio business.
1.4 "CBS PLUS" shall mean a corporation-wide, cross media sales unit that
designs customized, consumer-driven media and marketing programs for
advertisers. CBS PLUS media and marketing programs are executed in cooperation
with the sales organizations of the entire CBS organization, including: CBS
Television Network, the CBS Television Stations Group, CBS/Infinity Radio
Stations, CBS Cable and TDI, CBS's outdoor advertising business.
1.5 "CBS Sites" means any web sites that are wholly-owned or majority-
owned by CBS at any time during the Term of this Agreement. A list of CBS Sites
current as of the Effective Date is set forth on Exhibit C.
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1.6 "CBS Users" means individual users accessing Content from the
Switchboard Site through links on the CBS Sites and CBS Affiliated Sites.
(Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.)
1.7 "Co-Branded Interface" means any and all pages of the user interface
through which CBS Users can initiate queries of, or access content from, the
Switchboard Site, which interface shall comply with the provisions of Section
3.4.
1.8 "Common Stock" means the common stock, $.01 par value per share, of
Switchboard and, unless otherwise indicated, shall include securities of
Switchboard which are or will be convertible or exchangeable into Common Stock.
1.9 "Content" shall mean text, graphics, photographs, video, audio and/or
other data or information, including, without limitation, Content broadcast on
television, relating to any subject and/or advertisements.
1.10 "Contract Year" shall mean the annual period beginning on the date of
commencement of the Term, and each subsequent annual period during the Term
beginning on the anniversary of that commencement date (as such year may be
suspended or extended, and those dates postponed, as provided herein).
1.11 "Display Ad" shall mean an advertisement displayed as a result of a
user search of the Yellow Pages Directory or a Vertical Guide which
advertisement is searchable by such criteria as category, name and geographic
location. An example of a Display Ad is set forth in Exhibit D.
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1.12 "Email Directory" shall mean the email address directory, as featured
on the Switchboard Site, which allows users to search for email addresses.
1.13 "Internet" shall mean a global network of interconnected computer
networks, each using the Transmission Control Protocol/Internet Protocol and/or
such other standard network interconnection protocols as may be adopted from
time to time, which is used to transmit Content that is directly of indirectly
delivered to a computer or other digital electronic device for display to an
end-user, whether such Content is delivered through on-line browsers, off-line
browsers, or through "push" technology, electronic mail, broadband distribution,
satellite, wireless or otherwise.
1.14 "License Agreement" shall mean the License Agreement, dated the date
hereof, by and between CBS and Switchboard.
1.15 "Net Advertising Revenues" shall mean the revenue derived by
Switchboard from the sale of advertising on the Co-Branded Interfaces and
Vertical Guides, less (a) all third-party payments actually made, including,
without limitation, sales representative commissions (provided that, for the
purposes of this definition, such sales representative commissions shall be
deemed not to exceed [**]% in each instance), (b) commissions paid to CBS
or its employees pursuant to Section 2.5, and (c) applicable sales taxes, if
any.
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1.16 "Person" shall mean individual, partnership, corporation or organized
group of persons, including agencies and other instrumentalities of governments
and states.
1.17 "Switchboard Site" shall mean the Internet web site owned by
Switchboard that: (a) provides an online, interactive directory which allows
users to search for, among other things, residential listing information,
business listing information and advertisements, email addresses and web sites
(it being understood that the web site is and shall remain principally and
predominantly a directory); and (b) is accessed via the domain name
xxx.xxxxxxxxxxx.xxx and, upon consummation of this Agreement,
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xxx.xxx.xxxxxxxxxxx.xxx or xxx.xxxxxxxxxxxxxx.xxx (or a reasonable variation
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thereof to be mutually agreed on by the parties hereto).
1.18 "Term" shall have the meaning set forth in Section 6.1.
1.19 "Vertical Guide" shall mean a subject or category specific guide or
directory created by Switchboard pursuant to Section 4.2.
1.20 "Voting Agreement" means the Stockholders' Voting Agreement, dated
the date hereof, among CBS, Banyan and Switchboard.
1.21 "Web Site Services" shall mean the creation, hosting, support, and
distribution of merchants' web sites by Switchboard (or third parties under
agreements with Switchboard), as well as supplemental services or enhancements
which may be offered by Switchboard (or third parties under agreements with
Switchboard) to merchants from time to time.
1.22 "White Pages Directory" shall mean the residential directory as
featured on the Switchboard Site, which allows users to search for information
including names, addresses, and telephone numbers of individuals.
1.23 "Yellow Pages Directory" shall mean the business directory as
featured on the Switchboard Site, which allows users to search (by name,
category, and/or geographic location) browse, and download advertisements, web
sites, and listings of business information including names, addresses,
telephone numbers, and related maps and/or directions to business locations.
2. CBS ADVERTISING AND PROMOTION
2.1 (a) CBS shall arrange for the placement of advertising and promotion
of the Switchboard Site in the United States in the media category or type set
forth in the Advertising and Promotion placement schedule set forth on Exhibit A
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attached hereto, with an aggregate value of $95 million. CBS and Switchboard
will cooperate to endeavor to implement the advertising and promotional goals
set forth in the annual media plan presented to CBS by Switchboard (which may
address such goals as audience objectives, reach and frequency goals, geographic
preferences and special programming opportunities), to the extent that such plan
is consistent with Exhibit A attached hereto. Switchboard may, in its sole
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discretion and by
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(Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.)
written notice to CBS, elect to defer to any subsequent Contract Year, up to
thirty-five percent (35%) of the advertising and promotional value to which
Switchboard may be entitled in any current Contract Year; provided, however,
that CBS shall not be obligated, without its consent, to provide advertising and
promotional value aggregating more than eighteen million nine hundred thousand
dollars ($18,900,000) during any given Contract Year.
(b) (2.1 (b)) [**] all broadcast advertising and promotion provided
hereunder shall be based upon [**] purchased during the specific CBS Television
Network, CBS Owned and Operated Television Station, CBS Owned and Operated Radio
Station, or CBS Cable broadcast in which the advertising or promotion occurs.
Banner advertising on CBS Internet sites shall [**] in which [**]. The price of
the billboard ad concerned shall be based on [**] during the month previous to
the month in which such advertising is delivered. CBS shall [**]. CBS will
provide to Switchboard quarterly statements, or, if available, monthly
statements showing the advertising and promotional value [**] with respect to
the advertising and promotions purchased by Switchboard during the statement
period.
(c) Subject to the written consent of CBS, which consent may be
unreasonably withheld, Switchboard may elect to use a portion of the promotional
value described in Section 2.1(a) to promote, through radio spots or billboard
advertisements only, certain of Switchboard's significant third party business
partners.
2.2 CBS will maintain accurate books and records which report the
expenditure of the advertising and promotional value by Switchboard and
information from which the calculation can be derived. Switchboard may, at its
own expense, examine and copy those books and records, as provided in this
Section 2.2. Switchboard may make such an examination for a particular
statement provided pursuant to Section 2.1(b) within three (3) years after the
date such statement is sent by CBS to Switchboard. Switchboard may make those
examinations only during CBS's usual business hours, and at the place where it
keeps the books and records. Such books and records shall be kept at the
address set forth herein for the provision of notices to CBS, unless otherwise
notified. Switchboard will be required to notify CBS at least ten (10) days
before the date of planned examination.
2.3 CBS shall have the right to suspend and/or withdraw placement of all
advertising and promotion:
(a) (x) pending resolution of any claim covering use by the Company in
the United States of the tradename or trademark "Switchboard" either alone or in
combination with any other xxxx and/or (y) during such time as the Company is
enjoined from using the tradename or trademark "Switchboard" in the United
States on or in connection with the Switchboard Site and has not renamed the
Switchboard Site. (In connection with clause (x) of the foregoing sentence, CBS
shall use its reasonable judgment in suspending or withdrawing advertising,
taking into account the substance of the claim, the potential liabilities to
which CBS may be subject and the potential detriment to CBS's interests or
business.) The Company shall rename the Switchboard Site within thirty (30)
days following the issuance of any injunction or the resolution of any claim
which requires the Company to cease using the tradename or trademark
"Switchboard" in the United States on or in connection with the Switchboard Site
(the "Cessation Event"), it being understood, however, that CBS shall have the
sole right and power to approve the substitute tradename and/or trademark to be
used. In the event that CBS fails to approve the substitute tradename and/or
trademark within the 30-day period prescribed, then upon the expiration of such
30-day period, CBS shall submit a tradename proposal with three (3) alternate
tradenames which appear to be available for the Company's use on the Switchboard
Site in the United States based on trademark searches
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(Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.)
conducted by CBS, for the Company's approval, which approval is to be given
within ten (10) days of such submission. For the avoidance of doubt, CBS does
not and will not make any representation or warranty with respect to the
availability of any alternate name provided to Switchboard by CBS for use on the
Switchboard Site. Switchboard shall thereafter promptly apply for registration
of such trademark. In the event that during the application process, Switchboard
is advised in writing by its outside trademark counsel that such trademark does
not appear to be available for registration by Switchboard in connection with
the Switchboard Site or Switchboard is notified, in writing, that such
registration is denied, the foregoing process for determining a new trademark
shall begin again and the parties agree to work together in good faith to
endeavor to agree on a new trademark for the Switchboard Site in accordance with
this Section 2.3(a) or sooner, if reasonably practicable.
(b) in the event the Switchboard Site is not operational for a 48-hour
period until it becomes operational in a manner substantially consistent with
the normal operation of the Switchboard Site prior to the initial disruption of
service.
2.4 CBS will use its good faith efforts to suspend or withdraw advertising
and promotion upon receipt of a written request from Switchboard setting forth
Switchboard's reasonable belief that a continuation of such advertising and
promotion would be detrimental to CBS, Switchboard or the Switchboard Site.
2.5 CBS shall have the right, but not the obligation, to sell advertising
space on the Switchboard Site, any Co-Branded Interface and any Vertical Guide.
In connection with CBS's right to sell such advertising, CBS will (i) include
the Switchboard Site, Co-Branded Interfaces and Vertical Guides in its CBS PLUS
advertising sales programs, (ii) designate an individual or group of individuals
to (A) work with Switchboard, at Switchboard's request, to develop a commission
structure (payable by Switchboard) and plan designed to motivate CBS sales
personnel to sell advertising on the Switchboard Site, Co-Branded Interfaces and
Vertical Guides and (B) establish a process regarding allocation of available
advertising inventory on the Switchboard Site, Co-Branding Interface and
Vertical Guides, and (iii) comply with Switchboard's advertising content
policies, the current version of which is attached hereto as Exhibit E, as well
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as any applicable CBS advertising policies. In effecting ad sales, CBS will
have the right to bundle inventory relating to the Switchboard Site, Co-Branded
Interfaces and Vertical Guides with television, radio, cable and billboard
inventory. CBS will be entitled to receive from Switchboard a [**]%
commission with respect to advertising sold by CBS on the Switchboard Site, any
Co-Branded Interface and any Vertical Guide.
3. LINKS TO AND INTEGRATION OF SWITCHBOARD CONTENT
3.1 During the Term, hyperlinks to Co-Branded Interfaces for the purpose
of allowing CBS Users access to each of the Switchboard Directories shall be
placed on the home page of each of the CBS Sites. Such hyperlinks shall be in a
form as mutually agreed and shall be labeled, "find a person," "find a
business," and "find an e-mail address," or other mutually agreed designations.
Such hyperlinks shall be at least as large and prominently placed as any
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other third party hyperlink, logo, or icon on the web pages on which they
appear. In addition, hyperlinks shall be placed Above the Fold on each Co-
Branded Interface for the purpose of allowing users to access the CBS Site or
CBS Associated Site related to such Co-Branded Interface.
3.2 Notwithstanding anything to the contrary herein, Switchboard
acknowledges and agrees that the performance by CBS of any obligation pursuant
to this Agreement as it relates to any CBS Site is subject to any agreement or
condition existing as of the date hereof which could reasonably restrict or
prohibit CBS's ability to perform such obligation. CBS agrees that (i) it will
avail itself of any contractual right it may have to terminate such agreement or
condition without the incurrence of any penalty, interest or damages thereunder,
(ii) it will perform such obligation as soon as practicable upon the expiration
or termination of such agreement or condition and (iii) in no event will CBS
agree to modify, extend or renew such agreement or condition.
3.3 During the Term, CBS shall use good faith and commercially reasonable
efforts to try to obtain similar placement and implementation of hyperlinks on
each of the CBS Associated Sites to Co-Branded Interfaces for the purpose of
allowing CBS Users access to each of the Switchboard Directories, as set forth
in Section 3.1 with respect to CBS Sites.
3.4 On an ongoing basis throughout the Term, the parties shall work
together in good faith to evaluate and agree upon additional opportunities to
integrate features and functionality from the Switchboard Site into the CBS
Sites, including but not limited to the Switchboard Directories, through links
in appropriate areas of such CBS Sites. The goal of such mutual integration
effort shall be to enhance the content of the applicable CBS Sites and to
increase the traffic (page views) to the Switchboard Site. By way of example
and not limitation, the CBS Sites may provide links from their local content
areas to vertical business guides, local directories, or topical or local
message boards featured on the Switchboard Site. All traffic from links
established pursuant to this Section 3.4 shall be attributed to the Switchboard
Site. The parties may meet to evaluate and discuss such integration
opportunities on a regular basis, but no less frequently than every six (6)
months.
3.5 Through the hyperlinks referenced in Sections 3.1 3.3, CBS Users may
initiate queries to, and access content from, the Switchboard Site only through
a Co-Branded Interface. Each page of a Co-Branded Interface shall be subject to
the approval of CBS and shall feature equal co-branding of CBS and Switchboard.
Except for the co-branding, each page of a Co-Branded Interface shall have the
design and "look and feel" of the applicable CBS Site or CBS Associated Site,
and the features and content of the Switchboard Site, except to the extent that
such features or content are supplied by third parties pursuant to contracts
that preclude their display through the Co-Branded Interface. All pages of the
Co-Branded Interface shall be hosted on Switchboard's servers. CBS shall pay
Switchboard a co-branding fee of Two Thousand Dollars ($2,000) for the completed
development of Co-Branded Interfaces for each CBS Site up to a maximum of one
hundred and fifty (150) web sites. Fees for Co-Branded Interfaces for
additional web sites shall be as mutually agreed.
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4. DEVELOPMENT AND INTEGRATION BY SWITCHBOARD
4.1 On an ongoing basis throughout the Term, the parties shall work
together in good faith to evaluate and agree on opportunities to integrate local
content from the xxx.xxx.xxx web site into the Switchboard Site through links in
appropriate areas of the Switchboard Site. The goal of such mutual integration
effort shall be to enhance the content of the Switchboard Site and to increase
the traffic (page views) to the xxx.xxx.xxx web site. By way of example and not
limitation, the Switchboard Site may link to local content from the xxx.xxx.xxx
web site from the "What's Nearby(TM)," web-searching interfaces, or local or
topical bulletin boards of the Switchboard Site. All traffic from links
established pursuant to this Section 4.1 shall be attributed to the xxx.xxx.xxx
web site. The parties shall discuss and evaluate such integration opportunities
at meetings scheduled in accordance with Section 3.4.
4.2 The parties shall work together in good faith to identify appropriate
subject or category areas for the development by Switchboard of Vertical Guides
for CBS Sites and/or CBS Associated Sites. Switchboard will develop, activate
and maintain such Vertical Guides, in a form reasonably satisfactory to CBS, as
soon as practicable after the appropriate subject or category areas have been
identified. Such Vertical Guides shall include mutually agreed content and/or
features from the CBS Sites and from the Switchboard Site. Content or features
from the Switchboard Site are to include, without limitation, category-specific
business listings, Display Ads, topical web site listings, maps and directions,
and/or "What's Nearby(TM)" content. CBS shall assist Switchboard in integrating
any mutually agreed content from the CBS Sites into the Vertical Guides. All
Vertical Guides developed by Switchboard hereunder shall feature the equal co-
branding of CBS and Switchboard. All Vertical Guides shall be hosted on
Switchboard's servers.
4.3 Content from the Switchboard Site included in any Vertical Guide shall
be updated as such information is updated on the Switchboard Site, except that,
unless otherwise mutually agreed, Display Ads or web sites featured in the
Yellow Pages Directory may not appear in the Vertical Guide unless the
advertiser has purchased distribution in such Vertical Guide. Switchboard shall
not be responsible for updating content appearing in the Vertical Guides from
the CBS Sites or CBS Associated Sites except to the extent that such updates are
provided by CBS to Switchboard for such express purpose in a form reasonably
satisfactory to Switchboard.
4.4 CBS shall maintain links from the appropriate CBS Sites to the
applicable Vertical Guides. Switchboard may at its election provide links to
the Vertical Guides from the Switchboard Site.
4.5 Switchboard shall develop such mutually agreed Vertical Guides for CBS
Sites at no charge. Vertical Guides developed for CBS Associated Sites shall be
subject to mutually agreed terms that may include development or other fees and
mutually agreed branding.
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(Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.)
4.6 Switchboard shall retain all right, title and interest in the Vertical
Guides created by Switchboard hereunder, as the same may be updated from time to
time, and all content and intellectual property therein, except for content,
including without limitation, trademarks and logos, originating from the CBS
Sites or CBS Associated Sites.
4.7 As of the Effective Date, Switchboard is engaged in the business of
selling Web Site Services to merchants, including distribution of merchants' web
sites on the Switchboard Site as well as on certain third party web sites as
agreed to by the merchant. During the Term, for as long as Switchboard
continues to sell Web Site Services to new accounts, Switchboard shall market,
promote, and offer to "qualifying merchants" the right to purchase distribution
of links to their web sites from their Display Ads in the appropriate Vertical
Guides on the CBS Sites. Switchboard may elect to offer such distribution as
part of a package of options that may or may not include distribution on other
third party web sites. For the purposes of this Section, "qualifying merchants"
shall mean merchants within subjects or categories which are mutually agreed by
CBS and Switchboard to be appropriate for each Vertical Guide.
4.8 Notwithstanding anything to the contrary set forth in this Agreement,
the rights and obligations of Switchboard and CBS set forth herein, including,
without limitation, those set forth in Sections 3 and 4, shall be subject to and
governed by the terms and provisions of the License Agreement (specifically
excluding Section 1 (Definitions), Section 5 (Warranties; Representations;
Indemnities), Section 6.4 (Limitation of Liability), Section 6 (Remedies) and
Section 7 (General) of the License Agreement) which is incorporated herein by
reference as if fully set forth herein.
5. COMPENSATION
5.1 In consideration of the rights herein granted, Switchboard shall pay
CBS [**]% of the Net Advertising Revenues derived from the sale of
advertising on the Co-Branded Interfaces or Vertical Guides during the Term.
Payments made to CBS pursuant to this Section 5.1 shall be in addition to any
payments due or owing to CBS pursuant to Section 2.5.
5.2 Switchboard will compute Net Advertising Revenues as of each March 31,
June 30, September 30 and December 31 for the prior three (3) months. Within
forty-five (45) days after the calendar quarterly period concerned, Switchboard
will send CBS a statement covering those sums and will pay CBS any Net
Advertising Revenues due. Acceptance by CBS of any statement or payment shall
not preclude CBS from challenging the accuracy thereof.
5.3 Switchboard will maintain accurate books and records that report the
sales of advertising on the Co-Branded Interfaces or Vertical Guides. CBS may,
at its own expense, examine and copy those books and records, as provided in
this Section 5.3. CBS may make such an examination for a particular statement
within three (3) years after the date such statement is sent by Switchboard to
CBS. (Switchboard will be deemed conclusively to have sent CBS the statement
concerned on the date prescribed in Section 5.2, unless CBS notifies
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Switchboard otherwise with respect to any statement, within thirty (30) days
after that date.) CBS may make those examinations only during Switchboard's
usual business hours, and at the place where it keeps the books and records.
Such books and records shall be kept at the address set forth herein for the
provision of notices to Switchboard, unless otherwise notified. CBS will be
required to notify Switchboard at least ten (10) days before the date of planned
examination.
6. TERM
6.1 This Agreement shall commence on the Effective Date and shall remain
in full force and effect for an initial period of seven (7) years, unless
earlier terminated as provided herein. After the initial term, this Agreement
may be renewed for successive one-year periods upon the mutual written agreement
of the parties. The initial term and any renewal terms, including the extension
provided for in Section 6.2 below, shall be collectively referred to herein
as the "Term."
6.2 Notwithstanding the foregoing, upon the termination of the initial
period of this Agreement, this Agreement shall automatically be extended for one
additional year in the event that Switchboard elects to defer, in accordance
with Section 2.1(a), up to four million nine hundred thousand dollars
($4,900,000) of advertising and promotional value attributable to year seven (7)
of the initial period.
7. WARRANTIES, REPRESENTATIONS AND COVENANTS
7.1 (a) CBS represents and warrants that:
(i) it has full power and authority to enter into and fully
perform this Agreement; and
(ii) this Agreement has been duly authorized and is
enforceable in accordance with its terms.
(b) Each of Banyan and Switchboard represents and warrants that:
(i) it has full power and authority to enter into and fully
perform its obligations under this Agreement;
(ii) this Agreement has been duly authorized and is
enforceable in accordance with its terms; and
(iii) the Switchboard Site is free of defects which would
interrupt or interfere with the intended purpose thereof, including
without limitation, (A) any malfunctions or other usage problems
resulting from or in connection with the "Year 2000 Problem" (i.e.,
the year 2000 (and later years) as distinct from the years 1900
through 1999 (and earlier years)), and (B) "bugs" or "viruses."
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For the purposes of this paragraph, defects will be deemed to
"interrupt or interfere with the intended purpose" of the Switchboard
Site if they result in the failure to respond to user queries in a
manner consistent with the normal operation of the Switchboard Site
which shall have been maintained in a manner consistent with
Switchboard's performance standards with respect to the Switchboard
Site as set forth in Section 7.1(c)(iii).
(c) Switchboard covenants that:
(i) at all times during the Term, it will comply with all
applicable federal, state and local laws;
(ii) at all times during the Term, the Switchboard Site and
each Co-Branded Interface will be maintained in a professional manner
consistent with industry standards; and
(iii) it will use its reasonable best efforts to adhere to the
following performance standards:
(A) to maintain the availability of the Switchboard
Site and the Co-Branded Interfaces seven (7) days a week, twenty-
four (24) hours a day, except during periods of scheduled
maintenance;
(B) to maintain competitive standards of quality and
ease of use of its directory services with similar services
offered by the top two third-party leading Internet-based
directory services;
(C) there shall be a maximum five (5) second response
time for 90% of all directory searches of the Switchboard Site or
any Co-Branded Interface as measured by Switchboard's servers.
The response time measures the time a user request is received by
the Switchboard server to the time the response to such request
leaves the Switchboard server;
(D) the Switchboard Site and Co-Branded Interfaces as
displayed to users shall have at least 97% uptime over a twelve
(12) month period, excluding events of an extraordinary nature
which are beyond the control of Switchboard; and
(E) Switchboard shall provide CBS with a contact for
support of issues related to the Switchboard Site. Such contact
shall be available to CBS seven (7) days a week, twenty-four (24)
hours a day for emergency support.
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(iv) the Switchboard Site and each Co-Branded Interface
shall be free of defects which would interrupt or interfere with the
intended purpose thereof, including without limitation, (A) any
malfunctions or other usage problems resulting from or in connection
with the "Year 2000 Problem" (i.e., the year 2000 (and later years) as
distinct from the years 1900 through 1999 (and earlier years)), and
(B) "bugs" or "viruses." For the purposes of this paragraph, defects
will be deemed to "interrupt or interfere with the intended purpose"
of the Switchboard Site or Co-Branded Interface if they result in the
failure to respond to user queries in a manner consistent with the
normal operation of the Switchboard Site or Co-Branded Interface.
8. INDEMNIFICATION
8.1 Switchboard and, subject to Section 8.4, Banyan, shall, jointly and
severally, indemnify CBS and its respective affiliates and their respective
officers, directors, employees, stockholders, agents and representatives
against, and hold them harmless from, any loss, liability, claim, damage or
expense, including reasonable legal fees and expenses ("Losses") arising from,
in connection with or otherwise with respect to any breach of any representation
or warranty of Banyan or Switchboard or covenant of Switchboard contained in
this Agreement.
8.2 CBS shall indemnify Switchboard and its respective affiliates and
their respective officers, directors, employees, stockholders, agents and
representatives against, and hold them harmless from, any Losses arising from,
in connection with or otherwise with respect to any breach of any
representation, warranty or covenant of CBS contained in this Agreement.
8.3 The amount of any Loss for which indemnification is provided under
this Section 8 shall be calculated net of any amounts actually recovered by the
indemnified party under insurance policies with respect to such Loss and shall
be (i) increased to take account of net tax cost incurred by the indemnified
party arising from the receipt of indemnify payments hereunder (grossed up for
such increase) and (ii) reduced to take account of any net tax benefit realized
by the indemnified party arising from the incurrence or payment of any such
Loss. In computing the amount of any such tax cost or tax benefit, the
indemnified party shall be deemed to recognize all other items of income, gain,
loss deduction or credit before recognizing any item arising from the receipt of
any indemnity payment hereunder or the incurrence or payment of any indemnified
Loss.
8.4 Notwithstanding anything to the contrary in this Agreement, Banyan's
indemnification obligations hereunder with respect to the covenants of
Switchboard and the representation and warranty in Section 7.1(b)(iii) shall
terminate upon the earlier to occur of:
(a) the first business day after the second anniversary of the date of
this Agreement when Banyan beneficially owns or controls, directly or
indirectly, shares of Common Stock representing less than a majority of the
total voting power; and
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(Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.)
(b) the first business day after any person or entity beneficially
owns or controls, directly or indirectly, shares of the Common Stock
representing more voting power (based on then-outstanding shares) than those
beneficially owned or controlled, directly or indirectly, by Banyan
provided, however, that Banyan's indemnification obligations shall not terminate
pursuant to this Section with respect to an item as to which CBS has, before the
occurrence of either of the events set forth above, previously made a claim by
delivering a notice of such claim (stating in reasonable detail the basis for
such claim) pursuant to Section 8.5 to Banyan. For purposes of performing the
calculation of beneficial ownership and control referred to in the preceding
sentence, neither Banyan nor CBS shall be deemed to beneficially own or control
shares solely as a result of the existence of the Voting Agreement.
8.5 In order for the indemnified party to be entitled to any
indemnification provided for under this Agreement in respect of, arising out of
or involving a claim made by any person against the indemnified party, the
indemnified party shall: (i) promptly notify the indemnifying party of the
claim; (ii) allow the indemnifying party to direct the defense and settlement of
such claim with counsel of the indemnifying party's choosing; and (iii) provide
the indemnifying party, at the indemnifying party's expense, with information
and assistance that is reasonably necessary for the defense and settlement of
the claim. The indemnified party reserves the right to retain counsel, at the
indemnified party's sole expense, to participate in the defense of any such
claim. The indemnifying party shall not settle any such claim or alleged claim
without first obtaining the indemnified party's prior written consent, which
consent shall not be unreasonably withheld, if the terms of such settlement
would adversely affect the indemnified party's rights under this Agreement or
otherwise. If the indemnifying party assumes the defense and settlement of the
claim as set forth above, then the indemnifying party's only obligation is to
satisfy the claim, judgment or approved settlement.
8.6 (a) IN NO EVENT SHALL SWITCHBOARD OR BANYAN, ON THE ONE HAND, AND
CBS, ON THE OTHER HAND, BE LIABLE TO ONE ANOTHER, OR TO ANY PERSON CLAIMING
THROUGH SWITCHBOARD OR BANYAN, ON THE XXX XXXX, XX XXX, XX THE OTHER HAND, FOR
ANY CONSEQUENTIAL, INCIDENTAL, SPECIAL, OR INDIRECT DAMAGES, OR FOR ANY LOSS OF
PROFITS OR SALES OR LOSS OF OR DAMAGE TO DATA, REGARDLESS OF THE FORM OF SUCH
ACTION, WHETHER IN CONTRACT, TORT, OR OTHERWISE, EVEN IF ANY OF SWITCHBOARD OR
BANYAN, OR CBS, AS THE CASE MAY BE, HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES OR LOSS.
(b) EXCEPT FOR (1) SWITCHBOARD'S AND CBS'S OBLIGATIONS TO MAKE ANY
PAYMENT EXPRESSLY REQUIRED BY THE TERMS OF THIS AGREEMENT; OR (II) CBS'S
OBLIGATION TO PROVIDE [**] PROMOTIONAL VALUE IN ACCORDANCE WITH THIS AGREEMENT,
THE MAXIMUM LIABILITY OF CBS, ON THE ONE HAND, AND OF SWITCHBOARD AND BANYAN, IN
THE AGGREGATE, ON THE OTHER HAND, UNDER THIS AGREEMENT AND THE COMMON STOCK AND
WARRANT PURCHSE AGREEMENT SHALL BE LIMITED TO THE AMOUNT SPECIFIED IN THE
FOLLOWING TABLE, SUBJECT TO THE PROVISOS SET FORTH BELOW IN THIS SECTION 8.6(b):
PRIOR TO THE FIRST ANNIVERSARY OF
THE DATE OF THIS AGREEMENT [**]
ON OR AFTER THE FIRST ANNIVERSARY
OF THE DATE OF THIS AGREEMENT AND
PRIOR TO THE SECOND ANNIVERSARY OF
THE DATE OF THIS AGREEMENT [**]
ON OR AFTER THE SECOND ANNIVERSARY
OF THE DATE OF THIS AGREEMENT AND
PRIOR TO THE THIRD ANNIVERSARY OF
THE DATE OF THIS AGREEMENT [**]
ON OR AFTER THE THIRD ANNIVERSARY
OF THE DATE OF THIS AGREEMENT AND
PRIOR TO THE FOURTH ANNIVERSARY OF
THE DATE OF THIS AGREEMENT [**]
ON OR AFTER THE FOURTH ANNIVERSARY
OF THE DATE OF THIS AGREEMENT AND
PRIOR TO THE FIFTH ANNIVERSARY OF
THE DATE OF THIS AGREEMENT [**]
ON OR AFTER THE FIFTH ANNIVERSARY
OF THE DATE OF THIS AGREEMENT AND
PRIOR TO THE SIXTH ANNIVERSARY OF
THE DATE OF THIS AGREEMENT [**]
ON OR AFTER THE SIXTH ANNIVERSARY
OF THE DATE OF THIS AGREEMENT [**]
PROVIDED, HOWEVER, THAT IF PARTIES ENTITLED TO INDEMNIFICATION UNDER SECTION 8.1
OF THIS AGREEMENT SUFFER LOSSES AS A RESULT OF A BREACH OF ANY REPRESENTATION OR
WARRANRY OF SWITCHBOARD OR BANYAN CONTAINED HEREIN IN AN AMOUNT WHICH EXCEEDS
THE APPLICABLE LIMIATION ON LIABILITY SET FORTH IN THE PRECEDING TABLE, THEN
SUCH IDEMNIFIED PARTIES SHALL [**]; PROVIDED, FURTHER, HOWEVER, THAT THE
AGGREGATE LIABILITY OF SWITCHBOARD AND BANYAN FOR THE SUM OF ALL LOSSES UNDER
THIS SECTION 8 AND UNDER THE COMMON STOCK AND WARRANT PURCHASE AGREEMENT IN A
CIRCUMSTANCE WHRE THE IMMEDIATELY FOREGOING PROVISO CLAUSE APPLIES SHALL IN NO
CIRCUMSTANCE EXCEED THE SUM OF [**] RECEIVED BY THE SWITCHBOARD.
9. REMEDIES
9.1 CBS shall have the right to terminate this Agreement if (any of the
following occurs):
12
(a) Either Switchboard or Banyan breaches any material term or
condition of:
(i) this Agreement and has failed to cure such breach within
thirty (30) days after written notice of such breach from CBS (the
foregoing cure period will not apply where a specific cure period is
provided herein); and/or
(ii) the Common Stock and Warrant Purchase Agreement, dated June
1, 1999, by and among Switchboard, Banyan and CBS (the "Common Stock and
Warrant Purchase Agreement") or any other Ancillary Agreement (as such term
is defined in the Common Stock and Warrant Purchase Agreement) and has
failed to cure such breach within thirty (30) days after written notice of
such breach from CBS (the foregoing cure period will not apply where a
specific cure period is provided herein);
provided, however, that CBS's right to terminate this Agreement pursuant to this
Section shall not apply to a breach by Switchboard or Banyan of the
representation and warranty set forth in Section 7(b)(iii) of this Agreement and
the representation and warranty set forth in Section 3.12(f) of the Common Stock
and Warrant Purchase Agreement.
(b) Switchboard: (i) becomes insolvent or unable to pay its debts as
they mature or makes an assignment for the benefit of its creditors; (ii) is the
subject of a voluntary petition in bankruptcy or any voluntary proceeding
relating to insolvency, receivership, liquidation, or composition for the
benefit of creditors, if such petition or proceeding is not dismissed within
sixty (60) days of filing; (iii) becomes the subject of any involuntary petition
in bankruptcy or any involuntary proceeding relating to insolvency,
receivership, liquidation, or composition for the benefit of creditors, if such
petition or proceeding is not dismissed within sixty (60) days of filing; or
(iv) is liquidated or dissolved.
(c) Switchboard issues to a CBS Competitor or actively participates
in the acquisition by a CBS Competitor, in any one transaction or series of
transactions, of a number of voting securities of Switchboard such that after
such issuance or acquisition or series of issuances or acquisitions, such CBS
Competitor beneficially owns or controls, directly or indirectly, nine percent
(9%) or more of the outstanding shares of Common Stock or nine percent (9%) or
more of the total voting power of Switchboard.
(i) Notwithstanding the foregoing however, the provisions of this
Section 9.1(c) shall not apply to a stockholder of Switchboard who
beneficially owns or controls, directly or indirectly, nine percent (9%) or
more of the outstanding shares of Common Stock or nine percent (9%) or more
of the total voting power of Switchboard, on an "as converted" basis, on
the day prior to the date of this Agreement until such stockholder
beneficially owns or controls, directly or indirectly, fifteen percent
(15%) or more of the outstanding shares of Common Stock or fifteen percent
(15%) or more of the total voting power of Switchboard and such stockholder
is a CBS Competitor.
13
(ii) The parties hereby agree that Switchboard or Banyan may give
CBS confidential written notice of its intent to enter into an agreement
which would cause a stockholder to beneficially own or control, directly or
indirectly, nine percent (9%) or more of the outstanding shares of Common
Stock or nine percent (9%) or more of the total voting power of
Switchboard, together with a description of the party with whom Switchboard
or Banyan intends to effect such a transaction, for the purpose of
ascertaining CBS's opinion whether, as of the date of the notice, such
party is a CBS Competitor. CBS shall have five (5) days from the receipt
of such notice to respond to Switchboard or Banyan. CBS's opinion shall be
based solely on the information provided to CBS in the notice and CBS shall
have no independent duty whatsoever to investigate or inquire further. No
opinion provided by CBS hereunder is or shall be deemed to be a waiver of
any right of CBS pursuant to this Section 9.
(d) Any CBS Competitor (other than a CBS Competitor who acquired
shares of Switchboard capital stock directly from CBS) beneficially owns or
controls, directly or indirectly, fifteen percent (15%) or more of the then-
outstanding shares of common stock of Switchboard or fifteen (15%) or more of
the total voting power of Switchboard.
(e) Switchboard discontinues using the "Switchboard" xxxx or another
mutually agreed upon trademark in the United States (for any reason other than a
Cessation Event, or for no reason) and, within a reasonable time thereafter,
Switchboard does not establish a substitute xxxx acceptable to CBS in its sole
discretion, provided that if the substitute xxxx proposed by Switchboard is not
acceptable to CBS, CBS shall have submitted for Switchboard's approval a list of
three (3) proposed alternate trademarks which appear to be available for
Switchboard's use on the Switchboard Site in the United States based on
trademark searches conducted by CBS, and Switchboard has failed to approve any
such proposed trademarks within ten (10) days of such submission. For the
avoidance of doubt, CBS does not and will not make any representation or
warranty with respect to the availability of any alternate name provided to
Switchboard by CBS for use on the Switchboard Site.
(f) The termination (other than by reason of a breach by CBS) or
expiration of the License Agreement.
(g) The Switchboard Site ceases to operate for (i) a consecutive
period of ten (10) days, or (ii) more than two (2) consecutive hours per week
over a sixty (60) day period; provided that such operational failure is not
attributable to failures beyond Switchboard's reasonable control which also
affect multiple third-party web sites on the Internet in a similar manner.
(h) For purposes of this Section 9.1: (i) the term "beneficial
ownership" shall have the meaning set forth in Section 13(d) of the Securities
Act of 1933, as amended, and the rules and regulations promulgated thereunder;
(ii) the term "total voting power" shall mean at any time, the total number of
votes that may be cast in the election of directors of Switchboard at any
meeting of the holders of voting securities at such time for such purpose; and
(iii) the
14
(Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.)
term "voting securities" shall mean the Common Stock and any other securities
issued by Switchboard having the power to vote in the election of directors of
Switchboard, including without limitation any securities having such power only
upon the occurrence of a default or any other extraordinary contingency.
9.2 Switchboard shall have the right to terminate this Agreement if CBS
breaches any material term or condition of this Agreement or the License
Agreement, and has failed to cure such breach within thirty (30) days after
receipt of written notice from Switchboard of such breach.
9.3 Notwithstanding anything to the contrary set forth in this Agreement,
[**] in the event of a proposed termination of this Agreement pursuant to
Section 9.1(a) or Section 9.2, the terminating party shall not be entitled to
terminate this Agreement pursuant to Section 9.1(a) or Section 9.2 in the event
that the non-terminating party elects to commence an Arbitration Proceeding (as
defined below) unless (1) the sole arbitrator in such Arbitration Proceeding has
determined that (x) the non-terminating party is in breach of a term or
condition of this Agreement, (y) such breach has not been cured withing thirty
(30) days after written notice of such breach from the terminating party and (z)
the breached term or condition is a material term or condition (it being agreed
that a term or condition will not be found to be material unless the terminating
party has suffered, or would reasonably be expected to suffer more than an
insignificant amount of harm (except with respect to the use of the CBS Marks
(as defined in the License Agreement) in a manner which is not permitted under
the License Agreement which the parties agree shall always be material without
taking into consideration and degree of harm) as a result of breach of such term
or condition and (2) the non-terminating party fails to cure such breach within
five (5) business days after receipt of the arbitrator's finding referred to in
clause (1). "Arbitration Proceeding" shall mean a proceeding conducted in
accordance with the following rules:
(i) such proceeding is commenced by the non-terminating party,
within twenty (20) days of receipt by it of a written notice of breach from the
terminating party, by the non-terminating party giving written notice to the
other parties and requesting that the New York office of the American
Arbitration Association designate oen arbitrator (who is a retired federal or
state judge or a member of the CPC Panel of Distinguished Neutrals of the CPR
Institute for Dispute Resolution and who is not and has not been an afifliate,
employee, consultant, officer, director or stockholder of CBS, Banyan or
Switchboard) to conduct the proceeding;
(ii) within seven (7) days after the designation of the arbitrator,
the arbitrator and the parties shall meet, at which time each party shall be
required to set forth in writing al disputed issues, together with its proposed
resolution of the matter, all in reasonable and detail and containing such
supporting materials it may choose to submit;
(iii) the arbitrator shall set a date for a hearing, which shall be no
later than ten (10) days after the submission of written proposals pursuant to
clause (ii) above, to discuss each of the issues identified by the parties. Each
party shall have the right to be represented by counsel. The arbitration shall
be governed by the Commercial Arbitration Rules of the American Arbitration
Association, provided however, that the Federal Rules of Evidence shall apply
with regard to the admissibility of evidence;
(iv) arbitrator shall rule on each of the three (3) matters on which
a finding is to be made with respect to each claim made by the terminating
party within seven (7) days after the completion of the hearing described in
clause (iii) above. The arbitrator will resolve the dispute by choosing one of
the proposed resolutions for each matter, without modification. All rulings of
the arbitrator shall in writing, shall be delivered to the parties and shall be
final and conclusive as to any such matter;
(v) costs and expenses of the arbitration shall be borne by the
party against whom the arbitrator has ruled; and
(vi) the arbitration shall be conducted in New York City.
9.4 In the event of a Cessation Event as described in Section 2.3(a) and
Switchboard fails to approve one of CBS's proposed substitute tradenames within
ten (10) days following the submission to Switchboard of such substitute
tradenames, then the parties hereto will be deemed to have mutually agreed to
terminate this Agreement on the forty-first (41st) day following the date of the
Cessation Event and all rights and obligations of the parties hereunder shall
terminate.
9.5 Each party may exercise its right to terminate pursuant to this
Section 9 by sending each of the other parties hereto appropriate notice. No
exercise by CBS of its rights under this Section 9 will limit CBS's remedies by
reason of Switchboard's or Banyan's default, CBS's rights to exercise any other
rights under this Section 9, or any of CBS's other rights. No exercise by
Switchboard of its rights under this Section 9 will limit Switchboard's remedies
by reason of CBS's default, Switchboard's rights to exercise any other rights
under this Section 9, or any of Switchboard's or Banyan's other rights.
9.6 In the event of a termination of this Agreement:
(a) pursuant to Section 9.1, all rights and obligations of the parties
hereto shall terminate except those set forth in Section 8 (Indemnification),
Section 10 (Mandatory Transfer), Section 12 (Confidentiality), Section 13.1
(Permitted Assignments), Section 13.2 (Jurisdiction), Section 13.5 (Notice) and
Section 13.6 (Governing Law); or
(b) pursuant to Section 9.2, Switchboard's and Banyan's obligations
and CBS's rights and obligations (other than its obligation to provide
advertising and promotion in accordance with Section 2 and other provisions
related to the implementation thereof) shall terminate and, unless CBS makes the
election set forth in Section 9.6(b)(i), CBS's obligation to provide advertising
and promotion in accordance with Section 2 and such other related provisions
shall continue. Notwithstanding the foregoing, the rights and obligations of
the parties with respect to the following Sections shall not terminate: Section
8 (Indemnification), Section 10 (Mandatory Transfer), Section 12
(Confidentiality), Section 13.1 (Permitted Assignments), Section 13.2
(Jurisdiction), Section 13.5 (Notice) and Section 13.6 (Governing Law);
provided, however, that the rights and obligations set forth in Section 10
(Mandatory
15
(Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.)
Transfer) will terminate when (i) CBS's obligation to provide advertising and
promotion in accordance with Section 2 and such other related provisions has
terminated or expired and (ii) all of the parties' rights and obligations under
the License Agreement (other than those which survive the expiration or
termination of the License Agreement) have terminated or expired.
(i) [**] Switchboard [**] shall pay Switchboard [**] the
difference, if any, between (x) [**] and (y) [**] as follows:
(A) within thirty (30) days after the end of each Contract
Year, [**] (X) [**] this Agreement [**] pursuant to this Agreement for such
Contract Year; and (Y) [**] during such Contract Year; if any; or
(B) [**], at any time [**] Switchboard [**], calculated
based on [**] during the prior twelve month period.
(C) All payments made pursuant to this Section 9.6(b)(i)
shall be made in immediately available, non-refundable funds [**].
10. MANDATORY TRANSFER
10.1 CBS shall have the right (but not the obligation) in its sole
discretion to purchase Banyan's shares of Common Stock or require that such
shares of Common Stock be transferred to an independent trustee, as provided in
Section 10.2, within sixty (60) days after a CBS Competitor has directly or
indirectly acquired beneficial ownership of more than 30% of the outstanding
shares of the common stock, or securities representing, in the aggregate, more
than 30% of the total voting power, of Banyan (or any parent entity
controlling Banyan), or all or substantially all of Banyan's assets (a "Banyan
Change of Control"), at a time when Banyan and its subsidiaries and parent
entities shall then own in the aggregate a number of shares of Common Stock
equal to at least ten percent (10%) of the outstanding shares of the Common
Stock, without the prior written consent of CBS (a "Triggering Event"). The
parties hereby agree that Banyan may give CBS confidential written notice of its
intent to enter into an agreement which would cause a Banyan Change of Control,
together with a description of the party with whom Banyan intends to effect such
a transaction. CBS shall have twenty (20) days from receipt of such notice to
respond to Banyan in writing as to whether it would elect to trigger the
provisions of this Section 10 with respect to such potential Banyan Change of
Control. If, and only if, CBS notifies Banyan in writing that it would not make
such election, CBS shall be deemed to have waived its right to trigger such
mandatory transfer provisions with respect to such potential Banyan Change of
Control.
10.2 Upon the occurrence of a Banyan Change of Control, CBS may elect one
of the following within forty-five (45) days after written notice from Banyan
that a Banyan Change of Control has occurred:
(a) (i) CBS may offer to purchase the shares of Common Stock then
held by Banyan and its subsidiaries and parent entities, and Banyan and its
subsidiaries and parent entities shall be required to sell to CBS, such
sale to occur no later than ten (10) days after Banyan's receipt of CBS's
written offer to purchase such shares of Common Stock, at a purchase price
for the shares of Common Stock held by Banyan and its subsidiaries and
parent entities equal to the Fair Market Value of the Common Stock on the
date of the Triggering Event.
(ii) Notwithstanding the foregoing provisions of Section
10.2(a)(i), if (y) any legal or regulatory requirements, including, without
limitation, those imposed by the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, must be
16
first satisfied prior to making such sale or (z) the Fair Market Value must
be determined according to the terms of subsection (b) of the definition of
Fair Market Value, then such sale shall be made within two (2) days of the
satisfaction of such legal requirements or of the determination of the Fair
Market Value of the Common Stock, as applicable.
(iii) Upon the date that payment is made for the shares of
Common Stock held by Banyan and its subsidiaries and parent entities,
Banyan and its subsidiaries and parent entities will have no further rights
as a holder of such shares of Common Stock and Banyan and its subsidiaries
and parent entities will forthwith cause all certificate(s) evidencing such
shares of Common Stock to be surrendered to Switchboard or its transfer
agent for cancellation and new certificates evidencing such shares of
Common Stock will be promptly delivered to CBS.
(b) CBS may require Banyan to transfer all shares of Common Stock then
held by Banyan and its subsidiaries and parent entities to an independent
trustee reasonably satisfactory to CBS, which trustee shall then dispose of such
shares of Common Stock formerly held by Banyan and its subsidiaries and parent
entities to purchaser(s) that is/are not CBS Competitor(s), subject to the
foregoing, in such a manner as such trustee shall determine with a view to
maximizing the sale price of the shares of Common Stock formerly held by Banyan
and its subsidiaries and parent entities, while disposing of such shares within
one year. Upon such transfer, such trustee shall have sole voting and
dispositive control over such shares of Common Stock. Banyan shall no longer be
entitled to nominate any directors to the Board of Directors of Switchboard and
Banyan shall cause all current directors nominated by Banyan who are directors
or officers or other employees of Banyan to resign from their positions as
members of Switchboard's Board of Directors and shall use its best efforts to
cause all current directors nominated by Banyan who are not directors or
officers or other employees of Banyan to resign from their positions as members
of Switchboard's Board of Directors. Unless otherwise agreed in writing by CBS,
any trustee appointed pursuant to this Section 10.2(b) shall be a bank or trust
company incorporated or otherwise organized under the laws of the United States
or a state thereof and having a combined capital and surplus of at least
$100,000,000. Any such trustee shall perform its duties upon customary terms
pursuant to documentation reasonably satisfactory to CBS, it being understood
and agreed that, without the prior written consent of CBS, no such trustee shall
vote any shares of Common Stock held by it at any meeting of the stockholders of
Switchboard or otherwise.
10.3 "Fair Market Value" of the shares of Common Stock shall mean (i), for
any shares that are listed on a national securities exchange or authorized for
trading on the Nasdaq Stock Market or other automated quotation system, the
average of the closing prices for the five-day period ending on the date of the
Triggering Event, and (ii), for any other shares of Common Stock, such price as
is determined by a panel of appraisers (each of which is, or is an employee of,
an investment banking firm or appraisal firm of national reputation which has at
least three (3) years of experience in valuing technology or Internet
companies), one (1) chosen by CBS, one (1) chosen by Banyan and the third to be
chosen by the first two (2) appraisers. If
17
the appraisers cannot reach agreement within thirty (30) days of the date of the
Triggering Event, then each appraiser shall deliver its appraisal within forty
(40) days of the Triggering Event and the appraisal which is neither the highest
nor the lowest shall constitute the Fair Market Value. In the event either CBS
or Banyan fails to choose an appraiser within thirty (30) days of the date of
the Triggering Event, then the appraisal of the sole appraiser shall constitute
the Fair Market Value. Each party shall bear the cost of the appraiser selected
by it and the cost of the third appraiser shall be borne one-half by each of CBS
and Banyan. In the event either CBS or Banyan fails to choose an appraiser, the
cost of the sole appraiser shall be borne one-half by each CBS and Banyan.
11. INTELLECTUAL PROPERTY
11.1 CBS agrees and acknowledges that Switchboard, its licensors or
advertisers own all right, title and interest in and to all patents, copyrights,
trademarks, trade secrets and other intellectual property rights in the
Switchboard Site, or any content or data displayed therein (other than content
or data provided by CBS hereunder), and any software provided to CBS in
connection with this Agreement. Switchboard agrees and acknowledges that CBS,
its licensors or advertisers own all right, title and interest in and to all
patents, copyrights, trademarks, trade secrets and other intellectual property
rights in the CBS Sites, or any content or data displayed therein (other than
content or data provided by Switchboard hereunder). Neither CBS nor Switchboard
shall take any action inconsistent with the ownership of either party or its
licensors nor attempt to register any such intellectual property in any
jurisdiction.
12. CONFIDENTIALITY
12.1 Switchboard and CBS agree and acknowledge that they may be required
to disclose to each other certain confidential information, including but not
limited to information concerning the other party's online services and web
sites, technology, software, tools, business, or plans for the future in
connection with any of the foregoing, information concerning customers,
suppliers, personnel and other business relationships, sales and marketing
plans, financial information and other confidential information, all of which
shall be deemed "Confidential Information" for the purposes of this Section if,
with respect to such information disclosed in tangible form, it is marked
"Confidential" or its equivalent, and if disclosed orally or visually, it is
identified as confidential at the time of disclosure.
12.2 For a period of three (3) years from the date of receipt of any
Confidential Information hereunder, or in perpetuity with respect to source code
or related documentation, the receiving party agrees to protect the
confidentiality of the disclosing party's Confidential Information with at least
the same degree of care that it utilizes with respect to its own similar
proprietary information, but in no event less than a reasonable standard of
care, including without limitation agreeing:
(a) Not to disclose or otherwise permit any other person or entity
access to, in any manner, the Confidential Information, or any part thereof in
any form whatsoever,
18
except that such disclosure or access shall be permitted to (i) an employee or
consultant of the receiving party requiring access to the Confidential
Information in the course of his or her employment or consulting services in
connection with this Agreement and who has agreed in writing to maintain the
confidentiality of the confidential information of third parties in the
receiving party's possession; or (ii) a director, legal advisor, or financial
advisor of the recipient party hereunder, provided that such parties are bound
to maintain the confidentiality of such information and provided further that
they are permitted to use such Confidential Information only for the purposes of
carrying out their fiduciary or other advisory responsibilities on behalf of the
party hereto from which it received such Confidential Information; and
(b) Not to use the Confidential Information for any purpose other than
to carry out the purposes of this Agreement.
12.3 Nothing in this Section 12 shall restrict the receiving party with
respect to information or date, whether or not identical or similar to that
contained in the Confidential Information, if such information or data: (i) was
rightfully possessed by the receiving party before it was received from the
disclosing party; (ii) is independently developed by the receiving party without
reference to the disclosing party's information or data; (iii) is subsequently
furnished to the receiving party by a third party not under any obligation of
confidentiality with respect to such information nor data, and without
restrictions on use or disclosure; or (iv) is or becomes public or available to
the general public otherwise than through any act or default of the receiving
party.
13. GENERAL
13.1 No party may assign this Agreement, or their respective rights and
obligations hereunder, in whole or in part, without each other party's prior
written consent. Any attempt to assign this Agreement without such consent
shall be void and of no effect. Notwithstanding the foregoing, a party hereto
may assign this Agreement or any of its rights and obligations hereunder to any
entity controlling, controlled by or under common control with such party, or to
any entity that acquires such party by purchase of stock or by merger or
otherwise, or by obtaining substantially all of such party's assets (a
"Permitted Assignee"), provided that any such Permitted Assignee, or any
division thereof, (i) is not a CBS Competitor and (ii) thereafter succeeds to
all of the rights and is subject to all of the obligations of the assigning
party under this Agreement.
13.2 Each party hereto irrevocably submits to the exclusive jurisdiction
of (a) the Supreme Court of the State of New York, New York County; and (b) the
United States District Court for the Southern District of New York, for the
purposes of any suit, action or other proceeding arising out of this Agreement
or any transaction contemplated hereby or thereby. Each party hereto shall
commence any such action, suit or proceeding either in the United States
District Court for the Southern District of New York or if such suit, action or
other proceeding may not be brought in such court for jurisdictional reasons, in
the Supreme Court of the State of New York, New York County. Service of any
process, summons, notice or
19
document by U.S. registered mail to a party's address set forth below shall be
effective service of process for any action, suit or proceeding in New York with
respect to any matters to which it has submitted to jurisdiction in this Section
13.2. Each party hereto irrevocably and unconditionally waives any objection to
the laying of venue of any action, suit or proceeding arising out of this
Agreement or the transactions contemplated hereby in (i) the Supreme Court of
the State of New York, New York County; or (ii) the United States District Court
for the Southern District of New York, and hereby and thereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in any inconvenient forum.
13.3 Each party shall comply in all material respects with all laws and
regulations applicable to its activities under this Agreement.
13.4 If any provision of this Agreement (or any portion thereof) or the
application of any such provision (or any portion thereof) to any Person or
circumstance shall be held invalid, illegal or unenforceable in any respect by a
court of competent jurisdiction, such invalidity, illegality or unenforceability
shall not affect any other provision hereof (or the remaining portion thereof)
or the application of such provision to any other Persons or circumstances.
13.5 All notices or other communications required or permitted to be given
hereunder shall be in writing and shall be delivered by hand or sent, postage
prepaid, by registered, certified or express mail or reputable overnight courier
service and shall be deemed given when so delivered by hand, or if mailed, three
days after mailing (one business day in the case of express mail or overnight
courier service), as follows:
(a) if to Switchboard,
Switchboard Incorporated
000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: President
with a copy to:
Switchboard Incorporated
000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: General Counsel
20
(b) if to Banyan,
Banyan Systems Incorporated
000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Chief Financial Officer
with a copy to:
Xxxx & Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
(c) if to CBS Corporation,
CBS Corporation
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Chief Financial Officer
with a copy to:
CBS Corporation
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: General Counsel
13.6 The parties to this Agreement are independent contractors. There is
no relationship of partnership, joint venture, employment, franchise, or agency
between the parties. No party shall have the power to bind any other party or
incur obligations on any other party's behalf without such other party's prior
written consent.
13.7 The waiver by any party of a breach or default of any provision of
this Agreement by any other party shall not be construed as a waiver of any
succeeding breach of the same or any other provision, nor shall any delay or
omission on the part of any party to exercise or avail itself of any right,
power or privilege that it has, or may have hereunder, operate as a waiver of
any right, power or privilege by such party.
13.8 This Agreement, including any agreement incorporated herein by
reference, and any Exhibits hereto or thereto, contains the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to such
subject matter. No party shall be liable or bound to any other
21
party in any manner by any representations, warranties or covenants relating to
such subject matter except as specifically set forth herein.
13.9 This Agreement shall be governed by and construed in accordance with
the internal laws of the State of New York applicable to agreements made and to
be performed entirely within such State, without regard to the conflicts of law
principles of such State.
13.10 This Agreement is for the sole benefit of the parties hereto and
their permitted assigns and nothing herein expressed or implied shall give or be
construed to give to any Person, other than the parties hereto and such assigns,
any legal or equitable rights hereunder.
13.11 This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become effective
when one or more such counterparts have been signed by each party and delivered
to each other party.
13.12 This Agreement may not be amended except by an instrument in writing
signed on behalf of each party hereto. By an instrument in writing CBS or
Switchboard, as the case may be, may waive compliance by the other party with
any term or provision of this Agreement that CBS or Switchboard, as the case may
be, was or is obligated to comply with or perform.
13.13 The headings contained in this Agreement hereto are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. All Exhibits annexed hereto or referred to herein are hereby
incorporated in and made a part of this Agreement as if set forth in full
herein. Any capitalized terms used in any Exhibit but not otherwise defined
therein, shall have the meaning as defined in this Agreement. When a reference
is made in this Agreement to a Section or Exhibit, such reference shall be to a
Section of, or an Exhibit to, this Agreement unless otherwise indicated.
22
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the date first above written.
CBS CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice
President and Chief
Financial Officer
SWITCHBOARD INCORPORATED
By: /s/ Xxxx Xxxxxxxx
-----------------------------
Name: Xxxx Xxxxxxxx
Title: President
The undersigned has executed this Agreement solely for the purpose of
becoming bound by the provisions set forth in Section 8, Indemnification, and
Section 10, Mandatory Transfer.
BANYAN SYSTEMS INCORPORATED
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman of the Board
President and Chief
Executive Officer
23
(Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.)
EXHIBIT A
Attached to and forming a part of the Agreement made as of June 30, 1999
by and among CBS Corporation, Banyan Systems Incorporated and
Switchboard Incorporated
_______________________________________________________________________
Placement Obligations:
CBS will be responsible for the placement of all advertising and promotion
of the Switchboard Site operated by Switchboard, as follows:
Contract Year Advertising Value
------------- -----------------
First $[**] million
Second $[**] million
Third $[**] million
Fourth $[**] million
Fifth $[**] million
Sixth $[**] million
Seventh $[**] million
Placement Possibilities:
1. CBS Television Network programming
2. CBS Owned and Operated (a) Television and (b) Radio Stations programming
3. CBS outdoor billboards
4. CBS Internet Sites
5. CBS Cable
Available Placement types:
-- 30 second units, where available
-- 15 second units, where available
-- 10 second units, where available
-- URL Scrolls (5 seconds)
-- On-air mention (15 or 30 seconds)
-- Banner ads, buttons and sponsorships (measured on a daily, weekly or monthly
basis or as is otherwise appropriate)
-- Credit rolls/sign-offs (5 seconds)
CBS Associated Sites
--------------------
XXX.XxxxxxXxxxx.xxx
XXX.XxxxxxXxxx.xxx
XXX.XxxxxXxxxxx.xxx
Xxxxxx.xxx
XxxxxXxxXxxxx.xxx
Xxxxxx.xxx
EXHIBIT C
CBS Sites
---------
XXX.xxx
Web sites of the CBS wholly-or majority-owned radio stations
Web sites of the CBS wholly-or majority-owned television stations
EXHIBIT D
Display Ad
----------
(Shown below in right frame.)
[Switchboard Graphic]
EXHIBIT E
ADVERTISING CONTENT POLICY
1. Switchboard reserves the right to reject any order for an advertisement,
or any advertisement, or to remove any advertisement which, contains
or links to content which Switchboard reasonably deems:
(a) Is grossly offensive, including with limitation, bigotry,
racism, discrimination, hatred or profanity; is pornographic,
obscene, or sexually explicit; is disparaging, defamatory or
libelous, results in an invasion of privacy; promotes online
or offshore gambling, promotes or provides instructional
information about illegal activities or physical harm or injury
to any group, individual, institution or property; or infringes
on a proprietary interest of any third party, including without
limitation, any copyright, trademark, domain registration right,
trade secret or patent right; or may violate any federal, state,
county, and municipal laws, regulations, governmental agency
orders, and court orders;
(b) States or implies that the advertisement was placed by Switchboard
or any third party web site, or owner thereof, which links to the
Switchboard web site, or that such parties endorse the advertiser's
products or services.
