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Lycos / Singapore Telecommunications - Singapore Joint Venture Agreement
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JOINT VENTURE AGREEMENT
THIS JOINT VENTURE AGREEMENT is made as of September 13, 1999 by and between LYCOS, INC. ("Lycos"), a corporation organized under the laws of the State of Delaware, United States of America, and SINGAPORE TELECOMMUNICATIONS LIMITED ("SingTel"), a company incorporated under the laws of Singapore.
A. Lycos provides a World Wide Web navigation, search, directory, web community and e-mail service which is supported by advertising and electronic commerce. Lycos has exclusive worldwide rights to certain technology and knowhow used in providing such service. Lycos is interested in providing a comparable service, as culturally adapted and with suitable local content, for each of the countries in the Territory (as defined below) through a joint venture with SingTel.
B. SingTel is interested in establishing such a joint venture with Lycos, and has various knowledge, experience and resources which would be of benefit to the joint venture.
NOW, THEREFORE, the parties to this Agreement hereby agree as follows:
1. INCORPORATION OF THE COMPANY. As promptly as possible after the execution of this Agreement, the parties shall cause a private limited liability company to be incorporated under the laws of Singapore (the "Company") in accordance with the following:
1.1 NAME. The name of the Company shall be "Lycos Asia Pte Ltd" or such other name as may be agreed by the parties and approved by the Singapore Registrar of Companies.
1.2 MEMORANDUM AND ARTICLES. The Memorandum of Association (the "Memorandum") and Articles of Association (the "Articles") of the Company shall, as to form and substance, be as agreed to between the parties in connection with the incorporation of the Company.
1.3 AUTHORISED CAPITAL. [***]
1.4 INITIAL SUBSCRIPTION.
(a) The Memorandum shall be subscribed by two (2) persons and the parties shall each appoint one person to act as its nominee for such purpose. Such nominees will each agree in the Memorandum to subscribe for one (1) Share. As soon as practicable after the allotment and issue of such Shares to such nominees, the nominee appointed by Lycos shall
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transfer his or her Share to Lycos and the nominee appointed by SingTel shall transfer his or her Share to SingTel, and such transfers shall not be subject to any restriction on transfer of Shares set forth in this Agreement or in the Articles.
(b) Within sixty (60) days after the incorporation of the Company, each of Lycos and SingTel shall simultaneously subscribe and pay for its complement of Initial Shares (as defined below) at the Initial Subscription Price (as defined in Section 2.2), at a total subscription price, expressed in U.S. Dollars, of [***]. The Initial Subscription Price shall be paid by each party by wire transfer to the bank account of the Company and shall be received by the Company in clear funds within such sixty (60) day period. "Initial Shares" with respect to a party means the whole number of Shares determined by dividing the Initial Subscription Price by S$1.00.
1.5 INITIAL ADDRESS OF REGISTERED OFFICE. The address of the registered office of the Company shall initially be as follows:
31 Exeter Road
#18-00, Comcentre
Singapore 239732
1.6 FIRST DIRECTORS. The first Directors of the Company shall be the following two directors appointed by Lycos, and two directors appointed by SingTel as promptly as possible after the date of this Agreement:
Edward M. Philip
Eric J. Gerritsen
1.7 FINANCIAL YEAR. The financial year of the Company shall conform to the fiscal year of Lycos, as in effect from time to time.
1.8 INCORPORATION COSTS AND EXPENSES. The parties hereto shall procure that the Company shall bear all costs and expenses directly relating to the incorporation of the Company, including without limitation registration fees, filing fees, notary fees, stamp duties and the like, and, to the extent permitted by law, legal fees.
2. CAPITAL CONTRIBUTIONS.
2.1 CAPITAL COMMITMENT. [***]
2.2 INITIAL CAPITAL CONTRIBUTION. As used in this Agreement, "Initial Subscription Price" means the Singapore Dollar equivalent of [cad 157]***[cad 179], as converted from US Dollars to Singapore Dollars at an exchange rate calculated and fixed on the date
*** A CONFIDENTIAL PORTION OF MATERIAL HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
("Calculation Date") falling three (3) Business Days (as defined in Section 2.4) prior to the scheduled payment date as being the average of the closing rates as published by The Asian Wall Street Journal for the seven (7) Business Days preceding (and excluding) the Calculation Date at which Singapore Dollars can be purchased with US Dollars. Each of Lycos and SingTel shall make an initial capital contribution to the Company by payment of the Initial Subscription Price pursuant to Section 1.4.
2.3 MANDATORY ADDITIONAL CAPITAL CONTRIBUTIONS. After each of the parties has made its initial capital contribution to the Company as required under Section 2.2, each of the parties shall, from time to time in accordance with the capital contribution schedule set forth in the attached EXHIBIT A, contribute additional capital to the Company up to a maximum amount not to exceed [***] for each of Lycos and SingTel, for a total maximum aggregate additional amount of [A CONFIDENTIAL PORTION OF MATERIAL HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.] Each additional capital contribution to be made by the parties under this Section 2.3 shall be made by wire transfer to the bank account of the Company in Singapore Dollars at an exchange rate calculated and fixed on the date ("Relevant Calculation Date") falling three (3) Business Days prior to the scheduled payment date as being the average of the closing rates as published by The Asian Wall Street Journal for the seven (7) Business Days preceding (and excluding) the Relevant Calculation Date at which Singapore Dollars can be purchased with US Dollars.
2.4 BUSINESS DAY. As used in this Agreement, "Business Day" means a day (other than a Saturday or a Sunday or public holiday) on which banks are open for business in Singapore; provided, however, that if any payment obligation of Lycos hereunder falls due on a date on which banks are not open for business in New York City, the due date for such payment shall automatically be extended to the next date on which banks are open for business in New York City and Singapore.
2.5 NO FRACTIONAL SHARES. In the event any capital contribution amount after conversion from US Dollars to Singapore Dollars results in either of the parties being entitled to fractional parts of a Share, the fractional entitlement shall be disregarded and such party shall be allotted and issued such maximum whole number of Shares as corresponds to the relevant capital contribution amount paid by such party, with the excess funds relating to the fractional parts of a Share to be refunded to such party.
2.6 VOLUNTARY ADDITIONAL CAPITAL CONTRIBUTIONS. Neither party shall be required or permitted to make any capital contribution to the Company in excess of its commitment amount as required under Section 2.1 unless by mutual agreement.
3. LICENSES.
3.1 INITIAL LYCOS LICENSES. Within seven (7) days after the incorporation of the Company, Lycos shall enter into a license agreement with the Company in the form attached as EXHIBIT B (the "Local Searchservice Agreement"), and cause Tripod, Inc. to enter into a license agreement with the Company in the form attached as EXHIBIT C (the "Tripod Agreement"). As promptly as possible after the incorporation of the Company, Lycos shall (a)
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enter into a license agreement with the Company in substantially the form of the attached EXHIBIT B, but as modified to provide for the licensing of the MyLycos technology, to provide for lump sum royalties in the amount of [***] with respect to the initial English version of MyLycos and [***] with respect to the initial Chinese double byte version of MyLycos, and to omit the provision for termination in the event of failure to agree on "Commercial Readiness", and (b) cause WhoWhere, Inc. to enter into a license agreement with the Company in substantially the form of the attached EXHIBIT B, but as modified to provide for the licensing of the MailCity technology, to provide for lump sum royalties in the amount [***] of with respect to the initial English version of MailCity and with respect to the initial Chinese double byte version of MailCity, and [***] to omit the provision for termination in the event of failure to agree on "Commercial Readiness" (the four aforesaid agreements, collectively, the "Lycos License Agreements").
3.2 ADDITIONAL PROPERTIES OF LYCOS AND ITS AFFILIATES. Lycos agrees that neither Lycos nor any of its Affiliates (as defined in Section 21.14) will grant to any third party, or itself exercise, any right or license to offer, operate or maintain any service or feature from time to time offered by Lycos at or by any Affiliate of Lycos at a web site linked to on a networked basis (other than MyLycos, Tripod, MailCity or any search, navigation and directory service offered by Lycos under the "Lycos" brand name) which Lycos or such Affiliate is free to license to third parties, at a website including a country designation for any country in the Territory or at any other website which specifically targets residents in any country in the Territory unless Lycos or such Affiliate first offers to grant to the Company, on most favored customer terms (which may include payment of a lump sum royalty on a most favored customer basis), the right and license to offer, operate and maintain such features or services at the local websites at which the Company offers its services and the Company shall have failed to accept such offer within sixty (60) days after such offer is made, or, notwithstanding the good faith efforts of the parties, shall have failed to enter into a mutually acceptable license agreement with Lycos or such Affiliate within ninety (90) days after such offer is made.
3.3 PROPERTIES OF SINGTEL AND ITS AFFILIATES. SingTel agrees that neither SingTel nor any of its Affiliates will grant to any third party, or itself exercise, any right or license to offer, operate or maintain any Internet content properties acquired, licensed or developed by SingTel or its Affiliates after the date of this Agreement, at a website including a country designation for any country in the Territory or at any other website which specifically targets residents in any country in the Territory unless SingTel or such Affiliate first offers to grant to the Company, on most favored customer terms (which may include payment of a lump sum royalty on a most favored customer basis), the right and license to offer, operate and maintain such Internet content property at the local websites at which the Company offers its services and the Company shall have failed to accept such offer within sixty (60) days after such offer is made, or, notwithstanding the good faith efforts of SingTel and the Company, shall have failed to enter into a mutually acceptable license agreement with SingTel or such Affiliate within ninety (90) days after such offer is made. SingTel further agrees that a provision to the effect of this Section 3.1, and an exclusivity provision comparable to Section 2.2 of the Local Searchservice Agreement, shall be included in any license agreement for Internet content
*** A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
properties hereafter entered into between SingTel or any of its Affiliates and the Company, whether entered into pursuant to this Section 3.3 or otherwise.
4. DURATION AND SURVIVAL.
4.1 DURATION. This Agreement shall commence and be effective from the date hereof and continue in effect until the earlier to occur of any of the following events, upon the occurrence of which this Agreement shall terminate:
(a) the voluntary written agreement of the parties to terminate this Agreement;
(b) the dissolution of the Company pursuant to the provisions of this Agreement or otherwise;
(c) the purchase by Lycos of all of the ordinary shares in the capital of the Company registered in the name of SingTel or any of its Affiliates pursuant to the provisions of this Agreement or otherwise;
(d) the making of any order by the High Court of the Republic of Singapore for the winding up or judicial management of the Company, or the passing of any special resolution by the shareholders of the Company for the winding up or liquidation of the Company;
(e) the acquisition of all of the ordinary shares in the capital of the Company by a third party, or the acquisition of the Company by a third party by means of merger or consolidation resulting in the exchange of any ordinary shares for securities issued, or caused to be issued, by the acquiring entity;
(f) the listing of the shares in the capital of the Company on any stock exchange; or
(g) the termination of the Local Searchservice Agreement pursuant to Section 6.2 thereof or the Tripod Agreement pursuant to Section 5.2 thereof.
4.2 SURVIVAL. The provisions of Section 15 shall survive the termination of this Agreement.
5. PARTIES AS SHAREHOLDERS.
5.1 EXERCISE OF RIGHTS. Each of the parties, in its capacity as a shareholder of the Company, shall exercise, or refrain from exercising, any of its voting rights as a shareholder of the Company and any of its rights to appoint and remove Directors, so as to insure the adoption of any and every resolution of shareholders necessary to give effect to the provisions of this Agreement and to insure that no resolution of shareholders is adopted in violation of the provisions of this Agreement.
5.2 COMPLIANCE BY DIRECTORS.
(a) Each party shall cause the Directors which such party has the right to designate under this Agreement to act or refrain from acting, in their capacity as Directors, so as to observe, comply with and give effect to the provisions of this Agreement.
(b) The failure of a Director to act or refrain from acting, in his or her capacity as a Director, so as to observe, comply with and give effect to the provisions of this Agreement shall constitute a breach of this Agreement by the party for which such Director is designee.
5.3 PREVALENCE OF AGREEMENT. In the event of any inconsistency or conflict between the provisions of this Agreement and the provisions of the Memorandum or Articles, the parties shall give effect to the provisions of this Agreement.
6. MANAGEMENT.
6.1 DIRECTORS.
(a) As used in this Agreement:
(i) "Additional Appointment Date" shall mean the earlier of (A) either (1) the third anniversary date of the date of incorporation of the Company or (2) the first Business Day of the financial year of the Company in which the third anniversary date of the date of incorporation of the Company falls, as Lycos may decide, or (B) the date on which SingTel completes a sale of the SingTel Shares (as defined in Section 20.1) pursuant to Section 20; and
(ii) "Initial Period" shall mean the period commencing from the date of incorporation of the Company and ending on the Additional Appointment Date.
(b) At all times during the Initial Period, the Company shall have four (4) Directors, two (2) of whom shall be designated by Lycos and two (2) of whom shall be designated by SingTel.
(c) At all times after the Initial Period, the Company shall have (without necessity of amending the Memorandum or the Articles at the expiration of the Initial Period to make provision therefor) five (5) Directors, three (3) of whom shall be designated by Lycos and two (2) of whom shall be designated by SingTel.
(d) Lycos and SingTel shall cast their votes as shareholders of the Company to elect Directors in accordance with the requirements of Section 6.1(b) or (c), as applicable. Neither party shall cast its votes as a shareholder of the Company to remove a Director designated by the other party without the written consent of the other party.
(e) The Company shall have a Chairman of the Board, who shall be one of the acting Directors of the Company. The Chairman of the Board shall preside at all meetings of the Board of Directors of the Company (the "Board") at which the Chairman of the Board is present, but otherwise shall not have any powers, rights, duties or authorities which are different from the powers, rights, duties and authorities of any of the other Directors. The right to appoint the Chairman of the Board shall rotate between Lycos and SingTel, and Lycos shall have the right to appoint the first Chairman of the Board. Upon appointment by either Lycos or SingTel, the Chairman of the Board shall hold such office for the period from the conclusion of one annual general meeting of shareholders until the conclusion of the next following annual general meeting of shareholders, except that the first appointed Chairman of the Board shall hold such office from the date of the first Board meeting held after the incorporation of the Company to the conclusion of the first annual general meeting of shareholders.
(f) A Director shall be entitled at any time and from time to time to appoint any person to act as his or her alternate and to terminate such appointment, in each case in accordance with the applicable provisions of the Articles. From the time of appointment until the termination of such appointment, any such alternate director shall be entitled to receive notices of meetings of the Board, to attend meetings of the Board (whether or not the Director appointing him or her is present at any such meeting) and generally to exercise all of the powers, rights, duties and authorities and perform all of the functions of the appointing Director, except that he or she shall not be entitled to vote at any meeting at which the appointing Director is present. In the event that the appointing Director is not present at any meeting of the Board, such alternate director shall be entitled to exercise the vote of the appointing Director at such meeting, and if such alternate director represents more than one Director, such alternate director shall be entitled to one vote for every Director he or she represents who is not present at such meeting.
6.2 DECISIONS BY THE BOARD OF DIRECTORS. The quorum necessary for the transaction of any business of the Board shall be four (4) Directors, two of whom are Directors appointed by Lycos and two of whom are Directors appointed by SingTel. All decisions or actions taken by the Board shall require the affirmative majority vote of the Directors present at the meeting; provided, however, that any resolution of the Directors with regard to short notice of meetings of the Board shall require the approval of all of the Directors; and provided further that effective upon and from the expiration of the Initial Period the unanimous affirmative vote of all of the Directors shall be required with respect to any of the following matters:
(a) the entry or participation by the Company in any business which is not within the scope of the business described in Section 7.2;
(b) the authorization, creation, allotment or issuance of any shares, or classes or series of shares, in the capital of the Company or any securities or debentures of the Company (other than the allotment and issuance of Shares pursuant to Section 2.2 and Section 2.3), the issuance or grant of any option over the unissued share capital of the Company, or any change in the capital structure of the Company or the rights, preferences and privileges of any shares, or classes or series of shares, in the capital of the Company;
(c) the merger, consolidation, amalgamation or other such combination of the Company with any other entity, the recapitalization of the Company, the redemption, repurchase or cancellation of any securities of the Company, or a sale of all or substantially all of the assets of the Company;
(d) the giving or provision by the Company of any guarantees or indemnities, other than guarantees or indemnities necessary to secure borrowing or indebtedness of the Company or its Affiliates in the ordinary course of business, and any extension of credit or the making of any loans to any person or entity other than in the ordinary course of business;
(e) any transactions or agreements by the Company other than in the ordinary course of business and on arms-length terms with:
(i) any shareholder;
(ii) any Affiliate of any shareholder;
(iii) any Director or officer of the Company;
(iv) any director or officer of any shareholder or any Affiliate of any shareholder;
(v) any person who is a spouse, child or stepchild of the persons referred to in subparagraphs (iii) or (iv) above; or
(vi) any body corporate as to which the persons referred to in subparagraphs (iii) or (iv) above are interested in shares in the share capital of such body corporate of a nominal value equal to at least twenty percent (20%) of such share capital or are entitled to exercise or control the exercise of more than twenty percent (20%) of the voting power at any general meeting of such body corporate;
(f) any material modification of any transaction or any material amendment of any agreement subject to Section 6.2(e);
(g) any delegation of any powers of (or ceding of control by) the Board to (i) any committee of Directors, or (ii) any person, including any officer of the Company, with respect to any matter requiring the unanimous affirmative vote of the Directors as set forth in this Section 6.2;
(h) the declaration of any dividends or other distributions of profits of the Company; or
(i) any amendment to the Memorandum or the Articles.
6.3 MEETINGS OF DIRECTORS.
(a) The Company shall bear all reasonable expenses of Directors in connection with their attendance at meetings of the Board, including without limitation travel, lodging and meals. Unless otherwise agreed by the parties, the location of meetings of the Board shall alternate between a location in Asia, as designated by SingTel from time to time, and a location in the United States, as designated by Lycos from time to time.
(b) Meetings of the Board shall be held at such times as the Board shall determine. A meeting of the Board shall be held at least four (4) times per year. Not less than seven (7) days' notice (or such shorter period of notice in respect of any particular meeting as may be agreed unanimously by all Directors) specifying the date, place and time of the meeting and the business to be transacted at such meeting shall be given to all Directors.
(c) All or any of the Directors may participate in a meeting of the Board by means of a conference telephone or any communications equipment which allows all persons participating in the meeting to hear one another. A person so participating shall be deemed to be present in person at the meeting and shall be entitled to vote or be counted in a quorum accordingly. Any meeting of the Board in which one or more of the Directors participates by conference telephone or other communications equipment shall be deemed to take place at the site where the largest number of participating Directors are present, or if there is no site at which the number of participating Directors present exceeds the number of participating Directors present at each other site at which participating Directors are present, at the site where the Chairman of the Board is located.
(d) Any action required or permitted to be taken by the Board may be taken by a resolution in writing signed by all of the Directors, except that after the Initial Period any action required or permitted to be taken by the Board (other than any action requiring the unanimous approval of all of the Directors pursuant to Section 6.2) may be taken by at least four (4) Directors, two (2) of whom are Directors appointed by Lycos and two (2) of whom are Directors appointed by SingTel. Any such resolutions may be executed in counterparts, and copies of such resolutions transmitted by facsimile shall have the same effect as the originals.
6.4 MINUTES OF MEETINGS. Minutes of meetings of the Board and meetings of the shareholders of the Company, including records of all resolutions adopted and all actions taken by the Board or the shareholders of the Company, shall be in English.
6.5 CHIEF EXECUTIVE OFFICER. The Chief Executive Officer or such other position as shall constitute the most senior executive position of the Company (the "Chief Executive Officer") shall be as designated by SingTel. The Chief Executive Officer shall have internal control over the day-to-day affairs of the Company, including without limitation (a) the Company's incurring or making of any capital expenditures, (b) the Company's acquisition of any assets or property, or (c) the Company's creation of any security interest or encumbrance over any of its assets or properties.
6.6 CHIEF OPERATING OFFICER. The Chief Operating Officer or such other position as shall constitute the second most senior executive position of the Company (the "Chief Operating Officer") shall be as designated by Lycos.
6.7 MANAGEMENT PERSONNEL. Except as provided in Sections 6.5 and 6.6, the management personnel of the Company shall be as designated by the Chief Executive Officer in consultation with the Chief Operating Officer.
6.8 BUSINESS PLANS AND STRATEGIES. The management team of the Company shall have responsibility for developing and executing the business plans and strategies of the Company. The annual business plans, and any proposed diversification of or other material change to the business of the Company (as such business is described in Section 7.2), shall be subject to the internal approval of the Chief Executive Officer, who may in his discretion, subject always to the best interests of the Company, make all final decisions with respect thereto. Only the Chief Executive Officer shall submit to the Board for its approval the annual business plans for the Company, any variations of any such approved annual business plans, and any proposed diversification of or other material change to the business of the Company (as such business is described in Section 7.2).
7. BUSINESS OF THE COMPANY.
7.1 TERRITORY. For purposes of this Agreement, "Territory" means the following countries, except any of such countries otherwise excluded under the provisions of Section 7.4:
(a) Singapore, Hong Kong, Peoples' Republic of China, Taiwan, Malaysia and India (collectively, "Tier One Countries");
(b) Thailand, Philippines and Brunei (collectively, "Tier Two Countries"); and
(c) Indonesia, Vietnam, Laos, Myanmar and Cambodia (collectively, "Tier Three Countries").
7.2 BUSINESS PURPOSE. The business purpose of the Company shall be, and the parties have entered into this Agreement for the purpose of forming the Company to engage in, the following activities, directly or through Licensee Subsidiaries or Licensee Affiliates (as such terms are defined below) established pursuant to Section 8 or other sublicensees where permitted under the Lycos License Agreements:
(a) to provide, at a local site for each country in the Territory, a "Lycos" branded World Wide Web navigation, search, directory, web community and e-mail service which has the "look and feel" of the World Wide Web navigation, search, directory, web community and e-mail service offered by Lycos at and web sites linked to on a networked basis, but which is adapted culturally and in local content to be
suitable for, and is in a suitable language or languages for, each such country (collectively, the "Service");
(b) to generate revenue from all sources relating to the Service, including without limitation revenue from the sale of advertising and from electronic commerce; and
(c) to engage in all business activities relating to the development, maintenance, support, enhancement and promotion of the Service, including without limitation the development and acquisition of local content and the development and expansion of distribution channels for the Service.
For the avoidance of doubt, the Lycos branding and "look and feel" of the Service as referred to in paragraph (a) of this Section 7.2 shall not preclude the use of separate brand identities for established properties licensed by Lycos or its Affiliates to the Company under the Lycos License Agreements or otherwise, for established properties licensed by SingTel or its Affiliates to the Company, for established properties acquired by the Company from third parties or for new properties developed by the Company.
7.3 ROLL-OUT SCHEDULE.
(a) Unless otherwise agreed by the parties from time to time, the Service shall be initiated first in Tier One Countries, then in Tier Two Countries and finally in Tier Three Countries. Subject to Section 7.3 (b), any of the Tier One Countries for which the Service is not initiated on or before September 30, 2000, any of the Tier Two Countries for which the Service is not initiated on or before December 31, 2000, and any of the Tier Three Countries for which the Service is not initiated on or before March 31, 2001 shall thereupon be automatically excluded from the Territory and from the business activities of the Company.
(b) If the Company fails to meet the deadline set forth in Section 7.3(a) with respect to any country included in the Territory and such failure is solely attributable to (i) events beyond the control of the Company, including without limitation acts of God, war, invasion, rebellion, revolution, insurrection, civil commotion, civil war, acts of government, earthquakes, fire, lightning, storms, floods, unusually severe weather conditions, natural disasters, strikes, lockouts, boycotts, labor disputes, terrorism, sabotage, arson, and the like, (ii) the failure of the Company (or any Licensee Subsidiary or Licensee Affiliate established for such country), notwithstanding its diligent efforts, to obtain from any government, regulatory or administrative body any license, approval or permit required with respect to such country, or (iii) the failure of Lycos and/or its Affiliates to timely perform their respective obligations under the Lycos License Agreements, then such deadline shall be extended by a reasonable period of time having regard to the circumstances of the delay.
7.4 ACQUISITION OF ADDITIONAL PROPERTIES. The Company shall not be permitted to acquire from a party other than Lycos, SingTel or their respective Affiliates any Internet content properties which are similar or identical to any Internet content properties of Lycos,
SingTel or their respective Affiliates not then licensed to the Company unless the Company first offers to acquire from Lycos, SingTel or such Affiliate, on most favored customer terms (which may include payment of a lump sum royalty on a most favored customer basis), the right and license to offer, operate and maintain such Internet content property at the local webites at which the Company offers its services and Lycos, SingTel or such Affiliate of Lycos or SingTel, as applicable, shall have failed to accept such offer within sixty (60) days after such offer is made, or, notwithstanding the good faith efforts of the parties, shall have failed to enter into a mutually acceptable license agreement with the Company within ninety (90) days after such offer is made.
7.5 EMPLOYEES. The Company shall hire and engage such employees as shall be required from time to time to carry out its business purposes.
7.6 ACCOUNTING MATTERS AND BOOKS AND RECORDS.
(a) The Company shall be required to keep accurate books of account and financial and related records in accordance with both United States and Singapore generally accepted accounting principles, consistently applied. Upon reasonable prior notice and during normal business hours, the Company shall be required to make available at its principal office in Singapore for inspection by Lycos and SingTel, and their designated representatives, the books of account and records of the Company.
(b) The auditors for the Company shall be KPMG Peat Marwick or such other internationally recognized firm of certified public accountants as may be designated by Lycos from time to time.
(c) Within twenty (20) days after the end of the calendar month in which the Company commences to transact business, and within twenty (20) days after the end of each calendar month thereafter, the Company shall be required to provide to Lycos, for the calendar month then ended, unaudited financial statements, prepared in accordance with United States generally accepted accounting principles, for the Company and each Licensee Subsidiary and Licensee Affiliate then existing.
(d) Within thirty (30) days after the end of each financial year of the Company, the Company shall be required to provide to Lycos, for the financial year then ended, unaudited financial statements, prepared in accordance with United States generally accepted accounting principles, for the Company and each Licensee Subsidiary and Licensee Affiliate then existing.
(e) Within ninety (90) days after the end of each financial year of the Company which ends during or concurrently with the expiration of the Initial Period, and within sixty (60) days after the end of each financial year of the Company which ends after the Initial Period, the Company shall be required to provide to Lycos, for the financial year then ended, audited financial statements, prepared in accordance with United States generally accepted accounting principles, for the Company and each Licensee Subsidiary and Licensee Affiliate then existing.
8. LICENSEE SUBSIDIARIES AND LICENSEE AFFILIATES.
8.1 LICENSEE SUBSIDIARIES.
(a) Subject to the approval of the Board of Directors of the Company, the Company may establish wholly-owned corporate subsidiaries to engage in the business described in Section 7.2 with respect to one or more specific countries included in the Territory (collectively, "Licensee Subsidiaries").
(b) Except as may be otherwise required by applicable local law, the composition of the board of directors of any Licensee Subsidiary shall be determined in accordance with this paragraph. The number of Lycos designated directors and the number of SingTel designated directors appointed to the board of directors of any Licensee Subsidiary shall be the same as the number of Lycos designated Directors and the number of SingTel designated Directors, respectively, appointed to the Board of Directors of the Company.
(c) Except as may be otherwise required by applicable local law, all matters set forth in subparagraphs (a) through (i) of Section 6.2 shall require the unanimous affirmative vote of all of the directors of any Licensee Subsidiary (and for this purpose each reference to the "Company" in subparagraphs (a) through (i) of Section 6.2 shall be deemed to be a reference to such Licensee Subsidiary).
(d) Lycos and SingTel agree that any sublicense granted to a Licensee Subsidiary under the Lycos License Agreements shall be royalty-free, provided that the Company shall be permitted to recapture from any Licensee Subsidiary any cost items for technical assistance, referrals, catalog generation or the like benefitting such Licensee Subsidiary and chargeable to the Company.
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