Joint Venture Agreement

EXHIBIT 10.17


CONFIDENTIAL TREATMENT **Confidential treatment has been HAS BEEN REQUESTED FOR requested with respect to the CERTAIN PORTIONS OF THIS information contained within the DOCUMENT "[**]" marking. Such marked
portions have been omitted from
this filing and have been filed
separately with the Securities and
Exchange Commission.


15 FEBRUARY 2000


TRANSCEPTGATE LIMITED


and


LOOKSMART LTD


and


LOOKSMART (BARBADOS) INC


and


BT LOOKSMART LTD


and


BRITISH TELECOMMUNICATIONS PLC


JOINT VENTURE AGREEMENT


[* * *] - Confidential Treatment Requested


THIS JOINT VENTURE AGREEMENT is made on 15 February 2000


BETWEEN


(1) TRANSCEPTGATE LIMITED whose registered office is at Queen Victoria House,
Queen Victoria Street, Douglas, Isle of Man ("BTH");


(2) LOOKSMART LTD with its principal place of business at 625 Second Street,
San Francisco, CA 94107, USA ("LOOK");


(3) LOOKSMART (BARBADOS) INC. with its principal place of business at Hastings
Business Services Limited, Hastings, Christ Church, Barbados ("LOOK
BARBADOS");


(4) BT LOOKSMART LTD, a Bermuda exempted company, whose registered office is at
Clarendon House, 2 Church Street, Hamilton HM CX, Bermuda ("BT
LOOKSMART"); and


(5) BRITISH TELECOMMUNICATIONS plc whose registered office is at 81 Newgate
Street, London, EC1A 7AJ ("BT").


WHEREAS


(A) LOOK BARBADOS and BTH wish to agree terms for the formation of a business
venture for the purpose of making available and exploiting the revenue and
profit opportunities available from portal web sites and supply of
component parts of those portal web sites, with a brand agreed with equal
prominence given to each party's brand, with regional or country-specific
appellations. These sites will provide category-based Internet directory
services and associated "portal" functionality similar to existing LOOK
sites and other Web portals but will be targeted at Internet users residing
in or carrying on business in the Territory.


(B) LOOK wishes to expand its consumer internet business and content service
provision outside its current core territories, the United States of
America, Canada and Australia and is seeking a partner to increase the
speed to market of its portal proposition through distribution and
territory know-how.


(C) BTH wishes to increase its presence outside the United Kingdom in the
portal business and to provide content and a portal platform for the ISPs
of its joint ventures.


(D) LOOK BARBADOS is the owner of the existing Territory Databases. The parties
wish to combine LOOK's Databases, associated with the existing LOOK sites
and any Territory Databases developed by LOOK, or to be developed by the
joint venture and LOOK BARBADOS, and LOOK's other technical and software
experience, market knowledge, content, Internet culture and reputation with
BTH's knowledge, contacts, ability to generate users through its ISP and
other access businesses, applications and reputation.


(E) LOOK BARBADOS and BTH have formed BT LOOKSMART which will develop, market
and sell products and/or services in the Territory pursuant to licensing
arrangements between LOOK, LOOK BARBADOS and BT LOOKSMART and utilising
other third party products and/or services.


(F) LOOK BARBADOS and BTH are entering into this Agreement to establish the
manner in which BT LOOKSMART is to be established and to set out the terms
governing the relationship of BTH and LOOK BARBADOS as shareholders of BT
LOOKSMART.


(G) The parties intend to utilise their complementary skills to secure this
venture as a successful business venture. BTH and LOOK BARBADOS desire to
have BT LOOKSMART act and BT LOOKSMART desires to act as an independent
vehicle for the BT LOOKSMART activities described in this Agreement.


IT IS AGREED as follows:


1. INTERPRETATION


Definitions


1.1 In this Agreement, the following terms shall (unless the context requires
otherwise) have the following respective meanings:


"Accounting Principles" is defined in Clause 12;


"affiliate" means a company in which a party holds directly or indirectly
20 per cent or more of the equity share capital or controls directly or
indirectly, 20 percent or more of the voting rights;


"Agreed Form" means in relation to any document (or the draft of it) the
form which BTH and LOOK BARBADOS have initialled for the purposes of
identification;


"Ancillary Agreements" means the list of agreements set out in Schedule 1;


"Best Market Terms" means terms equivalent to the best available terms
(taking into account price, quality of service, volume, performance and
other relevant criteria) which the relevant party offers to a third party
and which in the context of regulated services will mean the applicable
published tariffs and terms and conditions;


"Board" means the board of directors of BT LOOKSMART;


"BTAP" means a company within the Territory in which BT holds directly or
indirectly an interest in the equity share capital or with whom BT has a
strategic relationship;


"BT Directors" means the directors of BT LOOKSMART from time to time
appointed by the BT Shareholder pursuant to Clause 9.2;


"BT Group" means all companies which control or are controlled by BT,
either directly or indirectly, through one or more companies, control being
defined as the holding of 50 per cent or more of the equity share capital
or of the voting rights of the controlled company;


"BT LOOKSMART Group" means all companies which are controlled by BT
LOOKSMART, either directly or indirectly, through one or more companies,
control being defined as the holding of 50 per cent or more of the equity
share capital or of the voting rights of the controlled company;


"BT Shares" means Shares with nominal value of US$.01 each of BT LOOKSMART,
held from time to time by BTH or other members of the BT Group;


"BT Shareholder" means BTH and its successors and/or such member of the BT
Group which is the holder(s) for the time being of BT Shares;


"BT Trade Mark Licence Agreement" means the agreement set out in Schedule
3;


"Budget" means a budget for BT LOOKSMART for a particular Financial Year
(in a format approved from time to time by the Board);


"Business Day" means a day on which banks generally are open in Sydney for
a full range of business;


"Business Plan" means a 5 year rolling business plan for BT LOOKSMART (in a
format approved from time to time by the Board) to be updated annually
having its origins in the Initial Business Plan;


"Bye-laws" means the Bye-laws of BT LOOKSMART to be adopted pursuant to
Clause 5.3, in the form to be agreed between BTH and LOOK BARBADOS (as they
may subsequently be altered from time to time);


"CEO" means the chief executive officer from time to time of BT LOOKSMART;


"CFO" means the chief financial officer from time to time of BT LOOKSMART;


"Chairman" means the chairman from time to time of the Board;


"Company" includes any body corporate, wherever incorporated;


"Completion" means completion of the matters set out in Clause 5.1;


"Directors" means directors of BT LOOKSMART;


"Fair Price" means the fair value, having regard to all relevant factors,
of the relevant Shares between a willing seller and a willing third party
buyer without any premium or discount being attributable to the percentage
of the issued share capital of BT LOOKSMART constituted by the relevant
Shares;


"free access portal" means the combination of portal and Internet access,
for which the only charges to the end user are local rate telephony
charges;


"Financial Year" means each financial year of BT LOOKSMART beginning on 1
January and ending on 31 December;


"holding company" shall be construed in accordance with sections 736 and
736A of the UK Companies Act 1985, as amended;


"Initial Business Plan" means the first Business Plan as set out in
Schedule 4;


"Initial Period" means the period from the date of signing of this
Agreement to and including 31 March 2001;


"Insolvency Event" is defined in Clause 21;


"Intellectual Property Rights" means registered designs, copyright of any
kind, database rights, rights (contractual or otherwise) to prevent
disclosure or use of confidential information, and any other similar form
of intellectual property or proprietary rights, statutory or otherwise,
whether registrable or not and shall include applications for any of them;


"ISP" means internet service provider;


"Loan Agreement" means the loan agreement referred to in Clause 5.2;


"Loco" means an operating subsidiary or a local presence of BT LOOKSMART in
a country within the Territory;


"LOOK Databases" means web directory databases, created and owned by LOOK,
of web sites for countries and/or languages not in the Territory;


"LOOK Directors" means the directors of BT LOOKSMART from time to time
appointed by the LOOK Shareholder pursuant to Clause 9.2;


"LOOK Group" means all companies which control or are controlled by LOOK,
either directly or indirectly, through one or more companies, control being
defined as the holding of 50 per cent or more of the equity share capital
or of the voting rights of the controlled company;


"LOOK Licensing Agreement" means the agreement in the form set out in
Schedule 5, pursuant to which LOOK grants BT LOOKSMART exclusive rights to
the LOOK Databases and LOOK BARBADOS grants BT LOOKSMART exclusive rights
to the Territory Databases;


"LOOK Services Agreement" means the agreement to be entered into between
LOOK BARBADOS and BT LOOKSMART containing the principles set out in
Schedule 6 pursuant to which LOOK BARBADOS shall provide certain services
to BT LOOKSMART, including the creation of Territory Databases;


"LOOK Shares" means Shares with nominal value of US$.01 each of BT
LOOKSMART, held from time to time by LOOK BARBADOS or other members of the
LOOK Group;


"LOOK Shareholder" means LOOK BARBADOS and its successors and/or such
member of the LOOK Group which is the holder(s) for the time being of LOOK
Shares;


"LOOK Trade Mark Licence Agreement" means the agreement in the form set out
in Schedule 14;


"LOOK Transfer Agreement" means the agreement, in the form set out in
Schedule 15, to be entered into for the transfer to a member of the BT
LOOKSMART Group of LOOK's business and assets in the Territory;


"Memorandum" means the Memorandum of Association of BT LOOKSMART, a copy of
which is set out in Schedule 2 (as it may subsequently be altered from
time to time);


"BT LOOKSMART Business" has the meaning set out in Clause 3.1;


"parties" means LOOK, LOOK BARBADOS, BTH, BT and BT LOOKSMART, and party
shall be construed accordingly;


"Peak Funding Requirement" means the maximum aggregate amount of cash
required to implement and build a successful BT LOOKSMART Business in
accordance with the plans set out in the Initial Business Plan, as may be
amended from time to time;


"Performance Objectives" means the Year One Performance Objectives and/or
the Year Two Performance Objectives, as appropriate;


"portal" means an internet site, based on current and future Territory
Databases and LOOK's and BT LOOKSMART's Intellectual Property Rights, which
aggregates general content and services designed for users in the
Territory;


"Regulatory Action" means any order of a court of competent jurisdiction or
any order, decision or view made, given or expressed by a competent
governmental or regulatory authority or agency or an enhancement of a
legislative body:


(a) which after Completion would materially prohibit or restrict the
carrying on of BT LOOKSMART Business as contemplated by this
Agreement; or


(b) in consequence of which, any of the Parties would incur fines or
a liability in damages were this Agreement to be performed in
accordance with its terms;


"Shareholders" means the LOOK Shareholder and the BT Shareholder (and
Shareholder shall be construed accordingly);


"Shareholder Matters" means the matters so defined in Clause 11.2;


"Shares" means shares in BT LOOKSMART with voting rights;


"subsidiary" shall be construed in accordance with sections 736 and 736A of
the UK Companies Act 1985 (as amended);


"Territory Databases" means existing web directory databases created and/or
owned by LOOK or LOOK BARBADOS for the Territory at the date of this
Agreement and any web directory databases created by LOOK BARBADOS on
behalf of BT LOOKSMART after the date of this Agreement, ownership of which
shall vest in LOOK BARBADOS until such time as the Performance Objectives
are met, at which time ownership shall thereafter vest in BT LOOKSMART;


"Territory" means the countries comprising (i) all of Europe and (ii) Asia
Pacific but excluding Australia and China but including Hong Kong and
Taiwan, as identified in Schedule 7;


"URL" means Uniform Resource Locator;


"USA" means United States of America;


"VISP" means virtual internet service provider;


"WAP" means wireless application protocol;


"wholesale services" means any services offered to third parties by BT
LOOKSMART including, without limitation, homepage programming, search,
licensing and syndication;


"Year One Performance Objectives" means the performance objectives set out
in Paragraph 1.1 of Schedule 8;


"Year Two Performance Objectives" means the performance objectives set out
in Paragraph 1.2 of Schedule 8.


Clauses and Schedules


1.2 Except where the context requires otherwise, references to Clauses and
Schedules are to Clauses of or Schedules to this Agreement.


Headings


1.3 Headings are inserted for convenience only and shall not affect the
construction of this Agreement or the Schedules.


1.4 In this Agreement, words and terms shall be read and construed in
accordance with trade, custom and usage in the Internet and e-commerce
business in the United Kingdom.


2. CHARACTERISTICS OF BT LOOKSMART


2.1 BT LOOKSMART is a company incorporated on 27 January 2000 in Bermuda as an exempted company with an authorised share capital of US$12,000 consisting of 12,000 shares with a par value of US$1.00 with 6,000 shares issued to BTH and 6,000 shares issued to LOOK BARBADOS. The share capital was subsequently subdivided into 1,200,000 shares with a par value of US$0.01. On 7 February 2000, or such later date as BTH and LOOK BARBADOS shall agree, the authorised share capital of BT LOOKSMART shall be increased from US$12,000 to US$2,000,000 by the creation of 198,800,000 new shares with a par value of US$.01. Fifteen million (15,000,000) of such new shares shall be set aside for the BT LOOKSMART stock plan to be established pursuant to Clause 15.2.


2.2 The directors of BT LOOKSMART on the date hereof are Evan Thornley, Vernon Irvin, Stephen Davies, Anthony Castagna, Timothy Pethick and a Chief Financial Officer to be appointed pursuant to Clause 9.10.


3. BUSINESS OF BT LOOKSMART


BT LOOKSMART Business


3.1 The business of BT LOOKSMART ("BT LOOKSMART Business") is:


(a) To be a leading Internet media company which offers content-rich free
Internet based services, based on the Territory Databases and the LOOK
Databases and other services, to users resident in the Territory by
building and maintaining a portal in each country in the Territory,
the aim of which is for BT LOOKSMART to be one of the top three
amongst its competitors in the relevant country as measured by page
views, visitors, registered users, revenues and applications.


(b) To be a leading Internet media company which offers wholesale Internet
based services in the Territory by:


(i) offering wholesale services in each country in the Territory;


(ii) working with BT or a BTAP, if any, or a third party in each
country in the Territory to offer packaged wholesale access and
wholesale services.


3.2 BT LOOKSMART's initial business shall be narrowband and BT LOOKSMART shall
develop services to be delivered over other means including broadband and
mobile. Subject to the agreement of BTH, BT LOOKSMART will be given the
opportunity to participate in any emerging distribution channels offered by
BT or a BTAP including but not limited to WAP.


3.3 BT LOOKSMART shall be responsible for the development or acquisition of
specific Territory content and applications, for the operation, support and
maintenance of any Territory file servers, applications and technologies,
for marketing in the Territory, ad sales, business development, additional
content licensing and developing Intellectual Property Rights.


3.4 BT LOOKSMART shall commence business in those countries as set out in the
Initial Business Plan. BT LOOKSMART may set up a Loco to conduct its
business in a particular country within the Territory. A BTAP or other
third party may be offered a shareholding in Loco with the consent of the
Shareholders.


3.5 The parties shall consider on a country by country basis whether BT
LOOKSMART shall offer a free access portal.


Commercial principles


3.6 The activities of BT LOOKSMART shall be conducted in the best interests of
BT LOOKSMART in accordance with the general principles of the then current
Business Plan approved by the Board and on sound commercial basis and in
compliance with applicable local laws and regulations.


4. REPRESENTATIONS AND WARRANTIES ON SIGNATURE


LOOK, LOOK BARBADOS, BTH and BT each warrant and represent to each other
that:


(a) it has obtained all necessary corporate authorisations to enter into
this Agreement and the Ancillary Agreements; and


(b) nothing in its Bye-laws or internal regulations prevents the full
performance of its obligations under this Agreement and the Ancillary
Agreements.


5. COMPLETION


Completion


5.1 Completion shall take place at Clarendon House, 2 Church Street, Hamilton
HM CX, Bermuda on 16 February 2000 or such later date as BTH and LOOK
BARBADOS shall agree but in any event no later than 28 February 2000, when
the events set out below shall take place:


(a) LOOK BARBADOS shall subscribe unconditionally for 41,900,000 Shares at
an issue price of US$.0238 per share, payment for which shall be made
in accordance with Clause 8.2;


(b) BTH shall subscribe unconditionally for 41,900,000 Shares at an issue
price of US$.0238 per share, payment for which shall be made in
accordance with Clause 8.3;


(c) LOOK BARBADOS and BTH shall procure that BT LOOKSMART allots and
issues and BT LOOKSMART shall allot and issue:


(A) 41,900,000 Shares to LOOK BARBADOS credited as fully paid; and


(B) 41,900,000 Shares to BTH credited as fully paid;


and BT LOOKSMART shall cause the names of LOOK BARBADOS and BTH to be
entered in the register of members of BT LOOKSMART as the respective
holders of the Shares subscribed by them and that share certificates
are issued to LOOK BARBADOS and BTH in respect of such Shares;


(d) LOOK BARBADOS and BTH shall procure that Evan Thornley, Anthony
Castagna, Timothy Pethick, Vernon Irvin and Stephen Davies are
appointed to the Board of Directors of BT LOOKSMART with Evan Thornley
being appointed Chairman of BT LOOKSMART and that Richard Jenkyn of
Codan Services Limited in Hamilton, Bermuda be appointed Secretary of
BT LOOKSMART.


(e) LOOK, LOOK BARBADOS and BT LOOKSMART shall execute and deliver the
LOOK Licensing Agreement and LOOK and BT LOOKSMART shall execute and
deliver the LOOK Trade Mark License Agreement;


(f) BT LOOKSMART shall adopt and LOOK BARBADOS and BTH shall approve the
Initial Business Plan;


(g) BT and BT LOOKSMART shall execute and deliver the BT Trade Mark
Licence Agreement;


(h) LOOK and BTH shall enter into the Loan Agreement.


5.2 LOOK undertakes to enter into the LOOK Transfer Agreement and LOOK
BARBADOS, BTH and BT LOOKSMART shall procure that an appropriate company
from a tax perspective within the BT LOOKSMART Group shall enter into the
LOOK Transfer Agreement on the date specified in a written notice from BT
LOOKSMART to LOOK that the transfer is to take place, such date to be no
earlier than the third Business Day after the date of such notice.


5.3 Within 30 days after the date of this Agreement, BTH and LOOK BARBADOS
shall agree the form of Memorandum and Byelaws and BT LOOKSMART shall and
BTH and LOOK BARBADOS shall procure that BT LOOKSMART shall adopt such
Memorandum and Byelaws.


5.4 No party shall be obliged to complete any of the transactions or do any of
the things referred to in subclause 5.1(a) to (g) unless all other
transactions and things referred to in those subclauses are completed in
accordance with subclauses 5.1(a) to (g).


Rescission


5.5 If a party shall fail or be unable to comply with any of its obligations
under subclause 5.1(a) to (g), the parties not in default may together:


5.5.1 defer Completion to a date not more than 28 days after the date set
by Clause 5.1; or


5.5.2 agree to proceed to Completion so far as practicable (without
prejudice to its rights hereunder); or


5.5.3 rescind this Agreement.


6. RELATIONSHIP BETWEEN BT LOOKSMART, THE LOOK GROUP AND THE BT GROUP


6.1 LOOK BARBADOS, BTH and BT LOOKSMART hereby agree that BT LOOKSMART shall
and BT LOOKSMART shall procure that Locos shall acquire telecommunications
products and services from the BT Group or a BTAP provided that their Best
Market Terms for providing the same are as favourable as a third party's
Best Market Terms (or, if not available, arm's length terms) for providing
the same.


6.2 BT and BT LOOKSMART shall use their respective reasonable endeavours to
procure that a BTAP located in a country in which BT LOOKSMART is
conducting or is about to conduct business, enters into a commercial
relationship with BT LOOKSMART for the provision of services by BT
LOOKSMART which may include BT LOOKSMART programming the BTAP's ISP home
page provided that BT LOOKSMART's Best Market Terms for providing the same
are as favourable as a


third party's Best Market Terms (or, if not available, arm's length terms)
for providing the same.


6.3 Subject to agreeing commercial terms and to applicable law and regulation,
BT shall provide on- and off-web marketing of BT LOOKSMART and Loco
services and, if possible, shall promote the business of BT LOOKSMART and
the relevant Loco through its BTAP in a relevant country and the partners
of the BTAP (including but not limited to BTAPs and their partners that are
providers of mobile services), to the customers of such BTAP and partners.


6.4 LOOK BARBADOS, BTH and BT LOOKSMART agree that BT LOOKSMART shall and BT
LOOKSMART shall procure that Locos shall acquire applications, including
email and IP communications services from the BT Group, a BTAP or the LOOK
Group provided that their Best Market Terms for providing the same are as
favourable as a third party's Best Market Terms (or, if not available,
arm's length terms) for providing the same. If more than one of the BT
Group, a BTAP and the LOOK Group could provide the application, then
whichever provides the Best Market Terms shall provide the application
subject to its Best Market Terms for providing the same being as favourable
as a third party's Best Market Terms (or, if not available, arm's length
terms) for providing the same.


6.5 LOOK BARBADOS, BTH and BT LOOKSMART agree that BT LOOKSMART shall and BT
LOOKSMART shall procure that Locos shall acquire wholesale access, network
and hosting platforms from the BT Group or a BTAP, provided that their Best
Market Terms for providing the same are as favourable as a third party's
Best Market Terms (or, if not available, arm's length terms) for providing
the same.


6.6 Subject to agreeing commercial terms and to applicable law and regulation,
LOOK shall provide on-and-off-web marketing of BT LOOKSMART`s services and
shall promote the business of BT LOOKSMART.


6.7 BT LOOKSMART and LOOK BARBADOS shall enter into the LOOK Services Agreement
within three months after the date of this Agreement. Until the LOOK
Services Agreement is entered into, LOOK BARBADOS shall use its best
endeavours to create new Territory Databases in accordance with the
principles set out in Schedule 6 as ...