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CONFIDENTIAL
**** CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED.
EXHIBIT 10.3
June 16, 1998
THIS AGREEMENT made as of this 16th day of June, 1998.
BETWEEN:
WIC Premium Television, a Limited Subsidiary of WIC Western International
Communications Ltd. an Alberta company having its business offices at
000-0000 Xxxxxxx Xxxxx Xxxxxxxx, Xxxxxxx, X0X 0X0
("WPT")
and:
BLUE ZONE ENTERTAINMENT INC., a British
Columbia company having its registered
office at 00 Xxxxx Xxxxxx, Xxxxxxxxx,
XX, X0X 0X0 ("BZE")
A. BZE specializes in interactive media and content creation. BZE will
design and operate WPT's internet Web Site as defined herein.
B. BZE, which maintains and markets the Web Site and pursues other
interactive media and internet business.
C. WPT specializes in pay and pay per view television broadcast and or
distribution and promotion. WPT will provide and continue to provide
BZE with content and programming information subject to the terms of
its supply agreements.
D. WPT has developed its own web site but desires such web site to be
enhanced hosted and maintained by Blue Zone
E. The parties desire to enter into this Agreement on the terms and
conditions hereinafter set forth.
NOW THEREFORE THIS AGREEMENT WITNESSES that it is agreed by and among
the parties hereto as follows:
ARTICLE 1
DEFINITIONS
1.1 In this Agreement, including the recitals hereto, the following expressions
shall have the following meanings:
"WPT" means WIC Premium Television, a Limited Subsidiary of Western
International Communications Ltd.;
"BZE" means Blue Zone Entertainment Inc.;
"Agreement" means this agreement, including any written amendments hereafter
made to this agreement;
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"Person" means an individual, a partnership, an incorporated company, a trust
company, an unincorporated association, a government or any department or agency
thereof and the heirs and legal representatives of an individual;
"Web Site" means WPT's internet world wide web site created by BZE, which
includes, but is not limited to; text, audio, video, photographic, graphic and
interactive content, promotional materials, pertaining to Super Channel, Movie
Max and Viewer's Choice and WIC Premium Television which services are currently
available only in Canada. This content and material will be made publicly
available on the world wide web at the Universal Resource Locator (URL) address
xxx.xxxxxxxxx.xx. and or any future name change in this URL, including but not
limited to multiple URL distribution, consolidation and integration with other
WIC/broadcaster entities.
ARTICLE 2
ENGAGEMENT OF BZE
2.1 WPT hereby engages BZE to maintain and operate the Web Site on the terms and
conditions set forth herein.
2.2 WPT shall, at its own expense: pay a production fee of $**** to BZE for its
know-how and effort in creating the Web Site, 50% of such fee to be payable as a
deposit and 50% upon launch of the Web Site;
to provide all necessary content and internet hosting which WPT and BZE agree
are necessary for the Web Site and BZE's activities relating to the Web Site;
to pay for all software purchases and or licensing fees associated with server
and database hosting;
provide full access to WPT's video content, graphic content, programming content
and other proprietary content (and, where permissible, content purchased and or
licensed by WPT) for use only on the Web Site, subject always to WPT's right and
discretion to exclude any such content which it does not desire to appear on the
Web Site; and to promote BZE as provided herein.
2.3 BZE agrees to maintain and operate the Web Site at a leading level of
aesthetic and technical quality and content; to pursue other interactive media
and internet business; and to deal with all related revenue as provided herein.
2.4 BZE agrees to maintain good corporate standing and to provide, at its
own expense, all know-how, management and personnel necessary for BZE
to carry out BZE's obligations herein.
2.5 Nothing in this Agreement shall be construed as transferring any interest in
any assets, including intellectual property rights, from any party to any other
party, or altering the ownership structure of WPT or BZE in any way, or to
entitle BZE to any interest whatsoever in WPT's broadcasting business, or to
entitle WPT to any interest whatsoever in BZE's interactive business.
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH THE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE
24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
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2.5 The term of this agreement and BZE's engagement will commence on the
date of execution of this Agreement and terminate on the earlier of:
an agreement in writing of the parties;
Two (2) years from the date hereof, unless renewed or extended by written
agreement of the parties;
if the Web Site ceases to exist; or
in the event of default in accordance with Article 7.
2.7 The parties agree to make reasonable good faith efforts to negotiate a
renewal agreement or extension hereof prior to the termination of this
Agreement.
2.8 The parties agree that during the term of this Agreement their
relationship is exclusive, meaning WPT shall not employ any other third
party to maintain, design or alter WPT's Web Site. WPT acknowledges
that BZE will continue to do unrestricted business with other clients
as well as business with other broadcasters which business involves web
design.
ARTICLE 3
SCOPE OF PARTNERSHIP BUSINESS
3.1 The business activities of BZE shall consist of designing and maintaining
the Web Site, marketing the Web Site, and acting as the exclusive agent for
advertising on the Web Site, and actively seeking out interactive media and
internet business opportunities for the partnership. BZE and WPT agree to
cooperate and assist the Web Site and BZE in that regard by making available
content, industry contacts, skill, goodwill and cross-promotional opportunities.
ARTICLE 4
LIABILITY AND INSURANCE
4.1 Each party covenants and agrees with the others to indemnify and save
harmless the others from any and all liability, obligations, claims or losses
resulting from any liability arising from content it alone has created, from its
unauthorized acts and from its failure to comply with its obligations hereunder.
ARTICLE 5
COLLECTION AND DISTRIBUTION OF REVENUE
5.1 The parties acknowledge WPT and BZE are each making certain proprietary
assets or goodwill available to assist business. BZE will not itself retain
profits. It is intended that its net revenue which is attributable principally
to a proprietary asset or goodwill of one party shall be divided ****%/****% in
favour of that party. More particularly, the parties agree:
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH THE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE
24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
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Advertising revenue, meaning revenue from advertisers who pay for a presence on
the Web Site, shall be distributed, after payment of related expenses which
shall not exceed **** (****) % of net revenue unless both parties agree to such
costs in accordance with ARTICLE 5.2, ****% to WPT and ****% to BZE. However, it
is agreed that if the net advertising revenue in any 12 month period exceeds
$**** (Cdn) the parties agree for such period BZE's share of that shall be
limited ****% of $**** and WPT's share shall be the balance.
Revenue from BZE properties, meaning revenue generated by the sale facilitated
on the Web Site of properties of BZE (including but not limited to BZE's videos,
WEB TV, DVD and other storage/delivery mediums, patented 3D technology, and any
code, database or game products owned by BZE or developed in the design of the
Web Site, which WPT acknowledges to be owned by BZE) shall be distributed, after
payment of all related expenses in accordance with ARTICLE 5.3, ****% to Blue
Zone and ****% to WPT. Revenue from WPT properties, meaning revenue generated by
the sale facilitated on the Web Site of properties of WPT (including videos, WEB
TV, DVD and other storage/delivery mediums) shall be distribute, after payment
of all related expenses in accordance with ARTICLE 5.2, ****% to WPT and ****%
to BZE.
5.2 In determining what revenue is attributable to each category in ARTICLE 5.1,
BZE will allocate each item of revenue to the category it initially considers
appropriate and maintain detailed descriptions of each item of revenue, and such
allocations will be reviewed and approved by both WPT and BZE parties prior to
any distributions which shall not exceed **** (****) % of net revenue unless
both parties agree to such costs.
5.3 In determining what expenses are related to each category of revenue, both
WPT and BZE will assign job numbers to each for the purpose of allocating hourly
and monetary costs, and such allocations will be reviewed and approved by WPT
and BZE prior to any distributions.
5.4 Payments to employees or representatives of BZE for their know-how and
effort are deemed to be expenses related to production fees. Out of pocket
expenses which are general in nature and not attributable to a single category
of revenue shall be allocated to the three categories of revenue in proportion
to the revenue generated in those categories for the same time period.
5.5 Subject only to a reasonable holdback agreeable to the parties for
anticipated Expenses, BZE shall distribute all net revenue on a quarterly basis
beginning January 1, 1999 or at such other or earlier period as the parties
agree.
5.6 BZE shall prepare and distribute financial reports following and within 30
days of each distribution.
5.7 BZE hereby guarantees the payment of all monies to which WPT is entitled
herein.
5.8 If any financial report shows that in the period covered by such report a
party has retained or been paid an amount which exceeds or is less than its
entitlement for such period then that party shall forthwith repay such excess or
be paid such deficiency.
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH THE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE
24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
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ARTICLE 6
OPERATIONS
6.1 Except as expressly provided herein, all decisions regarding the
maintenance, design, WPT content, and alterations to the Web Site, shall be
subject to WPT's ongoing approval and subject to restrictions WPT might have in
its supply agreements.
6.2 A designated representative from each of WPT, and BZE shall discuss monthly
or on such further occasions as any one of them requests, to review the progress
of the Web Site's business and financial position, and to ensure that the
cross-promotion opportunities and new business development of the Web Site is
maximized.
6.3 BZE shall keep complete and accurate books of account, accounting and
banking records, corporate documents and records, and any other records
necessary to the proper operation of the Web Site. Such records will be kept in
accordance with generally accepted accounting and business procedures, and in
full accordance with all requirements of law. WPT shall have the right at all
reasonable times (but at its own expense) to examine and make copies of or
extracts from all such documents and books. Such right may be exercised through
any agent or employee of WPT designated by it or by an independent chartered
accountant or lawyer designated by WPT.
ARTICLE 7
Default
7.1 In this ARTICLE, the following expressions shall have the following
meanings, namely:
"Default" means: failure to promptly honour any indemnification or make any
distribution required herein; any assignment for the benefit of creditors,
appointment of a trustee or receiver of any assets, or institution of any
bankruptcy proceedings which is acquiesced in or is not dismissed within ninety
days of the bringing of such action;
the dissolution, winding-up or termination of a party; or
a material breach of any other provision of this Agreement of which the party is
advised by notice in writing from another party, which failure continues for
fourteen days after the said notice. The party who is in receipt of such a
notice may request that the validity of the notice be determined by a single
arbitrator appointed pursuant to the provisions of the Commercial Arbitration
Act (B.C.). The costs of the arbitrator so appointed shall be borne by the party
requesting arbitration, and if it is determined that the notice is invalid, the
requesting party shall be repaid the cost of the arbitration by the party who
issues the notice.
7.2 In the event of a Default by any party, a non-defaulting party may do any
one or more of the following:
pursue any remedy available to it in law, equity or by statute, it being
acknowledged by each party that specific performance, injunctive relief
(mandatory or otherwise) or other equitable relief may be the only adequate
remedy for a default;
take all actions in its name or in the name of the defaulting party as may
reasonably be required to cure the default, in which event all payments, costs
and expenses incurred therefore shall be payable by the defaulting party to the
non-defaulting party on demand;
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waive the default provided, however, that any waiver of a particular default
shall not operate as a waiver of any subsequent or continuing default and shall
not bind the other non-defaulting party;
ARTICLE 8
Promotions
8.1 WPT will promote BZE without charge in the following ways:
BZE may include reasonable promotional logos, hyperlinks and design credits on
each and every page of the Web Site;
WPT will actively promote the Web Site content, services, features and the
URL(s) with on-air promotional spots. Each of the Premium TV services will
broadcast these promotions on a regular basis to assist in attracting traffic to
the Web Site. WPT will include a credit and reasonable promotion of BZE on all
promotional ads WPT prints for the Web Site;
WPT will make good faith efforts to ensure its sales and other staff refer all
requests it receives for internet ad designs, web design or other services of an
interactive media or internet nature to BZE; and
ARTICLE 9
ACKNOWLEDGMENTS upon termination
9.1 Upon termination of this Agreement, BZE shall perform a final distribution
in accordance with the terms hereof.
9.2 WPT is the sole owner of the domain known as xxx.xxxxxxxxx.xx, together with
all raw content provided by WPT for the Web Site and all equipment and software
it purchases for the use of BZE in accordance with the terms hereof.
9.3 BZE is the sole owner of all of its design, HTML, ASP, JAVA and other
coding/programming and content, together with incidental documentation, code,
database design, interactive designs and strategies, patented and copyrighted
technology, equipment and chattels supplied by BZE or its principals, and
software created by BZE.
ARTICLE 10
arbitration
10.1 All disputes or differences whatsoever which shall at any time hereafter
(whether during the continuance in effect of this Agreement or upon or after its
discharge or termination) arise between the Owners concerning this Agreement,
its construction or effect or as to the rights, duties and liabilities of the
Owners or Agent hereto, or any of them, under or by virtue of this Agreement, or
otherwise, as to any other matter in any way connected with or arising out of or
in relation to the subject matter of this Agreement shall be referred to
arbitration pursuant to the provisions of the Commercial Arbitration Act (B.C.).
ARTICLE 11
notices
11.1 Any notice or demand or other document required or permitted to be given
under the terms of this Agreement shall be sufficiently given to the party to
whom it is addressed if
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delivered or forwarded by registered mail, return
receipt requested, cable, telegraph, telex, email or facsimile to the parties
hereto at the addresses set forth below.
WPT: _____________________________________________
BZE: _______________________________________________
or to such other address as either party or parties may furnish to the other
from time to time. Every such notice shall be deemed to have been received and
given at the time when, in the ordinary course of transmission, it would have
been delivered at the address to which it was sent.
ARTICLE 12
interpretation
12.1 The headings to the paragraphs of this Agreement are inserted for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
12.2 Where the context of this Agreement requires, all pronouns and any
variations thereof shall be deemed to refer to the masculine, feminine or
neuter, or singular or plural, as the identity of the person, persons, entity or
entities may require.
12.3 In the event that any provision of this Agreement or any part thereof
is invalid, illegal or unenforceable, the validity, legality or
enforceability of the remaining provisions shall not in any way be
affected thereby.
ARTICLE 13
Relationship
13.1 Except as expressly provided herein, nothing herein shall be construed to
limit the parties in the carrying on of their own respective businesses or
activities. No party shall have any authority or power to act for or to
undertake any obligation or responsibility on behalf of any of the other party
except as herein may be expressly provided.
ARTICLE 14
Miscellaneous
14.1 The parties shall execute and deliver such further documents, and do such
further acts and things as may be required to implement the intent and
provisions of this Agreement and shall not act unreasonably or arbitrarily in
respect of any matter hereunder.
14.2 Time shall be of the essence of each of the provisions of this Agreement.
14.3 This Agreement may be executed by the parties hereto in any number of
counterparts with the same effect as if the parties hereto had all signed the
same document. All counterparts of this Agreement shall be construed together
and constitute one instrument.
14.4 The termination of this Agreement will not affect the rights or obligations
of any party arising pursuant hereto prior to the date of termination.
14.5 This Agreement shall ensure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns.
14.6 This Agreement shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the laws of the Province of British
Columbia and laws of
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Canada applicable therein excluding any conflicts of law, rule or principle
which might refer such construction to the laws of another jurisdiction.
14.7 Each of the Owners acknowledges that it has obtained such independent legal
advice with respect to this Agreement and the matters contemplated thereby as it
determined appropriate or necessary.
IN WITNESS WHEREOF the parties hereto have executed this Agreement to
take effect as of June 16, 1998.
Authorized Signatory of
WIC Premium Television, a Limited Subsidiary of Western International
Communications Ltd.
)
)
)
)
)Signed /s/
-------------------------------------
Authorized Signatory
)-------------------------------------
)name/title (print)
)
Witness )Signed /s/ Xxxxxx Xxxxx
)-------------------------------------
) /s/ Xxxxxx Xxxxx
)name/title (print)
)
Authorized Signatory of
BLUE ZONE ENTERTAINMENT INC.
)Signed /s/ Xxxxx Xxxxxx
-------------------------------------
Authorized Signatory
) Xxxxx Xxxxxx
-------------------------------------
)name/title (print)
)
Witness )Signed /s/ Xxxxx Xxxxxxxx
-------------------------------------
) Xxxxx Xxxxxxxx
-------------------------------------
)name/title (print)
)President
