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**** 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 10.1
WEB SITE AND INTERACTIVE TELEVISION DEVELOPMENT AGREEMENT
BY AND BETWEEN
CTV TELEVISION INC.
AND
BLUE ZONE PRODUCTIONS LTD.
DATED AS OF DECEMBER 14, 1999
This WEB SITE AND INTERACTIVE TELEVISION DEVELOPMENT AGREEMENT
("Agreement"), dated as of December 14, 1999, is by and between Blue Zone
Productions Ltd., a corporation formed under the laws of Bermuda having an
office at Xxxx House, 00 Xxxxxx Xxxxxx, Xxxxxxxx Xxxxxxx ("Xxxx Zone"), and CTV
Television Inc., a corporation formed under the laws of Canada having
headquarters at 0 Xxxxxxx Xxxx Xxxxx, Xxxxxxx, Xxxxxxx X0X 0X0 ("CTV").
W I T N E S S E T H :
WHEREAS, Blue Zone designs Web sites for use on the Internet's World
Wide Web and provides certain Web hosting and interactive television development
services;
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WHEREAS, CTV desires to engage Blue Zone to create, develop, test,
deliver, manage, and consult with respect to the CTV Web Site; and
WHEREAS, Blue Zone wants to undertake such work,
NOW THEREFORE, in consideration of the promises and mutual covenants
and agreements hereinafter contained, the receipt and sufficiency of which is
hereby mutually acknowledged, the parties hereto agree as follows:
Section 1. Definitions.
Under this Agreement, the following terms will have the following
meanings:
"Blue Zone Intellectual Property" has the meaning set forth in Section
5(c).
"Canadian Television Company" means a CRTC-licensed programming
undertaking under the Canadian Broadcasting Act, a broadcasting company
excluding radio whose headquarters is in Canada, whose primary target area and
audience/viewers are in Canada, whose signals are broadcast from within Canada,
and which is Canadian-owned and Canadian-controlled. The term expressly excludes
U.S. and other foreign-owned television broadcasting companies whose broadcast
signals may be or are received within Canada.
"Completion Certification" means the issuance of a written certificate
of the Designated CTV Representative acting reasonably that the testing of the
CTV Web Site has been successfully concluded, and that the CTV Web Site
demonstrates substantially all of the material content, core functionality and
performance characteristics described in the Specifications when tested
according to the agreed upon Test Plan, all as described more fully in Section
2.
"Consulting Fee" has the meaning set forth in Section 3.
"Corrected Version" means a version of the CTV Web Site prepared
substantially for the purpose of correcting Nonconformities in the CTV Web Site.
"CTV Materials" means the proprietary materials whether or not
designated in writing as such by CTV and delivered by CTV to Blue Zone for the
purpose of assisting Blue Zone in completing its obligations hereunder. "CTV
Materials" may include video, text and graphical content deemed appropriate by
CTV for public distribution, in digital or hard copy format, including articles,
news stories and flow charts, as well as CTV's marketing plans.
"Confidential Information" has the meaning set forth in Section 10.
"Content Model" has the meaning set forth in Section 2(b)(iii)
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"CTV Web Site" means the interactive video-to-publishing cross-media,
multi-platform environment including Internet (high and low bandwidth/speed),
web TV, and digital set-top environment using CTV Newsnet and CTV National News
as sources. The term "CTV Web Site" does not include Blue Zone Intellectual
Property.
"Designated CTV Representative" has the meaning set forth in Section
12(b)(ii).
"Effective Date" means the date first set forth above, which upon
execution of the Agreement by both parties, will be the effective date of this
Agreement.
"Final Acceptance" has the meaning set forth in Section 2(b)(vi)(3).
"includes" or "including", except where followed directly by the word
"only," means, "includes, but is not limited to" and "including, but not limited
to," respectively; it being the intention of the parties that any listing
following thereafter is illustrative and non exclusive or exhaustive.
"Indemnified Party" has the meaning set forth in Section 6(c).
"Indemnitor" has the meaning set forth in Section 6(c).
"License" has the meaning set forth in Section 5(d).
"Nonconformity" means a material design error, design defect,
functional defect, programming error or anomaly in the CTV Web Site and/or
deviation from the Specifications in the reasonable determination of Blue Zone.
"Phase I" means the process described in Section 2(a).
"Phase II" means the process described in Section 2(b).
"Specifications" has the meaning set forth in Section 2(a)(i).
"Term" has the meaning set forth in Section 13(a).
"Test Plan" has the meaning set forth in Section 2(b)(vi).
"Third-Party Commercial Matter" has the meaning set forth in Section
5(e).
"Web Site" means a computer system, but not the hardware, intended to
be accessed via the World Wide Web segment of the Internet or via an alternative
signal or proprietary transmissions of interactive data, including the content
intended to be viewed or accessed by persons so accessing the computer system.
"Year 2000 Compliant" means a product which:
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(i) accepts, calculates, compares, sorts, extracts, sequences,
and otherwise processes date inputs and date values (whether forward or
backward), and returns, generates, processes and displays date output
and date values, accurately, without interruptions, and in a consistent
manner (without errors or omissions due to date selection), regardless
of the date used, and whether before, on or after January 1, 2000 and
whether or not the dates are affected by leap years;
(ii) accepts and responds to two-digit year-date input in a
manner that resolves any ambiguities as to the century in a defined,
predetermined, and manner agreed to by the parties to be appropriate;
and
(iii) stores, processes and displays date information
(including, without limitation, in user interfaces and data fields) in
ways that are unambiguous as to the determination of the century in a
defined, predetermined and appropriate manner.
Section 2. Development of the CTV Web Site.
(a) Phase I.
(i) Preparation of Specifications. The CTV Web Site will
aggregate content from CTV News and CTV National News. Blue Zone will prepare,
with the assistance of CTV, specifications for the CTV Web Site setting forth
the concept; subject matter; major formatting requirements and other required
technical characteristics of the content; operation and technical requirements;
use and capacity expectations and other pertinent information for the CTV Web
Site; the development activities of the parties; the preliminary development
budget for the CTV Web Site; the allocation of responsibilities; and the
preliminary timelines for completion of those activities with respect to the CTV
Web Site (the "Specifications"), all as further described on Schedule A hereto.
The parties understand and agree that the Specifications may be modified from
time to time with the written agreement of the parties. The CTV Web Site will
not be required to meet standards or have characteristics which are not set
forth in the Specifications or in any agreed upon written modifications thereto.
(ii) Schedule for Preparation of Specifications. Blue Zone
will have ten (10) business days from the date hereof (which time may be
extended by mutual agreement of the parties acting reasonably) to prepare and
deliver to CTV a preliminary version of the Specifications. CTV will have five
(5) business days (which date may be extended by mutual agreement of the parties
acting reasonably) from the date it receives a copy of the proposed
Specifications to accept the Specifications, and such acceptance will not be
unreasonably withheld or delayed. Blue Zone agrees to make itself available for
a "walk through" of the preliminary Specifications during this review period.
Acceptance of the Specifications will be deemed to have occurred if CTV provides
Blue Zone with written notice of acceptance or if CTV fails to reject the
Specifications by written notice to Blue Zone delivered within such five (5)
business day period, at which point the parties will be deemed to have agreed to
proceed to Phase II. In the event that CTV, acting reasonably, rejects the
Specifications, CTV will notify Blue Zone in writing, and will
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specify its reasons in such notice for such rejection. If CTV rejects the
Specifications, Blue Zone will have thirty (30) business days (which date may be
extended by mutual agreement of the parties acting reasonably in light of the
objections made by CTV) in which to prepare and submit revised Specifications,
in which case the provisions of this Section 2 will apply to such re-submission
until such time as the Specifications are accepted by CTV. In the event that CTV
rejects the Specifications, CTV agrees to make itself available for a "walk
through" of its reasons for rejection during this 30 business day period. Unless
otherwise agreed in writing, the total time period for completion of Phase I
will not exceed sixty (60) business days. Either party may elect to review Phase
I materials prepared by Blue Zone or submitted by the other party "on line" in
lieu of or in addition to any in-person "walk through." In the event that the
parties cannot reach agreement on the revised Specifications, either party may
terminate the Agreement with no further liability on either party's part, except
for payments due and payments of amounts owed for costs and expenses incurred to
that date.
(iii) Payment Schedule for Phase I. The total consideration to
be paid to Blue Zone by CTV for Phase I is as specified on Schedule G, which
non-refundable amount has been received by Blue Zone from CTV.
(b) Phase II.
(i) Development of CTV Web Site. Upon successful completion of
Phase I, Blue Zone will then proceed to use its commercially reasonable efforts
to design, build and develop the CTV Web Site in accordance with the
Specifications, pursuant to the terms and conditions hereunder. During the
course of the development, Blue Zone will develop an executable and baseline
architecture; the specification of all important architecture patterns; a
release plan; and a risk assessment plan. Unless otherwise agreed in writing,
Blue Zone will deliver the CTV Web Site for Completion Certification according
to the agreed Test Plan no later than August 31, 2000.
(ii) Acquisition of Rights From Third Parties. Except with
respect to the CTV Materials, the CTV Web Site content furnished by CTV, and any
other materials supplied by CTV, for all of which CTV will bear all
responsibility, Blue Zone will be responsible for obtaining all rights and/or
permissions from any third party, if any, subject to approval by CTV which are
necessary for the development and use of the CTV Web Site, subject to the
restrictions set forth in this Agreement and in third party commercial software
licenses used by Blue Zone in developing and operating the CTV Web Site.(which
are subject to approval by CTV ) CTV shall pay all approved costs and expenses
associated with obtaining these rights and/or permissions within 45 days of
receiving Blue Zone's invoice for same.
(iii) CTV Acceptance of Content Model. As soon as is practical
after completion of the Specifications applicable to the intended content of the
CTV Web Site and delivery to Blue Zone by CTV of any and all content to be
supplied by CTV, Blue Zone will prepare and present to CTV prototypes or mockups
of the appearance and operation of the CTV Web Site and implementation and
presentation of the intended content (the "Content Model"). CTV will have ten
(10) business days after the date on
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which CTV receives from Blue Zone a copy of the proposed Content Model to accept
the Content Model, with such acceptance not to be unreasonably withheld or
delayed. Blue Zone will make itself available for questions and discussions of
the Content Model during this period. In the event that CTV rejects the Content
Model or any portion thereof, CTV will notify Blue Zone in writing, and will
specify its reasons for such rejection. CTV and Blue Zone will make itself
available for questions and discussions relating to CTV's rejection during this
period. If CTV rejects the Content Model, Blue Zone will have thirty (30)
business days, or such further time as, acting reasonably, it advises CTV is
necessary in light of CTV's reasons for rejection, in which to prepare and
submit a revised Content Model. In this case the provisions of this Section 2
will apply to such re-submission until such time as the Content Model is
accepted by CTV. In the event the parties cannot reach an agreement on a revised
Content Model, either party may terminate this Agreement with no further
liability on the part of either party, except for payments of amounts owed to
Blue Zone for services provided and costs and expenses incurred to that date.
(iv) Training. During the course of the Phase II development
process and prior to Final Acceptance, Blue Zone will commence training of
approximately 25 (subject to adjustment as the parties may agree) individuals,
who may, with CTV's approval, be CTV employees, in the requirements and
techniques of content production for the CTV Web Site.
(v) Personnel Funding/CTV Employees. During Phase II, CTV will
make available funding as specified on Schedule F, for approximately 25
individuals who will be engaged in content production and integration of CTV
Materials. Should Blue Zone and CTV agree that additional personnel will be
necessary, the parties shall agree on the appropriate number of personnel at
CTV's cost. At CTV's sole election, the personnel may be CTV personnel dedicated
to this project. CTV and Blue Zone will agree on the suitable technology,
graphic design, digital video, and/or management experience such employees must
have. CTV will indemnify and hold Blue Zone harmless for any acts or omissions
of CTV's employees whose services are provided in accordance with this provision
provided they are CTV employees. Blue Zone will indemnify and hold CTV harmless
for any acts or omissions of Blue Zone's employees whose services are provided
in accordance with this provision provided they are Blue Zone employees. Under
no circumstances will either party's employees bind the other party. CTV will
instruct any such CTV employees that Blue Zone has full authority to direct such
CTV employees with respect to the activities contemplated in Sections 2(b)(iv)
and (v). Either party will remove any one of its employees from such training
program at the reasonable request of the other party. CTV may replace any CTV
employee in such training program for any reason; provided, however, that CTV
agrees that Blue Zone will not be responsible for training more than a mutually
agreed number of replacement employees during the course of this Agreement
except upon the additional payment to Blue Zone of an agreed upon training fee
per CTV additional employee who Blue Zone trains pursuant to this Section
2(b)(v). To the extent that personnel requirements are met through the use of
CTV employees, CTV shall pay those employees directly and the payments CTV makes
to those employees shall be deducted from CTV's payment obligations under this
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paragraph. Blue Zone shall not be responsible for withholding or other required
payments with respect to CTV employees acting pursuant to this paragraph.
(vi) Technical Testing and Acceptance.
(1) Test Plan. Blue Zone will develop a test plan in
consultation with CTV for the purpose of unit testing,
integration testing and live environment testing of the CTV
Web Site and determining whether and when the CTV Web Site is
suitable for Completion Certification (the "Test Plan"). The
Test Plan will include procedures to be followed in conducting
actual online testing through Internet access prior to
publication of the address of the CTV Web Site or public
announcement of availability of the CTV Web Site and include
test scripts for each testing level which shall be designed by
the parties. The Test Plan will be subject to the prior
written approval of CTV, which approval will not be
unreasonably withheld or delayed.
(2) During the development phase Blue Zone will
periodically conduct preliminary testing in accordance with
the Test Plan, and will report the results of such completed
testing to CTV. The parties understand and agree that interim
or preliminary versions of the CTV Web Site may contain
Nonconformities which are not detected during preliminary
testing because of the limited nature of such testing,
including the facts that (a) a module or incomplete portion
may perform acceptably on its own, but fail to perform
acceptably when integrated with other elements of the CTV Web
Site or when operated in conjunction with hardware or other
software with which it is intended to operate, and (b)
preliminary testing does not include live environment testing
on real data. Once Blue Zone has completed work on the CTV Web
Site off-line, it will run the agreed upon Test Plan on-line
through Internet access prior to publication of the address of
the CTV Web Site or public announcement of availability of the
CTV Web Site and will provide the CTV Designated
Representative with the opportunity to view this testing. If
for ten (10) consecutive days or a for reasonable period of
time as the parties may agree (i) the completed CTV Web Site
reasonably appears to have the functionality and performance
as set forth in the Specifications; (ii) the completed CTV Web
Site reasonably appears to perform the functions described in
the Specifications in the manner described; (iii) the
completed CTV Web Site reasonably appears to be free from
material Nonconformities; and (iv) the completed CTV Web Site
reasonably appears to have no Nonconformities which cause
operational failure and/or premature termination of operation
of the CTV Web Site or any component thereof, CTV will issue a
Completion Certification. If the CTV Web Site does not pass
the Test Plan, CTV and Blue Zone will confer as to the reasons
and agree to a schedule for Blue Zone to correct any
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Nonconformities and resubmit the CTV Web Site for testing
under the Test Plan.
(3) Final Acceptance. Final Acceptance shall be
deemed to have occurred if CTV issues a Completion
Certification. In any event, should CTV commence live
commercial operation of the CTV Web Site, CTV will be deemed
to have finally accepted the CTV Web Site provided testing is
complete and successful in accordance with specifications.
(4) Preparation of Corrected Versions. During the
course of testing and through Final Acceptance, Blue Zone
will, to the extent practical, diligently prepare Corrected
Versions on a commercially reasonable basis on a timetable
taking into account the extent of any changes required to be
made by Blue Zone to prepare a Corrected Version.
(vii) Maintenance and Enhancement. Blue Zone will provide CTV
with the technical and formatting specifications which graphic and other content
submitted for inclusion in the Web Site must meet and will, pursuant to and
subject to the terms of the License granted in Section 5, provide employees
designated by CTV with access to Blue Zone input mechanisms for adding content
to the CTV Web Site and with Blue Zone methodologies for inputting, integrating
and modifying CTV content for the CTV Web Site. Such access is granted solely
for the purpose of permitting CTV employees to use said mechanisms and
methodologies to add CTV Material to or delete it from the CTV Web Site. All
such mechanisms and methodologies are Confidential Information. Only mutually
agreed upon CTV employees who have received appropriate training in the
techniques described in Sections 2(b)(iv) and (v) shall be given access to such
mechanisms and methodologies. Said employees may not reproduce, modify, divulge,
copy, reverse engineer, deal in or transfer Blue Zone's input, integration, or
modification mechanisms or methodologies, or use them other than as specified
herein, or permit others to do so.
(viii) Payment Schedule for Phase II. The total production fee
to be paid to Blue Zone by CTV for Phase 2 will be as specified on Schedule G,
to be paid by CTV as follows:
25% on execution of this Agreement
10% on acceptance by CTV of the Content Model
10% on delivery of the Specifications and Development
Plan
25% on delivery of the CTV Web site for testing on-line
according to the Test Plan
30% on issuance by CTV of the Completion Certification
and in no event later than August 31, 2000 provided
Blue Zone delivers the CTV Web Site for Completion
Certification on this said date, or as mutually
agreed.
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In addition, CTV will reimburse Blue Zone for all of its reasonable costs and
expenses associated with the development and creation of the CTV Web Site during
Phase II within 45 days after receiving Blue Zone's invoices for such approved
costs and expenses. Blue Zone will provide an estimate of such costs and
expenses as set forth in Schedule C and Schedule F hereto. The actual costs and
expenses may be higher or lower. In respect to the costs as set out in Schedule
C in this Phase II, Blue Zone agrees to provide to CTV a list of necessary
facilities, hardware and software in order to permit CTV an opportunity to
provide any of its own equipment and materials meeting these requirements to
reduce the costs for this Phase II. CTV agrees that any hardware it provides
will be dedicated to the CTV Web Site. Once the hardware is so located, Blue
Zone personnel shall have, unrestricted access to the hardware during the term
of this Agreement and any renewals of the Consulting Services Contract or
Contract for Management and Hosting of the CTV Web Site set forth in Sections 3
and 4 below. In the event that CTV hardware, software and/or facilities
(hereinafter "Materials")are located at Blue Zone's premises CTV shall have the
right , on notice, to attend the Blue Zone premises to perform technical
maintenance as it sees fit including, without limitation, the right to update
its Materials, replace its servers and Materials, and repair defects in its
hardware and Materials.
(ix) Modifications. If CTV requests any modifications to the
Specifications after agreement on the Specifications, CTV will first provide to
Blue Zone notice in writing setting out the particulars of the requested
modifications. Within fifteen (15) business days of receipt of CTV'S
modification notice, Blue Zone, acting reasonably, will notify CTV in writing of
Blue Zone's decision as to whether or not it is willing to perform the requested
modifications and will provide CTV an estimate of the costs and projected timing
to complete the specified modifications. In the event that Blue Zone is willing
to perform the requested modifications, Blue Zone will commence the requested
modifications only upon CTV's approval of Blue Zone's cost and timing estimate.
Blue Zone shall provide any upgrades to its software(as it becomes generally
available to its customers and provided same is within the reasonable parameters
of the Content Model) and shall install such upgrades provided CTV continues to
pay the annual Licence Fee.
Section 3. Consulting Services
(a) CTV hereby engages Blue Zone on an ongoing consulting basis for a
minimum one year term (subject to any early termination by CTV ) to perform
consulting services on a macro-level as described in Schedule D, relating to
developing long-term strategies for updating and enhancing the CTV Web Site. CTV
agrees to pay Blue Zone for these services a non-refundable consulting fee as
specified in Schedule G, plus disbursements as CTV approves, which approval will
not be unreasonably withheld (the "Consulting Fee"). The Consulting Fee will be
paid monthly in advance by way of twelve equal installments as specified in
Schedule G, except that the first payment shall include monthly payments
retroactive to October 1, 1999. The consulting services shall be performed for
CTV by Xxxxx Xxxxxx and /or Xxxxx Xxxxxxxx and Blue Zone shall use reasonable
best efforts to provide the consulting services on a priority basis to CTV. The
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consulting services will not include work performed relating to modifications,
as described in Paragraph 2(b)(ix).
(b) This Consulting Services provision will be automatically extended
at the end of the first one-year term on a month-to-month basis, and shall
automatically be renewed for successive periods of one month, unless either
party provides the other with at least sixty (60) days prior written notice of
non-renewal.
Section 4. Management and Hosting of the CTV Web Site
(a) CTV hereby engages Blue Zone to provide certain Web hosting
services to CTV described below, in Xxxxxxx, Xxxxxxx, or such other locations as
the parties may agree. CTV agrees to pay Blue Zone for these Web hosting
services commencing May 1, 2000, and continuing for the term of this Agreement,
at a rate to be agreed upon by the parties after determining the scope of the
required services. The rate to be paid will be Blue Zone's actual human
resources, material, and out-of-pocket costs incurred in performing the Web
hosting services, plus 20%.
(b) The Web hosting services provided by Blue Zone hereunder will not
include Internet connectivity from any network hubs or points of presence. CTV
will be solely responsible for obtaining the telecommunications infrastructure
necessary to operate the CTV Web Site. Before retaining any third parties to
perform services with respect to the telecommunications infrastructure, CTV
shall determine that they are mutually acceptable to Blue Zone.
(c) The Web hosting services provided by Blue Zone will not include any
conduct or review of chat rooms, message boards, or compilations of or responses
to e-mails. Should CTV wish to have a third party conduct these hosting
services, it shall notify Blue Zone in writing of the identity of such third
party and provide Blue Zone with contact information for such provider.
(d) The Web hosting services to be performed by Blue Zone will consist
solely of the maintenance and operation of the input and content integration and
modification mechanisms of the CTV Web Site and telephone support on a
twenty-four (24) hours per day, seven (7) days per week, including holidays
basis for inquiries and problem resolution encountered or required by CTV at its
locations. Blue Zone, using its commercially reasonable efforts, shall provide
these services continuously, twenty-four (24) hours per day, seven (7) days per
week, including holidays. Blue Zone will use its commercially reasonable efforts
to schedule and perform all hardware and software maintenance relating to these
mechanisms of the CTV Web Site during the hours of lowest historical usage in
the jurisdiction of the hosting environment. Blue Zone will use its commercially
reasonable efforts to maintain all equipment in good working order, will
maintain proper environmental conditions in the area(s) where such equipment is
located, and will also make and store archival backups with reasonable frequency
and store such archival backups in a secure, off site location suitable for
maintenance of such materials. In addition, CTV shall have audit rights to
ensure sufficient and proper archival back-ups.
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Blue Zone will use its commercially reasonable efforts to prevent unauthorized
access to the physical locations of the computer(s) on which the CTV Web Site is
established, and will use reasonable efforts to prevent unauthorized electronic
access to the CTV Web Site. Blue Zone will promptly notify CTV in the event of a
material breach (or known potential material breach) of the physical or
electronic security, or the operational integrity, of the CTV Web Site and will
promptly take all reasonable corrective steps. CTV will provide reasonable
cooperation with respect to such corrective steps.
(e) Operations Consistent with Internet Technical Standards. Blue Zone
covenants that it will perform its obligations with respect to the CTV Web Site
as described above in a manner consistent with any formal rules or formal
requirements established by InterNIC, the National Science Foundation, or any
other party whose authority to set such rules or requirements is either
established by applicable law or generally accepted within the Internet
community.
(f) Blue Zone assumes no control over, accepts no responsibility for,
and will not review the content, ownership, lawfulness, or accuracy of any
content passing to or posted on the CTV Web Site by CTV.
(g) Unless CTV or Blue Zone provide the other party with sixty (60)
days prior written notice of termination of the Web hosting and management
services under Section 4 hereof, such services will be automatically renewed for
successive periods of one year.
Section 5. Ownership and Rights
(a) CTV Rights. ****
(b) Right to Alter Web Site. Blue Zone agrees that while the License
granted hereunder remains in effect, CTV will have the unlimited right to vary,
change, alter, modify, add to or delete any content provided by CTV for the CTV
Web Site provided that all content meets the technical formatting and other
specifications provided by Blue Zone, and that if the License ceases to remain
in effect, CTV shall continue to have these rights but will no longer have the
right to use Blue Zone Intellectual Property to exercise them.
(c) Blue Zone Rights.
(1) CTV acknowledges and agrees the CTV Web Site will
include certain modules, routines, subroutines, programming
tools,
[****] 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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methods, know how, techniques, inputting and content
integration and modification mechanisms and methodologies and
other computer software other than Third-Party Commercial
Matter (as defined below), which were or will be created by
Blue Zone or other parties prior to, during and after the
commencement of work hereunder, and, that, in addition, Blue
Zone may prepare documentation relating to the immediately
foregoing items (collectively, the "Blue Zone Intellectual
Property"). Accordingly, as between CTV and Blue Zone, Blue
Zone will own all copyright, trade secret, trademark, patent,
and other proprietary right in and to the Blue Zone
Intellectual Property. CTV agrees that unless CTV terminates
this agreement for cause, Blue Zone shall have the world-wide
non-exclusive right to use, reproduce and analyze user/viewer
data which is processed, gathered or otherwise personalized by
Blue Zone in connection with the development and management by
Blue Zone of the CTV Web Site and to reproduce, market and
distribute such data and analyses thereof as permitted by law,
in compiled or uncompiled form, provided, however, that Blue
Zone shall not disclose, transfer, license or sell said data
or analyses (whether in compiled or uncompiled form) to any
other Canadian Television Company. If Blue Zone wishes to
offer said data or analyses in connection with an existing or
potential CTV-specific advertising opportunity, it shall
coordinate its efforts with CTV.
(2) CTV further agrees that Blue Zone is and will be
the owner, with no rights therein of any kind whatsoever in
favor of CTV, of all Blue Zone Intellectual Property including
software, documentation, copyrights, trademarks (other than
any CTV trademark, copyright or patent), back-end trade dress
rights, patents, trade secrets, methods, know how, formatting
methodologies, inputting and content integration and
modification mechanisms and methodologies, techniques, and
other intellectual property rights relating to the CTV Web
Site throughout the universe in all languages and in all media
and forms of expression and communication now known.
(3) Blue Zone Advertising on the CTV Web Site. CTV
agrees that Blue Zone will have the right at no charge to
place video advertising of Blue Zone's services on the CTV Web
Site at locations mutually agreed upon by the parties.
Additionally, Blue Zone will have the right at no charge to
place Blue Zone's trademarks or other identity designator as
an interactive graphic on the CTV Web Site with a hyperlink to
Blue Zone's own Web Site, and to place the Blue Zone name and
other indicators of identity on each page of the CTV Web Site
in a manner agreed to by CTV.
(d) License to CTV.
(1) In exchange for the annual fee specified in Schedule G, Blue Zone
grants CTV a non-exclusive, non-transferable worldwide License to use the Blue
Zone
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Intellectual Property (to the extent permitted under any license between
Blue Zone and a third party), but only (i) to process, input, integrate, modify
and display news content as an integrated part of the CTV Web Site. This License
may not be sublicensed or transferred to others or used or exploited by or on
behalf of others. CTV agrees that it does not have any right to reproduce,
modify, reverse engineer, transfer or distribute the Blue Zone Intellectual
Property, or to permit any other party to do so, and further agrees that it
shall have no rights with respects to such Blue Zone Intellectual Property other
than those specified in this paragraph 5(b) and (d)(1). Should CTV wish to
obtain additional licenses to use Blue Zone Intellectual Property for content
other than news, it may do so, provided that it is not in breach of this
Agreement, at the rates specified on Schedule E. There shall be no additional
Licenses or License fees required for local news, so long as CTV's local news
content becomes incorporated as part of the CTV Web Site. This License shall
automatically terminate if Blue Zone terminates this agreement for cause or if
CTV ceases to engage and pay Blue Zone for hosting and Licensing the
Intellectual Property for the CTV Web Site. CTV shall have the exclusive right
to terminate the License on sixty (60) days written notice to Blue Zone.
(2) During the period of the License, CTV shall use
Blue Zone's xxxx NewsBz(TM), or such other trademark as Blue
Zone specifies in writing, in the manner agreed to between CTV
and Blue Zone on the CTV Web Site and in promotional materials
relating to the CTV Web Site. Upon termination of this License
for any reason, CTV will not be entitled to use or display the
NewsBz(TM) or other Blue Zone trademarks or indicators of
identity on or in promotional material about the CTV Web Site.
(3) In the event that CTV terminates or does not
renew Blue Zone's Web hosting services under Sections 4, the
License under Section 5(d)(2) will immediately terminate on
the termination date or renewal date, as the case may be. In
that event, CTV will be entitled to continue to exercise all
rights of ownership of the CTV Web Site and over CTV Material
that has been prepared for display or is displayed on the CTV
Web Site using the Blue Zone Intellectual Property, but will
not be entitled to continue to access or use Blue Zone
Intellectual Property from that date forward.
(e) Third-Party Commercial Matter. CTV acknowledges and agrees that the
CTV Web Site may include certain software code, devices and other matter from
commercially available computer software products (collectively the "Third-Party
Commercial Matter") and that nothing in this Agreement conveys ownership of the
Third-Party Commercial Matter to CTV.
(f) Discussion of Relationship. Upon execution of this Agreement, Blue
Zone may refer to CTV as client of Blue Zone. After Final Acceptance, Blue Zone
may include a link of CTV's Web Site on Blue Zone's Web Site. If Blue Zone or
CTV receive press
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inquiries about Blue Zone's work for CTV, the parties may respond but will each
advise the other of the inquiry.
(g) Ownership of CTV Materials. As between CTV and Blue Zone, all
right, title and interest in and to, and ownership of the CTV Materials will
remain at all times exclusively in CTV, and Blue Zone will not acquire any
right, title or interest therein.
(h) Domain Names. As between CTV and Blue Zone, all right, title and
interest in and to, and ownership of the domain name "xxxxxxx.xxx" will remain
at all times exclusively in CTV.
Section 6. Indemnification
(a) Indemnification by CTV. CTV will indemnify and hold harmless Blue
Zone Productions, Ltd. and/or each of their directors, officers, agents,
employees, advisers and representatives from and against any losses, expenses,
claims, damages or liabilities of whatever nature, joint or several, including
reasonable costs of investigation and reasonable legal fees and expenses which
said directors, officers, agents, employees, advisers and representatives incur,
whether directly or as a result of claims by third parties, which arise out of
or are based upon:
(i) any representation or warranty of CTV made herein not
having been materially true, complete and accurate when made; and
(ii) any covenant made herein by CTV (whether in Section 12 or
elsewhere in this Agreement) not having been complied with.
CTV's obligations to indemnify for Blue Zone Productions,
Ltd's losses under this Agreement will accrue up to a maximum of CAN$Three (3)
million; provided, further, that the foregoing limitations will not apply in
respect of any payment default by CTV.
(b) Indemnification by Blue Zone. Blue Zone will indemnify and
hold harmless CTV and each of its directors, officers, agents, employees,
advisers, representatives from and against any losses, expenses, claims, damages
or liabilities, joint or several, including reasonable costs of investigation
and reasonable legal fees and expenses of legal counsel which CTV and/or each of
its directors, officers, employees, advisers and representatives incur, whether
directly or as a result of claims by third parties, which arise out of or are
based upon:
(i) any representation or warranty of Blue Zone made herein
not having been materially true, complete and accurate when made; and
(ii) any covenant made herein by Blue Zone (whether in Section
12 or elsewhere in this Agreement) not having been complied with.
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Blue Zone's obligations to indemnify CTV for losses under this
Agreement will accrue up to a maximum liability of the Blue Zone of CAN$ Three
(3) million.
(c) Indemnification Procedure. In the case of any claim asserted by a
third party against a party entitled to indemnification under this Agreement
(the "Indemnified Party"), written notice will be given by the Indemnified Party
to the indemnifying party (the "Indemnitor") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be sought, and
the Indemnified Party will permit the Indemnitor (at Indemnitor's expense) to
assume the defense of any claim or any litigation resulting therefrom, provided
that (i) the counsel for the Indemnitor who will conduct the defense of such
claim or litigation will be reasonably satisfactory to the Indemnified Party,
(ii) the Indemnified Party may participate in such defense at such Indemnified
Party's own expense, and (iii) the omission by any Indemnified Party to give
written notice as provided herein will not relieve the Indemnitor of its
indemnification obligation under this Agreement except to the extent that such
omission results in a failure of actual notice to the Indemnitor and the
Indemnitor is prejudiced as a result of such failure to give notice. Except with
the prior written consent of the Indemnified Party, the Indemnitor, in the
defense of any such claim or litigation, will not consent to entry of any
judgment or order, interim or otherwise, or enter into any settlement that
provides for injunctive or other nonmonetary relief affecting the Indemnified
Party or that does not include as an unconditional term thereof the giving by
each claimant or plaintiff to such Indemnified Party of a release from all
liability with respect to such claim or litigation. In the event that the
Indemnified Party in good faith determines that the conduct of the defense of
any claim subject to indemnification hereunder or any proposed settlement of any
such claim by the Indemnitor might be expected to affect adversely the
Indemnified Party's tax liability or the ability of the Indemnified Party or any
of its subsidiaries to conduct its business, or that the Indemnified Party may
have available to it one or more defenses or counterclaims that are inconsistent
with one or more of those that may be available to the Indemnitor in respect of
such claim or any litigation relating thereto, the Indemnified Party will have
the right at all times to take over and assume control over the defense,
settlement, negotiations or litigation relating to any such claim at the sole
cost of the Indemnified Party, provided that if the Indemnified Party does so
take over and assume control, the Indemnified Party will not settle such claim
or litigation without the written consent of the Indemnitor, such consent not to
be unreasonably withheld. In the event that the Indemnitor does not accept the
defense of any matter as above provided, the Indemnified Party will have the
full right to defend against any such claim or demand and will be entitled to
settle or agree to pay in full such claim or demand. Notwithstanding the
foregoing, the Indemnitor will still be obliged to provide indemnification to
the Indemnified Party. In any event, the Indemnitor and the Indemnified Party
will cooperate in the defense of any claim or litigation subject to this Section
and the records of each will be available to the other with respect to such
defense.
(d) Claims of Infringement. In the event that the claim for which
indemnification is sought is a claim that the Indemnified Party has, by reason
of the actions of the Indemnitor, infringed or violated the intellectual
property rights of a third party, the Indemnitor may, at its option, and at its
own expense, (1) procure for the Indemnitee the
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right to continue using the allegedly infringing intellectual property, (2)
replace or modify the allegedly infringing intellectual property in response to
the infringement claims, provided the third party acknowledges in writing that
the intellectual property, as modified, no longer infringes on the third-party
intellectual property, or (3) remove the allegedly infringing intellectual
property from the CTV Web Site and provide the Indemnified Party with a
commercially reasonable substitute of substantially similar functionality. In
the event that Indemnitor elects to take the measures set forth in paragraphs
6(d)(1), (2), or (3), and pays the amount it was otherwise obliged to pay under
this paragraph prior to taking these corrective measures, Indemnitor will have
fully discharged its indemnification obligation with respect to that specific
claim. Alternatively, the Indemnitor may litigate the claim to secure a
determination of non-infringement.
(e) Survival of Obligations. The obligations of the parties under
this Section 6 will survive the expiry or termination of this Agreement.
(f) Further Limitations on Liability.
(1) NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED
HEREIN, EXCEPT AS EXPRESSLY PROVIDED, NEITHER PARTY
WILL, UNDER ANY CIRCUMSTANCES, BE LIABLE TO THE OTHER
PARTY OR INDEMNIFY THE OTHER PARTY FOR THIRD PARTY
CLAIMS FOR CONSEQUENTIAL, INCIDENTAL, OR SPECIAL
DAMAGES, INCLUDING BUT NOT LIMITED TO LOST PROFITS,
EVEN IF SUCH PARTY HAS BEEN APPRISED OF THE
LIKELIHOOD OF SUCH DAMAGES OCCURRING EXCEPT FOR GROSS
NEGLIGENCE OR WILFUL MISCONDUCT OF BLUE ZONE OR THOSE
FOR WHOM IT IS LEGALLY RESPONSIBLE FOR.
(2) SAVE AS PROVIDED HEREIN, BLUE ZONE DISCLAIMS ALL
EXPRESS OR IMPLIED WARRANTIES, REPRESENTATIONS OR
CONDITIONS, INCLUDING, WITHOUT LIMITATION, THE
IMPLIED WARRANTIES OF MERCHANTABILITY, MERCHANTABLE
QUALITY AND FITNESS FOR A PARTICULAR PURPOSE, WITH
RESPECT TO ANY PRODUCTS AND THE SERVICES DELIVERED
HEREUNDER.
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Section 7. Exclusivity; Option to Expand Relationship
(a) During the term of this Agreement, or, if the Agreement terminates
for any reason, until the effective date of termination, Blue Zone will not
provide Web Site production or interactive television development services or
intellectual property relating to news to any other Canadian Television Company,
and CTV will not use the services of others to develop or maintain Web Site or
interactive television services or intellectual property relating to news other
than to create content and graphic materials for display on the CTV Web Site.
CTV acknowledges that Blue Zone has existing relationships and is engaged in
ongoing activities with WIC Premium Television, which includes Superchannel,
MovieMax!, and Viewer's Choice; with the following radio broadcasters: CKNW and
Rock 101 (CFMI). Blue Zone acknowledges that CTV has existing local station web
sites at some of it's local stations. Both CTV and Blue Zone do not deem these
activities to be in violation of this Section 7.
(b) The parties agree that for six (6) months after the Effective Date,
CTV shall not solicit the services of third parties to develop or maintain Web
site or interactive television services and Blue Zone shall not affirmatively
offer Web site development or maintenance or interactive television services to
any other Canadian Television Company, excluding non-competitive specialty
channels, including, but not-limited to YTV, and music stations.
(c) In the event that at any time within six (6) months of the
Effective Date, Blue Zone desires to develop an interactive television Web site
for a third party Canadian Television Company relating to a subject matter other
than news (the "Proposed Web Site") pursuant to a bona fide offer from such
third party Canadian Television Company (together, with, in the case of CTV,
bona fide offers from third parties to CTV as described in Paragraph (d) below,
the "Proposal"), Blue Zone shall submit a written offer to CTV (the "Blue Zone
Offer") to develop such Proposed Web Site exclusively for CTV on terms and
conditions, including total consideration, not less favorable to CTV than those
on which Blue Zone proposes to develop the Proposed Web Site for such third
party Canadian Television Company under the Proposal. The Blue Zone Offer shall
disclose the identity of the third party Canadian Television Company, the terms
and conditions, including the total consideration, of the Proposal, and any
other material facts relating to the Proposal. CTV agrees to treat all such
information submitted to it by Blue Zone as Confidential Information. The Blue
Zone Offer shall further state that CTV may acquire the right to have Blue Zone
develop the Proposed Web Site exclusively for CTV for the price, and upon the
terms and conditions, set forth therein. The annual license fee component
associated with each new Proposed Web Site shall be as set forth in Schedule E.
If CTV desires to acquire such right, CTV shall communicate in writing its
election to do so within thirty (30) days of the date on which the Blue Zone
Offer was made. Such communication shall, when taken in conjunction with the
Blue Zone Offer, be deemed to constitute a valid, legally binding and
enforceable agreement for the development by Blue Zone of the Proposed Web Site
for CTV. If CTV does not elect to enter into an agreement with Blue Zone for the
development of the Proposed Web Site, Blue Zone at any time thereafter may enter
into an agreement with the third party Canadian Television Company regarding the
development of Proposed Web Site.
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(d) In the event that at any time within six (6) months of the
Effective Date, CTV desires to engage a third party other than Blue Zone to
develop a Proposed Web Site pursuant to a Proposal, CTV shall submit a written
offer to Blue Zone (the "CTV Offer") to engage Blue Zone to develop such
Proposed Web Site exclusively for CTV on terms and conditions, including total
consideration not less favorable to Blue Zone than those on which CTV proposes
to have such third party develop the Proposed Web Site for CTV. The CTV Offer
shall disclose the identity of the third party, the terms and conditions,
including the total consideration, of the Proposal, and any other material facts
relating to the Proposal. Blue Zone agrees to treat all such information
submitted to it by Blue Zone as Confidential Information. The CTV Offer shall
further state that Blue Zone may acquire the right to have CTV engage Blue Zone
to develop the Proposed Web Site for the price, and upon the terms and
conditions, set forth therein. If Blue Zone desires to acquire such right, Blue
Zone shall communicate in writing its election to do so within thirty (30) days
of the date on which the CTV Offer was made. Such communication shall, when
taken in conjunction with the CTV Offer, be deemed to constitute a valid,
legally binding and enforceable agreement for the development by Blue Zone of
the Proposed Web Site for CTV. If Blue Zone does not elect to enter into an
agreement with CTV for the development of the Proposed Web Site, CTV at any time
thereafter may enter an agreement with a third party regarding the development
of the Proposed Web Site.
Section 8. Credit Clause
CTV's Web Site and all on-air, online and print
promotions/advertising of the CTV Web Site will contain Blue Zone's NewsBz(TM)
trademark or such other trademark as Blue Zone may specify in the style and
manner specified by Blue Zone where CTV, acting reasonably, determine that use
of said trademark is appropriate.
Section 9. Compensation
(a) All monies are stated in this Agreement in Canadian dollars.
However, payment will be in dollars at the United States dollar equivalent of
Canadian funds at the most favourable commercially available rate of exchange,
as determined by CTV's Canadian Chartered Bank, on the date the payment is
made.
(b) Expenses -- CTV will reimburse Blue Zone for all of Blue Zone's
pre-approved reasonable costs and expenses arising from its performance of its
obligations under this Agreement within forty-five days of receiving invoices
from Blue Zone for such costs and expenses.
(d) Records and Audit -- Blue Zone will maintain accounting records to
substantiate Blue Zone's charges on each invoice. Blue Zone will preserve such
records for a period of one year after completion of the pertinent work. CTV
will have access to such records at the offices of Blue Zone or other site
designated by Blue Zone for purposes of audit, either through its own
representatives or through an accounting firm selected and
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paid by CTV. Any such review of Blue Zone's records will be conducted at
reasonable times during business hours upon at least three (3) business days'
notice.
Section 10. Confidentiality
(a) Confidential Information. For purposes of this Agreement,
"Confidential Information" will mean any information or material which offers a
competitive advantage to the disclosing party, is not generally known other than
by the disclosing party, and is the subject of reasonable precautions by the
disclosing party to maintain secrecy. Confidential Information also includes any
information which the disclosing party obtains from any third party which the
disclosing party treats as Confidential Information or designates in writing as
Confidential Information, whether or not owned by the disclosing party. To the
extent practical, the disclosing party shall designate Confidential Information
as such in writing. "Confidential Information" does not include the following:
(i) information which is known by the receiving party at the time of disclosure
by the disclosing party which is not subject to any other non-disclosure
agreement between the parties; (ii) information which is now, or which hereafter
becomes, generally known to the industry through no fault of the receiving
party, or which is later published or generally disclosed to the public by the
disclosing party or others not under a duty of confidentiality to the disclosing
party; or (iii) information which is otherwise lawfully developed by the
receiving party, or lawfully acquired from a third party without any obligation
of confidentiality.
(b) Non-Disclosure. The receiving party agrees to hold in confidence
and not to disclose or reveal to any person or entity any Confidential
Information disclosed hereunder without the express prior written consent of a
duly authorized representative of the disclosing party. The receiving party
further agrees not to use or disclose any of the Confidential Information for
any purpose at any time, other than for the limited purpose(s) of this
Agreement. Each representative of the receiving party who is given access to
Confidential Information will execute an agreement to be bound by these
obligations. In the event that either party is subpoenaed or otherwise directed
to disclose any portion of any Confidential Information of the other party or
any other materials proprietary to the other party in conjunction with a
judicial proceeding or arbitration, the party so directed will immediately
notify the other party both orally and in writing. Each party agrees to provide
the other with reasonable cooperation and assistance in obtaining a suitable
protective order and in taking any other reasonable steps to preserve
confidentiality.
(c) Published Reports. Without limiting the generality of the
foregoing, the parties specifically agree that any reports concerning
Confidential Information which are not made or authorized by the disclosing
party and which appear in any publication shall not release the receiving party
from its obligations hereunder with respect to such Confidential Information.
Section 11. Representations and Warranties
(a) CTV represents and warrants to Blue Zone the following:
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(i) Creation. CTV is a duly created corporation, validly
existing, duly registered and in good standing pursuant to the laws of Canada.
(ii) Authority. CTV has full corporate authority and capacity
to enter into this Agreement and perform its obligations hereunder and
consummate the transactions contemplated hereby, pursuant to the terms and
conditions established herein
(iii) Binding Obligation. This Agreement constitutes a
binding, valid and legal obligation of CTV and is enforceable against it
pursuant to its terms except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency, moratorium, and other laws relating to or
affecting creditors' rights generally or by equitable principles.
(iv) No Violation.CTV is not subject to or bound by any
provisions of:
(1) any law, statute, rule, regulation or judicial or
administrative decision,
(2) any articles or certificate of incorporation or
bylaws,
(3) any mortgage, deed of trust, lease, note,
shareholders' agreement, bond, trust, indenture, other
instrument or agreement, license, permit, trust, custodianship
or restriction, or
(4) any judgment, order, writ, injunction or decree
of any court, governmental body, administrative agency or
arbitrator,
that would prevent or be violated by or that would result in creation of any
encumbrances or order which there would be a default as a result of, the
execution, delivery and performance by CTV of this Agreement and the
consummation of the transaction contemplated hereby.
(v) Consents. No consent, approval, or authorization or
declaration or filing with any individual, corporation, trust or any government
or agency or political subdivision thereof is required for the valid execution,
delivery and performance by CTV of this Agreement and the consummation of the
transactions contemplated hereby.
(vi) Year 2000. CTV represents and warrants to use its
reasonable efforts to ensure that any computer equipment, hardware or software
supplied and delivered by it under this Agreement will be Year 2000 compliant.
(vii) Non-Infringement. To the best of CTV's knowledge and
belief, the content, software and hardware, as well as the CTV Materials, to be
provided by CTV do not violate any existing intellectual property or privacy
rights of any third party, and are
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not libelous or slanderous, and CTV has received no reasonable notice or claim
of infringement.
(b) Blue Zone represents and warrants to CTV the following:
(i) Creation. Blue Zone is a duly created corporation, validly
existing, duly registered and in good standing pursuant to the laws of Bermuda.
(ii) Authority. Blue Zone has full corporate authority and
capacity to enter into this Agreement and perform its obligations hereunder and
consummate the transactions contemplated hereby, pursuant to the terms and
conditions established herein. Prior to Blue Zone's execution of this Agreement,
the Board of Directors of Blue Zone will approve this Agreement, pursuant to the
terms and conditions hereof.
(iii) Binding Obligation. This Agreement constitutes a
binding, valid and legal obligation of Blue Zone and is enforceable against it
pursuant to its terms except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency, moratorium, and other laws relating to or
affecting creditors' rights generally or by equitable principles.
(iv) No Violation. Blue Zone is not subject to or bound by any
provisions of:
(1) any law, statute, rule, regulation or judicial or
administrative decision,
(2) any articles or certificate of incorporation or
bylaws,
(3) any mortgage, deed of trust, lease, note,
shareholders' agreement, bond, trust, indenture, other
instrument or agreement, license, permit, trust, custodianship
or restriction, or
(4) any judgment, order, writ, injunction or decree
of any court, governmental body, administrative agency or
arbitrator,
that would prevent or be violated by or that would result in creation of any
encumbrances or order which there would be a default as a result of, the
execution, delivery and performance by Blue Zone of this Agreement and the
consummation of the transaction contemplated hereby.
(v) Consents. No consent, approval, or authorization or
declaration or filing with any individual, corporation, trust or any government
or agency or political subdivision thereof is required for the valid execution,
delivery and performance by Blue Zone of this Agreement and the consummation of
the transactions contemplated hereby.
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(vi) Year 2000. Blue Zone represents and warrants to use its
reasonable efforts to ensure that any computer equipment, hardware or software
supplied and delivered by it under this Agreement will be Year 2000 compliant.
(vii) Non-Infringement. To the best of Blue Zone's knowledge
and belief, the Blue Zone Intellectual Property and CTV Web Site to be designed
and developed by Blue Zone do not violate any existing intellectual property
rights of any third party, and Blue Zone has received no reasonable notice or
claim of infringement. The foregoing representation does not apply to the CTV
Materials or content supplied by CTV. In the event of an infringement herein,
Section 6(d) shall apply. In the further event that Blue Zone cannot rectify the
infringement by use of the remedies as contained in Section 6(d), then CTV shall
be entitled and Blue Zone shall refund the payments made pursuant to Section 2
(b) (viii) and Section 4(a) on a depreciated basis of twenty per cent (20%) per
year calculated daily to commence on the date of the first installment payment
as contained in Section 2(b) (viii). A non rectified infringement herein shall
be considered as an automatic termination as contained in section 13(c).
Section 12. Covenants.
(a) Covenants of Blue Zone.
(i) Employment Agreements. Blue Zone will enter into
agreements with Blue Zone Entertainment Inc. to obtain the services of Xxxxx
Xxxxxx and Xxxxx Xxxxxxxx and other Blue Zone employees trained by them and
acting under their supervision and control to perform the material obligations
of Blue Zone hereunder.
(ii) Most Favored Nations Provision. Blue Zone hereby agrees
that the terms for the License of the Blue Zone Intellectual Property to CTV
hereunder will be at least as favorable as those offered to other customers of
Blue Zone for a License in respect of Blue Zone Intellectual Property in
connection with the development by Blue Zone of a Web site relating to news, and
in the event Blue Zone enters into more favorable pricing, the pricing under
this Agreement will be immediately modified, as appropriate.
(b) Covenants of CTV.
(i) CTV will undertake all necessary measures, including,
those required under any license or other agreements to which CTV may be a
party, to provide Blue Zone with direct and unfettered access at Blue Zone's
facilities throughout the term of this Agreement to the video, text and
graphical content in digital or hard copy format which Blue Zone determines is
necessary to enable Blue Zone to encode and digitize the CTV content for the CTV
Web Site. CTV acknowledges that its failure to obtain such consents and provide
such access will delay or jeopardize completion of the CTV Web Site.
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(ii) CTV will within three (3) business days of the date
hereof appoint a single designated representative (the "CTV Designated
Representative") who will act as the signing authority for approving all matters
requiring action by CTV during the Term. This CTV Designated Representative will
act as the sole and exclusive representative for the full course of the Term,
until his or her successor or substitute is appointed in writing by CTV. All
approvals by the CTV Designated Representative will be binding on CTV.
Section 13. Term and Termination
(a) Term and Termination. This Agreement will become effective on the
date hereof and will continue until December 31, 2001, unless earlier terminated
in accordance with this Section 13 (the "Term"). Except as expressly set forth,
this Agreement may not be terminated by either party except in accordance with
this Section 13.
(b) Termination for Cause. Either party may terminate this Agreement at
any time effective upon written notice of termination to the other party in the
event that such other party fails to perform any of its material obligations
hereunder and such failure continues unremedied, after written notice of such
failure from the party alleging such failure, for a period of ten (10) days in
the case of any payment default or for a period of sixty (60) days in the case
of any other default hereunder. Such termination shall not relieve the party
initiating the termination from any payment obligations it had as of the date of
termination. In the event of a termination for cause as herein, the
non-defaulting party shall receive a complete refund of the payments made by it
under this Agreement or to be made to it under this Agreement depreciated on
annual basis of twenty percent (20%) calculated daily to commence on the date of
the first installment made pursuant to section 2 (b) (viii).
(c) Automatic Termination. This Agreement will terminate automatically,
with no further act or action of either party required for such termination to
be effective, if a receiver is appointed for either party or its property,
either party makes an assignment for the benefit of its creditors, any
proceedings are commenced by, for or against either party under any bankruptcy,
insolvency or debtor's relief law, or either party is liquidated or dissolved or
Blue Zone sells its assets out of the ordinary course of business or sells its
shares that effects a change of control of Blue Zone or Xxxxx Xxxxxxx and Xxxxx
Xxxxxx are no longer principles, employees or associated with Blue Zone, Blue
Zone Entertainment Ltd. or their successors. In this event CTV shall be free to
terminate this Agreement, retrieve its hardware at the Web Presence hosting
site, select a new Web Presence host and support and modify the Web Presence as
it sees fit. The parties shall agree upon a source code escrow agreement which
will govern access to source code in the event of Automatic Termination.
(d) Termination by CTV. CTV may terminate this Agreement without cause
upon sixty days written notice to Blue Zone. In the event that CTV terminates
this Agreement without cause, the License granted to CTV shall terminate, and
Blue Zone will be entitled to receive all payments owed under all of the
sections included in this Agreement up through the date of termination and CTV's
obligation to pay Blue Zone
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pursuant to Section 4 above will continue, (without duplication), during the
first year of this Agreement, for an additional twelve (12) months following the
effective date of such termination, or, in the second year of this Agreement,
for an additional six (6) months following the effective date of such
termination.
(e) Return of Property. In the event that this Agreement terminates for
any reason, the parties will return to each other any property in their
possession belonging to the other and will, at the disclosing party's option,
return or destroy any Confidential Information of the other.
(f) Survival. The obligations set forth in Sections 2(b)(ii)(iv), (v)
(vii) and (ix), 5, 6, 10, 11(a)(vii), 11(b)(vii) and 13 will survive the expiry,
termination by CTV and automatic termination of this Agreement for any reason
whatsoever. In the event Blue Zone terminates this Agreement for cause, all the
above-mentioned sections shall survive save and except Sections 2 and 5.
Section 14. Reports and Visits
(a) Site Visits. Blue Zone will, from time to time and upon reasonable
prior notice, allow representatives of CTV access to the portions of its
premises where it is conducting work or performing services for purposes of
project review and discussions between CTV and Blue Zone's management and
personnel concerning the status and conduct of work being performed hereunder.
Section 15. Miscellaneous
(a) Force Majeure. Either party will be excused from delays in
performing or from its failure to perform hereunder to the extent that such
delays or failures result from an "Act of God" beyond the control of such party,
except for approved money payment obligations which have arisen or arise
hereunder. The party whose performance is claimed to be suspended by an act of
force majeure shall notify the other party of the event and circumstances.
(b) No Agency. Blue Zone, in rendering performance under this
Agreement, is acting and will act solely as an independent contractor. CTV does
not undertake by this Agreement or otherwise to perform any obligation of Blue
Zone, whether by regulation or contract. In no way is Blue Zone to be construed
as the agent or to be acting as the agent of CTV in any respect, any other
provisions of this Agreement notwithstanding.
(c) Authority To Enter Into Agreement. The parties and their
representatives signing this Agreement hereby acknowledge and represent that the
representatives signing this Agreement are duly authorized agents of the parties
hereto and are authorized and have full authority to enter into this Agreement
on behalf of the parties for whom they are signing.
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(d) Section Headings; Exhibits and Schedules. The section and
subsection headings used herein are for reference and convenience only, and will
not enter into the interpretation hereof. The exhibits and schedules referred to
herein and attached hereto, or to be attached hereto, are incorporated herein to
the same extent as if set forth in full herein.
(e) No Waiver. No delay or omission by either party hereto to exercise
any right or power occurring upon any noncompliance or default by the other
party with respect to any of the terms of this Agreement will impair any such
right or power or be construed to be a waiver thereof. The terms and conditions
of this Agreement may be waived or amended only in writing and only by the party
that is entitled to the benefits of the term(s) or condition(s) being waived or
amended. A waiver by either of the parties hereto of any of the covenants,
conditions, or agreements to be performed by the other will not be construed to
be a waiver of any succeeding breach thereof or of any covenant, condition, or
agreement herein contained (whether or not the provision is similar). Unless
stated otherwise, all remedies provided for in this Agreement will be cumulative
and in addition to and not in lieu of any other remedies available to either
party at law, in equity, or otherwise.
(f) Governing Law/Consent to Jurisdiction and Venue. This Agreement
will be governed by and construed in accordance with the laws of the Province of
Ontario, without reference to the choice of law provisions thereof. All aspects
of all actions brought relating to the subject matter of this Agreement will be
governed by Province of Ontario law, without reference to the choice of law
provisions thereof. The parties hereto hereby consent to the exclusive
jurisdiction and venue of the courts for Toronto Region, Province of Ontario for
any action that may be brought in connection with this Agreement other than a
cross-claim for indemnification brought in response to a claim filed by a third
party in another court.
(g) Entire Agreement. Each party to this Agreement acknowledges that
this Agreement constitutes the entire Agreement of the parties with regard to
the subject matters addressed in this Agreement, that this Agreement supersedes
all prior or contemporaneous agreements, discussions, or representations,
whether oral or written, with respect to the subject matter of this Agreement,
and that this Agreement cannot be varied, amended, changed, waived, or
discharged except by a writing signed by all parties hereto. Except as provided
herein, each party to this Agreement further acknowledges that no promises,
representations, inducements, agreements, or warranties, other than those set
forth herein, have been made to induce the execution of this Agreement by said
party, and each party acknowledges that it has not executed this Agreement in
reliance on any promise, representation, inducement, or warranty not contained
herein.
(h) Neutral Construction. The parties to this Agreement agree that this
Agreement was negotiated fairly between them at arm's length and that the final
terms of this Agreement are the product of the parties' negotiations. Each party
warrants and represents that it has sought and received legal counsel of its own
choosing with regard to the contents of this Agreement and the rights and
obligations affected hereby. The parties
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CONFIDENTIAL
agree that this Agreement will be deemed to have been jointly and equally
drafted by them, and that the provisions of this Agreement therefore should not
be construed against a party or parties on the grounds that the party or parties
drafted or was more responsible for drafting the provision(s).
(i) No Third Party Beneficiaries. This Agreement is intended solely for
and inures to the benefit of the parties. No third party will have the right to
make any claim or assert any right under it, and no third party will be deemed a
beneficiary of this Agreement, except as expressly provided herein.
(j) Unenforceability. If any provision of this Agreement or any word,
phrase, clause, sentence, or other portion thereof should be held to be
unenforceable or invalid for any reason, then provided that the essential
consideration for entering into this Agreement on the part of any party is not
unreasonably impaired, such provision or portion thereof will be modified or
deleted in such manner as to render this Agreement as modified legal and
enforceable to the maximum extent permitted under applicable laws.
(k) Assignment. Blue Zone will not, without the prior written
permission of CTV, assign, transfer, subcontract, or sublicense this Agreement
or any obligation hereunder to any third party other than an affiliate partially
owned or controlled by Blue Zone. CTV may not, without the prior written consent
of Blue Zone, assign CTV's performance under this Agreement to a third party.
Except as otherwise provided herein, each party shall have the right to assign
or transfer this Agreement and its rights hereunder to any person into which
that party may be merged or consolidated or which purchases all or substantially
all of the assets of that party; provided, however, that (x) such transferee
agrees to be bound by the terms of this Agreement and (y) any such assignment or
transfer shall not relieve that party from any liability or obligation under
this Agreement, and (z) the provisions of 5(d) remain limited to the CTV Web
site only as defined in this Agreement.
(l) Notices All notices, petitions, demands for performances and other
communications pursuant to this Agreement will be in writing and in the
following way due:
To Blue Zone:
Blue Zone Productions Ltd.
Xxxx House
00 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx
Xxxxxxxxx: [_______________]
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with a copy to:
Blue Zone Entertainment
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX
Xxxxxx, X0X 0X0
Attention: Xxxxx Xxxxxx
Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
E-mail: xxxxx@xxxxxxxx.xxx
and a copy to:
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx, 00000-0000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Xxxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To CTV:
CTV Inc.
X.X. Xxx 0, Xxxxxxx X
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxx Xxxxx
Vice President, Strategic Planning and
Business Development
Telephone:
Facsimile:
E-mail: xxxxxx@xxx.xx
with a copy to:
Xxxxxxx Xxxxx, Esq.
CTV Inc.
X.X. Xxx 0, Xxxxxxx X
Xxxxxxx, Xxxxxxx X0X 0X0
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
E-mail: xxxxxx@xxx.xx
(m) Schedules. The Schedules hereto are deemed to be incorporated
herein.
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CONFIDENTIAL
IN WITNESS WHEREOF, CTV and Blue Zone have caused this Agreement to be
signed and delivered by their duly authorized agents, all as of the date of this
Agreement herein.
BLUE ZONE PRODUCTIONS LTD.
By: /s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx
Director
CTV TELEVISION INC.
By: /s/ Xxxxx Xxxxx
Xxxxx Xxxxx
Vice President, Strategic Planning
and Business Development
By /s/ Xxxxx Xxxxxxxxxx
Xxxxx Xxxxxxxxxx
Executive Vice President
and Chief Financial Officer
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Schedule A
Phase I Development of Specification
(1) Development of a CTV Web Site strategy including:
- Project Mission/ Vision Statement Project Objectives Conceptual
development, competitor and precedent assessment, business and
marketing objectives.
- Creating and defining Web Presence and interactive TV objectives, and
defining clear criteria for success.
- Recommendations for the scope, structure, and composition of the Web
Presence that will serve as the foundation for growth and expansion.
- Identify content, intellectual property
- Preliminary budget, schedule, resource evaluation
- Defining the scope and terms of a CTV News standards document for
interactive Blue Zone and development
- Exploring centralized/ decentralized solutions in all respects of the
Web Presence strategy and determining the necessary resources required
- Making recommendations on the workflow and content streams including
evaluating mechanisms for quality management and editorial approval
- Making suggestions for personnel requirements and task descriptions for
the internal and external Blue Zone and management of resources
(2) Technical recommendations including:
- Client-side technologies for the interactive News properties
- Database technology and architecture
- Video delivery and management strategies
- Networking/server solutions
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- Backup and site maintenance technologies
(3) Requirements
- Functional Requirements
Define the high-level processes that the Web Presence will be able to
perform in terms of information publishing and other management of
information.
- Data Requirements
Define the high-level data groups that the Web Presence must store and
process.
- Hardware Requirements
Define the specific type of equipment on which the system will operate.
- Software Requirements
Define the specific software with which the system will be developed
and run.
- Human Resource Requirements
Define the specific human resources necessary to develop and run the
web sites.
- Interfaces to Other Systems
Define the need for communicating with other systems. This may involve
accepting input data from other systems and/or producing data for other
systems, or suggesting beneficial upgrades or additions and automation
of key operational processes.
- Security, Audit and Control Requirements
Define the need for user ID's, passwords, logging of data updates, and
limiting user access to specific functions and data.
- Legal Requirements
Define the legislated functions or data that the system must
accommodate.
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Schedule B
Phase II
Objectives:
Based on the Requirements Document, the technical aspects of the systems and
site architecture will be developed and produced.
Actions:
Development Plan
Development Schedule
Development Budget
1 Technical Design
2 Staged Delivery Plan
3 Performance and Schedule Estimates
4 Determine the Development Team
Assign Roles and Responsibilities
Cross Training Plan
5 Re-use Analysis
Buy vs. Build/ Sub-Contracting
6 Development Budget
Hardware
Software
Human Resources
7 Documenting Vendor Dependencies
8 Prototypical UI Development
9 Design and Production
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Exploratory Phase
Initial site development is component based, with segmented functionality. This
staged delivery is to accommodate all aspects of a project to operate in
tighter, more accountable cycles, with the development team sequentially moving
through discovery, invention, and implementation.
Architectural Design
Design Considerations:
User interface
Database organization
Data storage
Memory management
Security
Localization
Networking
Portability
Programming language
Error handling
Blue Zone
Blue Zone commences after Phase I. Blue Zone estimates that a staff will be
hired as necessary to develop the site over a 6-month period.
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CONFIDENTIAL
Schedule C
Estimated Phase II Costs
Blue Zone estimates year 1 infrastructure costs of approximately CAN $****. This
amount is to be applied to facilities, hardware, third party software licences
and software necessary for the Blue Zone and ongoing maintenance of the CTV News
Site. Detailed infrastructure figures will be established during Phase II.
[****] 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.
34
CONFIDENTIAL
Schedule D
Consulting Fees
Consulting fees will cover professional services provided in the areas of Web
site development and interactive television development for CTV. Blue Zone's
role will be to advise CTV on macro Web strategies and technology opportunities.
Consulting services will include participation in key management and executive
meetings and minimum quarterly presentations to CTV, and may upon agreement of
the parties include some of the following items:
Strategy
- Interactive content creation, Blue Zone and distribution
- Consolidation of technology
- Consolidation of content management infrastructure
- Establishment of Blue Zone standards and guidelines
Content
- Proprietary Interactive content Blue Zone and distribution
- A centralized content resource via CTV News online.
(The content is available from all CTV station news Web Sites.)
- Distributed content Blue Zone
(All CTV affiliate Web Sites contribute to the content.)
Identity
- National and Regional broadcasters identity
(Local branding and regional, national and international content.)
Advertising of CTV
- Regional marketing and promotion
(Accessing regional advertising as well as national advertising.)
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Technical consolidation: Discussions pertaining to
- Building the infrastructure to efficiently collect, manage, and deliver
branding, content, and advertising to 30 separate web sites
- Creation of centralized databases for content, video, advertising, and
user profiles
- Creation of content input forms, standards manual and guidelines for
Blue Zone of material at the 30 separate stations
Data mining and analysis, if desired, will be provided subject to a separate
Analysis and Interpretation Agreement.
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CONFIDENTIAL
Schedule E
Licensing Fees
****
[****] 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.
37
CONFIDENTIAL
Schedule F
Management and Human Resource Costs
CTV will pay all reasonable costs associated with the use of CTV personnel in
content preparation and integration of CTV materials into the Web Presence. This
estimate is for approximately 25 full time dedicated positions or the equivalent
in total, some of whom may be CTV personnel, to staff the ongoing demand for
management and production of the Web site and for hardware, facilities and
software.
Schedule Totals
ITEM TIMING DESCRIPTION AMOUNT
Annual Ongoing Production and CAN $**** -
Management of CTV Web site $****
[****] 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.
38
CONFIDENTIAL
Schedule G
SUMMARY OF FEES
Schedule Totals
ANTICIPATED
ITEM TIMING DESCRIPTION AMOUNT
Phase I Schedule A Delivered October 1, Strategy and Requirements CAN $****
1999 Document
Phase II Schedule B Production started Design and Blue Zone CAN $****
October 15
Schedule C Dec. - February Infrastructure Costs CAN
$****
Schedule D Annual Consulting Fees CAN
$****
--------------------
[First payment to include monthly
payments retroactively to October,
1999]
Schedule E Annual Licensing Fees CAN
$****
Schedule F Annual Ongoing Blue Zone CAN
Production and Management $**** to
$****
Web Hosting and Management ****
Fees
[****] 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.
