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EXHIBIT 10.27
Certain confidential information contained in this document, marked by
brackets, is filed separately with the Securities and Exchange Commission
pursuant to Rule 406 of the Securities Act of 1933, as amended.
June 25, 1999
Xxxxx Xxxxxxxx
President
Torstar Corporation
Xxx Xxxxx Xxxxxx, Xxxxxxx,
Xxxxxxx, Xxxxxx, X0X 0X0
RE: XXXXX.XXX / HARLEQUIN
Dear Xx. Xxxxxxxx:
This letter agreement (the "Agreement") sets forth the agreement between
Xxxxx.xxx Networks, LLC, a Delaware limited liability company with offices at
0000 Xxxxxxx Xxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx 00000 ("Xxxxx.xxx"),
Torstar Corporation, an Ontario corporation with offices at One Yonge Street,
Toronto, Ontario, Canada, M5E 1P9 ("Torstar"), and Harlequin Enterprises
Limited, an Ontario corporation and a wholly-owned subsidiary of Torstar with
offices at 000 Xxxxxx Xxxx Xxxx, Xxx Xxxxx, Xxxxxxx, Xxxxxx, X0X 0X0
("Harlequin"), with respect to (1) the production and hosting of a Web site to
be located at xxx.xxxxxxxxx.xxx or some alternative address (the "Site") on
Xxxxx.xxx's Network and (2) the offer of stock of Xxxxx.xxx Networks, Inc. to
Torstar (collectively, the "Transactions"). This Agreement is intended to
confirm the understandings that have been reached by Xxxxx.xxx, Torstar and
Harlequin regarding the Transactions and is binding on the parties. It is
anticipated that the parties will enter into supplemental agreements (the
"Supplemental Agreements") within sixty (60) days relating to the production,
operation, maintenance, hosting and marketing of the Site. All rights and
obligations of Xxxxx.xxx under this Agreement will be assumed by Xxxxx.xxx
Networks, Inc. upon the consummation of the roll-up of Xxxxx.xxx into Hearst
HomeArts, Inc., a Delaware corporation, in connection with the merger of
Xxxxx.xxx Networks, a California corporation, into Hearst HomeArts, Inc. (to be
renamed Xxxxx.xxx Networks, Inc. upon the consummation of the merger). After
consummation of the merger, references to Xxxxx.xxx shall be deemed to refer to
Xxxxx.xxx Networks, Inc. The terms and conditions of the Agreement are as
follows:
1. BACKGROUND. Torstar publishes romance fiction paperbacks through
Harlequin and wishes to launch the Site to use the Internet and the
World Wide Web (the "Web") to market and sell its products. Xxxxx.xxx
maintains a proprietary network of related Web sites and plans to add
additional sites (the "Network") - with a gateway to such network
located at xxx.xxxxx.xxx - and owns or licenses a wide array of content
and tools, including interactive content and tools, targeted to the
interests and concerns of women. Accordingly, Xxxxx.xxx has substantial
expertise in the design and development of interactive Web sites and
communities. Xxxxx.xxx will produce, operate, maintain, host and market
the Site as part of the Network (all as more fully described below).
Xxxxx.xxx Networks, Inc. will offer shares of its stock to Torstar as
set forth below.
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2. THE SITE.
(a) LOCATION. The Site will be located at xxx.xxxxxxxxx.xxx or some
alternative address (the "Site URL"). The Site URL and all
matters relating to the Site will continue to be owned by
Harlequin. All pages of the Site will reside on a Network server
paid for and maintained by Xxxxx.xxx.
(b) PRODUCTION. Xxxxx.xxx and Harlequin will work in cooperation
with each other on the creative development and operation of the
Site. Approval of Harlequin will be required for all decisions
relating to style, content, look and feel and other portions of
the Site and use of any Harlequin Content outside of the Site on
the Network. Harlequin reserves the right to initiate editorial
changes to the Site. Additional responsibilities of Xxxxx.xxx
related hereto will be set forth in the Supplemental Agreements.
Harlequin agrees that the Xxxxxxx.xxx site will be incorporated
into the Site as appropriate, and will not be run as a separate
site after the launch of the Site. Xxxxx.xxx will use its
commercially reasonable efforts to launch the Site on or before
October 31, 1999, but will launch the fully operational version
of the Site no later than December 31, 1999, assuming that no
material delays are caused by Harlequin. During the term of this
Agreement, Harlequin will pay Xxxxx.xxx US$750,000 per year for
developing, producing, operating, maintaining and hosting the
Site, and all expenses associated therewith shall be borne by
Xxxxx.xxx. Once launched, Xxxxx.xxx shall be fully responsible
for operating, maintaining, revising and fixing problems
associated with the Site. The Site shall be operational and
accessible 24 hours a day 7 days a week, except for periodic
scheduled maintenance times and for rare outages not the fault
of Xxxxx.xxx. The Site shall be kept current and revised
reasonably regularly. Additional obligations of Xxxxx.xxx
regarding the Site production will be set forth in the
Supplemental Agreements. Harlequin reserves the right to program
manage the community elements of the Site and author relations.
(c) INTEGRATION INTO NETWORK. The Site will be included within the
Network. Visitors to the Site may access the Site through the
Site URL or through the Network. All pages of the Site will
include the Xxxxx.xxx navigation bar. The Site's content will be
used by Xxxxx.xxx to build a channel relating to romance (the
"Channel"). The name of the Channel will be determined by
Xxxxx.xxx in its sole reasonable discretion. This Channel shall
be the exclusive section within the Xxxxx.xxx site and the
Network primarily relating to romance. Xxxxxxxxx.xxx will be the
premier content provider within the Channel. For purposes of the
foregoing, "premier content provider" means the provider of a
majority of the content on the Channel. The parties will
incorporate, where appropriate, links between the Site and the
Network.
(d) MARKETING. Xxxxx.xxx will use its commercially reasonable
efforts to market the Site and maximize traffic to the Site in a
manner at least as favorable as other sites in the Network.
Xxxxx.xxx will be responsible for marketing the Site
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online via the Network and through its online distribution
relationships. Xxxxx.xxx will promote the Site on the Network.
At a minimum, Xxxxx.xxx will promote the Site on the Network
wherever all Hearst magazine sites are listed or promoted (e.g.
the navigation bar). For the first two years after the launch of
the Site, Harlequin will use commercially reasonable efforts to
promote the Site and Xxxxx.xxx on a co-branded basis with
Harlequin in every one of its North American romance books
(subject to any required approval from authors) and in 20
million direct mail pieces (subject to testing as to
effectiveness). In the event the co-branding promotion in any
year is less than seventy five percent (75%) of Harlequin's
North American books, then the two-year commitment will be
extended an additional year. Torstar will link to the Site from
its corporate site. Upon launch of the Site, the Xxxxxxx.xxx URL
will point to the Site URL. Harlequin reserves the right to
promote the Site itself online and offline.
(e) MEMBERSHIP. The Site will use and be part of the Xxxxx.xxx
universal registration. All users that register for the Site
("Site Registrants") will automatically become registered users
of Xxxxx.xxx. The parties will agree as to the type of
information to be solicited from Site Registrants. Xxxxx.xxx
will contact its registered users via email or member newsletter
at least four times per year with information or promotion
related to the Site. Within the universal registration process,
the Site will receive equal treatment to the individual Hearst
magazine titles with regard to registration. The information
concerning the Site Registrants shall be deemed co-owned by the
parties, but Xxxxx.xxx may only use the names and information
itself to market to Site Registrants and may not sell, license
or swap the names of Site Registrants with any third party and
must use the Site Registrant Information consistent with the
Site's Privacy Policy to be developed. Harlequin may use the
information regarding Site Registrants in any manner it
determines appropriate, provided that (i) it may use the
information for online marketing purposes only with respect to
the Site and (ii) it shall use the information consistent with
the Site's Privacy Policy to be developed.
(f) METRICS. For purposes of third party Internet industry traffic
and usage measurement metrics (e.g., Media Metrix), all Site
page views and visitors shall be attributed solely to Xxxxx.xxx.
(g) ADVERTISING. Xxxxx.xxx will have the exclusive right to sell
advertisements, site sponsorships and other promotions ("Ads")
on the Site. Harlequin may sell Ads, subject to Xxxxx.xxx's
approval for all transactions, which approval shall not be
unreasonably withheld or delayed. Xxxxx.xxx shall use its
reasonable commercial efforts to maximize revenues from Ads on
the Site. Xxxxx.xxx will pay Harlequin a royalty on gross
revenues (net of taxes and uncollectable amounts) from Ads on
the Site as follows: [*] in years one and two, [*] in year three
and [*] thereafter. Xxxxx.xxx does not guarantee a minimum level
of Ad revenues to Harlequin. For the purposes of this Agreement,
commerce affiliate revenues will be included in revenues from
Ads. In the event that
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* Certain confidential information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been requested
with respect to the omitted portions.
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Harlequin Content is used in other areas of the Network other
than the Site, Harlequin will be entitled to its share of
associated Ad revenues. The following categories of Ads (or
sites linked from Ads) are not acceptable on the Site or the
Network: .advertisements for tobacco, gambling or firearms,
advertisements that would violate any applicable law, regulation
or third party right; advertisements or sites containing
pornographic or sexually explicit material, links to
pornographic sites; advertising that is degrading or demeaning
to women or that promotes violence or abuse of women;
advertising or sites encouraging illegal activity or racism,
sites providing instructions or discussions about illegal
activities; sites that promote or utilize software or services
designed to deliver unsolicited e-mail; sites with products or
advertisements that are offensive or inappropriate; or any
advertising that has resulted or could result in legal liability
or adverse publicity to Xxxxx.xxx as a result of such
advertising being offensive, inaccurate, defamatory, libelous or
slanderous or involving potential infringement of third party's
intellectual property rights. No Ads may be sold on the Site to
a competitor of Torstar identified in Section 6.
(h) E-COMMERCE. Harlequin will be responsible for the execution of
all elements of Harlequin book sales on the Site, including
merchandising, billing, delivery of books to purchasers, and
related customer service. Harlequin will pay Xxxxx.xxx a [*]
royalty (net of shipping, taxes, handling charges, returns, and
uncollectable amounts) for all Harlequin books purchased in
North America from the Site and a [*] royalty (net of shipping,
taxes, handling charges, returns, and uncollectable amounts) for
all Harlequin books purchased outside North America from the
Site. Notwithstanding the foregoing, Xxxxx.xxx will receive a
[*] royalty on revenues (net of shipping, taxes, handling
charges, returns and uncollectable amounts) from the first paid
month of Harlequin Reader Service Memberships (as that term is
currently used by Harlequin) generated from the Site (excluding
persons responding to offline direct marketing efforts and
members purchasing Harlequin subscriptions who had previously
purchased a subscription within the 12 month period prior to the
new subscription purchase). Xxxxx.xxx will receive a [*] royalty
on gross income (net of shipping, taxes, handling charges,
returns, and uncollectable amounts) from merchandise sales
(excluding books) in the Site's store. Harlequin will pay
Xxxxx.xxx a [*] royalty on premium content services from the
Site (e.g. writing workshops), net of direct costs. Harlequin
Site purchases will be billed and shipped separately by
Harlequin.
(i) OTHER REVENUES. Allocation of revenues not contemplated herein
will be determined in the Supplemental Agreements.
3. PURCHASE AND SALE OF STOCK. Xxxxx.xxx Networks, Inc. agrees to offer to
sell to Torstar the lesser of (1) one million two hundred fifty thousand
(1,250,000) shares of common stock (the "Common Stock") of Xxxxx.xxx
Networks, Inc. at a per share price
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* Certain confidential information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been requested
with respect to the omitted portions.
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equal to the per share price to the public (the "Purchase Price") of the
Common Stock sold pursuant to a registration statement on Form S-1 (No.
333-78363) (the "Registration Statement") under the Securities Act of
1933, as amended, relating to the initial public offering of Xxxxx.xxx
Networks, Inc. (the "Initial Public Offering"), or (ii) that number of
shares of the Common Stock of Xxxxx.xxx Networks, Inc. which could be
purchased at the Purchase Price for $14,500,000. The purchase, if made,
will be pursuant to the Registration Statement, and the prospectus
contained therein, entitling Torstar to all rights under applicable
securities laws as a purchaser of Xxxxx.xxx Network, Inc.'s Common
Stock. Torstar agrees not to sell, pledge, hypothecate or otherwise
transfer any shares purchased under the Registration Statement for a
period of one (1) year following the date the Registration Statement is
declared effective pursuant to an agreement (the "Lock-up Agreement")
with Xxxxx.xxx and its managing underwriters to such effect. The Lock-up
Agreement shall provide that Torstar shall be released from the Lock-up
Agreement upon (1) the proposed sale of Xxxxx.xxx pursuant to a tender
offer made to Xxxxx.xxx's stockholders or an executed agreement of
merger, reorganization or otherwise in which the stockholders prior to
such sale will hold less than 50% of the shares outstanding after such
sale, or some other proposed sale of the Company announced by Xxxxx.xxx
or Hearst, (2) the consent of Xxxxx.xxx and the managing underwriters
(provided the consent of the managing underwriters shall only be
required during the initial six (6) months of the lock-up period) and
(3) such other events as may be agreed to in the Lock-up Agreement.
4. BOARD SEAT. If Torstar purchases, pursuant to Section 3 above, at least
1,250,000 shares of Common Stock or $14,500,000 of Common Stock,
whichever is less, Xx. Xxxxxxxx, as a designee of Torstar, will be
appointed to the Board of Directors of Xxxxx.xxx Networks, Inc.
effective one day after the closing of the Initial Public Offering, for
a Class II director term. During the term of this Agreement, Xxxxx.xxx
Networks, Inc. agrees to nominate Xx. Xxxxxxxx, as a Torstar designee,
to the Board of Directors of Xxxxx.xxx Networks, Inc. at all elections
of the Class II members of the Board of Directors and to recommend to
its stockholders the election of Xx. Xxxxxxxx, all subject to the
fiduciary obligations of the Board. In the event Xx. Xxxxxxxx is unable
to serve as director after his appointment, Torstar may designate
another director or executive officer of Torstar or Harlequin or any
other person reasonably acceptable to the Board of Directors of
Xxxxx.xxx Networks, Inc.
5. LICENSE. As part of the Supplemental Agreements, the parties are
expected to agree upon the terms and conditions of the license of
Harlequin Content to Xxxxx.xxx for the transactions contemplated herein,
and the terms and conditions of license of Xxxxx.xxx Content for the
Site.
The "Harlequin Content" means the Content (as defined below) that is
proprietary to Harlequin or its affiliates or third party licensors,
which Content Harlequin provides for inclusion on the Site. The
"Xxxxx.xxx Content" means the Content (as defined below) that is
proprietary to Xxxxx.xxx or its affiliates or third party licensors.
"Content" means the text, pictures, html, sound, video, graphical
elements and other data contained in any Web site, including all
trademarks, trade names, service marks, trade dress, logos, URLs, or
identifying slogans of a party, whether or not registered. "Derivative
Work" is original Content contained on the Site or the Network that is
based upon Harlequin Content, such as a translation, musical
arrangement, dramatization, fictionalization, motion picture version,
sound recording, art reproduction, abridgment, condensation, or any
other form in which a work may be recast, transformed, or adapted. All
Harlequin Content and Derivative Works, together with all other Content
on the Site or relating primarily to the Site that is not Xxxxx.xxx
Content will be deemed solely owned by Harlequin. Any Content (together
with any other copyrightable matters) developed or prepared for the Site
by Xxxxx.xxx will be deemed "work for hire" and owned solely by
Harlequin.
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6. EXCLUSIVITY. During the term of this Agreement, Harlequin will not enter
into any relationship substantially of the kind set forth herein with
any of the following companies: iVillage, Oxygen Media and CondeNast
(the "Xxxxx.xxx Competitors"). In addition, during the term of this
Agreement, (1) Torstar, Harlequin or any affiliates under their control
will not establish or operate an Internet or Web site that substantially
competes with the Site, and (2) Torstar will not make an equity
investment in any Xxxxx.xxx Competitor, provided that Torstar may,
directly or indirectly, purchase or hold no more than one percent (1%)
of the outstanding equity securities of a Xxxxx.xxx Competitor. During
the term of this Agreement, Xxxxx.xxx will not enter into a marketing,
distribution, content, or other strategic relationship with any of the
following companies as such relationship relates to romance or
romance-related topics: Avon Books, Bantam Doubleday Dell, Berkeley
Books, Doubleday Bookclub, Xxxxxx Xxxxxxx, Leisure Books, Penguin,
Xxxxxx, Pocket Books, St. Xxxxxx'x Press, Warner Books and Zebra Books.
7. TERM AND TERMINATION. The Agreement shall have a term of four (4) years
that commences on the date hereof (the "Initial Term"). Following the
Initial Term, this Agreement shall automatically renew for additional
one-year terms (each a "Renewal Term"), until such time as either party
terminates the Agreement upon written notice to the other parties given
no less than ninety (90) days prior to the end of the Initial Term or
any Renewal Term, as applicable. In the event that Xxxxx.xxx, on the one
hand, or Torstar or Harlequin, on the other hand, materially breaches
this Agreement, the other party may terminate this Agreement by
providing the breaching party with no fewer than thirty (30) days notice
of termination; provided, that in the event of breaches capable of cure,
the breaching party shall have the right to cure the default within such
period (or such longer period as then non-breaching party may agree to
in writing) and thereby forestall termination of this Agreement. If the
default is not cured within such thirty (30) day period, the
non-breaching party may terminate this Agreement by providing the
breaching party with no fewer than thirty (30) days notice of
termination. In addition, Harlequin may terminate this Agreement upon at
least ninety (90) days written notice to Xxxxx.xxx upon either of the
following events:
(a) The loss of Xxxxx.xxx's rights to the Hearst magazine content
under the Magazine Content, License and Hosting Agreement by and
between Xxxxx.xxx and Hearst Communications, Inc., dated January
27, 1999.
(b) If within two (2) years after the launch of the Site, the number
of Site Registrants is less than 700,000. If Harlequin
terminates pursuant to this Section 7(b), then Harlequin shall
pay to Xxxxx.xxx an amount equal to the sum of the prior
calendar year's: (1) revenues from Ads on the Site (less
royalties paid to Harlequin pursuant to Section 2(g)); and (2)
book royalties paid to Xxxxx.xxx pursuant to the first sentence
of Section 2(h).
In addition, Xxxxx.xxx, on the one hand, and Torstar or Harlequin, on
the other hand, may terminate this Agreement upon the institution of
proceedings for the other party to
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be adjudicated a bankrupt or insolvent, or the consent by the other
party to institution of bankruptcy or insolvency proceedings against it
or the filing of a petition or answer or consent seeking reorganization
or release under the Federal Bankruptcy Act, or any other applicable
Federal or state law, or the consent by the other party to the filing of
any such petition or the appointment of a receiver, liquidator,
assignee, trustee, or other similar official or of any substantial part
of its property, or the making by the other party of an assignment for
the benefit of creditors, or the admission in writing by the other party
of an assignment for the benefit of creditors, or the admission in
writing by the other party of its inability to pay its debts generally
as they become due or the taking of corporate action by the other party
in furtherance of any such actions.
Upon proper notice of termination given by any party, the parties agree
to cooperate in good faith to effect an orderly transition of the Site
in a manner to allow Harlequin to independently operate the Site,
subject to Harlequin obtaining any third-party licenses necessary to
operate the Site.
8. OBLIGATIONS UPON TERMINATION. Upon termination of this Agreement for any
reason:
(a) Xxxxx.xxx shall cease use of, and shall deliver to Harlequin,
all Harlequin Content and other Content deemed to be solely
owned by Harlequin pursuant to Section 5 above.
(b) Xxxxx.xxx shall provide Harlequin a non-exclusive license to use
Xxxxx.xxx proprietary code, technology or software necessary to
operate the Site. Such license shall be free of charge for a
period of six (6) months following termination, and thereafter
shall be licensed to Harlequin on commercially reasonable terms
for a period of up to three (3) years from termination.
(c) The parties shall comply with any additional obligations
relating to post-termination matters as may be set forth in the
Supplemental Agreements.
(d) No party shall use, sell, license or trade the co-owned Site
Registrants list to promote the competitors of the other parties
as defined in Section 6 for a period of five (5) years from
termination.
9. WARRANTIES.
(a) WARRANTIES OF ALL PARTIES. Each party to this Agreement
represents and warrants to the other parties that:
(i) such party has the full corporate right, power and
authority to enter into this Agreement and to perform
the acts required of it hereunder;
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(ii) the execution of this Agreement by such party, and the
performance by such party of its obligations and duties
hereunder, do not and will not violate any agreement to
which such party is a party or by which it is otherwise
bound;
(iii) when executed and delivered by such party, this
Agreement will constitute the legal, valid and binding
obligation of such party, enforceable against such party
in accordance with its terms; and
(iv) such party acknowledges that the other party makes no
representations, warranties or agreements related to the
subject matter hereof that are not expressly provided
for in this Agreement.
(b) HARLEQUIN WARRANTIES. Harlequin hereby warrants to and for the
benefit of Xxxxx.xxx that Harlequin shall not provide any
Harlequin Content to Xxxxx.xxx that: (a) infringes on any third
party's copyright, patent, trademark, trade secret or other
proprietary rights or rights of publicity or privacy; (b)
violates any law, statute, ordinance or regulation (including
without limitation the laws and regulations governing export
control); (c) is defamatory, trade libelous, unlawfully
threatening or unlawfully harassing; (d) is obscene or
pornographic or contains child pornography; (e) violates any
laws regarding unfair competition, antidiscrimination or false
advertising; or (f) to the best of Harlequin's knowledge,
contains any viruses, trojan horses, worms, time bombs,
cancelbots or other computer programming routines that are
intended to damage, detrimentally interfere with,
surreptitiously intercept or expropriate any system, data or
personal information .
(c) XXXXX.XXX WARRANTIES. Xxxxx.xxx hereby warrants to and for the
benefit of Harlequin that Xxxxx.xxx shall not use any Content
(excluding Harlequin Content) or operate the Network or the Site
in any manner that (a) infringes on any third party's copyright,
patent, trademark, trade secret or other proprietary rights or
rights of publicity or privacy; (b) violates any law, statute,
ordinance or regulation (including without limitation the laws
and regulations governing export control); (c) is defamatory,
trade libelous, unlawfully threatening or unlawfully harassing;
(d) is obscene or pornographic or contains child pornography;
(e) violates any laws regarding unfair competition,
antidiscrimination or false advertising; or (f) to the best of
Xxxxx.xxx's knowledge, contains any viruses, trojan horses,
worms, time bombs, cancelbots or other computer programming
routines that are intended to damage, detrimentally interfere
with, surreptitiously intercept or expropriate any system, data
or personal information.
(e) REMEDIES. Each party agrees that its sole and exclusive remedy
for a breach of any warranty made by the other party pursuant to
this Section 9 shall be indemnification as set forth in Section
10 hereof.
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10. INDEMNIFICATION.
(a) HARLEQUIN INDEMNITY. Harlequin agrees to defend, indemnify and
hold harmless Xxxxx.xxx and its directors, officers, agents and
employees from and against any and all claims, suits, damages,
losses, costs, liabilities, expenses and fees (including without
limitation reasonable attorneys' and expert witnesses' fees)
incurred or arising from (a) any breach of the warranties set
forth in Section 9, (b) any Harlequin Content, or (c) e-commerce
conducted on the Site (other than due to the fault of
Xxxxx.xxx). Xxxxx.xxx may, at its own expense, participate in
any defense or settlement negotiations with respect to any claim
to which it is entitled to indemnification with counsel of its
own choosing. Harlequin agrees not to enter into any settlement
of any claim without the prior written consent of Xxxxx.xxx,
which consent shall not be unreasonably withheld or delayed.
(b) XXXXX.XXX INDEMNITY. Xxxxx.xxx agrees to defend, indemnify and
hold harmless Harlequin and its directors, officers, agents and
employees from and against any and all claims, suits, damages,
losses, costs, liabilities, expenses and fees (including without
limitation reasonable attorneys' and expert witnesses' fees)
incurred or arising from (a) any breach of the warranties set
forth in Section 9, (b) any Content (excluding Harlequin
Content) created, developed, published or distributed by
Xxxxx.xxx (c) the manner in which Xxxxx.xxx uses any of the
Harlequin Content on the Network, other than on the Site and (d)
e-commerce problems on the Site due to the fault of Xxxxx.xxx or
e-commerce conducted elsewhere on the Network . Harlequin may,
at its own expense, participate in any defense or settlement
negotiations with respect to any claim to which it is entitled
to indemnification with counsel of its own choosing. Xxxxx.xxx
agrees not to enter into any settlement of any claim without the
prior written consent of Harlequin, which consent shall not be
unreasonably withheld or delayed.
11. LIMITATIONS ON LIABILITY/DISCLAIMERS OF WARRANTIES. IN NO EVENT SHALL
ANY PARTY BE LIABLE TO ANY OTHER PARTY FOR ANY SPECIAL, INDIRECT,
INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT (INCLUDING BUT NOT LIMITED TO SUCH DAMAGES ARISING FROM
TORT, INCLUDING NEGLIGENCE AND STRICT LIABILITY, BREACH OF CONTRACT OR
WARRANTY), INCLUDING WITHOUT LIMITATION DAMAGES FOR INTERRUPTED
COMMUNICATIONS, LOST DATA OR LOST PROFITS, EVEN IF SUCH PARTY HAS BEEN
ADVISED OF (OR KNOWS OR SHOULD KNOW OF) THE POSSIBILITY OF SUCH DAMAGES
AND NOTWITHSTANDING THE FAILURE OF ESSENTIAL PURPOSE OF ANY REMEDY.
12. LIAISON. Each party shall appoint an individual to act as a primary
point of contact for the other party with respect to all activities and
issues arising under this Agreement.
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13. CONFIDENTIAL INFORMATION.
(a) DEFINITION. "Confidential Information" as used in this Agreement
shall mean any and all technical and non-technical information
of a party (the "Disclosing Party") to this Agreement
(including, without limitation, patents, copyrights and works of
authorship, trade secrets, and proprietary information,
techniques, sketches, drawings, models, inventions, know-how,
processes, apparatus, equipment, algorithms, software programs,
and software source documents) related to the current, future
and proposed business, products and services of such party, and
its suppliers and customers, and includes, without limitation,
information concerning development, design details and
specifications, engineering, customer lists, business forecasts,
sales, and marketing plans and any other similar information or
data which is disclosed to the other party (the "Recipient") or
to which the Recipient otherwise gains access as a result of
performing under this Agreement. "Confidential Information" also
includes proprietary or confidential information of any third
party that may disclose such information to the Disclosing Party
in the course of the Disclosing Party's business. Confidential
Information does not include information, technical data or
know-how which: (i) is in the Receiving Party's possession at
the time of disclosure as shown by the Receiving Party's files
and records immediately prior to the time of disclosure; (ii)
before or after it has been disclosed to the Receiving Party,
enters the public domain, not as a result of any action or
inaction of the Receiving Party; (iii) is approved for release
by written authorization of the Disclosing Party; (iv) is
disclosed to the Receiving Party by a third party not in
violation of any obligation of confidentiality; or (v) is
independently developed by the Receiving Party without reference
to the Disclosing Party's Confidential Information.
(b) USE AND DISCLOSURE. The Receiving Party agrees not to use the
Confidential Information of the Disclosing Party for any purpose
except to the extent necessary to fulfill its obligations under
this Agreement. The Receiving Party agrees not to copy, alter,
modify, disassemble, reverse engineer or decompile any of the
materials comprising Confidential Information, unless permitted
in writing by the Disclosing Party. The Receiving Party agrees
not to disclose the Confidential Information to any third
parties or to any of its employees, contractors or agent except
those of whom who have a need to know the Disclosing Party's
Confidential Information to enable the Receiving Party to
fulfill its obligations under this Agreement; provided, that
such parties shall be made aware that such Confidential
Information is confidential to the Disclosing Party and shall be
under a written contractual restriction on nondisclosure and
proper treatment of Confidential Information that is consistent
with and no less restrictive than the terms of this Section 13.
Notwithstanding the foregoing, the Receiving Party may disclose
the Disclosing Party's Confidential Information to the extent
required by a valid order of a court or other governmental body
or by applicable law; provided, however, that the Receiving
Party will use all reasonable efforts to notify the Disclosing
Party of the obligation to make such disclosure in advance
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so that the Disclosing Party will have a reasonable opportunity
to object to such disclosure. The Receiving Party agrees that it
shall treat the Confidential Information with the same degree of
care as it accords its own Confidential Information of a similar
nature; provided that in no event shall the Receiving Party
exercise less than reasonable care to protect the Disclosing
Party's Confidential Information. The Receiving Party agrees to
advise the Disclosing Party in writing of any misappropriation
or misuse by any person of the Disclosing Party's Confidential
Information of which the Receiving Party may become aware. The
Receiving Party will not communicate any information to the
Disclosing Party in violation of the proprietary rights of any
third party.
(c) RETURN OF MATERIALS. Any Confidential Information furnished to
the Receiving Party, and all copies thereof, at the earlier of
the Disclosing Party's request, or the termination of the
business relationship between the Disclosing Party and the
Receiving Party, at the Disclosing Party's option, will either
be: (i) promptly returned to the Disclosing Party; or (ii)
destroyed by the Receiving Party (with the Receiving Party
providing written certification of such destruction to the
Disclosing Party).
14. MISCELLANEOUS. This Agreement sets forth the entire understanding and
agreement of the parties with respect to the subject matter hereof and
supersedes any and all oral or written agreements or understandings
between the parties as to the subject matter hereof. This Agreement may
be changed only by a writing signed by both parties. No party may assign
this Agreement or any of its rights or delegate any of its duties here
under this Agreement without the consent of all other parties, provided
that (i) Xxxxx.xxx may assign its rights and obligations to Xxxxx.xxx
Networks, Inc. in connection with the merger described in the
introductory paragraph of this Agreement, (ii) Harlequin or Torstar may
assign its rights and obligations to any subsidiary or affiliate of
Torstar or Harlequin provided that such assignee continues to perform
all obligations of Torstar or Harlequin under this Agreement, or (iii)
any party may assign this Agreement in connection with the sale or
transfer of substantially all the assets or stock of the party, or
merger, reorganization or similar transaction in which control of the
corporation is transferred. All notices, demands and other communication
hereunder must be in writing or by written telecommunications and will
be deemed to have been duly given: (a) if mailed by certified mail,
postage prepaid, on the date three (3) days from the date of mailing,
(b) if delivered by overnight courier, when received by the addressee or
if sent by confirmed telecommunication, one business day following
receipt by the addressee at the addresses set forth above, or such other
address as the party may specify in writing. In the event that any
provision of this Agreement shall for any reason be held to be invalid,
illegal or unenforceable in any respect, the remaining provisions shall
remain in full force and effect. The parties' rights and obligations
will bind and inure to the benefit of their respective successors,
heirs, executors and administrators and permitted assigns. The parties
are independent contractors, and no agency, partnership, joint venture
or
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employee-employer relationship is intended or created hereby. This
agreement will be construed in accordance with the laws of the state of
California without regard to its conflict of law principles, and the
parties consent to the exclusive jurisdiction of the state and federal
courts having jurisdiction over San Mateo County, California.
Announcements or press releases concerning this Agreement shall be
subject to the approval of all parties.
15. SUPPLEMENTAL AGREEMENTS. With respect to matters that are to be covered
in the Supplemental Agreements, Xxxxx.xxx agrees that Harlequin will
receive terms, covenants, representations and other rights at least as
favorable as those granted to Hearst or Rodale, taken as a whole ;
provided, however, that the terms of this Agreement shall govern in any
case where this Agreement conflicts with the terms of the agreements
between Xxxxx.xxx and Hearst or Xxxxx.xxx and Rodale.
Very Truly Yours,
XXXXX.XXX NETWORKS, LLC
By: /s/ Xxxxxxx XxXxxxxx
-------------------------------
Xxxxxxx XxXxxxxx
President & CEO
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ACCEPTED AND AGREED:
TORSTAR CORPORATION HARLEQUIN ENTERPRISES LIMITED
By: /s/ Xxxxx Xxxxxxxx By: /s/ Xxxxx Xxxxxxxx
------------------------------- -------------------------------
Name: Xxxxx Xxxxxxxx Name: Xxxxx Xxxxxxxx
----------------------------- -----------------------------
Title: Title:
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