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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 TELEVISON 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;
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,
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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)
"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.
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"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:
(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;
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(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
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
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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 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
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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
paragraph. Blue Zone shall not be responsible for withholding or other
required payments with respect to CTV employees acting pursuant to this
paragraph.
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(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
Nonconformities and resubmit the CTV Web Site for testing under
the Test Plan.
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(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
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reasonable best efforts to provide the consulting services on a priority basis
to CTV. The 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.
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In addition, CTV shall have audit rights to ensure sufficient and proper
archival back-ups. 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. Notwithstanding any other provision of this
Agreement, CTV will be the sole and exclusive owner of the CTV Web Site and
all elements thereof including, without limitation, Web Site content, CTV
Material, viewership/usership data and hardware purchased by CTV to operate
and support the Web, and the CTV content processed by Blue Zone (or CTV
employees acting pursuant to paragraph 2(b)(vii)), which will be displayed on
the CTV Web Site, save and except Section 5 (c) (1). Blue Zone assigns to CTV
any interest it may have in the foregoing and waves any moral right therein.
(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.
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(1) CTV acknowledges and agrees the CTV Web Site will
include certain modules, routines, subroutines, programming
tools, 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.
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(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 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.
14
(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 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$Three (3)
million; provided, further, that the foregoing limitations will not apply in
respect of any payment default by CTV.
(b) Indemnification by Blue Zone. Blue Zone will indemnify and
hold harmless CTV and each of its directors, officers, agents, employees,
advisers, representatives from and against any losses, expenses, claims,
damages or liabilities, joint or several, including reasonable costs of
investigation and reasonable legal fees and expenses of legal counsel which
CTV and/or each of its directors, officers, employees, advisers and
representatives incur, whether directly or as a result of claims by third
parties, which arise out of or are based upon:
(i) any representation or warranty of Blue Zone made herein
not having been materially true, complete and accurate when made; and
15
(ii) any covenant made herein by Blue Zone (whether in Section
12 or elsewhere in this Agreement) not having been complied with.
Blue Zone's obligations to indemnify CTV for losses under this
Agreement will accrue up to a maximum liability of the Blue Zone of CAN$ 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.
16
(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 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 RESPONSILBE 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.
17
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.
18
(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
19
selected and 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
20
(a) CTV represents and warrants to Blue Zone the following:
(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
21
are 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 Xxxxxxxxx.Xxxx 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.
22
(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.
23
(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
24
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.
25
(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
26
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 Xxxxx
00 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx
Xxxxxxxxx: [_______________]
27
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.
28
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
29
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
30
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.
31
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
32
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.
33
Schedule C
Estimated Phase II Costs
Blue Zone estimates year 1 infrastructure costs of approximately CAN $500,000.
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.
34
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.)
35
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.
36
Schedule E
Licensing Fees
For greater clarity only an illustration is provided in the following table.
First NewsBz(TM) license fee CAN$ 120,000
Second NewsBz(TM) license fee CAN$ 120,000 for second subject matter
Third NewsBz(TM) license fee CAN$ 120,000 for third subject matter
Fourth NewsBz(TM) license fee CAN$ 120,000 for fourth subject matter
Fifth NewsBz(TM) license fee CAN$ 20,000 for fifth subject matter
Sixth plus NewsBz(TM) license fee CAN$ 0 for subsequent subject matters
Total maximum annual licensing fees CAN$ 500,000
37
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 $1,000,000 -
Management of CTV Web $2,000,000
site
38
Schedule G
SUMMARY OF FEES
Schedule Totals
ANTICIPATED
ITEM TIMING DESCRIPTION AMOUNT
Phase I Schedule A Delivered October Strategy and CAN $130,000
1, 1999 Requirements Document
Phase II Schedule B Production Design and Blue CAN
started October 15 Zone $1,000,000
Schedule C Dec.-February Infrastructure Costs CAN
$ 500,000
Annual Consulting CAN
Schedule D Fees $ 120,000
-----------------
[First payment to include monthly
payments retroactively to October,
1999]
Schedule E Annual Licensing CAN
Fees $ 120,000
Schedule F Annual Ongoing Blue CAN
Zone Production and $1,000,000 to
Management $2,000,000
Web Hosting and Labor and
Management Fees out-of-pocket
costs + 20%
