AGREEMENT
Agreement for advertising services effective July 1, 1999, between Infocast
Corporation, (hereinafter referred to as the "Client") with offices at 1
Richmond Street West, Suite 902, Toronto, Ontario, M5H 3W4 and Lasso
Communications Inc. (hereinafter referred to as the "Agency") with offices at
1881 Yonge Street, Suite 500, Toronto, Ontario, M4S 3C4
Whereas the Agency has the facilities and expertise to provide advertising
services in Canada and is willing to provide such advertising services to Client
in relation to such of Client's products and services as designated by Client
and accepted by Agency; and
Whereas Client wishes to avail itself of such advertising facilities services
and expertise;
Now therefore in consideration of the mutual promises made herein and for other
good and valuable consideration, the parties do agree as follows:
1. TERM. The term of this Agreement (the "Term") shall commence effective
July 1, 1999 and continue for a fixed term until May 31, 2000 (the
"Initial Term"). Thereafter this agreement, shall be automatically
renewed from year to year (the "Renewal Term"), unless either party
delivers written notice of termination as hereinafter provided.
2. PRODUCTS. Client hereby engages the Agency to perform, in Canada and
the U.S. (the "Territory"), advertising services customarily performed
by an advertising agency in respect of the Client products and services
designated by the Client and agreed to by the Agency (collectively
referred to herein as "Client Products").
3. SERVICES. Agency shall provide in the Territory the following core
advertising services in respect of the creation, production and
placement of authorized Client advertising in the Territory for the
Client Products:
A. General Advertising
-------------------
i) the development, preparation and production of copy, layouts,
and/or finished advertisements, for all types of print media
including, without restriction, newspaper, magazine, all forms
of outdoor advertising, billboards, transit advertising,
in-store advertising;
ii) the preparation of copy, storyboard, finished films, tapes
and/or recordings for all types of broadcast media including,
without restriction, television, radio, video formats of all
kinds, electronic messaging, theaters and cinemas;
iii) the purchase of artwork, engravings, film, tapes, and/or other
mechanical and collateral materials;
iv) testimonials, endorsements, researchers, etc., on Client's
behalf with Client's written approval;
B. Media
-----
i) to provide, media planning, buying and reporting;
ii) the auditing of all billings submitted by all media or other
parties for material and services provided;
iii) strategic input and recommendations on an ongoing basis as may
be reasonably requested by Client.
C. Interactive Media Services
--------------------------
i) to provide web-site design and development, software
engineering and application development.
D. General
-------
i) the carrying out of such special assignments within the
framework of this Agreement as Client and Agency may agree,
from time to time, in writing.
4. COMPENSATION. The Agency shall be compensated according to the terms
set forth in Schedule A, attached hereto and made part hereof (the
"Agency Compensation").
5. AGENT STATUS. The Agency will conduct and represent itself as agent for
the Client. The Agency shall not enter into any contract or make any
commitment on behalf of the Client, unless Client's approval of such
contract or commitment has first been secured.
6. OWNERSHIP.
A. All creative materials (herein collectively referred to as "Creative
Material") adopted by the Client for use in its advertising shall, as
between Client and the Agency be the sole and exclusive property of
Client provided Client has fully paid Agency for the costs of
production, out-of-pocket expenses and all outstanding fees and
commissions owing to Agency in respect of such Creative Material.
B. In consideration of the payments aforesaid, Agency hereby assigns to
Client copyright in the Creative Material and Client shall have the
right to obtain and hold in its
-2-
own name copyrights, registrations and similar protection which may be
available in the Creative Material. Agency agrees to give Client, at
Client's expense, all assistance reasonably required to perfect such
rights.
C. Agency agrees that with respect to all items prepared for and
submitted to Client containing or proposed to contain any pre-existing
or third party created materials in respect of which rights have been
reserved by some third party (hereinafter collectively referred to as
"Third Party Works"), Agency will specifically identify all Third Party
Works.
D. Any agreement or license for Third Party Works, authorized by Client
and entered into by Agency on behalf of Client with a third party,
shall be entered into in the name of the Client.
E. Notwithstanding anything to the contrary herein contained, all
copyright, patents and code, including source and object code for any
programs designed by Agency relating tot he provision of Interactive
Media Services to Client shall remain the sole property of the Agency.
7. DOCUMENT RETENTION/DESTRUCTION. The Agency shall retain for two years
all contracts, papers, correspondence, copy books, account, invoices,
and all other information in its possession relating to the business of
the Client and make all of such material or such portions of it as the
Client may reasonably request available at the Agency's principal
office for examination, copying and retrieval by the Client's
authorized representatives at such times during the Agency's normal
business hours as the Client may reasonably request.
On an annual basis, stored artwork, mechanicals, film and tape shall be
reviewed and at the written direction of the Client be (i) retained by
Agency, (ii) returned to Client, provided that there is no undisputed
overdue indebtedness owing by Client to Agency, or (iii) destroyed.
8. CONFIDENTIALITY. Client will supply all information reasonably
requested by the Agency as necessary for the performance of its duties
and obligations hereunder. Unless otherwise specified by Client, all
information obtained from Client shall be held in confidence by Agency
and the Agency will not disseminate or utilize such information for its
own purposes and will restrict dissemination of such information within
its own personnel on a "need to know basis" both during the Term of
this Agreement and after its termination. Upon termination of this
Agreement, the Agency will return to Client all copies of documents or
other material containing such information.
Notwithstanding the foregoing, the Agency shall have no obligation to
keep confidential information which (a) is or becomes generally
available to the public through no fault of the Agency, (b) is
disclosed to others by Client without obligation of confidentiality,
(c) was known to the Agency prior to its being obtained from Client by
the Agency, and (d) required to be disclosed by statute, regulation,
court order or legal process.
-3-
Client expressly reserves the right, in its own discretion and for
reasons deemed by it to be sufficient, to modify or reject any and all
schedules, plans or production submitted by the Agency and to instruct
the Agency to cease work on any schedules, plans or production
performed on its behalf. All such advice or instructions shall be given
in writing. When advised to cease work, the Agency shall immediately
cease internal activities and notify all publishers, printers,
engravers, artists, designers or other third parties engaged in
carrying out such schedules or plans to cease work thereon. Client
shall be liable for all non-cancellable committed costs and penalties
incurred.
9. APPROVAL OF ESTIMATES. The Agency shall not commence work on any
project on behalf of Client, unless and until they have submitted an
estimate for that project to Client, and in turn have received a
written approval of that estimate from Client. In case of any changes
affecting the ultimate billing to Client as it would relate to the
estimate by more than 10%, the Agency will submit written revisions to
Client, and not proceed with the project until such revisions have been
approved in writing by Client.
10. A. AUTHORIZED CLIENT PERSONNEL. Client shall advise the Agency of the
individuals authorized by Client to provide the instructions, advice
and/or approvals called for under this Agreement.
B. AGENCY PERSONNEL. Agency will involve such Agency personnel as may
be required to perform the Services.
11. DUE CARE. The Agency shall exercise all reasonable due care and
precautions in the preparation and examination of all material used by
it on behalf of Client.
12. ETHICAL APPLICATIONS. The Agency has the right to refuse to handle any
advertising or other service that, in its opinion, does or may violate
a law, regulation, or self-regulatory rule or policy to which the
Agency, Client or the media have subjected themselves. In any such
event, the Agency shall, at Client's request and expense, furnish
counsel's opinion.
13. INDEMNIFICATION. Client shall indemnify Agency against any liabilities
and expenses (including reasonable attorney's fees) Agency may incur as
a result of any loss, liability, claim, cause of action, suit, damage,
injury, cost or expense relating to:
(i) any undertaking or obligation on the part of Client
under this Agreement;
(ii) Client Products;
(iii) any alleged injury or death to persons or injury or
damage to property during the term of this Agreement
if such injury occurs as a result of acts of Client
or Client's employees, whether said loss is sustained
by Agency or any other person(s) or third party.
-4-
(iv) false, deceptive, or misleading description,
depiction or comparison of Client and/or competitive
products results directly and to the extent that
inaccurate information, material or data was supplied
by or on behalf of Client to Agency.
Upon the assertion of any claim or the commencement of any suit or
proceeding against Agency by and third party that may give rise to
liability of the Client hereunder, the Agency shall promptly notify the
Client of the existence of such claim for Client's defense and/or
settlement of the claim at Client's own expense and with counsel of its
own selection. Agency shall at all times have the right to fully
participate in such defense at its own expense and shall not be
obligated, against its consent, to participate in any settlement which
it reasonably believes would have an adverse affect on its business.
The Agency shall make available to the Client all books and records
relating to the claim, and the parties agree to render to each other
such assistance as may reasonably be requested in order to insure a
proper and adequate defense. The Agency shall not make any settlement
of any claims which might give rise to liability of an Client hereunder
without the prior written consent of the Client.
14. TRADE-MARKS. Agency shall ensure that all Client advertising, creative
and promotional material prepared by the Agency which contains any of
the Client's trade-marks as identified to the Agency from time to time
properly and accurately identifies the Client's trade-marks in
accordance with any Client written trade-mark policy delivered to the
Agency.
15. INSURANCE. During the Term of this agreement, the Agency shall, at its
own cost and expense, maintain the following insurance in full force
and effect:
(a) Agency shall maintain in full force and effect at its own cost
and expense an advertising Agency Liability Policy issued by
an insurance company acceptable to Client protecting against
the following named perils: libel; slander; defamation;
infringement of copyright or of title or slogan; piracy;
plagiarism; unfair competition or idea misappropriation under
implied contract; and/or invasion of rights of privacy, in an
amount not less than $1,000,000; and
(b) Comprehensive general liability insurance providing coverage
for operations and for contractual liability with respect to
liability assumed by the Agency hereunder. The limits shall be
not less than $1,000,000 for bodily injury per occurrence and
$1,000,000 for property damage; or alternatively, the limits
shall be not less than $2,000,000 combined single limit
coverage.
16. AGREEMENT NOT ASSIGNABLE. This Agreement is not assignable. Provided
that Agency and Client hereby agree that either of them may assign
their respective interests, rights and obligations under this Agreement
to any entity with which such party has merged or
-5-
amalgamated or by which such party has been acquired or to which fifty
percent (50%) or more of such party's capital stock, partnership
interest or other analogous ownership interest has been sold or
transferred, provided that such transferee assumes the transferor's
obligations hereunder.
17. NOTICE. Communications, notices, directions and demands which either
party hereto desires, or may under the provisions of this Agreement be
required, to make or give the other shall be properly given and shall
be in full compliance with the Terms hereof, if in writing, and
delivered or sent by prepaid first class mail addressed to:
To Agency: Lasso Communications Inc.
1881 Yonge Street
Suite 500
Toronto, Ontario
M4S 3C4
Attention: President
To Client: Infocast Corporation
1 Richmond Street West
Suite 902
Toronto, Ontario
M5H 3W4
Attention: President
Any communications, notice or direction so given shall be deemed to
have been given and received when delivered or when sent by mail on the
fifth business day following the day on which it was so mailed, subject
to disruptions in the postal service. The Agency and Client may from
time to time by notice aforesaid change their respective addresses for
notice hereunder.
18. TERMINATION. The Initial Term of this Agreement is non-cancellable by
the Client. In the event: i) the Client purports to terminate or cancel
this Agreement prior to the end of the Initial Term for whatever
reason; or ii) the Agency terminates this Agreement for material breach
by the Client, the unpaid balance of the retainer fee set out in
Schedule A shall immediately become due and payable in full, and any
outstanding adjustments to such retainer fee and all outstanding
disbursements shall immediately become due and payable.
The Agency may terminate this Agreement for convenience during the
Initial Term on at least thirty (30) days prior written notice in which
event none of the retainer fee installments which would have become due
subsequent to the effective date of termination shall be
-6-
payable, provided that any Agency compensation payable on a periodic
basis shall be prorated to the effective date of termination.
The Agency will be paid in full, in accordance with the terms of this
Agreement and the attached Schedules, for all authorized costs,
charges, expenses and disbursements incurred prior to the effective
date of termination.
The Agency's rights, duties and responsibilities shall continue during
the applicable termination notice period.
During any renewal terms following the Initial Term, either party shall
have the right to terminate this Agreement at any time upon ninety (90)
days prior written notice to the other.
Effective upon the termination of this Agreement by Client or Agency,
Client agrees to assume, and to indemnify and hold harmless Agency
from, any responsibility for all talent payment for the
post-termination use or re-use of advertising materials, which payments
may be required pursuant to any applicable performers' union agreement,
including without limitation ACTRA and L'Union des Artistes; and Client
further agrees to so notify the applicable union in writing, copying
the Agency (or to execute Agency's notification for, if so requested)
forthwith upon termination of this Agreement. The Agency shall provide
a list of all such continuing obligations.
The provisions of this Agreement relating respectively to Ownership,
Confidentiality and Indemnification shall not be affected by any
termination of this Agreement.
19. NO PARTNERSHIP. This Agreement is a contract for the performance of a
service, and nothing shall be construed as constituting either party
the employer, servant, partner, or joint venture of the other.
20. WAIVER. No waiver by either party of the breach of any provision of
this Agreement shall be construed to be a waiver of any preceding or
succeeding breach of the same or any other provision.
21. REMEDIES CUMULATIVE. Either party's various rights and remedies
hereunder shall be cumulative, and the exercise or enforcement of any
one or more of them shall not preclude either party from exercising or
enforcing any of the others or any right or remedy allowed by law.
22. APPLICABLE LAW. This Agreement shall be construed in accordance with
the laws of the Province of Ontario.
-7-
In Witness Whereof, the parties have duly executed this Agreement
INFOCAST CORPORATION
By: /s/ (signature is illegible)
Title: President
Date: July 20, 1999
By: A.T. Griffis
Title: Chairman
Date: July 20, 1999
LASSO COMMUNICATIONS INC.
By: /s/ (signature is illegible)
Title: Chief Executive Officer
Date: June 15, 1999
By: /s/ (signature is illegible)
Title: Chief Financial Officer
Date: June 15, 1999
-8-
SCHEDULE "A"
------------
AGENCY COMPENSATION
-------------------
Compensation Basis
------------------
1. FEE COMPONENT
(a) The Client shall pay Agency for the services described in the agreement
to which this schedule is attached (the "Agreement") in accordance with
the following fees and rates:
i) RETAINER: Agency shall bill the Client, and the Client shall pay the
Agency an annual retainer fee of $250,000 (plus GST) payable in equal
monthly installments of $20,833 (plus GST) in advance, with the first
payment payable on execution of this Agreement and thereafter on the
first day of each month during the Initial Term until the last payment
is made on May 1, 2000. During any Renewal Term the retainer fee shall
continue at an annual rate equal to the immediately previous year's
annual retainer fee and shall continue to be payable monthly in advance
in equal monthly installments, unless at least sixty (60) days prior to
the end of the Initial Term or any subsequent Renewal Term, the
retainer fee is renegotiated and fixed between the parties.
Notwithstanding payment of the monthly installments paid in respect of
the retainer fee, actual staff time will be reported to Client monthly.
Staff time will be summarised in a report delivered every six months
("Reporting Period") which report shall set out the staff time spent on
behalf of the Client at the Agency's then current blended hourly rate
(currently $145 per hour) applied against Client's account.
ii) RETAINER ADJUSTMENT INITIAL TERM: In the event the aggregate of the
staff time charges calculated at the applicable blended hourly rate for
the first Reporting Period during the Initial Term of this Agreement
exceeds the aggregate of the monthly installments paid during the first
Reporting Period, Client shall forthwith, upon delivery of the report
for the said Reporting Period, pay to Agency the shortfall (plus GST)
as indicated on such report (the "First Period Differential").
Within 90 days following the end of the second Reporting Period during
the Initial Term of this Agreement, the Agency shall provide the Client
with a summary report (the "Annual Report") of the total staff time
spent on behalf of the Client during the first two Reporting Periods of
the Initial Term.
In the event the aggregate of the staff time charges calculated at the
applicable hourly rate for the two Reporting Periods set out in the
Annual Report (the "Annual Staff Charges") exceeds the aggregate of the
monthly installments paid during the said two Reporting Periods plus
any First Period Differential paid to the Agency (the "One Year
Aggregate"), Client
shall forthwith, upon delivery of the report for the said Reporting
Period, pay to Agency the shortfall as indicated in such report.
In the event the Client has paid to Agency a First Period Differential,
and the Annual Staff Charges are less than the One Year Aggregate,
Agency shall forthwith after delivering the Annual Report, rebate to
the Client the difference between the One Year Aggregate and the Annual
Staff Charges provided that the aforesaid rebate shall not exceed the
First Period Differential.
iii) RETAINER ADJUSTMENT RENEWAL TERM: During any Renewal Term, the
provisions and formulae contained in Section 1(a)(ii) with respect to
the adjustment of the retainer fee shall apply mutatis mutandis to each
particular Renewal Term.
(b) The Client shall pay to Agency, in advance, all amounts required to
secure media space and time, including newspaper, periodical, trade
paper, public vehicle transit, radio, television, outdoor, direct mail
advertising and other similar advertising expenditures. The Agency
shall have no obligation to advance any sums on behalf of the client
for the purchase of media. The Agency will allow the Client the benefit
of any arrangements the Agency is able to make with media for terms
more favourable than published rate card rates. The Agency shall not be
entitled to a commission on the placement of media by the Agency.
(c) For Client approved expenditures for externally produced layouts,
storyboards, artwork, photographs, type composition, mechanicals,
engravings, electro-typing, patterns, plates, mats, printing film etc.,
and for all elements of broadcast production including, without
limitation, external storyboards and artwork, music, recording
session(s), talent payment and repayment, colour corrections, rights of
all kinds, release prints, and for all other similar and comparable
items required in and for the production of print, outdoor, transit,
radio and television advertising, the Agency shall bill the Client at
net cost to Agency. Agency agrees to obtain at least three quotes for
the external jobs as noted above when the job is estimated to exceed
$15,000.
(d) All expenditures shall be supported by invoices and purchase orders
which shall be made available to Client upon request.
(f) Client will pay for Client approved:
(i) product testing and product and package development;
(ii) sample surveys for measuring the size, characteristics and
trends of markets;
(iii) advertising testing both before advertising is exposed in
media and after advertisements or campaigns are in use; and
(iv) production, time and space costs, inclusive of commission,
incurred in the testing of copy.
For all such research, Client will be billed and pay to Agency,
supplier's invoices and out-of-pocket expenses at net cost plus 15%
(g) Other expenses not specifically identified will be agreed between the
Client and Agency prior to their expenditure.
2. Miscellaneous Costs and Charges
-------------------------------
(a) The Client will pay at net cost reasonable travel and accommodation
expenses for Agency personnel associated with the creation and
production of television and radio commercials or print advertisements.
Such expenditures must be authorized in advance by the Client as part
of a production estimate.
(b) The Client will pay, on a net basis, travel and accommodation expenses
of Agency personnel who attend presentations, business or sales
meetings at the Client's request. The cost of travel between Agency
offices and Client offices within the same municipality are not payable
by Client.
(c) The Client will pay Agency charges at net cost for:
(i) long distance telephone and facsimile (FAX) charges;
(ii) all extraordinary documents' duplication;
(iii) courier, shipping, delivery or storage charges for
extraordinary service specifically requested by Client; other
than as aforesaid, each of Client and Agency shall be
responsible for all their shipping, delivery and courier
charges for shipments (including without limitation, all forms
of correspondence) originating from each of their own
respective offices;
Receipts and invoices in support of such charges shall be made
available upon request by Client.
(d) The Client will pay all customs duties, federal, provincial and state
taxes, GST and any other value added taxes, excise taxes and any other
taxes (other than Agency's income taxes) applied to or which may become
applicable to any of the fees, costs, charges and expenses billed,
charged or invoiced to the Client hereunder.
3. Vendor's Discounts
------------------
All discounts in the amounts allowed to the Agency from all vendors for prompt
payment, volume, frequency and other similar discounts will be passed on to
Client.
4. Payment Terms
-------------
The Agency will submit its accounts for amounts other than the fixed fee
retainer, monthly by the fifteenth day of the next subsequent month. The terms
of payment, for amounts other than the fixed fee retainer, are net 30 days.
Media costs and charges will be billed in advance by media estimate and,
notwithstanding the foregoing, must be received by Agency prior to Agency
booking or ordering the media. Client's funds shall be in the Agency's hands in
time for the Agency to make timely payment to other suppliers and where
applicable, to secure discounts. On Agency request, the Client shall advance to
Agency any amounts for external supplier costs and expenses detailed in Client
approved Agency estimates. Overdue fees and accounts will be charged a late
payment interest penalty of 2% per month (24% per annum).