Document:

exv10w1

 

Exhibit 10.1

MakeMusic, Inc.

2008 Executive Compensation Plan

     The Compensation Committee (the “Committee”) of MakeMusic, Inc. (the “Company”) has approved a
2008 Executive Compensation Plan (the “Plan”), which is designed to provide annual incentive
awards to certain key employees (“Participants”) based on the achievement of financial objectives.
Incentive awards will be comprised of cash, restricted stock units and, at the Committee’s
discretion, option grants. The maximum annual incentive to which each Participant is entitled will
vary based upon the percentage achievement of certain incentive factors established by the
Committee, in relation to annual performance targets established by the Board of Directors.

     The Board of Directors defined 2008 performance targets for each of the five incentive factors
that were chosen by the Committee. Each incentive factor was assigned a weight for purposes of the
bonus calculations. The incentive factors and their weights are set forth below:

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Incentive	 	 
	 	 	 	 	Factor	 	Threshold
	Financial Objective	 	Incentive Factor	 	Weight	 	Performance
	Return on Invested Capital
	 	Operating Margins	 	 	35	%	 	 	80	%
	 
	 	Asset Turns	 	 	15	%	 	 	90	%
	Sales Growth
	 	Notation Revenue	 	 	20	%	 	 	80	%
	 
	 	SmartMusic Revenue	 	 	21	%	 	 	80	%
	 
	 	SmartMusic Subscriptions	 	 	9	%	 	 	80	%

     Before a bonus may be paid under any incentive factor, a minimum percentage of the performance
target for that incentive factor target must be achieved, as set forth in the “Threshold
Performance” column above. For example, no bonus may be paid under the Operating Margins incentive
factor unless the Company’s actual performance is at least 80% of the performance target for that
incentive factor.

     The amount of each Participant’s incentive award will be based on a percentage of his or her
2008 base salary. For our Co-Chief Executive Officers and Chief Financial Officer, this
percentage ranges from 60%-80% of base salary. The following table indicates, for our Co-Chief
Executive Officers and Chief Financial Officer, the bonus target for each Participant as a
percentage of his or her base salary and the maximum value of cash and restricted stock unit awards
each Participant is eligible to receive under the plan:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Maximum
	 	 	 	 	 	 	 	 	 	 	Maximum	 	Restricted
	 	 	2008 Base	 	Bonus	 	Cash	 	Stock
	Participant	 	Salary	 	Target(1)	 	Bonus(2)	 	Bonus(2)
	John Paulson, Co-Chief Executive Officer
	 	$	200,000	 	 	 	80	%	 	$	160,000	 	 	$	160,000	 
	Ron Raup, Co-Chief Executive Officer
	 	$	200,000	 	 	 	80	%	 	$	160,000	 	 	$	160,000	 
	Karen VanDerBosch, Chief Financial Officer
	 	$	165,000	 	 	 	60	%	 	$	99,000	 	 	$	99,000	 

 

 

 

			
	(1)	 	Represents the percentage of the Participant’s 2008 base salary that may be paid to the
Participant in the form of cash and restricted stock unit awards.
	 
	(2)	 	Equal to the Participant’s 2008 Base Salary multiplied by the Participant’s Bonus Target.

     Upon the Committee’s evaluation of the Company’s 2008 audited financial statements (the
“Determination Date”), the Committee will determine the cash bonus to which each Participant is
entitled. Each Participant’s 2008 cash bonus shall be the sum of his or her 2008 cash bonus for
each incentive factor. For each incentive factor, the Committee shall determine each Participant’s
2008 cash bonus by multiplying the percentage achievement of the performance target for that
incentive factor by the Participant’s Maximum Cash Bonus and the corresponding Incentive Factor
Weight. For example, if the Company achieves 85% of the Notation revenue target in 2008, each
Participant will receive a cash bonus equal to 85% of their Maximum Cash Bonus multiplied by the
Incentive Factor Weight of 20%. Cash bonuses are capped at 100% for each incentive factor target
and no Participant will receive a total cash bonus that exceeds 100% of their Bonus Target.

     If the Company’s shareholders approve an increase to the shares reserved under the Company’s
2003 Equity Incentive Plan, which proposal shall be submitted at the Company’s 2008 Annual
Shareholder Meeting, each Participant will receive, on the date that shareholders approve the
increase, a restricted stock unit award equal to the cash amount of his or her Maximum Restricted
Stock Bonus divided by the per share price of Company common stock on the date the restricted stock
units are granted (the “Maximum RSU Award”). On the Determination Date, the Committee will
calculate the percentage of the Maximum RSU Award that each Participant has earned based on the
Company’s 2008 performance and adjust the Maximum RSU Award downward if the Company’s performance
did not meet or exceed 150% of the performance targets for all incentive factors (the “Earned RSU
Award”).

     Each Participant’s Earned RSU Award shall be the sum of his or her Earned RSU Awards for each
incentive factor. For each incentive factor, the Committee shall determine each Participant’s
Earned RSU Award by doubling the percentage by which the Company’s actual performance exceeds 100%
of the performance target for that incentive factor, and multiplying that figure by each
Participant’s Maximum RSU Award and the corresponding Incentive Factor Weight. For example, if the
Company’s actual performance is 110% of the operating margins target, each Participant’s Earned RSU
Award would equal 20% of their Maximum RSU Award multiplied by the Incentive Factor Weight of 35%.
Twenty-five percent of each Participant’s Earned RSU Award shall vest on the Determination Date and
the remaining 75% will vest in 25% increments on the next three anniversary dates of the
Determination Date, provided that the unvested portion of each earned restricted stock unit award
is subject to forfeiture if, prior to vesting of such portion, the Participant has voluntarily
terminated employment without good reason or has been terminated by the Company for cause.

     The Participants, as well as other employees upon recommendation to the Compensation Committee
by the Co-Chief Executive Officers or the Chief Financial Officer, are also eligible to receive
stock option awards. Such awards will be granted in the sole discretion of the Compensation
Committee, and shall be available only if the Company’s performance meets or exceeds 80% of the
target performance for all incentive factors. The aggregate number of option shares issued in any
calendar year may not exceed 2.5% of the Company’s outstanding stock.exv10w1

 

Exhibit 10.1

MASTER SERVICES AGREEMENT

     THIS MASTER SERVICES AGREEMENT (the “Agreement”) is entered into as of the
14th day of February, 2008 (the “Effective Date”) by and between The Sun-Times
Company, a Delaware corporation (“Customer”), having its principal office at 350 N.
Orleans St., Chicago, Illinois 60654, on behalf of itself and each affiliate that elects
to execute and deliver a “Statement of Work” substantially in the form attached hereto,
and Affinity Express, Inc., a Delaware corporation having its principal office at 2200
Point Blvd., Suite 130, Elgin, IL 60123 (“AE”).

R E C I T A L S:

     WHEREAS, certain of Customer’s affiliates publish newspapers (“Newspapers”) and own
related print businesses;

     WHEREAS, AE is a provider of graphic print production services; and

     WHEREAS, Customer wishes to engage AE to provide certain graphic print production
services and AE is willing and able to provide such services to Customer, all on the terms
and subject to the conditions set forth in this Agreement.

     NOW, THEREFORE, in consideration of the representations, warranties, covenants and
agreements hereinafter set forth, the parties hereto hereby agree as follows:

ARTICLE 1

SERVICES

     1.1 Services.

     (a) Subject to the terms and conditions of this Agreement, Customer hereby engages AE
to render on a nonexclusive basis, and AE hereby agrees to provide, the services (the
“Services”), which for purposes of this Agreement means the services, functions,
processes and responsibilities described in one or more statements of work attached
hereto (each a “Statement of Work” or “SOW”).

     In the event of a conflict between the terms of this Agreement and the terms of a
SOW, the terms of the body of this Agreement shall prevail unless the SOW specifically
states that such term is to override the term set forth herein. Neither this Agreement,
nor any SOW, may be modified or amended except via a written document signed by an
authorized representative of both parties.

     (b) As part of the Services, AE hereby grants Customer during the Term a limited,
non-exclusive, nontransferable license (the “Software License”) to use the Asura Pro
software

 

 

applications, 2 Replistor applications, WebSphere Express 800 units and the Guss
software application solely on an ASP basis, as hosted by AE on its servers. As used
herein “ASP” shall mean application service provider, as such term is commonly understood
in the software industry and “Software” shall mean the following: the Mediaspectrum
Software, 2 Asura Pro software applications, 2 Replistor applications, WebSphere Express
800 units and the Guss software application.

     (c) As part of the Services, AE hereby grants Customer a perpetual limited,
non-exclusive, nontransferable license (the “Mediaspectrum License”) to use the
Mediaspectrum Software solely on an ASP basis, as hosted by AE on its servers.

     As used herein “Mediaspectrum Software” shall mean the following software licensed by
AE from Mediaspectrum, Inc. (“Mediaspectrum”): Mediaspectrum Enginebridge Software
Components, Mediaspectrum AdWatchEX, Mediaspectrum AdDrop — support for both content
collection and manual order capture, Mediaspectrum eProofs, Plug in for Flash Ads, Plug in
for Quark and Plug in for InDesign.

     Mediaspectrum requires that AE pass through to Customer and Customer hereby
acknowledges and agrees that its license and use of the Mediaspectrum Software hereunder
is governed by and Customer shall be subject to the additional license terms as specified
on Schedule 1.1(c) attached hereto.

     The parties acknowledge and agree that any time the Agreement is terminated in accordance with
the terms herein, Customer may directly license from Mediaspectrum the use of the Mediaspectrum
Software. Upon a written notice executed by Mediaspectrum and Customer indicating that such direct
license has occurred, AE shall deliver the Mediaspectrum Software to Customer.

     (d) As part of the Services, Customer hereby buys and AE hereby sells to Customer the
hardware listed on Schedule 1.1(d) attached hereto (the “Hardware”). AE shall and
Customer hereby grants AE the right and license to retain, host and use the Hardware
during the Term to provide the Services for and on behalf of Customer as specified
hereunder.

     1.2 Delivery Schedule.

          (a) AE shall perform the Services in accordance with the delivery schedule to be
agreed upon by the parties and included in each Statement of Work.

          (b) As reasonably agreed to by the parties, the parties will meet to review the
delivery schedule and discuss any appropriate changes thereto.

     1.3 Responsibilities.

            Each party will be responsible to provide the services and obligations as specified
to be performed by such party in the applicable SOW. In addition, each party will
reasonably cooperate with the other party in taking actions, executing documents and
providing timely

 

 

information and feedback as appropriate, to achieve the objectives of this Agreement
and each SOW. Customer agrees that AE’s performance is partially dependent upon
Customer’s timely and effective cooperation with AE. Accordingly, Customer acknowledges
that any delay by Customer may result in AE being released from an obligation or scheduled
deadline or in Customer having to pay extra fees for AE’s agreement to meet a specific
obligation or deadline despite the delay based on the fee rate set forth in the applicable
SOW.

ARTICLE 2

ACCEPTANCE; TITLE

     2.1 Acceptance. The procedure for acceptance by Customer from AE of
deliverables (“Customer Deliverables”), if any, is set forth in the applicable Statement
of Work.

     2.2 Title. Except as specified otherwise in an SOW, title to any
deliverables and materials provided by Customer shall remain with Customer and title to
the final deliverable (the “Customer Property”) shall vest in Customer when such
deliverable has been delivered to Customer pursuant to this Agreement, provided that AE
or its licensors shall retain ownership of all information, materials, deliverable and
other property owned by it prior to this Agreement or which it develops independently of
this Agreement, including any templates and content (images, photos, etc.) used by AE in
the performance of the Services (“AE Property”), whether or not such AE Property is
incorporated into the Customer Property. AE Property shall be treated as Confidential
Information of AE in accordance with this Agreement and Customer Deliverables and
Customer-Supplied Property (as defined herein) shall be treated as Confidential
Information of Customer in accordance with this Agreement. The Customer Deliverables
(subject to AE and its licensor’s ownership in any AE Property which comprises the
Customer Deliverables) shall be considered “Works Made for Hire,” as defined under the
U.S. Copyright laws, and shall be owned by and for the benefit of Customer. In the event
that such Customer Deliverables are determined not to qualify as Work Made for Hire, AE
will and does hereby assign to Customer all right, title and interest that it may possess
in such Customer Deliverables, including but not limited to copyright and other related
proprietary rights. AE shall cooperate as reasonable, at Customer’s sole expense, in
assisting Customer in recording any such assignments and U.S. and foreign copyright and
other intellectual property right applications covering the Customer Deliverables,
including but not limited to signing such documents necessary to effectuate the foregoing.
Customer will have a non-exclusive, non-transferable license to use the AE Property
provided to Customer as part of the Customer Deliverables hereunder upon Customer’s
payment in full of all amounts due hereunder at the time of such use, solely in
conjunction with, and consistent in scope with, Customer’s permitted use of the Customer
Deliverables under this Agreement. AE may utilize any and all methods, computer software,
know-how or techniques related to programming and processing of data, developed by it
while providing the Services and may incorporate the work product, not including
Customer-Supplied Property, in future services of AE. Customer agrees that all
intellectual property rights and all other ownership in any ideas, modifications, or
suggestions it proposes, creates, or authors relating to the Services, other than Customer
Deliverables and Customer-Owned Property (“Suggestions”), are hereby assigned to AE and
shall be the sole and exclusive property of AE. AE will have sole discretion as to
whether and how to implement any such Suggestions.

 

 

Nothing contained in this Section 2.2 shall modify the respective rights of the
parties regarding the Mediaspectrum Software provided for elsewhere in this Agreement.

ARTICLE 3

LABOR AND MATERIALS

     3.1 Labor, Tools, Materials and Facilities. AE agrees that except as
otherwise specified in this Agreement, the applicable SOW or agreed to in writing by
Customer, AE will be responsible for providing all labor, tools, equipment, software,
material and facilities necessary to perform the Services and fulfill its obligations
under this Agreement.

     3.2 AE Personnel.

          (a) Throughout the Term, AE will be responsible for recruiting, hiring and retaining
all personnel necessary to meet its obligations under this Agreement. AE also will
determine the methods, details and means of performing the Services in accordance with the
terms and conditions of the Agreement.

          (b) AE shall cause its personnel to work collaboratively with Customer personnel to
ensure successful performance of the Services. AE also shall take reasonable measures to
ensure that the AE employees, representatives, agents or other personnel who perform any
work on-site at a Customer facility do not pose a threat or risk to the health, safety and
security of Customer’s personnel or its property.

          (c) AE will bear sole responsibility for payment of compensation, expense
reimbursement, unemployment insurance, benefits and workers’ compensation for all AE
personnel. AE will report and withhold, in accordance with Law, for all AE personnel
assigned to the project or performing the Services, all income for federal, state, local
or other taxes, social security taxes, unemployment insurance taxes and any other taxes
applicable to such persons as required by Law. AE further agrees that it bears sole
responsibility for any health or disability insurance, retirement or severance benefits or
other welfare or pension benefits, if any, to which AE personnel may be entitled.

          (d) Throughout the term of this Agreement, AE shall maintain workers’ compensation
insurance on all its employees and comprehensive liability insurance, with coverages and
deductibles consistent with industry standards. The insurance required by this Section
3.2(d) shall be maintained with reputable insurance companies duly licensed to conduct
business in the states or foreign countries where the Services are being performed.

     3.3 Customer-Provided Software. If Customer provides AE with any
Customer-owned software and imagery (the “Customer-Owned Software”) and software
programs which Customer licenses from third parties (the “Third Party Software”)
in connection with AE’s performance of the Services, such Customer-Owned Software and
Third Party Software shall be identified in the applicable SOW and AE’s rights and license
to use such software shall be as specified in the applicable SOW.

 

 

     3.4 Customer-Supplied Property. Any and all tools, equipment, materials,
software, documents, records, information and other items whatsoever (in whatever form or
media) which are furnished to AE by Customer or any of Customer’s representatives or
agents including, without limitation, the Customer-Owned Software (collectively, the
“Customer-Supplied Property”) are and will remain the sole and exclusive property
of Customer (other than the Third Party Software, title to which shall remain with the
vendor thereof). While in AE’s possession, AE shall safeguard and maintain all
Customer-Supplied Property in good condition, shall bear the risk of loss therefor and
shall not use any Customer-Supplied Property for any purpose other than its performance of
the Services.

ARTICLE 4

PRICES; INVOICING AND PAYMENT

     4.1 Fees. In consideration for the Services provided hereunder, Customer
shall pay AE the following fees:

          (a) the transaction fees (the “Transaction Fees”) in the amounts and per the schedule as set
forth in Schedule 4.1 attached hereto; and

          (b) the one-time non-refundable set up and configuration services fees, software license and
hardware purchase fees (the “Capitalization Fees”) for the Software License, the Mediaspectrum
License and the Hardware in the amounts set forth in Schedule 4.1(b) attached hereto and
such Capitalization Fees shall be due, paid and delivered by Customer upon execution and delivery
by Customer of this Agreement.

     4.2 Expenses. Customer shall reimburse AE for reasonable travel and
travel-related expenses (collectively, the “Expenses”) incurred by AE in connection with
the Services, provided that the aggregate Expenses for the 4 SOWs entered into by and
between the parties on the Effective Date shall not exceed $25,000. The parties agree to
work in good faith to minimize the Expenses incurred by AE hereunder. Upon presentation
of documentation of and an invoice for such Expenses the Company will reimburse AE within
thirty (30) days following the date or such invoice.

     4.3 Invoices. AE will invoice Customer on for the Transaction Fees in
accordance with Schedule 4.1(a) attached hereto, unless otherwise agreed in each
SOW. All invoices shall be denominated and paid in U.S. Dollars. All amounts payable
pursuant to this Agreement are exclusive of taxes. Accordingly, Customer shall be
responsible to pay any and all current and future applicable taxes, however designated,
incurred as a result of or otherwise in connection with this Agreement or the Services,
including without limitation state and local privilege, excise, sales, services,
withholding, and use taxes and any taxes or other amounts in lieu thereof (other than
taxes based on AE’s net income).

     4.4 Payment. Except as otherwise provided in this Agreement Customer will
pay AE, in U.S. Dollars, the amounts due under an invoice within thirty (30) days
following the date or such invoice. Payments shall be made by check or by any other
method as agreed to by the parties. Fees that are overdue by thirty (30) days or more
shall accrue interest at the rate of 1.5% per month.

 

 

     4.5 Disputed Charges. Customer will notify AE, in writing, of any dispute
with respect to an invoice or any charges set forth therein within thirty (30) days of the
date of such invoice. The parties agree to work to resolve any disputed charges within
fifteen (15) days of the receipt of such dispute notice by AE.

ARTICLE 5

RELATIONSHIP MANAGERS

     5.1 Relationship Managers. Customer and AE may each designate one of its
management employees to act as its “Relationship Manager” for purposes of
implementing this Agreement as specified in the applicable SOW.

     5.2 Replacement of Relationship Manager. Either party may change its
Relationship Manager at any time by giving written notice to the other party in accordance
with this Agreement; provided, however, that the parties shall use all
reasonable efforts to limit changes so as to minimize any disruption of their business
relationship.

     5.3 Role and Responsibilities of the Relationship Managers. The role of each
Relationship Manager is to provide a primary point of contact through which the parties
can address any questions or issues that may arise during the Term. The Relationship
Managers shall use all reasonable efforts to perform their responsibilities, which shall
include:

          (a) Facilitating communication and cooperation, minimizing conflict and maintaining a
relationship that furthers the parties’ shared interests and objectives;

          (b) Cooperating to ensure that the actual relationship between the parties reflects
as closely as possible each party’s intentions;

          (c) Responding to questions and resolving disputes referred to them by the parties’
employees having direct responsibility for the Services to be provided and the day-to-day
operations involved in or affected by this Agreement;

          (d) Communicating, reviewing and negotiating (when contemplated) any and all changes
to the Services, the Service Levels or any Schedule to this Agreement;

          (e) Communicating and reviewing information relating to Improvements and negotiating
(when contemplated) any changes to this Agreement arising therefrom; and

          (f) Reviewing and discussing, on at least a quarterly basis: (i) AE’s processes,
techniques and operations relating to this Agreement; (ii) AE’s performance under, and
compliance with, this Agreement; (iii) AE’s strategic plans and objectives relating to
this Agreement; and (iv) AE’s invoicing and Customer’s payment for Services under this
Agreement.

 

 

     5.4 Meetings. Relationship Managers may meet (either in person or via
conference call) from time to time, as reasonably requested by either party, for the
purpose of formally reviewing this Agreement and discussing high-level relationship and
performance issues.

     5.5 Decisions of Relationship Managers and Escalation of Disputes. Decisions
of the Relationship Managers shall be made in accordance with the terms and conditions of
this Agreement and shall be in a written document executed by both parties and shall be
binding on the parties. If this Agreement specifies that an issue will only take effect
if agreed between the parties, then the resolution will only be passed if both
Relationship Managers agree in writing. If this Agreement specifies that a party has an
approval right or discretion, then the other party’s Relationship Manager may make
objections and recommendations, but may not prevent such party from making a particular
decision or force such party to make a particular decision. If the Agreement is silent on
a matter, the Relationship Managers will work in good faith to address the issue.

ARTICLE 6

CONFIDENTIAL INFORMATION

     6.1 Confidential Information. As used herein, the term “Confidential
Information” means any non-public, confidential or proprietary information relating to
either party or a third party that is furnished, disclosed or made accessible by the other
party hereunder, whether verbally or in writing (including, but not limited to, trade
secrets, marketing plans, financial data, specifications, ideas, concepts, techniques,
processes, know-how, drawings, diagrams, sketches, models, samples, computer programs and
documentation, advertising content, pricing and policies). Confidential Information also
includes the terms and conditions of this Agreement (but not its existence), disclosure of
which shall be governed by the terms of Section 11.8 of this Agreement. All Confidential
Information shall remain the property of the disclosing party and no license or other
rights in or to any Confidential Information are granted by virtue of this Agreement.

     6.2 Exclusions from Confidentiality Obligation. Confidential Information of
a party shall not include any information that: (i) is in the possession of or known to
the other party prior to the time of disclosure to the recipient and was not acquired
directly or indirectly from the disclosing party or any person or entity acting on its
behalf, as evidenced by documentation; (ii) is or becomes publicly available through no
fault of the recipient; (iii) is independently developed by the recipient without the use
of any Confidential Information; or (iv) is obtained from a third party without breach by
such third party or the recipient of any obligation of confidence with respect to the
information disclosed.

     6.3 Court Ordered Disclosure. If either party is subject to an order or
requirement of a court, regulatory agency or other government body of competent
jurisdiction to disclose Confidential Information of the other party, it: (i) will notify
the other party immediately of such order or requirement to disclose (unless prohibited by
such court, agency or government body) and use reasonable efforts to resist, or to assist
the other party in resisting, such disclosure and, if such disclosure must be made, to
obtain or assist in obtaining a protective order or comparable assurance that the
Confidential Information disclosed shall be held in confidence and not be

 

 

further disclosed absent the other party’s prior written consent and (ii) disclose
only those portions of the disclosing party’s Confidential Information as are necessary to
comply with such order or requirement.

     6.4 Use and Disclosure Restrictions. Both parties agree: (i) to use the
other party’s Confidential Information solely for the purpose of performing its
obligations and exercising its rights under this Agreement; (ii) to make only such number
of copies of any Confidential Information as may be reasonably necessary for the purpose
of performing its obligations and exercising its rights under this Agreement; (iii) not to
disclose any Confidential Information to any third party, except to those of its
representatives, employees, subcontractors and agents who have a need to know such
Confidential Information for purposes of fulfilling the obligations of each party
hereunder and who agree to maintain the confidentiality of such Confidential Information;
and (iv) not to encrypt any Confidential Information transmitted electronically. Each
party will be responsible for any breach of this Article 8 by its representatives,
employees, subcontractors and agents.

     6.5 Return or Destruction. Upon the expiration or termination of this
Agreement, or at any time upon the request of the disclosing party, the other party will
promptly return or, at the disclosing party’s direction, destroy all Confidential
Information of the other party, in whole or in part, in whatever format, including any
copies thereof.

     6.6 Equitable Relief. Each party agrees that monetary damages will not be a
sufficient remedy for any breach of its obligations under this Article and that, in the
event of such a breach, the non-breaching party shall be entitled to equitable relief
including injunction and specific performance. Such equitable relief shall be in addition
to other remedies at law or in equity that are available to the non-breaching party.

     6.7 Survival. The provisions of this Article shall survive termination of
this Agreement.

ARTICLE 7

REPRESENTATIONS AND WARRANTIES

     7.1 Representations and Warranties of AE. AE represents and warrants to
Customer as follows:

          (a) All Services will be performed in a professional and workmanlike manner,
consistent with industry standards and in accordance with the provisions of each
applicable SOW.

          (b) AE has all approvals, bonds, licenses, permits and consents which are necessary
to perform its obligations in accordance with this Agreement, including granting the
Software License and the Mediaspectrum License.

          (c) AE will at all times maintain all necessary legal permits and licenses required
by any governmental unit or agency and will comply with all applicable international,

 

 

national, state, regional and local laws, regulations, court orders and governmental
or regulatory agency orders (collectively, “Laws”) in performing its duties
hereunder and in connection with providing the Services.

          (d) AE has full power and authority to execute, deliver and perform this Agreement
and each SOW.

          (e) This Agreement and each SOW have been duly and validly authorized, executed and
delivered by AE and constitute valid and binding agreements enforceable against AE in
accordance with their respective terms, except to the extent that such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws
relating to creditors’ rights generally and by principles of equity.

          (f) Neither the Services nor any Customer Deliverable (not provided by Customer)
infringes or involves the misappropriation of any intellectual property right of any third
party (AE sole liability and Customer’s sole remedy shall be as specified in Section 8.1
hereof).

     EXCEPT AS PROVIDED IN SECTION 7.1(A), THE SERVICES AND ANY DELIVERABLES PROVIDED BY
AE TO CUSTOMER SHALL BE PROVIDED “AS IS” WITHOUT ANY WARRANTIES WHATSOEVER, EITHER
EXPRESS, IMPLIED OR STATUTORY, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT.

     If the Services are not performed as warranted in Section 7.1(a), or are not timely
performed, then AE shall promptly re-perform, or cause to be re-performed, such Services,
at no additional charge to the Customer, provided, however, that if Customer is required
to issue its customer a credit or refund its customer a fee for the Services even if the
Services were to be re-performed by AE in accordance with the terms herein, , then AE
shall not re-perform the Services and shall instead refund the fees paid by Customer with
respect to such particular deficient Services. The warranty set forth in Section 7.1(a)
shall, except insofar as a breach thereof may provide the grounds for termination of this
Agreement, only survive for thirty (30) days following the end of the calendar month
during which the completion of the Services or delivery of any applicable deliverable, as
the case may be, occurs. Such re-performance or refund shall be Customer’s exclusive
remedy and AE’s sole liability for any such non-performance of Section 7.1(a), except for
such rights to terminate this Agreement as Customer may have under Section 10.2.

     7.2 Representations and Warranties of Customer. Customer represents and
warrants to AE as follows:

          (a) Customer or the applicable affiliate of Customer has full power and authority to
execute, deliver and perform this Agreement and each SOW.

 

 

          (b) This Agreement and each SOW have been duly and validly authorized, executed and
delivered by Customer or the applicable affiliate of Customer and constitute valid and
binding agreements enforceable against Customer or the applicable affiliate of Customer in
accordance with their respective terms, except to the extent that such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws
relating to creditors’ rights generally and by principles of equity.

ARTICLE 8

INDEMNIFICATION; LIABILITY

     8.1 AE Indemnity.

          (a) AE shall indemnify, defend and hold harmless Customer from and against any and
all liabilities, losses, claims, demands, damage, judgments and costs and expenses,
including reasonable attorneys’ fees (collectively, “Damages”), based upon third party
claims against Customer that arise out of or in connection with: (i) any aspect of the
employment relationship between AE and AE’s employees assigned to provide the Services
hereunder; (ii) any action brought by any of AE’s personnel seeking to be treated as an
Customer employee and/or seeking Customer employee benefits; (iii) a claim that the
Services, including the Software, or any Customer Deliverable (not provided by Customer)
infringes or involves the misappropriation of any intellectual property right of any third
party; (iv) any bodily injury, death or damage to tangible personal property caused by the
negligent or willful acts or omissions of AE or its employees or subcontractors in the
performance of Services; (v) theft, fraud, misappropriation by AE or its officers,
employees, agents, contractors, subcontractors or successors, of tangible or intangible
property of Customer; (vi) any breach of this Agreement or an SOW by AE; or (vii) any
violation of any Law by AE in its performance of this Agreement.

          (b) Should any Customer Deliverable become, or in AE’s opinion be likely to become,
the subject of a claim of infringement or trade secret misappropriation as set forth
above, AE shall, at its option and expense, in addition to its obligations under Section
8.1(a)(iii) hereof, either: (i) procure for Customer the right to continue to use the
infringing deliverable, or (ii) replace or modify the infringing deliverable to make its
use non-infringing without loss of substantial functionality.

          (c) Regardless of the foregoing, AE shall have no liability or obligation to Customer
with respect to any claim if such a claim is based on the combination, operation, or use
of the Customer Deliverable with materials which were not provided by AE, to the extent
that Customer’s liability for such claim would have been avoided in the absence of such
combination, operation, or use.

          (d) Sections 8.1(a) and (b) state AE’s sole obligation and Customer’s sole remedy in
the event that a deliverable infringes or misappropriates any intellectual or proprietary
rights of any third party.

     8.2 Customer Indemnity. Customer shall indemnify, defend and hold harmless
AE from and against any and all Damages, based upon third party claims against Customer
that arise

 

 

out of or in connection with AE’s possession of or use of the Customer-Supplied
Property, Customer-Owned Software and/or Third Party Software in accordance with this
Agreement.

     8.3 Limitation On Liability. In no event shall either party be liable for
lost profits, lost savings, loss of information or data, or any other special, indirect,
consequential or incidental damages. AE’s cumulative liability for any claims arising
under this Agreement or in connection with a SOW (other than claims arising under Article
6 or Section 8.1(a)(i), (ii), (iii), (iv), (v) or (vii) hereof) shall be limited to the
amount that AE has received from Customer in connection with such SOW during the twelve
month period immediately preceding the event giving rise to such damages.

     8.4 Indemnification Procedures.

          (a) The party seeking indemnification (the “Indemnified Party”) shall give
prompt notice to the party against whom indemnification is sought (the “Indemnifying
Party”) of the assertion of any claim, or the commencement of any suit, action or
proceeding in which indemnification may be sought under this Article (a
“Proceeding”).

          (b) Promptly after receipt by the Indemnified Party of notice of the commencement of
any Proceeding against it, such Indemnified Party will give notice to the Indemnifying
Party of the commencement of such claim, but the failure to notify the Indemnifying Party
will not relieve the Indemnifying Party of any liability that it may have to any
Indemnified Party, except to the extent that the Indemnifying Party demonstrates that the
defense of such action is prejudiced by the Indemnifying Party’s failure to give such
notice.

          (c) If any Proceeding is brought against an Indemnified Party and it gives notice to
the Indemnifying Party of the commencement of such Proceeding, the Indemnifying Party will
have the sole right to assume the defense of such Proceeding (unless the Indemnifying
Party fails to provide reasonable assurance to the Indemnified Party of its financial
capacity to defend such Proceeding and provide indemnification with respect to such
Proceeding) with counsel selected solely by the Indemnifying Party, and to defend and
settle the claim in its sole discretion. If notice is given to an Indemnifying Party of
the commencement of any Proceeding and the Indemnifying Party does not, within fifteen
(15) days after the Indemnified Party’s notice is given, give notice to the Indemnified
Party of its election to assume the defense of such Proceeding, the Indemnified Party
shall be entitled to control the defense of such Proceeding, at the Indemnifying Party’s
sole cost and expense, provided that the Indemnifying Party shall have the right to
participate at its sole cost and expense, and the Indemnifying Party will be bound by any
determination made in such Proceeding or any compromise or settlement effected by the
Indemnified Party. If an Indemnifying Party assumes the defense of such a Proceeding, (a)
no compromise or settlement thereof may be effected by the Indemnifying Party without the
Indemnified Party’s consent (which shall not be unreasonably withheld) unless (i) there is
no finding or admission of any violation of Law or any violation of the rights of any
person by, and no effect on any other claims that may be made against, the Indemnified
Party and (ii) the sole relief provided is monetary damages that are paid by the
Indemnifying Party and (b) the Indemnifying Party shall have no liability with respect to
any compromise or settlement thereof effected by the Indemnified Party without its consent
(which shall not be unreasonably

 

 

withheld). If the Indemnifying Party chooses to defend any legal proceeding, the
Parties hereto shall cooperate in the defense or prosecution of such legal proceeding.
Such cooperation shall include the retention and (upon the Indemnifying Party’s request)
the provision to the Indemnifying Party of records and information that are reasonably
relevant to such proceeding, and making employees available on a mutually convenient basis
to provide additional information and explanation of any material provided hereunder.

ARTICLE 9

Intentionally Omitted.

ARTICLE 10

TERM AND TERMINATION

     10.1 Term of Agreement. This Agreement shall be effective as of the date the
first SOW is effective (the “Effective Date”) and shall expire on the third anniversary of
the Effective Date, unless sooner terminated as provided in this Article 10 (the
“Term”). Upon the expiration or termination of this Agreement, all Statements of
Work executed pursuant to this Agreement shall also terminate concurrently with the
expiration or termination of the Agreement. Upon at least ninety (90) days prior written
notice before the end of the then current term, Customer may renew the Agreement for
successive one (1) year periods provided that the fee to host and support the
Mediaspectrum Software during each such renewal period shall be $180,000 and the parties
shall agree on the transaction fees for each such renewal period. In addition, in the
event of the termination or expiration of this Agreement, AE shall, at Customer’s request,
provide Customer with an electronic copy of all Customer data in the Mediaspectrum
Software previously hosted by AE or with access to extract such data.

     10.2 Termination for Cause.

          (a) Upon the occurrence of a breach of this Agreement or any SOW, the breaching party
shall have a period of thirty (30) days after the date of written notice thereof from the
other party in which to cure such breach to the reasonable satisfaction of the other
party. If the breaching party does not cure its breach to the reasonable satisfaction of
the other party, then as of the end of such thirty (30) day period an “Event of
Default” with respect to the breaching party shall be deemed to have occurred.

          (b) Upon an Event of Default, the non-breaching party shall have the right, in the
exercise of its sole discretion, to terminate this Agreement by giving written notice
thereof to the breaching party. Thereafter, the non-breaching party may pursue any and all
available legal and equitable remedies against the breaching party. In addition, upon an
Event of Default by AE, Customer may elect to terminate only those individual Services
affected by such Event of Default without terminating the entire Agreement.

     10.3 Termination without Cause. Any time after the first year anniversary of
the Effective Date, either party may terminate this Agreement, without cause, upon one
hundred eighty (180) days prior written notice to the other party.

 

 

     10.4 Termination for Insolvency or Cessation of Business. Either party may
terminate this Agreement upon ten (10) days prior written notice in the event the other
party: (i) becomes insolvent or unable to pay its debts as they mature; (ii) makes a
general assignment for the benefit of its creditors; (iii) makes or permits the
appointment of a receiver for all or substantially all of its property; (iv) authorizes,
applies for or consents to the appointment of a trustee or liquidation of all or a
substantial part of its assets or has proceedings seeking such appointment commenced
against it; (v) files a voluntary petition under any bankruptcy, insolvency or
reorganization laws of the United States or has proceedings under any such law instituted
against it; (vi) has any substantial part of its property become subject to any levy,
seizure, assignment or sale for or by any creditor or governmental agency; or (vii)
dissolves or ceases to do business.

     10.5 Termination for Non Payment of Invoices. AE may, at its sole
discretion, cease providing Services under this Agreement if Customer is more than thirty
(30) days late in payment of any undisputed invoice amount, and may terminate this
agreement for non-payment if Customer is more than forty-five (45) days late in payment of
any undisputed invoice amount, provided that AE provides written notice to Customer
pursuant to this Agreement of AE’S intended action.

     10.6 Remedies Cumulative. The rights and remedies herein provided for an
Event of Default or in the case of insolvency or cessation of business are cumulative and
shall not affect in any manner any other remedies that a party may have by reason of such
Event of Default, insolvency or cessation of business. The exercise of any right or
remedy herein provided shall be without prejudice to the right to exercise any other right
or remedy provided herein, at law or in equity. Except as provided herein,
non-performance by a party experiencing a Force Majeure Condition will not be a breach of
this Agreement for any purpose other than providing grounds for termination of this
Agreement as long as all reasonable efforts are made to expeditiously remedy the problem
causing such non-performance. The party affected by a Force Majeure Condition shall
immediately notify the other party thereof, and make all commercially reasonable efforts
to mitigate the effect and extent of any Force Majeure Condition and the adverse
consequences thereof.

     10.7 Effect of Termination. Upon Customer’s request, after the date of
termination AE shall, at Customer’s sole expense, deliver the Hardware to Customer as
reasonably directed by Customer. If Customer does not request delivery of the Hardware
within thirty (30) days of the termination date, AE shall retain the Hardware and own all
rights, title and interest in and to the Hardware. All fees due an payable under this
Agreement shall survive termination of the Agreement (including without limitation any
true-up fees as specified in any applicable SOW).

ARTICLE 11

MISCELLANEOUS

     11.1 Force Majeure Condition. A party shall not be in default under this
Agreement for any purpose other than providing grounds for termination of this Agreement
or liable for any nonperformance which is caused by acts outside of its reasonable control
including fire, flood, explosion, war, terrorism, embargo, or act of God during the period
to the extent that such

 

 

extraordinary condition delays, impairs or prevents such party’s performance,
provided that such breach or delay is not the fault of the non-performing party and could
not have been prevented by the non-performing party taking commercially reasonable
precautions (a “Force Majeure Condition”).

     11.2 Governing Law; Jurisdiction; Forum. This Agreement shall be governed by
and construed in accordance with the laws of the State of Illinois in the United States of
America as such laws are applied to contracts entered into and performed entirely within
such state, without regard to the conflict of law principles thereof. AE and Customer
irrevocably elect as the sole judicial forum for the adjudication of any matters arising
under or in connection with this Agreement, and consent to the jurisdiction of, the
federal and state courts of the State of Illinois, County of Kane, in the United States of
America.

     11.3 Service of Process. Each party irrevocably consents to the service of
process in any action or proceeding in the same manner as provided for notice pursuant to
Section 11.5; provided, however, that the foregoing shall not limit the
right of either party to effect service of process on the other party by any other legally
available method.

     11.4 Attorneys’ Fees. In the event that an action is brought to enforce the
terms of this Agreement, the prevailing party shall be reimbursed its costs and reasonable
attorneys’ fees by the nonprevailing party.

     11.5 Notices.

              (a) The parties hereby appoint the following individuals to act as their authorized
representatives for the purposes of the Agreement. All notices, requests, demands and
other communications under this Agreement shall be in writing and delivered in person or
sent by overnight courier, postage prepaid, or by facsimile transmission, and addressed as
follows:

	 	 	 
	The Sun-Times Company

	 	Affinity Express, Inc.
	 
	 	 
	Attn: John Barron

	 	Attn: Chief Financial Officer
	The Sun-Times Company

	 	Affinity Express Inc.
	c/o Sun-Times Media Group, Inc.

	 	2200 Point Blvd, Suite 130
	350 North Orleans Street 10-S

	 	Elgin, Il 60123
	Chicago, IL 60654

	 	Facsimile: (847) 930-3299
	Fax: 312-321-2199
	 	 
	 

	 	with a copy to:
	with a copy to:
	 	 
	Legal Department

	 	Attn: Daniel M. Carroll, Esq.
	Sun-Times Media Group, Inc.
	 	 
	350 North Orleans Street 10-S

	 	Carroll & Vounessea, LLP
	Chicago, IL 60654

	 	Three Essex Green Drive, Suite 5
	Attn: General Counsel

	 	Peabody, MA 01960
	Fax: 312-321-0629

	 	Facsimile:  (978) 359-0261

 

 

          (b) Any party may from time to time change its address for the purpose of notices to
that party by a similar notice specifying a new address, but no such change shall be
deemed to have been given until it is actually received by the party sought to be charged
with its contents.

          (c) All notices and other communications required or permitted under this Agreement
which are addressed as provided in this Section 11.5 shall be effective: (i) on the second
business day after deposit, if delivered by overnight courier, charges prepaid; (ii) on
the day of transmission, if sent via facsimile (with a confirmation copy sent by regular
mail); or (iii) as of the day of receipt if hand delivered.

     11.6 Independent Contractors. The parties to this Agreement are independent
contractors. Neither party is an agent, representative or partner of the other party.
Neither party shall have any right, power or authority to enter into any agreement for, or
on behalf of, or incur any obligation or liability of, or to otherwise bind, the other
party. This Agreement shall not be interpreted or construed to create an association,
agency, joint venture or partnership between the parties or to impose any liability
attributable to such a relationship upon either party. Moreover, nothing in this
Agreement will be interpreted or construed as establishing or creating the relationship of
joint employer, single employer or any other employment relationship between AE and
Customer, or employer and employee between Customer and any employee, contractor,
representative or agent of AE. Each party has and hereby retains the right to exercise
full control of and supervision over the performance of its obligations hereunder and full
control over the employment, direction, compensation and discharge of its employees (and
permitted agents and subcontractors) assisting in the performance of such obligations.

     11.7 No Recruiting. During the term of this Agreement and for a period of
one (1) year after the expiration or termination of this Agreement, neither party will
recruit nor employ, directly or indirectly, any employee of the other party involved in
the performance of this Agreement, unless otherwise mutually agreed; provided, however,
that employment resulting from general solicitations that appear in digital or written
media shall not be deemed to violate this Section.

     11.8 Disclosure and Publicity. The specific terms and conditions of this
Agreement are confidential and shall not be disclosed by either of the parties hereto
without the consent of the other party, not to be unreasonably withheld, except as
required by law or the rules of the New York Stock Exchange or any other national
securities exchange; provided, however, that either party may disclose the
general nature of this Agreement and their business relationship. In addition, AE may
identify Customer as a user of AE’s services and either party may issue media releases,
public announcements and public disclosures relating to this Agreement or its subject
matter, including promotional or marketing material, subject to the consent of the other
party, not to be unreasonably withheld.

 

 

     11.9 Expenses. Each party shall pay all of its own costs and expenses
incurred or to be incurred by it in the negotiation and preparation of this Agreement.

     11.10 No Dependence. AE acknowledges and agrees that Customer is not
responsible for knowing AE’s dependence on revenues from sales to Customer in proportion
to AE’s revenues from other customers and AE agrees to release, hold harmless and
indemnify Customer from any and all claims and liabilities relating to AE’s financial
stability or AE’s loss of business or profits from other customers which may result from
Customer’s termination of this Agreement for any reason whatsoever.

     11.11 Entire Agreement. This Agreement, together with the Schedules attached
hereto and any SOWs, sets forth the entire agreement and understanding of the parties and
supersedes any and all prior written and oral agreements between the parties with respect
to the subject matter hereof.

     11.12 Amendments. This Agreement may not be amended, modified or
supplemented except by a written instrument signed by both parties.

     11.13 Headings. The subject headings of the articles, sections and
subsections of this Agreement are included only for purposes of convenience, and shall not
affect the construction or interpretation of any of its provisions.

     11.14 No Third Party Beneficiaries. Except for the rights of Mediaspectrum
as it pertains to the Mediaspectrum Software as specified on Exhibit 1.1(c)
attached hereto, this Agreement is not made for the benefit of any person, firm,
corporation or association other than the parties hereto and the parties do not intend to
confer any rights or benefit hereunder on any person, firm or corporation other than the
parties hereto; nor shall any person, firm or corporation be allowed to claim any rights
or benefits.

     11.15 Waivers. The failure of either party to insist upon or enforce strict
performance by the other party of any provision of this Agreement, or to exercise any
right under this Agreement, shall not be construed as a waiver or relinquishment of such
party’s right to enforce any such provision or right in any other instance.

     11.16 Severability. In the event that any provision of the Agreement
conflicts with the law under which the Agreement is to be construed, or if any such
provision is held invalid by an arbitrator or tribunal with jurisdiction over the parties
to the Agreement, such provision shall be deemed to be restated to reflect as nearly as
possible the original intentions of the parties in accordance with applicable law, and the
remainder of the Agreement shall remain in full force and effect.

     11.17 Survival. To the extent that provisions in this Agreement impose
obligations that by their terms extend beyond the duration of this Agreement, such
provisions shall survive termination or expiration of this Agreement as necessary to
affect their purposes.

 

 

     11.18 Assignment. Neither party may assign or otherwise transfer this
Agreement or any SOW or any rights or obligations hereunder or thereunder, in whole or in
part, other than to a successor entity in the event of merger, consolidation, transfer,
sale, “roll-up,” stock purchase or public offering of stock or the sale of substantially
all of the assets, without the other party’s prior written consent, which consent shall
not be unreasonably withheld or delayed, provided, however that if any of Customer’s
affiliates who have executed an SOW or any Newspaper owned by Customer or any such
affiliate is sold, transferred or otherwise acquired by another party, Customer shall have
the right, upon prior written notice to AE but without the consent of AE, to assign or
otherwise transfer this Agreement or any SOW and the rights and obligations hereunder and
thereunder, in relevant part, to any such acquiror. Notwithstanding anything in this
Section 11.18 to the contrary, Customer shall not have the right to assign its rights to
the use of the Mediaspectrum Software unless such assignment is consented to by
Mediaspectrum as specified on Exhibit 1.1(c) attached hereto.

     11.19 Binding Effect; Counterpart and Facsimile Signatures. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and together constitute the same
instrument. Facsimile signatures shall have the same legal effect as original signatures.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as
of the date first set forth above.

	 	 	 	 	 	 	 	 	 	 	 
	THE SUN-TIMES COMPANY	 	 	 	AFFINITY EXPRESS, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Cyrus F. Freidheim, Jr.  
	 	 	 	By:
	 	/s/ David McTarnaghan	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Name:

	 	Cyrus F. Freidheim, Jr.  
	 	 	 	Name:
	 	David McTarnaghan	 	 
	 

	 	 

	 	 	 	 	 	 
  	 	 
	Title:

	 	President & CEO  
	 	 	 	Title:
	 	President, Ad Services

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