Exhibit 10.7
SOFTWARE LICENSE, TECHNICAL SUPPORT, AND OPERATION OF
CUSTOMER SERVICE & DATA CENTRE AGREEMENT
THIS AGREEMENT is made as of the 1st day of September, 2001.
BETWEEN:
CYOP SYSTEMS INC., a limited liability company incorporated under
the laws of Barbados and having its principal offices at Suite
00-0xx Xxxxx, Xxxxxxxx Xxxx, Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxx
("LICENSOR")
AND:
XXXXX.XXX (CANADA) ENTERPRISES INC., a limited liability company
incorporated under the laws of Canada and having its principal
offices at 3rd Xxxxx--0000 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx
Xxxxxxxx, Xxxxxx
("LICENSEE")
BACKGROUND:
A. Licensor has developed a software program known as "CrediPlay" (the
"SOFTWARE"), which is an online financial network offering Pay-for-Play
tournaments, and Pay-per-Use integrated games, products, and services for
licensed users, and which includes an integrated credit card and financial
payment processing application that permits licensed users to access and
utilize the services of credit card organizations and collect, record, and
distribute financial payments in the course of the licensed users' business
activities.
B. Licensee operates and maintains an Internet portal or Website that hosts,
operates, and organizes skill-based bingo and bingo-like games, tournaments
and competitions and an online reference for information and activities
relating to bingo and bingo-like games ("LICENSEE'S BUSINESS").
C. Licensor has the necessary personnel, resources, experience, skills, and
background in the operation of a customer service and data centre to
effectively operate and manage those functions for Licensee's Business.
D. Licensee has requested Licensor to grant a license for the Software and to
provide services for the operation of Licensee's customer service and data
centre.
E. The parties have agreed to enter into this Agreement on the terms and
conditions set forth in this Agreement.
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AGREEMENTS:
In consideration of the mutual covenants and agreements set forth in this
Agreement, the parties agree as follows:
PART I--DEFINITIONS & INTERPRETATION
1. DEFINITIONS
1.1 DEFINITIONS. In this Agreement:
"ASP" means an application service provider selected by Licensor from
time to time to host and operate the Software on the ASP's computer
server for access by Licensee, Sublicensees and Customers;
"APPROVED FINANCIAL INSTITUTION" means a bank, credit union, trust
company, investment or brokerage firm, or other financial institution
which appears on the list attached as Schedule A to this Agreement,
which Schedule A may be modified by Licensee from time to time;
"BINGO TOURNAMENT" means a bingo or bingo-like tournament, game or
competition accessed from Licensee's or Sublicensee's Website,
regardless of the name or format of such tournament, game or
competition;
"CONVERSION RATIO" means, at any time, the ratio then in effect as
determined or established by the Rules and Regulations for converting
Customer Payments into Customer Credits and converting Network
Maintenance Fees into dollar amounts, and vice versa, and which will
initially be $0.01 for 1 Customer Credit, subject to change under the
Rules and Regulations;
"CUSTOMER" means any person who gains access to Licensee's or
Sublicensee's Website via the Internet for the purpose of participating
in a Bingo Tournament, and who pays the applicable Network Maintenance
Fees and/or the applicable Tournament Entrance Fees, and "LICENSEE'S
CUSTOMER" means a Customers who accesses a Bingo Tournament from
Licensee's Website, and "SUBLICENSEE'S CUSTOMER" means a Customer who
accesses a Bingo Tournament from a Sublicensee's Website;
"CUSTOMER CREDITS" means an electronic unit of participation, which is
recorded and used by the Software to allow Customers access to and
participation in a Bingo Tournament;
"CUSTOMER PAYMENTS" means all funds collected from Customers, whether
by credit card, debit card, cheque, cash, or any other means;
"CUSTOMER INFORMATION" means all data relating to Customers collected
and stored by the Software or by Licensee's or Sublicensee's Website
including, without limiting the generality of the foregoing, name,
address, telephone number, telecopier number, e-mail address, credit
card numbers and expiration dates, information on other types of
payments or fees, activities on the Internet, activities on the
Website, and the amount of Customer Payments and Customer Credits;
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"DOCUMENTATION" means any and all documentation accompanying or
describing the Software, specifically including any localized version
of the Documentation created by Licensor or Licensee and all
supplements and new versions of the foregoing items;
"DOWNLOADABLE SOFTWARE" means the portion of the Software, if any, that
must be present on a Customer's computer in order for that Customer's
computer to have access to a Bingo Tournament and which may be
downloaded or obtained by the Customer via the Internet as a java
applet;
"EFFECTIVE DATE" means the date of this Agreement;
"ESCROW AGENT" means an independent third party selected, from time to
time, by Licensee to hold the Software, including without limitation
all source code materials, pursuant to the Escrow Agreement (if and
when required by Licensee);
"ESCROW AGREEMENT" means the agreement to be entered into between
Licensor, Licensee, and Escrow Agent pursuant to Section 4.3, as
amended from time to time;
"INITIAL SET UP FEE" means the sum of $50,000 payable to Licensor for
services rendered to initialize and make the Software accessible for
use by Licensee and its Customers;
"INTERNET" means the worldwide collection of computer networks and
gateways that use the TCP/IP suite of protocols to communicate with
one another;
"LICENSE TERM" has the meaning set out in Section 3.3;
"LICENSE FEES" means, in respect of any period of time, an amount equal
to 25% of the Network Maintenance Fees collected by or on behalf of
Licensee for that period of time for Bingo Tournaments accessed from
Licensee's Website, subject to adjustment under Section 8.4;
"LICENSOR'S CASH ACCOUNT" means an account opened and maintained by
Licensor for the benefit of Licensee and/or a Sublicensee with an
Approved Financial Institution for the deposit and withdrawal of cash
payments for and on behalf of Licensee and/or Sublicensee, as the case
may be;
"LICENSEE'S CONFIDENTIAL INFORMATION" has the meaning set out in
Section 10.4;
"LICENSOR'S CONFIDENTIAL INFORMATION" has the meaning set out in
Section 10.1;
"MASTER CD" means a compact disc containing the Downloadable Software,
which may be used to mass produce compact discs for delivery of
Downloadable Software to Customers when and if Licensee elects to use
such delivery mechanism;
"NETWORK MAINTENANCE FEES" means the fees expressed in Customer Credits
and determined or established by the Rules and Regulations from time to
time, which the Customer must pay to Licensee or Sublicensee to
register with, and to gain access to Bingo Tournaments, but the Network
Maintenance Fees do not include the Tournament Entrance Fees;
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"RESIDUAL NETWORK MAINTENANCE FEES" means, in respect of any period of
time, the balance of converted Network Maintenance Fees paid by
Customers during that period of time after deduction and payment of the
Initial Setup Fee and applicable License Fees, Sublicense Fees, Service
Fees, Sublicensee Service Fees and Sublicensee Initialization Fees;
"RULES AND REGULATIONS" means the instructions and guidelines developed
or modified from time to time by Licensee to govern all aspects of a
Bingo Tournament, including, without limitation, the rules of play that
Customers must adhere to, the distribution of the Customer Payments,
the method and ratio for conversion of Customer Payments into Customer
Credits and vice versa, the eligibility and entrance requirements and
criteria for Bingo Tournaments, the amount of Network Maintenance Fees,
and the allocation and distribution of the Tournament Entrance Fees,
with the initial Rules and Regulations attached hereto as Schedule B;
"SERVICE FEES" means, in respect of any period of time, an amount equal
to 5% of the Network Maintenance Fees collected by or on behalf of
Licensee for that period of time, for Bingo Tournaments accessed from
Licensee's Website, subject to adjustment under Section 8.6;
"SERVICES TERM" has the meaning set out in Section 5.4;
"SOFTWARE"--further to the description set forth in the recitals--means
the source code form (in all data formats) of the current and any
future version of Licensor's software programs known as "CrediPlay" and
specifically includes the most current release of any localized version
of the Software by Licensor and any Updates to any such program from
time to time;
"SUBLICENSEE" means any party to whom Licensee grants a sublicense to
use the Software in the Territory for the support or operation of Bingo
Tournaments accessed from the Sublicensee's Website;
"SUBLICENSE FEES" means, in respect of any period of time, an amount
equal to 26% of the Network Maintenance Fees collected by or on behalf
of a Sublicensee for that period of time for Bingo Tournaments accessed
from the Sublicensee's Website;
"SUBLICENSEE INITIALIZATION FEES" means, in respect of any Sublicensee
appointed by Licensee, a fee to be mutually determined by Licensor and
Licensee and paid to Licensor for services rendered to initialize and
make the Software accessible for use by that Sublicensee and its
Customers;
"SUBLICENSEE'S PORTION OF RESIDUAL NETWORK MAINTENANCE FEES" means, in
respect of any period of time for a Sub licensee appointed by Licensee,
the portion determined by Licensee and advised to Licensor of the
converted residual Network Maintenance Fees paid by Customers who
access Bingo Tournament s from the Sublicensee's Website during that
period of time after deduction and payment of applicable Sublicense
Fees, Sublicensee Service Fees and Sublicensee Initialization Fees;
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"SUBLICENSEE SERVICE FEES" means, in respect of any period of time, an
amount equal to 10% of the Network Maintenance Fees collected by or on
behalf of a Sublicensee for that period of time for Bingo Tournaments
accessed from the Sublicensee's Website;
"SPECIFICATIONS" means all specifications and requirements for the
Software set forth in Licensor's standard documentation as modified or
supplemented in writing and signed or approved by Licensor;
"SUPERVISOR" means Licensee's Chief Financial Officer;
"TERRITORY" has the meaning set out in Section 3.2;
"TRADEMARKS" means all Licensor-owned trademarks related to the
Software;
"TOURNAMENT ENTRANCE FEES" means the amount of Customer Credits that
the Customer elects to pay towards the winner's prize for Bingo
Tournaments, which amount will be retained in a holding account until
the completion of the applicable Bingo Tournament, and the sum of all
Tournament Entrance Fees paid for a specific Bingo Tournament will be
the prize that Customers compete to win in accordance with the Rules
and Regulations;
"UPDATES" means any bug fixes, patches, error corrections,
enhancements, improvements, supplements, upgrades, and new versions of
the Software which Licensor makes available at any time to any of its
customers or business associates with or without charge;
"WARRANTY PERIOD" means the period during which the grant of license
and rights made by Licensor to Licensee under this Agreement remains in
effect;
"WEB PAGE" means a document or file that is formatted using HTML and
that is intended to be accessible to Customers with a web browser;
"WEBSITE" means a series of interconnected Web Pages; and
"WITHHOLDING" means any deduction or withholding made by an Approved
Financial Institution from the remittance of converted Network
Maintenance Fees by Licensor to Licensee or any Sublicensee.
2. INTERPRETATION
2.1 GENDER AND NUMBER. Words expressed in one gender include all genders,
and the singular includes the plural and vice versa.
2.2 HEADINGS. Headings have been inserted into this Agreement for
convenience of reference only and they do not affect the interpretation
of this Agreement.
2.3 RECITALS AND SCHEDULES. The recitals and schedules to this Agreement
are incorporated by reference and form part of this Agreement.
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2.4 CURRENCY. All references to dollar amounts are references to lawful
currency of the United States of America, unless expressly stated to be
otherwise.
2.5 AMBIGUITIES. Ambiguities, inconsistencies, or conflicts in this
Agreement will not be strictly construed against the drafter of the
language but will be resolved by applying the most reasonable
interpretation under the circumstances, giving full consideration to
the parties' intentions at the time this Agreement is entered into.
PART II--SOFTWARE LICENSE & TECHNICAL SUPPORT
3. OWNERSHIP, TERRITORY, AND LICENSE TERM
3.1 OWNERSHIP. As between the parties, Licensor owns and will retain all
right, title, and interest in and to the Software and the
Documentation, except for the limited license rights specifically
granted in this Agreement. In addition, Licensee agrees that any
derivative software technology or products developed by or on behalf of
Licensee (with or without the consent of Licensor) using or based upon
the Software or the Documentation will be the sole property of
Licensor, and Licensee will, upon request by Licensor, execute an
assignment and transfer of rights in such derivative software
technology, products, or documentation in favour of Licensor.
3.2 TERRITORY. The license and rights granted to Licensee will apply
worldwide (the "TERRITORY").
3.3 LICENSE TERM. The license and rights granted to Licensee will have
effect from the Effective Date and continue until otherwise terminated
pursuant to this Agreement (the "LICENSE TERM").
4. GRANT
4.1 PERPETUAL WORLDWIDE LICENSE. Licensor grants to Licensee an
irrevocable, worldwide, perpetual license to use the Software in and
throughout the Territory for the support and operation of Licensee's
Business. The above license includes the right to concurrently access
and utilize the Software on all computer systems, servers and Websites
which host or support Licensee's Business from time to time, to
distribute and sublicense the Downloadable Software to Customers as
necessary, and to create and maintain copies of the Software for
back-up and security purposes. The above license includes the right to
grant sublicenses to Sublicensees to use the Software in the Territory
for the support and operation of Bingo Tournaments accessed from the
Sublicensees' Websites, provided that the terms of the sublicenses
shall be on such same terms and conditions as Licensee may from time to
time require. The above license does not include the right to modify,
improve, or create derivative software, technology, or products from
the Software, or to use the Software for any activities that are not in
the ordinary course of Licensee's Business. Licensor covenants and
agrees that Licensee will, for the duration of this Agreement, have the
exclusive right to use the Software in the Territory for the support
and operation of an Internet portal or Website to access Bingo
Tournaments as conducted by Licensee or its Sublicensees from time to
time.
4.2 SOFTWARE HOSTING SERVICES. Licensor will engage the services and
computer facilities of an experienced and competent ASP to host the
Software on the ASP's computer server
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for access by Licensee, Sublicensees and Customers. Licensor warrants
and covenants that the hosting services and facilities of the ASP will
enable Licensee, Sublicensees and Customers to access Bingo Tournaments
and utilize the Software at all times, on a 24 hours per day, 7 days
per week, 365 days per year basis. Licensor will continue to remain
responsible for the due performance of its obligations under this
Agreement notwithstanding the engagement of the ASP.
4.3 DELIVERY BY LICENSOR TO ESCROW AGENT. When and if required by Licensee,
Licensor will enter into an Escrow Agreement on terms and conditions
reasonably required by Licensee. Upon execution of the Escrow
Agreement, Licensor will immediately deliver to the Escrow Agent, at no
additional cost to Licensee, one complete copy of the Software to be
held pursuant to the Escrow Agreement, which delivery will include all
source code materials for the Software, and from time to time
thereafter, Licensor will deliver to the Escrow Agent, at no additional
cost to Licensee, the following materials to be held pursuant to the
Escrow Agreement:
(a) current versions of the Software, Specifications, and
Documentation, in such format and on such media as Licensee may
require to install and operate the Software on Licensee's computer
systems and servers, and to grant and support Sublicenses of the
Software in accordance with this Agreement, when and if the same
are released pursuant to the Escrow Agreement; and
(b) a Master CD containing the Downloadable Software (including
Upgrades thereto).
4.4 INTERNET ACCESS BY CUSTOMERS. Licensor will permit and facilitate
Customers to:
(a) have access to Bingo Tournaments and the Software through the
Websites of Licensee and Sublicensees; and
(b) download and install the Downloadable Software on Customers'
computers.
4.5 FINANCIAL TRANSACTIONS AND BINGO TOURNAMENT PARTICIPATION. As part of
the Software, Licensor will provide Licensee and Sublicensees a
financial transaction processing and Bingo Tournament participation
system to allow:
(a) Customers to deposit, through the use of credit cards, debit
cards, cheques, cash, or any other method of payment, the Customer
Payments, to convert the same into Customer Credits at the
Conversion Ratio, and vice versa, to receive payment of the
converted amount of Customer Credits and to obtain detailed
reports on the status of transactions involving Customer Payments
and Customer Credits;
(b) Customers to gain access to and participate in Bingo Tournaments
in accordance with the Rules and Regulations; and
(c) Licensee and Sublicensees to collect, directly or through a
Software administrator, Network Maintenance Fees, to monitor and
administer the collection and distribution of Tournament Entrance
Fees, to pay the Initial Setup Fee and applicable License Fees,
Service Fees, Sublicense Fees, Sublicensee Service Fees and
Sublicensee Initialization Fees, and to obtain detailed
transaction reports on
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Customer Payments, Customer Credits, Network Maintenance Fees,
Initial Setup Fee, License Fees, Service Fees, Sublicense Fees,
Sublicensee Service Fees and Sublicensee Initialization Fees.
4.6 SUPPORT OBLIGATIONS OF LICENSOR. Licensor will, during the License
Term, provide the following support at no additional cost to Licensee
or Sublicensees:
(a) Licensor will use commercial best efforts to create, acquire or
develop new Upgrades or Documentation that will implement,
facilitate and support the effective, timely and accurate
performance of all services which Licensor has agreed to provide
herein, and to implement, accommodate and support the Rules and
Regulations, and to make all new Upgrades and Documentation
immediately available to Licensee;
(b) maintain and upgrade its staff and facilities to enable it to
carry out its obligations under this Agreement and the Rules and
Regulations in the most effective, timely, and accurate manner
that is technologically possible;
(c) technical assistance to promptly respond to and resolve
difficulties encountered by Licensee or Sublicensees with the
Software, such assistance to be available by e-mail, telecopier,
and telephone facilities 24 hours per day, 7 days per week, 365
days per year; and
(d) software programming services to promptly correct errors and
overcome problems with the Software, to enhance the effectiveness
of the Software and to enable the Software to effectively operate
on or be accessed from Licensee's and Sublicensee's computer
systems and Websites.
PART III--OPERATION OF CUSTOMER SERVICE & DATA CENTRE
5. ENGAGEMENT OF LICENSOR
5.1 ENGAGEMENT AND RESPONSIBILITIES. Licensee hereby engages Licensor to
operate the customer service centre and data centre for Licensee's
Business on the terms and conditions set out in this Agreement.
Licensor will be responsible to provide and manage all staff,
equipment, and facilities necessary for the operation of:
(a) the customer service centre to receive and promptly and effective
ly reply to and process requests for information and service from
present, potential, and future Customers; and
(b) the data centre to promptly and accurately process and issue
financial, management, and Customer reports for Licensee's
Business (in a form and by such deadlines as the Supervisor may
reasonably require from time to time) and to issue and process
payments of funds to Customers based on converted Customer Credits
in accordance with the Rules and Regulations.
Licensor hereby accepts the above engagement and agrees to carry out
the above duties and responsibilities in accordance with this Agreement
and the reasonable targets and requirements and directions of Licensee
from time to time. Licensor agrees its duties and
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responsibilities may be reasonably modified, reduced, or increased at
Licensee's request from time to time to meet the requirements of
Licensee's Business.
5.2 COVENANTS. Licensor will report to the Supervisor. Licensor will comply
with all lawful instructions and directions given by Licensee. Licensor
will not represent itself as being a partner of Licensee nor as having
any proprietary interest in the Licensee's Business or the intellectual
property developed by Licensee. Licensor will not commit or purport to
commit Licensee to any financial obligation or liability, without the
prior approval of the Supervisor.
5.3 INDEPENDENT CONTRACTOR. Licensor is and will be deemed to be an
independent contractor and will provide or procure its own office,
equipment, and staff to complete its responsibilities and duties under
this Part. Licensor will register and pay applicable employer premiums
under Workers Compensation legislation and will pay all income taxes
and statutory remittances on payments received from Licensee. Licensor
may, at its sole cost and liability, contract with subsidiaries,
affiliates, and third parties to provide portions of the services and
facilities which Licensor is required to provide under this Part,
provided that Licensor will continue to remain responsible for the due
performance of its obligations under this Part.
5.4 RENEWABLE SERVICES TERM. Subject to the provisions for termination set
forth in this Agreement, the term of Licensee's engagement under this
Part (the "SERVICES TERM") will be for an initial period of 3 years
commencing on the Effective Date. Thereafter, the Services Term may be
renewed by mutual written agreement of the parties for successive 3
year periods, until:
(a) Licensor's engagement under this Part is terminated by either
party in accordance with this Agreement; or,
(b) either party gives written notice to the other party at least 90
days prior to the end of the initial Services Term or any renewal
thereof, that the first party elects not to renew the engagement
of Licensor for a further Services Term and following such notice,
the engagement of Licensor under this Part will terminate on the
last day of the current Services Term.
5.5 SERVICES FOR SUBLICENSEES. Licensor will provide the above-stated
services for the operation of a customer service centre and data centre
for any Sublicensees appointed by Licensee from time to time.
PART IV--COLLECTION & DISTRIBUTION OF CUSTOMER PAYMENTS AND
LICENSOR'S CASH ACCOUNTS
6. CUSTOMER PAYMENTS
6.1 LICENSOR'S CASH ACCOUNTS. Licensee authorizes Licensor to establish,
maintain or operate one or more Licensor's Cash Accounts for the
deposit of Customer Payments and for the withdrawal of payments
authorized by this Agreement. When requested by Licensee, Licensor will
promptly transfer cash amounts between Licensor's Cash Accounts.
Licensor acknowledges and agrees that Licensee will be the sole owner
of all Customer Payments made by Licensee's Customers and that all
funds deposited into
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Licensor's Cash Accounts as a result of such Customer Payments pursuant
to this Agreement and the Rules and Regulations will be held in trust
by Licensor for Licensee, subject to the express provisions of this
Agreement which entitle Licensor to withdraw interest and fees from
Licensor's Cash Accounts. At Licensee's request, Licensor will execute
a form of general security agreement or other agreement prepared by
Licensee's solicitors to confirm Licensee's beneficial ownership of all
Customer Payments made by Licensee's Customers, subject to the above
mentioned rights of withdrawal in favour of Licensor.
6.2 COLLECTION OF CUSTOMER PAYMENTS FOR LICENSEE. Licensee hereby appoints
Licensor as its agent to use the Software to collect and record the
Customer Payments made by Licensee's Customers in a timely and accurate
manner. The Customer Payments will be made and retained in US
currency. Licensor will deposit the Customer Payments in one or more of
Licensor's Cash Accounts. Upon deposit into Licensor's Cash Accounts,
all Customer Payments made by Licensee's Customers will be the property
of Licensee and will be held in trust by Licensor, provided:
(a) all interest earned on the Licensor's Accounts will be for the
sole benefit of Licensor (and Licensee hereby waives and disclaims
all rights and title to such interest in favour of Licensor) and
such interest may be withdrawn from Licensor's Cash Accounts by
Licensor at any time; and
(b) all fees payable to Licensor pursuant to this Agreement may be
withdrawn from Licensor's Cash Accounts by Licensor as and when
such fees are due and payable (and Licensee hereby authorizes
Licensor to make such withdrawals).
Following such deposit, no Customer will have any property rights in
the Customer Payments or in Licensor's Cash Accounts. Customers' rights
will then be limited to the Customer Credits as set out in Article 7 of
this Agreement and the Rules and Regulations. Licensor agrees to remit
the Residual Network Maintenance Fees to Licensee as set out in Article
8 of this Agreement.
6.3 COLLECTION OF CUSTOMER PAYMENTS FOR SUBLICENSEES. Licensor will act as
agent for each Sublicensee appointed by Licensee from time to time, to
use the Software to collect and record the Customer Payments made by
the Sublicensee's Customers in a timely and accurate manner. The
Customer Payments will be made and retained in US currency. Licensor
will deposit the Customer Payments in one or more of Licensor's Cash
Accounts. Upon deposit into Licensor's Cash Accounts, all Customer
Payments made by the Sublicensee's Customers will be the property of
that Sublicensee and will be held in trust by Licensor, provided:
(a) all interest earned on the Licensor's Accounts will be for the
sole benefit of Licensor (and Licensee will cause Sublicensee to
waive and disclaim all rights and title to such interest in favour
of Licensor) and such interest may be withdrawn from Licensor's
Cash Accounts by Licensor at any time;
(b) all fees payable in to Licensor for the Sublicense to this
Agreement may be withdrawn from Licensor's Cash Accounts by
Licensor as and when such fees are due and payable (and Licensee
will cause Sublicensee to authorize Licensor to make such
withdrawals).
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At Licensee's request, Licensor will execute a form of general security
agreement or other agreement prepared by Licensee's solicitors to
confirm the Sublicensee's beneficial ownership of all Customer Payments
made by that Sublicensee's Customers, subject to the above- mentioned
rights of withdrawal in favour of Licensor.
6.4 BOOKS AND RECORDS. On the second business day of each month Licensor
will issue a transaction statement to Licensee detailing the
calculation, collection, and deposit of the Customer Payments and all
applicable Licensor's Cash Accounts for the immediately preceding
month. If Licensee has appointed Sublicensees, Licensor will issue
separate statements for the Customer Payments relating to each
Sublicensee's Website. Licensor will maintain books of account and
records relating to the Customer Payments and all applicable Licensor's
Cash Accounts and will take reasonable measures to ensure that these
books and records are accurate. Upon reasonable notice of not less than
10 days, Licensee or a Sublicensee may, at its expense, inspect such
books of account and records. If an inspection determines that Licensor
has not collected or deposited the correct amount of the Customer
Payments collected or deposited, then Licensor will immediately make
the necessary adjusting payment. If Licensor has incorrectly collected
and deposited Customer Payments by a figure of greater than 0.5% for
the period covered by the inspection, then Licensor will bear the cost
of that inspection.
6.5 FINANCIAL SERVICE CHARGES AND CHARGE-BACKS. Notwithstanding any other
provision of this Agreement, Licensor will bear the cost of all fees
and service charges, however described or named, payable to credit card
companies, banks, credit unions, trust companies, investment or
brokerage firms or financial institutions for the collection, deposit,
investment, handling and remittance of Customer Payments and other
payments referred to in this Agreement and the operation of Licensor's
Cash Accounts. If any Customer Payment that is made by credit card or
debit card is subsequently reversed by the processing financial
institution (referred to as a "charge-back"), then such charge-back
will be the responsibility of the Licensee or Sub licensee whose
Customer Payment is the subject of the charge-back, and Licensor will
be entitled to withdraw the amount of the charge-back from the funds
held in trust for the responsible Licensee or Sublicensee in the
Licensor's Cash Accounts.
7. CUSTOMER ACCOUNTS
7.1 ESTABLISHMENT OF CUSTOMER ACCOUNTS. Upon receipt of a Customer Payment,
Licensor will use the Software to establish a separate account for that
Customer. Licensor will use the Conversion Ratio to determine the
amount of Customer Credits to be added to that Customer's account in
respect of the Customer Payment. Licensor will immediately update and
at all times maintain an accurate record of the amount of Customer
Credits in a Customer's account, in accordance with the Rules and
Regulations and this Agreement. The Software's user interface and the
reports issued to Customers and Licensee may, for ease of reference,
understanding and operation, show the Customers' accounts in US
currency, however, this depiction does not grant the Customers' any
rights in the Licensor's Cash Accounts.
7.2 INCREASING CUSTOMER CREDITS. Licensor will increase the amount of
Customer Credits in a Customer's account if and to the extent that:
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(a) the Customer is entitled, under the Rules and Regulations, to
receive all or part of the Tournament Entrance Fees for a specific
Bingo Tournament;
(b) the Customer makes additional Customer Payments;
(c) the Customer is entitled, under the Rules and Regulations, to a
refund of any Network Maintenance Fees or Tournament Entrance Fees
previously paid by the Customer;
(d) a third party transfers his or her Customer Credits to the
Customer in accordance with the Rules and Regulations ;
(e) an entry in required to correct one or more errors in the
Customer's account; or
(f) any other increase is authorized under the Rules and Regulations.
7.3 DECREASING CUSTOMER CREDITS. Licensor will decrease the amount of
Customer Credits in a Customer's account if and to the extent that:
(a) the Customer is required, under the Rules and Regulations, to pay
Network Maintenance Fees for a specific Bingo Tournament;
(b) the Customer, under the Rules and Regulations, elects to pay
Tournament Entrance Fees for a specific Bingo Tournament;
(c) the Customer demands conversion of the Customer Credits in his or
her account and payment of the converted Customer Credits to the
Customer's credit card or other account;
(d) the Customer transfers his or her credits to a third party in
accordance with the Rules and Regulations;
(e) an entry is required to correct one or more errors in the
Customer's account; or
(f) any other deduction is authorized under the Rules and Regulations.
Using the Software, Licensor will initiate and record prior notice to
the Customer of each proposed decrease in the amount of Customer
Credits and enable the Customer to record his or her approval of such
decrease by sending the appropriate command through the Software.
7.4 CONVERSION AND WITHDRAWAL OF CUSTOMER CREDITS. At any time, a Customer
of Licensee or Sublicensee may authorize the conversion and withdrawal
of the Customer Credits, or a portion of the Customer Credits,
remaining in the Customer's account. Upon receipt of such
authorization, Licensor will immediately use the Software to decrease
the Customer's account by the requested amount of Customer Credits (up
to the remaining Customer Credits available), and to convert the
applicable credits into US currency according to the Conversion Ratio,
and immediately withdraw and remit the converted amount of Customer
Credits in US currency from funds held in trust in Licensor's Cash
Accounts for Licensee or Sublicensee, as the case may be, to the
Customer's credit card
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or other account in accordance with the Rules and Regulations, and any
applicable national, federal, state, provincial, municipal, or other
laws.
7.5 CUSTOMER ACCOUNT RECORDS. Upon a request by a Customer, Licensor will,
using the Software, immediately provide that Customer with an accurate
transaction record of that Customer's account, which will display the
amount of Customer Credits in that Customer's account, the amount of
Network Maintenance Fees and Tournament Entrance Fees paid by that
Customer, the amount of Tournament Entrance Fees deposited to that
Customer's account for winning a Bingo Tournament as defined in the
Rules and Regulations, the total deposits made to that Customer's
account, and the total withdrawals made from that Customer's account.
Licensor will provide this report in a secure, confidential electronic
form on Licensee's or Sublicensee's Website, in a format suitable for
downloading by that Customer via the Internet.
8. NETWORK MAINTENANCE FEES, LICENSE FEES, SERVICE FEES, SUBLICENSE FEES,
SUBLICENSEE SERVICE FEES, INITIAL SETUP FEE AND SUBLICENSEE
INITIALIZATION FEES
8.1 NETWORK MAINTENANCE FEES. Licensee will be the sole owner of all
Network Maintenance Fees paid by Licensee's Customers and each
Sublicensee will be the sole owner of all Network Maintenance Fees paid
by that Sublicensee's Customers, regardless of the place, account, or
manner in which the Network Maintenance Fees are collected, stored,
recorded, deposited, or held.
8.2 COLLECTION OF NETWORK MAINTENANCE FEES. Using the Software, Licensor
will deduct and collect the Network Maintenance Fees from the
Customers' accounts on behalf of Licensee and Sublicensees. The Network
Maintenance Fees will be initially expressed in Customer Credits and
will be recorded in separate accounts for Licensee and each
Sublicensee. At the end of each month, Licensor will use the Conversion
Ratio to convert the Network Maintenance Fees in Licensee's and
Sublicensees' accounts into US currency. Until paid to Licensee or
Sublicensees, Licensor will hold the converted Network Maintenance Fees
in trust for Licensee or Sublicensees in a separate account at an
Approved Financial Institution, with interest accruing on this account
for the benefit of Licensor. At Licensee's request, Licensor will
execute a form of general security agreement or other agreement
prepared by Licensee's solicitors to confirm Licensee's and
Sublicensee's beneficial ownership of all Customer Payments made by
their respective Customers, subject to the above mentioned rights of
withdrawal in favour of Licensor.
8.3 LICENSE FEES AND SUBLICENSE FEES. As consideration for the grant of
license and rights by Licensor and for the issuance of the warranties
and representations by Licensor, Licensee hereby agrees to pay, or will
direct its Software administrator to pay, to Licensor the applicable
License Fees. Licensee will pay only one set of License Fees regardless
of the number of computer systems or servers that the Software is
installed on or utilized in the course of Licensee's Business. Licensee
will pay, or will direct its Software administrator to pay, Sublicense
Fees for each sublicense granted by Licensee.
8.4 MINIMUM MONTHLY LICENSE FEES. Commencing on the Effective Date,
Licensee will pay Licensor a minimum monthly license fee of $60,000 for
each complete calendar month, inclusive of License Fees and Sublicense
Fees payable for that month. The
Page 14
amount by which the minimum monthly license fees for a completed
calendar month exceeds the License Fees and all Sublicense Fees paid
for that month, if any, will be paid by Licensee to Licensor within 14
days of the last day of that month.
8.5 SERVICE FEES AND SUBLICENSEE SERVICE FEES. Licensee will pay, or will
direct its Software administrator to pay, Service Fees to Licensor. The
Service Fees will be calculated for each calendar month and paid to
Licensor within 14 days after the end of the applicable calendar month.
Licensee will pay, or will direct its Software administrator to pay,
Sublicensee Service Fees for each sublicense granted by Licensee.
8.6 MINIMUM MONTHLY SERVICE FEES. Commencing on the Effective Date,
Licensee will pay a minimum monthly service fee of $18,000 for each
complete calendar month, inclusive of the Service Fees and Sublicensee
Service Fees payable for that month. The amount by which the minimum
monthly service fees for a completed calendar month exceeds the Service
Fees and all Sublicensee Service Fees for that calendar month will be
paid by Licensee to Licensor within 14 days after the end of the
calendar month.
8.7 INITIAL SETUP FEE AND SUBLICENSEE INITIALIZATION FEES. Licensee will
pay Licensor the Initial Setup Fee as the one-time consideration for
services rendered by Licensor to initialize and make the Software
accessible for use by Licensee and its Customers. The Initial Setup Fee
will be due and payable on the date the Software is first initialized
and made accessible for use by Licensee and its Customers. Licensee
will pay Licensor a onetime Sublicensee Initialization Fee for each
Sublicensee appointed by Licensee, payable on the date the Software is
first initialized for each Sublicensee and its Customers.
8.8 TAXES. The Initial Setup Fee, and all License Fees, Service Fees,
Sublicense Fees, Sublicensee Service Fees and Sublicensee
Initialization Fees will be subject to all laws and regulations now or
hereafter in existence requiring the deduction or withholding of
payment for income or other taxes and duties payable by or assessable
against Licensor. Licensee will have the right to make such deductions
and withholdings and to remit the same to the government or agency
concerned and such action will fulfill Licensee's obligation to pay the
applicable amount of License Fees, Service Fees, Sublicense Fees,
Sublicensee Service Fees, Initial Setup Fee and Sublicensee
Initialization Fees to Licensor. Licensor will indemnify and save
Licensee harmless from all such taxes and duties.
8.9 REMITTANCE OF CONVERTED NETWORK MAINTENANCE FEES. Within 14 calendar
days after the end of each calendar month, commencing 30 days after the
Effective Date, Licensor will remit from Licensor's Cash Accounts;
(a) to Licensor, or as Licensor directs, the Initial Setup Fee and all
applicable License Fees, Service Fees, Sublicense Fees,
Sublicensee Service Fees and Sublicensee Initialization Fees, less
Withholding for the preceding month subject to any adjustments or
reconciliation payments required from time to time pursuant to
this Agreement;
(b) to each Sublicensee (or as the Sublicensee directs), the
Sublicensee's Portion of Residual Network Maintenance Fees after
payment of the fees referred to in subsection 8.9 (a) for the
preceding month; and
Page 15
(c) to Licensee (or as Licensee may direct), the Residual Network
Maintenance Fees after payment of the fees and amounts referred to
in subsections 8.9 (a) and (b) for the preceding month.
8.10 BOOKS AND RECORDS. Licensor will issue a monthly statement detailing
the calculation and payment of the Initial Setup Fee, Network
Maintenance Fees, License Fees, Service Fees, Sublicense Fees,
Sublicensee Service Fees and Sublicensee Initialization Fees to
accompany each payment of converted Network Maintenance Fees to
Licensee. If Licensee has appointed Sublicensees, Licensor will issue
separate statements and payments for the Network Maintenance Fees,
Sublicense Fees, Sublicensee Service Fees and Sublicensee
Initialization Fees relating to each Sublicensee's Website. This
statement will be conclusive as to the contents thereof, except for
manifest errors and omissions. Licensor will maintain books of account
and records relating to the Initial Setup Fee, Network Maintenance
Fees, License Fees, Service Fees, Sublicense Fees, Sublicensee Service
Fees and Sublicensee Initialization Fees, and will take reasonable
measures to ensure that these books and records are accurate. Upon
reasonable notice of not less than 10 days, Licensee or Sublicensee
may, at its expense, inspect such books of account and records. If an
inspection determines that Licensor has not paid the correct amount of
Initial Setup Fee, Network Maintenance Fees, License Fees, Service
Fees, Sublicense Fees, Sublicensee Service Fees or Sublicensee
Initialization Fees, then the parties will make the necessary adjusting
payment within 14 calendar days after such determination. If Licensor
has underpaid the correct amount of the Network Maintenance Fees, or
overpaid the correct amount of Initial Setup Fee, License Fees, Service
Fees, Sublicense Fees Sublicensee Service Fees or Sublicensee
Initialization Fees, by more than 2%, then Licensor will bear the cost
of the inspection.
8.11 INTEREST ON OVERDUE PAYMENTS. Licensor will pay to Licensee or
Sublicensee, as the case may be, interest at the rate of 2% per month,
compounded monthly, on all payments of funds due and owing to Licensee
or Sublicensee under this Agreement and which have become overdue.
Interest will accrue at the aforesaid rate on a daily basis until the
outstanding payments have been made.
8.12 PRE-CONDITION TO WITHDRAWAL OF FEES. Notwithstanding any other
provision of this Agreement, Licensor will not be entitled to withdraw
any fees or payments from Licensor's Cash Accounts if Licensor is in
default of its obligations or breach of its warranties and
representations under this Agreement.
9. TOURNAMENT ENTRANCE FEES
9.1 COLLECTION OF TOURNAMENT ENTRANCE FEES. Using the Software, Licensor
will deduct and collect the Tournament Entrance Fees from Customers'
accounts. The Tournament Entrance Fees will be initially expressed in
Customer Credits and will be recorded in a separate account for the
applicable Bingo Tournament.
9.2 DISTRIBUTION OF TOURNAMENT ENTRANCE FEES. Upon completion of each Bingo
Tournament, Licensor will cause the collected Tournament Entrance Fees
to be distributed to Customers, in accordance with the Rules and
Regulations. Nothing in this Agreement gives Licensee, Licensor, or any
Sublicensee any property in or rights to the Tournament Entrance Fees,
and no part of the Tournament Entrance Fees will be distributed to
Licensee, Licensor, or any Sublicensee.
Page 16
9.3 BOOKS AND RECORDS. On the second business day of each month Licensor
will issue a statement to Licensee detailing the collection,
calculation and distribution of the Tournament Entrance Fees for the
immediately preceding month. Licensor will maintain books of account
and records relating to the Tournament Entrance Fees and will take
reasonable measures to ensure that these books and records are
accurate. Upon reasonable notice of not less than 10 days, Licensee or
a Sublicensee may, at its expense, inspect such books of account and
records. If an inspection determines that Licensor has not collected or
distributed the correct amount of the Tournament Entrance Fees, then
Licensor will immediately make the necessary adjusting payment to the
Customers suffering an underpayment. If Licensor has overpaid or
underpaid out the Tournament Entrance Fees to Customers by a figure of
greater than 0.5% for the period covered by the inspection, then
Licensor will bear the cost of that inspection. If Licensee has
appointed a Sublicensee or Sublicensees, then Licensor will issue
separate statements for the Tournament Entrance Fees relating to each
Sublicensee's Website.
PART V--CONFIDENTIAL, CUSTOMER, & PROPRIETARY INFORMATION
10. CONFIDENTIALITY
10.1 LICENSOR'S CONFIDENTIAL INFORMATION. The Software, the Documentation,
and any other source code, computer program listings, techniques,
algorithms, and processes and technical and marketing plans or other
sensitive business information, including all materials containing said
information, which are supplied by Licensor to Licensee is the
confidential information of Licensor (the "LICENSOR'S CONFIDENTIAL
INFORMATION").
10.2 RESTRICTIONS ON USE. Licensee agrees that, except as allowed under this
Agreement or as authorized in writing by Licensor, Licensee will:
(a) preserve and protect the confidentiality of all of the Licensor's
Confidential Information;
(b) not disclose to any third party the existence, source, content, or
substance of the Licensor's Confidential Information or make
copies of the Licensor's Confidential Information;
(c) not deliver any of the Licensor's Confidential Information to any
third party, or permit the Licensor's Confidential Information to
be removed from Licensee's premises;
(d) not use any of the Licensor's Confidential Information in any way
other than as provided in this Agreement; and
(e) not disclose, use, or copy any third-party information or
materials received in confidence by Licensee for the purposes of
this Agreement.
10.3 LIMITATIONS. Information is not considered to be the Licensor's
Confidential Information if Licensee can demonstrate that it:
(a) is already or otherwise becomes publicly known through no act of
Licensee;
Page 17
(b) is lawfully received from third parties subject to no restriction
of confidentiality;
(c) can be shown by Licensee to have been independently developed by
it without the use of the Licensor's Confidential Information;
(d) is required or authorized by applicable law, regulation, or by
administrative, quasi- judicial, or judicial order or decree to be
disclosed; or
(e) is authorized in writing by Licensor to be disclosed, copied, or
used.
10.4 LICENSEE'S CONFIDENTIAL INFORMATION. The Customer Information, all
information, data, specifications, documentation, and software listings
relating to Licensee's Business, and any other source code, computer
program listings, techniques, algorithms, and processes and technical
and marketing plans or other sensitive business information, including
all materials containing said information, which Licensee may from time
to time disclose or impart to Licensor is the confidential information
of Licensee (the "LICENSEE'S CONFIDENTIAL INFORMATION").
10.5 RESTRICTIONS ON USE. Licensor agrees that, except as authorized in
writing by Licensee, Licensor will:
(a) preserve and protect the confidentiality of all of the Licensee's
Confidential Information;
(b) not disclose to any third party the existence, source, content, or
substance of the Licensee's Confidential Information or make
copies of the Licensee's Confidential Information;
(c) not deliver any of the Licensee's Confidential Information to any
third party, or permit the Licensee's Confidential Information to
be removed from Licensor's premises;
(d) not use any of the Licensee's Confidential Information in any way
other than as provided in this Agreement;
(e) not disclose, use, or copy any third party information or
materials received in confidence by Licensor for the purposes of
this Agreement; and
(f) require that each of its employees who work on or have access to
the materials that are the subject of this Agreement sign a
suitable confidentiality and work- for-hire/ assignment agreement
and be advised of the confidentiality and other applicable
provisions of this Agreement.
10.6 LIMITATIONS. Information is not considered to be the Licensee's
Confidential Information if Licensor can demonstrate that it:
(a) is already or otherwise becomes publicly known through no act of
Licensor;
(b) is lawfully received from third parties subject to no restriction
of confidentiality;
Page 18
(c) can be shown by Licensor to have been independently developed by
it without the use of the Licensee's Confidential Information;
(d) is required or authorized by applicable law, regulation, or by
administrative, quasi- judicial, or judicial order or decree to be
disclosed; or
(e) is authorized in writing by Licensee to be disclosed, copied, or
used.
10.7 LICENSEE REPORTS. Licensor will ensure that all reports and statements
to be provided to Licensee or Sublicensees by the Software are in a
secure, confidential electronic form in a format suitable for
downloading by Licensee or Sublicensees via the Internet.
11. CUSTOMER INFORMATION
11.1 CUSTOMER INFORMATION. Licensor acknowledges and confirms that Licensee
holds all right, title, and interest in the Customer Information.
Nothing in this Agreement gives Licensor any property or interest in
the Customer Information. Licensor will preserve, safeguard, and not
disclose to any third party any Customer Information that Licensor may
be in possession of. Licensor may use the Customer Information to
further the interests of the Licensee's Business.
11.2 CUSTOMER REPORTS. Nothing in this Agreement restricts Licensor from
recording, storing, manipulating, and extracting Customer Information
solely for the purpose of producing the Customer reports described in
Part III.
12. TRADEMARKS
12.1 RIGHT TO USE. Further to the rights granted to Licensee by Licensor,
Licensor hereby grants to Licensee and Sublicensees the right to use
and display Trademarks solely to the extent reasonably necessary to
disclose to third parties Licensee's rights to use the Software and
Licensor's ownership interest in the Software and Documentation.
Licensee will display the Licensor's trademarks on Licensee's and
Sublicensee's Websites in a manner as agreed between the parties.
13. NON-DISCLOSURE
13.1 NON-DISCLOSURE. Neither party will disclose any of the terms of this
Agreement to any third party without first obtaining the consent of the
other party, save and except where such disclosure is required or
authorized by applicable law, regulation, or by administrative,
quasi-judicial, or judicial order or decree to be disclosed.
PART VI--WARRANTIES & INDEMNITY
14. WARRANTIES AND INDEMNITY
14.1 GENERAL WARRANTIES. Licensor warrants as follows:
(a) during the Warranty Period the media containing each portion of
the Software and the Downloadable Software (except for
modifications made by Licensee) will,
Page 19
under normal use, be free of defects in materials and workmanship,
the Software and the Downloadable Software will operate and
perform in accordance with the Specifications and the
Documentation, and the media containing the Software and the
Downloadable Software will allow the Licensee to replicate the
Software and the Downloadable Software;
(b) Licensor is the sole and exclusive owner of all rights, whether
registered or unregistered, in the Software, the Downloadable
Software, and the Documentation;
(c) the Software and the Downloadable Software are not subject to any
restriction or to any mortgages, liens, pledges, charges, security
interests, encumbrances, or claims or to any rights of others or
any kind or nature whatsoever which may prevent, or may be
breached by, the grant of license and rights to the Licensee;
(d) the Software, the Downloadable Software, and the Documentation do
not encroach or infringe upon or misappropriate any copyrights,
trademarks, trade secrets, or any other proprietary or contractual
rights of third parties;
(e) Licensor has not entered into any agreement or arrangement of any
kind whatsoever which may have any restricting affect upon
Licensor's rights and authority to grant the license and rights to
Licensee;
(f) Licensor has not entered into any agreement or arrangement of any
kind whatsoever which may have any restricting affect upon
Licensor's rights and ability to carry out its responsibilities
under this Agreement;
(g) Licensor will not, for the duration of the License Term, provide
any management or financial services or support to any third
parties conducting business competitive to the Licensee's
Business, other than Sublicensees that propose to operate or
acquire an internet portal to host bingo tournaments and
competitions as conducted by Licensee from time to time;
(h) Licensor will use best commercial efforts to promote and serve the
best interests of Licensee and Sublicensees;
(i) Licensor will provide to all Sublicensees appointed by Licensee
from time to time the services and facilities required to be
provided to Licensee pursuant to this Agreement, subject to such
enhancements or limitations as Licensee may require;
(j) Licensor will not interfere with or interrupt the contractual
relationship between Licensee and its Sublicensees; and
(k) the execution, delivery, and the performance and completion of
this Agreement by Licensor have been duly authorized by all
necessary corporate resolutions of the directors and shareholders
of Licensor, as necessary, and the terms of this Agreement are
valid and binding obligations of Licensor.
14.2 INDEMNITY AND LIMITATION OF LICENSOR'S LIABILITY. Licensor agrees to
indemnify, hold harmless, and defend Licensee and its Sublicensees,
directors, officers, employees, and
Page 20
agents from and against all claims, defence costs (including reasonable
attorney's fees and disbursements), judgments, and other expenses
arising out of or on account of such claims, including without
limitation claims of:
(a) alleged infringement or violation of any trademark, copyright,
trade secret, right of publicity or privacy (including but not
limited to defamation), patent, or other proprietary right with
respect to the Software or Documentation as delivered to Licensee;
(b) any use of confidential or proprietary information or trade
secrets Licensor has obtained from sources other than Licensee;
(c) any misrepresentation or breach of warranty by Licensor or any
negligent act, omission, or breach of Licensor in the performance
of this Agreement (and for greater certainty, the failure of
Licensor to provide a Sublicensee the services and facilities
contemplated in this Agreement or a breach of warranty or
misrepresentation by Licensor to a Sublicensee shall constitute a
breach by Licensor of this Agreement); and
(d) Licensor's failure to comply with federal, provincial, state, or
local law.
Licensee agrees that Licensor's maximum aggregate liability under this
Section will be limited to the lesser of (i) $5,000,000 and (ii) the
aggregate amount of the Initial Setup Fee and all License Fees, Service
Fees, Sublicense Fees, Sublicensee Service Fees and Sublicensee
Initialization Fees paid or payable by Licensee during the term of this
Agreement and the term of Licensor's engagement under Part III. Any
claim for indemnity by Licensee under this Section must be initiated or
documented in writing prior to the second anniversary of the date on
which Licensee first becomes aware of circumstances which entitle
Licensee to claim financial recovery from Licensor under this Section.
This Section will survive termination of this Agreement or any Part of
this Agreement.
PART VII--CANCELLATION, TERMINATION, & DISPUTE RESOLUTION
15. CANCELLATION AND TERMINATION
15.1 CANCELLATION. If Licensee does not pay the License Fees, the Service
Fees, the Sublicense Fees or the Sublicensee Services Fees (if the
Sublicense Fees or Sublicensee Service Fees are applicable at a given
time), then Licensor may cancel this Agreement and thereafter neither
party will have any liability or obligation to the other in respect of
the matters set out in this Agreement.
15.2 TERMINATION. A party may terminate this Agreement by issuing notice in
writing to the other party, if any of the following events occurs:
(a) the other party is in breach of any provision of this Agreement
and fails to cure such breach within 14 days after notice of such
breach is received;
(b) the other party is subject to voluntary or involuntary proceedings
which may lead to the dissolution or winding up of its corporate
existence, to a declaration of
Page 21
bankruptcy or insolvency against it, to the appointment of a
receiver or receiver-manager in respect of its assets or to the
assignment of its assets for the benefit of one or more of its
secured or unsecured creditors; or
(c) the other party ceases to carry on business in the ordinary
course.
15.3 TERMINATION FOR CONVENIENCE. Licensee or Licensor may at any time
terminate Licensor's engagement under Part III, on 3 months written
notice.
15.4 ADDITIONAL RIGHT OF TERMINATION BY LICENSEE. In addition to Sections
15.2 and 15.3, Licensee may immediately terminate Licensor's engagement
under Part III of this Agreement at any time by providing written
notice to Licensor if Licensee has reasonable grounds to believe
Licensor has committed an act of fraud or dishonesty in the course of
its engagement under Part III, whether or not such act has resulted in
actual loss or damage to Licensee.
15.5 EFFECTS. Upon cancellation or termination of this Agreement, the
parties will remain liable to each other for any defaults that occurred
prior to the cancellation or termination. Licensee and all Sublicensees
will immediately cease using the Software and Documentation and return
all copies of the Software and Documentation, and the Licensor's
Confidential Information, to Licensor. Licensor will immediately return
all of the Licensee's Confidential Information, including the Customer
Information, to Licensee. Licensor will, at Licensee's direction,
continue to perform its obligations and duties under this Agreement to
the date of termination and will cooperate fully with Licensee to
ensure that other staff or contractors of Licensee become familiar with
the content and status of the services and responsibilities assigned to
Licensor.
16. DISPUTE RESOLUTION AND GOVERNING LAW
16.1 ARBITRATION. The parties agree to submit any dispute arising out of or
in connection with this Agreement to binding arbitration in Vancouver,
British Columbia before a single arbitrator, appointed by agreement of
the parties (or, if they are unable to reach agreement within 21
calendar days, appointed by a justice of the British Columbia Supreme
Court) pursuant to the provisions of this Section, and to the extent
not inconsistent with this Agreement, the Commercial Arbitration Act
(British Columbia), the International Commercial Arbitration Act
(British Columbia), and the Rules of the British Columbia International
Commercial Arbitration Centre. The parties agree that such arbitration
will be in lieu of either party's rights to assert any claim, demand,
or suit in any court action, provided that either party may elect
either binding arbitration or a court action with respect to a breach
by the other party of such party's proprietary rights, including
without limitation any trade secrets, copyrights, or trademarks. Any
arbitration will be final and binding and the arbitrator's order will
be enforceable in any court of competent jurisdiction.
16.2 GOVERNING LAW AND VENUE. The validity, construction, and performance of
this Agreement will be governed by the laws of British Columbia, and
the applicable laws of Canada, and, subject to Section 16.1, all claims
and lawsuits, or either, in connection with this Agreement must be
brought in the courts of British Columbia.
Page 22
PART VIII--GENERAL PROVISIONS
17. GENERAL
17.1 ENTIRE AGREEMENT, MODIFICATION, AND WAIVER. The Agreement, including
the recitals and schedules, constitutes the entire agreement between
the parties and replaces and supersedes any and all representations,
negotiations, or agreements previously existing between the parties.
This Agreement may only be modified by the prior written approval of a
duly authorized representative of each party. The failure by Licensee
or Licensor to enforce at any time, or for any period of time, the
provisions of this Agreement, will not be interpreted to be a waiver of
the right of either party to enforce any such provision.
17.2 NOTICES. All notices or demands under this Agreement will be via
messenger, overnight delivery services, telecopier, or mail to the
address of the receiving party specified on page one, above, and will
be deemed complete upon receipt.
17.3 ASSIGNMENT. Licensee or Licensor may assign or subcontract this
Agreement or any of their respective rights and obligations under this
Agreement, or any Part of this Agreement, to another person or entity,
upon giving the other party 14 days advance notice, which notice will
include the name of the proposed assignee or subcontractor. Despite the
foregoing, no such assignment or subcontract will operate to release
either Licensee or Licensor from responsibility for the due performance
of its obligations under this Agreement. The terms of this Agreement
will be fully binding upon, enure to the benefit of, and be enforceable
by the parties and their respective successors and permitted assigns.
17.4 INJUNCTIVE RELIEF. It is understood and agreed that a breach of any
provision of this Agreement by either party may cause the other
irreparable harm for which recovery of money damages would be
inadequate and that either party will therefore be entitled to obtain
timely injunctive relief to protect its rights under this Agreement in
addition to any and all remedies at law.
17.5 TIME OF THE ESSENCE. Time is of the essence in this Agreement and all
obligations of the parties under this Agreement.
17.6 FURTHER ASSURANCES. The parties agree to do all such further acts and
execute such further documents as may be reasonably necessary to
effectively carry out the terms and intent of this Agreement and to
assure to Licensee all of the rights and privileges in the Software and
the Documentation.
17.7 PUBLIC DISCLOSURE. Licensor and Licensee are, or will become, either a
reporting issuer or controlled by a reporting issuer. Accordingly, each
party will have the right, notwithstanding any other provision
contained in this Agreement, to make such public disclosure relating to
this Agreement and Licensee's use of and rights in the Software as may
be required to comply with Licensor's and Licensee's obligations to
make full disclosure of its affairs to the public and to regulatory and
stock exchange officials.
17.8 SEVERABILITY. If any of the terms or provisions of this Agreement are
determined to be invalid, unlawful, or unenforceable to any extent,
such term or provision will be severed
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from the remaining terms and provisions which will continue to be valid
to the fullest extent permitted by law.
17.9 COUNTERPARTS. This Agreement may be executed and delivered in
counterparts and by telecopier with the same effect as if the parties
had concurrently executed and delivered the same original copy of this
Agreement.
17.10 FORCE MAJEURE. Neither party will be held responsible for damages
caused by any delay or default due to any contingency beyond its
control preventing or interfering with its performance under this
Agreement.
17.11 NO THIRD PARTY RIGHTS. This Agreement is not for the benefit of any
third party, and will not be considered to grant any remedy to any
third party whether or not referred to in this Agreement.
17.12 AGENCY. The parties are separate and independent legal entities. Except
as expressly set out herein, this Agreement will not constitute either
Licensee or Licensor as an agent, representative, partner, joint
venturer, or employee of the other party for any purpose. Neither party
has the authority to bind the other or to incur any liability on behalf
of the other, nor to direct the employees of the other.
TO EVIDENCE THEIR AGREEMENT, the parties have executed this Agreement as of the
date written on page one, above.
Accepted and Agreed by Licensee: Accepted and Agreed by Licensor:
XXXXX.XXX (CANADA) ENTERPRISES INC. CYOP SYSTEMS INC.
by: by:
/s/ Xxxxx Xxxxxxxx /s/ Xxxxx Xxxxx
------------------------------ -----------------------------
AUTHORIZED SIGNATORY AUTHORIZED SIGNATORY
by: by:
/s/ Xxxxx Xxxxxxxx
------------------------------ -----------------------------
AUTHORIZED SIGNATORY AUTHORIZED SIGNATORY
WE HAVE AUTHORITY TO BIND THE WE HAVE AUTHORITY TO BIND THE
CORPORATION CORPORATION
SCHEDULE A
List of Approved Financial Institutions.
CIBC
HSBC Bank of Canada
Royal Bank of Canada
Scotia Bank (Bank of Nova Scotia)
TD Canada Trust
SCHEDULE B
Rules and Regulations.
