INTERACTIVE APPLICATIONS AGREEMENT

INTERACTIVE APPLICATIONS AGREEMENT

1.

Definitions

2 

2.

The Parties’ Obligations for Providing the Applications

3 

3.

Grant of License for Distributing Applications

4 

4.

Trademark License

5 

5.

Service Level Agreement

6 

6.

Royalty/Revenue-Sharing Payments

6 

7.

Promotion, Publicity and Press Releases

6 

8.

Representations and Warranties

7 

9.

Confidentiality

7 

10.

Term and Termination

8 

11.

Intellectual Property Rights

9 

12.

Relationship of the Parties

9 

13.

Zone4Play Indemnification and Insurance

10 

14.

Limitations of Liability

10 

15.

Littlewoods Indemnification

10 

16.

Dispute Resolution

10 

17.

No Exclusivity

11 

18.

Entire Agreement and Amendments

11 

19.

Assignment

11 

20.

Force Majeure

12 

21.

Severability

12 

22.

Governing Law

12 

23.

Notices

12 

24.

Expenses

13 

25.

Construction

13 

26.

Titles, Headings and Subheadings

13 

27.

Counterparts

13 

28.

Authority and Binding Effect

13 

29.

No Waiver

13 

30.

Third Party Rights

13 

Appendix A – ITV Fixed Odds Games

15 

Appendix B – Multiplayer Games

16 

Appendix C – SMS Fixed Odds Games

17 

Appendix D – Net Revenue

18 

Appendix E – Zone4Play Services and Service Level Agreement

20 

THIS AGREEMENT is made the 27th day of May 2005

1.

LITTLEWOODS PROMOTIONS LIMITED, a company incorporated under the laws of England and Wales (registered number 00545018) whose registered office is located at Sportech House, No.2 Enterprise Way, Wavertree Technology Park, Liverpool L13 1FB ("Littlewoods"); and

2.

ZONE4PLAY, INC. a company incorporated under the laws of the state of Delaware, USA having its registered offices at 103 Faulk Rd. Suite 202, Wilmington, Delaware, USA (“Zone4Play”);

1.

Definitions

In this Agreement:

1.1

"Acceptance Testing" shall mean the tests on the Applications (devised by Littlewoods and/or an Operator) to be carried out in order to establish (to Littlewoods' reasonable satisfaction) that the Applications meet the Technical Criteria;

1.2

"Application" shall mean, subject to Clause 2.1, software applications that enable Customers to play the games specified in Appendices A, B, and C, that are owned by Zone4Play or for which Zone4Play otherwise holds sufficient rights to grant the licenses set forth herein;

1.3

"Associate" shall mean in relation to a Party any entity that is a subsidiary or a holding company of such Party or any subsidiary of such holding company (whether direct or indirect), and the expressions "subsidiary" and "holding company" shall have the meanings ascribed thereto by section 736 of the Companies Act 1985;

1.4

"Customer" shall mean any person that is entitled to receive and view the television services (whether interactive or linear) of any Operator;

1.5

"During All Hours" shall mean twenty four (24) hours per day, three hundred and sixty five (365) days per year and including 29 February in leap years;

1.6

"Effective Date" shall mean the date on which this Agreement is signed by both of the Parties;

1.7

"Gross Win" the total amount of money collected by Littlewoods from Customers in consideration of Customers' use of the Applications, less winnings and chargebacks;

1.8

"Intellectual Property Rights" shall mean all inventions, rights in designs, patents, copyright, trade marks, service marks, database rights, trade names, domain names and all other intellectual property rights and other rights and forms of protection of a similar nature or effect which may subsist anywhere in the world for the full term of such rights and any extensions or renewals thereof subsisting prior to, at or after the Effective Date (whether or not any of these rights are registered, and including applications and the right to apply for registration of any such rights as registered rights, anywhere in the world);

1.9

"Launch Date" means the date on which the first Application is made available to Customers by Littlewoods;

1.10

"Littlewoods Services" shall mean customer support, infrastructure and e-wallet services to be provided by or procured by Littlewoods in connection with the use which is made by the Customers of the Applications;

1.11

"Littlewoods Trademarks" shall mean any trademarks, service marks, design marks, symbols, logos and/or other indicia of source owned or used under license by Littlewoods, and all goodwill associated therewith;

1.12

"Net Revenue" has the meaning set out in Appendix D;

1.13

"Operator" any person or entity with whom Littlewoods or any of its Associates has an agreement for Littlewoods or its Associate to produce and/or provide interactive games or applications and any platform provider or multiplex or cable operator transmitting the said content (and the term "Operator" shall include ITV Network Limited, Sky Subscriber Services Limited and Sky Interactive Limited), for their broadcasting in the United Kingdom;

1.14

"Revenue Share" shall mean the share of Net Revenue to be paid by Littlewoods to Zone4Play and to be calculated in accordance with Appendices A, B and C;

1.15

"STBs" has the meaning given in Clause 8.1;

1.16

"Term" the period of time commencing on the Effective Date and ending on the expiry or termination of this Agreement;

1.17

"Technical Criteria" shall mean all the technical requirements that an Operator shall make in respect of interactive applications;

1.18

"Zone4Play Services" shall mean the serving, hosting and maintenance services set out in Appendix E; and

1.19

"Zone4Play Trademarks" shall mean any trademarks, service marks, design marks, symbols, logos and/or other indicia of source owned or used under license by Zone4Play, and all goodwill associated therewith.

2.

The Parties’ Obligations for Providing the Applications.

2.1

Zone4Play shall develop the Applications in accordance with a specification and a timetable (the “Timetable”) each of which shall be negotiated in good faith between the Parties. Zone4Play shall customize the look and feel of the Applications exclusively for Littlewoods using such of the Littlewoods Trademarks and such other materials (together, the “Littlewoods Materials”) as shall be notified by Littlewoods to Zone4Play from time to time (such customization by Zone4Play being referred to in this Agreement as the “Customization Work”). Littlewoods shall have a right of approval in its sole discretion over the final form of the Applications following completion of the Customization Work (and, unless the context otherwise requires, references in this Agreement to the “Applications” shall be deemed to be references to the Applications following completion of the Customization Work to Littlewoods' satisfaction under this Clause).

2.2

Zone4Play shall ensure that the Applications comply in all respects with the Technical Criteria, and Zone4Play shall integrate the Applications and the Littlewoods Services with each other and with the technical infrastructure used by the Operators according to any Operators' Technical Criteria in order to make the Applications available for access and use by Customers. Littlewoods and/or Zone4Play and/or any relevant Operator (as necessary in each case) shall carry out Acceptance Tests on the Applications (unless both of the Parties and the relevant Operator all agree that such Acceptance Tests are not required in respect of SMS games). If in Littlewoods' reasonable opinion an Application meets the Technical Criteria then Littlewoods shall inform Zone4Play in writing that it has accepted such Application. Acceptance by Littlewoods after Acceptance Testing shall be deemed completion and fulfilment of Zone4Play's obligation to meet the Technical Criteria, but this shall be subject to and entirely without prejudice to the representation and warranty provided by Zone4Play at Clause 8.1(v) and the indemnity at Clause 13.1, both of which provisions shall continue in full force and effect at all times during and after this Agreement.

2.3

For the avoidance of doubt, Littlewoods shall at all times retain the sole and absolute discretion as to whether it shall or shall not distribute any Application via any Operator(s) to any Customer(s) from time-to-time and nothing herein shall be construed as an obligation upon Littlewoods actually to launch the Applications or any of them, or, once launched/if launched, to maintain them in live usage. The only Application that Littlewoods will be obliged to launch (subject to Clause 2.4) will be multi-player poker (as referred to in Appendix B), which (subject to Clause 2.4) shall remain accessible for a period of no less than three (3) months from ITV1 via a Littlewoods or Littlewoods branded menu subject to Clause 2.4. Littlewoods further confirms that it will use its reasonable endeavours to ensure that ITV launches the Applications in Appendix C however Littlewoods' failure to do so will not create any liability whatsoever on the part of Littlewoods. For the purpose of clarification, notwithstanding any undertaking contained herein, Zone4Play shall not in any way be obliged to provide Littlewoods and/or any Operator with any Application other than multi-player poker as specified in Appendix B unless, the Parties have agreed on the Timetable and launch date for such Applications.

2.4

For the avoidance of doubt, Littlewoods shall have no obligation to launch multi-player poker, to make multi-player poker available on the services of any Operator, or available to Customers, nor shall Littlewoods be obliged to continue to make multi-player poker available (if it has been launched) if Littlewoods has for any reason not been granted the right to launch and make multi-player poker available as described in Clause 2.3 by all relevant parties, or if such right has been withdrawn from Littlewoods.

2.5

Zone4Play will provide the reports and materials to Littlewoods with the frequency set against the relevant item in the tables further detailed in section 2 of Appendix A.

2.6

Littlewoods shall be solely responsible for providing the Littlewoods Services and for procuring the availability of the necessary testing environment.

2.7

Littlewoods will track the activity and transactions generated from the provision of the Applications to the Customers, and will report such activity to Zone4Play in accordance with Clause 6 below.

2.8

Notwithstanding anything to the contrary in this Agreement, unless and until the Parties have (as set out in Clause 13.2) agreed in writing, the limitation on Zone4Play's liability for any loss, damage, costs, expenses or other liability arising directly or indirectly from Zone4Play's breach of Clauses 8.1(v)(a) and 8.1(v)(b), neither party shall have any obligation to distribute, use, deploy, configure or make available to any party (including any Operator or Customer), any of the ITV Fixed Odds Games (as set out in Appendix A) or the Multiplayer Games (as set out in Appendix B).

3.

Grant of License for Distributing Applications.

3.1

Zone4Play hereby grants to Littlewoods, during the Term, a non exclusive license and right to distribute, promote, and sub-license the Applications and to make the Applications available for access and use by Customers and to deploy on and/or incorporate the Applications within or in conjunction with the services of any Operator PROVIDED THAT such right to sub-license the Applications is subject to the terms of this Agreement and does not in any way confer on Littlewoods any ownership right in the Applications other than the Customisation Work. Zone4Play shall be entitled to grant rights to any third party only in respect of Applications as they stood prior to the Customisation Work having been carried out on them and Zone4Play may not use itself nor permit or authorise any third party to use any Customisation Work.

3.2

Littlewoods hereby grants to Zone4Play, during the Term, a limited, non-exclusive, non-transferable license to use the Littlewoods Materials solely to the extent necessary for Zone4Play to perform its undertakings under this Agreement including the Customisation Work pursuant to Clause 2.1.

4.

Trademark License.

4.1

Zone4Play grants to Littlewoods, during the Term, a worldwide, non-exclusive, royalty-free license to use the Zone4Play Trademarks in online, print or any other media for the purposes of promoting, selling, licensing, and distributing the Applications to Operators and Customers.

4.2

Littlewoods acknowledges that all right, title and interest in and to the Zone4Play Trademarks, including all goodwill related thereto, are and shall remain owned solely and exclusively by Zone4Play and that all usage of the Zone4Play Trademarks by or on behalf of Littlewoods shall inure to the benefit of Zone4Play.

4.3

Littlewoods agrees to comply with any and all usage guidelines provided by Zone4Play to Littlewoods with respect to the Zone4Play Trademarks, and shall supply, upon Zone4Play’s written request, specimens of all advertising, marketing and/or promotional materials in which a Zone4Play Trademark appears to Zone4Play for inspection and approval, which approval shall not be unreasonably withheld, delayed or made conditional.

4.4

If Zone4Play has not indicated its approval or rejection of such specimens within seven (7) business days after receiving such specimens, such specimens shall be deemed approved by Zone4Play. Zone4Play agrees to provide Littlewoods a copy of its current trademark usage guidelines promptly upon execution of this Agreement.

4.5

Zone4Play acknowledges that all right, title and interest in and to the Littlewoods Materials (including without limitation the Littlewoods Trademarks), including all goodwill related thereto, are and shall remain owned solely and exclusively by Littlewoods and that all usage of the Littlewoods Trademarks by or on behalf of Zone4Play shall inure to the benefit of Littlewoods. Zone4Play agrees to comply with any and all usage guidelines provided by Littlewoods to Zone4Play with respect to its use of the Littlewoods Trademarks in the provision of the Customisation Work.

4.6

Zone4Play agrees to comply with any and all usage guidelines provided by Littlewoods to Zone4Play with respect to the Littlewoods Trademarks, and shall supply, upon Littlewoods' written request, specimens of all advertising, marketing and/or promotional materials in which Littlewoods Trademarks appear, to Littlewoods for inspection and approval, which approval shall not be unreasonably withheld, delayed or made conditional.

5.

Service Level Agreement.

6.

Royalty/Revenue-Sharing Payments.

6.1

Revenues arising from the provision of the Applications shall be shared between the Parties in accordance with Appendices A, B or C as appropriate to the type of Application.

6.2

In accordance with Littlewoods' accounting calendar (details of which Littlewoods shall provide to Zone4Play on Zone4Play's request). Littlewoods shall send Zone4Play a report detailing the Net Revenue received from the Applications during the previous Littlewoods accounting cycle, and the Revenue Share due to Zone4Play in respect of that previous Littlewoods accounting cycle.

6.3

Zone4Play shall invoice Littlewoods accordingly for the Revenue Share and Littlewoods shall pay such invoice by the end of the next four (4) or five (5) weekly cycle in Littlewoods' accounting calendar. Strictly subject to any obligation of confidentiality owned by Littlewoods or its Associates to any Operators, Zone4Play shall have the right, at its cost, to audit Littlewoods' books and accounts during the Term in relation to the Net Revenue upon reasonable notice to Littlewoods but not more than once in any twelve (12) month period during the Term.

6.4

The Revenue Share shall be paid to Zone4Play on the basis that no VAT is payable on the Net Revenue or the Revenue Share. However if subsequently the Parties discover that VAT is payable on the Net Revenue and/or the Revenue Share then the Revenue Share due to Zone4Play and the Net Revenue due to Littlewoods shall be adjusted by the parties such that the VAT shall be shared by both parties in the same proportion as the parties share Net Revenue pursuant to Appendix D.

7.

Promotion, Publicity and Press Releases.

8.

Representations and Warranties.  

8.1

By Zone4Play.

8.2

By Littlewoods.

8.3

Disclaimer.

9.

Confidentiality.

9.1

The Parties agree that during the Term there may be a need to exchange certain confidential or proprietary information. In this Agreement, “Confidential Information” shall be defined as the terms of this Agreement and any confidential, trade secret, or other proprietary information disclosed by any Party (the “Disclosing Party”) to the other Party (the “Receiving Party”) under this Agreement. Confidential Information shall not include information that (i) is public knowledge at the time of disclosure, (ii) was known by the Receiving Party before disclosure by the Disclosing Party, or becomes public knowledge or otherwise known to the Receiving Party after such disclosure, other than by breach of the confidentiality obligations of this Agreement, or (iii) is independently developed by the Receiving Party by persons without access to Confidential Information of the Disclosing Party.

9.2

The Receiving Party shall during the Term and following expiry or termination of this Agreement limit disclosure of Confidential Information to such of its Associates, employees and agents who have a strict need to know such information in the performance of the Receiving Party’s duties hereunder, and shall not disclose the Confidential Information to any third party other than its professional and legal advisers (or in the case of Littlewoods to such Operators who have the need to know the same).

9.3

The Receiving Party shall take appropriate action, by instruction, agreement, or otherwise, with any persons permitted access to the Disclosing Party’s Confidential Information in accordance with Clause 9.2 so as to assure that they will hold such items in confidence. All Receiving Party personnel who receive or use the Confidential Information of the Disclosing Party shall, before receipt or use of such information, be informed of the Receiving Party’s obligations under this Agreement.

9.4

The Receiving Party agrees to return to the Disclosing Party, upon expiry or termination of this Agreement, the Disclosing Party’s Confidential Information and any and all copies and derivatives thereof, or to certify the destruction of the same upon the request of the Disclosing Party.

9.5

The Parties agree that any breach of the confidentiality obligations of this Clause 9 may result in irreparable harm to the Disclosing Party for which damages would be an inadequate remedy and therefore, in addition to its rights and remedies otherwise available at law, the Disclosing Party shall be entitled to seek equitable relief, including injunction, in the event of such breach.

10.

Term and Termination.

10.1