Exhibit 10.1
LICENSE
AGREEMENT
THIS LICENSE AGREEMENT (the "Agreement") is made and entered
into as of the 15 th day of July, 2004 (the "Effective
Date") by and between FirstBingo.com, a corporation organised
pursuant to the laws of Nevada, with a place of business at 488
Huron Street Toronto, Ontario M5R 2R3, Canada (hereinafter referred
to as the "Owner") and Bingo TVNet Corporation, a Colorado
corporation with a place of business at 90 Inverness Circle East,
Englewood, Colorado 80211 (hereinafter referred to as the
"Producer").
WHEREAS, Owner is the proprietor of certain Software (as that
term is defined below) and related property used to facilitate
games of skill, namely bingo and Trivia Bingo™, via varying
methods and forms of multimedia;
WHEREAS, Producer desires to obtain a license to, and Owner
desires to license the Software to Producer, and the parties desire
to enter into a business relationship for the exploitation of the
Software via the internet, interactive and standard television, and
possibly elsewhere;
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Owner and Producer agree as follows:
1. DEFINITIONS
.
Along with the terms defined in the
Agreement, the following terms shall have the meanings ascribed
thereto below:
1.1 "Format" shall mean
the unique combination of concepts, rules, elements, including (but
not limited to) set designs, scripts, music, castings, lighting,
and underlying materials for a television program more specifically
delineated in Schedule A (attached hereto and incorporated by this
reference) and referred to hereinafter as "Trivia Bingo."
1.2 "Territory: shall
mean the United States, Puerto Rico & the U.S. Virgin
Islands.
1.3 "Software" shall mean
the FirstBingo.com™ proprietary Software to be used for
operation of the internet, television and interactive television
(hereinafter, "iTV") games as more fully set forth on Schedule B
hereto (attached hereto and incorporated by this reference).
1.4 "New Series" shall
mean a television (including without limitation iTV) program and/or
series of programs utilizing the Format, wherever such program or
program series may be produced and/or distributed within the
Territory.
1.5 "Broadcast" shall
mean all free and paid television broadcasts, which shall include
terrestrial, cable, and satellite transmissions within the
Territory (including Overspill), pay-per-view, and shall include
both analogue and digital transmission.
1.6 "Overspill" shall
mean the possibility that a New Series Broadcast in the Territory
is capable of reception outside the Territory due to the inherent
incapability of satellite signals to be received only in an area
confined by territorial boundaries.
1.7 "Materials" shall
mean marketing, advertising and publicity collateral in all
forms.
1.8 "Copyright" shall
mean Owner's copyright interest in and to the TriviaBingo Format
and Software.
1.9 "Trademark" shall
mean Trivia Bingo™.
2. GRANT OF RIGHTS .
In consideration of the fees payable
hereunder, Owner hereby grants to Producer the exclusive right (but
not the obligation except as otherwise specified herein) to use the
Software, Copyright, Trademark, Format and other intellectual
property appurtenant thereto to produce the New Series of Trivia
Bingo and to create derivative works based upon any or all of the
foregoing.
3. TERM .
The license granted herein shall be effective as of the Effective
Date and shall expire on the first anniversary date thereof unless
terminated earlier as provided herein (the "Initial Term") or
unless renewed by the parties (the "Renewal Term"). For avoidance
of doubt, Producer may renew this Agreement for a further exclusive
term of five (5) years at Producer's sole discretion (the Initial
Term and Renewal Term, if any, are hereinafter individually and
collectively referred to as the "Term"). Producer shall notify
Owner not less than thirty (30) days prior to expiry of the Initial
Term of its intention to renew this Agreement for such Renewal
Term.
4. OWNER'S RIGHTS AND RESPONSIBILITIES
.
4.1 Owner shall host,
provide and facilitate all forms of the internet Trivia Bingo game.
All hosting of the internet Trivia Bingo game will take place
exclusively on Owner's servers. Account verification and the
debiting of internet Trivia Bingo player (hereinafter, "Internet
Player(s)") account funds will be via a backend function
transparent to the Internet Player. Owner shall maintain accurate
and complete books and records reflecting all cards played by all
Internet Players for reconciliation and/or auditing purposes and
shall collect all fees due from all Internet Players within the
Territory and shall pay to Producer its share of such fees as set
forth in Section 9 hereof as and when due.
4.2 During the term of
this Agreement the Owner shall not enter into any other agreement
with any entity for the licensing of Broadcast rights of the Format
in the Territory, or undertake in the Territory any marketing
activities directly related to the Format unless expressly
permitted by the Producer.
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4.3 Owner shall deliver
to Producer any Materials as may be reasonably requested by
Producer, at no cost to Producer, for the purposes of producing the
Format.
4.4 At all times
throughout the Term of this Agreement, Owner shall deposit in trust
the then-current version of the Software source code at the offices
of the law firm representing Owner. Owner shall provide Producer
with the identity of such law firm and shall identify a primary
contact within such firm within twenty (20) days of the Effective
Date. Further, Owner shall promptly notify Producer of any
change(s) in either the law firm or the primary contact. In the
event Owner breaches the terms of this Agreement or in the event of
the liquidation of Owner or the appointment of a receiver for
Owner, in addition to its other rights and remedies hereunder,
Producer shall immediately be entitled to the Software source
code.
4.5 Owner shall
contribute a maximum of ten percent (10%) of the Owner's Share of
all net internet and iTV revenues (i.e. gross internet and iTV
revenues actually collected minus set-offs, credits, refunds, etc.,
hereinafter, "Net Revenues") derived from the Territory during the
Term of this Agreement, by depositing such sums on or before the
last business day of each month during the Term hereof in a trust
account to be identified by account and routing numbers by Producer
within thirty (30) days of the Effective Date (the "Trust
Account"), which contribution (the "Prize Pool Contribution") will
be used solely to fund prizes for contestants participating in the
TV series, iTV and Internet competitions (the "Prize Pool").
5. PRODUCER'S RIGHTS AND
RESPONSIBILITIES .
5.1 Producer shall
produce and provide a forum for all iTV versions of the Trivia
Bingo game. Producer shall track cards played by iTV Trivia Bingo
players (hereinafter, "iTV Players") for reconciliation and/or
auditing purposes, shall collect all monies due from any iTV
Players and shall pay to Owner its share of such fees as set forth
in Section 9 hereof as and when due.
5.2 The Producer shall
have the right to sub-license the rights granted it hereunder to
another broadcaster in the Territory provided that any such
sub-license shall be subject to the provisions of this
Agreement.
5.3 The Producer shall
notify the Owner as soon as practicable of any sub-license it
enters into with another broadcaster.
5.4 The Producer or its
assigns shall have complete creative control of any pilot program
and all programs of the New Series.
5.5 The Producer shall
market the Owner's web site and the New Series through account
statement inserts, broadcast trailers and/or any other reasonable
marketing methods it elects, in its sole discretion, to employ.
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5.6 Producer shall
deliver to the Owner; two (2) VHS tapes of each and every show of
the New Series produced within thirty (30) days of production.
Owner shall not use, or permit to be used for any purpose, any
tapes of the New Series provided to Owner pursuant to this Section
5.6 without first obtaining Producer's express written consent.
5.7 The Producer agrees
to complete production of a minimum of one (1) Trivia Bingo game
show, in accordance with the terms hereof, in each and every one
hundred fifty (150) day period during the Term of this
Agreement.
5.8 The Producer will use
all reasonable efforts to ensure that any production of the New
Series shall follow as closely as practicable the guidelines set
forth in the Format Description annexed hereto as Schedule A.
5.9 Subject at all times
to Section 9 hereof, Producer shall make a Prize Pool Contribution
of a maximum of ten percent (10%) of the Producer's Share of all
Net Revenues (which, for the avoidance of doubt, shall also be net
of the "Production Cost" as that term is defined in Section 9.3
hereof) derived from the Territory during the Term of this
Agreement, by depositing such sums on or before the last business
day of each month during the Term hereof in the Trust Account,
which Prize Pool Contribution will be used solely to fund the Prize
Pool.
5.10 Producer shall be
responsible for making payments from the Prize Pool Trust Account
to contestants participating in the TV series, iTV and Internet
competitions
6. PRODUCTION OF NEW SERIES
.
With the exception of the Prize Pool
Contributions and the Production Cost, the Producer shall be
responsible for obtaining all of the financing required for the
production of the New Series and shall be responsible for any and
all expenses incurred during the course of production of the New
Series and Owner shall have no additional liability or
responsibility therefore. Except for the Prize Pool Contribution
and the Production Costs, and any other agreed upon expense to be
jointly borne, Producer and/or its assigns or licensees shall
indemnify and hold Owner safe and harmless therefrom and from any
other actions taken by the Producer and/or said assigns and/or
licensees with reference to the production of the New Series unless
such actions are attributable to or a result of Owner's
representations and warranties or any breach thereof.
7. OWNERSHIP .
7.1 The Producer or its
assigns shall own the copyright in the New Series and all of the
television programs thereof including without limitation all iTV
programs and services and Producer or its assigns shall own any and
all rights in and thereto into perpetuity, provided that,
notwithstanding the exclusive rights granted to Producer hereunder,
any and all copyright in the Format as embodied in the New Series
and iTV programs shall remain with the Owner and is in no way
transferred, conveyed or assigned hereunder.
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7.2 All rights of
any kind and nature not expressly and specifically granted
hereunder are reserved to and shall remain the exclusive property
of the respective owner thereof.
8. MERCHANDISING RIGHTS .
Prior to commencement of production of
the New Series, the parties hereto shall enter into a merchandising
rights agreement, (on terms to be negotiated in good faith),
wherein the Owner shall receive a 5% royalty and the Producer shall
receive a 95% royalty on all sales in the Territory.
9. PAYMENT TERMS .
9.1 All internet and iTV
Net Revenues derived from the Territory during the Term of this
Agreement shall be divided and shared as follows: (i) 60% to the
Producer (the "Producer's Share"); and (ii) 40% to Owner (the
"Owner's Share"). The parties shall reconcile all gross revenues
(both internet and iTV-based) on the first business day of each
month and shall pay the other its share of Net Revenues along with
providing an accounting thereof in accordance with Section 9.2
below.
9.2 The Producer and the
Owner shall each pay to the other such sums set forth in Section
9.1 above, calculated monthly in arrears, not more than 45 days
following the end of the month in which monies are received from
both the Internet and iTV Players, respectively. Such payment shall
be accompanied by an accounting of the number of Internet Players
in the case of Owner and iTV Players in the case of Producer, the
total number of games played and charged for, as well as the gross
revenue collected from the applicable Players during the period
reflected by the corresponding payment.
9.3 Producer shall be
entitled to withhold the Trivia Bingo TV show production cost of a
maximum of Thirty Thousand U.S. Dollars ($30,000) per show (the
"Production Cost") from the iTV Player gross revenues and all
payments to Owner of Owner's Share of the Net iTV Revenues
hereunder shall be calculated after first deducting the Production
Cost from the gross revenue generated by the iTV Players. In the
event that the iTV revenues are insufficient to offset the
Production Cost for the New Series including any individual show
thereof, Producer shall invoice Owner and Owner shall promptly pay
Producer for half of the actual costs, not to exceed a maximum of
Fifteen Thousand Dollars ($15,000) per show, actually incurred by
Producer in connection with the production of the New Series.
10. AUDIT RIGHTS.
10.1 Producer agrees to
keep and maintain accurate books and records of the number of iTV
Players and the payment of fees by iTV Players hereunder. During
the Term
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and for one (1) year thereafter, Owner
shall have the right upon at least sixty (60) days written notice,
and at Owner's expense, to conduct an audit of such books and
records that are reasonably necessary to verify the accuracy of any
reports by Producer; provided that such books and records so
audited shall be limited to iTV Player counts and payment records
relating directly to Owner. Such audit shall be conducted by an
independent nationally-recognized certified public accounting firm
approved by Producer, which firm shall execute a non-disclosure
agreement acceptable to Producer. Any such audit shall be conducted
during Producer's regular business hours (such hours to be
determined in Producer's sole discretion) and at Producer's office,
where records are regularly maintained. Owner's right to perform
such audit shall be limited to once in any consecutive twelve
(12)-month period. Any audit shall be limited to the books and
records of the preceding and current year only. Owner shall provide
the results of such audit to Producer within four (4) months of
conducting the audit and any such information shall be deemed the
Confidential Information (as that term is defined in Section 14.4
hereof) of Producer. Owner shall submit any claims of
non-compliance as a result of an audit to Producer in writing
within three (3) months of the auditors leaving Producer's offices
or Owner shall have waived its rights to such claim. Any claim as a
result of such audit shall be limited to the current year and the
immediate preceding year only. In addition, only if, with respect
to any audit, the difference between the amounts payable to Owner
and paid to Owner is greater than five percent (5%), then Producer
shall reimburse Owner for the reasonable and documented costs and
expenses of Owner's inspection and audit.
10.2 Owner agrees to keep
and maintain accurate books and records of the number of Internet
Players and the payment of fees by Internet Players hereunder.
During the Term and for one (1) year thereafter, Producer shall
have the right upon at least sixty (60) days written notice, and at
Producer's expense, to conduct an audit of such books and records
that are reasonably necessary to verify the accuracy of any reports
by Owner; provided that such books and records so audited shall be
limited to Internet Player counts and payment records relating
directly to Producer. Such audit shall be co
