EXHIBIT 4.37
SOFTWARE LICENSE AGREEMENT
THIS AGREEMENT is entered
into this 23 day of May 2000.
BETWEEN:
INTERNET EMPIRE ENTERTAINMENT LTD., with registered offices in
St.
John's Antigua, West Indies
(hereinafter referred to as the "Licensee")
AND
STARNET SYSTEMS INTERNATIONAL INC., (formerly known as Softec
Systems
Caribbean Inc.) with registered offices at 1589 Newgate Street,
St.
John's Antigua, West Indies.
(hereinafter referred to as "SSII")
WHEREAS,
A.
Softec Systems Caribbean Inc. changed its name to Starnet
Systems
International Inc. pursuant to Section 161(2) of the
International
Business Corporations Act, Cap.222, by Special Resolution dated
19th
day of July 1999;
B. SSII
owns rights to Internet casino software (the
"Software");
C. SSII
wishes to license the Software to other companies;
D. SSII
wishes to provide a complete computer hardware and
software
package that the Licensee may use to operate an Internet Gaming
site;
and,
E. The
Licensee wishes to license the Software and make use of
SSII's
computer hardware in order to operate an Internet gaming
site.
NOW THEREFORE, in
consideration of the premises and mutual covenants herein
set
forth, the parties agree as
follows:
1.
GENERAL PROVISIONS
1.1
DEFINITIONS
1.1.1
"Licensed Software" shall mean a licensed data
processing program or micro program consisting of a
series or sequence of signals, or instructions,
statements, or fonts stored on any media in machine
readable form, and any related licensed materials
such as, but not limited to, graphics, flow charts,
logic diagrams, manuals and listing made generally
available by SSII for use in connection
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with the licensed programs. The Licensed Software
shall consist of
not more than 2 casinos, based on
themes selected by the Licensee (collectively, the
"Casino"). The Casino shall have various games of
chance which includes, but are not limited to,
blackjack, roulette, pai gow poker, video poker and
slot machine and other games as added from time to
time, based on a theme chosen by the Licensee, a
sportsbook web site within the gaming site, an HTML
version of the sportsbook, and a lottery ticket
distribution web site.
1.1.2 "Net
Monthly Revenue" shall mean, for any given
calendar month, the total amount wagered in the
casino, horse track and the sportsbook, less winnings
in the Casino, horse track and the sportsbook, PLUS,
total sales of lottery tickets less the invoiced cost
for purchasing lottery tickets for the lottery ticket
sales, PLUS any membership fees or additional fees
that may be charged by the Licensee that are not
related to currency conversion or transaction
processing.
1.1.3
"Hardware" shall mean all the necessary computers,
routers, cabling, monitors, hard drives, back-up
systems, and other equipment, as determined by SSII
in its absolute discretion, located at its offices in
St. John's Antigua, or other locations designated by
SSII as may be required in order to properly store,
distribute and run the Licensed Software.
1.1.4
"Games" shall mean the casino style games,
sportsbook, lottery, and pari-mutuel games that are
played using the Licensed Software and are available
from time to time.
1.1.5 "Downloadable Software"
shall mean the portion of the
Licensed Software that must be resident on a
customer's computer in order for the customer to
access and play the Games.
1.1.6
"Master CD" shall mean the compact disc containing
the Downloadable Software that may be used to
mass-produce compact discs for delivery to the
Licensee's customers.
1.1.7
"Customer Information" shall mean all data collected
and stored on customers including, without limiting
the generality of the foregoing, name, address,
phone, and fax number, e-mail address, credit card
numbers and expiration dates or information on other
types of payments, amounts wagered and frequency of
wagering.
1.1.8
"Confidential Information" shall mean material in the
possession of SSII which is not generally available
to or used by others or the utility or value of which
is not generally known or recognized as
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standard practice, including, without limitation, all
financial business and personal data relating to
SSII's clients, any non-public information about
affiliates, subsidiaries, consultants and employees
of SSII or its affiliates, business and marketing
plans, strategies and methods, studies, charts,
plans, tables and compilations of business industrial
information, computer software and computer
technology whether patentable, copyrightable or not,
which is acquired or developed by or on behalf of
SSII or its affiliates from time to time.
1.2 RIGHT TO
AUDIT
1.2.1 The
Licensee shall within reason, have the right,
without prior notice to SSII to inspect and audit all
SSII's business, accounting and supporting records
that are necessary for purposes determining SSII's
compliance with the terms of this Agreement. SSII
shall fully co-operate with any independent chartered
accountants or certified public accountants hired by
the Licensee to conduct any such inspection or audit.
If any such inspection or audit discloses an under
statement of less than 3% for any period, SSII shall
pay, within ten days after receipt of the inspection
or audit report, the sums due on account of such
understatement with interest calculated at U.S. prime
plus one percent. Further, if such inspection or
audit is made necessary by failure of SSII to furnish
invoice reports or any other documentation as herein
required, or if an understatement for any period is
determined by such inspection or audit to be 3% or
greater, SSII shall, on demand and in any event
within the said ten days, in addition to paying the
sums due on account of such understatement, also
reimburse for the cost of such inspection or audit,
including without limitation, the charges of any
independent chartered accountants or certified public
accountants retained by the Licensee in connection
with such audit or inspection and the reasonable
travel expenses, room, board and compensation of
employees of the Licensee.
1.2.2 The
Licensee's right to audit records shall only
extend to records that date back no more than two of
SSII's fiscal years prior to the date SSII receives
notice of an impending audit.
1.3
INDEMNIFICATION
1.3.1 The
Licensee acknowledges and agrees that neither
SSII nor any of its members, shareholders, directors,
officers, employees or representatives will be liable
to the Licensee or any of the Licensee's customers
for any
special, indirect, consequential, punitive or
exemplary damages, or damages for loss of profits or
savings, in connection with this Agreement, the
services or the
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Hardware or any other information, material or
services provided by SSII to the Licensee under this
Agreement. If, despite the foregoing limitations,
SSII or any of its shareholders, directors, officers,
employees or representatives should become liable to
the Licensee or any other person (a "Claimant") in
connection with this Agreement, then the maximum
aggregate liability of SSII, its members,
shareholders, directors, officers, employees and
representatives for all such things and to all such
parties will be limited to the lesser of the actual
amount of loss or damage suffered by the Claimant or
the amount of the Licensee's fees payable by the
Licensee to SSII for the six months prior to the
loss.
1.3.2 The
Licensee shall indemnify and save harmless SSII
and its members, shareholders, directors, officers,
employees, agents, contractors, representatives,
parent company, or subsidiaries (together, the
"Indemnified Parties") from and against all damages,
losses, costs and expenses (including actual legal
fees and costs), fines and liabilities incurred by or
awarded asserted or claimed against any of the
Indemnified Parties by any licensing or government
agency who licenses, regulates, or otherwise governs
the licensing or use of Internet gambling in
connection with the Licensee's activities under this
Agreement, including claims brought by a person using
or relying upon any advice given or publication
produced and distributed by the Licensee.
1.3.3
Notwithstanding anything in this Section 1.3, if SSII
is found guilty of fraud in executing its'
obligations under this Agreement, the Licensee shall
not responsible for any indemnification of the
Indemnified Parties to the extent that the fraud has
caused there to be damages.
1.4
DISRUPTIONS
1.4.1 The
Licensee acknowledges that from time to time as a
result of Hardware failure, supplier failures, or
acts of God, the services provided under this
Agreement by SSII can be temporarily disrupted. The
Licensee acknowledges and agrees that neither SSII
nor any of its members, shareholders, directors,
officers, employees or representatives will be liable
to the Licensee or any of the Licensee's customers
for any special, indirect, consequential, punitive or
exemplary damages, or damages for loss of profits or
savings, in connection with these temporary
disruptions. For the purpose of this section, if the
services provided under this Agreement by SSII are
temporarily disrupted for seven days within any
one-month period, the minimum monthly fees as
calculated in section 1.7.3 shall be reduced on a pro
rata basis.
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1.4.2 The
Licensee acknowledges that SSII's ability to
perform its obligations under this Agreement are
subject to government licensing in whatever
jurisdiction SSII may choose to operate. SSII shall
not be held liable for any damages of any kind
whatsoever that may result from changes in government
legislation or policy.
1.5 CONDITIONS
OF LICENSE
This license is granted under the following conditions:
1.5.1 The
Licensee acknowledges that its rights in and to
the Licensed Software may not be assigned, licensed
or otherwise transferred by operation of law without
the prior written consent of SSII. Violation of this
section is grounds for immediate termination of this
Agreement. SSII will not unreasonably withhold its
consent to the Licensee's requests to sub-license the
Licensed Software to a third party subject to the
following obligations of the Licensee and limitations
of SSII:
(a) that the
Licensee will have first provided
SSII with a copy of its draft sub-licensing
agreement with the proposed sub-licensee
(the "Sublicensee"), such agreement must
contain the following provisions (the
"Sub-licensing Agreement"):
(1) that
Licensee is responsible
for all communication with the
Sublicensee and SSII
will have no
responsibility in this regard;
(2) that the
Sublicensee will have
presented the Licensee with a
current criminal check confirming
that Sublicensee has no criminal
record;
(3) the
Sublicensee shall obtain no
rights in the Licensed Software
other than those specifically
granted in the Sub-licensing
Agreement;
(4) the
Licensee is responsible for all
technical support and customer
service support of the Sublicensee
and the Sublicensee's customers and
the Licensee will be responsible
for establishing its own methods of
communication in this regard;
(5) the
Sublicensee shall not own the
Customer Information generated in
respect of the Sublicensee's
customers and, during the term of
this Agreement ownership of such
Customer Information will be
retained by the Licensee and
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will not in any circumstances be
transferred by the Licensee to the
Sublicensee;
(6) that the
Licensee is responsible
for paying all of the additional
production costs associated with
producing a copy of the software
and a report generator for each of
the Licensee's sublicensees
approved by SSII under this
Agreement (see attached Fee
Schedule);
(7) that the
Licensed Software is the
sole property of SSII, and that
Licensee has only the specific
rights to sub-license that are
granted to it under this Agreement;
and,
(8) that the
cost of any upgrades to
the Licensed Software that are
sublicensed to the Sublicensee will
be borne by the Licensee.
1.5.2
Copyright, trademarks and other proprietary rights of
SSII (SSII's Intellectual Property) protect the
Licensed Software. The Licensee may be held directly
responsible for acts relating to the Licensed
Software which are not authorized by this Agreement
1.5.3 All
right, title and interest in and to SSII's
Intellectual Property to the Licensed Software, and
any copies threreof, and all documentation, code and
logic, which describes and/or comprises the Licensed
Software remains the sole property of SSII.
1.5.4 SSII
shall not be responsible for failure of
performance of this Agreement due to causes beyond
its control, including, but not limited to, work
stoppages, fires, civil disobedience, riots,
rebellions, acts of God, and similar occurrences.
1.5.5 The
sportsbook "format" shall remain standard, and
will not be materially altered from SSII's standard
sportsbook facilities. Format shall refer to the
tabular presentation of the sports information making
up the sportsbook look and feel and shall not include
the graphics that may be added in order to
personalize it.
1.5.6 The
Licensee acknowledges that this is a
non-exclusive agreement and that SSII will license
the Licensed Software to as many other parties as are
willing to enter into a licensing agreement with
SSII.
1.5.7
INTENTIONALLY DELETED
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1.5.8 The
Licensee shall be responsible for ensuring that
they are operating the Licensed Software in
compliance with any and all applicable state,
provincial, national, and international laws.
1.5.9 The
Licensee shall provide SSII with all
documentation necessary to show that the Licensee has
obtained any and all necessary licenses in order to
operate an Internet casino and/or Sportsbook in the
jurisdiction in which the gaming servers are located.
1.5.10 It is the
policy of SSII to prevent the use of the
Licensed Software for use as a "money laundering"
vehicle. The Licensee warrants that they will
undertake all reasonable efforts to prevent persons
from using the Licensed Software for use as a
money-laundering vehicle. If it is revealed that the
Licensee is purposely allowing or is willfully blind
to money laundering, SSII may terminate this
agreement without notice.
1.5.11 The
Licensee shall not accept wagers from persons
residing in Canada and shall implement all measures
stipulated by SSII to ensure that persons residing in
Canada are not able to wager utilizing the Licensed
Software.
1.6 TERMS AND
TERMINATION
1.6.1 This
Agreement shall commence and be deemed effective
on the date when fully executed (the "Effective
Date"). This Agreement is in effect for a period of
one-year (the "Term') and shall be automatically
renewed indefinitely with additional one year terms
unless the Licensee gives written notice of
termination of this Agreement at least 45 days prior
to the end of any one year period.
1.6.2 SSII
may terminate this Agreement by giving written
notice to the Licensee at least six months prior to
the end of any one year term provided, however, SSII
shall not give notice of termination in the first
year of this Agreement.
1.6.3 SSII
may terminate this Agreement at any time upon
five days notice if the Licensee is more than 30 days
in arrears in paying any material monthly fees due
and owing to SSII. The Licensee shall be allowed to
cure the breach during the notice period, thus
pre-empting SSII's ability to terminate this
Agreement in accordance with this section. The
arrears contemplated in this section must be of a
material amount for this section to be used by SSII.
For the purposes of this section, material shall mean
anything greater than 5% of the previous month's
fees.
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1.6.4 SSII
may terminate this Agreement at any time upon
five days notice if the Licensee becomes bankrupt or
insolvent or ceases carrying on business for any
reason.
1.6.5 The
Licensee may terminate this Agreement at any time
upon five days notice if SSII becomes bankrupt or
insolvent or ceases carrying on business for any
reason.
1.6.6 The
Licensee may, inter alia, terminate this
Agreement at any time upon five days notice if SSII
is materially in breach of this Agreement for more
than 30 days. SSII shall be allowed to cure the
breach during the notice period, thus pre-empting the
Licensee's ability to terminate this Agreement in
accordance with this section.
1.6.7 SSII
may terminate this Agreement at any time upon
five days notice if SSII, or any of its principals,
officers or Directors becomes the subject of third
party civil or criminal litigation as a result of the
Licensee's operations under this Agreement. The
litigation contemplated herein must be material, and
found to be of a serious nature by independent legal
counsel.
1.6.8 Upon
termination of this Agreement, the Licensee
shall immediately return to SSII any and all of
SSII's materials which SSII has a proprietary right
in that are in the Licensee's possession and/or in
the possession of the Licensee's agents, servants and
employees.
1.6.9 Upon
termination of this Agreement, all Customer
Information shall he given to the Licensee and SSII
shall not make use of or disclose any Customer
Information to any third party.
1.6.10 Upon
termination of this Agreement for any reason,
any security given by the Licensee shall be returned
to the Licensee within thirty days of termination,
provided however that if there are any outstanding
invoiced amounts (as per section 1.5.7) against the
Licensee, sufficient security shall be retained in
order to pay for those claims.
1.7
REMUNERATION
1.7.1 The
Licensee shall pay to SSII a non-refundable
one-time fee of $100,000 U.S. for the development of
the graphical front end of the gaming site and all
set-up costs.
This payment shall be paid in
accordance with the following schedule:
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o
$50,000 within five (5) business days upon
signing this Agreement; and
o
$50,000
