EXHIBIT 10.7
LETTER OF INTENT
July 7, 2000
TO: Xxxxxxx Xxxxxxx
Xxxxxx Xxxx
Both of the City of Toronto, in the Regional
Municipality of Metropolitan Toronto, in trust,
for a company to be incorporated
("Newco")
FROM: Playstar Wyoming Holding Corp.
A company incorporated pursuant to the Laws of the
Country of Antigua, whose shares are publically
traded on the NASDAQ Exchange
("Playstar")
This letter will serve to summarize our present intention and to set
out the general terms and conditions of a proposed business arrangement between
the parties.
This letter is a binding agreement and establishes an obligation on
each party to negotiate in good faith with a view to concluding a business
arrangement that will set our the legal rights and obligations of the parties.
The transaction shall be completed in accordance with the mutual
covenants terms and conditions contained herein:
Master Casino Software Program
1. Playstar hereby engages the services of Newco to create and provide a
completed and fully implemented software program ("Master Casino
Program") designed to successfully operate an Internet Gaming Casino
for Playstar.
2. The form and content of the Master Program is subject to final approval
by Playstar, which consent is not to be unreasonably withheld.
3. In consideration of the foregoing, Playstar agrees to pay the sum of
One Hundred and Fifteen Thousand Dollars ($115,000.00) Canadian to
Newco payable as follows:
(i) $25,000.00 upon execution of this Letter of Intent
(ii) $25,000.00 payable on August 1, 2000;
(iii) $25,000.00 payable on September 1, 2000; and
(iv) $40,000.00 payable on October 1, 2000
4. Playstar will cause to be issued:
(a) Five Hundred Thousand (500,000) un-restricted shares of its
capital stock to Newco within 30 days after completion of the
Master Casino Program; and
(b) A further Five Hundred Thousand (500,000) un-restricted shares
of its capital stock to Newco within 30 days after the program
has been fully implemented and is operating on Playstar's
Website.
5. (a) Playstar will cause to be issued to Newco an additional
500,000 of unrestricted common shares as a bonus,
providing the Master Program is operational no later
than October 15, 2000. In the event that the said
program is not fully completed by that date, then the
bonus shall be reduced by the sum of 100,000 free-
trading shares from the bonus package for each week
that the project is delayed beyond October 15, 2000.
(b) It is further acknowledged that the time for implementation
and costs related thereto are not included in the price of
development and are contemplated to take place after September
15, 2000.
(c) The October 15, 2000 deadline contemplates the date that the
software is developed, complete and ready to implement.
(d) If the system is not completed by November 30, 2000, Playstar,
at its sole option, may demand, and Newco shall return, 50% of
all payments made to that date.
(e) No modification of the system specifications shall be made,
except by written agreement between the parties. Such
modifications shall not change the completion schedule unless
by written agreement.
(f) The Program shall be considered completed upon delivery by
Newco to Playstar of a Program that conforms to the agreed
upon system specifications. The system shall be considered
completed upon delivery by Newco to Playstar of the completed
program, documentation and manual.
(g) Newco shall perform the program development testing,
debugging, documentation, and such user education, up to a
maximum of 30 hours as may be necessary to enable Playstar to
operate the system as described in the system specifications.
6. Playstar agrees to pay a maximum sum of Five Thousand Dollars
($5,000.00) per month for a period of three (3) months as its
contribution to the overhead costs relating to the development of the
program, and which is to be contributed toward office rental,
computers, networking devices, related software, telephone equipment,
and furniture.
7. Reasonable business expenses shall be paid by Playstar subject to prior
approval by Xxxxxxx Xxxxxxxxxx after receipt by him of written receipts
from Newco.
Licencing Software Program
8. In addition to developing a Master Casino Program, Newco agrees to
construct a licensed version of the Master Program, ("Licensing
Software Program"), which versions may vary from the Master Program,
and which may vary between licensees, for the marketing of the Program
throughout the World.
9. (a) Playstar shall be the designated licensor in all licensing
agreements entered into and shall retain all existing and
future rights to issue licenses.
(b) Playstar shall administer all of the licensees financial
records and have complete access to all records of the
licensee and the same shall be set forth in all licensing
agreements.
10. (a) The licensing agreements shall entitle Playstar to
retain a portion of the Net Revenue Win of each
licensee.
(b) Playstar agrees to pay to Newco an amount equal to 15% of the
amount retained by Playstar as above described as set forth in
the individual licensing agreements for a period of five (5)
years from inception for all casino licenses arranged by
Newco.
(c) Playstar agrees to advance to Newco the sum of Three Thousand
Five Hundred Dollars ($3,500.00) each of July, 7, 2000, August
7, 2000, and September 7, 2000 to be used for advertising of
the programs. These advances totalling Ten Thousand Five
Hundred Dollars ($10,500.00) shall be deducted from any monies
due to Newco pursuant to Clauses 11 and 12 herein.
11. (a) Newco shall act as exclusive marketing agent for the
licensing software program for a period of eighteen
(18) months ending December 31, 2001. Newco shall
receive 50% of the Net Revenue generated from licensing
fees for the licensing software program paid by each
licensee. This sum shall be payable upon receipt and
clearance of funds by Playstar. Playstar shall retain
the remaining 50% of each fee.
(b) Newco shall retain its exclusivity as marketing agent under
the following conditions:
(i) Provided that there is a minimum of Two
Hundred Thousand Dollars ($200,000.00) of
net revenue generated by Newco during the
period of August 1, 2000 to February 28,
2001.
(ii) Provided that there is a further minimum of
Three Hundred Thousand Dollars ($300,000.00)
of net revenue generated by Newco for the
period of March 1, 2001 to August 31, 2001.
(iii) Provided that there is a further minimum of
Four Hundred Thousand Dollars ($400,000.00)
of net revenue generated by Newco during the
period of September 1, 2001 to end of
February, 2002.
(c) Newco shall, however, retain the benefit of net revenue
generated to this date from any programs in which they
generated for the purposes of qualifying for the bonus payable
under Clause 12 herein.
12. In addition, Newco shall receive as a bonus, One (1) unrestricted
common share of Playstar for each three Dollars ($3.00) of Net Revenue,
(calculated on a quarter yearly basis), generated from the sale of the
licenses. This bonus shall remain in effect for the maximum period of
18 months from August 1, 2000, and shall be available to Newco up to a
maximum of One Million, Five Hundred Thousand shares of Playstar only.
Definitions
13. (a) "Net Revenue Win"
For the purposes of this agreement, Net Revenue Win is defined
as the total gross amount wagered by casino clientele less the
total amount won by casino clientele during defined periods of
time in the individual licensing agreements.
(b) "Net Revenue"
For the purpose of calculating the bonus in Clause 12 only
herein; Net Revenue shall include (i) that portion of the Net
Revenue Win retained by Playstar in Clause 10 herein, being
the 85% of Playstar's share of Net Revenue Win from each
Licensee, and (ii) Playstar's net profit generated from portal
and affiliate programs.
Intellectual Property and Title
14. The Master Casino Program and the Licensing Software Program developed
hereunder and all source codes related thereto shall become and remain
the property of Playstar with full right, title, and interest thereto,
and shall be copyrighted in Playstar's name.
Warranty
15. (a) Newco warrants and represents that the program developed
by them will function in accordance with system
specifications. This warranty includes liability for indirect,
special, and/or consequential loss or damage resulting from
the use of this program or arising our of any breach of this
warranty.
(b) Playstar acknowledges that Newco shall not be liable for the
negligence of Playstar, its employees, servants or agents in
the operation of the programs developed herein.
16. In the event that the program does not function during the one (1) year
period from the date of installation, Newco shall correct any
malfunctions forthwith at their cost. The parties agree to enter into
an exclusive continuing development and maintenance agreement upon
terms mutually agreed upon.
Further Assurances
17. The parties shall provide such further assurances in order to complete
all necessary documents in order to complete this transaction.
Confidentiality
18. Information and data made available to the parties in relation to this
business, capitalization, prospects, and affairs of Newco and/or
Playstar Wyoming Holding Corp. and/or its principals will be held in
strict confidence by both parties.
19. If these general terms and conditions of the proposed joint venture are
acceptable to Option, would each of you please sign where indicated.
Yours very truly,
PLAYSTAR WYOMING HOLDING CORP.
Per:
/s/ Xxxxxxx Xxxxxxxxxx
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Xxxxxxx Xxxxxxxxxx
I have authority to bind the
corporation
THE GENERAL TERMS AND CONDITIONS OF THE PROPOSED BUSINESS ARRANGEMENT SET OUT IN
THE WITHIN LETTER ARE ACCEPTABLE TO THE UNDERSIGNED.
DATED this day of July, 2000.
/s/ Xxxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxx
/s/ Xxxxxx Xxxx
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Xxxxxx Xxxx
