Exhibit 10.9
MARKETING AND LICENSE AGREEMENT
This MARKETING AND LICENSE AGREEMENT (the "Agreement") is made and entered
into as of the 14th day of January, 2000, by and between ONLINE GAMING SYSTEMS,
LTD., a corporation established and existing under the laws of the State of
Delaware having its principal place of business at 000 X. Xxxxxxxx Xxxx Xxxx,
Xxxxx 000, Xxxx Xxxxx, XX 00000 ("OGS"), and INTERCAPITAL GLOBAL FUND, LTD,. a
corporation established and existing under the laws of Antigua having a place of
business at 0000 Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxx, Xxxxxx H3A ("1GF").
BACKGROUND:
A. OGS is actively engaged in the business of developing and
marketing online computer software programs that enable the user to create a
virtual gaming operation over the Internet including those programs set forth on
Schedule A attached hereto (the "Products"); and
B. IGF is actively engaged in the utilization and operation of OGS
Products pursuant to existing license agreements between the parties; and
C. Both parties desire to establish a long term business
relationship through mutual assistance.
NOW, THEREFORE, in consideration of the mutual covenants and premises
contained herein, the parties agree as follows:
1. Definitions.
1.1 "Excluded Products" shall mean OGS's products not listed on Schedule
A attached hereto.
1.2 "Intellectual Property Rights" shall mean any and all patents and
other intellectual property rights of OGS with respect to the Products and
related technology, excluding any such rights related to Excluded Products and
the source code for any of the Products.
1.3 "IGF Operations" shall mean the IGF's offices at the above address.
1.4 "Internet Gaming Venue" shall mean any gaming organization whose
gaming activities are based solely on the Internet without any land based gaming
operations.
1.5 "Level I Services" refer to IGF's responsibility to receive and
report calls from Purchasers regarding technical problems with Products. "Level
2 Services" refer to IGF's responsibility to determine whether there is a valid
problem with the Product or whether the Purchaser's problem results from user
error. "Level 3 Services" refer to
OGS' responsibility, once a valid problem is identified by IGF, to provide all
forms of technical and maintenance support to Purchasers necessary to detect,
fix and repair such problems and as may be necessary for IGF to perform its
obligations under any Maintenance Agreement.
1.6 "Purchase Price" shall mean the full amount collected by IGF on the
sale or lease of Products after deduction of (a) any collected tax or other
governmental charge on the sale, transportation, use or delivery of the
Products, and (b) any amounts repaid or credited by reasons of returns or
rejections. The Purchase Price shall not include the percentage of net winnings
or royalties which may be received by IGF in connections with the sale or lease
of Products pursuant to its contracts with Purchasers.
1.7 "Purchaser" shall mean any person or entity who purchases or leases
Products from IGF pursuant to the License granted hereunder.
1.8 "Residual Period" shall mean a period beginning on the date of any
termination of this Agreement prior to the end of the initial five year term set
forth in Section 7.1, including as a result of the exercise of IGF's right to
terminate pursuant to Section 7.3, and ending at the end of such initial five
year term.
1.9 "Term Year" shall mean a period of four consecutive calendar
quarters beginning with the calendar quarter of January to March, 2000 and each
of four consecutive calendar quarters thereafter during the term of this
Agreement.
1.10 "Technical Information" shall mean all areas of technology related
to the Products, whether patentable or not, relating to the operation of the
Products, including without limitation equipment specifications, product design
standards instruction manuals, training programs, and any other controls,
processes, systems, documents, equipment and related technology which would be
of assistance in operation of the Products by IGF and its customers, excluding
however any source code and any confidential Technical Information related
thereto.
2. Grant of License.
2.1 OGS hereby grants to IGF an exclusive license (the "License") to
market, sell and lease the Products to all Internet Gaming Venues worldwide.
The License shall be exclusive as to OGS as well as third parties.
2.2 IGF may not sub-license the rights granted hereunder other than to
its affiliates, except with the prior written consent of OGS.
2.3 IGF shall have the right to negotiate and enter into contracts
with Purchasers for the sale or lease of the Products consistent with the terms
of this Agreement.
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3. Consideration.
3.1 In consideration for the License, IGF shall receive thirty-three
(33%) percent of the Purchase Price for each Product and OGS shall receive
sixty-seven (67%) percent thereof for the first 15 Products sold by IGF.
Thereafter, IGF shall receive forth (40%) percent of the Purchase Price and OGS
shall receive sixty (60%) percent of the Purchase Price. Subject to IGF's actual
receipt of funds from Purchasers, IGF shall remit to OGS its share of the
Purchase Price on a monthly basis during the term of this Agreement; provided,
however, that for any Products sold or leased by IGF during the term of this
Agreement, IGF shall be entitled to collect and retain its share of the Purchase
Price for the Residual Period. IGF shall be entitled to retain 100% of any and
all royalties (or percentage of net winnings) collected by IGF pursuant to its
contracts with Purchasers.
3.2 In addition, in connection with the sale or lease of a product, each
Purchaser shall enter into an agreement with IGF for the maintenance of such
Product (the "Maintenance Agreement"). Subject to IGF's actual receipt of funds
from Purchasers, IGF shall remit to OGS twenty-five percent (25%) of each
monthly payment of maintenance fees payable under the Maintenance Agreement (the
"Maintenance Payment") on a monthly basis during the term of this Agreement;
provided, however, that for any Products sold or leased by IGF during the term
of this Agreement, IGF shall be entitled to collect and retain its share of the
Maintenance Payment for the Residual Period.
3.3 As additional consideration for the License granted hereunder, IGF
shall distribute or cause to have distributed to OGS a total of 1,500,000 shares
of common stock of its parent company, Total Entertainment, Inc. (OTCBB --
TTLN), with 500,000 shares to be distributed by January 31, 2000, and 250,000
shares per year for the next four years on the anniversary thereof; provided,
however, that IGF shall not be required to distribute any shares to OGS on or
after the date this Agreement shall be terminated pursuant to IGF's rights under
Section 7.3 hereof. Such shares shall be restricted securities under the federal
securities laws and shall be subject to resale restrictions and legended
accordingly. OGS represents that it is acquiring such shares for its own account
and not with a view to any resale or distribution thereof.
3.4 IGF shall receive $15,000.00 of the proceeds from the sale of the
Lucky Dragon Casino as and when received by OGS.
3.5 IGF shall provide one "ICE" Product, as defined on Schedule A, for
the use of IGF in its operation of a Internet Gaming Venues for its own account
without charge.
3.6 IGF currently owns two (2) Bingo Products, as defined on Schedule A,
which IGF may sell and keep the proceeds from such sale.
3.7 IGF shall keep full and accurate books of account containing all
information necessary to compute any monies due OGS under this Agreement. Such
books of
account shall be kept at the IGF Operations, and shall be available upon
reasonable notice for inspection and audit by financial representatives of OGS
from time to time during regular business hours, but not more than twice in any
calendar year.
4. Marketing of Products.
4.1 IGF shall promptly provide to OGS in writing by fax, e-mail, mail or
via online form information concerning all prospective clients approached by
them.
4.2 Under the Maintenance Agreements, IGF shall be responsible for
providing Xxxxx 0 Services and Level 2 Services to Purchasers with respect to
the Products. OGS shall be responsible for providing Xxxxx 0 Services to
Purchasers with respect to the Products. OGS shall indemnify and hold IGF
harmless from and against any and all liabilities, claims and expenses under any
Maintenance Agreement that arise from OGF's failure to perform Level 3 Services
in accordance with the terms hereof and the Maintenance Agreements. Unless
otherwise agreed, the Maintenance Agreements shall be in substantially the same
form as those entered into between the parties pursuant to the existing
licensing agreements between the parties.
4.3 IGF shall provide demonstrations of the Products to prospective
customers.
4.4 Prior to making the sale of any Product, IGF shall use its best
efforts to qualify all prospective Purchasers as to quality of operator and
financial ability.
4.5 IGF is authorized to make quotations to customers and to accept
orders on the basis of the Purchase Prices for Products as may be established by
IGF from time to time, provided such prices are above the minimum amount set
forth in Schedule A.
4.6 The parties agree to renegotiate the minimum prices on Schedule A in
the event that OGS adds new games or makes other improvements to the Products.
If the minimum price list is amended pursuant to such a renegotiation after a
quotation has been provided by IGF to a prospective Purchaser, IGF may accept an
order from the Purchaser on the basis of minimum prices set forth in Schedule A
prior to any amendment thereof.
4.7 IGF may make sales at prices or on conditions other than those
provided by OGS, provided that IGF obtains OGS's prior written approval.
4.8 IGF will use its reasonable best efforts to ensure that Purchasers
obtain all necessary business and occupational licences necessary to utilize the
Products to conduct a gaming business over the Internet.
4.9 IGF shall not, under any circumstances, reverse engineer, decompile,
disassemble nor copy the Products.
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4.10 OGS shall provide IGF with assistance with demonstrations to
customers and prospective customers when needed provided there is at least one
week notice.
4.11 OGS shall provide sales materials to IGF as soon as practicable
after the date hereof, and from time to time in the future to the extent such
materials are or should be updated.
4.12 OGS shall provide an assignment to IGF within seven (7) days of
execution of this Agreement of all current agreements for the sale of Products,
which agreements are set forth on Schedule B. All payments pursuant to the
current agreements set forth on Schedule B which are due and payable after the
date of this Agreement shall be paid to IGF.
4.13 OGS shall assist in the hiring and training of the IGF technical
support staff in such manner as to enable such staff to carry out their
maintenance and support responsibilities hereunder.
4.14 IGF and OGS shall cooperate and participate with each other in a
variety of joint marketing efforts relating to the Products and other products
that they agree on, including, without limitation, efforts to devise short and
long term strategies, to identify product needs, to develop product concepts and
optimum product specifications, and to provide distribution and service in
furtherance of joint marketing goals. IGF and OGS agree to share all information
for product planning unless prohibited by law or by any contracts or agreements
with a third party. IGF and OGS shall be jointly responsible for coordinating
the planning and execution of all promotional activities for the products. IGF
and OGS shall cooperate in connection with their participation in trade shows
including, without limitation, sharing resources and costs, in a mutually
agreeable manner, to maximize the mutual benefits of such shows to the parties.
IGF and OGS shall endeavor to utilize each other's products as much as possible
for displays and product demonstrations at trade shows, if such utilization is
warranted and mutually agreeable to the parties. IGF and OGS shall cooperate to
finalize the layout of trade show booths and displays for trade shows in which
they are both participating, the specifications of the products, the number of
items to display, and the way they run the trade shows.
5. Names and Marks.
5.1 IGF shall have the exclusive right to use OGS's trademarks and trade
names ("Names and Marks") only in connection with the sale and maintenance of
the Products and any other transactions covered by this Agreement. IGF shall
identify OGS as the owner of the Names and Marks.
5.2 IGF shall use and refer to the name of OGS as the owner of the
Intellectual Property Rights in an appropriate manner.
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6. Confidentiality.
6.1 Each of the parties hereto agrees to keep strictly secret and
confidential any and all Technical Information and other confidential
information identified as such and acquired from the other party hereunder and
not to disclose it to any third persons or use it except as permitted by this
Agreement.
6.2 The obligation imposed by this Section shall not apply to any
information:
(a) which at the time of disclosure is in the public domain; or
(b) which after disclosure becomes part of the public domain, by
publication or otherwise, through no fault of the recipient party, or
(c) which at the time of disclosure is already in the recipient party's
possession, and such possession can be properly demonstrated by it; or
(d) which is rightfully made available to one party from sources
independent of the other party, or
(e) the disclosure of which is agreed in writing by the other party.
The obligations of this Section shall survive for a period of five (5) years,
after the termination of this Agreement for any reason.
7. Term and Termination.
7.1 Term: This Agreement shall be for an initial term of five (5) years,
commencing on the date of this Agreement.
7.2 Renewals: This Agreement shall be automatically reviewed for an
additional term of five (5) Years provided both parties provide the other party
with written notice of the election to renew this Agreement on or before the
sixtieth (60th) day prior to the then expiring term.
7.3 Termination: Either party shall have the right to terminate this
Agreement prior to the expiration of its Term of any renewal upon giving thirty
(30) days written notice to the other. Notwithstanding the foregoing, IFG shall
have the right, in its discretion, to terminate this Agreement on each
anniversary of the date hereof during the initial term or any renewal thereof
upon thirty (30) days written notice to OGS.
7.4 Either party may terminate this Agreement in the event that
proceedings for reorganization, liquidation, bankruptcy or receivership are
filed or instituted against or by the other party.
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7.5 Either party may terminate this Agreement upon the breach of this
Agreement by the other party, which breach is not cured within 30 days of
receiving written notice thereof.
8. Payments. All payments to be made under this Agreement shall be in
United States dollars.
9. Arbitration. Any dispute between the parties arising out of or
concerning the subject matter of, or the respective rights and obligations of
the parties under, this Agreement shall be submitted to arbitration if it cannot
be resolved by the parties. If arbitration is requested by OGS, the arbitration
proceeding shall be conducted in Boca Raton, Florida in accordance with the
rules of the American Arbitration Association; if arbitration is requested by
IGF, the arbitration proceeding shall be conducted in New York, New York in
accordance with the rules of the American Arbitration Association then in
effect.
10. Governing Law. This Agreement and the rights and obligations of the
parties hereunder shall be construed and interpreted in accordance with the laws
of Florida.
11. Force Majeure. Both parties to this Agreement shall be excused from
the performance of their obligations hereunder, and shall be excused for so long
as such condition continues, if such performance is prevented by conditions
beyond the control of the parties, such as acts of God, voluntary or involuntary
compliance with any regulation, law or order of any government, war, civil
commotion, strike, epidemic, failure or default of public utilities or common
carriers, destruction of production facilities or materials by fire, earthquake,
storm or like. This Section does not apply to the IGF's inability to get
exchange of currency to fulfill its payment obligations under this Agreement. If
exchange of currency is blocked for more than one year, OGS may terminate this
Agreement or request payment in other currency.
12. Notice Provisions. Any notice required or permitted to be given
hereunder shall be in writing and any notice shall be deemed to have been given
when delivered in person or seven (7) days after the date upon which it was
mailed, postage prepaid, by certified or registered air mail properly addressed
to the addresses written on the first page of this Agreement; provided, however,
that the presumption of actual receipt shall be subject to rebuttal by probative
evidence showing that such notice was not actually received.
12. Assignment. Neither this Agreement nor any rights or obligations
hereunder may be assigned by either party without the prior written consent of
the other party. Notwithstanding the foregoing, either party may assign all of
its rights and obligations under this Agreement to any entity which acquires
such party by merger, consolidation or purchase of substantially all of the
assets or business of such party related to the Products.
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13. Entire Agreement. This Agreement shall constitute the entire
agreement of the parties with respect to the subject matter of this Agreement.
14. Amendments: Counterparts. This Agreement may not be amended or
modified except pursuant to a writing signed by both parties. This Agreement may
be excuted in one or more counterparts, and all such counterparts, when taken
together, shall constitute one agreement.
15. Benefit of Agreement. This Agreement is made solely for the benefit
of the parties and no other person shall acquire or have any right under or by
virtue of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to this
Agreement to be executed by their duly authorized officers as of the above date.
INTERCAPITAL GLOBAL FUND, LTD. ONLINE GAMING SYSTEMS, LTD
By: /s/ Xxxxx X. Xxxxxxxx, Xx. By: /s/ Xxxxxxx Xxxxxxx
-------------------------- -------------------------
Name: Xxxxx X. Xxxxxxxx, Xx. Name: Xxxxxxx Xxxxxxx
Title: Chairman and CEO Title: President & CEO
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