EXHIBIT 2
ASSET PURCHASE & ASSIGNMENT AGREEMENT
THIS AGREEMENT dated the 13 day of February 2003.
BETWEEN:
BLUE DIAMOND INTERNATIONAL CAPITAL INC.
a corporation incorporated pursuant to the
laws of the British Virgin Islands
and having an office at
1st Floor, No 8 Pictet de Rochemont
1207, Geneva, Switzerland
(herein called the "VENDOR")
OF THE FIRST PART
AND:
SKILL POKER.COM INC.
a corporation incorporated pursuant to the
laws of the state of Washington and having an
office at 210 - 1166 Alberni Street,
Vancouver, British Columbia, Canada
(herein called the "PURCHASER")
OF THE SECOND PART
AND:
POKER.COM, INC.,
a corporation incorporated pursuant to the
laws of the state of Florida
and having an office at
210 - 1166 Alberni Street,
Vancouver, British Columbia, Canada
(herein called the "POKER.COM")
OF THE THIRD PART
WITNESSES THAT WHEREAS:
A. The Vendor has acquired all right, title and interest, in the United
States of America and the world, in and to certain inventions related to "A
method for Determining Skill in a Tournament Setting" (the "SKILL POKER
INVENTIONS"), as disclosed in the proposed patent application attached
hereto as Schedule "B" (the "SKILL POKER PATENT APPLICATION") and the five
(5) registered Internet Domain Names "skillpoker.com",
"skillblackjack.com", "skillomaha.com", "skillholdem.com" and
"skillstud.com" (collectively, the five (5) Internet Domain Names and the
Skill Poker Application are referred to herein as the "Skill Poker
Inventions");
B. The Vendor is desirous of selling, assigning, transferring and
relinquishing to the Purchaser all of its right, title and interest in and
to the Skill Poker Inventions, on those terms and conditions hereinafter
set forth;
C. The Purchaser is desirous of purchasing and acquiring from the
Vendor and confirming that it has acquired all right, title and interest in
the United States of America and the world, in and to the Skill Poker
Inventions, on those terms and conditions hereinafter set forth;
NOW THEREFORE in consideration of the promises and the respective covenants,
agreements representations and warranties of the parties herein contained and
for other good and valuable consideration (the receipt and sufficiency of which
is hereby acknowledged) the parties hereto covenant and agree as follows:
1 DEFINITIONS AND INTERPRETATION
--------------------------------
1.1 For the purposes of this Agreement, unless the context otherwise
requires, the following terms will have the respective meanings set out below
and grammatical variations of such terms will have corresponding meanings:
(a) "Agreement" means this Asset Purchase & Assignment Agreement;
(b) "Closing Date" means February 28, 2003 or such earlier or later date
as the parties agree;
(c) "Derivative Additional Patent Application" means any and all existing
or future substitute, divisional, continuation or continuation in-part
patent applications and / or issued patents deriving directly or
indirectly either in whole or in part from the Skill Poker Patent
Application or the Skill Poker Inventions and any Additional Patent
Applications;
(d) "Gross Revenue" means
(i) all revenues, receipts, and monies received by the Purchaser and
the Purchaser's Affiliates from customers and players that it
hosts in games and tournaments utilizing any of the Skill Poker
Inventions or any Derivative Additional Patent Applications or
other rights as granted to the Purchaser under Section 2.1 herein
but not including any of the following:
(aa) monies received from players that are paid out for winning
prizes;
(bb) player credit card and fraudulent transactions charged back
to the Purchaser;
(cc) first time player bonuses actually paid by the Purchaser to
the players which is not to exceed, per player, 20% of the
initial deposit or USD$50.00; and
(dd) License Fees;
and,
(ii) all revenues, receipts and monies received by the Purchaser in
connection with any advertising, subscription, sponsorship,
deposits or awards or other payments to the Purchaser in
connection with the utilization of the Skill Poker Inventions or
any Derivative Additional Patent Applications;
(e) "Licence Fee" means all revenues, receipts, monies, milestone
payments, equity, royalties, license fees and the fair market value of
all other consideration directly or indirectly collected or received
whether by way of cash, or credit or any barter, benefit, advantage,
or concession received by the Purchaser pursuant to each license
agreement relating to the Skill Poker Inventions and / or any
Derivative Additional Patent Applications;
(f) "License Gross Revenue" means:
(i) all revenues, receipts, and monies received by the any
licensee of the Purchaser or the Purchaser's Affiliates from
customers and players that such licensee hosts in games and
tournaments utilizing any of the Skill Poker Inventions and / or
any Derivative Additional Patent Applications but not including
any of the following:
(aa) monies received from players that are paid out for winning
prizes;
(bb) player credit card and fraudulent transactions charged back
to any licensee;
(cc) first time player bonuses actually paid by the licensee to
the players which is not to exceed, per player, 20% of the
initial deposit or USD$50.00, and,
(ii) all revenues, receipts and monies received by any
licensee of the Purchaser or Purchaser Affiliates in
connection with any advertising, subscription,
sponsorship, deposits or awards or other payments in
connection with the utilization of the Skill Poker
Inventions and / or any Derivative Additional Patent
Applications;
(g) "Purchase Price" means
(i) Fifty Thousand United States Dollars (USD$50,000);
(ii) 3,000,000 common shares of Poker.com;
(iii) the greater of USD$3,500 per month or 4% of the monthly Gross
Revenue during the period commencing on Closing and ending on
December 31, 2099; and payable to the Vendor for all of the
right, title and interest of the Vendor in and to the Skill Poker
Inventions, as provided in Section 3 herein;
(h) "Purchaser's Affiliates" means a corporation that is a subsidiary
corporation of the Purchaser;
(i) "Skill Poker Patent Application" means the proposed patent application
and filing receipt attached as Schedule B to this Agreement; and
(j) "Time of Closing" means 11:00 a.m. PST on the Closing Date.
1.2 The division of this Agreement into sections and subsections and the
insertion of headings are for convenience of reference only and will not affect
the interpretation of this Agreement. Unless otherwise indicated, any reference
in this Agreement to a section or subsection refers to the specified section or
subsection of this Agreement.
1.3 In this Agreement, words importing the singular number only will
include the plural and vice versa, words importing gender will include all
genders and words importing persons will include individuals, corporations,
partnerships, associations, trusts, unincorporated organizations, governmental
bodies and other legal or business entities of any kind whatsoever.
1.4 In this Agreement "hereof", "herein", "hereby", "hereto" and similar
terms refer to this Asset Purchase & Assignment Agreement and not to any
particular clause, paragraph or other part of this Agreement. References to
particular clauses are to clauses of this Agreement unless another document is
specified.
1.5 In this Agreement "including" means including without limitation or
prejudice to the generality of any description, definition, term or phrase
preceding that word, and the word "include" and its derivatives will be
construed accordingly.
2 PURCHASE AND SALE -- ASSIGNMENT
-------------------------------
2.1 For and in consideration of the covenant and agreement of the
Purchaser to pay the Purchase Price to the Vendor as herein provided, the
sufficiency of which is hereby acknowledged by the Vendor, the Vendor hereby
confirms that the Vendor has subject to the terms of this Agreement sold,
assigned and transferred, and by these presents does hereby sell, assign and
transfer to the Purchaser the entire right, title and interest in the United
States of America and in the world in and to the Skill Poker Inventions,
including without limitation:
(a) all right, title and interest in the United States of America and in
the world in, to and under the Skill Poker Patent Application and any
registration issuing thereunder and any other patents for the Skill
Poker Inventions, anywhere in the world;
(b) the right to file the Skill Poker Patent Application and additional
patent applications in any country for said Skill Poker Inventions,
and to do so in its own name (such applications hereinafter referred
to as "Additional Patent Applications");
(c) all right, title and interest in the United States of America and in
the world in Derivative Additional Patent Applications;
(d) all right, title and interest in the United States of America and in
the world, in, to and under all patents granted directly or indirectly
on or as a result of the Skill Poker Patent Application, any
Additional Applications, and any Derivative Applications, and any
reissues, renewals or extensions thereof;
(e) the right to claim benefits available in any country under the
International Convention For The Protection of Industrial Property,
and any like treaties or laws; and
(f) the right to claim and to the benefit of any priority dates
established by the Skill Poker Inventions or the Skill Poker Patent
Application;
free and clear of all encumbrances, the same to be owned, held and enjoyed by
the Purchaser and its his successors and assigns as fully and exclusively as it
would have been held and enjoyed by the Vendor had this sale, assignment and
transfer not been made.
3 PAYMENT OF THE PURCHASE PRICE
-----------------------------
3.1 The Purchaser will pay the Purchase Price to the Vendor as follows:
(a) on the Closing Date and subject to the terms of this Agreement, the
sum of Fifty Thousand United States Dollars (USD$50,000.00) by wire
transfer to the account of the Vendor
(b) on the Closing Date and subject to the terms of this Agreement,
3,000,000 common shares in the capital stock of Poker.com, Inc.; and,
(c) at those times specified in Schedule A attached hereto, the balance of
the Purchase Price in those amounts specified in that schedule, by
wire transfers to the account of the Vendor in accordance with the
instructions specified in section 3.1(a) or to such other account,
with the account number of the Vendor being such number as the Vendor
shall have advised the Purchaser in writing prior to the date upon
which such payment is required to be made.
4 SECURITY INTEREST
------------------
4.1 The Purchaser hereby grants to the Vendor a security interest (the
"Security Interest") in the Skill Poker Inventions and / or Derivative
Additional Patent Applications and in all of the Purchaser's rights, title and
interest in the Skill Poker Inventions and / or Derivative Additional Patent
Applications, to secure payment of the Purchase Price due to the Vendor in
accordance with the terms of this Agreement. The Purchaser agrees that the
Security Interest will attach to the patent and Skill Poker Inventions and
Derivative Additional Patent Applications immediately on execution of this
Agreement and that, to the extent necessary to give full effect to the Security
Interest, the clause is intended to constitute a security agreement as defined
in Title 62ARCW Uniform Commercial Code of the State of Washington, as amended
from time to time. This Security Agreement is separate from and will survive
the termination, expiry or disclaimer of the remaining provisions of this
Agreement. If the Purchaser fails to make due payment of the Purchase Price in
accordance with the terms of this Agreement, the Vendor itself, or by its
agents, employees, or by a receiver appointed by the Vendor, may realize upon
the Skill Poker Inventions and /or any Derivative Additional Patent Applications
and enforce the Security Interest by all or any of the remedies, methods or
proceedings authorized or permitted by law, including without limitation all
rights, remedies and methods available to a secured party under the Uniform
Commercial Code and any other similar statutes from time to time in force in
State of Washington.
4.2 Should the Purchaser through either voluntary or involuntary
proceedings, declare or become bankrupt or insolvent, or cease to carry on
business in the ordinary course, the Skill Poker Inventions and / or any
Derivative Additional Patent Applications and all rights, title and interest in
the Skill Poker Inventions and/or any Derivative Additional Patent Applications
will again become the property of the Vendor.
5 REPRESENTATIONS AND WARRANTIES OF THE VENDOR
--------------------------------------------
5.1 The Vendor represents and warrants to the Purchaser and to Poker.com
with the intent that the Purchaser and Poker.com will rely thereon in entering
into this Agreement, that:
(a) the Vendor is a corporation duly incorporated, validly existing, and
in good standing under the laws of the British Virgin Islands and has
the power, authority, and capacity to enter into this Agreement and to
carry out its terms;
(b) the execution and delivery of this Agreement and the completion of the
transaction contemplated hereby have been duly and validly authorized
by all necessary corporate action on the part of the Vendor, and this
Agreement constitutes a valid and binding obligation of the Vendor
enforceable against the Vendor in accordance with its terms;
(c) the Vendor is the legal and beneficial owner of the Skill Poker
Inventions, free and clear of all encumbrances whatsoever, and is not
a party to or bound by any contract or any other obligation whatsoever
that limits or impairs its ability to sell, transfer, assign or
convey, or that otherwise affects, the Skill Poker Inventions;
(d) the Vendor has the right to convey, assign and transfer all of the
right, title and interest in the Skill Poker Inventions in the manner
provided herein;
(e) no person other than the Purchaser has been granted any interest in or
right to use the Skill Poker Inventions or any portion thereof;
(f) the Vendor is not aware of any claim of infringement (or the inducing
of or contribution to the infringement) of any intellectual property
rights of any other person arising from the use of the Skill Poker
Inventions, nor has the Vendor received any notice that use of the
Skill Poker Inventions infringes upon or breaches or will infringe
upon or breach any intellectual property rights of any other person;
(g) the Vendor has not been provided with any offering memorandum or
similar disclosure document, including financial information, in
respect of Poker.com's current or proposed business activities;
(h) the Vendor has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of an
investment in the common shares of Poker.com (the "Securities") and
the Vendor is able to bear the economic risk of loss of its entire
investment;
(i) Poker.com has provided to the Vendor the opportunity to ask questions
and receive answers concerning the terms and conditions of the
offering and it has had access to such information concerning
Poker.com as it has considered necessary or appropriate in connection
with its investment decision to acquire the Securities;
(j) the Vendor is acquiring the Securities for its own account, for
investment purposes only and not with a view to any resale,
distribution or other disposition of the Securities in violation of
the United States or British Columbia securities laws;
(k) the Vendor understands that the Securities have not been and will not
be registered under the Securities Act or the securities laws of any
state of the United States and that the sale contemplated hereby is
being made in reliance on an exemption from such registration
requirements;
(l) the Vendor understands that the Securities are being offered without a
prospectus being filed with any securities commission in Canada and
that the sale contemplated hereby is being made in reliance on an
exemption from prospectus requirements in Canada;
(m) the Vendor has not purchased the Securities as a result of any form of
general solicitation or general advertising, including advertisements,
articles, notices or other communications published in any newspaper,
magazine or similar media or broadcast over radio, or television, or
any seminar or meeting whose attendees have been invited by general
solicitation or general advertising;
(n) if the Vendor decides to offer, sell or otherwise transfer any of the
Securities, it will not offer, sell or otherwise transfer any of such
Securities directly or indirectly, unless:
(i) the sale is to Poker.com; or
(ii) the sale is made outside the United States in a transaction
meeting the requirements of Rule 904 of Regulation S under the
Securities Act and in compliance with applicable local laws and
regulations; or
(iii) the sale is made outside of the Province of British Columbia in
a transaction meeting the requirements of Multi-Lateral
Instrument 45-102 under Canadian securities law; or
(iv) the sale is made pursuant to the exemption from the registration
requirements under the Securities Act provided by Rule 144 there
under and in accordance with any applicable state securities or
"Blue Sky" laws; or
(v) the Securities are sold in a transaction that does not require
registration under the Securities Act or any applicable state
laws and regulations governing the offer and sale of securities,
and it has prior to such sale furnished to Poker.com an opinion
of counsel reasonably satisfactory to Poker.com;
(o) the certificates representing the Securities will bear a legend
stating that such Securities have not been registered under the
Securities Act or the securities laws of any state of the United
States and may not be offered for sale or sold unless registered under
the Securities Act and the securities laws of all applicable states of
the United States or an exemption from such registration requirements
is available;
(p) the certificate representing the Securities will bear a legend stating
that such Securities shall not be traded, unless permitted under
securities legislation, until the earlier of (i) the date that is 12
months and a day after the date the issuer first became a reporting
issuer in any of Alberta, British Columbia, Manitoba, Nova Scotia,
Ontario, Quebec and Saskatchewan, if the issuer is a SEDAR filer; and
(ii) the date that is 12 months and a day after the later of (A) the
distribution date, and (B) the date the issuer become a reporting
issuer in the local jurisdiction of the purchaser of the securities
that are the subject of the trade;
(q) the Vendor understands and agrees that there may be material tax
consequences to the undersigned of an acquisition or disposition of
the Securities. Neither the Purchaser nor Poker.com give any opinion
and make no representation with respect to the tax consequences to the
undersigned under United States, Canadian, state, provincial, local or
foreign tax law of the undersigned's acquisition or disposition of
such Securities; and
(r) the Vendor have been represented by independent counsel in connection
with this Agreement and the matters related hereto. Any fees, expenses
or costs associated with such representation shall be the sole expense
and obligation of the Vendor.
6 COVENANTS OF THE VENDOR
--------------------------
6.1 The Vendor hereby covenants and agrees to do all such things and to
execute or obtain execution without further consideration, and in a timely
manner, of such further lawful documents, assurances, applications and other
instruments as may be reasonably required to make and prosecute at Purchasers
cost any and all patent applications in the United States of America and
anywhere else in the world on the Skill Poker Inventions; to enforce, at
Purchasers cost, any patents arising from or out of the Skill Poker Inventions,
the Skill Poker Patent Application and any and all patents in the United States
of America, Canada or elsewhere on the Skill Poker Inventions, and to confirm in
the Purchaser or its successors and assigns, legal title in the United States of
America, and anywhere else in the world, to the Skill Poker Inventions, the
Skill Poker Patent Application, all Additional Applications and Derivative
Applications and all United States patents and United States applications,
Canadian patents and Canadian patent applications and any other patents or
applications for patents, anywhere in the world, on the Skill Poker Inventions.
6.2 The Vendor shall complete and execute the Investor Questionnaire
attached as Schedule B to this Agreement prior to the Closing Date.
7 REPRESENTATIONS OF THE PURCHASER AND POKER.COM
---------------------------------------------------
7.1 The Purchaser and Poker.com represent and warrant to the Vendor as
follows, with the intent that the Vendor will rely thereon in entering into this
Agreement that:
(a) the Purchaser and Poker.com are corporations duly incorporated,
validly existing, and in good standing under the laws of State of
Washington and Florida, respectively and have the power, authority,
and capacity to enter into this Agreement and to carry out its terms;
and
(b) the execution and delivery of this Agreement and the completion of the
transactions contemplated hereby has been duly and validly authorized
by all necessary corporate action on the part of the Purchaser and
Poker.com, and this Agreement constitutes a valid and binding
obligation of the Purchaser and Poker.com in accordance with its
terms.
8 COVENANTS OF THE PURCHASER AND POKER.COM
---------------------------------------------
8.1 The Purchaser hereby covenants and agrees that, except for licensing
the Skill Poker Inventions and any Derivative Additional Patent Applications and
as otherwise provided for in this Agreement, until the Purchaser has made
payments to the Vendor equalling or exceeding an aggregate US$450,000.00, the
Purchaser will not assign, transfer, relinquish, dispose of or encumber in any
manner any right, title, benefit or interest in and /or to the Skill Poker
Inventions and / or the Skill Poker Patent Application and/or any Derivative
Additional Patent Applications without the prior written consent of the Vendor.
In the event of any assignment, transfer or sale or other form of disposition of
the Skill Poker Inventions and / or the Skill Poker Patent Application and / or
any Derivative Additional Patent Applications by the Purchaser, the terms and
conditions as setforth herein in relation to the utilization of the Skill Poker
Inventions and / or the Skill Poker Patent Application and/or any Derivative
Additional Patent Applications shall survive and will remain in full effect for
the term of the agreement. For the purposes of this Section, payments shall
include all amounts paid by the Purchaser or Poker.com to the Vendor as provided
for in Section 3.1 herein including any proceeds on sale by the Vendor of the
common shares that the Vendor receives on the Closing. For clarity, if at the
time of any such sale, the Vendor holds any of the common shares it received on
the Closing Date, those common shares so held will be deemed to be valued at
US$0.01 per share for the purposes of this Section.
8.2 Poker.com agrees that the Vendor shall be permitted to nominate
one person to the board of directors of the Purchaser and that Poker.com will
cause such person to be elected to such board.
9. LICENSE BACK TO VENDOR
-------------------------
9.1 The Purchaser hereby grants to the Vendor an exclusive, irrevocable,
worldwide, perpetual license to use the Skill Poker Inventions and/or any
Derivative Additional Patent Applications for the development, support and
operation of:
(a) other games which are not based upon or similar to "poker",
"poker like", "blackjack" or "blackjack like" games. For greater
certainty, the foregoing license does not permit the Vendor to
use the Skill Poker Inventions and / or any Derivative Additional
Patent Applications in respect of any "poker", "blackjack" or
"any like" games regardless of the name of such other games. The
above license includes the right to grant sublicenses to use the
Skill Poker Inventions and / or any Derivative Additional Patent
Applications for the development, support and operation of games
which are not based upon or similar to "poker", "poker like",
"blackjack" or "blackjack like" games, provided that the terms of
the sublicenses shall be subject to the same terms and conditions
as set out in this Agreement.
(b) land based "poker", "poker like", "blackjack" or "blackjack like"
games where the players meet in a physical sense for the playing
of the games and tournaments but is not restricted to the meeting
place to a facility on land and may include a meeting place on
the water or in the air. For greater certainty, the foregoing
license does not permit the Vendor to use the Skill Poker
Inventions and / or any Derivative Additional Patent Applications
in respect of any "poker", "blackjack" or "any like" games
regardless of the name of such other games except where
participants meet in a physical location as is presently
characterized by bricks and mortar Poker Card Rooms and Casinos
or on water or in the air. The foregoing license does not apply
to virtual or online environment. The playing of the games and
tournaments are not restricted to only cards or betting chips and
may be augmented through the electronic representation of the
cards and other functions so as to facilitate the tournament
principles of the Skill Poker Inventions and / or any Derivative
Additional Patent Applications. The above license included the
right to grant sublicenses to use the Patent and / or any
Derivative Additional Patent Applications for the development,
support and operation of land based "poker", "poker like",
"blackjack" or "blackjack like" games, provided that the terms of
the sublicenses shall be subject to the same terms and conditions
as set out in this Agreement.
This license is granted to the Vendor without any consideration payable to the
Purchaser either by way of licensing or maintenance fees.
9.2 In the event that the Purchaser licenses any of the Skill Poker
Inventions and / or any Derivative Additional Patent Applications, the Purchaser
will pay to the Vendor 20% of any upfront fee that the Purchaser receives on any
such license. In addition, the Purchaser will provide in any such license, for
License Fees to the Purchaser to be at least 4% of the License Gross Revenue
from the license of the Skill Poker Inventions. The Purchaser will on the
receipt of such License Fee from the licensee pay to the Vendor 4% of such
License Gross Revenue monthly and in arrears. The Purchaser will use its best
commercial efforts to collect any receivables owing to it by any license.
9.3 The Purchaser will undertake the management and reasonable commercial
expense to ensure that a patent is filed in the United States Patent Office and
a PCT Patent Application is submitted in connection with the Skill Poker Patent
Application and will promptly notify the Vendor when such patent is filed.
9.4 The Purchaser will pay to the Vendor 20% of any lump sum damage
awarded, settled, or agreed to by the Purchaser that is paid and remitted by a
third party to the Purchaser for patent infringement in connection with the
Skill Poker Inventions. In addition, the Purchaser will pay to the Vendor 4% of
the total gross revenue paid from any such third party in connection with the
same. For the purpose of this paragraph, the Purchaser will be entitled to
deduct all legal fees and other expenses incurred by the Purchaser in connection
with any claim of patent infringement as against a third party from any lump sum
or on going payment prior to calculating the percentage of same to be paid to
the Vendor herein. The Purchaser will use its best commercial efforts to
enforce or claim against patent infringement.
9.5 The Purchaser makes no representations, conditions or warranties,
either express or implied, with respect to the Skill Poker Inventions and / or
any Derivative Additional Patent Applications. Without limitation, the Purchaser
specifically disclaims any implied warranty, condition or representation that
the Skill Poker Inventions and / or any Derivative Additional Patent
Applications:
(a) correspond with a particular description;
(b) are of merchantable quality;
(c) are fit for a particular purpose; or
(d) are durable for a reasonable period of time. The Purchaser is not
liable for any loss, whether direct, consequential, incidental or
special, which the Vendor suffers arising from any defect, error,
fault or failure to perform with respect to the Skill Poker
Inventions and / or any Derivative Additional Patent Applications
that are licensed to the Vendor hereunder, even if the Purchaser
has been advised of the possibility of the defect, error, fault
or failure. The Vendor acknowledges that it has been advised by
the Purchaser to undertake its own due diligence with respect to
the Skill Poker Inventions and / or any Derivative Additional
Patent Applications.
9.6 The Vendor agrees that nothing in this agreement is to be construed
as:
(a) a warranty or representation by the Purchaser that it owns any right,
title or interest in the Skill Poker Inventionsand / or any Derivative
Additional Patent Applicationsor that anything made, used, sold or
otherwise disposed of under the license granted in this agreement to
the Vendor is or will be free from infringement of patents,
copyrights, trade-marks, industrial design or other intellectual
property rights;
(b) an obligation by the Purchaser to bring, prosecute or defend actions
or suits against third parties for infringement of patents,
copyrights, trade-marks, industrial designs or other intellectual
property or contractual rights; or
(c) the conferring by the Purchaser of the right to use in advertising or
publicity the name of the Purchaser or the Purchasers' trade-marks.
9.7 Notwithstanding Article 9.6, if there is an alleged infringement of
the Skill Poker Inventions and/or any Derivative Additional Patent Applications
or any right with respect to the Skill Poker Inventions and/or any Derivative
Additional Patent Applications or, the Vendor may, on receiving the prior
written consent of the Purchaser, prosecute litigation designed to enjoin
infringers of the Skill Poker Inventions and / or any Derivative Additional
Patent Applications. Provided that it has first granted its prior written
consent, the Purchaser agrees to reasonably co-operate to the extent of signing
all necessary documents and to vest in the Vendor the right to institute the
litigation, provided that all the direct and indirect costs and expenses of
bringing and conducting the litigation or settlement are paid by the Vendor and
in this case all recoveries are for the benefit of the Vendor.
9.8 If any complaint alleging infringement of any patent or other
proprietary rights is made against the Vendor or a sublicensee of the Vendor
with respect to the use of the Skill Poker Inventions and / or any Derivative
Additional Patent Applications licensed by the Purchaser to the Vendor
hereunder, the following procedure must be adopted:
(a) the Vendor must promptly notify the Purchaser on receipt of the
complaint and must keep the Purchaser fully informed of the
actions and positions taken by the complainant and taken or
proposed to be taken by the Vendor on behalf of itself or a
sublicensee;
(b) except as provided in Article 9.8(d), all costs and expenses
incurred by the Vendor or any sublicensee of the Vendor in
investigating, resisting, litigating and settling the complaint,
including the payment of any award of damages and / or costs to
any third party, must be paid by the Vendor or any sublicensee of
the Vendor, as the case may be;
(c) no decision or action concerning or governing any final
disposition of the complaint may be taken without full
consultation with, and approval by, the Purchaser, which approval
will not be unreasonably withheld;
(d) the Purchaser may elect to participate formally in any litigation
involving the complaint to the extent that the court may permit,
but any additional expenses generated by the formal participation
will be paid by the Purchaser (subject to the possibility of
recovery of some or all of the additional expenses from the
complainant); and
(e) notwithstanding Article 9.7, if the complainant is willing to
accept an offer of settlement and one of the parties to this
agreement is willing to make or accept the offer and the other is
not, then the unwilling party must conduct all further
proceedings at its own expense, and is responsible for the full
amount of any damages, costs, accounting of profits and
settlement costs in excess of those provided in the offer, but is
entitled to retain for itself the benefit of any litigated or
settled result giving a lower payment of costs, damages,
accounting of profits and settlement costs than that provided in
the offer.
9.9 The Vendor indemnifies, holds harmless and defends the Purchaser,
its directors, officers, employees, against any and all claims (including all
associated legal fees and disbursements actually incurred) arising out of the
exercise of any rights under this agreement, including without limitation
against any damages or losses, consequential or otherwise, arising in any manner
at all from or out of the use of the Skill Poker Inventions and / or any
Derivative Additional Patent Applications licensed under this agreement by the
Vendor or its sublicensees or their customers or end-users.
9.10 The Purchaser must maintain at its principal place of business, or
another place as may be most convenient, separate accounts and records of all
Gross Revenues, and License Fees, and all other revenue and all business done in
connection with this agreement. The accounts and records must be in sufficient
detail to enable proper returns to be made under this agreement, and the
Purchaser must cause its licensees to keep similar accounts and records. The
Purchaser will also provide reasonable access to data records contained by the
online systems operated by the Purchaser and / or Purchaser's Affiliates and /
or licensees in relation to the use of the Skill Poker Inventions and/or any
Derivative Additional Patent Applications through online, remote access.
9.11 The Purchaser agrees to retain the accounts and records referred
to in Section for at least six years from when they were made and must permit
any duly authorized representative of the Vendor to inspect the accounts and
records during normal business hours of the Purchaser at the Vendor's expense.
The Purchaser must provide to the representative all reasonable evidence as the
representative deems necessary to verify the detail in which the Gross Revenue,
License Fee and any other revenue was determined and must permit the
representative to make copies of or extracts from the accounts, records and
agreements at the Vendor's expense. If an inspection of the Purchaser's records
by the Vendor shows an under-reporting or underpayment by the Purchaser of any
amount to the Vendor, then the Purchaser must pay to the Purchaser any amount
found due (including any interest charges) within 30 days of notice by the
Vendor to the Purchaser.
10. CONDITIONS OF CLOSING
-----------------------
10.1 The obligation of the Purchaser or Poker.com to complete the
transactions contemplated in this Agreement is subject to the following terms
and conditions for the exclusive benefit of the Purchaser and Poker.com, to be
fulfilled or performed at or prior to the Time of Closing or waived in whole or
in part by the Purchaser or Poker.com at its sole discretion without prejudice
to any rights the Purchaser or Poker.com may otherwise have:
(a) Poker.com shall have received from the Vendor a signed Investor
Questionnaire that is completed to the satisfaction of Poker.com;
(b) the representations and warranties of the Vendor contained in this
Agreement shall be true and correct in all material respects at the
Time of Closing, with the same force and effect as if such
representations and warranties were made at and as of such time; and
(c) the Purchaser shall have received an opinion from Professor Nelson
Rose (to the satisfaction of the Purchaser) to the effect that the
Skill Poker Inventions represents games of skill.
10.2 The obligation of the Vendor to complete the transactions contemplated
in this Agreement is subject to the following terms and conditions for the
exclusive benefit of the Vendor to be fulfilled or performed at or prior to the
Time of Closing or waived in whole or in part by the Vendor at its sole
discretion without prejudice to any rights the Vendor may otherwise have:
(a) the Purchaser has executed a financing statement in favour of the
Vendor; and
(b) the representations and warranties of the Purchaser contained in this
Agreement shall be true and correct in all material respects at the
Time of Closing, with the same force and effect as if such
representations and warranties were made at and as of such time.
11. TAXES
-----
11.1 The Purchaser will be liable for and will pay all applicable sales
taxes properly payable in connection with the sale of the Patent by the Vendor
to the Purchaser.
12. SUCCESSORS AND ASSIGNS
------------------------
12.1 This Agreement will enure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns.
13. ENTIRE AGREEMENT
-----------------
13.1 This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether written or oral. There
are no conditions, covenants, agreements, representations, warranties or other
provisions, express or implied, collateral, statutory or otherwise, relating to
the subject matter hereof except as herein provided.
14. TERMINATION
-----------
14.1 The Purchaser may terminate this Agreement on three months written
notice to the Vendor, at any time after six months from the Closing Date
("Termination").
14.2 On Termination of this Agreement, the Purchaser will transfer and
assign all rights, title and interest in the Skill Poker Inventions, any
subsequent patents, derivative patents or associated applications to the Vendor
with no encumbrances for any amounts owing in connection with filing or
maintaining such patents until the date upon which termination is exercised by
the Purchaser. Reasonable attention to the filing and anniversary dates will not
be withheld by the Purchaser so as not to adversely affect normal patent filing
practice.
15 TIME OF ESSENCE
---------------
15.1 Time will be of the essence of this Agreement.
16 APPLICABLE LAW
---------------
16.1 This Agreement will be construed, interpreted and enforced in
accordance with, and the respective rights and obligations of the parties will
be governed by, the laws of the state of Washington and the federal laws of the
United States applicable therein without reference to its choice of law rules,
and each party hereby submits to the jurisdiction of the state of Washington and
all courts competent to hear appeals therefrom.
17. AMENDMENT AND WAIVER
----------------------
17.1 No amendment or waiver of any provision of this Agreement will be
binding on either party unless consented to in writing by such party. No waiver
of any provision of this Agreement will constitute a waiver of any other
provision, nor will any waiver constitute a continuing waiver unless otherwise
provided.
18. SEVERABILITY
------------
18.1 If any provision or any part thereof is held by a court of
competent jurisdiction, after appeals therefrom have been exhausted, to be
unenforceable, invalid or illegal, then it will be severable or deemed to be
limited in respect of such territory and time to the extent necessary to render
such provision enforceable, valid or legal, and the remaining provisions will
remain valid and binding.
19. ELECTRONIC MEANS
-----------------
19.1 Delivery of an executed copy of this Agreement by electronic facsimile
transmission, telecopy, telex, or other means of electronic communication
producing a printed copy will be deemed to be execution and delivery of this
Agreement on the date of such communication by the party so delivering such
copy.
20. NOTICES
-------
20.1 Any notice or other documents required or permitted to be given
under this Agreement will be in writing and may be given by personal service,
telecopier or by prepaid registered mail, posted in Canada or by certified mail,
posted in the United States, and addressed to the proper party at the address
stated below:
(a) IF TO THE VENDOR:
Blue Diamond International Capital Inc
1st Floor, No 8 Pictet de Rochemont
1207, Geneva, Switzerland
Telecopier No.: +41-22-736-8154
Attention: Newman Leech
(b) IF TO THE PURCHASER OR POKER.COM
Skill Poker.com and/or Poker.com, Inc.
210 - 1166 Alberni Street
Vancouver, British Columbia
Canada
Telecopier No.: 604-689-8988
Attention: Mark Glusing
or to such other address as any party may specify by notice. Any notice sent by
telecopier will be deemed conclusively to have been effectively given and
received at the time of successful transmission. Any notice sent by registered
mail as aforesaid will be deemed conclusively to have been effectively given and
received on the fifth business day after posting; but if at the time of posting
or between the time of posting and the fifth business day thereafter there is a
strike, lockout or other labour disturbance affecting postal service, then such
notice will not be effectively given until actually received.
21. COUNTERPARTS
------------
21.1 This Agreement may be executed in several counterparts, each of
which will be deemed to be an original and all of which will together constitute
one and the same instrument.
IN WITNESS WHEREOF the parties have executed and delivered this Agreement as of
the date first written above.
BLUE DIAMOND INTERNATIONAL CAPITAL INC.
Per: /s/ Newman Leech
-----------------------------------
Authorized Signatory
Newman Leech, President
-----------------------------------
Print Name and Title
SKILL POKER.COM INC.
Per: /s/ Mark Glusing
-----------------------------------
Authorized Signatory
Mark Glusing, President
-----------------------------------
Print Name and Title
POKER.COM., INC.
Per: /s/ Mark Glusing
-----------------------------------
Authorized Signatory
Mark Glusing, President
-----------------------------------
Print Name and Title
SCHEDULE A
-----------
PAYMENT SCHEDULE FOR BALANCE OF PURCHASE PRICE
1. The Purchaser will pay to the Vendor the greater of (i)
US$3,500.00 per month (the "Minimum Payment") and (ii) 4% of the monthly Gross
Revenue (the "Maximum Payment").
2. The Purchaser will pay the Minimum Payment to the Vendor on
or before the last day of each month beginning in the month following from the
date of this Agreement (the "Effective Date") to December 31, 2099.
3. On or before the 15th day of each month beginning in the
second month following the Effective Date of this Agreement, the Purchaser will
deliver to the Vendor a letter confirming the Gross Revenue for the prior month
and the Maximum Payment.
4. In the event that the Maximum Payment is greater than
the Minimum Payment, the Purchaser will pay to the Vendor the difference between
the Maximum and Minimum Payment on the next Minimum Payment date.
5. The Purchaser will pay to the Vendor interest at a rate of
twenty-five percent (25%) per annum, compounded monthly, on all overdue payment
of funds due and owing to the Vendor from the Purchaser under this Agreement.
Such interest will accrue at the aforesaid rate on a daily basis until the
outstanding payments have been made.
6. In the event that the Purchaser fails to make a payment in
respect of the Purchase Price as provided above and prior to exercising the
rights under the Security Interest as provided for in Section 4.1 of this
Agreement, the Vendor will notify the Purchaser in writing of such default (a
"Default Notice") and upon receipt of any particular Default Notice, the
Purchaser will have forty-five (45) days within which to make the payment,
including interest, specified therein as being outstanding.
SCHEDULE B
----------
SKILL POKER PATENT APPLICATION
SCHEDULE C
----------
INVESTOR QUESTIONNAIRE
PLEASE COMPLETE STATEMENT #1 AND STATEMENT #2
---------------------------------------------
With the understanding that the purpose of this Questionnaire is to determine
whether the Undersigned shall be entitled to receive a written proposal from
Poker.com Inc or its subsidiary corporation, the Undersigned represents and
warrants to Poker.com Inc. that:
---------------------------------------------------------------------------
STATEMENT #1 - THE UNDERSIGNED SATISFIES ONE OR MORE OF THE CATEGORIES
INDICATED BELOW (PLEASE PLACE AN "X" ON THE APPROPRIATE LINES):
---------------------------------------------------------------------------
____ Category 1. An organization described in Section 501(c)(3) of the
United States Internal Revenue Code, a corporation, a Massachusetts or
similar business trust or partnership, not formed for the specific purpose
of acquiring common shares of Poker.com Inc. (the "Securities"), with total
assets in excess of US$5,000,000;
____ Category 2. A natural person whose individual net worth, or joint
net worth with that person's spouse, at the date hereof exceeds
US$1,000,000;
____ Category 3. A natural person who had an individual income in
excess of US$200,000 in each of the two most recent years or joint income
with that person's spouse in excess of US$300,000 in each of those years
and has a reasonable expectation of reaching the same income level in the
current year;
____ Category 4. A trust that (a) has total assets in excess of
US$5,000,000, (b) was not formed for the specific purpose of acquiring the
Securities and (c) is directed in its purchases of securities by a person
who has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of an investment in
the Securities;
____ Category 5. A director or executive officer of Poker.com Inc.;
____ Category 6. An entity in which all of the equity owners satisfy the
requirements of one or more of Category 1-5;
____ Category 7. it does not satisfy any of the above indicated Categories
---
1-6
---------------------------------------------------------------------------
STATEMENT #2 - THE UNDERSIGNED SATISFIES ONE OR MORE OF THE CATEGORIES
INDICATED BELOW (PLEASE PLACE AN "X" ON THE APPROPRIATE LINES AND COMPLETE
THE REQUISITE INFORMATION WHERE THE "X" IS MARKED):
---------------------------------------------------------------------------
____ Category 8. he/she is a director, senior officer or control person of
the Poker.com Inc., or an affiliate of Poker.com Inc.;
____ Category 9. he/she is a spouse, parent, grandparent, brother, sister
or child of a director, senior officer or control person of Poker.com Inc.
named below, or of an affiliate of Poker.com Inc.
Name of director, senior officer or control person:
_________________________________________________
Specify relationship: _________________________
____ Category 10. he/she is a close personal friend of a director, senior
officer or control person of Poker.com Inc., or of an affiliate of
Poker.com Inc. and has known the person named below, directly, for a
sufficient period of time to be in a position to assess the capabilities
and trustworthiness of the person named below (Refer to Note 1 below):
Name of director, senior officer or control person:
_________________________________________________
____ Category 11. he/she is a close business associate of a director,
senior officer or control person of Poker.com Inc., or of an affiliate of
Poker.com Inc., named below (Refer to Note 1 below):
Name of director, senior officer or control person:
_________________________________________________
____ Category 12. a person or company that is wholly-owned by any
combination of persons or companies described in Categories 8-11 above;
____ Category 13. an individual who, either alone or jointly with a
spouse, beneficially owns, directly or indirectly, financial assets having
an aggregate realizable value that before taxes, but net of any related
liabilities, exceeds CDN $1,000,000;
____ Category 14. an individual whose net income before taxes exceeded CDN
$200,000 in each of the two most recent years or whose net income before
taxes combined with that of a spouse exceeded CDN $300,000 in each of the
two most recent years and who, in either case, reasonably expects to exceed
that net income level in the current year;
____ Category 15. a corporation, limited partnership, limited liability
partnership, trust or estate, other than a mutual fund or non-redeemable
investment fund, that had net assets of at least CDN$5,000,000 as shown on
its most recently prepared financial statements;
____ Category 16. a person or company in respect of which all of the
owners of interests, direct or indirect, legal or beneficial are persons or
companies that are described in Categories 13-15 above;
____ Category 17. he/she/it does not satisfy any of the above indicated
---
Categories 8-16.
Dated this 13 day of February 2003.
Blue Diamond International Capital Inc.
1st Floor, No. 8 Pictet de Rochemont
1207, Geneva
Switzerland
/s/ Newman Leech
------------------------------------------
(Signature)
Newman Leech, President
------------------------------------------
Print Name of Signatory and Title
- --------------------------------------------------------------------------------
Note 1: An individual in not a close personal friend solely because
the individual is a member of the same organization, associate or
religious group.
A casual business associate or a person introduced or solicited for
the purpose of purchasing securities is not a close business
associate.
An individual is not a close personal friend or close business
associate solely because the individual is a client or former client.
The relationship between the purchaser and the director, senior officer or
control person must be direct. For example, a close personal friend of a close
personal friend does not qualify for this category. Nor does a close business
associate of a close business associate qualify for this category.