NET-FORCE SYSTEMS INC.
SOFTWARE LICENSE AGREEMENT
THIS AGREEMENT is entered into this 31st day of July 1999,
BETWEEN:
NET-FORCE ENTERTAINMENT INC., with registered offices in St. John's,
Antigua, West Indies;
(hereinafter referred to as the "Licensee")
AND
SOFTEC SYSTEMS CARIBBEAN INC. with offices at 1589 Newgate Street, St.
John's Antigua, West Indies;
(hereinafter referred to as "Softec")
WHEREAS,
A. Softec owns rights to Internet casino software (the "Software");
B. Softec wishes to license the Software to other companies;
C. Softec wishes to provide a complete computer hardware and software package
that the Licensee may use to operate an Internet gaming site; and,
D. The Licensee wishes to license the Software and make use of Softec'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
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1.1 DEFINITIONS
"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 Softec for use
in connection with the licensed programs.
The Licensed Software shall consist of not more than 2 casinos, one with an
adult theme (where a license is available), and one with a non-adult theme
(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
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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 Softec in its absolute discretion, located at its offices in St.
John's Antigua, Vancouver, Canada, or other locations designated by Softec 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
Softec which is not generally available to or used by others or the utility or
value of which is not generally known or recognized as standard practice,
including, without limitation, all financial business and personal data relating
to Softec's clients, any non-public information about affiliates, subsidiaries,
consultants and employees of Softec 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 Softec 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 Softec to inspect and audit all Softec's business, accounting and
supporting records that are necessary for purposes of determining Softec's
compliance with the terms of this Agreement. Softec 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, Softec 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 Softec 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, Softec 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 c 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 Softec's fiscal years prior to the date
Softec receives notice of an impending audit.
1.3 INDEMNIFICATION
1.3.1 The Licensee acknowledges and agrees that neither Softec 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 Hardware or any other information, material or services provided by Softec
to the Licensee under this Agreement. If, despite the foregoing limitations,
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Softec 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 Softec, 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 Softec for the six
months prior to the loss.
1.3.2 The Licensee shall indemnify and save harmless Softec 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 Softec is found
guilty of fraud in executing its' obligations under this Agreement, the Licensee
shall not be 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 Softec can be temporarily disrupted. The Licensee acknowledges
and agrees that neither Softec 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 Softec 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.
1.4.2 The Licensee acknowledges that Softec's ability to perform its
obligations under this Agreement are subject to government licensing in whatever
jurisdiction Softec may choose to operate. Softec 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 Softec. Violation of this section is
grounds for immediate termination of this Agreement.
1.5.2 Copyright and other proprietary rights of Softec 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 the Licensed Software, and
any copies thereof, and all documentation, code and logic, which describes
and/or comprises the Licensed Software remains the sole property of Softec.
1.5.4 Softec 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 Softec'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.
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1.5.6 The Licensee acknowledges that this is a non-exclusive agreement
and that Softec will license the Licensed Software to as many other parties as
are willing to enter into a licensing agreement with Softec.
1.5.7 The Licensee shall supply to Softec an irrevocable letter of credit
in the amount of $100,000 U.S. An appropriate amount of these funds shall be
released to Softec in the event the Licensee should become unable or unwilling
to pay for any legitimately invoiced amounts. This security shall only be used
to remedy non-payment of legitimate invoices, and cannot be applied by Softec to
any other alleged breaches of this Agreement. This section shall only become
effective upon the Licensee achieving in any one month Net Monthly Revenue of
$1,000,000 or greater.
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 Softec 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
Licensee chooses to operate.
1.5.10 It is the policy of Softec 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,
Softec 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 Softec to ensure that
persons residing in Canada are not able to wager utilizing the Licensed
Software.
1.6 TERM 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 Softec 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, Softec shall not give notice of termination in the first year of this
Agreement.
1.6.3 Softec 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 Softec. The Licensee shall be allowed to cure the
breach during the notice period, thus pre-empting Softec'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 Softec. For
the purposes of this section, material shall mean anything greater than 5% of
the previous month's fees.
1.6.4 Softec 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 Softec 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 Softec is materially in breach of this Agreement for
more than 30 days. Softec 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 Softec may terminate this Agreement at any time upon five days
notice if Softec, or any of its principals, officers or Directors becomes the
subject of third party civil or criminal litigation as a result of the
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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 Softec any and all of Softec's materials which Softec 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
be given to the Licensee and Softec 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 Softec 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:
o $ 10,000 per month for ten months with the first payment being made
three months from the date of the 3 acceptance of the first wager using the
Licensed Software.
1.7.2 The Licensee shall pay to Softec a monthly fee based on a
percentage of the Net Monthly Revenue. The fee shall be paid in accordance with
Schedule A of this Agreement. The fees shall commence when the Licensee accepts
a wager utilizing the Licensed Software.
1.7.3 Notwithstanding any amount due and owing in accordance with
Schedule A of this Agreement, the Licensee shall pay to Softec a minimum of
$25,000 per month. This section shall come into effect 120 days from the
acceptance of the first wager utilizing the Licensed Software.
1.7.4 All monthly payments shall be delivered to Softec by the 15th of
each month in payment for the previous month's activity.
1.8 CONFIDENTIALITY
1.8.1 The Licensee shall not disclose, publish, or disseminate
Confidential Information to anyone other than those of its employees or others
with a need to know, and the Licensee agrees to take reasonable precautions to
prevent any unauthorized use, disclosure, publication, or dissemination of
Confidential Information. The Licensee agrees not to use Confidential
Information otherwise for its own or any third party's benefit without the prior
written approval of an authorized representative of Softec in each instance.
1.8.2 Softec shall not disclose, publish, or disseminate Customer
Information to anyone other than those of its employees with a need to know, and
Softec agrees to take reasonable precautions to prevent any unauthorized use,
disclosure, publication, or dissemination of Customer Information. Softec agrees
not to use Customer Information otherwise for its own or any third party's
benefit without the prior written approval of an authorized representative of
the Licensee in each instance.
1.8.3 All Confidential Information, and any Derivatives thereof whether
created by Softec or the Licensee, remains the property of Softec and no license
or other rights to Confidential information is granted or implied hereby. For
purposes of this Agreement, "Derivatives" shall mean: (a) for copyrightable or
copyrighted material, any translation, abridgement, revision or other form in
which an existing work may be recast, transformed or adapted; (b) for patentable
or patented material, any improvement thereon; and (c) for material which is
protected by trade secret, any new material derived from such existing trade
secret material, including new material which may be protected by copyright,
patent and/or trade secret.
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1.8.4 Notwithstanding anything in this Section 1.8, Softec shall be
allowed to use Customer Information for the purpose of fulfilling its reporting
obligations as a public company. Softec shall also be allowed to use Customer
Information in a statistical form so long as it does not identify individuals or
specific companies.
1.8.5 The Licensee shall not disclose the contents of this Agreement to
any third party who is not bound to maintain confidentiality between the
parties. The Licensee acknowledges that disclosure of the terms of this
Agreement to third parties would cause considerable damage to Softec and its
parent company, Starnet Communications International Inc.
2. OBLIGATIONS OF THE LICENSOR
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2.1 HARDWARE
2.1.1 Softec shall supply the Hardware as defined in this Agreement.
2.1.2 Softec shall maintain the Hardware and pay all costs for
maintaining and/or upgrading the Hardware.
2.1.3 Softec shall supply the office space required to house the
Hardware.
2.1.4 The Hardware shall, at all times, remain the property of Softec.
2.1.5 Softec shall supply an appropriate connection to the Internet with
sufficient bandwidth to properly operate the Licensed Software. The Licensee
shall pay for all bandwidth associated only with those customers that are not
playing the Games using real money and for the downloading of the Licensed
Software via the Internet, and for any related marketing via the Internet.
Bandwidth shall be charged to the Licensee at market rates.
2.1.6 Softec shall not be required to maintain a redundant site.
2.1.7 Softec shall make all reasonable efforts to repair and correct any
problems arising under Softec's areas of responsibility that may arise from time
to time which would cause it to be unable to perform its' obligations under this
Agreement (see section 1.5.4).
2.1.8 Softec shall notify the Licensee of any problems that may arise
from time to time and shall keep the Licensee apprised of any efforts undertaken
to rectify the problem.
2.1.9 The Hardware shall be located only in places where Internet
gambling may be operated legally and where the Licensee has obtained all
necessary licenses to conduct online gaming.
2.2 THE LICENSED SOFTWARE
2.2.1 Softec shall install the Licensed Software on the Hardware.
2.2.2 Softec shall allow all of the Licensee's customers and all persons
who seek to be licensee's customers Internet access to the Licensed Software.
2.2.3 Softec shall allow the Licensee's customers to download directly
from the server the Downloadable Software necessary for the Licensee's customer
to play the Games.
2.2.4 Softec shall supply to the Licensee a single Master CD containing
the Downloadable Software.
2.2.5 Softec may from time to time, at its discretion, create additional
games, which can be added to the Licensed Software. If additional games become
available, the Licensee may request to have the additional games added to the
Licensed Software at no additional licensing cost to the Licensee.
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2.2.6 Softec may from time to time, at its discretion, translate part or
all of the Games into other languages, which can be added to the Licensed
Software. If additional languages become available, the Licensee may request to
have the additional languages added to the Licensed Software at no cost to the
Licensee.
2.2.7 Notwithstanding anything stated in this section 2.2, any changes
requested by the Licensee to be made to the graphics portion of the Licensed
Software, shall be charged to the Licensee at market rates.
2.2.8 Notwithstanding anything stated in this section 2.2, any changes
made to the Master CD at the Licensee's request will be billed to the Licensee
at market rates, plus a $100.00 U.S. administration fee. Softec retains the
right to refuse to make the requested changes.
2.2.9 Softec shall only be required to provide the Licensed Software in
the English language only.
2.2.10 Softec will provide all upgrades of the Licensed Software that do
not require changes to the graphical interface, at no charge to the Licensee.
2.2.11 All upgrades are to be made available to the Licensee within 30
days of the completion of testing.
2.2.12 The Licensee may operate the Casino on as many separate URL's as
the Licensee wants, with no additional licensing fee to be paid.
2.2.13 Softec warrants that the Licensed Software correctly implements
algorithms, which are in accordance with the rules and payouts, which may be
displayed on the screen at any time by the player. Pseudo-random numbers used by
the software for the purposes of choosing game outcomes and shuffling cards are
generated in an unbiased manner.
2.2.14 Notwithstanding anything in this Agreement, the Licensee shall not
operate more than two casinos with different names and/or different graphics.
2.3 FINANCIAL TRANSACTIONS
2.3.1 Softec shall provide a transaction processing system that will
allow the Licensee's customers to deposit funds for use of the Games (the
"Transaction Processing System"). The Licensee's customers will be able to
deposit funds via the Internet through the use of Visa, Master Card, or American
Express credit cards. Other methods of payment may be made available from time
to time at Softec's discretion, at a cost to the Licensee to be agreed upon at
the time.
2.3.2 Softec shall only be responsible for processing credit card debits
and credits for which the Licensee holds the appropriate merchant number
accounts.
2.3.3 The Licensee shall be responsible for all aspects of collecting and
paying funds, in accordance with this Agreement.
2.3.4 The Licensee shall have no rights whatsoever in the Transaction
Processing System.
2.4 TECHNICAL SUPPORT
2.4.1 Softec shall supply 24-hour technical support for the Licensee's
customers and for the Licensee.
2.4.2 Softec shall make the Technical support available via the Internet
and via toll free telephone lines.
2.4.3 Softec shall determine the number of people acting as technical
support and the number of incoming telephone lines for technical support in its
absolute discretion.
2.4.4 Technical support offered via the telephone shall be in English
language only.
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2.5 ACCOUNTING
2.5.1 Softec shall maintain records of all transactions and wagers placed
utilizing the Licensed Software.
2.5.2 The Licensee shall pay a flat fee of $100.00 US plus all reasonable
hourly administration fees and disbursements, including printing, photocopying
and shipping costs, each time accounting information is requested.
Administration fees shall be paid at market prices. No fees are payable for
regular accounting information provided to the Licensee for the purpose of
calculating Net Revenue.
2.5.3 Softec shall supply a complete accounting record, as defined by
Softec from time to time, of the previous month's activity relating to the
Licensed Software within ten working days of the end of each month. The
accounting records shall be delivered either by facsimile or by e-mail.
2.5.4 Softec shall provide daily interim accounting reports, as defined
by Softec from time to time. The daily interim accounting records shall be
delivered either by facsimile or by e-mail.
2.5.5 Softec shall have the right to utilize the accounting information
for statistical and reporting purposes provided specific information about the
Licensee is not disclosed.
2.5.6 Softec shall archive and maintain the accounting information for a
period of 2 fiscal years.
2.5.7 Softec, at its discretion, may destroy any portion of the
accounting information that Softec deems to be no longer relevant.
2.5.8 The Licensee shall be given thirty days written notice prior to the
destruction of any accounting information. The Licensee may choose to archive
information about to be destroyed, at its own facilities.
2.6 CUSTOMER DATA
2.6.1 Softec shall maintain a database containing the Customer
Information.
2.6.2 The Customer Information shall remain the property of the Licensee.
2.6.3 Softec shall provide daily interim Customer Information reports, as
defined by Softec from time to time.
2.6.4 The Licensee shall pay a fee of $100.00 US plus all reasonable
hourly administration fees and disbursements, including printing, photocopying
and shipping costs, each time additional Customer Information is requested.
Administration fees shall be paid out at market prices.
2.6.5 Softec shall have the right to utilize the Customer Information for
any purpose that does not conflict with the Licensee's marketing of the Licensed
Software. Under no circumstances shall Softec utilize the Customer Information
in the marketing of any gaming site being operated by a subsidiary of Starnet
Communications International Inc., Softec's parent company.
2.6.6 Softec shall archive and maintain the Customer Information for a
period of two years.
2.6.7 Softec, in its discretion, may destroy any portion of the Customer
Information that Softec deems to be no longer relevant.
2.6.8 The Licensee shall be given thirty days written notice prior to the
destruction of any Customer Information. The Licensee may choose to archive
information about to be destroyed, at its own facilities.
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2.7 THE GAMES
2.7.1 The lottery tickets and play options available in the lottery web
site shall be determined from time to time by Softec in its sole discretion.
2.7.2 Softec shall determine the odds for the casino from time to time.
The Licensee shall be responsible for setting the odds for the sportsbook and
the HTML sportsbook, from time to time, in its sole discretion.
2.7.3 The Licensee shall determine the betting limits for both the casino
sportsbook and the HTML sportsbook, from time to time, in its sole discretion.
The Licensee may choose zero as a betting limit.
2.7.4 The Licensee, in its sole discretion, shall determine the betting
limits for the Games. The Licensee may choose zero as a betting limit.
2.7.5 Softec shall determine the games available in the casino and both
versions of the sportsbook, from time to time, in its sole discretion.
2.7.6 Softec shall determine the lottery tickets available in the casino
as well as the forms of play, from time to time, in its sole discretion.
2.7.7 Softec shall only supply the Games that the Licensee has
appropriate licenses to operate.
3. OBLIGATIONS OF THE LICENSEE
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3.1 LICENSES
3.1.1 The Licensee shall be responsible for obtaining and maintaining all
necessary licenses for the operation of an Internet Casino and an Internet
Sportsbook operation, or whichever the Licensee intends to operate, in a
location where Softec maintains Hardware.
3.1.2 Softec shall recommend a lawyer in Antigua that can assist the
Licensee in obtaining, an Internet casino license as required by the Antigua
Free Trade Zone.
3.2 MERCHANT NUMBERS
3.2.1 The Licensee shall be responsible for obtaining and maintaining
appropriate merchant numbers for the processing of Visa, Master Card American
Express credit cards and any other credit card the Licensee may obtain merchant
numbers for (the "Merchant Numbers").
3.2.2 Notwithstanding that from time to time, Softec may make merchant
numbers available to the Licensee through another subsidiary of Starnet
Communications International Inc. ("SCII"), neither Softec nor SCII, nor any
other subsidiary of SCII shall be responsible for maintaining or continuing to
provide merchant numbers.
3.3 MARKETING
3.3.1 The Licensee shall be responsible for all marketing of the services
offered through the Licensed Software.
3.3.2 The Licensee shall spend on a monthly basis, a minimum of 15% of
the previous month's Net Revenue on marketing and promoting the Licensee's
gaming site.
3.3.3 Softec is not responsible for tracking or maintaining any records
or data with respect to marketing. The Licensee shall be allowed access to the
Hardware for the purpose of tracking and maintaining marketing data.
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3.3.4 The Licensee shall be responsible for all aspects of customer
service, including, but not limited to dealing with customer complaints and
paying out winnings, provided that the Licensee has and is using its own credit
card merchant accounts.
3.4 DISTRIBUTION OF SOFTWARE
3.4.1 The Licensee shall be responsible for the production and
distribution of compact discs containing the Downloadable Software.
3.4.2 The Licensee shall not alter the Licensed Software as supplied on
the Master CD in any way.
3.4.3 The Licensee shall ensure that the packaging for the Licensed
Software, as well as any logo imprinted on the compact disk, shall display all
proprietary rights symbols such as Copyright and Trademark, as supplied by
Softec (the "Symbols"). The Symbols shall be of the exact same size and font as
supplied by Softec.
3.5 REGULATORY ISSUES
3.5.1 The Licensee shall be solely responsible for determining which
jurisdictions they choose to market to and receive wagers from.
3.5.2 The Licensee shall be responsible for determining the legality of
accepting wagers in whichever jurisdictions they choose to market to and receive
wagers from.
3.5.3 The Licensee shall indemnify Softec for any reasonable legal costs,
and fines that arise as a result of the Licensee choosing to accept wagers from
any jurisdiction that determines or has determined that Internet wagering is
illegal.
3.6 THE WEB SITE
3.6.1 The Licensee shall construct and maintain the entire web site(s)
where the Downloadable Software is to be made available to the Licensee's
customers (the "Web Sites").
3.6.2 The Licensee shall pay for any and all Uniform Resource Locators
("URL's") that the Licensee deems necessary to properly market the Licensed
Software.
3.6.3 The Licensee shall ensure that the Web Sites shall display a
statement that the software is licensed, as well as all proprietary rights
symbols such as Copyright and Trademark, as supplied by Softec (the "Symbols").
The Symbols shall be of the exact same size and font as supplied by Softec.
3.6.4 The Licensee shall have the right to add as many URL's that are
dedicated solely to the promotion of the Licensee's gaming site as the Licensee
deems necessary.
3.6.5 The Licensee shall have the right to make any changes to the Web
Sites the Licensee feels appropriate. All changes that are effected by Softec
will be charged to the Licensee at market rates.
3.6.6 If requested, Softec shall construct and maintain any and all
additional web sites the Licensee deems necessary for the marketing of the
Licensed Software. All work done to build additional web sites shall be charged
to the Licensee at market rates.
3.6.7 Softec shall not in any way be responsible for the design of the
Web Sites utilized by the Licensee.
3.6.8 The Licensee shall include in their Terms and Conditions of Play
for the Licensed Software the Terms and Conditions that are recommended by
Softec. The Licensee may embellish or add to these Terms and Conditions. If the
Licensee does not implement the minimum required Terms and Conditions, in so far
as the Terms and Conditions would have protected the Licensee, Softec shall not
be responsible to the Licensee, notwithstanding anything in this Agreement.
Registration Statement Page 126
NET-FORCE SYSTEMS INC.
4. STANDARD CLAUSES
- -- ----------------
4.1 NOTICES
Unless otherwise provided in this Agreement, any notice provided for under
this Agreement shall be in writing and shall be sufficiently given if delivered
personally, or if transmitted by facsimile with an original signed copy
delivered personally within twenty-four hours thereafter, or mailed by prepaid
registered post addressed to Softec at their respective addresses set forth
below or at such other than current address as is specified by notice.
To Softec: Newgate Street
P.O. Box 1589
St. John's, Antigua
West Indies
Attention: General Counsel
Fax: (268) 480-1656
To the Licensee: Hill & Hill legal offices in St.
John's, Antigua
4.2 ENTIRE AGREEMENT AND SCHEDULES
The parties agree that this Agreement and its Schedule, if any, constitute
the complete and exclusive statement of the terms and conditions between the
Licensee and Softec covering the performance hereof and cannot be altered,
amended or modified except in writing executed by an authorized representative
of each party. The Licensee further agrees that any terms and conditions of any
purchaser order or other instrument issued by the Licensee in connection with
this Agreement which are in addition or inconsistent with the terms and
conditions of this Agreement shall not be binding on Softec and shall not apply
to this Agreement.
4.3 GOVERNING LAW AND ARBITRATION
Any dispute in connection with this Agreement shall be settled by
arbitration in accordance with any Arbitration Act agreed upon between the
parties; provided, however, should any dispute arise under this Agreement, the
parties shall endeavor to settle such dispute amicably between themselves. In
the event that the parties fail to agree upon an amicable solution, such dispute
shall be finally determined by arbitration as aforesaid.
4.4 GOOD FAITH
The parties acknowledge to one another that each respectively intends to
perform its obligations as specified in this Agreement in good faith.
4.5 PARTIES TO ACT REASONABLY
The parties agree to act reasonably in exercising any discretion, judgment,
approval or extension of time that may be required to effect the purpose and
intent of this Agreement. Whenever the approval or consent of a party is
required under this Agreement, such consent shall not be unreasonably withheld
or delayed.
4.6 GOVERNING LAW
This agreement and all Schedules shall be governed by and construed in
accordance with the laws of the Country of Antigua, and the Licensee hereby
attorns to the jurisdiction of the courts of Antigua notwithstanding any other
provision expressed or implied in either this agreement or the Schedules.
Registration Statement Page 127
NET-FORCE SYSTEMS INC.
4.7 TIME TO BE OF THE ESSENCE
Time is of the essence.
4.8 NUMBER AND GENDER
In this Agreement the use of the singular number includes the plural and
vice versa the use of any gender includes all genders, and the word "person"
includes an individual, a trust, a partnership, a body corporate and politic, an
association and any other incorporated or unincorporated organization or entity.
4.9 CAPTIONS
Captions or descriptive words at the commencement of the various sections
are inserted only for convenience and are in no way to be construed as a part of
this Agreement or as a limitation upon the scope of the particular section to
which they refer.
4.10 NON-ASSIGNABILITY
This Agreement is personal to the Licensee, except as provided in S. 4.11,
and the Licensee may not assign or transfer any of its rights or obligations
under this Agreement without the prior written consent or Softec.
4.11 BENEFIT
This Agreement shall ensure to the benefit of and be binding upon the
Licensee, its successors and assigns. The Licensee may delegate the performance
of any of its obligations hereunder to any corporation which controls, is
controlled by or is under common control with the Licensee.
4.12 WAIVER
No condoning, excusing or waiver by any party hereto of any default, breach
of non-observance by any other party hereto, at any time or times with respect
to any covenants or conditions herein contained, shall operate as a waiver of
that party's rights hereunder with respect to any continuing or subsequent
default, breach or nonobservance, and no waiver shall be inferred from or
implied by any failure to exercise any rights by the party having those rights.
4.13 FURTHER ASSURANCE
Each of the parties hereto hereby covenants and agrees to execute such
further and other documents and instruments and to do such further and other
things as may be necessary to implement and carry out the intent of this
Agreement.
4.14 CUMULATIVE RIGHTS
All rights and remedies of Softec are cumulative and are in addition to and
shall not be deemed to exclude any other rights or remedies allowed by law
except as specifically limited hereby. All rights and remedies may be exercised
concurrently.
4.15 PRIOR AGREEMENTS
Except as specifically provided for herein, this Agreement, including its
Schedules, contains all of the terms agreed upon by the parties with respect to
the subject matter herein and supersedes all prior agreements, arrangements and
understandings with respect thereto, whether oral or written.
Registration Statement Page 128
NET-FORCE SYSTEMS INC.
4.16 SEVERABILITY
If any part of this Agreement is unenforceable because of any rule of law
or public policy, such unenforceable provision shall be severed from this
Agreement, and this severance shall not affect the remainder of this Agreement.
4.17 NO PARTNERSHIP
Notwithstanding anything in this Agreement, no part of this Agreement, nor
the Agreement as a whole shall be construed as creating a partnership or agency
relationship between the parties. If any part of this Agreement should become
construed as forming a partnership or agency relationship, that part shall be
amended such that no partnership or agency relationship is created, but that
part achieves what it was originally intended to achieve.
4.18 DOLLAR AMOUNTS
All references to money or specific dollar amounts in this Agreement are in
United States Dollars.
4.19 INTERPRETATION
In the interpretation of this Agreement or any provision hereof, no
inference shall be drawn in favor of or against any party by virtue of the fact
that one party or its agents may have drafted this Agreement or such provision.
IN WITNESS WHEREOF the parties have executed this Agreement on the date first
written.
SOFTEC SYSTEMS CARIBBEAN INC.
Per: /s/ "Christopher Zacharias" Per: /s/ "Mark Dohlen"
Name: Christopher H. Zacharias Name: Mark N. Dohlen
Title: In House Counsel Title: CEO
THE LICENSEE: NET-FORCE ENTERTAINMENT INC.
Per: /s/ "Terry Bowering"
Name: Terry G. Bowering
Title: President, Director
Registration Statement Page 129
NET-FORCE SYSTEMS INC.
SCHEDULE A
- ----------
The Licensee agrees to pay Softec monthly fees according to the following:
THE LICENSEE'S NET MONTHLY FEE PAYABLE
REVENUE (U.S. DOLLARS)
> $0.00 but < or = to $500,000 25%
> $500,000 but < or = to $1,000,000 20%
> $1,000,000 but < or = to $5,000,000 15%
> $5,000,000 to $10,000,000 12.5%
> $10,000,000 plus 10%
The above table should be read with the following understanding: If the
licensee has a Net Monthly Revenue of $550,000, the fee payable is calculated as
follows:
25% on the first $500,000 = $125,000
20% on the next $50,000 = $ 10,000
---------
For a total fee payable = $135,000
Registration Statement Page 130
NET-FORCE SYSTEMS INC.
SCHEDULE OF MARKET RATES
------------------------
The Market rates as set out in this schedule and referred to in this
Agreement are subject to change without notice to the Licensee.
3D graphics:--------------------------------- $150.00 per hour
Video editing:------------------------------- $100.00 per hour
Graphic design:------------------------------ $75.00 per hour
Programming:--------------------------------- $150.00 per hour
Quality Assurance and testing:--------------- $40.00 per hour
Registration Statement Page 131
NET-FORCE SYSTEMS INC.
SCHEDULE OF MERCHANT NUMBER TERMS
---------------------------------
o Monthly processing limit: $100,000
o Merchant discount: 5.50%
o Rolling reserve: 5% for 180 days if chargeback are less than 5%
o 25% if chargebacks exceed 5% - but will be subject to review
o Transaction fee: $1.60 per transaction applied to both debit and
credit transactions
o Fraud Screen fee: $0.60 per transaction applied to all sales
transaction regardless of the response, (accept or reject). This
system is essential to keep the chargeback ratio down.
o Settlement: 30 days following the month end (e.g. All September
transactions will be settled by October 30th 1998)
o Chargeback: $25 per chargeback transaction
o Payout processing fee is $5.00 per bank draft.
Softec makes no guarantee as to the availability of the merchant numbers
contemplated in this Schedule. Please refer to section 3.2.2 of this Agreement
for clarification.
Registration Statement Page 132
NET-FORCE SYSTEMS INC.
AMMENDMENT TO SOFTWARE LICENSE AGREEMENT
Between Softec Systems Caribbean inc. (now Starnet Systems
International Inc., "Starnet") and Net Force entertainment Inc. ("Net Force")
dated July 31, 1999
WHEREAS Net Force entered into a software license agreement with Starnet dated
July 31, 1999 (the "Software License Agreement");
AND WHEREAS Starnet's Licensed software erroneously prevented Net Force from
accepting certain wagers;
AND WHEREAS Starnet now wishes to compensate Net Force for any inconvenience and
costs caused by Starnet;
AND WHEREAS Net Force wishes to provide Starnet with a release for the purposes
of making a full and final compromise and settlement of all claims against
Starnet;
NOW THEREFORE, in consideration of the mutual covenants set out herein, and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Starnet and Net Force agree as follows;
1. Capitalized terms used in this Amendment that are defined in the
Software License Agreement shall have meaning as ascribed thereto in
the Software License Agreement.
2. Starnet hereby waives any further amounts payable by Net Force under
section 1.7.1 of the Software License Agreement.
3. For a period of twelve months, commencing September 1, 2000, Starnet
will reduce the monthly fee payable by Net Force under section 1.7.2
of the Software License Agreement so that the maximum monthly fee for
Net Monthly Revenues below $1,000,000 will be fifteen (15%).
4. Starnet hereby waives the provisions of section 1.7.3 of the Software
License Agreement.
5. Starnet hereby waives any further fees payable to Starnet by Net Force
for its initial Virtual Casino License, issued by the Antiguan Free
Trade Zone, which expires on April 6, 2001.
6. All other provisions, of the Software License Agreement shall remain
in full force and effect.
7. Net Force, its officers, directors, employees, agents, successors,
predecessors, affiliates and assigns, (herein collectively referred to
as the ("Net Force Group") hereby release Starnet and its officers,
directors, employees, agents, successors, predecessors, affiliates and
assigns, (herein collectively referred to as the ("Starnet Group") of
and from any and all actions causes of action, demands and damages
relating to the Licensed Software, howsoever arising, which the Net
Force Group presently has or at any time can, shall or may have
against the Starnet Group.
8. Starnet and Net Force will hold the terms of this Amendment and of the
release contained herein strictly confidential and will not disclose
the same to any person or entity whatsoever, except to its legal or
financial advisors or as required by law.
AGREED TO THIS 6TH DAY OF SEPTEMEBER 2000
/s/ Meldon Ellis
- --------------------------------------
Meldon Ellis
Starnet Systems International Inc.
/s/ Terry Bowering
- --------------------------------------
Terry Bowering
Net Force Entertainment Inc.
Registration Statement Page 133