Exhibit 10.4
ASSET PURCHASE & ASSIGNMENT AGREEMENT
THIS AGREEMENT dated the 18th day of September, 2001
BETWEEN:
FYRC 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:
BINGO.COM, INC.,
a corporation incorporated pursuant to the
laws of the state of Florida
and having an office at
3rd Floor, 1286 Homer St.
Vancouver, British Columbia, Canada
(herein called the "PURCHASER")
OF THE SECOND 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
Skill-Bingo (the "SKILL-BINGO INVENTIONS"), as disclosed in the proposed patent
application attached hereto as Schedule "B" (the "SKILL BINGO PATENT
APPLICATION") and is desirous of selling, assigning, transferring and
relinquishing to the Purchaser all of its right, title and interest in and to
the Skill-Bingo Inventions, on those terms and conditions hereinafter set forth;
B. 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-Bingo Inventions, on those
terms and conditions hereinafter set forth;
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NOW THEREFORE in consideration of the premises 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) "Business Quarter" means the period of three consecutive months
commencing on October 1, 2001 and on each three month anniversary
thereof, as case may be;
(c) "Cumulative Gross Revenue" at any particular time means the Gross
Revenue of the Purchaser derived from all sources utilizing the
Skill-Bingo Inventions for the period commencing on the date of
this Agreement and ending at that time;
(d) "Gross Revenue" means, in respect of any specified period, the
gross revenue of the Purchaser derived from the utilization of the
Skill-Bingo Inventions for that period, without setoff of any
kind, as determined in accordance with United States of America
generally accepted accounting principles and, where the period
specified is a Business Quarter, reportable as such on the
financial statements of the Purchaser for that Business Quarter
(or, where that Business Quarter is the fourth Business Quarter of
a fiscal year of the Purchaser, the financial statements of the
Purchaser for that fiscal year, being, by implication, the
difference between the gross revenue of the Purchaser reportable
therein for that fiscal year and the aggregate gross revenue of
the Purchaser previously reported for the first three Business
Quarters of that fiscal year) required to be filed with the United
States of America Securities and Exchange Commission;
(e) "Purchase Price" means the greater of:
(i) Two Hundred Thousand United States Dollars (U.S.$200,000);
and
(ii) 4% of the Gross Revenue derived by the Purchaser during
the period commencing on Closing and ending on December 31,
2098; and
payable to the Vendor for all of the right, title and interest of
the Vendor in and to the Skill Bingo Inventions, as provided in
Section 3 herein;
(f) "Skill Bingo Inventions" means those inventions related to a
method for Skill Bingo disclosed in the Skill Bingo Patent
Application; and
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(g) "Skill Bingo Patent Application" means the proposed patent
application attached as Schedule B to this Agreement.
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 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-Bingo 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-Bingo Patent Application
and any registration issuing thereunder and any other patents for
the Skill-Bingo Inventions, anywhere in the world;
(b) the right to file the Skill-Bingo Patent Application and
additional patent applications in any country for said Skill-Bingo
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 any and all existing or future substitute,
divisional, continuation or continuation-in-part patent
applications deriving directly or indirectly either in whole or in
part from the Skill Bingo Patent Application or the Skill Bingo
Inventions and any Additional Patent Applications (such
applications hereinafter referred to as "Derivative
Applications");
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(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-Bingo Patent
Application, any Additional Applications, and any Derivative Bingo
Like 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-Bingo Inventions or the Skill-Bingo
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) upon execution of this Agreement, the sum of Five Thousand United
States Dollars (U.S.$5,000.00) by wire transfer to the account of
the Vendor in accordance with the following instructions:
To: Barclays Bank
St. Peters Port
Guernsey
Channel Islands
Swift Code: BARCGB22
Sort Code 20-35-32
For Credit To:
the account of: FYRC Inc.
Account Number: 52139188
Advising: John Wright/David Bertram
Tel. +44-1481-705606
(b) 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(b), 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 the first such payment is required to be made.
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3.2 The Purchaser will, on or before February 15, 2002, report to the
Vendor in writing the Gross Revenue of the Purchaser for the period commencing
on the date of this Agreement and ending on December 31, 2001 and will on or
before the forty-fifth (45th) day after the end of each Business Quarter of the
Purchaser, report to the Vendor in writing the Gross Revenue of the Purchaser
for that Business Quarter.
4 DEFAULT
4.1 In the event that the Purchaser fails to make a payment in respect
of the Purchase Price as provided in 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 shall have sixty (60) days within
which to make the payment specified therein as being outstanding (the "Default
Period" in respect of such Default Notice) .
4.2 The Purchaser hereby grants to the Vendor a security interest (the
"Security Interest") in the Patent and in all of the Purchaser's rights, title
and interest in the Patent, to secure payment due payment of the Purchase Price
to the Vendor in accordance with the terms of this Agreement. The Purchaser
agrees that the Security Interest will attach to the Patent immediately upon
execution of this Agreement and that, to the extent necessary to give full
effect to the Security Interest, this clause is intended to constitute a
Security Agreement as defined in the Personal Property Act of British Columbia,
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 Patent 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 said Personal Property Security Act and any other similar statutes from time
to time in force in British Columbia.
5 REPRESENTATIONS AND WARRANTIES OF THE VENDOR
5.1 The Vendor represents and warrants to the Purchaser, with the intent
that the Purchaser 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;
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(c) the Vendor is the legal and beneficial owner of the Skill-Bingo
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-Bingo
Inventions;
(d) the Vendor has the right to convey, assign and transfer all of the
right, title and interest in the Skill-Bingo 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-Bingo Inventions or any portion
thereof; and
(h) 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-Bingo Inventions, nor has the Vendor received any
notice that use of the Skill-Bingo Inventions infringes upon or
breaches or will infringe upon or breach any intellectual property
rights of any other person;
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 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-Bingo Inventions; to enforce, at Purchasers cost, any patents arising
from or out of the Skill-Bingo Inventions, the Skill-Bingo Patent Application
and any and all patents in the United States of America, Canada or elsewhere on
the Skill-Bingo 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-Bingo Inventions, the Skill-Bingo Patent Application,
all Additional Applications and Deriviative 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-Bingo Inventions.
7 REPRESENTATIONS OF THE PURCHASER
7.1 The Purchaser represents and warrants to the Vendor as follows, with the
intent that the Vendor will rely thereon in entering into this Agreement that:
(a) the Purchaser is a corporation duly incorporated, validly
existing, and in good standing under the laws of State of Florida
and has 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 this Agreement constitutes a valid and binding
obligation of the Purchaser in accordance with its terms.
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8 COVENANTS OF THE PURCHASER
8.1 The Purchaser hereby covenants and agrees that, until the Purchase
Price has been paid in full by the Purchaser, 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-Bingo Inventions and/or the
Skill-Bingo Patent Application without the written consent of the Vendor.
8.2 The Purchaser hereby grants to the Vendor an irrevocable, worldwide,
perpetual license to use the Patent for the development, support and operation
of games which are not based upon or similar to "bingo" or "bingo like" games.
For greater certainty, the foregoing license does not permit the Vendor to use
the Patent in respect of any "bingo" or "bingo like" games regardless of the
name of such other games. The above license includes the right to grant
sublicenses to use the Patent for the development, support and operation of
games which are not based upon or similar to "bingo" or "bingo like" games,
provided that the terms of the sublicenses shall be subject to the same terms
and conditions as set out in this Agreement.
9 TAXES
9.1 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.
10 SUCCESSORS AND ASSIGNS
10.1 This Agreement will enure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns.
11 ENTIRE AGREEMENT
11.1 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.
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12 TIME OF ESSENCE
12.1 Time will be of the essence of this Agreement.
13 APPLICABLE LAW
13.1 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.
14 AMENDMENT AND WAIVER
14.1 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.
15 SEVERABILITY
15.1 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.
16 COUNTERPARTS
16.1 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.
17 ELECTRONIC MEANS
17.1 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.
18 NOTICES
18.1 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:
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(c) IF TO THE VENDOR:
FYRC Inc.
1st Floor, No 8 Pictet de Rochemont
1207, Geneva, Switzerland
Telecopier No.: +41-22-736-8154
Attention: Newman Leech
(d) IF TO THE PURCHASER:
Bingo,com, Inc.
3rd Floor, 1286 Homer Street
Vancouver, British Columbia
Canada
Telecopier No.: (604) 647-6422
Attention: T.M.Williams
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.
IN WITNESS WHEREOF the parties have executed and delivered this Agreement on the
18th day of September, 2001
FYRC INC.
Per: /s/ Newman Leech
----------------------------------------
Control Services Corp. on behalf of FYRC
Authorized Signatory
BINGO.COM, INC.
Per: /s/ Tryon Williams
----------------------------------------
Authorized Signatory
SCHEDULE A
PAYMENT SCHEDULE FOR BALANCE OF PURCHASE PRICE
The balance of the Purchase Price shall be payable to the Vendor at the
following times in the following amounts:
1. on February 15, 2002 -- Four percent (4%) of the Gross Revenue of the
Purchaser for the period commencing on the date of this Agreement and
ending on December 31, 2001 (the "First Business Quarter");
2. on the sixtieth (60th) day of each of the nineteen (19) Business Quarters
next following the First Business Quarter -- Four percent (4% ) of the
Gross Revenue of the Purchaser for the immediately preceding Business
Quarter;
3. on the sixtieth (60th) day of the Business Quarter (the "Minimum Payment
Business Quarter") next following those nineteen Business Quarters
specified in section 2 above:
(a) if Four percent (4%) of the Cumulative Gross Revenue of the Purchaser
to the end Business Quarter immediately preceding the Minimum Payment
Business Quarter exceeds U.S.$195,000 -- Four percent (4% ) of the
Gross Revenue of the Purchaser for the Business Quarter immediately
preceding the Minimum Payment Business Quarter; or
(b) if Four percent (4%) of the Cumulative Gross Revenue of the Purchaser
to the end Business Quarter immediately preceding the Minimum Payment
Business Quarter is less than U.S.$195,000 -- the difference between
U.S.$200,000 and the aggregate of all payments theretofore made by the
Purchaser in respect of the Purchase Price;
4. in those Business Quarters, if any, after the Minimum Payment Business
Quarter in respect of which Four percent (4%) of the Cumulative Gross
Revenue of the Purchaser to the end of the immediately preceding Business
Quarter is less than or equal to U.S.$195,000 -- no payment;
5. on the sixtieth (60th) day of the first Business Quarter after the Minimum
Payment Business Quarter in respect of which Four percent (4%) of the
Cumulative Gross Revenue of the Purchaser to the end of the immediately
preceding Business Quarter exceeds U.S.$195,000 -- the lesser of Four
percent (4% ) of the Gross Revenue of the Purchaser for the immediately
preceding Business Quarter and the difference between Four percent (4%) of
the Cumulative Gross Revenue of the Purchaser to the end of the immediately
preceding Business Quarter and U.S.$195,000;
6. on the sixtieth (60th) day of each Business Quarter thereafter, to and
including the Business Quarter commencing on January 1, 2099 -- Four
percent (4%) of the Gross Revenue of the Purchaser for the immediately
preceding Business Quarter.