Exhibit 10.1
Cooperation Contract
Cooperation Contract
Party A: Shanghai Welfare Lottery Issuing Center
Party B: Win Win Consulting (Shanghai) Co., Ltd.
This is a cooperation agreement by and between Shanghai Welfare Lottery Issuing
Center ("Party A") and Win Win Consulting (Shanghai) Co. Ltd. ("Party B") dated
September 21, 2005, with respect to the design, marketing, promotion, sale and
distribution of instant scratch-off lottery tickets issued under the name of
China Welfare Lottery.
Whereas, Party B is in the business of design, marketing, promotion, sale and
distribution of instant scratch-off lottery tickets worldwide, and is the owner
of the brand and trademark "Slam Dunk" in the People's Republic of China ("PRC")
for use in connection with lottery and lottery related businesses;
Whereas, SLAM DUNK instant tickets is one kind of instant ticket series under
China welfare lottery, and Party A has the right to issue China welfare lottery
tickets in Shanghai, including the rights to issue SLAM DUNK instant tickets in
Shanghai.
Whereas, Party A's authority to issue tickets is under the supervision of the
Shanghai Civil Affairs Bureau; and
Whereas, Party A desires the assistance of Party B, and Party B desires to
assist Party A, with the designing, marketing, promotion, sale and distribution
of Party B's Slam Dunk series of instant scratch-off lottery tickets ("SD II
Tickets") throughout Shanghai to help raise funds for welfare purposes.
Now therefore, after friendly negotiations and with the intent to be legally
bound, Party A and Party B referenced above have reached the following
understanding and agreements;
1. Party B agrees to offer many SD II Tickets to Party A for its choosing.
Both Parties agree that for the launch tentatively scheduled for the end
of November, 2005, several kinds of SD II tickets will be issued in
succession, with a minimum of 6 tickets will be on display in Shanghai for
sale at all available outlets, which Party A expects to have over 2,000
outlets by 2006. Party A reserves the right to sell other instant lottery
tickets designed and issued by China Welfare Lottery Issuing Center.
2. Party A agrees to obtain all proper approvals for issuance of SD II
Tickets in Shanghai.
3. Party A confirms that the play methods and prize structures of SD II
Tickets will conform to the rules and regulations of China Welfare Lottery
Issuing Center. Party A agrees that it will be responsible for the sale
and distribution of all SD II Tickets in cities and counties in Shanghai
as part of the initial launch of the SD II Tickets. Party B is authorized
to work with other organizations to increase selling locations for Slam
Dunk II lottery tickets. Party A shall use its best efforts to include
them in their distribution plan and empower them with the proper authority
to sell at such selling locations. Furthermore, Party A shall coordinate
with local related governments to assist Party B if necessary, for any
additional marketing, sale and promotion activities that Party B may
desire to engage for the purpose of enhancing the sale of SD II Tickets.
4. The SD II Tickets, subject to this Agreement, shall be as follows:
a) SD II TV Tickets will provide players the opportunity to win larger
cash prizes via a television program to be broadcast periodically.
These SD II TV Tickets will be launched by Party A provide that a
suitable time and television station is procured on terms and
conditions agreeable to Party B. The lucky player of this type of SD
II TV Tickets require the player to call a toll number or send an
SMS (Short Message Service) to register, such as an IVR (Interactive
Voice Response) number sanctioned and managed by one or more major
Chinese telephone carriers or their affiliates. Party B will
independently manage the operation of this operation and be
responsible for all the risks, investment, prizes and related
obligations, including compliance with all laws, rules and
regulations governing this matter. Party B shall also be accountable
for any and all losses from this operation and shall be able to
solely realize any potential profits gained from this operation.
With respect to the cash prizes on the TV game show: Party A will be
responsible for all the prizes on the TV show. If the amount
allocated for prizes on TV game show is insufficient to cover prizes
claimed on TV based on the then current sales revenue of SD II TV
Tickets, Party A will temporarily advance the balance in order to
enable contestants to receive prizes.
b) SD II Non-TV Tickets will consist of two parts and will be launched
as soon as possible after execution of this Agreement. The first
part shall contain the play method and award structure approved by
Party A. Party A will manage all lottery retailers and selling
locations to market, sell and distribute the SD II Tickets with
advice and counsel from Party B. The second part of the SD II
Tickets shall contain a free second chance to win additional prizes.
This free second chance game is designed to help drive or improve
the sales of the entire series of SD II Tickets. It is Party B's
intention to have some of the prizes offered in this second chance
game be sponsored and supported by different companies. This free
second chance will require the player to call a toll number or send
an SMS (Short Message Service) to register, such as an IVR
(Interactive Voice Response) number sanctioned and managed by one or
more major Chinese telephone carriers or their affiliates. Party B
will independently manage the operation of this free second chance
game and be responsible for all the risks, investment, prizes and
related obligations, including compliance with all laws, rules and
regulations governing this matter. Party B shall also be accountable
for any and all losses from this operation and shall be able to
solely realize any potential profits gained from this operation.
5. In consideration of Party B's contribution and effort as indicated above,
Party B shall be able to benefit from this cooperation in the following
manner:
a) Party A agrees that Party B shall be able to earn a return on its
investment through revenue sharing on the gross sale of the SD II
Tickets. Party A and Party B hereby agree that said revenue sharing
shall be 1.65% of the gross sale amount of the SD II Tickets sold or
distributed throughout Shanghai district. Furthermore, Party A
hereby agrees to remit to Party B said royalty or commission to
Party B once per month within 15 days after the close of each month.
All remittance calculations shall be available for audit at the
request of Party B by a Certified Public Accountancy Corporation.
b) Party B is hereby granted the worldwide right to solicit advertisers
and sponsors, including product placements, in association or
connection with the marketing, promotion, sale and distribution of
SD II Tickets. Agreed by Party A and China Welfare Lottery Issuing
Center, Party B can print such advertisement directly on the SD II
Tickets, as well as advertisement expressed in any other media, such
as newspaper, magazines, TV, radio, billboards, bus or taxi wraps,
etc. Party B's right to solicit advertisers includes the right to
receive compensation or products from such advertisers or sponsors.
Party B agrees that prior to any advertising campaign, it will
submit the concept to Party A for approval, which approval Party A
agrees shall not be unreasonably withheld.
c) Furthermore, both parties agree and confirm that all rights relating
to or connected with a television program designed to promote said
SD II Tickets shall belong exclusively to Party B.
6. Party B will provide marketing, promotion and sales support to the SD II
Tickets in most selected locations where SD II Tickets are sold with
advice, counsel and assistance from Party A. These marketing and promotion
efforts may consist of a television show, road show, point of sale
materials, radio, newspaper, and other media advertisement where the
benefits of the tickets will be made known to our customers. The details
will be further discussed by both parties; but in general, Party B will
provide support for some local advertising, promotion and certain limited
other sales expenses, provided Party A likewise contributes to the effort,
which Party A hereby agrees that it will spend a minimum of 540,000 RMB in
promoting the SD II tickets in Shanghai. The amount to be spent by Party B
and the way to manage the expenditures will ultimately be decided by Party
B, with advice and counsel from Party A.
7. If the sales of any SD II Ticket fall below expectation, Party A and Party
B may negotiate and agree to terminate the further distribution of that
particular SD II Ticket and replace said SD II Ticket with other approved
SD II Tickets, or withdraw said ticket from the marketplace entirely. If
all SD II Tickets available for sale all fall below expectation, Party A
and Party B may negotiate and agree to terminate this Agreement with
reasonable advance notice (no more than 30 days advance notice required)
consistent with the laws and regulations of the PRC governing lottery
issuance.
GENERAL PROVISIONS:
A. The Agreement is executed by authorized representatives from both
parties on 21 September, 2005 in Shanghai, PRC.
B. This Agreement shall be governed by the laws of the People's
Republic of China. Any dispute arising out of this Agreement shall
first be settled through negotiation by both parties. If
negotiations fail, it will be litigated in the people's court of
site of Party A. Both the English version and the Chinese version of
this Agreement shall be given equal weight in interpreting the
intent of the parties.
C. This Agreement, and the rights and obligations stemming from such an
agreement, shall be assignable and transferable by Party B to
another entity under the direction and control of Party B. This
Agreement shall have a duration of three (3) years, ending on the
third anniversary of the effective date of this Agreement. Unless
written notice is received by the renewing party clearly stating
that the non-renewing party has no intention to renew this Agreement
at least 180 days prior to the third anniversary of the effective
date of this Agreement, this Agreement shall automatically renew on
substantially the same terms and conditions for an additional
three-year term.
D. This Agreement shall remain in full force and effect during its
entire duration and any renewals thereof unless it is cancelled or
terminated by either party with cause, or unless its continuation is
in violation of Chinese Law and Regulations. This Agreement is null
and void if the execution of this Agreement precludes Party B from
deploying its SD II Tickets in other provinces per decision by China
Welfare Lottery Issuing Center.
Party A: Shanghai Welfare Lottery Issuing Center
/s/
Authorized Representative:
Date: September 21, 2005
Party B: Win Win Consulting (Shanghai) Co., Ltd.
/s/
Authorized Representative:
Date: September 21, 2005
