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Exhibit 10.3
CONTRACT AGREEMENT
For the Operation of an Internet Lottery system for
the Sale and Operation of Lottery Games via the Internet
And Wireless Mobile Phone Systems
On behalf of Tropical Gaming Ltd., Belize
This Agreement is made the Twenty Seventh day of November, 0000, xxxxxxx
Xxxxxxxx Xxxxxx, Xxxxxx ( hereinafter the "TG") and Net Lottery Services LTD.
(hereinafter, "Operator" or its nominee), a corporation established in
accordance with the laws of the Republic of Ireland.
WHEREAS, the TG has the right to conduct a Lottery and other games of chance via
the Internet and Wireless Systems and is free to appoint an operator of it's
Internet/Wireless Lottery activities;
WHEREAS the TG desires to implement Internet/Wireless Lottery Activities,
offering a full range of lottery, video lottery, raffles in accordance with it's
Government issued lottery license;
WHEREAS Operator possesses extensive experience in the establishment, operation
and management of lotteries and Internet/Wireless based Lottery systems;
WHEREAS TG has agreed to appoint Operator as the authorized operator/contractor
to manage it's Internet/ Wireless Lottery sales, administration, marketing and
operations in accordance with the terms of this Agreement;
NOW THEREFORE, in consideration of the mutual promises, covenants and agreements
herein, TG and Operator hereby agree as follows:
ARTICLE 1. DEFINITIONS
In this Agreement the following terms and expressions shall have the following
meanings:
ACT means Decree of the Government of Belize, plus all other related and
relevant acts, decrees, laws and regulations in full force and effect, as the
same exists in the Belize pertaining to the operation of a lottery and it's
Internet/Wireless activities:
AGREEMENT means this agreement and all schedules hereto, as the same may be
amended, modified, or supplemented by the Parties:
OPERATOR MANAGEMENT DATE means the date on which the conditions set forth in
Article 6.1 are satisfied in accordance with Article 6.
TG FEE has the meaning set forth in Article 5.2;
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GAMES means any scheme, plan, game, operation or arrangement whereby prizes in
the form of money or other property or benefit are awarded to persons who
conform to the rules of the Lottery or Internet operations including without
limitation for placing and honoring xxxxxx, holders of tickets (both tangible
and cyber-tickets), or chances acquired by prior payment, credit and drawn by
some predetermined process, or whereby the winners are determined by the
incidence of chance from amongst the holders of tickets (both tangible and
cyber-tickets) such as Traditional Draw Lotteries, Standard Lottery Games,
Instant Tickets, Keno, Video Lottery, Numbers and Lotto Type Lottery Games;
PARTIES means the TG and Operator collectively;
PERSON includes an individual, corporation, partnership, joint venture,
unincorporated organization, a government or any other legal entity recognized
by law;
PROCEEDS means the gross receipts collected by Operator from the sale of any
products relating to the Lottery and it's Internet Games and Operation Games,
less the amounts of all discounts, failed receipts, free tickets and any and all
other credits issued to retailers or customers, as such shall be determined in
the sole discretion of Operator and in conformance with applicable laws;
INTERNET LOTTERY NETWORK means that the Operator intents to form a network of
dozens of Charity Lotteries in order to create Mega prize opportunities and
provide economies of operations through shared technology and promotion;
NET PROCEEDS means Proceeds less prizes paid, less advertising, less retailer
commissions, less all third party supplier such as credit card fees, systems
fees and GAMES software costs (as such is determined in accordance with
reasonable and normal accounting procedures and agreed to by Operator);
TERM has the meaning set forth in Article 7.
ARTICLE 2. TG APPOINTMENT OF OPERATOR
2.1 TG appoints Operator as the authorized contractor and operator to
manage all Internet and Wireless Lottery Games and Operations in
accordance with this Agreement.
2.2 TG agrees, for the term of this agreement, not to conduct or license
or permit any other company, firm, or person to conduct any portion
of it's Internet and Wireless Lottery activities .
2.3 TG agrees to pursue the right from the Belize Government to offer
Internet based casino like games. TG may choose to offer these games
by applying for the right within a Free-Trade Zone within Belize and
potentially in association with a charitable organization.
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2.4 From and after the Operator Management Date, Operator shall be
entitled to manage and operate all aspects of TG's Internet and
Wireless Lottery Games and Operations, in its capacity as the
authorized contracting operator, in such manner as it may determine
in its sole discretion. Without limiting the generality of the
foregoing. Operator shall be entitled to determine:
(A) the types, characteristics and structures of the Games to be
conducted as part of the Lottery and it's Operations, including
without limitation the amounts to be paid as prizes. Examples of
games include Instants, Traditional, Raffles, Numbers, Lotto,
Bingo, Keno, and Video Casino Type games including without
limitation Internet operations, phone or email wagering, and;
(B) the forms of tickets, coupons or other documents to be used in
connection with the Internet & Wireless Lottery, these forms
include the use of computers, and traditional telephone systems
and mobile telephone systems in addition to TG's existing Store
and Forward system;
(C) the number of tickets or plays per game in connection with the
Games;
(D) all draw procedures relating to the Games;
(E) the determination of any dispute as to the person entitled to
any prize or money in respect of the Internet Lottery Games and
Operations;
(F) the method of claiming prizes in respect of the Lottery and
Casino Games and Operations, including the rules for determining
when a prize is considered unclaimed.
(G) TG shall decide which games offered by operator it will allow
for sale on it's Store and Forward system. Cash management
support and accounting will be agreed to by both parties.
ARTICLE 3. OBLIGATIONS OF OPERATOR
3.1 After the Operator Management Date, Operator shall, from time to time
on a timely basis:
(A) during the Term hereof, be the contracting operator to TG, of
all Internet & Wireless lottery products and services, including
without limitation, equipment, hardware, software, telephone
system support, design and marketing, required in the conduct of
the Lottery or other games of chance conducted directly or
indirectly by and on behalf of TG in such quantities and at such
times as Operator in its sole discretion, shall determine.
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(B) maintain the systems software and hardware that will provide
ongoing sales service support and management reporting
requirements;
(C) maintain a high level of security and technical expertise in all
of the services provided
(D) supply staffing and working capital from time to time in such
amounts as may be determined by Operator in its sole discretion
to be necessary for the conduct of the Internet/Wireless Games
and Operations.
(E) staff operations and offices, supply back-up office systems,
including computer hardware and software, necessary for the
conduct of the Lottery, including systems for validation,
Lottery allocation and participation, payment systems, game
accounting and distribution ;
(F) design all of the Games for implementation as part of the
Internet & Wireless Lottery, including the prize structures,
rules and regulations of the games and/or draws related thereto;
(G) provide reasonable support, as such may be determined in the
sole discretion of Operator, for the marketing and sales of the
Lottery;
(H) design and implement advertising and promotional programs for
the Lottery to the extent deemed appropriate by Operator;
(I) generally provide the TG with the benefit of its expertise
relating to the establishment, operation and management of
Lottery Games;
(J) license all patents and/or copyright material necessary for the
conduct of the Lottery and Games, which licenses shall be in
effect for the duration of the Term;
(K) provide to TG quarterly interim unaudited statements of accounts
in respect of the operation of the Lottery Games and Operations,
within ninety (90) days from the end of each calendar, and an
annual statement of accounts audited by a recognized auditing
firm; and
(L) disperse prizes relating to the Lottery and Operations Games in
a timely and reasonable manner, subject to compliance with
security procedures and operational policies.
3.2 Within six (6) months of the Contract Date will be the Operator's
Management Date, at which time the Operator shall commence sales
operations and formalize its plan for the operation of the Lottery
Games and Operations, including designating and working with service
professionals, marketing and advertising groups, in anticipation of
the Operator Management Date. All of said plans and
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preparations shall be designed and made at Operator's discretion.
3.3 Operator shall have the right consistent with law to:
(A) hire, contract, appoint and release personnel of lottery
operations at its sole discretion;
(B) set employment policy according to industry standards and
compensation arrangements for all employees, consultants,
technical advisors, and otherwise all aspects involving salary
and commission schedules for the term of the contract;
(C) release, terminate or suspend employees;
(D) operate and oversee its business interest in accordance with any
and all policies or procedures it deems necessary and
appropriate.
ARTICLE 4. OBLIGATIONS OF TG
4.2 TG agrees to:
(A) Confirm that no existing rules or legislation prevents the
pursuit of it's internet and Wireless operations and provide
ongoing support on the rules required of it's internet gaming
operations;
(B) ensure the passing, of such statutory instruments, acts,
regulations, orders and other appropriate legal measures, as may
be necessary to give effect to the provisions of this Agreement;
(C) participate with the Operators Network of Charities/Lotteries
programs to achieve mega prize levels, network promotion and
economies of service costs
(D) support the Internet Lottery's use of all forms of media
including phones, mobile phones, television, satellite and
cable;
(E) to support the Games conducted by Operator and to jointly
support any future legal issues , if required;
(F) to assist in all forms of advertising and promotional
activities, and to participate in the overall planning of it's
internet lottery operations;
4.3 TG agrees that the Government VAT shall not apply to Games sales and
that all imported products brought into the Republic by OPERATOR to
run and administer its lottery operations shall be free of all taxes
and import duties.
4.4 The Neither the Operator or the Internet Lottery operations will not
be responsible for any and all costs or other liabilities associated
with the TG.
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4.5 TG agrees that it would prefer to pursue Internet sales from both
within and outside the Belize. In the future, if legislation requires
the limitation of sales to only in-country sales the operator will have
the right to continue its contract and its local operations;
ARTICLE 5. DISTRIBUTION OF PROCEEDS
5.1 From and after the Operator Management Date, all Proceeds received by
the Internet & Wireless Lottery entity as contemplated in this
Agreement shall be collected by Operator, whereupon Operator shall
hold such Proceeds, pending distribution thereof in accordance with
this Article 5. And with observance of the following conditions;
SALES LESS THE FOLLOWING DETERMINES NET PROCEEDS
a. Prizes
b. Retailer/ 'dealers' Commissions, click thru fees
c. Gaming software license fees
d. Advertising
e. Credit card fees
f. Site maintenance
g. Store and forward system fees (if applicable)
h. Government fees
5.2 TG shall be entitled to receive the Forty five percent (45%) of the
net profits received and held by Operator as referred to in Section
5.1 (c) (the "TG Fee"). The TG Fee shall be paid by Operator to TG
within 30 days after the end of each calendar month following the
commencement of the Lottery's sales. TG will pay to operator its
calculated fee on local games sold utilizing TG's current retailer
base. Starting in the sixth year of the contract TG's fee will
increase to 50% of net profits.
A reduction in TG's fees will result from the recoupment of the
initial costs of establishing TG's specific site. This amount will be
agreed to by TG and amortized over a five year period in equal
installments.
ARTICLE 6. CONDITIONS
6.1 As a condition precedent to this agreement TG will provide Operator
with a copy of its Lottery license. The management date is defined as
a period of six months after signing in which the operator designs
and launches TG's Web operations and site.
6.2 OPERATOR and TG acknowledges that the Parties hereto are independent
contractors, and that it is not intended by entering into this
Agreement to constitute either of them as the agent of the other or
to form a partnership of any nature whatsoever between them, nor is
it intended that they should be characterized as carrying on business
in partnership. Neither OPERATOR nor TG shall take actions whatsoever
which might be reasonably expected to cause any
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person to believe that OPERATOR and TG are agents for each other or
are carrying on business in partnership.
ARTICLE 7. TERM AND TERMINATION
7.1 Subject to prior termination in accordance with articles 7.2 or 7.3
this Agreement will have an initial term commencing on the Effective
Date and ending ten (10) years after the OPERATOR Management Date,
provided that such term may be extended by OPERATOR, in its sole
discretion and on written notice to the other Parties, for two
subsequent terms of five (5) years each. In addition, the term may be
extended or renewed further and at any time by the written consent of
the Parties. Such initial term plus the period or periods of any
extension directed by OPERATOR or agreed by the written consent of
the Parties is referred to herein as the Term.
7.2 This Agreement may be terminated by either party upon the default in
the performance by the other Party of its obligations arising under
the terms of this Agreement. In such event, the Party desiring to
terminate this Agreement will provide written notice to the other
party of its intent to terminate and will set forth the reasons for
termination. If the reasons for termination are not resolved to the
satisfaction of the notifying Party within one hundred eighty (180)
days of the date of such notice, this Agreement will terminate
effective as of the end of such one hundred eighty (180) day period,
provided that if the Party notified of the others intent to terminate
does not concur that it has defaulted in its obligations under this
Agreement or that it has failed to cure any actual default in its
obligations under this Agreement or that it has failed to cure any
actual default on its part, then the matter will be submitted to
arbitration in accordance with Article 11.2 below and the Agreement
will not terminate, pending the resolution of the matter in
arbitration. Upon termination of this contract, both parties shall be
released of all obligations under the Agreement save and except for
obligations incurred prior to termination.
7.3 Termination by OPERATOR will be granted if TG is found to have
materially affected to integrity of the Lottery program through its
actions and activities, which for whatever reason have brought
discredit or harm to the reputation of TG and it's lottery programs.
7.4 Termination of this Agreement for any reason whatsoever shall not
effect any rights, duties and liabilities which arose to or accrued
up to the effective day of the termination.
7.5 Upon the effective date of any termination of this Agreement for any
reason whatsoever (a) the license to use the equipment, goods or
other property provided for in Article 3.1(j) shall be terminated,
(b) OPERATOR shall be entitled to repossess forthwith and TG shall
deliver to OPERATOR forthwith, all equipment, goods and other
property supplied by OPERATOR to the TG pursuant to this Agreement or
otherwise in connection with the Lottery Games
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(c) the license to use the OPERATOR Software provided for in Article
3.1(j) shall be terminated and (d) the TG operations shall
immediately cease using the OPERATOR Software and return to OPERATOR
the OPERATOR Software.
7.6 Notwithstanding the termination or expiry of this Agreement for any
reason whatsoever, the provisions of the Articles 5.1, 8, 11.1, and
11.2 shall survive and remain enforceable in accordance with their
terms without time limit.
ARTICLE 8. CONFIDENTIALITY
8.1 TG acknowledges that during the Term of this Agreement neither TG and
its officers, directors, employees and agents may acquire
confidential information from OPERATOR, including without limitation,
information concerning Games and accountant, product or service
research and development, methods, techniques, processes, trade
secrets and license, as well as information concerning the market for
OPERATOR's products and services and the marketing, merchandising and
selling strategies of OPERATOR (collectively, the Confidential
Information), all of which is hereby acknowledged by the TG to be
confidential and protectable property of OPERATOR.
8.2 TGC acknowledges that the use, publication or disclosure of the
Confidential Information at any time by them or any of its employees
will necessarily cause grave and irreparable injury to OPERATOR and
its business, and accordingly, except as OPERATOR may consent in
writing, TG shall:
(A) not at any time, directly or indirectly, use, publish or
otherwise disclose any Confidential Information other than in
connection with the performance of TG's activities hereunder;
(B) take such reasonable steps as may be necessary to ensure that
its officers, employees do not at any time, directly or
indirectly, use, publish or otherwise disclose any Confidential
Information including cost structures and pricing, other than in
connection with the performance of the TG's activities
hereunder;
(C) identify to OPERATOR each of its officers, employees who might
be expected to come into possession of any Confidential
Information and use its best efforts to have each such
individual execute and deliver to OPERATOR a confidentiality
agreement in favor of OPERATOR in the form attached as Schedule
A hereto; and
(D) at all times use the same degree of care in safeguarding the
Confidential Information as it uses for its own confidential
information.
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8.3 Articles 8.1 and 8.2 shall not apply to information which:
(A) is or becomes public knowledge without the fault of the TG or
any of its officers or employees;
(B) is or becomes available to the TG from a source other than
OPERATOR, provided such source is not under a duty of
confidentiality with respect to such information; and
(C) is disclosed by TG or any of its officers, employees under
obligation imposed by court or government action.
8.4 None of OPERATOR, nor TG shall communicate or otherwise disclose the
contents of this Agreement or any provision hereof to any person
except with the prior written consent of the parties, as strictly
required to perform its obligations hereunder or as required under
obligation imposed by applicable law.
ARTICLE 9. FORCE MAJEURE
9.1 Performance of either Party affected by an Event of Force Majeure
will be suspended for as long as such Event of Force Majeure
continues but the Parties will use their best efforts to find
alternative means of accomplishing performance. Immediately upon the
cessation of the Event of Force Majeure, the Party effected by such
Event of Force Majeure will continue the performance that was
suspended. An Event of Force Majeure means any: (a) act of God, fire,
flood, earthquake, hurricane, explosion, epidemic, or quarantine, (b)
act of war, blockade, martial law, sabotage, insurrection, or
national emergency, (c) lockout, or other labor dispute, governmental
or judicial law, regulation, order, decree, instructions, or the
failure by the Government or any other government subdivision to act;
(d) a disruption in the capital markets or unreconcilable inflation;
(e) any other event, cost or circumstance, whether similar or
dissimilar to the foregoing beyond the reasonable control of the
Parties.
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ARTICLE 10. GENERAL PROVISIONS
10.1 This Agreement shall be governed by and construed in accordance with
the Laws of the Republic of Ireland.
10.2 In case of any dispute or differences relating to this Agreement any
Party may refer any dispute arising under this Agreement for
resolution through arbitration by one or three arbitrators.
Arbitration shall be according to the procedural rules of the
International Center for the Settlement of Investment Disputes
(ICSID), affiliated with the International Bank for Reconstruction
and Development (World Bank) in Washington and, if ICSID arbitration
shall be unavailable for whatever reason any Party may commence
arbitration proceedings under the auspices of the Swedish Chamber of
Commerce in Stockholm and the arbitration tribunal shall apply the
UNCITRAL Rules.
10.3 Any notice to be given here under shall be deemed to have been well
and sufficiently given if mailed by prepared registered airmail or
sent by facsimile as follows:
To: OPERATOR:
Attention: Xxxx Xxxxxx
Ireland: 011 000 00 0000 3754
US: 000 000 0000
Canada: 000 000 0000
To TG Lotteries Group:
Attention: Xxxxx Xxxxx 011 501 272 991
Xxxxxx Xxxxx 011 501 234 026
10.4 All notices shall be deemed to be received and effective: (a) upon
the date of delivery, if delivered personally, by facsimile
transmission, or by express mail or air courier or (b) in the case of
telex or cable upon the date of receipt of confirmation by answer
back, in each case to be appropriate addresses or numbers set forth
above. Any Party may change its address for the purpose of this
clause by notice to the other.
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10.5 This Agreement constitutes the entire Agreement between the Parties
pertaining to the subject matter hereof and supersedes all prior
agreements, representations, statements, negotiations, discussions
and understandings, written or oral, between the Parties.
10.6 The TG warrants to OPERATOR, that (a) has full legal power and
authority to sign and execute this Agreement; (b) all necessary
governmental approvals have been procured to permit the execution,
delivery, and performance of this Agreement without any limitation of
said above.
10.7 Each Party shall indemnify and save the other Party and their
respective officers, directors, shareholders, employees and operator
contractors harmless of and from any liability obligation, cost,
expense, damage, or loss whatsoever arising out of any breach of any
provision hereof by such Party and all claims, demands, suits, causes
of action, proceedings, judgments, costs and expenses or other
liabilities of any kind of whatsoever (including without limitation
reasonable legal fees and disbursements) in respect thereof.
10.8 The TG irrevocably waves any right of immunity, sovereign or other,
which it or its assets or property have or may hereafter acquire from
suit, action, attachment, arrest, detention, seizure or forfeiture in
respect of its obligations under this Agreement.
10.9 This Agreement may be amended, modified or supplemented only by
written agreement signed by all Parties.
10.10 Any waiver of the requirements of any provision of agreement shall be
effective only if it is in writing and signed by the Party giving in,
and only in the specific instance and for the specific purpose for
which it has been given. No failure on the part of any Party to
exercise, and no delay in exercising, any right under this Agreement
shall operate as a waiver of such right.
10.11 The Parties acknowledge that they are independent participants and
that except as expressly provided herein, it is not intended by
entering into this Agreement to constitute any of them as the form of
partnership of any nature whatsoever between them, but it is intended
by carrying out the terms hereof that they should be characterized as
carrying on business in partnership.
10.12 Each Party warrants that the individuals executing this Agreement
have the full right, power and authority to do so.
10.13 This Agreement is signed in the language in six copies each of which
is authentic and collectively is an agreement.
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IN WITNESS WHEREOF the Parties have executed this Agreement as of the day and
year first above written.
ON BEHALF OF AND FOR
Tropical Gaming
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Managing Director
ON BEHALF OF AND FOR
Net Lottery Services Ltd.
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