EXHIBIT 10.16
HUB SERVICES AGREEMENT
Agreement dated as of the 18th day of June, 1997, by
and between International Sports
Wagering Inc., a Delaware corporation, ("ISW") and Yarlow Inc.
d/b/a Tom's Sunset Casino, a Nevada
corporation (the "Hub Operator").
WHEREAS, ISW owns the hardware, software and all rights
relating to and comprising
the SportXction sports wagering system (the "System") generally
described on Exhibit A hereto;
WHEREAS, Hub Operator desires to operate a facility to
be known as the
SportXction sports wagering hub (the "Hub") for the conduct,
management, operation and control
of interactive sports wagering by means of the System at multiple
casinos and sports wagering
establishments in Nevada ("SportsBooks"); and
WHEREAS, ISW and Hub Operator each agree to furnish
certain equipment needed to
operate the Hub and to control ISW's Player Betting Stations
("PBS") located at SportsBooks in
Nevada which are connected to the Hub by means of
telecommunications lines and which arrangements
among ISW, Hub Operator and SportsBooks shall be conducted in the
manner generally described in
Exhibit A; and
WHEREAS, ISW agrees to grant a license to Hub Operator
to operate the System during
the Term of this Agreement.
NOW THEREFORE, in consideration of the premises and the
mutual covenants
hereinafter set forth, the parties hereto agree as follows:
SECTION 1. FURNISHING OF EQUIPMENT, SYSTEMS AND SERVICES BY ISW.
1.1 Subject to the terms and conditions of this
Agreement, during the Term, ISW
shall, at its sole cost and expense:
(a) Provide and install (i) at the Hub: all
computer server and networking
equipment which is listed on Exhibit B, that is necessary to
operate interactive sports wagering from
the Hub; and (ii) at each SportsBook that is connected to the
Hub: all client computer and networking
equipment which is listed on Exhibit C that is necessary to
conduct interactive sports wagering at the
SportsBook and to interconnect to the Hub.
(b) Maintain the System and the equipment
furnished by ISW at the Hub.
ISW shall "swap" all equipment furnished by ISW at the Hub that
proves defective or in need of
maintenance or repair.
(c) Provide technical and diagnostics support,
training and communications
consulting to the Hub Operator with respect to ISW's equipment
and software located at the Hub and
the communications equipment or services to be provided or
contracted for by the Hub Operator at the
Hub.
(d) Provide to Hub Operator all system software
related to the equipment
furnished by ISW that is located at the Hub which is required to
operate the System.
(e) Grant a non-exclusive, non-transferable,
license to Hub Operator to
utilize the System during the Term pursuant to the terms of this
Agreement.
(f) Obtain and maintain approval of the System by
the appropriate Nevada
gaming authorities for operation in the manner contemplated
hereby.
1.2 All right, title and ownership in and to the
System, the equipment, software
and all System operating plans and procedures, strategies, data
and information furnished by ISW or
disclosed as a consequence of operating the System shall at all
times remain with ISW. Hub Operator
agrees to grant to ISW, upon reasonable notice to the Hub
Operator, full access to the System,
equipment and software and shall permit ISW to modify, maintain,
update or remove any parts thereof
when not required at the Hub or for maintenance thereof. ISW may
make any filings that it deems
necessary to record and give notice of such ownership and Hub
Operator shall cooperate therein with
ISW including, but not limited to, signing any statements
required by ISW to do so.
SECTION 2. RESPONSIBILITY OF HUB OPERATOR.
Subject to the terms and conditions of this Agreement,
during the Term, Hub Operator
shall, at its sole cost and expense:
(a) Hub Operator shall promptly, but in no event
later than July 1, 1997, use
its best efforts to apply and obtain and maintain all licenses
required by the State of Nevada Gaming
Control Board or otherwise ("Nevada Gaming Authorities") in order
to manage and operate the Hub.
Hub Operator shall comply with all requirements and limitations
imposed by the Nevada Gaming
Authorities in any license granted to Hub Operator.
(b) Contract with the provider of
telecommunications services designated
by ISW (i) for all initial (set-up) and on-going
telecommunications services required to enable the Hub
to communicate between the Hub and each of the SportsBooks
connected to the Hub; provided that the
ongoing costs of such telecommunications services to be paid by
the Hub shall be reimbursed to the
Hub by the SportsBooks monthly on the basis set forth in Section
1(b) of the Hub Operator/SportsBook
Agreement; and (ii) for an ISDN line from the Hub to ISW's
facility in Las Vegas, Nevada.
(c) Provide, install, test and maintain at the
Hub, all communications
equipment listed on Exhibit D or otherwise designated by ISW from
time to time (the "Hub Operator
Equipment") that ISW determines is required to interconnect the
Hub and the SportsBooks being served
by the Hub and to operate the Hub.
(d) Arrange for and pay all costs of construction
and installation for the
network, power and video cabling and associated connectors and
adjuncts designated by ISW for use
at the Hub.
(e) Pay to ISW the fees set forth in Section 3(a)
and 3(b).
(f) Provide comprehensive general liability
insurance, fire, theft and other
insurance in amounts and with terms and conditions reasonably
acceptable to ISW with respect to all
equipment owned or leased by ISW or the Hub Operator that is
located at the Hub relating to the
operation of the System, naming ISW as an additional insured.
(g) Be responsible for any damage or destruction
to all ISW equipment
provided by ISW at the Hub.
(h) Provide security and access control to the
Hub and all equipment and
software related to the System or operation thereof through the
Hub, in a manner reasonably acceptable
to ISW.
(i) Provide a sufficient number of its personnel
to be trained by ISW to
operate the System.
(j) Operate the System on all days on which
sports wagering through the
System is being conducted, as determined by ISW after
consultation with Hub Operator.
(k) Except as specifically provided herein, be
responsible for and pay all
costs associated with operating the Hub, including, but not
limited to, costs of Hub Operator's personnel
for operating the System.
(l) Provide all VCR tapes, System backup tapes,
computer paper, pre-printed
forms, and all other expendable supplies as designated by ISW.
(m) Cooperate with ISW and each SportsBook
designated by ISW as a
participant in the Hub operation, to connect said SportsBook to
the Hub.
(n) Enter into agreements with each SportsBook
designated by ISW in the
form mutually agreed to by ISW and Hub Operator with respect to
the Hub operation.
(o) Provide personnel to take equipment needed
for the Hub from curbside
or the loading dock into the Hub, unpack it, store packing
material, place equipment in operating
locations and repack such equipment and place it at the curbside
or loading dock upon termination of
this Agreement.
(p) Repack and return for repair to the location
designated by ISW any ISW
equipment located at the Hub which is in need of repair.
(q) Use its best efforts to expedite approval of
the System for use with
multiple inter-linked casinos.
(r) Be responsible for reconciling on a monthly
basis all cash receipts and
cash payments made by and to SportsBooks. The Hub Operator shall
(i) cause SportsBooks which have
received more cash than the portion of the Gross Profit which
they are entitled to retain, to pay such
cash to the Hub Operator, and (ii) pay cash to SportsBooks which
have received less cash than the
portion of the Gross Profit to which they are entitled, (See
Section 3(d)(ii)).
SECTION 3. PAYMENT.
(a) On the 20th day of each month during the Term,
Hub Operator shall pay to
ISW (without set-off or deduction of any kind) for use of the
System during the prior month with
respect to all PBS' connected to the Hub: $5 per sporting event
per PBS used by a player of the
SportXction sports wagering game. In addition the Hub Operator
shall pay to ISW all applicable
sales, use or rental taxes (other than income taxes) payable by
ISW that are calculated on the basis of
the fee payable to ISW.
(b) During the Term, Hub Operator shall collect and
remit to ISW without set-off
or deduction of any kind, at the same time it remits the payment
provided in Section 3(a), all fees
charged by ISW, or any SportsBook on ISW's behalf, for the use of
statistical information to players,
less 5% thereof which Hub Operator may retain as a service fee.
Hub Operator shall maintain accurate
records of all such fees and make them available to ISW upon
request.
(c) Interest shall accrue and be paid to ISW by Hub
Operator at the rate of 2%
per month on any amount not paid to ISW when due, unless such
rate is higher than the maximum
amount permitted by law, in which case the interest rate payable
shall be the highest amount permitted
by law. All payments received by ISW shall first be applied to
interest due.
(d) As used herein the term (i) "Total Xxxxxx" shall
mean the total amount bet
through all PBSs connected to the Hub on two-sided wagering
propositions in which the System
dynamically changes the betting line in order to attempt to
create a balanced betting pool; and (ii)
"Gross Profit" shall mean Total Xxxxxx minus (x) the total amount
paid out or credited to accounts of
players of the System at such PBSs and (y) the fee payable to ISW
as provided in Section 3(a). During
the Term, for performance by the Hub Operator herein provided,
Hub Operator shall be paid a monthly
fee calculated on the following basis:
(i) The Hub Operator shall receive 40% of Gross
Profit.
(ii) It should be noted that the SportsBooks
shall receive, pursuant to
agreements between each SportsBook and
the Hub Operator in the
aggregate 60% of Gross Profit (the
"SportsBooks' Share"). The
SportsBooks' Share each month shall be
divided among the SportsBooks
connected to the Hub during such month
in the following manner: the
amount to which each individual
SportsBook shall be entitled for a
given month shall be determined by
multiplying the SportsBooks' Share
by a fraction, the numerator of which is
the total amount wagered
through PBSs located at the individual
SportsBook in question, and the
denominator of which is the Total
Xxxxxx.
(e) If the System operates at a loss for any month as
a result of the operation of
the System by the Hub Operator, the loss shall be divided among
Hub Operator and SportsBooks in the
same manner that any Gross Profits are divided as provided in
Subsection 3(d)(ii).
(f) The calculations described in Sections 3(d) and
3(e) shall be made monthly and
all payments shall be paid to the party entitled thereto by the
10th day of the month following the month
for which payment is being made.
(g) Hub Operator shall be responsible for and have
risk of collecting all money due
from SportsBooks.
(h) Notwithstanding the foregoing, for each month
during the Term in which the
amount to be paid to Hub Operator exceeds $46,000, 50% of such
excess shall be deposited by Hub
Operator into a reserve account to be used by ISW exclusively for
advertising and promotion of the
SportXction sports wagering game. Any amount remaining in such
account at the end of the Term
shall be paid to ISW to be used by ISW for advertising and
promotion of the SportXction sports
wagering game.
SECTION 4. TERM AND TERMINATION.
(a) The Term of this Agreement (the "Term") shall
commence on the date hereof
and shall terminate on March 31, 1999, unless sooner terminated
as herein provided.
(b) The parties recognize that the System has been
approved by the State of
Nevada Gaming Control Board (the "Board) for use in individual
casinos but has not been approved
by the Board for use at multiple inter-linked casinos. ISW shall
have the right to require the Hub
Operator to participate in any tests or trials of the System or
any proposed modifications thereof, which
in the reasonable judgment of ISW are necessary in order to
obtain approval of the Nevada Gaming
Authorities.
(c) ISW shall have the right to terminate this
Agreement for its convenience at any
time upon not less than 30 days prior notice to the Hub Operator
provided that such termination may
not be effective prior to one year from the date hereof.
(d) In the event that Hub Operator is at any time
during the Term, precluded from
acting as a Hub Operator for any reason whatsoever, including but
not limited to, as a result of its
failure to obtain, by no later than August 31, 1997, the
requisite licenses to act as Hub Operator or if
such licenses are not maintained or are suspended or terminated,
this Agreement may be terminated by
ISW on three business days notice and such termination shall not
be treated as a termination for
convenience pursuant to Section 4(c).
(e) In the event that (i) wagering by means of the
System shall be prohibited or
become illegal by statute or court decision or by action of any
cognizant governmental agency, this
Agreement shall automatically terminate without prejudice to any
rights or obligations that either party
had to the other up to the date of such prohibition; provided,
however, that in the event such prohibition
is subsequently eliminated, this Agreement shall be reinstated,
for the remainder of the Term, subject
to the availability of ISW's personnel and equipment.
(f) Upon termination of this Agreement at the end of
the Term or otherwise, ISW
shall promptly remove the System, equipment and software owned by
it located at the Hub; provided
that if the Hub is located in a facility owned or leased by Hub
Operator, Hub Operator shall, at its
expense, remove the System, equipment and software located at the
Hub and ship it to a location in Las
Vegas, Nevada designated by ISW. Hub Operator shall cooperate
with ISW in repacking and removal
of ISW equipment at the Hub as provided in Section 2(p).
(g) Upon termination of this Agreement at the end of
the Term or prior thereto as
set forth herein for any reason whatsoever, Hub Operator shall
cooperate with ISW in order to provide
a reasonable transition such that the operation of the System
shall not be interrupted.
(h) Upon termination of this Agreement at the end of
the Term or prior thereto as
set forth herein for any reason whatsoever, (i) Hub Operator
shall transfer to the successor hub operator,
if any, all money then held for the benefit of players of the
SportXction sports wagering game (i.e.
money in players' accounts that has not been withdrawn by such
players) and (ii) ISW shall purchase
from Hub Operator all of the equipment listed on Exhibit D at a
purchase price equal to the residual
value thereof (Hub Operator's original cost less accumulated
depreciation).
SECTION 5. EXCLUSIVITY.
(a) During the Term, Hub Operator shall have the
exclusive right to operate the
Hub for multiple, unaffiliated, inter-linked casino interactive
sports wagering through the System,
provided that nothing herein shall prohibit ISW from selling,
leasing or providing the System, PBSs,
Game Controllers, Game Supervisor and Cashier Stations and any
other hardware or software related
to the System to (a) any individual casino or gaming
establishment, and/or (b) any group of affiliated
or jointly owned, operated or managed casinos or gaming
establishments that desire to connect and
control PBSs in such affiliated SportsBook operations.
(b) During the Term, Hub Operator shall not operate
any other system intended
for interactive sports wagering other than the System.
SECTION 6. HUB LOCATION; ACCESS.
(a) The location of the Hub shall be at a facility
owned or leased by the Hub
Operator in Henderson, Nevada. Hub Operator shall pay the rent,
if any, the cost of all electricity used
at the Hub and all other expenses needed to operate the Hub,
except as specifically set forth herein.
(b) Hub Operator shall permit ISW to have full access
to the Hub, seven days each
week, 24 hours each day, in order for ISW to perform diagnostics,
maintenance and support services.
ISW shall provide reasonable notice (which may be by telephone)
to the Hub Operator of its need for
access to the Hub.
SECTION 7. LICENSE
(a) ISW hereby grants to Hub Operator, during the
Term, a non-exclusive, non-
transferable, license in and to ISW patents, trade secrets and
copyrights, to operate the SportXction
sports wagering system solely in the manner contemplated by this
Agreement and pursuant to the terms
hereof. The license granted hereby shall automatically terminate
upon termination of this Agreement
at the end of the Term or otherwise.
(b) Hub Operator shall not use the name "SportXction
" or any derivative thereof
without the prior written consent of ISW. Prior to advertising
or otherwise promoting the Hub or the
SportXction sports wagering game, Hub Operator shall consult
with ISW.
SECTION 8. WARRANTY.
(a) ISW warrants that the System shall be suitable
for interactive sports wagering
and has been adapted for wagering on the sports of football,
basketball and baseball.
(b) THE WARRANTIES AND REMEDIES SET FORTH IN THIS
AGREEMENT SHALL EXTEND ONLY TO HUB OPERATOR, ARE THE SOLE AND
EXCLUSIVE WARRANTIES AND REMEDIES AVAILABLE TO HUB OPERATOR,
APPLY TO
ALL EQUIPMENT AND SOFTWARE FURNISHED THEREUNDER BY ISW AND ARE
EXPRESSLY MADE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS, IMPLIED,
OR
STATUTORY, INCLUDING, WITHOUT LIMITATION, THE WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
(c) The parties agree that damages for any breach of
warranty hereunder or for any
breach or default hereunder will be difficult to determine and,
accordingly, agree that the liquidated
damage obligations of ISW that are specified in Exhibit G
constitute the sole and exclusive remedy of
Hub Operator concerning performance by ISW or the System or any
part thereof.
SECTION 9. RULES AND REGULATIONS; SYSTEM ADMINISTRATIVE
FUNCTIONS;
BETTING PROPOSITIONS
(a) After consultation with ISW, Hub Operator shall
determine how all betting
propositions shall be decided, upon the occurrence of different
game situations that might occur
("House Rules"). Hub Operator shall submit such House Rules to
the State of Nevada Gaming Control
Board for approval and shall, upon approval thereof provide
copies thereof to each SportsBook and
ISW. If Hub Operator desires to change, modify or provide
additional House Rules it shall first consult
with ISW. Any such modified or additional House Rules shall be
distributed to each SportsBook at
least three days prior to implementation.
(b) All System Administrative Functions that Hub
Operator may perform are listed
on Exhibit E.
(c) Attached hereto as Exhibit F are the Generic
Betting Propositions that may be
implemented in the System by Hub Operator. ISW, or in its
absence, Hub Operator, shall determine
from time to time which betting propositions, from the list of
Generic Betting Propositions, shall be
implemented for any given sporting event or during the course of
any sporting event. Hub Operator
shall not create any new Generic Betting Propositions without the
prior written consent of ISW.
(d) To the extent possible, at least 5 days prior to
the beginning of each month
during the Term, ISW shall, after consultation with Hub Operator,
determine for which sporting events
during the succeeding month the Hub shall be operational.
Notwithstanding the foregoing, in the event
that the suitability of wagering on a particular sporting event
could not be foreseen in advance, ISW
may designate the event as one on which wagering through the
System will be conducted and Hub
Operator shall operate the System for such event. All
SportsBooks shall be required to be open for the
acceptance of xxxxxx through PBS' connected to the Hub for each
sporting event for which the Hub
is operating.
SECTION 10. PATENT INFRINGEMENT.
(a) ISW agrees to defend at its own cost and expense
all patent claims or patent
litigation (including any claim for damages or royalties which
may be made or instituted against Hub
Operator, or to which Hub Operator may be a party), based upon or
by reason of the installation and
operation of the System, uncombined with any equipment or device
not furnished by ISW, and to
indemnify and hold Hub Operator harmless from and against any
claims, damages or liability incurred
or sustained by Hub Operator by reason of any such patent claim
or litigation; provided that Hub
Operator shall notify ISW promptly in writing of any claim of
infringement for which ISW is
responsible, shall cooperate with ISW in every reasonable way to
facilitate the defense of any such
claim, shall allow ISW to have sole control of the defense of any
such claim, suit or cause of action and
all negotiations for the settlement or compromise thereof and
shall not settle any such claim or action
without the prior written consent of ISW. Should any System part
thereof become, or in ISW s opinion
be likely to become, the subject of a claim for infringement, ISW
shall at its own expense and option,
either procure for Hub Operator the right to continue using such
System or replace the same with a non-
infringing system or modify the System so that it becomes
non-infringing or require the System s
return; provided, however, if Equipment is replaced or modified
such replacements or modifications
shall result in equally suitable substitute equipment. This
Section shall survive cancellation or
termination of this Agreement.
(b) THE FOREGOING STATES THE SOLE AND EXCLUSIVE
LIABILITY
OF THE PARTIES HERETO FOR INFRINGEMENT OR THE LIKE OF PATENTS,
TRADEMARKS AND COPYRIGHTS, WHETHER DIRECT OR CONTRIBUTORY, AND IS
IN
LIEU OF ALL WARRANTIES, EXPRESS, IMPLIED OR STATUTORY IN REGARD
THERETO,
INCLUDING WITHOUT LIMITATION, THE WARRANTY AGAINST INFRINGEMENT
SPECIFIED IN THE UNIFORM COMMERCIAL CODE.
SECTION 11. FORCE MAJEURE.
Non-performance of any of the obligations of ISW or Hub
Operator (other than payment
obligations) hereunder due to delays from any cause beyond their
respective control which could not
by reasonable diligence have been avoided, including any act of
governmental authority, act of God,
accident such as fire, or explosion, strike or other labor
difficulties, riot, failure of transportation
facilities, shortage of fuel or other material shortage, shall be
excusable delay and shall not be a breach
of this Agreement. Neither Hub Operator nor ISW shall be liable
to the other for any damages or cost,
as a result of any such delay.
SECTION 12. OWNERSHIP RIGHTS AND CONFIDENTIAL INFORMATION.
(a) All information, know-how, equipment,
programming, software, trademarks,
trade secrets, plans, drawings, specifications and documentation
of ISW, and all other property of ISW,
real or personal, tangible or intangible, of any nature
whatsoever, used or developed in the course of
the performance of this Agreement, including, without limitation,
the equipment and software furnished
with or part of the System, details of wagering through the
System and at each SportsBook, System
performance, usage, revenue, profits, costs, terms of agreements
with SportsBooks and all other matters
relating to the operations and performance of the System, shall
be and remain the sole property of ISW
and neither Hub Operator not any other party shall have any
interest therein. Hub Operator and ISW
shall in all respects honor and maintain the confidentiality of
all such confidential or proprietary
information as may be disclosed by one party of the other, and
shall not use or disclose to others any
such information, except for purposes of performing this
Agreement or as may be required by law. For
purposes of this section, ISW shall include its respective
subsidiaries and affiliates. Confidential
Information shall not include information which Hub Operator can
demonstrate by tangible evidence
is in the public domain, was rightfully acquired from a third
party, or was already known at the time
of disclosure to Hub Operator or independently developed by Hub
Operator without breach of this
Agreement.
(b) Hub Operator shall protect the confidentiality of
all ISW confidential
information by all reasonable means including, but not limited
to, restricting access thereto only to its
employees with a need to know such information, at least to the
same extent as it protects its
confidential information.
(c) Except as specifically provided herein, nothing
in this Agreement shall give
the Hub Operator any rights to the name "SportXction " or to any
patents, copyrights, software, trade
secrets or other intellectual property of ISW, all of which shall
remain the exclusive property of ISW.
(d) Hub Operator shall not to copy, duplicate, use
(other than in connection with
operation of the Hub pursuant to this Agreement), sell, transfer,
give, dispose of or otherwise use any
statistics or statistical information contained in the System or
which is or may be made available to
players of the SportXction sports wagering System.
(e) Hub Operator shall not modify or copy any part of
the software in the System
without the prior written consent of ISW, which consent ISW may
grant or withhold in its absolute
discretion.
(f) This Agreement and its terms and conditions shall
remain confidential and not
disclosed by Hub Operator except as may be required by law.
SECTION 13. LIMITATION OF LIABILITY.
EXCEPT AS SPECIFICALLY PROVIDED FOR HEREIN, IN NO EVENT
SHALL
ISW BE LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL
DAMAGES. IN NO EVENT SHALL ISW S LIABILITY HEREUNDER FOR BREACH
OF ANY
PROVISION OF THIS AGREEMENT (OTHER THAN WARRANTY AGAINST PATENT
INFRINGEMENT), EXCEED THE SPECIFIC LIQUIDATED DAMAGE AMOUNT
PROVIDED
IN THIS AGREEMENT.
SECTION 14. INDEMNITY
(a) ISW shall indemnify and hold Hub Operator
harmless from and against any
loss, liability, costs or expenses (including reasonable attorney
s fees) arising out of or related to claims
and suits for damages to persons or property which may be
instituted against Hub Operator, or to which
Hub Operator may be made a party, arising out of or by reason of
the installation, operation or use of
the System or the equipment provided by ISW at the Hub, provided
written notice of such claim is
given to ISW within ten (10) days after receipt of same by Hub
Operator. ISW shall have the right to
exercise full control of all negotiations and litigation in
connection therewith, including selection of
counsel, and shall not be liable for any costs, expenses or
settlements incurred by Hub Operator without
ISW s prior written approval, nor shall ISW be responsible for
any claim or litigation based on
equipment not furnished by ISW as part of its responsibilities
hereunder.
(b) Hub Operator shall indemnify and hold ISW
harmless from and against any
loss, liability, costs or expenses (including reasonable attorney
s fees) arising out of or related to claims
or suits for damages to persons or property which may be
instituted against ISW, or to which ISW may
be a party, arising out of or by reason of the installation,
operation or use of any equipment, software,
telecommunications or cabling provided by Hub Operator or any
person or entity other than ISW, or
of the wagering by agents and employees of Hub Operator through
the System, provided written notice
of such claim is given to Hub Operator within ten (10) days after
receipt of same by ISW. Hub
Operator shall have the right to exercise full control of all
negotiations and litigation in connection
therewith, including selection of counsel, and shall not be
liable for any costs, expenses or settlements
incurred by ISW without Hub Operator s prior written approval,
nor shall Hub Operator be responsible
for any claim or litigation based on equipment furnished by ISW
as provided hereunder.
SECTION 15. DEFAULT.
(a) In the event that ISW shall default in the
performance of any provision of this
Agreement on its part to be performed and such default shall not
be cured within a period of thirty (30)
days after written notice shall have been given by Hub Operator
to ISW specifying the nature of such
default, then Hub Operator may terminate this Agreement by giving
to ISW written notice of such
termination, and in the event of any such termination, ISW, at
its expense, shall promptly remove the
System, software and equipment provided by ISW, from the Hub. In
the event that operation of the
System is interrupted as a result of the fault of ISW, ISW's
liability to Hub Operator hereunder shall
be limited to the Liquidated Damages specified in Exhibit G
hereto.
(b) Except as provided in Section 15(c), in the event
that Hub Operator shall
default in the performance of any provision of this Agreement on
its part to be performed and such
default shall not be cured within a period of thirty (30) days
after written notice shall have been given
by ISW to Hub Operator specifying the nature of such default,
then ISW may terminate this Agreement
by giving to Hub Operator written notice of such termination, and
in the event of any such termination,
ISW shall promptly remove the System, software and equipment
provided by ISW, from the Hub, and
the cost of such removal shall be paid for by Hub Operator.
(c) If any sums of money due ISW under this Agreement
are not promptly and
fully paid when the same become due and payable, or if Hub
Operator becomes insolvent, ceases to do
business as a going concern, a petition in bankruptcy or for
arrangement or reorganization be filed by
or against Hub Operator, the System, software or equipment
provided by ISW are attached through no
fault of ISW, or a receiver be appointed for Hub Operator, in
addition to any other rights which ISW
has, ISW shall have the right to terminate this Agreement upon
three business days notice.
(d) Upon the occurrence of a default as provided in
Section 15(b) or any of the
events specified in Section 15(c), ISW is authorized and
empowered to enter the premises of Hub
Operator or other place where ISW s System, software or equipment
may be, and retake possession of
the same without notice or demand or without legal process, such
notice and demand being expressly
waived, and ISW may at its option, by suit or otherwise, enforce
payment of all due obligations, plus
interest and reasonable attorney s fees, and no suit or legal
proceedings with respect thereto shall be
deemed any waiver of said rights of ISW to resume possession of
said property as herein provided.
SECTION 16. ARBITRATION AND REMEDIES.
(a) Any controversy or claim arising out of or
relating to this Agreement, or the
breach thereof, that is not resolved by the parties hereto, shall
be settled by arbitration in New Jersey
in accordance with the Rules of the American Arbitration
Association, and judgment upon the award
rendered by the Arbitration(s) may be entered in any Court having
jurisdiction there. The arbitrator(s)
may award legal fees and costs to the successful party in any
such arbitration proceeding.
(b) The remedies expressly provided in this Agreement
for breach thereof by ISW
or Hub Operator shall constitute the sole and exclusive remedies
to the aggrieved party, and all other
remedies which might be otherwise available under the law of any
jurisdiction are hereby waived by
both ISW and Hub Operator.
SECTION 17. RESPONSIBILITIES.
All persons employed by each party and assigned to
perform work specified by this
Agreement shall be employees or representatives of each party at
all times and not of the other party,
and shall be under the supervision and control of their
respective company. Each party shall obey and
abide by all social security, xxxxxxx s compensation, and
unemployment laws which shall be
applicable to the persons performing the work hereunder.
SECTION 18. ENTIRE AGREEMENT.
This Agreement, including the Exhibits annexed hereto,
contains the entire agreement
between ISW and Hub Operator, and no prior written or oral
representations, inducements, agreements,
promises or understandings altering, modifying, taking from or
adding to its terms and conditions shall
have any force or effect. No waiver or modification hereof shall
be effective unless the same is in
writing and validly executed by the party to be charged. Each of
the parties hereby confirms that it is
not placing any reliance on any covenant, representation or
warranty of the other party, whether oral
or in writing, express or implied, except those herein set forth.
SECTION 19. WAIVER.
The Waiver by either party of any right hereunder shall
not be deemed a waiver of any
other right hereunder.
SECTION 20. ASSIGNMENT.
Neither party shall, without the prior written consent
of the other party (which consent
shall not be unreasonably withheld) assign this Agreement or
delegate its duties hereunder in whole or
part, provided that ISW shall have the right to subcontract any
of its installation or maintenance
obligations hereunder. All of the terms and conditions of this
Agreement shall be binding upon and
inure to the benefit of any transferee, successor or permitted
assign of either party hereto.
SECTION 21. NOTICE.
All notices or communications hereunder shall be given
to the respective parties hereto
in writing and shall be sent Registered or Certified mail, return
receipt requested, by express mail or
other national overnight delivery service, or by facsimile
transmission and promptly confirmed by first
class mail, to the address or facsimile number indicated below or
to such other address as either party
hereto shall designate by written notice to the other party
hereto.
If to ISW:
International Sports Wagering Inc.
000 Xxxxx Xxxxx Xxxx (Xxxxx 0X)
Xxxxxx Xxxxx, XX 00000
Attn: President
Fax: 000-000-0000
with a copy to:
Xxxxx Xxxx Xxxxx Constant & Xxxxxxxx
00 Xxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
Attn: X. X. Xxxxxxx, Esq.
If to Yarlow Inc. d/b/a Tom's Sunset Casino:
Yarlow Inc. d/b/a Tom's Sunset Casino
000 Xxxx Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
Fax: 000-000-0000
Attn: Xxx Xxxxxxxxx
SECTION 22. GOVERNING LAW.
This Agreement shall be governed by the laws of the
State of Nevada and shall be
subject to the rules and regulations of the State of Nevada
Gaming Control Board.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the
day and year first above written.
YARLOW INC. d/b/a TOM'S INTERNATIONAL SPORTS WAGERING INC.
SUNSET CASINO
By: /s/ Xxxxxx X. Xxxxxxxxx By:/s/ Xxxxxxx
Xxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx Name: Xxxxxxx
Xxxxxxxx
Title: President Title: President
EXHIBIT A
Brief Description of the SportXction Sports Wagering
Inter-Casino Linked System
I. General Description of the System.
The SportXction sports wagering system is an interactive,
proprietary PC-based computer
system that enables users to wager during the course of a
sporting event, such as football,
baseball and basketball. The System accepts bets on the
outcome of a sporting event and on
discrete parts of the event and on specific game situations.
The System permits betting while
game situations are in progress.
The interactive element of the System is a Player Betting
Station ("PBS") that is a personal
computer with a touch screen, operating a "windowing" system
which displays a television
picture of a live sporting event in the upper left-hand
quadrant of the PC monitor. A list of
available bets together with the terms of those bets
(including the amount of the wager
necessary to receive a particular payout and the contestants
upon whom the wager is being
placed) and other details relating to the event being
watched and the bets previously placed are
displayed on the remainder of the monitor. By touching the
screen, a bettor can place a variety
of bets within seconds on the sporting event then being
viewed. The System is capable of
permitting bettors to select from multiple sporting events
being televised simultaneously,
thereby allowing the bettor to bet on numerous games while
using the System.
The SportXction sports wagering system is composed of
system and applications software
integrated with a computer hardware network which allows the
placing of xxxxxx on sporting
events at fixed money odds while a sporting event is in
progress. The system will automatically
adjust the betting odds on any particular betting
proposition to induce a balanced betting pool.
This will virtually assure that the house has enough money
collected from the losers to pay off
the winners, regardless of the outcome of the proposition.
II. Hub Concept Overview:
With a small betting pool, a few xxxxxx can cause the odds
to change, much as stock prices in
a thinly traded stock change with a small number of shares
changing hands. In order to increase
the effectiveness of the betting odds adjustment mechanisms,
and minimize odds changes, it is
desirable to maximize the number of xxxxxx in each betting
pool. One way to do this is to have
Player Betting Stations in many casinos linked together to a
central system (the "hub"). The
xxxxxx would be placed in a common pool, and acted upon as
if all had originated at the same
casino. All decisions concerning the betting propositions,
and their associated betting pools,
are controlled at the hub through a combination of system
software and hub employee input.
No decisions concerning the odds being offered or the
acceptance of xxxxxx are made at the
individual casinos.
III. Description of System Functions:
A. Hub Workstations:
1. Game Controller (GC) - This module allows the
entry into the system of the
status of a sporting event, as well as the results
of certain plays in real-time. For
example: points scored, balls-strikes-outs in
baseball, ball position-downs in
football, or any other information needed about
the status of the sporting event.
This information is entered into the system by an
individual operating this
module (terminal) as it occurs during the event.
2. Game Supervisor (GS) - This module allows the
monitoring of the GC input, to
assure accuracy and timeliness. The game
supervisor is able to monitor the
status of any betting pool such as, amount bet,
out of balance condition, etc.
The GS is also able to override the system in
order to open or close pools, or to
set the (re)opening line.
3. System Administrators Module (XXX) - This module
provides for the
administration of some of the database tables,
including the entry of employees
and their security rights, and the scheduling of
upcoming contests.
4. Reports Module (RM) - This module provides
financial reports for hub
management, various taxing authorities, and ISW.
5. Managers Module (MM) - This module allows
monitoring of workstation
activity at the casinos as well as at the hub. It
also monitors the overall financial
activity for each game, sends messages throughout
the network, and performs
other miscellaneous management functions.
B. Unmanned "server applications" running at the hub:
1. Transaction Server (TS) - All inter-process
transactions generated by any of the
other modules are sent to the TS. This module
may, based on the transaction,
read/write the database, route the transaction to
another module(s) or broadcast
to all other modules. A scaled down version of
the TS, called the Broadcast
Router (BR), will be used at each casino to route
transactions from/to the hub
TS.
2. Pool Processor (PP) - The Pool Processor receives
transactions containing wager
requests from the Players Betting Station's
(PBS's), real-time information about
the sporting event from the GC, and override
commands from the GS. Using
this data, the PP will maintain financial and
other status information about the
various pools, which will allow it to make
decisions about the system's
treatment of the propositions they represent. The
decisions it will make include
the following: accept or reject a wager, modify
the money line offered to a
side(s) of a proposition, close the betting on a
side(s) of a proposition, re-open
betting on a side(s), and declare a proposition
decided (win, lose, draw, no-contest).
C. Casino Workstations:
1. Players Betting Station (PBS) - This module allows
players to watch one of
several sporting events at their individual
station. While watching the event,
they can make xxxxxx on the outcome of various
propositions. They can review
the status of their accounts, including any
undecided xxxxxx. They may also opt
to cash in any undecided wager by taking an
"immediate payoff" on that wager.
2. Cashier Station (CS) - This module is used by
casino employees to set up new
player's accounts, to deposit or withdraw funds
from each account, and to
otherwise maintain each player's account.
3. Managers Module (MM) - A restricted version of
this module is utilized by a
casino supervisor. It provides a set of
surveillance tools for the casino, as well
as provides cashier reconciliation functions.
This function provides for the
monitoring of individual PBS's, and the betting
activity taking place at any
station as well as the monitoring of the
transactions generated by the cashiers.
The MM will also be able to monitor the financial
activity generated by the
casino for each game.
4. Other Modules - Through limited functionality
versions of the XXX and RM,
maintenance and reporting of casino specific
information will be allowed.
IV. Operational Overview:
A player who does not have a SportXction account number
must go to a cashier at any
participating casino to set up an account and deposit money.
Once an account is established the
player is free to use that account at any SportXction PBS
at any casino. After playing, the
player can go to any cashier in any participating casino to
withdraw money. If any funds are
left in the account they are available for wagering in the
future at any participating casino.
At the end of the month, the revenue (xxxxxx less payouts)
generated by the system will be
divided into a hub share and a casino share based on the
contractual agreement. The casino
share will be further subdivided among the participating
casinos in proportion to the amount
wagered at that casino in relation to the total amount
wagered at all the casinos. Thus, the
casino's share of the revenue is independent of the amount
won or lost by the players wagering
at that casino, but only depends on the volume of xxxxxx
placed at that casino and the overall
profitability of the entire system. Accordingly, there is a
sharing of the risk among all the
casinos.
At the end of each month, the system will produce a report
which will divide the profits among
the hub and the participating casinos. It will also perform
a cash flow analysis for each casino
using the calculated share of the profit, deposits received,
withdrawals paid out, adjustments
made, and other fees (e.g. for statistics) collected, to
determine how much money is owed to
hub by the casino, or (less likely) what is owed by the
hub to the casino.
EXHIBIT B
Computer Server and Networking Equipment Furnished
by ISW at the Hub
1. One (or more) computer(s) to perform the Transaction Server
and Pool Processor functions
2. One (or more) computer(s) to perform the System
Administration, Reporting, Manager s Module
and other miscellaneous functions
3. One line or character printer to print the Contemporaneous
Journal
4. One line or laser reports printer
5. For each simultaneous game for which wagering will be
accepted:
a) One computer to perform the Game Controller function
b) One (or two) computer(s) to perform the Game Supervisor
function
c) One computer to act as a dummy (i.e. non-wagering)
PBS for display only functions
6. Networking equipment to interconnect the computers at this
location:
a) Bay Networks ASN2 Base Unit
b) Bay Networks ASN Wan Suite
c) Bay Networks Dual Ethernet Module
ISW RESERVES THE RIGHT TO SUBSTITUTE EQUIVALENT EQUIPMENT
COMPONENTS IN PLACE OF ANY OF THE ABOVE ITEMS.
EXHIBIT C
Client Computer and Networking Equipment Furnished by
ISW
at SportsBooks Connected to the Hub
1. Several Players Betting Stations (i.e. computers with
touch screen monitors)
2. One (or more) computer(s) with receipt printer to perform
the Cashier Station function
3. One (or more) computer(s) to perform the System
Administration, Reporting, Manager s Module,
Broadcast Router and other miscellaneous functions
4. One (or two) line or character printer(s) to print the
Contemporaneous Journal and the Account
Identification Cards
5. One line or laser reports printer
6. Networking equipment to interconnect the computers at this
location:
a) Bay Networks BayStack ARN Ethernet Base Unit
b) Bay Networks IP Access Suite
c) Several (as needed to connect PBS s) Bay Networks Managed
10BASET Workgroup
Concentrators
ISW RESERVES THE RIGHT TO SUBSTITUTE EQUIVALENT EQUIPMENT
COMPONENTS IN PLACE OF ANY OF THE ABOVE ITEMS.
EXHIBIT D
Communications Equipment to be Furnished by Hub Operator
1. Bay Networks Quad ISDN BRI Net Module for ASN (each unit
accommodates 4 ISDN lines)
2. The items below are required for expansion only after 12
ISDN lines have been added to the
original base unit. They will accommodate another 12 lines.
a) Bay Networks ASN2 Base Unit
b) Bay Networks SPEX-HS Net Unit (plus cables and
terminators)
ISW RESERVES THE RIGHT TO SUBSTITUTE EQUIVALENT EQUIPMENT
COMPONENTS IN PLACE OF ANY OF THE ABOVE ITEMS.
EXHIBIT E
System Administrative Functions
1. Database Maintenance
a) Employee Information:
i) Add, modify and delete hub employees into the
database
ii) Set-up security limitations for the above
mentioned employees
b) Game Information:
i) Set-up game schedule information
ii) Add, modify and delete propositions (from the list
of approved generic
propositions) for the scheduled games
c) Sport Specific Information:
i) Add or delete default propositions
ii) Add or modify contestant information for that
sport
iii) Add, modify or delete roster information for the
contestants
d) Standard Text Messages:
i) Add or modify Standard Text Messages
2. Reports
a) All reports will be accessible
3. Backup
a) Backup routines will be accessible
EXHIBIT F
Generic Betting Propositions
1. Basketball
a) "player" Ov/Un total points
b) 10 point mini-game
c) 7 point mini-game
d) Game Ov/Un total 3pt FG s
e) Make 2 FT's
f) Make 3 FT's
g) Make next 3pt FG
h) Most pts - game
i) Most pts - quarter
j) Ov/Un total points - game
k) Ov/Un total points - quarter
2. Football
a) Ov/Un 1st Downs in Drive
b) Fair Catch
c) Make 1st Down
d) Make FG
e) Most pts - game
f) Most pts - quarter
g) Next Pass/Run
h) Next Score a TD?
i) Ov/Un total points - game
j) Ov/Un total points - quarter
k) Pass Complete?
l) Ov/Un Plays to 1st Down
m) Score Next
n) Score this Drive
3. Baseball
a) 1.5 Inning Mini-Game
b) Most runs - game
c) Next Ground/Fly Out
d) Ov/Un Strike Out's - game
e) Ov/Un Runs - game
f) Pitches this Batter
g) Reaches 1st
h) Ov/Un Runs - .5 Inn
i) Ov/Un Runs - Inn
j) Score Next
k) Strikes Out
EXHIBIT G
Liquidated Damages
The sole and exclusive damages for which ISW shall be liable
as a result of interruption of
the System as provided in Section 15, or as provided in Section
8, shall be a pro rata share of the
telecommunications costs for which Hub Operator is responsible
for each day or portion thereof
that operation of the System is interrupted.
HUB SERVICES AGREEMENT
INDEX
Section
Page
SECTION 1. FURNISHING OF EQUIPMENT, SYSTEMS AND SERVICES BY ISW.
. . . . .1
SECTION 2. RESPONSIBILITY OF HUB OPERATOR. . . . . . . . . . . .
. . . . .3
SECTION 3. PAYMENT.. . . . . . . . . . . . . . . . . . . . . . .
. . . . .5
SECTION 4. TERM AND TERMINATION. . . . . . . . . . . . . . . . .
. . . . .8
SECTION 5. EXCLUSIVITY.. . . . . . . . . . . . . . . . . . . . .
. . . . .9
SECTION 6. HUB LOCATION; ACCESS. . . . . . . . . . . . . . . . .
. . . . 10
SECTION 7. LICENSE . . . . . . . . . . . . . . . . . . . . . . .
. . . . 10
SECTION 8. WARRANTY. . . . . . . . . . . . . . . . . . . . . . .
. . . . 11
SECTION 9. RULES AND REGULATIONS; SYSTEM ADMINISTRATIVE
FUNCTIONS; BETTING PROPOSITIONS . . . . . . . . . . .
. . . . 11
SECTION 10. PATENT INFRINGEMENT.. . . . . . . . . . . . . . .
. . . . 12
SECTION 11. FORCE MAJEURE.. . . . . . . . . . . . . . . . . .
. . . . 13
SECTION 12. OWNERSHIP RIGHTS AND CONFIDENTIAL INFORMATION. .
. . . . 14
SECTION 13. LIMITATION OF LIABILITY.. . . . . . . . . . . . .
. . . . 15
SECTION 14. INDEMNITY . . . . . . . . . . . . . . . . . . . .
. . . . 15
SECTION 15. DEFAULT.. . . . . . . . . . . . . . . . . . . . .
. . . . 16
SECTION 16. ARBITRATION AND REMEDIES. . . . . . . . . . . . .
. . . . 18
SECTION 17. RESPONSIBILITIES. . . . . . . . . . . . . . . .
. . . . 18
SECTION 18. ENTIRE AGREEMENT. . . . . . . . . . . . . . . . .
. . . . 19
SECTION 19. WAIVER. . . . . . . . . . . . . . . . . . . . .
. . . . 19
SECTION 20. ASSIGNMENT. . . . . . . . . . . . . . . . . . .
. . . . 19
SECTION 21. NOTICE. . . . . . . . . . . . . . . . . . . . .
. . . . 19
SECTION 22. GOVERNING LAW. . . . . . . . . . . . . . . . .
. . . . 20
EXHIBITS
A - Brief Description of the SportXction Sports Wagering
System and
Arrangements among ISW, Hub Operator and SportsBooks
B - Computer Server and Networking Equipment Furnished by
ISW at the Hub
C - Client Computer and Networking Equipment Furnished by
ISW at
SportsBooks Connected to the Hub
D - Communications Equipment to be Furnished by Hub
Operator
E - System Administrative Functions
F - Generic Betting Propositions
G - Liquidated Damages
