JOINT VENTURE
AGREEMENT
THIS AGREEMENT
is entered into effective the 28 th of
October 2004 by and between New Media Lottery Services
Inc. (“NMLS”), a Virginia corporation, with
its offices at 1400 Technology Drive, Harrisonburg, Virginia 22802,
USA, contact: Mr. Randolph H. Brownell III, voice (1) 540-437-1688,
fax (1) 540-574-0491, e-mail rbrownell@nmlsinc.com , and
Cybercyte Sistemas e Serviços Ltda.
(“CYBERCYTE”), a Brazilian corporation with its offices
at Rua Barão do Triunfo, 550 - sala 92, São Paulo, SP,
CEP 04602-002, Brazil, contact: Mr. Ari Célia, voice (5511)
5092-5883, fax (5511) 5533-6526, e-mail ari.celia@cybercyte.com.br .
WHEREAS NMLS possesses extensive experience in the
establishment, operation and management of lotteries and has
developed and operated a number of Internet lottery
programs;
WHEREAS CYBERCYTE and its associated companies possess
extensive expertise in the Brazilian lottery marketplace, operate a
number of lottery/gaming websites, hold two state lottery licenses
awarded by the Brazilian States of Pará and Santa Catarina and
are actively involved in bingo hall ownership and operation;
and
WHEREAS NMLS and CYBERCYTE desire to enter into a
business relationship to establish a joint venture in accordance
with the terms and conditions set out in this agreement to combine
their expertise and to jointly pursue a number of lottery projects
in Brazil.
NOW
THEREFORE , the
parties agree as follows:
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1.
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Establishment
of a joint venture company. The parties shall form a new company
that shall be called New Media Digital Services Ltda.
(“NMD”). NMD will be a limited liability company
established as a ‘sociedade empresária limitada’
in the Brazilian State of São Paulo, with ownership shared
between the parties below (the “Members”) as
follows:
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CyberCyte
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50.00
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%
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NMLS
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50.00
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%
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Total
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100.00
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%
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2.
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Purpose of NMD.
The purpose of NMD is to launch an Internet lottery program in
Brazil under the existent lottery license issued by the Brazilian
State of Pará to WJM Entretenimentos e Participações
Ltda. Cybercyte, who owns 50% of WJM
confirms that the holder of the license agrees to the terms and
conditions of the Joint Venture Agreement. It is also agreed that
the parties will pursue additional state and federal Internet
lottery programs.
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NMD will
subsequently put in place a business and financial plan to be
agreed upon by the Parties (such agreement not to be unreasonably
withheld) to:
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(i)
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develop
opportunities to utilize its Internet lottery on video lottery
machines (“VLMs”) currently situated at Bingo Tijuca in
Rio de Janeiro;
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Page 1 of 7
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(ii)
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develop
opportunities to utilize its Internet lottery on VLMs in bingo
halls throughout Brazil;
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(iii)
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seek its own
state lottery licenses from any and all Brazilian State lottery
programs;
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(iv)
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develop its
Internet lottery website into an Internet lottery portal for
Brazil.
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3.
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Obligations of
NMLS to NMD. NMLS shall, among other obligations:
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(i)
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design the
lottery games, design the web interface API that allows NMD to
operate these games from a website and assist in the integration of
the NMD website and the lottery games;
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(ii)
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provide to NMD
free of charge limited rights to its Internet lottery/gaming
systems;
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(iii)
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ensure any
third party licenses required to operate its Internet
lottery/gaming systems are maintained operational and in good
order;
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(iv)
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provide to NMD
free of charge the management of its Internet lottery/gaming
systems;
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(v)
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provide to NMD
free of charge access to existing computer systems
(software and hardware) on which to operate the lottery games
intended for Brazil, however if and when a decision is made to set
up full Brazilian operation all of these costs will become part of
NMD ;
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(vi)
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validate
winners and maintain appropriate accounting records through its
Internet lottery/gaming systems;
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(vii)
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provide free of
charge to NMD lottery expertise and some general operational
management;
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(viii)
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provide free of
charge to NMD personnel of sufficient caliber and experience to
deliver the obligations set out above.
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4.
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Obligations of
CYBERCYTE to NMD. CYBERCYTE shall, among other
obligations:
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(i)
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using NMLS
templates, assist NMLS in the design of the lottery games and the
website intended for Brazil and provide free of charge to NMD all
requisite local language translation services;
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(ii)
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provide to NMD
free of charge the rights to its registration and financial
transaction systems;
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(iii)
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ensure any
third party licenses required to operate its registration and
financial transaction systems are maintained operational and in
good order without cost to NMD;
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(iv)
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ensure the
extant lottery license issued by the Brazilian State of Pará
to WJM Entretenimentos e Participações Ltda. is
maintained operational and in good order;
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Page 2 of 7
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(v)
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provide to NMD
free of charge the management of its registration and financial
transaction systems;
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(vi)
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establish on
behalf of NMD bank accounts with appropriate banks in order to
facilitate player deposits and payouts;
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(vii)
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provide
customer support to NMD’s Internet lottery
players;
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(viii)
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provide free of
charge to NMLS advice and guidance on Brazilian business
procedures, funds repatriation and taxation issues;
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(ix)
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provide free of
charge to NMD local lottery expertise;
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(x)
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provide the
management of one NMD employee manager, reporting to Ari Celia, and
general operational management;
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(xi)
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provide
serviced office accommodation to house one NMD employee
manager;
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(xii)
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provide access
to its database of non current Internet users for the purpose of
marketing the lottery games and the website intended for Brazil.
For these purposes, non current Internet users are defined as users
which have not visited the websites of CYBERCYTE and its associated
companies for 2 months; and
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(xiii)
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provide free of
charge to NMD personnel of sufficient caliber and experience to
deliver the obligations set out above.
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5.
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Lottery
Customer Data. NMLS and CYBERCYTE each acknowledge and agree that
all data relating to a customer of NMD’s Internet lotteries,
including names, addresses and any other personal information
(“Lottery Customer Data”) is the property of
NMD.
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6.
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Representations
and Warranties of NMLS and CYBERCYTE. NMLS and CYBERCYTE each
represents and warrants that:
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(i)
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it has the
right and corporate authority to enter into this agreement and has
all the necessary rights to perform its obligations under this
agreement;
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(ii)
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it has
sufficient rights to the technology and the systems covered by this
agreement and the right to transfer such rights for transactions as
contemplated under this agreement;
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(iii)
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it will use and
process Lottery Customer Data only in accordance with this
agreement; and
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(iv)
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its entry into
this agreement does not breach any other agreement to which it is a
party.
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CYBERCYTE
represents and warrants that:
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(i)
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two State
lottery licences have been awarded by the Brazilian States of
Pará and Santa Catarina respectively to its associated
company, WJM Entretenimentos e Participações
Ltda.;
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Page 3 of 7
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(ii)
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it legally and
validly manages and maintains one bingo hall in Rio de Janeiro
through its associated company, Hunter Representação e
Locaç
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