Joint Venture Agreement
Between: eBet Limited
(ACN 056 210 774)
Level 4, 500 Pacific Highway
St Leonards NSW 2065
Australia; and
TrackPower, Inc
580 Granite Court
Pickering Ontario L1W3Z4
Canada; and
Penn National Gaming, Inc
825 Berkshire Boulevard
Wyomissing Pennsylvania 19610
USA
1. Background:
1.1 eBet Limited ("eBet") and certain of its subsidiaries ("eBet Group")
develop, operate and market interactive gaming & wagering systems
("eBet System") to facilitate, among other things, the online
distribution of race wagering products and services via the Internet
and other distribution networks ("eBet Race Wagering Business"). For
the avoidance of doubt eBet group does not include eBet subsidiaries
not involved in development, operation and marketing of interactive
gaming and wagering systems.
1.2 eBet Group holds copyright, title and proprietary rights to the eBet
System and its interfaces to various gaming & wagering systems.
1.3 eBet Group is a party to a contract with New Zealand TAB ("NZ TAB
Contract") to distribute the NZ TAB's pari-mutuel race betting and
fixed-odds sports betting products on an agency basis.
1.4 eBet Group owns various Internet domain names including, among
others, eBetRacing.com and eBet USA.com ("eBet Racing Domains").
1.5 eBet Group is in negotiations with various international race betting
operators to provide various services and/or act as an agent on their
behalf ("eBet Race Negotiations")
1.6 eBet Group is a party to a license agreement with Penn National
Gaming, Inc ("Penn") to establish an operating entity to be known as
eBet USA Inc ("eBetUSA Contract") to offer Internet wagering on
racing events hubbed by Penn.
1.7 TrackPower, Inc ("TrackPower") is a NASDAQ OTCBB ("OTCBB") listed
company that, among other things, operates a satellite broadcast
business, which broadcasts horseracing to subscribers of the US-based
Dish Network ("Dish") ("TrackPower Business").
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1.8 TrackPower is a party to various contracts ("TrackPower Contracts")
with racetracks, broadcasters, technology developers, satellite
operators and Penn which facilitate the operation of the TrackPower
Business.
1.9 TrackPower owns various Internet domain names including, among others,
TrackPower.com ("TrackPower Domains").
1.10 Penn holds a license ("Wagering License") to operate, among other
things, telephone wagering services whereby it facilitates the
placing of wagers by customers ("Penn Customers") via the telephone
("Penn Phone Wagering Business").
2. Establishment of TrackPower Joint Venture
2.1 eBet Group, TrackPower and Penn ("The Parties") intend to consolidate
the TrackPower Business, the management and operation of the Penn
Phone Wagering Business, the eBetUSA Contract, the NZ TAB Contract in
part and the eBet Race Wagering Business ("Consolidation").
2.2 To facilitate Consolidation, by way of the issue of its shares and
warrants, TrackPower will acquire various assets, interests,
contracts and licenses from eBet Group and Penn. Specifically,
TrackPower will acquire, directly or indirectly, subject to the
provisions of this Agreement and on an on-going basis relevant
regulatory, horsemen and shareholder approvals ("Approvals"):
2.2.1 From eBet Group:
a) Subject to any necessary shareholder approvals, an exclusive,
perpetual worldwide license to operate the eBet System for
pari-mutuel race wagering applications and on a non-exclusive
basis, fixed odds race wagering applications ("eBet System
License"); and
b) subject to the approval of NZ TAB, all rights and obligations of
the NZ TAB contract with respect to race wagering; and
c) the eBet Race Wagering Business and eBet Racing Domains; and
d) rights and obligations in other contracts and eBet Race
Negotiations necessary and relevant to the operation of the eBet
Race Wagering Business,
in consideration of the issue of 18,000,000 fully paid common shares in
the capital of TrackPower, and 5,000,000 warrants to acquire shares in
the capital of TrackPower at an exercise price of US$1.00 per share
exercisable at any time for a period of two years from the date of this
Agreement issued on terms, and with rights, no less favourable than any
other TrackPower shares or warrants on issue at the time of this
Agreement.
eBet Group is not obliged to transfer to TrackPower:
e) any interest in any fixed odds race wagering business conducted
by eBet Group as principal using the eBet System; or
f) any interest eBet Group has in any contract relating to any fixed
odds race wagering or sports betting conducted by New Zealand TAB
using the eBet System.
g) for the avoidance of doubt the eBet System License is a perpetual
license to use, develop and sub-license the source code necessary
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to conduct the eBet Race Wagering Business ("eBet Race Wagering
System"). TrackPower acquires no right, title or interest in the
intellectual property rights to the source code, object code or
any other part of the technology necessary to conduct the eBet
Race Wagering System except as provided for by this Agreement.
2.2.2 From Penn:
a) Subject to any on-going necessary horsemen or regulatory
approvals, a worldwide, perpetual license and management contract
("Management Contract") to manage the Penn Phone Wagering
Business, whereby TrackPower will assume the management, marketing
and operation of all facets of the Penn Phone Wagering Business on
an exclusive basis in accordance with the Wagering License,
in consideration for the issue of 18,000,000 fully paid common shares in
the capital of TrackPower; and 1,000,000 warrants to acquire shares in
the capital of TrackPower at an exercise price of US$1.00, exercisable
at any time for a period of one year from the date of this Agreement
and issued on terms, and with rights, no less favourable than any other
TrackPower shares or warrants on issue at the time of this Agreement.
b) For the avoidance of doubt, Penn must make available to TrackPower
all information relating to the customers of and suppliers to Penn
and its affiliates relating to the Penn Phone Wagering Business to
enable TrackPower to manage all aspects of that business.
TrackPower is entitled to all revenue and profits ("Revenues")
derived from the conduct of that business.
For the avoidance of doubt Revenues to TrackPower will be net of
horsemen percentages, simulcast fees, taxes, and any source market fees
or TrackPower will be obligated to pay such fees and taxes.
c) This Management Contract will be on terms customary for management
of gaming operations. Penn must, at its own expense, provide to
TrackPower all necessary equipment and facilities currently in
place and necessary for the operation of the Penn Phone Wagering
Business. TrackPower will meet all capital expenditure and working
capital requirements in respect of the Penn Phone Wagering
Business from the date of execution of the Long Form Agreements
referred to below.
d) The Management Contract may be terminated by Penn if an insolvency
event occurs with respect to TrackPower, TrackPower fails to
operate in a manner so as to preserve licenses held by Penn to
conduct the Penn Phone Wagering Business or otherwise fails to use
its best efforts to promote and manage that business. In return
for its appointment of TrackPower as manager, Penn will be
entitled to a fee ("Account Wagering Fee") that will be:
(i) the first US$150,000 per month of Revenues.
For the avoidance of doubt, the maximum annual account wagering fee
payable shall be US$1,800,000 per annum.
2.2.3 TrackPower.
For the avoidance of doubt TrackPower will retain and must preserve:
a) the TrackPower Business; and
b) all rights and obligation in the TrackPower Contracts, including,
but not limited to, those with Dish and Penn; and
c) other such contracts and negotiations relevant to the operation
of the TrackPower Business; and
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d) the TrackPower Domain Names.
2.3 It is the intention of the Parties that the terms of this Agreement
be reflected in long form agreements ("Long Form Agreements") which
will set out the relationship between the Parties in greater detail.
The Parties will negotiate in good faith to agree the terms of Long
Form Agreements as soon as possible and in any event within 90 days
of the date of this Agreement. However, until such Long Form
Agreements are executed, this Agreement is legally binding on the
Parties. If the Long Form Agreements are not executed within this
timeframe or should all necessary shareholder, regulatory, Horsemen,
contractual or other approvals not be gained within the same
timeframe, unless otherwise agreed by the Parties, this Agreement
terminates and each Party is released from all obligations under this
agreement. Any such release is without prejudice to any rights a
party may have against another in respect of any breach that occurs
prior to termination. The confidentiality undertakings set out in
Part 8 survive termination of this Term Sheet.
2.3.1 The Parties must negotiate in good faith to settle the terms of
the Long Form Agreements within 90 days of execution of this
Agreement including, but not limited to providing access to due
diligence material as customary in completion of transactions of
the nature contemplated by this Agreement.
2.4 Each Party must not and must ensure that none of its affiliates do
not provide any information to a third party in relation to
encouraging, soliciting, negotiating or otherwise being involved in
any transaction that may in any way prejudice its ability to complete
the transactions contemplated by this Agreement.
2.5 No Party may be involved in and must procure that its affiliates are
not involved in any way (including without limitation, as shareholder,
unit holder, principal, agent, manager, consultant, service provider or
adviser) in any race wagering business similar to that conducted by
TrackPower anywhere in the world from the date of completion of the
transfers under Clause 2.2 until the date 2 years after that Party
ceases to hold at least 10% of the issued share capital of TrackPower.
This restriction does not restrict eBet Group from:
a) conducting a fixed odds race wagering business as principal
using the Bet System; or
b) eBet Group making the eBet System available to the New Zealand
TAB to enable it to conduct a fixed odds race wagering business
under the NZ TAB Contract.
3. TrackPower Management
3.1 The board of directors of TrackPower ("TrackPower Board") will be
comprised of initially six members("Initial Board") during the period
between this Agreement and execution of the Long Form Agreement or
ninety (90) days whichever occurs earlier, and when the New Board,
referred to below, is constituted, seven members.
3.2 eBet Group and Penn will have the right to nominate a representative
to the TrackPower Board and TrackPower must secure requisite
resignations and/or approvals to facilitate this so as such
appointments coincide with the execution of the Long Form Agreements.
3.2.1 Upon execution of the Long Form Agreements, unless otherwise
agreed by eBet and Penn, all of the TrackPower Board other
than John Simmonds, and the nominees of eBet and TrackPower
referred to above, must tender their resignations for
consideration by the remaining board members to facilitate the
formation of a new TrackPower board ("New Board"), with the
nominees to be agreed by the parties.
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3.2.2 Upon formation, the New Board will:
a) elect a chairman by unanimous vote; and
b) the independent nominees will by unanimous vote elect a further
independent director; and
c) determine the terms, conditions and timing of the Secondary Offering
and NASDAQ Listing referred to below.
3.2.3 Until formation of the New Board TrackPower agrees not to:
a) issue any securities including, without limitation, options to acquire
any shares in the capital of TrackPower; or
b) pay any dividend or undertake any other distribution; or
c) dispose of any material asset or grant any security or other third
party interest over any asset; or
d) permit the amendment of the constituent documents of TrackPower; or
e) proceed with the Secondary Offering or NASDAQ Listing, referred to below,
without the written consent of eBet and Penn.
3.3 The Parties will each nominate an executive management representative
to the executive management team of TrackPower ("TrackPower
Executive") with such nominations to be confirmed by the TrackPower
Board and CEO. For the avoidance of doubt, Penn shall nominate a
suitably qualified North American racing executive: the identity of
each executive nominee must be approved by all the parties.
3.3.1 The TrackPower Executive will be responsible for, among other
things:
a) the development and coordination of the Long Form
Agreements; and
b) the development and coordination of the Business Plan,
referred to below in 5.3; and
c) the coordination and management of the Secondary Offering
and NASDAQ listing; and
d) other such duties as are customary in the operation of a
company such as TrackPower and as agreed between the Parties
and/or as directed by the TrackPower Board .
3.3.2 TrackPower will be headed by the TrackPower Chief Executive
Officer ("CEO"), who shall report directly to the TrackPower
Board.
3.3.3 eBet Group shall appoint the CEO on terms reasonably
acceptable to the Parties. The identity of the CEO must be
approved by all the Parties.
4. Secondary Offering and NASDAQ Listing
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4.1 It is the intention of the Parties to secure an underwriting or
sponsorship agreement ("Underwriting Agreement") from an investment
bank/s satisfactory to all Parties in preparation for a secondary
offering of securities in TrackPower to raise capital ("Secondary
Offering") and NASDAQ listing or listing on an alternative exchange,
by way of application to the relevant exchange and/or regulatory
bodies, to give effect to a transference of TrackPower's OTCBB
listing..
4.2 The Long Form Agreements to give effect to this Agreement, and
without limitation, the parts of Clause 2 of this Agreement, shall be
conditional upon the TrackPower Board [and, if necessary, TrackPower
Shareholder,] passing any and all necessary resolutions to give
effect to the Secondary Offering and NASDAQ listing on terms
acceptable to the Parties.
5. Current Operations and Business Plan
5.1 Prior to execution of the Long Form Agreements the Parties:
a) will continue to operate their business activities, referred to
in the parts of Clause 2 of this Agreement, using prudent
business practices and their best endeavours to maximize growth
opportunities and ensure compliance with contracts,
regulations, and legislation relevant to those business
activities; and
b) the current contractual arrangements between the Parties shall
remain enforceable until the execution of the Long Form
Agreements or upon termination of this Agreement if termination
is in accordance with the terms of this Agreement.
5.2 Each Party agrees that their respective employees are critical to the
day to day operation of their businesses. Given this, the Parties
agree to avoid any discussions concerning the hiring of the other's
employees. Any contact or discussions concerning an offer of
employment to the other Party's employee/s shall have the prior
approval of an officer of that employee's employer.
5.3 The Parties intend that TrackPower will be operated in accordance
with a business plan ("Business Plan") that will address, among other
things, corporate and business development, financing, operations,
marketing, expenditure and revenue budgeting, compliance and
staffing.
5.4 The Parties will use their best endeavours to develop and agree to
the terms of the Business Plan within 60 days of this Agreement. This
Business Plan will form an exhibit to the Long Form Agreements
representing the agreed Business Plan for TrackPower.
6. No Assignment
6.1 The rights of the Parties under this Agreement may not be assigned or
otherwise
made available to any third party except as expressly provided for by
this Agreement with the written consent of the other parties such to
not be unreasonably withheld.
7. Representations and Warranties
7.1 Each Party will grant the other customary representations and
warranties. Without limitation, each Party represents and warrants to
the other as follows:
a) it has the full power, right and authority to enter into this Agreement and
to perform its obligations under this Agreement;
b) this Agreement has been duly authorized by all requisite corporate action
and is a valid and legally binding obligation of that Party;
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c) it has no prior commitments, arrangements or agreements with
any other person, entity or corporation which might interfere
with or preclude it from carrying out its obligations;
(d) it is able to pay its debts as and when they fall due;
(e) it holds all necessary assets to perform its obligations in accordance with
this Agreement;
(f) the audited financial statements in respect of it which it has
provided to the other Parties provide a true and fair view of
its financial position as at the balance date referable to
those accounts; and
(g) other than as has been disclosed to another party or has been
disclosed to the securities exchange on which its securities
are traded, there has been no material adverse change in the
financial circumstances of the Party since the balance date
for the last financial statements referred to in Clause
7.1(f).
8. Confidential Information
8.1 The Parties acknowledge all information relating to the other Parties
and their respective businesses, including, without limitation, each
others' business plans, operations, contracts, negotiations, and
technology not in the public domain and all information in the public
domain which has been made public by a Party in breach of this Part 8
("Confidential Information") is confidential. Each Party will be
required to make available such Confidential Information for, among
other things, the development of the Business Plan and the due
diligence enquiries of each of the other Parties.
8.2 Each Party will use its best endeavours to ensure that Confidential
Information is maintained in confidence. A Party need not comply with
clause 8.2 to the extent that:
(a) disclosure is required by applicable law; or
(b) disclosure is made to an employee, agent, consultant or
adviser provided such disclosure is limited to disclosure
required on a "need-to-know" basis and that third party
undertakes to be bound by the confidentiality undertakings
under this Part 8.
8.2.1 Notwithstanding Clause 8.2 a), the parties must use their best
endeavours to provide advance notice to the other parties as
to any disclosure, and the form of such disclosure, required
by applicable law prior to its release.
8.3 Each recognizes that the other is obliged by the listing rules of the
stock exchange on which its shares are traded ("Listing Rules") and
other applicable law to disclose material information relevant to its
business.
8.4 If a Party is required by applicable law or the Listing Rules of the
exchange on which its shares are quoted to disclose any Confidential
Information, it must consult fully with the other Parties with
respect to the form, content and timing of that disclosure. Any Party
so required to disclose Confidential Information must in good faith
have regard to the reasonable requests of the others regarding the
form, content and timing of the release of that Confidential
Information. In relation to the form, content and timing of that
disclosure, however, the determination of the Party obliged to make
disclosure will be final.
9. Governing Law
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9.1 This Term Sheet is governed by the laws of the State of Wyoming, United
States of America and the Federal laws in force in that State.
Executed as an Agreement
Dated this...............6..... Day of......March, 2000......................
Signed for and on behalf of: Signed for and on behalf of:
EBET LIMITED TRACKPOWER, INC
(ACN 056 210 774)
Signature /s/Keith R. Cullen Signature /s/John G. Simmonds
NAME: Keith R. Cullen NAME: John G. Simmonds
POSITION: Managing Director.............POSITION:...Chairman/CEO......
In the presence of: In the presence of:
Signature ................ Signature
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Signed for and on behalf of:
PENN NATIONAL GAMING, INC
Signature .../s/Joseph A. Lashinger
NAME: Joseph A. Lashinger In the Presence of:
POSITION: .Vice President/General Counsel..................................
Signature .../s/Colleen A. Kline..............
Witness
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