[Exhibit 10.1 Cooperation Agreement, dated December 15, 2003,
between WinWin Shanghai and Shanghai Lottery.]
COOPERATION AGREEMENT
("Agreement")
[Chinese Text]
Party A: Shanghai Welfare Lottery Issuing Center
[Chinese Text]
Add: Jinxiu building, 0-00 xxxxx Xxxxx Xxxxxxxx Xxxx #000,
Xxxxxxxx, 000000
[Chinese Text: Chinese Text 406 Chinese Text 911 Chinese Text: 200031
Tel [Chinese Text]: 00-00-00000000: 00-00-00000000*601
Fax [Chinese Text]: 00-00-00000000
Party B: Win Win Consulting (Shanghai) Co. Ltd.
[Chinese Text]: [Chinese Text]
Add: 000 Xxxxxxxxxxx Xxxx, Xxxx 000, Xxxxxxxx, X.X.X. 000000
[Chinese Text]: [Chinese Text] 680 [Chinese Text] 408 [Chinese Text]
Tel: [Chinese Text] 00-00-00000000
Fax: [Chinese Text] 00-00-00000000
Attn: Xxxxxxx Xxxxxx, President and CEO
[Chinese Text]: [Chinese Text], XXX XXXXXX [Chinese Text]
With copy to: Xxxxx X. Xxxx, Legal Representative
[Chinese Text]: [Chinese Text], XXXXX X XXXX [Chinese Text]
In order to cooperate on improving the sales and distribution of instant lottery
games in the Shanghai municipal district, People's Republic of China ("PRC"),
both Party A and Party B referenced above have reach the following agreement
after friendly negotiations. [Chinese Text].
The parties hereby agree as follows, having given due consideration of the
mutual benefits to be derived and the expertise of the respective parties:
[Chinese Text]:
ONLINE INSTANT LOTTERY TICKET MARKETING & SALES PROGRAM ("Program")
[Chinese Text]
I. SERVICES SOUGHT [Chinese Text]
Party A is in charge of the China Welfare Lottery games in the
Shanghai municipal district. Party A desires to seek: [Chinese
Text]:
A. Party B's exclusive advice and counsel on lottery management,
lottery television programs, lottery sales, marketing,
promotion, distribution and training of sales and marketing
personnel associated therewith relating to or connected with a
new online instant lottery ticket game or series of games
recently approved by the Central Government of China ("Games")
for rollout in the Shanghai municipal district; and [Chinese
Text].
B. Party B's expertise in tying said Games to a new television
game show broadcast to be produced by Party B with the
assistance of local television production partners. These new
Games will be created by Party B fundamentally consistent with
the new on-line games recently approved by China Welfare
Lottery Center Headquarters in Beijing. [Chinese Text].
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C. Both parties agree to sign a formal confirmation letter on the
effective date of this agreement, so as to specify the types
and names of the lottery tickets that is the basis of this
cooperation. This confirmation letter shall be the basis of
the gross revenue of the lottery tickets tied to the Games (as
defined in VI.B). [Chinese Text].
II. SERVICES TO BE PROVIDED
[Chinese Text]
Party B, a duly registered Chinese corporation and a
wholly-owned subsidiary of Win Win, Inc., a Nevada, USA
corporation, hereby agrees to: [Chinese Text]:
A. Provide the consulting services to Party A as set forth above
in Section 1 A above. See Exhibit 1 for greater details; and
[Chinese Text].
B. Provide the services necessary to accomplish the production of
a new online instant lottery ticket television program tied to
the Games for broadcast with one or more of Party A's
cooperation partners at local television stations. See Exhibit
2 for greater details. [Chinese Text].
III. CONDITION PRECEDENT TO PROVISION OF SERVICES
[Chinese Text]
Party A desires to cooperate with Party B, and warrants to
Party B that it will ensure at least one television station in
the Shanghai municipal district will broadcast 50 episodes, at
least once per week during prime time television for 50 weeks
per year, of a new online instant lottery television game show
of at least 20 minutes in length tied to the Games. Both
parties will sign an agreement on TV program cooperation
specifically about the design, production, and other
cooperative matters. The agreement on TV Program will be a
premise to the execution of the current agreement. [Chinese
Text].
IV. AGREEMENT TO ACCEPT REASONABLE ADVICE
[Chinese Text]
Party A welcomes Party B's services enumerated in Exhibits 1
and 2, and agrees to timely implement as many of the
suggestions as possible and permitted by the laws and
regulations of the PRC and the rules governing the operation
of China Welfare Lottery Center. [Chinese Text].
V. EXPENSES ASSOCIATED WITH PROGRAM
Party B agrees to bear all out-of-pocket costs related to the
implementation of its consultation services as enumerated in
Exhibits 1 and 2 during the first year of the agreement,
except for the internal and overhead costs of Party A, which
Party A agrees that such expenses and costs are for its own
account. During the second and third years of the Agreement,
the cost of implementation of the suggestions, except the
internal and overhead costs of either Party, shall be an
expense of the joint cooperation and paid out of the Shanghai
GRP or Maximum Shanghai GRP (as defined below) prior to
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any distributions to the parties hereto. Shanghai GRP or
Maximum Shanghai GRP less the out-of-pocket expenses
referenced above, as the case may be, shall be hereinafter be
referred to as Lesser Shanghai GRP or Lesser Maximum Shanghai
GRP, respectively. [Chinese Text].
VI. FIELD SUPPORT BY PARTY A
A. Party A shall support and assist Party B in its effort to
maximize Party A's gross revenue percentage (as defined below)
for this Program from the sale and distribution of online
instant lottery tickets tied to the Games. The breakdown of
how revenue from sale of online instant lottery tickets tied
to the Games is calculated according to the current PRC and
China Welfare Lottery regulations is as follows: [Chinese
Text]:
1. 50% of the revenue generated from such sale is used to
pay for winners of the Games; [Chinese Text];
2. 35% of the revenue generated from such sale belongs to
China Welfare Lottery to be used for welfare purposes:
[Chinese Text];
3. 2.85% is used for payment for printing of tickets and
other related expenses; [Chinese Text];
4. 1.3% is used for payment to facility that provides
support for scanners necessary to management and track
sales of the instant lottery tickets for the Games;
[Chinese Text];
5. 7% is given to retailers/distributors who distribute the
online instant lottery tickets; [Chinese Text];
6. 1.5% is given to a management organization for handling
and managing the distributors for the online instant
lottery tickets; and [Chinese Text];
7. 2.35% is the gross revenue percentage (before expenses)
that remains with Party A ("Shanghai GRP")
B. Party A and Party B hereby agree that Party B shall use its
reasonable efforts, with the strong backing and support of
Party A, to persuade, modify, change or otherwise make
available alternatives or incentives to all parties, entities
or channels of approvals in the Central, Provincial and Local
Government of the PRC having an interest in or otherwise in a
position to dictate the percentages set forth in A1 through
A6, to accept less than the percentages so indicated for their
contributions to the Program, thereby increasing the net
percentage of the Shanghai GRP subject to distribution under
this Agreement (the sum of the aggregate percentages pulled or
released from A1 through A6 above, plus the original Shanghai
GRP referenced in A7 shall hereinafter be referred to as
"Maximum Shanghai GRP"). This means Party A shall clear the
way for regulatory approval, if necessary, as well as
assistance in renegotiation of any existing arrangements with
printers, lottery management companies, distributors,
retailers and other sellers of instant lottery tickets
currently part of Party A's network. For purposes of this
Agreement, the Shanghai GRP and the Maximum Shanghai GRP (and
their corresponding Lesser Shanghai GRP and Lesser Maximum
Shanghai GRP as defined above) shall be calculated on the
aggregate gross revenue of Games that are tied to the
television shows and the specific Games that the parties
designate in advance will
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benefit directly from Party B's advice, action, investment in
out-of-pocket expenses, or utilized Party B's methodology,
know-how, strategy or other proprietary information,
regardless of whether such Games are tied to one or more
television shows. [Chinese Text].
C. Party A also agrees to open its relevant books and records in
a timely fashion, including all relevant existing agreements
and arrangements with all parties related to the sales and
distribution of instant lottery tickets in the PRC so as to
enable Party B to provide quality advice and improvements to
Party A and to avoid duplication of effort. Party B shall keep
such information confidential and is willing to sign any
reasonable confidentiality and non-disclosure agreement as may
be proposed by Party A. [Chinese Text].
VII. PAYMENT
[Chinese Text]
A. In consideration of all of Party B's efforts and services
enumerated herein, including efforts to increase the Shanghai
GRP to Maximum Shanghai GRP, Party A agrees that Party B shall
be rewarded promptly for its efforts. This means payments to
party B shall be made within 15 days following the end of each
quarter based on the sales of that quarter (Shanghai
GRP/Maximum Shanghai GRP X Allocation Percentage.). [Chinese
Text].
B. During the first year of this Agreement, because all of the
out-of-pocket expenses for the Program are paid by Party B,
Party A and Party B shall split the Shanghai GRP or the
Maximum Shanghai GRP, as the case may be, with 30% of the
Maximum Shanghai GRP (or Shanghai GRP if there has been no
increase in net percentage) for Party A and 70% for Party B.
[Chinese Text].
C. During the second and third years, because the out-of-pocket
expenses for the Program (exclusive of all fees associated
with the production and broadcast of the TV programs tied to
the Games) are paid out first from the aggregate pool of
percentages remaining prior to distribution to the parties
thereto. Party A and Party B shall split the Lesser Shanghai
GRP or the Lesser Maximum Shanghai GRP, as the case may be,
with 40% of the Lesser Maximum Shanghai GRP (or lesser
Shanghai GRP if there has been no increase in net pool
percentage) for Party A and 60% for Party B. However, should
the overall gross revenue of the Games upon which the Shanghai
gross revenue or Maximum Shanghai gross revenue are calculated
for the second and third years increase or fall below the
gross revenue established in the year immediately preceding
expressed in percentage points of total gross revenue, then
Party B's share of the percentage split between Party A and
Party B shall be adjusted likewise in the same percentage
points. Party B's percentage share of the split for all the
years following year one and any renewals or extensions hereof
shall also be adjusted up or down based on the increase or
decrease in gross revenue from the year immediately preceding.
In no event shall Party A's share of the percentage split with
Party B fall below 15%.
[Chinese Text].
[Chinese Text].
D. During the second and third years when the out-of-pocket
expenses are agreed to be
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reimbursed out of the Shanghai GRP or the Maximum Shanghai GRP
(as indicated below), as the case may be, both Party A and
Party B agree to advance such out-of-pocket expenses as needed
on a 50/50 basis for operations in accordance to an annual
budget mutually agreed to by the parties and then submit
receipts for reimbursement prior to distributions to either
party. Reimbursement to Party A or payments to Party B shall
be made via wire transfer into an account designated by the
appropriate Party. As indicated above (paragraph VII A),
payments to Party B shall be made on the basis of the
percentage split (60%) set forth herein within 15 days after
the end of each quarter. However, at the end of each year,
adjustments to the Shanghai GRP or Maximum Shanghai GRP, as
the case may be, shall be made to the total paid out
percentage to reflect increases or decreases in total annual
sales. [Chinese Text].
GENERAL PROVISIONS
[Chinese Text]
A. The Agreement is executed by authorized representatives from
both parties on 15 (date), 12 (month), 2003 in Xuhui the
Shanghai District, China. [Chinese Text]
B. This Agreement shall be governed by the laws of the People's
Republic of China. Any dispute arising out of this Agreement
shall be settled in accordance with the rules of the China
International Economic & Trading Arbitration Association in
Shanghai, PRC. The parties hereto execute this agreement with
the intent to be legally bound. Both the English version and
the Chinese version of this Agreement shall be given equal
weight in interpreting the intent of the parties. [Chinese
Text]
C. This Agreement, and the rights and obligations stemming from
such an agreement, shall be assignable and transferable by
Party B, with the consent of Party A, to another entity under
the direction and control of Party B. This Agreement shall
have a duration of three (3) years, ending on the third
anniversary of the effective date of this Agreement. Unless
written notice is received by the renewing party clearly
stating that the non-renewing party has no intention to renew
this Agreement at least 180 days prior to the third
anniversary of the effective date of this Agreement, this
Agreement shall automatically renew on substantially the same
terms and conditions for an additional three-year term, except
that all out-of-pocket expenses shall be shared for the
following three year term in the same manner as it was shared
in years two and three of the Agreement. The `effective date'
herein refers to the issuing date of the cooperative lottery
tickets tied to the Games. [Chinese Text].
D. This Agreement shall remain in full force and effect during
its entire duration and may renewals thereof unless it is
cancelled or terminated by either party with cause, or unless
its continuation is in violation of Chinese Law and
Regulations. [Chinese Text].
E. In the event there are circumstances or conditions beyond the
control of the parties, such as political changes, severe
economic conditions, natural disasters or other conditions
that would normally be considered beyond the control of the
parties such as Force Majeure conditions, then this Agreement
shall be amended and continued to reflect the changed
circumstances or events. [Chinese Text].
5
Party A: Party B:
Shanghai Welfare Lottery Ltd. Win Win Consulting (Shanghai) Co.
Issuing Center
[Chinese Text] [Chinese Text]
Authorized representative: Authorized representative:
[Chinese Text] [Chinese Text]
/s/ [Chinese Text] /s/ Xxxxxxx Xxxxxx
(Chop, [Chinese Text])
Date: 15 (date, 12 (month), 2003
2003 [Chinese Text] 12 [Chinese Text] 15 [Chinese Text]
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EXHIBIT 1
[Chinese Text]
CONSULTING SERVICES FOR PARTY A
[Chinese Text]
1) Produce a new television game shows tied to the Games: [Chinese Text];
2) Develop new ways to "play the games" to enhance customer interest;
[Chinese Text];
3) Develop complete marketing programs to increase sales and customer
awareness; [Chinese Text];
4) Develop, train and assist in the implementation of a sales and network
that incentives and rewards dealer/distributor loyalty and performance;
[Chinese Text];
5) Develop, train and assist in the implementation of various promotional
programs that generate customer awareness, sales, hype, viewer interest
and viewer participation; [Chinese Text];
6) Improve and streamline distribution network to maximize profit and cash
flow; [Chinese Text];
7) Assist with the design of instant lottery tickets to increase non-winning
ticket value and customer retention value; [Chinese Text];
8) Design and implement a sales system that maximizes efficiency, improves
and consolidates record keeping and reporting, and distributor
accountability; [Chinese Text];
9) Develop a profit sharing system tied to ticket sales that encourages
dealers/distributors to improve sales; [Chinese Text];
10) Develop and implement an advertising campaign that will reach new
customers; [Chinese Text];
11) Develop new ways to link the instant lottery sales to other businesses who
may profit from such association; and [Chinese Text];
12) Develop ways to link China's lottery programs to programs in other
countries. [Chinese Text].
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EXHIBIT 2
[Chinese Text]
SERVICES RELATED TO PRODUCTION AND BROADCAST OF A NEW TELEVISION
INSTANT LOTTERY SHOW
[Chinese Text]
1) Assist, advise, produce and broadcast a new high quality of television
show tied to the Games; [Chinese Text];
2) Advise on production, methods to improve quality and efficiency; [Chinese
Text];
3) Introduce and advise on available software that will be useful in
production and post production tasks; [Chinese Text];
4) Advise on distribution of programs to other local affiliates to improve
viewership and viewer retention; [Chinese Text];
5) Advise on various revenue models that will improve net income to local
television stations; [Chinese Text];
6) Advise on ways to reduce expenditure for game sets and utilize high
technology and software to emulate sets; [Chinese Text];
7) Advise on television program production to allow for possible audience
participation; and [Chinese Text];
8) Advise and potentially "participate" on other ways to generate revenue for
the television station involved in the production and broadcasting of
lottery shows. [Chinese Text].
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