AGREEMENT

THIS AGREEMENT (“Agreement”) is entered into this 6th day of May 2005 by and
among Alladdin Limited, Alladdin Lotteries Limited and New Media Lottery
Services, Inc. (each a "Party" and together the "Parties").

As used in this Agreement, capitalized terms have the meanings ascribed to them
above and in Section 1 below, except as otherwise expressly provided.

WITNESSETH

WHEREAS, Licensor and ALL currently perform certain services for Licensee
similar to the Alladdin Services on an oral basis without the benefit of a
written agreement; and

WHEREAS, Licensee desires to engage Licensor and ALL to perform the Alladdin
Services on the basis set forth in this Agreement and Licensor and ALL accept
the engagement by Licensee to perform the Alladdin Services; and

WHEREAS, Licensor desires to engage Licensee to provide the NMLS Services on the
basis set forth in this Agreement and Licensee accepts the engagement by
Licensor to perform the NMLS Services; and

WHEREAS, Licensor has developed the Software which is useful in the operation of
Internet lotteries; and

WHEREAS, Licensee desires to acquire the right to Use, re-write and Enhance the
Software from Licensor and Licensor desires to grant that right in the Software
to Licensee.

NOW, THEREFORE, in consideration of the mutual agreements contained in this
Agreement, intending to be legally bound hereby, the Parties agree as follows:

SECTION 1. CERTAIN DEFINITIONS AND INTERPRETATION

1.1 Definitions.

“Affiliated Companies" means in relation to any Person (i) any corporation that
owns, directly or indirectly, more than fifty (50) percent of the outstanding
capital stock of the Person entitled to vote in the election of directors; (ii)
any corporation of which the Person owns, directly or indirectly, more than
fifty (50) percent of the outstanding capital stock entitled to vote in the
election of directors; and (iii) any other corporation of which a corporation
described in clause "(i)" above owns, directly or indirectly, more than fifty
(50) percent of the outstanding capital stock entitled to vote in the election
of directors.

“ALL” means Alladdin Lotteries Limited, a corporation organized and existing
pursuant to the laws of England and Wales.

“Alladdin Services” means the services to be rendered by Licensor or ALL in
favor of Licensee contemplated by Section 3 below and described on Schedule B.

“Developments” means the modifications and/or enhancements to the Software to be
carried out by Licensee contemplated by Section 2.1(c) below.

 
 

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“Documentation” means the documentation and operating instructions for the
Software as described on Schedule A.

“Enhance” means to create Developments to the Software.

“Excluded Territory" means the UK and the Republic of Ireland and any additional
country in which Licensee makes available for purchase by the general public an
official, state regulated lottery, provided that Licensee shall give written
notice to Licensor at least (3) three months prior to the proposed date of the
sale to the general public of the first chance or entry to such lottery.
Licensor agrees that it shall, within (3) months of the launch of such a lottery
by Licensee, cease to operate any competing lottery, if any, in such country,
except in the case were Licensor has been operating such lottery for (9) nine
months or if otherwise agreed by the Parties.

“GBP” means British Pound Sterling, the currency of Great Britain.

“Internet” means the collection of networks of computers and related devices
around the world linked by telecommunications and related methods and any
development(s) thereto and successor(s) thereof.

“Legal Proceeding” means any action, suit, litigation, arbitration proceeding,
or other similar proceeding of any nature (including any civil, criminal,
administrative, or appellate proceeding).

“License” means the license in relation to the Software granted by Licensor to
Licensee under Section 2.1 of this Agreement.

“Licensee” means New Media Lottery Services, Inc., a Delaware corporation.

“Licensor” means Alladdin Limited, a corporation organized and existing pursuant
to the laws of England and Wales.

“NMLS Services” means the services to be rendered by Licensee in favor of
Licensor contemplated by Section 4 below and described on Schedule C.

“Person” means any individual, corporation, partnership, venture, estate, trust,
association, entity, governmental body, or governmental authority.

“Proprietary Right” means any trademark, trade name, service mark, trade secret,
patent right, copyright, or other proprietary right.

“Securities” means the Shares, the Additional Shares, the Warrants and the
shares of Common Stock issuable upon exercise of the Warrants (all as defined in
Section 5 below).

“Software” means the proprietary computer software program developed and
utilized by Licensor and described in the Documentation as existing at the date
of this Agreement (the “Original Version”) and as re-written by Licensee
pursuant to the rights as in Section 2.1(b) (the “Re-written Version”),
including any corrections or amendments made to such program (in whatever
version) not being Developments.

“Territory” means anywhere in the entire world.

“Use”means operate, reproduce, transmit (by electronic means or otherwise), make
available, perform and display.

 
 

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“VAT” means value added, sales, use or similar UK tax.

1.2 Interpretation. In this Agreement unless otherwise specified, reference to:-

(a) a statute or statutory instrument or any of its provisions is to be
construed as a reference to that statute or statutory instrument or such
provision as the same may have been or may from time to time hereafter be
amended or re-enacted;

(b) sections or schedules are to sections and schedules to this Agreement. The
schedules form part of the operative provisions of this Agreement and references
to this Agreement shall include references to the schedules.

SECTION 2. GRANT OF LICENSE

2.1. Grant of License. Subject to the terms of this Agreement, Licensor hereby
grants to Licensee, and Licensee hereby accepts, a non-transferable,
non-exclusive, perpetual (subject to Section 6.1(b) below), royalty-free
license:-

(a) to Use the Software in the Territory. Licensee may (subject to Section 2.6)
sublicense Use of the Software to such Persons in the Territory and on such
terms as Licensee, in its discretion, determines to be appropriate.; and

(b) to re-write the Software and create a Re-written Version (being such
re-write producing the same functionality as exists in the Original Version);
and

(c) to Enhance the Software so as to create additional functionality not present
in the Original Version and thereby create Developments.

2.2. Reservation of Rights. All other rights in the Software are expressly
reserved to Licensor.

2.3. Delivery of Software and Documentation. Within ten (10) days from the date
of this Agreement, Licensor shall deliver (by physical delivery or electronic
transmission) to Licensee: one (1) copy of the source code of the most current
version of the Software in computer readable form; and one (1) copy of the
Documentation.

2.4. Effect of Merger or Like Transaction. This Agreement and all rights and
obligations of the Parties shall remain in full force and effect following any
merger of either Party with or into another Person and following any transfer of
all or any portion of the outstanding stock or of all or any portion of the
assets of either Party.
 
2.5. Developments.

(a) Licensee is free to make any Developments, at its own cost, which Licensee,
in its discretion, determines to be appropriate. For the avoidance of doubt, a
Development is the addition of functionality and not replication or correction
of functionality present in the Software.

(b) Licensee shall deliver to Licensor within ten (10) days of each of 31 March,
31 July, and 30 November of each year (by physical delivery or electronic
transmission): one (1) copy of the source code of the most current version of
the Software (whether the Original Version or the Re-written Version) and of any
Developments in computer readable form; and one (1) copy of documentation and
operating instructions for the Software altered by any Developments, except in
the case where there have been no Developments since the last delivery pursuant
to this Section 2.5(b), in which case the Licensee shall instead deliver on each
such date a notice to Licensor in the form set out at Schedule F.

 
 

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(c) Licensee hereby grants to Licensor, and Licensor hereby accepts, a
non-transferable, non-exclusive, perpetual, royalty-free license to Use and
Enhance the Developments anywhere in the Territory except in the Excluded
Territory.

2.6. Sub-Licensing.

(a) Licensee. Subject to the provisions of subsection 2.6(c) below, Licensee
shall be entitled to sub-license any version of the Software in any form without
restriction, provided, however, that (i) Licensee shall advise Licensor of its
intention to provide any such sub-license; and (ii) prior to granting any
sub-license, Licensee shall provide Licensor with a current version of the
Software being sub-licensed.

(b) Licensor. Subject to the provisions of subsection 2.6(c) below, Licensor may
sub-license any version of the Development(s) without restriction to Affiliated
Companies of Licensor and/or ALL. For the avoidance of doubt, Licensor may
license and/or sub-license the Software in any form to any Person anywhere in
the Territory and the provisions of subsection 2.6(c) below do not apply in
respect of any such license and/or sub-license by the Licensor of the Software.

(c) Any sub-license granted as permitted in this Section 2.6 shall be subject to
the following provisions:-

(i) the sub-license shall be only in relation object code and only in relation
to Use (and not for the avoidance of doubt to Enhance or in relation to source
code);

(ii) the Party granting the sub-license provides expressly in any sub-license
that there can be no further sub-licensing; and

(iii) the Party agrees to be primarily liable for the performance by the
sub-licensee of its obligations under such sub-license.

SECTION 3. ALLADDIN SERVICES

3.1. Engagement of Licensor and ALL. Licensee hereby engages Licensor and ALL to
perform the Alladdin Services, on the terms set out in this Section 3 and
Schedule B, and Licensor and ALL hereby accept such engagement.

3.2. Standard of Service. Licensor and ALL shall perform the Alladdin Services
with reasonable care and skill and in conformity with all laws and regulations
applicable to the business in which it engages.

3.3. Term. Licensor’s and ALL’s duty to perform the Alladdin Services shall
commence as of the date hereof and shall extend for a term of two (2) years
(“Initial Term”). After expiry of the Initial Term, the Alladdin Services will
continue automatically for additional one (1) year term(s) (each a “Renewal
Term”) unless or until terminated by Licensee or Licensor or ALL upon at least
ninety (90) days’ prior written notice to expire at the end of the Initial Term
or a Renewal Term. Notwithstanding the foregoing, this Agreement may be
terminated as provided in Section 6 below.

 
 

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3.4. Independent Contractor. Licensor and ALL shall provide the Alladdin
Services solely as independent contractors and nothing contained in
this Agreement shall be construed as giving rise to an employment or agency
relationship, joint venture, partnership or other form of business relationship.

3.5. No Authority to Bind Licensee. Licensor and ALL shall have no authority to
take, nor shall it take, any action committing or obligating Licensee in any
manner, and they shall not represent themselves to others as having such
authority.

SECTION 4. NMLS SERVICES

4.1. Engagement of NMLS. Licensor hereby engages Licensee to perform the NMLS
Services, on the terms set out in this Section 4 and Schedule C, and Licensee
hereby accepts such engagement.

4.2. Term. Licensee’s duty to perform the NMLS Services shall commence as of the
date hereof and shall extend for a term of two (2) years (“Initial Term”). After
expiry of the Initial Term, the NMLS Services will continue automatically for
additional one (1) year term(s) (each a “Renewal Term”) unless or until
terminated by Licensor or ALL or Licensee upon at least ninety (90) days’ prior
written notice to expire at the end of the Initial Term or a Renewal Term.
Notwithstanding the foregoing, this Agreement may be terminated as provided in
Section 6 below.

4.3. Independent Contractor. Licensee shall provide the NMLS Services solely as
an independent contractor and nothing contained in this Agreement shall be
construed as giving rise to an employment or agency relationship, joint venture,
partnership or other form of business relationship.

4.4. No Authority to Bind Licensor or ALL. Licensee shall have no authority to
take, nor shall it take, any action committing or obligating Licensor or ALL in
any manner, and it shall not represent itself to others as having such
authority.

SECTION 5. CONSIDERATION

5.1. Consideration for License.

(a) Definitions. For purposes of the Section 5 only, capitalized terms used in
this Section shall have the meaning set forth below.

(i) “Actual Value” means the Stock Price multiplied by 275,000.

(ii) “Additional Shares" means any shares of Common Stock which may be issued to
Licensor in order to cover the deficit between the Ascribed Value and the Actual
Value.

(iii) “Ascribed Value” means US$225,000.

(iv) “Common Stock” means the class of common stock of Licensee, par value
US$0.001 per share.

 
 

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(v) “Securities Act” means the U.S. Securities Act 1933, as amended.

(vi) “Shares” means 275,000 shares of Common Stock, subject to adjustment as
provided in Section 5.1.(c), below.

(vii) “Stock Price” means the average of the closing price of the Common Stock
over the five trading days prior to the date on which Licensor may first sell
Shares pursuant to Rule 144 under the Securities Act. For the avoidance of doubt
this is the first day not being a Saturday or Sunday after the day on which the
Shares are received by Licensor.

(viii) “U.S.” means the United States of America.

(ix) “Valuation Date” means the fifth day after the date on which Licensor may
first sell the Shares pursuant to Rule 144 under the Securities Act. For the
avoidance of doubt this is the first day not being a Saturday or Sunday after
the day on which the Shares are received by Licensor.

(x) “US$” means the currency of the U.S.

(b) In consideration for the grant of the License, Licensee shall issue Shares
to Licensor or its designees (all of which shall be subject to the applicable
provisions of this Agreement relating to Shares) upon the execution of this
Agreement. Licensee may be obligated to deliver to Licensor Additional Shares
pursuant to Section 5.1(c) below.

(c) In the event that the Actual Value of the Shares is less than Ascribed Value
on the Valuation Date (“Deficiency”), Licensee shall deliver to Licensor within
5 days of the Valuation Date, cash and/or Additional Shares in an amount equal
to the difference between the Ascribed Value and the Actual Value. The mix of
cash and shares of Common Stock which Licensee is required to deliver to
Licensor to offset any Deficiency shall be in the sole discretion of Licensee.
To the extent that Licensee issues shares of Common Stock to offset any portion
of the Deficiency, Licensee shall deliver to Licensor a number of Additional
Shares as shall be calculated by dividing the US$ amount of the Deficiency to be
paid by the issuance of shares of Common Stock by the Stock Price. Any Common
Stock delivered to Licensor under this Section 5.1.(c) shall be subject to the
provisions of this Section 5.1 and Sections 9.9, 10.9 and 12 below and all of
the representations, warranties and covenants of Licensor and Licensee with
respect to the Shares included elsewhere in this Agreement.

(d) Licensee shall pay all costs and expenses related to (to be paid by Licensee
within 5 days of the completion of the visit) a visit by an officer of Licensor
to Licensee’s offices in Calgary, Canada to be undertaken before the end of the
month of February 2005. Licensee shall make available suitably senior personnel
during regular business hours during the visit to meet with the officer of
Licensor.

5.2. Compensation for Services. In consideration of and as complete compensation
for the Alladdin Services Licensee shall:

(a) pay to Licensor or ALL or their designees a sum equal to 2% of all card
deposits run under the Barclaycard Business merchant accounts designated as
GeLotto ID 2806107 and Rehab ID 2201036 (“Card Deposits”), said payment to be
made the 10th day of each month. Licensee guarantees a minimum payment of
US$8,000 per month ("Minimum Payment") to Licensor or ALL or their designees in
connection with procuring the Alladdin Services and that in the event that 2% of
Card Deposits equals more than the Minimum Payment in any month, Licensee shall
pay to Licensor the amount of any such difference by the 5th day of the
following month. All monetary amounts payable under this Section 5.2(a) are net
of any VAT which may be added if appropriate, and, if added, the VAT amount(s)
shall be billed on a proper tax invoice. Licensor or its designees may charge
Licensee daily interest on late payment of amounts due under this Section
5.2.(a) (both before and after judgment) at a rate of 5% per annum above the
Bank of England Base Rate (as at the date the payment was due), from the due
date until the date of actual payment. If Licensee fails to pay amounts due to
Licensor or its designees under this Section 5.2(a) by the due date, Licensee
shall reimburse Licensor or its designees all reasonable expenses incurred by
Licensor or its designees in recovering such amount. The Minimum Payment shall
be recalculated every 31st January, 30th April, 31st July and 31st October by
multiplying GBP4,200 by the spot US$/GBP foreign exchange rate quoted by
Investec Bank (UK) Limited, or such other bank as the Parties may determine, at
noon on said dates and rounded up to the nearest US$. For the avoidance of
doubt, any foreign exchange or other banking fees or expenses which may be
charged to Licensor in the event that any payment is received by Licensor in a
currency other than GBP shall be immediately reimbursed to Licensor by Licensee;
and

 
 

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(b) upon the execution hereof, issue to Licensor or its designees warrants (“the
Warrants”) to purchase up to two hundred thousand (200,000) shares of Common
Stock on terms and conditions no less favorable than the most favorable terms
and conditions of warrants to purchase Common Stock granted by Licensee to its
management or any other third party and the anti dilution provisions of which
shall apply and operate from the date hereof and not the date of issue of the
Warrants, if later.

5.3. Survival Upon Termination. This Section 5 shall survive the expiry or
earlier termination of this Agreement.

SECTION 6. TERMINATION

6.1. Termination.

(a) Termination by Licensee.

(i) License. The consideration paid for the License as described in Section 5.1
above is tendered in full payment for the License and the License may be
terminated only in accordance with Section 6.1.(b) below.

(ii) Alladdin Services. If Licensor or ALL is in material breach of its
obligations to provide the Alladdin Services and such breach continues for
thirty (30) days after written notice served by Licensee specifying in
reasonable detail the basis thereof, Licensee's obligation to make payments
under Section 5.2(a) above shall be suspended during the period beginning thirty
(30) days after the delivery of such notice to Licensor and ending when such
breach has been cured by Licensor or ALL in all respects. In the event that
Licensor or ALL effects a cure of any material breach Licensee shall immediately
make the payments previously suspended, subject to a right of set-off for any
amounts paid during such time as Licensor or ALL failed to provide the Alladdin
Services. In the event that Licensor or ALL is unable to cure any material
breach within ninety (90) days of the notice described in the foregoing
sentence, Licensee may serve notice in writing on Licensor terminating the
provision of the Alladdin Services and Licensee's obligation to make payments
for the Alladdin Services.

 
 

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(iii) NMLS Services. Licensee may by serving notice in writing on Licensor
terminate the NMLS Services (i) if Licensor becomes bankrupt or insolvent or is
unable to pay its debts or enters into compulsory or voluntary liquidation other
than for the purpose of any corporate restructuring or reorganisation not in
consequence of debt or compounds with or convenes a meeting of its creditors or
has a receiver or manager or an administrative receiver or an administrator is
appointed over its assets or ceases for any reason to carry on business or takes
or suffers any similar or analogous action in any jurisdiction of the Territory
or (ii) by reason of the operation of Section 6.1(a)(ii) above, in which cases,
for the avoidance of doubt, Licensee shall adhere to the Migration Plan as set
out in Section 6.3 below.

(b) Termination by Licensor or ALL.

(i) License. Licensor or ALL may by serving notice in writing on Licensee
terminate the License if:

(A) Licensee fails to comply within thirty (30) days of the date of performance
with any of the provisions set out in Section 5.1 above; and

(B) Licensee is in material breach of any obligation in this Agreement relating
to the License (including those set out in Section 2 above and Section 8 below)
and fails to remedy such breach (if capable of remedy) within thirty (30) days
of a written notice served by Licensor or ALL specifying the breach.

(ii) Alladdin Services. (A). In the event that Licensee fails to perform any of
Licensee’s obligations set out in Section 5.2 above within thirty (30) days of
the date due for performance, Licensor or ALL shall be entitled by serving
notice in writing on Licensee to suspend performance of the Alladdin Services
(but without prejudice to Licensee’s obligations to pay the consideration under
Section 5.2 above) until such time as Licensee performs such obligation. If
Licensee fails to perform any of such obligations, within a period of ninety
(90) days of the date due for performance, Licensor or ALL shall be entitled by
serving notice in writing on Licensee to terminate the rendering of the Alladdin
Services.

(B) If a Development is deployed which contravenes or in Licensor’s or ALL’s
reasonable opinion may contravene any law, regulation or other rule or code of
conduct in Great Britain, Licensor or ALL shall be entitled by serving notice in
writing on Licensee to suspend performance of the Alladdin Services (but without
prejudice to Licensee’s obligations to pay the consideration under Section 5.2
above) until the Development has been removed. If it has not been removed within
ninety (90) days of the date of being deployed, Licensor or ALL shall be
entitled by serving notice in writing on Licensee to terminate the rendering of
the Alladdin Services.
(C) If a claim is asserted or any Legal Proceeding is commenced against Licensor
or Licensee alleging that any Development infringes or has infringed any
Proprietary Right of any Person, Licensor or ALL shall be entitled by serving
notice in writing on Licensee to suspend performance of the Alladdin Services
(but without prejudice to Licensee’s obligations to pay the consideration under
Section 5.2 above) until such time as the claim or Legal Proceeding is settled.
If the claim or Legal Proceeding is not settled within ninety (90) days of
having been commenced, Licensor or ALL shall be entitled by serving notice in
writing on Licensee to terminate the rendering of the Alladdin Services.

(iii) NMLS Services. Licensor or ALL may by serving notice in writing on
Licensee terminate the NMLS Services if:

 
 

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(A) Licensee is in material breach of any obligation in this Agreement relating
to the NMLS Services (including those set out in Sections 4 or Schedule C) or in
breach of any obligation in Section 5 and fails to remedy such breach (if
capable of remedy) within ninety (90) days of a written notice served by
Licensor or ALL specifying the breach; or

(B) Licensee becomes bankrupt or insolvent or is unable to pay its debts or
enters into compulsory or voluntary liquidation other than for the purpose of
any corporate restructuring or reorganisation not in consequence of debt or
compounds with or convenes a meeting of its creditors or has a receiver or
manager or an administrative receiver or an administrator is appointed over its
assets or ceases for any reason to carry on business or takes or suffers any
similar or analogous action in any jurisdiction of the Territory.

6.2. Consequences of Termination.

(a) If the License terminates for any reason, Licensee shall immediately cease
to Use or Enhance the Software and/or any Developments and shall deliver to
Licensor within ten (10) days of the date of such termination (by physical
delivery or electronic transmission): one (1) copy of the source code of the
most current version of the Software (whether the Original Version or the
Re-written Version) and of any Developments in computer readable form; and one
(1) copy of documentation and operating instructions for the Software altered by
any Developments. The remedies of Licensor or ALL pursuant to this Section
6.2(a) are not exclusive and shall not limit or otherwise affect any of the
rights or remedied otherwise available to Licensor or ALL granted by law and
under this Agreement, including recovery of damages.

(b) Sections of this Agreement which are expressed or intended to survive
termination of this Agreement (in whole or in part) shall survive.

(c) The termination of this Agreement howsoever caused shall not affect the
rights and obligations of the Parties that have accrued prior to termination.

6.3 Migration Plan.

(a) Licensee acknowledges that Licensor may wish to have continuity of the NMLS
Services following termination of the NMLS Services (for whatever reason).
Licensee agrees to co-operate with Licensor and/or any new service provider
appointed by Licensor to provide the NMLS Services or any part of them (“New
Service Provider”) to ensure smooth migration and continuity of the NMLS
Services during the Migration Period.

(b) For the purposes of this Section 6.3, “Migration Period” means the period
commencing on the date one Party gives written notice to the other terminating
this Agreement and/or the NMLS Services and shall end on the date the NMLS
Services have been successfully migrated or (if later) ninety (90) days after
the date of the notice.

(c) As part of the migration, and to the extent reasonably required by Licensor,
Licensee shall:

 
(i)
perform the NMLS Services up to the end of the Migration Period in accordance
with this Agreement;

 
 

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(ii)
provide a comprehensive list of tasks and/or issues outstanding (if any) at the
end of the Migration Period;

 
(iii)
provide any technical assistance reasonably required by Licensor and/or New
Service Provider to enable the smooth migration of the NMLS Services; and

 
(iv)
promptly, on request, do all other things and acts that may reasonably be
required to ensure a smooth migration of the NMLS Services.

(d) As part of the migration, and to the extent reasonably required by Licensee,
Licensor shall promptly, on request, do all other things and acts that may
reasonably be required to ensure a smooth migration of the NMLS Services.

SECTION 7. ADDITIONAL OBLIGATIONS OF THE PARTIES

7.1. Technical Assistance. Licensor shall make itself available to Licensee (at
reasonable times and locations and upon reasonable notice), to consult with,
instruct, and assist Licensee and Affiliated Companies with respect to the Use
of the Software. Licensee shall make itself available to Licensor and its
designees (at reasonable times and locations and upon reasonable notice), to
consult with, instruct, and assist Licensor and its designees with respect to
the Use of Developments.

7.2. Confidentiality. The Parties and each of their respective employees, agents
and representatives shall keep strictly and permanently confidential all
information obtained in connection with this Agreement and the transactions
contemplated by this Agreement. Without limiting the generality of the
foregoing, neither Licensor, ALL, Licensee nor any of their respective
employees, agents and representatives shall use or disclose to any other Person
(i) any non-public information regarding the business operations or financial or
other affairs of the Parties or (ii) any of the terms and provisions of this
Agreement. This Section 7.2 shall survive the expiry or earlier termination of
this Agreement for a period of two years from such termination.

SECTION 8. CLAIMS AND LEGAL PROCEEDINGS

8.1. Infringement Claims. If any claim is asserted or any Legal Proceeding is
commenced against either Party that the Software and/or Developments or their
Use or Enhancement infringes or has infringed any Proprietary Right of any
Person (each an “Infringement Claim”), then the defense of such Infringement
Claim shall be under the control of the Party responsible for it as defined in
Section 8.2 (the “Responsible Party”).

8.2. Responsible Party.

(a) Infringement Claims relating only to the Original Version of the Software or
the Alladdin Materials (as defined in Schedule C below) shall be the
responsibility of Licensor;

(b) Infringement Claims relating only to the Re-written Version of the Software
and/or Developments shall be the responsibility of Licensee;

(c) other Infringement Claims shall be the joint responsibility of the Parties
and dealt with in accordance with Section 8.5 (a “Joint Responsibility Claim”).

8.3. Claims brought against non-Responsible Party. If the Infringement Claim
(other than a Joint Responsibility Claim) is made against the Party who is not
the Responsible Party, the other Party (the “Other Party”) shall immediately
provide the Responsible Party with written notice of the assertion of such
Infringement Claim and shall immediately furnish to the Responsible Party copies
of all correspondence, pleadings and other materials relating to such claim or
Legal Proceeding. The Responsible Party shall assume the defense of any such
claim or Legal Proceeding, and the following provisions shall apply:

 
 

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(a) the Responsible Party shall have the exclusive right to control the defense
of such Infringement Claim with counsel of its own choosing;

(b) the Other Party shall, at the Responsible Party’s reasonable expense,
provide the Responsible Party with such information and assistance as the
Responsible Party may request regarding such Infringement Claim;

(c) the Other Party shall not enter into any settlement with respect to such
Infringement Claim without the consent of the Responsible Party;

(d) the amount payable to the complaining party in connection with any
settlement of such Infringement Claim, and the amount of any damages or costs
awarded to the complaining party by any court, arbitrator, or other trier of
fact, shall be borne and paid exclusively by the Responsible Party;

(e) all reasonable expenses incurred by the Other Party in connection with such
Infringement Claim (including costs of investigation and attorneys' fees, only
where incurred in respect of such Legal Proceeding where these have been
incurred after the commencement of any such Legal Proceeding) shall be borne and
paid exclusively by the Responsible Party.

8.4. Claims brought against Responsible Party. If the Infringement Claim (other
than a Joint Responsibility Claim) is made against the Responsible Party, then:

(a) the other Party (the “Other Party”) shall, at the Responsible Party’s
reasonable expense, provide the Responsible Party with such information and
assistance as the Responsible Party may reasonably request for the purpose of
enabling the Responsible Party to defend such Infringement Claim;

(b) the Responsible Party shall have the exclusive right to control the defense
of such Infringement Claim with counsel of its own choosing, and shall have the
exclusive right to settle such Infringement Claim (without the need to obtain
any consent or approval of the Other Party or any other Person and provided that
such settlement forecloses the possibility of future action as to any matter
settled against the Other Party) on such terms as the Responsible Party, in its
discretion, determines to be appropriate;

(c) the amount payable to the complaining party in connection with any
settlement of such Infringement Claim, and the amount of any damages or costs
awarded to the complaining party by any court, arbitrator or other trier of
fact, shall be borne and paid exclusively by the Responsible Party;

(d) all reasonable expenses incurred by the Responsible Party in connection with
such Infringement Claim (including costs of investigation and attorneys' fees,
whether incurred before or after the commencement of any such Legal Proceeding)
shall be borne and paid exclusively by the Responsible Party.

 
 

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8.5. Joint Responsibility Claims. If a Joint Responsibility Claim is brought,
then:-

(a) if the Joint Responsibility Claim is brought against Licensee, Licensee
shall immediately provide Licensor with written notice of the assertion of such
Infringement Claim and shall immediately furnish to Licensor copies of all
correspondence, pleadings and other materials relating to the Infringement
Claim;

(b) Licensor shall control the defense of such Infringement Claim with counsel
of its own choosing;

(c) Licensor and Licensee shall always consult fully with each other and obtain
the other Party’s prior written approval (not to be unreasonably withheld or
delayed) before taking any material step in relation to such actions or
proceedings;

(d) Neither party shall settle the Infringement Claim without the other Party’s
prior written consent (such consent not to be unreasonably withheld or delayed);

(e) Each Party shall, at its own expense, provide all such information and
assistance as may reasonably required for the purpose of defending the
Infringement Claim;

(f) the amount payable to the complaining party in connection with any
settlement of such Infringement Claim, and the amount of any damages or costs
awarded to the complaining party by any court, arbitrator or other trier of fact
and all expenses incurred by Licensor in connection with such Infringement Claim
(including costs of investigation and attorneys' fees, whether incurred before
or after the commencement of any such Legal Proceeding) shall be shared between
the Parties equally unless:-

(i) the Infringement Claim fails in respect of the Original Version of the
Software and the Alladdin Materials (as defined in Schedule C below) but
succeeds in respect of the Re-written Version of the Software and/or a
Development, in which case all such amounts and expenses will be borne by
Licensee;

(ii) the Infringement Claim fails in respect of the Re-written Version of the
Software and/or a Development but succeeds in respect of the Original Version of
the Software and the Alladdin Materials (as defined in Schedule C below), in
which case all such amounts and expenses will be borne by Licensor.

8.6. Survival Upon Termination. This Section 8 shall survive the expiry or
earlier termination of this Agreement.

SECTION 9. LICENSOR REPRESENTATIONS AND WARRANTIES

Licensor hereby represents and warrants to Licensee as follows:

9.1. Corporate Organization. Licensor is duly organized, and validly existing
under the laws of England and Wales and has full corporate power and authority
to carry on its business as it is now being conducted and to own the properties
and assets it now owns.

9.2. Authorization. Licensor has full corporate power and authority to enter
into this Agreement and to carry out the transactions contemplated hereby. The
Board of Directors and stockholders of Licensor have taken all necessary action
required by law, their Memorandum and Articles of Association or otherwise to be
taken by them to authorize the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, and this Agreement is a
valid and binding agreement of Licensor enforceable in accordance with its
terms.

 
 

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9.3. No Violation. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will violate any provision
of the Memorandum and Articles of Association of Licensor, or will violate, or
be in conflict with, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or cause the
acceleration of the maturity of any debt or obligation pursuant to, or result in
the creation or imposition of any security interest, lien or other encumbrance
upon any property or assets of Licensor under, any agreement or commitment to
which Licensor is a party or by which Licensor is bound, or to which the
property of Licensor is subject, or violate any statute or law or any judgment,
decree, order, regulation or rule of any court or governmental authority.

9.4. Title to Software. Licensor owns all legal and beneficial title to the
Software free and clear of all title defects or objections, liens, claims,
charges, security interests or other encumbrances of any nature whatsoever
including, without limitation conditional sales contracts, collateral security
arrangements and other title or interest retention arrangements, which would
prevent Licensor from entering into this Agreement or consummating the
transactions contemplated hereby.

9.5. Representations Relating to the Intellectual Property.

(a) Licensor is the sole owner of all title and interest in the Proprietary
Rights in the Software and has full right to grant the License.

(b) To the best of Licensor's knowledge: (i) the Software does not infringe nor
conflict with any Proprietary Right or other right of any Person and; (ii)
neither Licensor nor any other Person has received any written notice alleging
that the Software infringes or conflicts with, or will infringe or conflict
with, any Proprietary Right or other right of any Person, and there is no basis
for the assertion of any such claim.

(c) To the best of Licensor's knowledge, the Use of the Software will not
require the unauthorized use of any Proprietary Right, and, without having
conducted any special investigation, such use will not involve infringement or
claimed infringement of any Proprietary Right of any Person.

9.6. Litigation. There are no Legal Proceedings pending or threatened against or
involving Licensor or which questions or challenges the validity of this
Agreement or any action taken or to be taken by Licensor pursuant to this
Agreement or in connection with the transactions contemplated hereby; nor is
there and Licensor does not know or have any reason to know of any valid basis
for any such Legal Proceeding.

9.7. Consents. No consent of any Person not being a Party is necessary to the
consummation of the transactions contemplated by this Agreement, including,
without limitation, consents from parties to loans, contracts, leases or other
agreements and consents from national or local government or any agency thereof.

9.8. Non-contravention. Neither the execution and delivery of this Agreement nor
the performance of this Agreement will result (with or without notice or lapse
of time) in (i) a violation of any law, rule, regulation, judgment, order, or
decree to which Licensor or the Software is subject; or (ii) a breach or
violation of any agreement or understanding (whether oral, written, express, or
implied) to which Licensor is a party or by which Licensor is bound.

 
 

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9.9. Representations Relating to the Securities.

(a) Legend on Certificates Evidencing the Securities.

(i) Licensor acknowledges and agrees, and shall to the extent required by law
cause each Person to whom Securities are issued or transferred to acknowledge
and agree, that the Securities are “restricted securities” as defined by Rule
144 of the Rules and Regulations promulgated under the U.S. Securities Act of
1933, as amended (the “Securities Act”), and that each certificate evidencing
the Securities shall be imprinted with a restrictive legend substantially in the
following form:

"“[NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE/CONVERSION
OF THESE SECURITIES HAVE BEEN REGISTERED] THESE SECURITIES HAVE NOT BEEN
REGISTEREDWITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.”

(ii) Licensor acknowledges and agrees, and shall cause each Person to whom
Securities are issued or transferred to acknowledge and agree, that such
Securities may be disposed of only pursuant to an effective registration
statement under the Securities Act or pursuant to an available exemption from or
in a transaction not subject to the registration requirements thereof; and

(iii) in connection with any transfer of any Securities other than pursuant to
an effective registration statement, Licensee may require the transferor thereof
to provide to Licensee with an opinion of counsel selected by the transferor,
the form and substance of which opinion shall be reasonably satisfactory to
Licensee, to the effect that such transfer does not require registration under
the Securities Act. Licensee shall not be obligated to register or recognize any
transfer of Securities if such transfer is not affected as provided in this
Section 9.9 and shall not be liable to any party other than Licensor in
connection therewith.

9.10 Full Disclosure. This Agreement does not in relation to the Software or
Licensor contain any untrue statement of fact or omit to state any fact
necessary to make any of the representations or any of the other statements or
information contained in this Section 9 or therein not misleading.

9.11 Survival Upon Termination. This Section 9 shall survive the expiry or
earlier termination of this Agreement.

SECTION 10. LICENSEE REPRESENTATIONS AND WARRANTIES

Licensee hereby represents and warrants to Licensor as follows:

 
 

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10.1. Corporate Organization. Licensee is duly organized, validly existing and
in good standing under the laws of the U.S. State of Delaware and has full
corporate power and authority to carry on its business as it is now being
conducted and to own the properties and assets it now owns.

10.2. Authorization. Licensee has full corporate power and authority to enter
into this Agreement and to carry out the transactions contemplated hereby. The
Board of Directors and stockholders of Licensee have taken all necessary action
required by law, its Certificate of Incorporation, By-Laws or otherwise to be
taken by them to authorize the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, including the issue of the
Securities and this Agreement is a valid and binding agreement of Licensee
enforceable in accordance with its terms.

10.3. No Violation. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby including the issue of the
Securities will violate any provision of the Certificate of Incorporation or
By-Laws of Licensee, or, will violate, or be in conflict with, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or cause the acceleration of the maturity of any debt
or obligation pursuant to, or result in the creation or imposition of any
security interest, lien or other encumbrance upon any property or assets of
Licensee under, any agreement or commitment to which Licensee is a party or by
which Licensee is bound, or to which the property of Licensee is subject, or
violate any statute or law or any judgment, decree, order, regulation or rule of
any court or governmental authority.

10.4. Title to Developments. At the time of any transfer of a Development to
Licensor, Licensee will have good, valid and marketable title to such
Development free and clear of all title defects or objections, liens, claims,
charges, security interests or other encumbrances of any nature whatsoever
including, without limitation leases, chattel mortgages, conditional sales
contracts, collateral security arrangements and other title or interest
retention arrangements, which would prevent Licensee from entering into this
Agreement or consummating the transactions contemplated hereby.

10.5. Representations Relating to the Intellectual Property.

(a) Licensee will be the sole owner or will obtain sole ownership of all title
and interest in the Re-written Version of the Software and the Developments
(subject to the rights of Licensor in the Original Version of the Software) and
will have full right to grant to Licensor the license described in Section
2.5(c), above.

(b) the Re-written Version of the Software and/or Developments will not infringe
nor conflict with any Proprietary Right or other right of any Person and there
will be no basis for the assertion of any such claim.

(c) The Use and Enhancement of the Re-written Version of the Software and/or
Developments will not require the unauthorized use of any Proprietary Right, and
such use will not involve infringement or claimed infringement of any
Proprietary Right of any Person.

10.6. Litigation. There are no Legal Proceedings pending or threatened against
or involving Licensee or which questions or challenges the validity of this
Agreement or any action taken or to be taken by Licensee pursuant to this
Agreement or in connection with the transactions contemplated hereby; nor is
there and Licensee does not know or have any reason to know of any valid basis
for any such Legal Proceeding.

 
 

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10.7. Consents. No consent of any Person not being a Party is necessary to the
consummation of the transactions contemplated by this Agreement, including,
without limitation, consents from parties to loans, contracts, leases or other
agreements and consents from national or local government or any agency thereof.

10.8. Non-contravention. Neither the execution and delivery of this Agreement
nor the performance of this Agreement will result (with or without notice or
lapse of time) in (i) a violation of any law, rule, regulation, judgment, order,
or decree to which Licensee or any Development is subject; or (ii) a breach or
violation of any agreement or understanding (whether oral, written, express, or
implied) to which Licensee is a party or by which Licensee is bound.

10.9. Representations Relating to Securities.

(a) Only class of shares. Common Stock is the only class of equity securities
authorized and issued by Licensee; and

(b) The Securities have been duly authorized and when issued in accordance with
the terms of this Agreement will be duly and validly issued and outstanding,
fully paid and non-assignable and will not have been deemed in violation of any
pre-emptive rights of any person.

10.10. Full Disclosure. This Agreement does not in relation to Licensee contain
any untrue statement of fact or omit to state any fact necessary to make any of
the representations or any of the other statements or information contained in
this Section 10 or therein not misleading.

10.11. Survival Upon Termination. This Section 10 shall survive the expiry or
earlier termination of this Agreement.

SECTION 11.   LIMITATION OF LIABILITY

11.1 Alladdin Services.

(a) Subject to Section 11.4 below, neither Licensor, ALL, nor any Affiliated
Company of Licensor or of ALL, shall be liable for:-

(i) any loss of anticipated savings, loss of business, loss of profits, loss of
revenue, and/or

(ii) any loss of availability, business interruption, loss of or corruption of
data; and/or

(iii) any additional operational and/or administrative costs and expenses; or

(iv) any indirect or consequential loss or damage;

arising out of or in connection with the Alladdin Services and all such
liability is hereby excluded howsoever arising whether arising in contract, in
tort (including in negligence), for breach of statutory duty or otherwise.

(b) Subject to Section 11.4 below, the maximum aggregate combined liability of
Licensor, ALL and any Affiliated Company of Licensor or ALL to Licensee or any
Affiliated Company of Licensee howsoever arising (whether arising in contract,
tort (including negligence) or otherwise) in connection the Alladdin Services
relating to events in any calendar year shall not exceed the aggregate of the
consideration paid or payable to Licensor by Licensee under Section 5.2(a)
during such year.

 
 

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11.2. NMLS Services.

(a) Subject to Section 11.4 below, neither Licensee nor any Affiliated Company
of Licensee shall be liable for:-

(i) any loss of anticipated savings, loss of business, loss of profits, loss of
revenue, and/or

(ii) any loss of availability, business interruption, loss of or corruption of
data; and/or

(iii) any additional operational and/or administrative costs and expenses; or

(iv) any indirect or consequential loss or damage;

arising out of or in connection with the NMLS Services and all such liability is
hereby excluded howsoever arising whether arising in contract, in tort
(including in negligence), for breach of statutory duty or otherwise.

(b) Subject to Section 11.4 below, the maximum aggregate combined liability of
Licensee and any Affiliated Company of Licensee to Licensor or any Affiliated
Company of Licensor howsoever arising (whether arising in contract, tort
(including negligence) or otherwise) in connection with the NMLS Services
relating to events in any calendar year shall not exceed the aggregate of the
consideration paid or payable to Licensor by Licensee under Section 5.2(a)
during such year.

11.3. Force Majeure. Neither of the Parties will be liable for or be regarded as
being in breach of any of the provisions of this Agreement by reason of any
failure to perform any obligation under this Agreement, if such failure is the
direct or indirect result of any cause beyond its reasonable control including,
without limitation: Act of God; refusal, failure to grant, suspension or
withdrawal of any governmental license or consent or any other act or omission
of any government (including any change in law or regulation in the Territory);
fire, floods, storms; explosion; breakdown of machinery or act of terrorism. In
any such case, the Party claiming the benefit of this Section will notify the
other Parties of the existence of the delay, and such notifying Party will use
due diligence to remove the cause of such delay and take reasonable steps to
resume performance as soon as possible. If performance is not achieved within
three (3) months, either of the other Parties may terminate this Agreement by
service notice in writing on the other Parties.

11.4. Certain Exceptions. Nothing in this Agreement excludes or limits liability
for death or personal injury caused by negligence nor for fraudulent
misrepresentation.

11.5. Survival Upon Termination. This Section 11 shall survive the expiry or
earlier termination of this Agreement.

 
 

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SECTION 12. REGISTRATION RIGHTS

12.1(a) If Licensee at any time proposes to register the offer and sale of any
of its securities under the U.S. Securities Act of 1933, as amended (the
“Securities Act”) (other than on a Registration Statement filed under the
Securities Act on Form S-8 or S-4 or any similar or successor forms), whether or
not for sale for its own account, it will each such time give at least thirty
(30) days prior written notice (the "Notice") to Licensor (so long as Licensor
or its designees still own any Securities, which, for purposes of this Section
are referred to collectively as the “Registrable Securities”) of its intention
to file a Registration Statement under the Securities Act and of their rights
under this Section 12. Upon the written request of Licensor made within twenty
(20) days of the date of the Notice (which request shall specify the aggregate
number of Registrable Securities which Licensor wishes to be registered and will
also specify the intended method of disposition thereof, if any), Licensee will
effect the registration under the Securities Act of all securities which
Licensee has been so requested to register by Licensor (an “Incidental
Registration”); provided, that if, any time after giving written notice of its
intention to register securities and prior to the effective date of the
Registration Statement filed in connection with such registration, Licensee
shall determine for any reason not to register any of Licensee’s securities,
Licensee shall give written notice of such determination to Licensor and,
thereupon, shall be relieved of its obligation to register any securities in
connection with such registration (but not from its obligation to pay the
registration expenses incurred prior to the date of Licensee’s determination in
connection therewith). The Licensee will pay all expenses in connection with any
Incidental Registration other than any underwriting discounts or commissions
with respect to securities sold by Licensor. Licensor may not participate in any
underwritten registration unless Licensor (i) agrees to sell its securities on
the basis provided in any underwriting arrangements approved by the persons who
have selected the underwriter and (ii) accurately completes in a timely manner
and executes all questionnaires, powers of attorney, underwriting agreements,
escrow agreements, indemnification agreements and other documents customarily
required under the terms of such underwriting arrangements; it being understood
and agreed that, Licensor shall not be obligated to make any representation or
warranty or to agree to any covenant or obligation (including “lockups” and
other similar restrictions) which are not imposed upon or otherwise obtained
from all other participating security holders (other than officers and employees
of Licensee).

(b) Only in the event that any registration of the Licensee’s securities is made
pursuant to or in connection with an agreement with Persons other than Licensee
Affiliated Companies who have invested in excess of an aggregate of US$2,500,000
in the Licensee or the Licensee Affiliated Companies and such Persons do not
approve the inclusion of the Registrable Securities in any such Registration
Statement, Licensee shall be entitled to exclude the Registrable Securities from
such Registration Statement.

12.2. Licensee agrees that until a period of two (2) years after Licensor has
exercised the last of its Warrants Licensee will make publicly available the
information required by Rule 144(c) of the Securities Act.

12.3. Licensor agrees to comply with all relevant provisions of US securities
laws and any reasonable requirements of Licensee in connection with the sale of
the Registrable Securities registered on Licensor’s behalf.

SECTION 13. MISCELLANEOUS PROVISIONS

13.1. Notices. Any notice, demand, consent, request, or other communication
required or permitted to be delivered under this Agreement to either Party
(“Receiving Party”) shall be in writing and shall be deemed properly delivered,
given, and received on the earlier of (i) the date of actual delivery of such
notice, demand, consent, request, or other communication to the Receiving Party
at the address set forth beneath the name of the Receiving Party below (or at
such other address as the Receiving Party shall have specified in a written
notice delivered to the other Party); or (ii) the date four business days after
the date on which such notice, demand, consent, request, or other communication
is deposited in the mail as registered or certified mail, postage prepaid, with
return receipt requested, addressed to the Receiving Party at the address set
forth beneath the name of the Receiving Party below (or at such other address as
the Receiving Party shall have specified in a written notice delivered to the
other Party):

 
 

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Licensor:           Alladdin Limited
12 St James’s Square
London SW1Y 4RB
Attn.: Mr Andrew della Casa
Facsimile: (44) (207) 352 2672

Copied to:     Mr Andrew della Casa, 20 Stadium Street, London SW10 0PT

ALL:                          Alladdin Lotteries Limited
12 St James’s Square
London SW1Y 4RB
Attn.: Mr Andrew della Casa
Facsimile: (44) (207) 352 2672

Copied to:     Mr Andrew della Casa, 20 Stadium Street, London SW10 0PT

Licensee:                   New Media Lottery Services, Inc.
370 Neff Avenue
Suite L
Harrisonburg, VA 22801
Attn.: Mr. Randolph Brownell
Facsimile: (1) (540) 574 0491

Copied to:     Mr W Ruffa, Ruffa & Ruffa, 150 East 58 Street, New York 10155

13.2. Headings. The underlined headings contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.

13.3. Counterparts. This Agreement may be executed in several counterparts, each
of which shall constitute an original and all of which, when taken together,
shall constitute one agreement.

13.4. Governing Law and Jurisdiction. This Agreement shall be construed and
interpreted in accordance with, and shall be governed in all respects by, the
laws of England and the Parties hereby irrevocably consent and submit to the
exclusive jurisdiction of the English courts.

13.5. Assignment. (A) Licensor may, at its election and upon three (3) months
prior written notice to Licensee, assign any or all of its rights or delegate
any or all of its obligations under this Agreement (i) to ALL, (ii) to any of
its or ALL’s Affiliated Companies; or (iii) to any Person that acquires or
otherwise succeeds to (whether by merger, acquisition of assets, or otherwise)
all or any portion of Licensor's or ALL’s assets or business. In the event
Licensor assigns its rights and delegates its obligations under this Agreement
as permitted by this Section 13.5(A), Licensor shall automatically (and without
the necessity of any further action on the part of the Parties) be fully and
unconditionally released and discharged from all of its obligations under this
Agreement.

 
 

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(B) ALL may, at its election and upon three (3) months prior written notice to
Licensee, assign any or all of its rights or delegate any or all of its
obligations under this Agreement (i) to Licensor, (ii) to any of its or
Licensor’s Affiliated Companies; or (iii) to any Person that acquires or
otherwise succeeds to (whether by merger, acquisition of assets, or otherwise)
all or any portion of Licensor's or ALL’s assets or business. In the event ALL
assigns its rights and delegates its obligations under this Agreement as
permitted by this Section 13.5(B), ALL shall automatically (and without the
necessity of any further action on the part of the Parties) be fully and
unconditionally released and discharged from all of its obligations under this
Agreement.

(C) Licensee may, at its election and upon three (3) months prior written notice
to Licensor and ALL, assign any or all of its rights or delegate any or all of
its obligations under this Agreement (i) to any of its Affiliated Companies, or
(ii) to any Person that acquires or otherwise succeeds to (whether by merger,
acquisition of assets, or otherwise) all or any portion of Licensee's assets or
business. In the event Licensee assigns its rights and delegates its obligations
under this Agreement as permitted by this Section 13.5(C), Licensee shall
automatically (and without the necessity of any further action on the part of
the Parties) be fully and unconditionally released and discharged from all of
its obligations under this Agreement.

13.6. Successors and Assigns. Subject to the provisions of Section 13.5 above,
this Agreement shall inure to the benefit of Licensor, to the benefit of ALL and
to the benefit of Licensee. Subject to the provisions of Section 13.5 above,
this Agreement shall be binding upon (a) Licensor and its successors and
assigns; (b) ALL and its successors and assigns; and (c) Licensee and its
successors and assigns. The provisions of this Agreement are not intended to,
and shall not, provide any rights or remedies to any sublicensee or to any other
Person.

13.7. Severability. In the event that any provision of this Agreement, or the
application of such provision to any Person or set of circumstances, shall be
determined to be invalid, unlawful, void, or unenforceable to any extent, the
remainder of this Agreement, and the application of such provision to Persons or
circumstances other than those as to which it is determined to be invalid,
unlawful, void, or unenforceable, shall not be affected and shall continue to be
valid and enforceable to the fullest extent permitted by law.

13.8. Entire Agreement. This Agreement sets forth the entire understanding of
the Parties with respect to the subject matter of this Agreement and supersedes
all prior agreements, representations and understandings (other than fraudulent
misrepresentations) between the Parties relating to the subject matter of this
Agreement. All implied terms, conditions and warranties (whether implied by
statute, common law, a course of dealings, or otherwise) are excluded to the
maximum extent permitted by law.

13.9 Third Party Rights. A Person who is not a party to this Agreement has no
right under the Contracts (Rights of Third Parties) Act 1999 or otherwise to
enforce any term of this Agreement.

13.10. Waiver. No failure on the part of either of the Parties to exercise any
power, right, privilege, or remedy hereunder, and no delay on the part of either
of the Parties in exercising any such power, right, privilege, or remedy, shall
preclude any other or further exercise thereof or of any other power, right,
privilege, or remedy.

13.11. Variations of Pronouns. Whenever the context so requires, the singular
number shall include the plural, and vice versa; the masculine gender shall
include the feminine and neuter genders; and the neuter gender shall include the
masculine and feminine genders.

 
 

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13.12. Additional Documents and Actions. The Parties agree to execute and
deliver, or cause to be executed and delivered, such agreements, instruments,
and documents (including, without limitation, a memorandum of license suitable
for recording in the U.S. Patent and Trademark Office and satisfactory in form
and substance to the submitting Party), and to take such other actions, as a
Party reasonably determines to be necessary or appropriate for the purpose of
effectuating, evidencing, implementing, or facilitating the consummation of any
of the transactions contemplated by this Agreement or for the purpose of
enabling a Party to enforce any of its rights under this Agreement.

13.13. Non-exclusivity. The rights and remedies of the Parties under this
Agreement are not exclusive of or limited by or in limitation of any other
rights or remedies (including, without limitation, any rights of set off) which
the Parties may have, whether at law, in equity, by contract or otherwise, all
of which shall be cumulative. Without limiting the generality of the foregoing,
the rights and remedies of the Parties under this Agreement, and the obligations
and liabilities of the Parties under this Agreement, are in addition to their
respective rights, remedies, obligations, and liabilities under the law of
unfair competition, misappropriation of trade secrets, and the like. This
Agreement does not limit, and is not limited by, the terms of any covenant not
to compete, employment, confidentiality, invention, or similar agreement which
the Parties may contemporaneously herewith or hereafter enter into.
 

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SCHEDULE A

Documentation

1. Documents forming Documentation:
 

 
1.
Lottery-Interfaces-Database

 
2.
Business Process Diagrams

 
3.
Draft Functional Spec

 
4.
Lottery-Server-Environment

 
5.
Draw Procedures

2.
For the purposes of Section 2.3 above, a copy of the Documentation has, as of
the date of this Agreement, been delivered to Licensee by Licensor.

 

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SCHEDULE B

Alladdin Services

Ongoing activity undertaken by Alladdin in respect of NMLS
 
1.
Regulatory responsibility for Rehab UK, OldOppos, Lotter-eÔ

2.
Reconciliations - Rehab Lotteries, Rehab UK, OldOppos, Lotter-eÔ

3.
Gaming Board returns - OldOppos/Lotter-eÔ, Rehab UK

4.
Beneficiary relationship management - 2 charities (Rehab Lotteries, Rehab UK),
12 charities (Lotter-eÔ), 4 charities (OldOppos)

5.
Beneficiary receipts - 1 charity (Rehab UK), 12 charities (Lotter-eÔ), 4
charities (OldOppos)

6.
merchant ID accounts management - GeLotto ID 2806107 and Rehab ID 2201036

7.
bank and bank accounts management - for above lotteries/societies

8.
sales reports for above lotteries in accordance with applicable law

9.
withdrawal processing and management - Euro and GBP, all above accounts

10.
advise on statutory requirements in Britain / regulatory management

11.
monitor current sites for compliance with statutory requirements - Rehab UK,
OldOppos, Lotter-eÔ

12.
monitor current Terms & Conditions for compliance with statutory requirements -
Rehab UK, OldOppos, Lotter-eÔ

13.
monitor UK marketing of above lotteries for compliance with statutory
requirements

14.
processes monitoring and management

15.
liaising with Calgary, New Jersey, Harrisonburg

 

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SCHEDULE C

NMLS Services

1. Definitions. For purposes of Section 4 and this Schedule C only, capitalized
terms shall have the meaning set forth below:

“Alladdin Materials” means the trade marks, colours, style, graphics, and other
aspects of appearance owned or controlled by or licensed to Licensor by its
licensors provided by Licensor to Licensee for inclusion on the Hosted Site;

“Alladdin URL” means www.lotter-e.co.uk and www.lotter-e.co.uk/ntltv/index.htm;

“Customisation Requirements” means the document attached as schedule one which
indicates how the Lottery Engine will be customised for Licensor;

“Database” means the compilation of data about Users collected by Licensee
whilst operating the Hosted Site;

“Hosted Site” means the web sites, constituting the Lottery Engine with the
Alladdin Materials, to be operated, maintained and hosted by Licensee in
accordance with Section 4 and this Schedule C, to which the Alladdin URLs point;

“Lottery Engine” means the Software and any Developments which are accepted by
Licensor under paragraph 2(g) below;
 
“Service Level Agreement” means the service level agreement set out in Schedule
D.

“User” means a person using the Hosted Site.

2. Operation, Maintenance and Hosting of the Hosted Site.

(a) Licensee shall be responsible for operating, maintaining and hosting the
Hosted Site in accordance with the provisions of Section 4 above and this
Schedule C.

(b) Licensee shall operate and maintain the Hosted Site to operate and provide
the same visual appearance and functionality as exists at the date of this
Agreement.

(c) Licensee shall use reasonable endeavors to correct or make good any errors
in the Hosted Site which Licensor notifies to Licensee within a reasonable
period of time.

(d) Licensee shall operate and host the Hosted Site on secure and virus free
computer servers operated and maintained by Licensee or its Internet service
provider sub-contractor(s) and shall be responsible for all costs associated
with hosting, operating and maintaining the Hosted Site, including all system
operation software costs, hardware costs, and network costs.

(e) Licensee shall host, operate and maintain the Hosted Site consistent with
the Service Level Agreement and, without prejudice to this requirement, the
Hosted Site shall meet response performance standards (including but not limited
to up-time continuity and speed of processing) that are no less than those
achieved for other websites operated by Licensee. Licensee shall ensure that the
Hosted Site is on average available on the Internet for at least the same
percentage of time (measured over each year of the NMLS Services) as its own
websites.

 
 

--------------------------------------------------------------------------------

 
(f) Licensee shall provide Licensor with as much advance warning as is
reasonably possible of all scheduled maintenance with respect to the Hosted Site
which is likely to result in it being unavailable. Licensee shall use reasonable
endeavors to minimise the duration of any unavailability.

(g) Whenever Licensee completes a new Development, it shall inform Licensor and
if Licensor requires, Licensee shall within a reasonable time incorporate the
new Development into the Hosted Site.

(h) Licensee agrees to indemnify and hold Licensor and ALL harmless from and
against any and all claims, damages and costs arising out of any claim brought
by any User or other person arising out of a failure by Licensee to provide the
NMLS Services in accordance with this Agreement.

(i) Licensor grants to Licensee a non-exclusive and non-transferable license to
use the Alladdin Materials on the Hosted Site throughout the Territory during
the term of the NMLS Services. Except as stated in this Section 4.3.(i),
Licensee shall not make any other use of the Alladdin Materials. The license
granted in this Section 4.3.(i) shall terminate automatically on termination of
the NMLS Services. All use of the Alladdin Materials shall inure to the sole
benefit of Licensor.

3. Database of Users.

(a) Licensee shall ensure that the Database is segregated from the databases
Licensee operates for other instances of the Lottery Engine. However, Licensee
is not obliged to dedicate any separate hardware to the Hosted Site and this
segregation may be achieved on the same hardware as used by Licensee for itself
or for other licensees of Licensee. Licensee shall use reasonable endeavors to
ensure that the data contained in the Database is kept integral and secure.

(b) Licensee shall not use the Database for any purpose other than as directed
by Licensor, and shall give Licensor a copy of the Database in any format
reasonably specified by Licensor on request. Licensee shall take all appropriate
technical and organisational measures against unauthorised access and loss or
damage of any personal data within the Database.

(c) All Proprietary Rights in the Database shall vest in Licensor.
 

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SCHEDULE D
 
Service Level Agreement
1 INTRODUCTION

The service levels for the NMLS Services (“Service Levels”) set out at paragraph
4 of this Schedule D will be measured over a rolling 1 month period.

Licensee will provide the NMLS Services in accordance with these Service Levels.
 
2 OBLIGATIONS ON FAILURE

If Licensee fails to provide the NMLS Services in accordance with the Service
Levels, Licensee shall:
 

 
1.1
notify Licensor as soon as practicable of the failure; and

 

 
1.2
take such steps as Licensor may reasonably require to remedy the failure
including (but not limited to):

 
1.2.1 arranging such additional personnel as are necessary to perform the NMLS
Services as soon as practicable;
 
1.2.2 remedying the failure within a timeframe specified by Licensor;
 
1.2.3 re-performing any non-conforming NMLS Service; and/or
 
1.2.4 putting any other reasonable measures in place to ensure that the NMLS
Services are performed in accordance with the Service Level in the future.
 
3 OTHER REMEDIES

3.1
If, during any rolling 1 month period, Licensee fails to perform a particular
part of the Service Level for more than 15 days during that 1 month period for
reasons other than Force Majeure, then Licensor shall, in addition to any other
remedies available to it under this Agreement, be entitled to:

   

 
(a)
terminate this Agreement and/or the NMLS Services immediately by giving written
notice to Licensee; and/or

 

 
(b)
procure, at its own expense, the provision or rectification of the NMLS Services
(or part of it) from a third party which Licensee has failed to provide to the
Service Level, in which case Licensee shall:

 
(i) not unreasonably refuse to manage the delivery of the NMLS Services (or part
of it) by the third party on Licensor’s behalf; and
 
(ii) compensate Licensor for any amount Licensor may be required to pay that
third party for a period of no longer than three (3) months.

 
 

--------------------------------------------------------------------------------

 
4 SERVICE LEVELS

 
The following table details the different classes of support for the NMLS
Services and how Licensee will respond.

 
 
Critical Problem
(Priority 1)
 
 
Involves fundamental functionality of Lottery Engine and/or Hosted Site (as
defined in Schedule C), precluding productive use of Lottery Engine and/or
Hosted Site.
 
 
Response Time
 
 
Within 30 minutes during Business Hours. Best endeavours will be made outside
Business Hours.
 
 
Resolution
 
 
Continuous efforts to resolve during Business Hours.
 
If there is a problem with the hosting solution, Licensee will make best
endeavours to resolve on a 24x7 basis.
 
These issues will normally be resolved within 4 hours.
 
 
Significant Problem
(Priority 2)
 
 
Involves functionality of Lottery Engine and/or Hosted Site, but does not
preclude productive use of Lottery Engine and/or Hosted Site.
 
 
Response Time
 
 
Within 4 hours during Business Hours.
 
 
Resolution
 
 
Best endeavours to resolve during Business Hours. These issues will normally be
resolved within 2 business days.
 
 
Minor Appearance or Functionality Changes
(Priority 3)
 
 
Does not preclude productive use of Lottery Engine and/or Hosted Site.
 
 
Response Time
 
 
As soon as work schedules allow.
 
 
Resolution
 
 
Licensee will resolve these issues or fixes or documentation as required during
Business Hours or may implement in a Development.
 

Notes:

 
1.
Business Hours are 8AM to 4PM Mountain Standard Time (Greenwich Mean Time less 7
hours)

 
2.
Response times quoted are start times for appropriately skilled personnel to
commence work on resolving the support request.

 
3.
For Critical Problems (Priority 1) contact telephone number is 00 1 403 209 2998
x 231 during normal office hours. Outside these hours contact telephone number
is the help desk on a 24x7 basis on the Support mobile
number [xxxxxxxxxxxxxxxxx].

 

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SCHEDULE E
 
Form of Warrant

NEITHER THIS WARRANT NOR THE SECURITIES INTO WHICH THIS WARRANT IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN
COMPLIANCE WITH APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.

NEW MEDIA LOTTERY SERVICES, INC.

WARRANT

Dated_______ 2005

New Media Lottery Services, Inc., a corporation organized and existing under the
laws of the State of Delaware (the "Company"), hereby certifies that, for value
received,  , or its registered assigns ("Holder"), is entitled, subject to the
terms set forth below, to purchase from the Company up to an aggregate of Two
Hundred Thousand (200,000) shares of Common Stock, US$0.001 par value per share
(the "Common Stock"), of the Company (each such share, a "Warrant Share" and all
such shares, the "Warrant Shares") at an exercise price equal to US$_______ per
Warrant Share (the “Exercise Price”), at any time and from time to time on or
after the date hereof and through and including (a period comparable to that
granted to the Company’s management) (the "Expiration Date"), and subject to the
following terms and conditions:

1. Registration of Warrant. The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, and the Company shall not be affected by
notice to the contrary.

 
 

--------------------------------------------------------------------------------

 
2. Registration of Transfers and Exchanges.

(a) The Company shall register the transfer of any portion of this Warrant in
the Warrant Register, upon surrender of this Warrant, with the Form of
Assignment attached hereto duly completed and signed, to the Company at its
address for notice specified in Section 11 along with an opinion of counsel to
the Holder reasonably acceptable to the Company that such transfer may be made
without compliance with Federal and state securities laws. Upon any such
registration or transfer, a new warrant to purchase Common Stock, in
substantially the form of this Warrant (any such new warrant, a "New Warrant"),
evidencing the portion of this Warrant so transferred shall be issued to the
transferee and a New Warrant evidencing the remaining portion of this Warrant
not so transferred, if any, shall be issued to the transferring Holder. The
acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance of such transferee of all of the rights and obligations of a holder
of a Warrant.

3. Duration and Exercise of Warrants.

This Warrant shall be exercisable by the registered Holder on any business day
before 5:00 P.M., New York City time, at any time and from time to time on or
after the date hereof to and including the Expiration Date. At 5:00 P.M., New
York City time on the Expiration Date, the portion of this Warrant not exercised
prior thereto shall be and become void and of no value.

4. Delivery of Warrant Shares.
 
a. To effect exercises hereunder, the Holder shall not be required to physically
surrender this Warrant unless the aggregate Warrant Shares represented by this
Warrant is being exercised. Upon delivery of the Exercise Notice to the Company
(with the attached Warrant Shares Exercise Log) at its address for notice set
forth herein and upon payment of the Exercise Price multiplied by the number of
Warrant Shares that the Holder intends to purchase hereunder, the Company shall
promptly (but in no event later than three Trading Days after the Date of
Exercise (both as defined herein) issue and deliver to the Holder, a certificate
for the Warrant Shares issuable upon such exercise which shall be free of
restrictive legends.
 
b. "Trading Day" means (i) a day on which the Common Stock is traded on a
Trading Market (being, for the purposes of this Section, any stock exchange,
market or trading facility on which the Common Stock is traded other than the
OTC Bulletin Board), or (ii) if the Common Stock is not listed on a Trading
Market, a day on which the Common Stock is traded or quoted in the
over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the
Common Stock is not quoted on a Trading Market, a day on which the Common Stock
is quoted in the over-the-counter market as reported by the National Quotation
Bureau Incorporated (or any similar organization or agency succeeding to its
functions of reporting prices); provided, that in the event that the Common
Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then
Trading Day shall mean a Business Day (being, for the purposes of this Section,
any day other than Saturday, Sunday or other day on which commercial banks in
The City of New York are authorized or required by law to remain closed).
 
 
 

--------------------------------------------------------------------------------

 
 
c. A "Date of Exercise" means the date on which the Holder shall have delivered
to Company: (i) the Exercise Notice (with the Warrant Exercise Log attached to
it), appropriately completed and duly signed and (ii) payment of the Exercise
Price for the number of Warrant Shares so indicated by the Holder to be
purchased.
 
5. Payment of Taxes. The Company will pay all documentary stamp taxes
attributable to the issuance of Warrant Shares upon the exercise of this
Warrant; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the registration
of any certificates for Warrant Shares or Warrants in a name other than that of
the Holder, and the Company shall not be required to issue or cause to be issued
or deliver or cause to be delivered the certificates for Warrant Shares unless
or until the person or persons requesting the issuance thereof shall have paid
to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid. The Holder shall be
responsible for all other tax liability that may arise as a result of holding or
transferring this Warrant or receiving Warrant Shares upon exercise hereof.

6. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and indemnity, if
reasonably satisfactory to it. Applicants for a New Warrant under such
circumstances shall also comply with such other reasonable regulations and
procedures and pay such reasonable charges as the Company may prescribe.

7. Reservation of Warrant Shares. The Company covenants that it will at all
times reserve and keep available out of the aggregate of its authorized but
unissued Common Stock, solely for the purpose of enabling it to issue Warrant
Shares upon exercise of this Warrant as herein provided, the number of Warrant
Shares which are then issuable and deliverable upon the exercise of this entire
Warrant, free from preemptive rights or any other actual contingent purchase
rights of persons other than the Holder (taking into account the adjustments and
restrictions of Section 8). The Company covenants that all Warrant Shares that
shall be so issuable and deliverable shall, upon issuance and the payment of the
applicable Exercise Price in accordance with the terms hereof, be duly and
validly authorized, issued and fully paid and nonassessable.

8. Certain Adjustments. The Exercise Price and number of Warrant Shares issuable
upon exercise of this Warrant are subject to adjustment from time to time as set
forth in this Section 8. Upon each such adjustment of the Exercise Price
pursuant to this Section 8, the Holder shall thereafter prior to the Expiration
Date be entitled to purchase, at the Exercise Price resulting from such
adjustment, the number of Warrant Shares obtained by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of Warrant
Shares issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.

(a) If the Company, at any time while this Warrant is outstanding, (i) shall pay
a stock dividend or otherwise make a distribution or distributions on shares of
its Common Stock (as defined below) or on any other class of capital stock (and
not the Common Stock) payable in shares of Common Stock, (ii) subdivide
outstanding shares of Common Stock into a larger number of shares, or (iii)
combine outstanding shares of Common Stock into a smaller number of shares, the
Exercise Price shall be multiplied by a fraction of which the numerator shall be
the number of shares of Common Stock (excluding Treasury Shares, if any)
outstanding before such event and of which the denominator shall be the number
of shares of Common Stock (excluding Treasury Shares, if any) outstanding after
such event. Any adjustment made pursuant to this Section shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision or combination, and shall
apply to successive subdivisions and combinations.

 
 

--------------------------------------------------------------------------------

 
(b) In case of any reclassification of the Common Stock, any consolidation or
merger of the Company with or into another person, the sale or transfer of all
or substantially all of the assets of the Company in which the consideration
therefor is equity or equity equivalent securities or any compulsory share
exchange pursuant to which the Common Stock is converted into other securities
or property, then the Holder shall have the right thereafter to exercise this
Warrant only into the shares of stock and other securities and property
receivable upon or deemed to be held by holders of Common Stock following such
reclassification, consolidation, merger, sale, transfer or share exchange, and
the Holder shall be entitled upon such event to receive such amount of
securities or property of the Company's business combination partner equal to
the amount of Warrant Shares such Holder would have been entitled to had such
Holder exercised this Warrant immediately prior to such reclassification,
consolidation, merger, sale, transfer or share exchange. The terms of any such
consolidation, merger, sale, transfer or share exchange shall include such terms
so as to continue to give to the Holder the right to receive the securities or
property set forth in this Section 8(b) upon any exercise following any such
reclassification, consolidation, merger, sale, transfer or share exchange.

(c) If the Company, at any time while this Warrant is outstanding, shall
distribute to all holders of Common Stock (and not to holders of this Warrant)
evidences of its indebtedness or assets or rights or warrants to subscribe for
or purchase any security (excluding those referred to in Sections 8(a), (b) and
(d)), then in each such case the Exercise Price shall be determined by
multiplying the Exercise Price in effect immediately prior to the record date
fixed for determination of stockholders entitled to receive such distribution by
a fraction of which the denominator shall be the Exercise Price determined as of
the record date mentioned above, and of which the numerator shall be such
Exercise Price on such record date less the then fair market value at such
record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of Common Stock as determined by
a nationally recognized or major regional investment banking firm or firm of
independent certified public accountants of recognized standing (which, in all
events, may be the firm that regularly examines the financial statements of the
Company) (an "Appraiser") mutually selected in good faith by the holders of a
majority in interest of the Warrants then outstanding and the Company. Any
determination made by the Appraiser shall be final.

(d) If, at any time while this Warrant is outstanding, the Company shall issue
or cause to be issued rights or warrants to acquire or otherwise sell or
distribute shares of Common Stock to all holders of Common Stock for a
consideration per share less than the Exercise Price then in effect, then,
forthwith upon such issue or sale, the Exercise Price shall be reduced to the
price (calculated to the nearest cent) determined by dividing (i) an amount
equal to the sum of (A) the number of shares of Common Stock outstanding
immediately prior to such issue or sale multiplied by the Exercise Price, and
(B) the consideration, if any, received or receivable by the Company upon such
issue or sale by (ii) the total number of shares of Common Stock outstanding
immediately after such issue or sale.

 
 

--------------------------------------------------------------------------------

 
(e) For the purposes of this Section 8, the following clauses shall also be
applicable:

(i) Record Date. In case the Company shall take a record of the holders of its
Common Stock for the purpose of entitling the holders of Common Stock (A) to
receive a dividend or other distribution payable in Common Stock or in
securities convertible or exchangeable into shares of Common Stock, or (B) to
subscribe for or purchase Common Stock or securities convertible or exchangeable
into shares of Common Stock, then such record date shall be deemed to be the
date of the issue or sale of the shares of Common Stock deemed to have been
issued or sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.

(ii) Treasury Shares. The number of shares of Common Stock outstanding at any
given time shall not include shares owned or held by or for the account of the
Company, and the disposition of any such shares shall be considered an issue or
sale of Common Stock.

(f) All calculations under this Section 8 shall be made to the nearest cent or
the nearest 1/100th of a share, as the case may be.

(g) If:

(i) the Company shall declare a dividend (or any other distribution) on its
Common Stock; or

(ii) the Company shall declare a special nonrecurring cash dividend on or a
redemption of its Common Stock; or

(iii) the Company shall authorize the granting to all holders of the Common
Stock rights or warrants to subscribe for or purchase any shares of capital
stock of any class or of any rights; or

(iv) the approval of any stockholders of the Company shall be required in
connection with any reclassification of the Common Stock of the Company, any
consolidation or merger to which the Company is a party, any sale or transfer of
all or substantially all of the assets of the Company, or any compulsory share
exchange whereby the Common Stock is converted into other securities, cash or
property; or

(v) the Company shall authorize the voluntary dissolution, liquidation or
winding up of the affairs of the Company,

then the Company shall cause to be mailed to each Holder at their last address
as they shall appear upon the Warrant Register, at least 30 calendar days prior
to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up; provided, however, that the failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the validity of the
corporate action required to be specified in such notice.

 
 

--------------------------------------------------------------------------------

 
9. Payment of Exercise Price. The Holder may exercise this Warrant by tendering
to the Company cash or certified or official bank check or checks in an amount
calculated by multiplying the Exercise Price per share by the number of Warrant
Shares the Holder desires to purchase.

10. Fractional Shares. The Company shall not be required to issue or cause to be
issued fractional Warrant Shares on the exercise of this Warrant. The number of
full Warrant Shares which shall be issuable upon the exercise of this Warrant
shall be computed on the basis of the aggregate number of Warrant Shares
purchasable on exercise of this Warrant so presented. If any fraction of a
Warrant Share would, except for the provisions of this Section 10, be issuable
on the exercise of this Warrant, the Company shall, at its option, (i) pay an
amount in cash equal to the Exercise Price multiplied by such fraction or (ii)
round the number of Warrant Shares issuable, up to the next whole number.

11. Notices. Any and all notices or other communications or deliveries hereunder
shall be in writing and shall be deemed given and effective on the earliest of
(i) the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile telephone number specified in this Section 11, (ii)
three business days following the date of mailing, if sent by internationally
recognized overnight courier service, or (iii) upon actual receipt by the party
to whom such notice is required to be given. The addresses for such
communications shall be:

If to the Company, to:                 New Media Lottery Services, Inc.
370 Neff Avenue - Suite L
Harrisonburg, VA 22801
Attn.: Mr. Randolph H. Brownell
Facsimile: (540) 437-1686

If to the Holder, to the Holder at the address or facsimile number appearing on
the Warrant Register or such other address or facsimile number as the Holder may
provide to the Company in accordance with this Section 11.

12. Warrant Agent.

(a) The Company shall serve as warrant agent under this Warrant. Upon thirty
(30) days' notice to the Holder, the Company may appoint a new warrant agent.

(b) Any corporation into which the Company or any new warrant agent may be
merged or any corporation resulting from any consolidation to which the Company
or any new warrant agent shall be a party or any corporation to which the
Company or any new warrant agent transfers substantially all of its corporate
trust or shareholders services business shall be a successor warrant agent under
this Warrant without any further act. Any such successor warrant agent shall
promptly cause notice of its succession as warrant agent to be mailed (by first
class mail, postage prepaid) to the Holder at the Holder's last address as shown
on the Warrant Register.

 
 

--------------------------------------------------------------------------------

 
13. Miscellaneous.

(a) This Warrant shall be binding on and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. This Warrant may
be amended only in writing signed by the Company and the Holder.

(b) Subject to Section 12(a), above, nothing in this Warrant shall be construed
to give to any person or corporation other than the Company and the Holder any
legal or equitable right, remedy or cause under this Warrant; this Warrant shall
be for the sole and exclusive benefit of the Company and the Holder.

(c) This Warrant shall be governed by and construed and enforced in accordance
with the internal laws of the State of Delaware without regard to the principles
of conflicts of law thereof.

(d) The headings herein are for convenience only, do not constitute a part of
this Warrant and shall not be deemed to limit or affect any of the provisions
hereof.

(e) In case any one or more of the provisions of this Warrant shall be invalid
or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Warrant shall not in any way be affected
or impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
its authorized officer as of the date first indicated above.

NEW MEDIA LOTTERY SERVICES, INC.

By: _______________________________

Name: _______________________________

Title: _______________________________

--------------------------------------------------------------------------------

EXERCISE NOTICE
NEW MEDIA LOTTERY SERVICES, INC.
WARRANT DATED [ ], 2005

In accordance with the Warrant enclosed with this Form of Election to Purchase,
the undersigned hereby irrevocably elects to purchase [___________] shares of
Common Stock ("Common Stock"), US$0.001 par value per share, of New Media
Lottery Services, Inc. and encloses herewith US$________ in cash or certified or
official bank check or checks, which sum represents the aggregate Exercise Price
(as defined in the Warrant) for the number of shares of Common Stock to which
this Form of Election to Purchase relates, together with any applicable taxes
payable by the undersigned pursuant to the Warrant.

 
Pursuant to this Exercise Notice, the Company shall deliver to the holder
_______________ Warrant Shares in accordance with the terms of the Warrant.
 

           
Dated: ____, _____
 
Name of Holder:
         
(Print) ______________________
         
By: ________________________
   
Name: ______________________
   
Title: _______________________
   
 
Print social security or tax identification number if US resident:
_________________________________________
   
 
_________________________________________
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant)

--------------------------------------------------------------------------------

WARRANT SHARES EXERCISE LOG
 
Date
 
Number of Warrant Shares
Available to be Exercised
 
Number of Warrant
Shares Exercised
 
Number of Warrant Shares Remaining to be Exercised
 
 
 
 
 
 
 
 
 
 
     

 

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FORM OF ASSIGNMENT
 
[To be completed and signed only upon transfer of Warrant]
 
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________ the right represented by the within Warrant to
purchase ____________ shares of Common Stock of NEW MEDIA LOTTERY SERVICES, INC.
to which the within Warrant relates and appoints ________________ attorney to
transfer said right on the books of the Company with full power of substitution
in the premises.
 
Dated: _______________, ____
 

 
 
____________________________________
 
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant)
 
____________________________________
 
Address of Transferee
 
____________________________________
 
 
____________________________________
 
In the presence of:
 

 
 
__________________________
 

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SCHEDULE F

Notice

New Media Lottery Services, Inc.
370 Neff Avenue
Suite L
Harrisonburg
VA 22801
USA
NOTICE

This notice is issued by New Media Lottery Services, Inc. (“NMLS”) under the
terms of the Agreement between NMLS, Alladdin Limited (“Alladdin”) and Alladdin
Lotteries Limited dated 6th May 2005 (“the Agreement”).

The defined terms of the Agreement shall have the same meanings and
interpretations in this notice.

In accordance with Section 2.5(b) of the Agreement, NMLS hereby certifies that
no Development(s) has(have) been made since the last delivery to Alladdin of
source code of the most current version of the Software and the documentation
and operating instructions for the Software altered by any such Development(s)
pursuant to Section 2.5(b) of the Agreement.

The issue of this notice does not in any way prejudice the respective rights and
remedies of the Parties available under the Agreement or otherwise at law.

SIGNED FOR AND ON BEHALF OF
NEW MEDIA LOTTERY SERVICES, INC.

______________________

Signature

______________________

Name  please print

______________________

Date

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IN WITNESS WHEREOF, Licensor, Licensee and ALL have caused this Agreement to be
executed as of the date first above written.

Licensor:

ALLADDIN LIMITED

By: ___________________

Print name: Andrew della Casa

ALL:

ALLADDIN LOTTERIES LIMITED

By: ___________________

Print name: David Hart

Licensee:
 
NEW MEDIA LOTTERY SERVICES, INC.

By: ___________________

Print name: Randolph Brownell
 
 
 
 

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