Houston Texans Lottery Agreement

TRADEMARK

LICENSE

AGREEMENT

THIS TRADEMARK LICENSE AGREEMENT (the "Agreement"), effective as of the last date shown next to the signature lines below (the "Effective Date"), is by and between Houston NFL Holdings, L.P. (hereinafter called LICENSOR), a Delaware limited partnership licensed to do business in the State of Texas and doing business as the "Houston Texans" (the "Team"), with its principal place of business located at Reliant Stadium, Two Reliant Park, Houston, Texas, 77054-1573, and the Texas Lottery Commission (hereinafter called SPONSOR), a Texas state agency, with its principal place of business located at 611 East 6th Street, Austin, Texas 7870]-37]5 (LICENSOR and SPONSOR are ~ach sometimes referred to herein individually as a "Party," and collectively as the "Parties"). WHEREAS, LICENSOR is the owner and licensor of the trademarks, name, logos, symbols, emblems, characters, artwork, depictions, illustrations, insignia, trade dress, service marks, copyrights and other intellectual property rights relating to the Houston Texans NFL Football franchise as shown in Exhibit A attached hereto (hereinafter called the "Team's Trademarks"); and, WHEREAS, SPONSOR is the owner and licensor of the trademarks, name, logos, symbols, emblems, characters, artwork, depictions, illustrations, insignia, trade dress, service marks, copyrights and other intellectual property rights relating to the Texas Lottery and the Texas Lottery Commission as shown in Exhibit B attached hereto (hereinafter called the "s ponsor' s Trademarks"); and, WHEREAS, SPONSOR desires to license the Team's Trademarks in connection and LICENSOR desires to use Sponsor's Trademarks in connection with its business. NOW, THEREFORE, in consideration forth, the Parties agree as follows:

1.

with its business,

of the foregoing and of the mutual promises hereinafter set

DEFINITIONS

1.1

"Licensed Products" means lottery tickets and prize packages pertaining to such tickets, and materials or services related or ancillary to the offering or sale of such lottery tickets and prize packages (e.g., advertising, marketing, billboards, flyers, brochures, point of sale materials, etc.), all bearing or using the Team's Trademarks. 1.2 "Game" means the lottery game to be launched by Sponsor in approximately August 2009, ancIJor any lottery games launched by Sponsor thereafter, in the Territory and utilizing the Licensed Products for the Term of the Agreement.

1.3 "Sales," "sale," "sell" or "sold" refers to Game tickets sold and processed by SPONSOR's Lottery Gaming System, less (a) any Game tickets that have been canceled or returned, (b) any promotional tickets or promotional coupons, and (c) any retailer adjustments. 1.4 "Term" means the period of ti,?e from the Effective Date until Sponsor in its sole discretion ends or terminates the Game, or until June 30, 2010, whichever is earlier, and any subsequent extensions of this Agreement, either by express written agreement of the Parties or through operation of the force majeure provisions set forth in section ]5 of this Agreement. Notwithstanding the foregoing and anything contained

1

....•

herein to the contrary, in accordance with NFL 2009 Resolution BY -I, this Agreement shall expire no later than June 1,2011.

1.5

"Territory" means within the geographic boundaries of the State of Texas.

2.

GRANT OF LICENSE. EXCLUSIVITY

(a) Subject to the terms and conditions hereof, and as set forth in Addendum No.1, which is attached hereto and fully incorporated herein by reference, LICENSOR grants to SPONSOR an exclusive, non-transferable right and license to use the Team's Trademarks during the Term solely in connection with the sale, marketing, advertising, and promotion (including but not limited to television, radio, print mediums, and the Internet) of the Licensed Products and Game (or for such other use as may be approved by LICENSOR and agreed to by SPONSOR), tickets for which shall be prepared and printed by one or more of SPONSOR's ticket manufacturers or vendors (hereinafter called PRINTER) and to be offered for sale in the Territory, at duly licensed lottery sales agent locations and/or directly by SPONSOR. SPONSOR shall be solely and exclusively responsible for the design and execution of the Game, including selection and notification of prizewinners, and for compliance with all rules and regulations of any state, federal, or other governmental body with respect to the Game. (b) LICENSOR represents that it is duly authorized to grant such right and license to SPONSOR, and to PRINTER for the sole purpose of producing the instant lottery game tickets. LICENSOR has not previously granted any right or authority to any third party that would conflict with the licensed rights granted to SPONSOR herein. LICENSOR further represents that this Agreement does not violate any obligation owed by LICENSOR to the National Football League or any other third party. (c) The Game shall be designated as "The Official Scratch-Off Lottery Game of the Houston Texans." For the Term of the Agreement, LICENSOR shall not permit any other person or entity to utilize the Team's Trademarks to advertise, promote, offer or sell any goods or services that are the same as or similar to the Licensed Products. LICENSOR's grant of exclusivity to SPONSOR is subject to the rules and policies of the National Football League, as such may be amended from time to time, and specifically subject to NFL 2009 Resolution BY -1, a copy of which is attached hereto as Exhibit C. (d) SPONSOR hereby grants to LICENSOR a non-exclusive, non-transferable right and license to use Sponsor's Trademarks during the Term in connection with the marketing, advertising, and promotion (including but not limited to television, radio, print mediums, and the Internet) of the Licensed Products and Game, and in connection with marketing and advertising of SPONSOR's involvement with and sponsorship of LICENSOR.

3.

OWNERSHIP OF RESPECTIVE INTELLECTUAL

PROPERTY

(a) SPONSOR acknowledges the ownership of the Team's Trademarks by LICENSOR and SPONSOR agrees that it will do nothing inconsistent with such ownership and that all use of the Team's Trademarks by SPONSOR shall inure to the benefit of and be on behalf of LICENSOR. SPONSOR agrees that nothing in this Agreement shall give SPONSOR any right, title or interest in the Team's Trademarks other than the right to use the Team's Trademarks in accordance with this Agreement and SPONSOR agrees that it will not attack the title of LICENSOR to the Team's Trademarks or attack the validity of this Agreement. Further, SPONSOR shall not claim adversely to any right or interest of LICENSOR in and to: 2

(i) the Team's Trademarks; or (ii) any trademarks, service marks, trade dress or trade names confusingly similar to the Team's Trademarks. SPONSOR agrees not to attempt to register or to use or to aid any third party in attempting to register or use any trademarks, service mark, or trade name, or apply for any copyright or design right which may be confusingly similar to the Team's Trademarks in any territory and shall fully inform PRINTER of this obligation. (b) LICENSOR acknowledges the ownership of SPONSOR's Trademarks by SPONSOR and LICENSOR agrees that it will do nothing inconsistent with such ownership and that all use of SPONSOR's Trademarks by LICENSOR shall inure to the benefit of and be on behalf of SPONSOR. LICENSOR agrees that nothing in this Agreement shall give LICENSOR any right, title or interest in the SPONSOR's Trademarks other than the right to use SPONSOR's Trademarks in accordance with this Agreement and LICENSOR agrees that it will not attack the title of SPONSOR to SPONSOR's Trademarks or attack the validity of this Agreement. Further, LICENSOR shall not claim adversely to any right or interest of SPONSOR in and to: (i) the SPONSOR's Trademarks; or (ii) any trademarks, service marks, trade dress or trade names confusingly similar to the SPONSOR's Trademarks. LICENSOR agrees not to attempt to register or to use or to aid any third party in attempting to register or use any trademarks, service mark, or trade name, or apply for any copyright or design right which may be confusingly similar to SPONSOR's Trademarks in any territory.

4.

QUALITY STANDARDS

Each Party agrees that the nature and quality of all goods produced and services rendered by a Party in connection with the other Party's intellectual property, and all related advertising, promotional and other uses of the other Party's intellectual property, shall conform to standards set by and be under the control of the Party owning that intellectual property.

s.

QUALITY MAINTENANCE

Each Party agrees to cooperate with the other Party in facilitating the owning Party's control of the nature and quality of use of the owning Party's intellectual property. Each Party agrees to submit to the other Party color proofs of all tickets, point-of-sale and advertising materials containing the Team's Trademarks and/or SPONSOR's Trademarks (the "Artwork") prior to production, for approval in writing. The receiving Party shall have three (3) business days to approve in writing each piece of Artwork or to return the Artwork to the submitting Party for revision. The submitting Party shall submit any such revised Artwork to the receiving Party, and the receiving Party shall again have three (3) business days to approve in writing all such revised Artwork or return the Artwork to the submitting Party for further revision. If the receiving Party does not return the Artwork within the aforementioned time periods, the Artwork shall be deemed approved by the receiving Party, subject to the National Football League's approval rights set forth in NFL 2009 Resolution BV-I (LICENSOR shall have the duty to submit the relevant Artwork to the National Football League for such approval). The receiving Party's approval of, and requests for revision of, Artwork shall be communicated via email, fax, or other written documentation. Neither Party hereto will unreasonably withhold its approval of any act or request of the other to which its approval is necessary or desirable. The submitting Party agrees not to change such Artwork in any material respect after approval by the receiving Party. SPONSOR agrees to supply LICENSOR with ten (10) packs of voided tickets as finally produced, and specimens of all other authorized uses of the Team's Trademarks upon LICENSOR's request. Each Party agrees that it will comply with all applicable laws and regulations and obtain all

3

appropriate government or NFL approvals pertaining to the sale, distribution services covered by this Agreement.

6.

and advertising

of goods and

FORM OF USE

SPONSOR agrees to use the Team's Trademarks on the Licensed Products in the form and manner and with appropriate legends as approved or prescribed by LICENSOR, and not to use any other trademark or service mark of LICENSOR in combination with the Team's Trademarks without prior written approval of LICENSOR. Without restricting or limiting the foregoing, all goods sold by SPONSOR using the Team's Trademarks, and all advertising and promotional materials of SPONSOR using the Team's Trademarks shall bear the following statement: "The Houston Texans and the Houston Texans' logo are registered trademarks of Houston NFL Holdings, L.P. and are used under license. All Rights Reserved." SPONSOR shall place the registered trademark symbol "@" whenever the Team's Trademarks appear in tangible form. LICENSOR shall place the registered trademark symbol "@" whenever the SPONSOR's Trademarks appear in tangible form.

7.

INFRINGEMENT

PROCEEDINGS

A Party agrees to promptly notify the other Party of any unauthorized use of the other Party's intellectual property by others if or when such unauthorized use comes to a Party's attention. The owning Party shall have the sole right and discretion to bring infringement, unfair competition or other legal or equitable actions involving the owning Party's intellectual property.

8.

TERMINATION

IN THE EVENT OF INSOLVENCY OR FOR CAUSE

Each Party shall have the right to terminate this Agreement upon thirty (30) days' prior written notice to the other Party in the event of: (a) any affirmative act of insolvency by the other Party, (b) the appointment of any receiver or trustee to take possession of all or any part of the property of the other Party, (c) the winding-up, sale, consolidation, merger or any sequestration by government authority of the other Party, or (d) a breach of the material terms of this Agreement that is not cured within thirty (30) days after receipt of written notice of such breach. Notwithstanding anything herein to the contrary, the Parties acknowledge this Agreement (including SPONSOR's obligations to make royalty and merchandise sales allocations payments to LICENSOR) is contingent on the continued availability of funding. If funds for making payment(s) hereunder become unavailable due to lack of appropriations, SPONSOR or LICENSOR may terminate this Agreement without penalty or further obligation to make payment or provide prizes following such termination, as applicable, by providing notice to the other Party.

9.

EFFECT OF TERMINATION

OR EXPIRATION

Upon termination or expiration of this Agreement, each Party agrees to discontinue all use of the other Party's intellectual property, or anything confusingly similar thereto, and to cooperate with each other or their respective appointed agents to destroy or remove from public display all printed materials bearing the other Party's intellectual property, subject to SPONSOR's right to sell through its existing inventory of Licensed Products in connection with the Game, for a period of four (4) months following such expiration or termination but in no event later than June 1, 2011. Each Party agrees that before and after any such 4

expiration or tennination, all right, title and interest in the intellectual property, and the goodwill connected therewith, shall remain the sole property of the respective owning Party.

10.

PROHIBITED ASSIGNMENT AND SUB-LICENSING

Each Party agrees that this Agreement and the rights conveyed hereunder may not be assigned and that neither Party shall be entitled to grant sub-licenses without the prior, express written consent of the other Party.

11.

EXCEPTIONS TO RESTRICTIONS

ON THE TERRITORY

The Parties agree that the Licensed Products may be sold within the State of Texas, pursuant to the tenns of current Texas law. However, incidental advertising, marketing and/or promotion of the Licensed Products may occur, or be viewed by others, beyond the borders of the State of Texas, without violation of the tenns of this Agreement (e.g., advertising via the Internet, television or radio broadcasts in Texas, or through publications circulated beyond the State of Texas). Notwithstanding the foregoing sentence, LICENSOR shall comply with all laws governing the broadcasting and publication of advertisements and other infonnation concerning a lottery, including 18 u.s.c. sections 1304 and 1307. Further, LICENSOR acknowledges and agrees that a Dallas Cowboys scratch-off lottery ticket may be offered, sold and distributed by SPONSOR in the Territory, including in Houston, Texas, during approximately the same Tenn as the Game, without violating the tenns of this Agreement. LICENSOR further acknowledges and agrees that if the Dallas Cowboys or its parent, subsidiary or related companies provide marketing support in conjunction with a Dallas Cowboys scratch-off lottery ticket in the Territory, including in Houston, Texas, during approximately the same Tenn, LICENSOR will not bring a claim against SPONSOR related to such marketing support.

12.

APPROVALS

LICENSOR's grant of rights hereunder is subject to prior written approval by the National Football League. This Agreement is subject to the rules and policies of the National Football League, as such may be amended from time to time, including, without limitation the tenns of NFL 2009 Resolution BY -I, attached hereto as Exhibit C. Subject to the foregoing, the Parties hereto represent that the execution, delivery and perfonnance of this Agreement has been duly authorized by all necessary corporate action and government or other approvals on the part of the Parties and that this Agreement constitutes a valid and legally binding agreement of the Parties enforceable against them in accordance with its terms.

13.

NOTICES

All notices and other communications under this Agreement shall be in writing and shall be deemed given when delivered personally or by overnight delivery to the Parties (and shall also be transmitted by facsimile or email to the persons receiving copies thereof) at the following addresses (or to such other address as a Party may have specified by notice given to the other Party pursuant to this provision): If to SPONSOR, to: Texas Lottery Commission 611 East 6th Street 5

Austin, TX 7870 I Attn: Dale Bowersock Telecopy: 512-344-5242 Email: [email protected] If to Licensor, to: The Houston Texans Reliant Stadium, Two Reliant Park Houston, TX 77054-1573 Attn: Jamey Rootes Telecopy: 832-667-2062 Email: [email protected]

14.

HOLD HARMLESS

LICENSOR represents that it has the full right and authority to license the use of LICENSOR's intellectual property as contemplated in this Agreement, for the purposes set forth in this Agreement. LICENSOR therefore represents and agrees that it will indemnify and hold SPONSOR harmless from and against any claims of infringement or other loss or damage that may be alleged as a result of SPONSOR's use of LICENSOR's intellectual property for the purposes set forth in this Agreement. SPONSOR shall notify LICENSOR promptly and in writing of any such claim, give LICENSOR, at LICENSOR's sole expense, sole control over its defense or settlement, and provide reasonable assistance in the defense thereof. SPONSOR represents that it has the full right and authority to license the use of SPONSOR's intellectual property as contemplated in this Agreement, for the purposes set forth in this Agreement. LICENSOR shall notify SPONSOR promptly and in writing of any claim of infringement arising out of the use of SPONSOR's intellectual property, give SPONSOR, at SPONSOR's sole expense, sole control over its defense or settlement, and provide reasonable assistance in the defense thereof. In no event shall either Party hereto have any liability to any other Party in connection with this Agreement for consequential, special or punitive damages. This Section shall survive the expiration or termination of this Agreement.

15.

FORCE MAJEURE

If any Party is delayed in or prevented from complying, either totally or in material part, with any of the terms or provisions of this Agreement by any reason out of its control (such as but not limited to riot, war, terrorism, or rebellion; fire, flood, severe storm, accident, or other act of God) or by a player strike, management lockout, walk out, postponement or any other work stoppage (whether or not LICENSOR has supported such work stoppage) (collectively, a "force majeure"), then the affected obligations of such Party shall be suspended during the period of such inability, and such inability shall not be deemed a breach of this Agreement. If any of the Team's home games are cancelled, postponed or played at a location other than the Reliant Stadium due to a force majeure, then LICENSOR shall provide the in-stadium benefits set forth in Addendum No.1 on the date(s) and at such location(s) at which any such cancelled, postponed or relocated 6

games are played. LICENSOR will use all commercially reasonable efforts to satisfy its obligations with respect to prizes or benefits under this Agreement. With respect to prizes that are unable to be provided due to a cancelled, postponed or relocated game, the Parties will work together in good faith to agree either upon additional prizes to be provided during any football seasons during the Term and/or refund of any prepayments by SPONSOR for prizes paid for but not received. If three (3) or more regular season home games in any single football season during the Term are cancelled and not rescheduled as a consequence of such force majeure (a "Cancelled Season"), the Term of this Agreement shall automatical1 y be extended by one (l) additional year but in no event later than June I, 20 II. The consideration payable by SPONSOR during the year following a Cancelled Season will be the same as the amount that would have been payable during the Cancelled Season. The consideration payable during any subsequent years remaining in the Term will be the same as that which would have been payable in the immediately preceding year if there had been no Cancelled Season. If any home game is scheduled by the NFL (with or without the consent of LICENSOR) to be played at a location outside the United States, LICENSOR may satisfy its obligations with respect to instadium benefits by making commercially reasonable efforts to provide such benefits at the remaining home games. If such is not commercially feasible, LICENSOR agrees that the benefits to be received by SPONSOR pursuant to this Agreement shall be proportionately reduced by the number of such home games scheduled to be played at a location outside the United States, and the Parties will discuss in good faith a means to provide substitute benefits of equal or greater value to SPONSOR. Except as otherwise stated above, a force majeure shall not release the Parties from their other obligations under this Agreement that are not prevented or delayed by the force majeure. A force majeure shall not include any event that a Party could have prevented by any exercise of due diligence and expressly does not include financial hardship.

16.

APPLICABLE LA WS AND COURTS

This Agreement shall be governed and construed in all respects according to the laws of the State of Texas, and subject to the dispute resolution provisions set forth in section 17 below, any litigation with respect thereto shall be brought in the courts of the State of Texas. This section is purely a venue provision and shall not be deemed a waiver of sovereign immunity by SPONSOR.

17.

DISPUTE RESOLUTION

The dispute resolution process provided for in Texas Government Code Chapter 2260 and 16 Texas Administrative Code §§ 403.201-223 must be used by LICENSOR to attempt to resolve any disputes brought by LICENSOR arising under this Agreement.

18.

ELIGIBILITY

TO RECEIVE PAYMENTS ON STATE CONTRACTS

Under Texas Family Code Section 231.006, LICENSOR certifies that the individual or business entity named in this Agreement is not ineligible to receive the specified grant, loan, or payment and acknowledges that this Agreement may be terminated and payment may be withheld if this certification is inaccurate. 7

19.

CERTIFICATION

Pursuant to Texas Government Code Section 466.103, SPONSOR's Executive Director may not award a contract for the purchase or lease of facilities, goods or services related to lottery operations to a person who would be denied a license as a sales agent under Texas Government Code Section 466.155 (see Exhibit D, attached hereto and incorporated by reference for all purposes). By executing this Agreement, LICENSOR certifies that it has reviewed the provisions of Texas Government Code Section 466.155, and further certifies that LICENSOR would not be prohibited by the terms of Texas Government Code Section 466.155 from obtaining a license as a sales agent.

20.

WAIVER

No waiver by either party of any default shall be deemed as a waiver of prior or subsequent defaults of the same or other provisions of this Agreement.

21.

SEVERABILITY

If any term, clause, or provision hereof is held invalid or unenforceable by a court of competent jurisdiction, such invalidity shall not affect the validity or operation of any other term, clause, or provision and such invalid term, clause, or provision shall be modified to the extent possible to comply with the terms of the then-existing law and as adhering to the intent of the parties, and if such modification is not possible then in such event the provision shall deemed to be severed from the Agreement.

22.

RIGHT TO AUDIT

LICENSOR understands that acceptance of funds under this Agreement acts as acceptance of the authority of the State Auditor's Office, or any successor agency, to conduct an audit or investigation in connection with those funds. LICENSOR further agrees to cooperate fully with the State Auditor's Office or its successor in the conduct of the audit or investigation, including providing all records requested. LICENSOR will ensure that this clause concerning the authority to audit funds received indirectly by subcontractors through LICENSOR and the requirement to cooperate is included in any subcontract awards.

23.

INTEGRATION

This Agreement constitutes the entire understanding of the Parties, and revokes and supersedes all prior agreements between the Parties. This Agreement shall not be modified or amended except in writing signed by the Parties hereto and specifically referring to this Agreement.

24.

REPRESENT ATION. MUTUAL NEGOTIATION

Each Party has had the opportunity Agreement. This Agreement shall therefore request, direction, and construction of the counsel, and will be interpreted in accordance

to be represented by counsel of its choice in negotiating this be deemed to have been negotiated and prepared at the joint Parties, at arms length, with the advice and participation of with its terms without favor to any Party.

8

25.

HEADINGS

The headings interpretation hereof.

26.

used herein are for reference

and convenience

only and shall not enter into the

COUNTERPARTS

This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and which together shall constitute one and the same instrument.

27.

STATUS OF THE PARTIES

This Agreement is not intended to create, and shall not be interpreted or construed as creating, a partnership, joint venture, agency, employment, master and servant, or similar relationship between the Parties, and no representation to the contrary shall be binding upon either Party.

HOUSTON NFL HOLDINGS, L.P., d/b/a HOUSTON TEXANS ("LICENSOR")

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TRADEMARK

LICENSE

This ADDENDUM

ADDENDUM AGREEMENT

NO.1 TO BETWEEN LICENSOR

AND

LICENSE AGREEMENT

BETWEEN

NO. I TO TRADEMARK

SPONSOR LICENSOR

AND SPONSOR is attached to and fully incorporated into that certain TRADEMARK LICENSE AGREEMENT, effective as of the last date shown to the signature lines therein, by and between Houston NFL Holdings, L.P., d/b/a Houston Texans, and the Texas Lottery Commission (the "Agreement"). Capitalized Agreement.

terms

used but not defined

herein

shall have the meaning

given to them in the

1. FEES AND CONSIDERATION In consideration of being granted the right to use the Team's Trademarks during the Term, SPONSOR shall allocate funds not to exceed two hundred sixty-two thousand five hundred dollars ($262,500) for Licensing Fees and one million one hundred ninety thousand dollars ($1,190,000) in Merchandise Allocation payment for the following. a.

Payment to LICENSOR

of a royalty based upon the actual Sales of the Game (as defined in

section 1.3 of the Agreement)

as follows:

Licensim! Fee Sales Allocation (Based on actual ticket sales - invoiced monthly) Sell Through Range*

Licensing Percentage

Price per Ticket

Actual Sales

Licensing Fee

Up to 4 million tickets 4,000,001 to 5 million

1.00 1.25

$5 $5

$20,000,000 $5,000,000

$200,000 $62,500

Total Licensing *

Fee Allocation:

$262,500.

License percentage fees apply directly to the relevant sales tier and are not retroactive to lower sales levels.

SPONSOR

(with the assistance

approximately

of PRINTER)

agrees to print with the intent to distribute and sell

5,000,000 Texas Lottery scratch-off

tickets bearing the Team's Trademarks

and that

the scratch-off tickets shall be sold at retail for a price of $5.00 per ticket. For example: If the initial sales period indicated sales of 4,250,000 would be calculated as: •

4,000,000 tickets sold at $5 = $20,000,000 $200,000

•

250,000 $15,625

tickets sold at $5

= $1,250,000

1

tickets, the invoiced amount

multiplied by 1.00% licensing fee percentage =

multiplied

by 1.25% licensing fee percentage

=

• b.

The total Licensing Fee invoice would be for $215,625

Payment to LICENSOR for merchandise and experiential prize packages that will contain a predetermined number of individual prizes to be awarded through second-chance drawings conducted by SPONSOR and fulfilled by LICENSOR. The total allocation of prize funds for these prizes will be one million, one hundred and ninety thousand dollars ($1,190,000). Payment amounts are determined based upon the prize being fulfilled and are detailed as follows: 1.

11.

Invoicine

"Texans VIP Suite Weekend,"

five (5) allocated and valued at $40,000 each.

Team Autographed Authentic Jersey from Team Star Players, two thousand, hundred and seventy-five (2,475) allocated and valued at $400 each.

for Merchandise

and Experiential

four

Prize Fulfillment

LICENSOR will be paid by SPONSOR for merchandise and the Game as prizes are fulfilled, as more particularly described in this five (5) second chance drawings for the prizes and to award one (1) four hundred ninety-five (495) Team Autographed Authentic Jerseys drawing, in accordance with the following schedule:

experiential prizes over the course of section. SPONSOR agrees to conduct Texans VIP Suite Weekend prize and from Team Star Player prizes in each

"End-of-Game" Time Period the Between Sept. Oct. 15 -- Nov. Oct. 15, 15,2009 2009 Between Nov. Dec. 16 16 Jan. Dec. 15, 15,2009 20 I0 Within (15) business days Drawine No.datefifteen after I in the 4following 352 described section

LICENSOR will invoice SPONSOR on a monthly basis as the prizes are fulfilled. A detailed accounting of the prizes fulfilled will be included with the invoice, including the name and address of all experiential and merchandise prize pack winners during the monthly billing period and the date each experiential prize was fulfilled (which, for purposes of this section, shall be considered when the Texans VIP Suite Weekend has been fulfilled with the winner) or each merchandise prize was mailed to each wmner. Invoicine

for Licensine

Fee Sales Allocation

During the term of this Agreement, SPONSOR shall deliver Game sales reports to LICENSOR on the first state business day of each month beginning October I, 2009; if the first business day of the month is a State of Texas holiday, then sales report will be due on the next business day that is not a State holiday. SPONSOR will detail weekly sales totals for the applicable reporting period. LICENSOR then will issue an invoice for the licensing fee sales allocation to SPONSOR in accordance with the tiered License Fee Allocation schedule above. This process will continue until the official "Call" date for the Game determined by SPONSOR in its sole discretion. The "Call" date begins a 45-day period during which all remaining tickets for the Game are returned to SPONSOR. The "End-of-Game" date is 45 days from the "Call" date 2

and marks the end of the Game. No tickets for the closed Game may be distributed to or sold by retailers after this date. A final reconciled sales report will be provided to LICENSOR by SPONSOR no later than 90 days following the official "End-of-Game" date. The timing and decision to close a Game will be in accordance with SPONSOR's rules, policies and procedures. All of SPONSOR's directives, policies, procedures, rules, regulations and applicable laws shall apply to the Game. LICENSOR shall be responsible for the print costs incurred by SPONSOR above the cost to print the Game at a 4.5 million ticket quantity, subject to a cap of $16,000, unless otherwise agreed to by LICENSOR and SPONSOR. This cost will be deducted by SPONSOR from merchandise fulfillment and licensing fee sales invoices payable to LICENSOR for the Game until the additional printing charges (>4.5 million tickets) are paid in full.

2. MERCHANDISE FULFILLMENT SERVICES Merchandise and Experiential Prizes, as detailed in Section 4, will be awarded by second-chance drawings in which qualifying non-winning tickets may be submitted as entries by eligible players. SPONSOR

shall control the procedure for the second-chance

SPONSOR

shall provide LICENSOR

drawings.

a detailed list of prizewinners

LICENSOR shall provide complete fulfillment of all merchandise shall be no additional charge for any aspect of such order fulfillment.

after each drawing. and experiential

prizes.

There

From the date that LICENSOR is notified by SPONSOR of a winner of a Texans VIP Suite . Weekend prize, LICENSOR shall contact the winner within ten (10) business days to begin making arrangements for fulfillment. From the date that LICENSOR is notified by SPONSOR of a winner of a Team merchandise LICENSOR shall complete fulfillment of the prize within ten (10) business days.

prize,

LICENSOR shall bear all risks of loss of or damage to the prize until the prize winner has received, inspected and accepted the units, at which point those risks shall pass to the prize winner. In the event the winner's prize is damaged or defective, LICENSOR shall immediately replace the damaged prize at no additional cost to SPONSOR or the prize winner. LICENSOR shall provide a monthly list of fulfilled prizes to SPONSOR. The list shall include an accounting of all merchandise/experiential prizes, including the names and addresses of the winners and the shipment tracking numbers. The list shall be provided in both .xls and .xml formats. LICENSOR shall provide a monthly list of all experiential fulfilled, with their scheduled fulfillment dates, if known.

prizes that have been won but not

SPONSOR has the right to monitor the fulfillment process and contact LICENSOR reported problems with fulfillment and request possible solutions. 3

to discuss any

.

3. MARKETING SUPPORT LICENSOR agrees to provide, at no additional cost, the following as Marketing Support to support the continued sales of the Game: a.

SPONSOR will receive the right to utilize the Team's Trademarks for the purposes of creating a Team branded scratch-off game throughout the state of Texas, as more particularly described in the Agreement.

b. SPONSOR will receive a 360 degree LED graphic display for one (1) minute of game time per quarter on approximately 1230' of LED signage for Team pre- and regular season home games ("Home Games") and all other events in Reliant Stadium from August 1, 2009 to January 31, 2010, including the Texas Bowl (except for events that have a policy of not displaying advertisements from state lotteries). LICENSOR will provide related production/animation at LICENSOR's expense. c.

SPONSOR will receive two (2) :30 second 360 degree "Timeout" animations per half at each Home Game. LICENSOR will provide related production/animation at LICENSOR's expense.

d.

SPONSOR branding will be incorporated in the Texans Helmet Shuffle interactive video board feature. Immediately following the Helmet Shuffle, a joint SPONSOR and LICENSOR fan promotion will be featured on the Reliant Stadium video boards where selected fans receive a package of prizes mutually agreed upon by LICENSOR and/or SPONSOR.

e.

SPONSOR will be the exclusive sponsor of the "Texas Lottery Halftime Report" during the Texans' pre-season games aired on KTRK ABC-I3 (Houston) and affiliate stations and will receive the following benefits:

I.

Exclusive name and logo recognition as Halftime Report sponsor a minimum of three (3) times per broadcast, including a rebroadcast in Houston at midnight on the day of the original game broadcast.

I. Second Quarter Stay-Tuned Tease II. Beginning and End of Halftime Report. II.

f.

Three (3) :30 second network commercial advertisements in each game broadcast - (Eighteen (18) total spots (original and re-broadcast combined), one (l) of the spots will be the first spot during the "Texas Lottery Halftime Report."

SPONSOR will receive one (1) :30 second commercial advertisement during each of the twenty (20) broadcasts of Texans Inside the Game (Total of twenty (20) spots).

4

g. SPONSOR will receive the following advertisements on the three FS Houston shows (Texans Countdown on Sundays at 11:00 AM, Texans Wrap-up on Sundays at 11 :00 PM and Texans Huddle on Thursdays at 6:30 PM): 1.

11.

Ill.

One (1) :30 second commercial (Total of fifty-two (52) spots)

One (1) billboard during each broadcast (52) billboards)

11.

of the three shows (Total of fifty-two

will receive the following during each Texans Gameday Broadcast:

Two (2) :30 second network commercials during the in-game portion of each game simulcast on KILT -AM (Houston) and KILT -FM (Houston) (two (2) spots per station per game plus network distribution) Two (2) : 10 second network commercials game simulcast

111.

Two (2) Major SPONSOR game simulcast

IV.

Sponsorship

v.

of the three (3) shows

One (1) mutually determined feature during the twenty (20) broadcasts on one (1) of the Texans shows on FS Houston (Up to twenty (20) features).

h. SPONSOR

I.

during each broadcast

during the in-game portion of each

Billboards during the in-game network portion of each

of one (l) in-game network feature based on availability

A five (5)-month rotating banner on the Texans Radio Network/Sports (Houston) website, with hyperlinks to SPONSOR's website.

Radio 610

I.

SPONSOR will receive two (2) :30 second spots in each Texans Hispanic Gameday Broadcast on KLA T La Tremenda 10 10 AM (Houston) (Total offorty (40) spots)

J.

SPONSOR will receive a dedicated information page within the HoustonTexans.com site to promote the Texans Scratch-off game and all prize details. LICENSOR will provide related production/animation at LICENSOR's expense.

k. SPONSOR will receive one (1) rotating skyscraper ad throughout HoustonTexans.com with a total of at least five (5) million unique impressions from August 1, 2009 through January 31,2010 (skyscraper ad size is 160W x 600H pixels). 1. SPONSOR will receive the following ticket packages to use as incentives for Texas Lottery retailers to be used at the following two Team Home Games: Texans vs. Seahawks on December 13,2009 and Texans vs. Patriots on January 3,2010:

I.

One hundred (100) lower- level tickets (Fifty (50) per game) 5

11.

111.

One hundred (100) Churrascos Club passes (Fifty (50) per game) Fifty (50) VIP Parking Passes (Twenty-five

m. SPONSOR will receive the following support for the Game: 1.

II.

(25) per game).

Team merchandise

to be utilized as marketing

One hundred and fifty (150) Team t-shirts. One hundred and fifty (ISO) Team ball caps.

n. SPONSOR will receive a full page, four color ad in the following Team publications: 1. 11.

111.

Texans Gameday Magazine Texans Bulletin Texans Gameday Playbook.

LICENSOR will ensure that lottery commercials that are not licensed to a location in the state of Texas.

pertaining to SPONSOR do not air on any stations

Except as specifically noted above, SPONSOR shall provide to LICENSOR, at SPONSOR's own expense, the substantive television and radio content and production, and/or animation, necessary for inclusion in the above-referenced Marketing Support. Notwithstanding anything contained herein to the contrary, SPONSOR elements for Texans playoff games.

4. MERCHANDISE / EXPERIENTIAL (awarded through second-chance

shall not receive the above

PRIZE DESCRIPTIONS

drawings)

a) "Texans VIP Suite Weekend," valued at $40,000 each. Five (5) winners will be selected through second-chance drawings, one per drawing. Prize will include: 1.

Fourteen (14) tickets in a private Team Luxury Suite to a mutually determined Team home game in either the 2009 or 2010 NFL season including food and nonalcoholic beverages (menu determined by LICENSOR in its sole discretion)

11.

Each winner (i.e., one (I) person) will receive the right to be in the Texans Tunnel during the presentation of the Team starting line-ups

111.

Texans Ambassador

(retired NFL legend) will watch the game with the winner

IV.

Round trip airfare for fourteen (14) for a winner outside of the Houston area (from nearest major international airport), or ground transportation for fourteen (14) for a winner within the Houston area, and one (1) night hotel 6

accommodations (single occupancy) for fourteen at The Westin Galleria (or other 3-star or above hotel selected by LICENSOR) for the selected game v.

Fourteen (14) pre-game sideline passes Dinner for fourteen (14) at a high-end Houston restaurant selected by LICENSOR the evening prior to the game

VI.

Ground transportation throughout the weekend

Vll.

A Team merchandise gift bag consisting of a Team polo shirt, Team hat and Texans Power Towel.

Vlll.

b) Team Autographed Authentic Jersey from Team Star Player, valued at $400. Two thousand four hundred and seventy-five (2,475) winners will be selected through second-chance drawings, four hundred and ninety-five (495) per drawing. Prize will include: An authentic Team jersey chosen by the winner and autographed by one of the following three (3) Team's star players:

I.

1. Andre Johnson 2. Mario Williams 3. DeMeco Ryans Notwithstanding the foregoing list, LICENSOR or SPONSOR reserves the right to substitute a different Texans player, subject to LICENSOR's and SPONSOR's consent, such consent not to be unreasonably withheld, conditioned, or delayed, if any of the foregoing players are unable or unavailable to autograph the jerseys (e.g., if the player is traded, injured, etc.), or cease to be a consistent starter. 11.

Each jersey will be delivered to the winner's home address.

Ill.

The prize will include a letter of authenticity from Team.

IV.

SPONSOR agrees not to include the specific names of the players in any marketing or other advertising materials related to the Game. However, SPONSOR shall be permitted to refer to the players as "Texans Star Players" or such other mutually agreed to description, and to refer to the specific players in the context of legal agreements and official game procedures (e.g., in official postings on the Texas Register and through a link to the official game procedures on SPONSOR's website, pursuant to Texas Administrative Code section 401.302).

7

V LIRIHX:tI

J!;XHJHJT

HOUSTON TEXANS INTELLECTUAL

A

PROPERTY GUIDELINES

The LICENSOR provides the following guidelines regarding the LICENSOR's intellectual lroperty .

•

You may use the LICENSOR's intellectual property in connection with the promotion of the Game as referenced in the Agreement. You may not use the LICENSOR's intellectual property for any other purpose, including the sales of any merchandising or tie-in materials that may feature the LICENSOR's intellectual property, without express written consent ITom the LICENSOR.

•

Use of the LICENSOR's intellectual property inures to the benefit ofthe LICENSOR, and you do not acquire any rights in such intellectual property as a result of use allowed by the LICENSOR.

•

The LICENSOR's intellectual property should be printed in accordance with the guidelines set out in Exhibit A-I.

•

You should not alter, manipulate, blur, distort or otherwise modify the LICENSOR's intellectual property .

EXHIBIT A-I Houston Texans Trademarks

v ~/

•• OUS ..•.ON

TEXANS \\

\0/ * c,~"i•• ~

..

' "~.:ia.'1 ---J.-~~

HOUSTON TEXANS antone Colors: leep Steel Blue: 5395

:attle Red: 187 iberty White: no pantone

I-v .LUIIHX3

9 IT9THXJJ

EXHIBIT B TEXAS LOTTERY COMMISSION INTELLECTUAL PROPERTY GUIDELINES The SPONSOR provides the following guidelines regarding the SPONSOR'S intellectual property.

•

You may use the SPONSOR'S intellectual property in connection with the promotion of the Game as referenced in the Agreement. You may not use the SPONSOR'S intellectual property for any other purpose, including the sales of any merchandising or tie-in materials that may feature the SPONSOR'S intellectual property with express written consent from the SPONSOR.

•

Use of the SPONSOR'S intellectual property inures to the benefit of the SPONSOR, and you do not acquire any rights in such intellectual property as a result of use allowed by the SPONSOR.

•

Please do not use "Lotto" or "Texas Lottery" as a substitute for a particular game name. For example, "Lotto Texas" is the name of an on-line game, and is not interchangeable with "Lotto" or "Texas Lottery". Use "Texas Lottery Commission" to describe the governmental entity.

•

You should mark the SPONSOR'S intellectual property as shown in Exhibit B-1.

•

The SPONSOR'S intellectual property sould be printed in accordance with the guidelines set out in Exhibit B-2.

•

You should not alter, manipulate, blur, distort or otherwise modify the SPONSOR'S intellectual property.

•

You should not "frame" the SPONSOR'S web site in the context of your own Internet web site. (For example, a newspaper's web site should not frame the entire SPONSOR'S web site in the context of the newspaper's web site, because of advertising and "preference" concerns.)

•

The SPONSOR wishes to avoid association with alcohol and tobacco products. Therefore, we prefer that our intellectual property not be directly placed next to the logo of such products.

EXHIBIT B-1

Frequently Used Texas Lottery Commission (TLC) Trademarks

Trademark

Notes

Texas Lottery® Use the symbol "®" with this word mark. Use the name "Texas Lottery Commission" to describe the governmental entity.

OR

-TEXRS~ LOTTERY

Use the symbol "®" with this logo.

-TEXHSI.OTTERY

"

~..

I

j~'

•

'.'

CII,I\~ITI\BLE _oj ~~.~ (j r " I I l' I/"/ ! ,I 'i .. 'i ~ '"a''Ou'~ J

I) ",' II ,I',!I-,l'\,\.':\ ,.".r,. 1\.'. ~'1""\' lIIiI!!"'''. I

1/

'

f",'

),

£1.,.1"

Use the symbol "TM" with this logo.

Use the symbol "®" with this logo. TExns

LOTiEnv

•• Lotto Texas®

~(-~

Miif'iPiiiS-

Use the symbol "®" with this word mark.

•

Use the symbol "®" with this logo.

"""-

The State of Illinois has registered this word mark and has given the TLC permission to use the mark in connection with the multi-state game. Use the symbol "®" with this word mark.

Mega Millions®

Megaply®

Use the symbol "®" with this word mark.

Megaplier®

Use the symbol "®" with this word mark.

Mega-plier®

Use the symbol "®" with this word mark.

When you buy, Megaply!®

I

Use the symbol "®" with this word mark.

Use the symbol "®" with this logo. TEXHS

Texas Two Step®

Use the symbol "®" with this word mark.

Use the symbol "®" with this logo. TEXHS

LOTTEHY

Use the symbol "TM" with this logo.

Pick 3

™

Use the mark symbol "TM" with this word mark.

Use the symbol "®" with this logo. LOTTERY

Cash Five®

Use the symbol "®" with this word mark.

.1 Use the symbol

Texas Lottery Daily 4™

Use the symbol "TM" with this word mark.

Use the symbol

Texas Lottery Daily 4 with Sum It Up ™

Daily 4™

"®" with this logo.

"®" with this logo.

Use the symbol "TM" with this word mark.

Use the mark symbol "TM" with this word mark.

Use the symbol "@" witb this logo.

~~~.

Sum It Up®

Use the symbol

"®" with this word mark.

Use the symbol "®" with this logo. IBAfCS-oFFS -11111

Llllln-

Scratch-Offs

Next Time, It Could be You®

Do not use either the "TM" symbol or the "®" symbol in connection with the words "Scratch-Offs".

Use the symbol "®"with this word mark. Use the symbol "®" with this word mark.

Play the Games of Texas®

It's a Whole New Ball Game® Maybe It's Your Lucky Day ™

Use the symbol "®" with this word mark.

Use the symbol "TM" with this word mark.

EXHIBIT B-2 TLC Logo Color Sheets The TLC logo color sheets provide the color formulas for each logo, for three different application formats: one-color, spot color, and four-color. All TLC logos must be printed using the color specifications for each application. The intellectual property mark that appears with each logo must also be included. To determine which IP mark to use with text-only logo names, please refer to the Legal Division's "TLC Trademarks Chart," located on the intranet in the TLC Style Center. The Publications and Graphics team maintains a library of TLC logos in a variety of formats to suit different media and purposes. We will be happy to provide you with any of the logos upon request and can also assist in determining which application to use for a particular job. Please contact a team member for assistance.

Four-Color/CMYK

Spot Color/PMS: Logos must be printed in the approved PMS SPOT colors for that logo. The CMYK formulas used in each spot color logo match the most recently updated Pantone Color Standards, which is the Pantone Color Bridge edition. These formulas are for reference only and should not be used when spot color is requested.

One-Color:

(or "Process"):

Logos must be printed in the approved colors for that logo. All four-color logos (except Mega Millions and the Texas Education logo) have CMYK formulas that are unique to the Texas Lottery Commission.

Logos must be printed in BLACK, WHITE, or the PMS color approved for one-color application of that logo.

These unique formulas are not intended to match any Pantone Color Standards. These unique formulas should always be used when four-color/CMYK, or "process," printing is requested.

SPOT: PMS Color

1C: One Color

4C: CMYK (orIProcess")

1C options:

CMYK formulas:

2 Spot Color logo:

This particular logo consists of 9 colors, none of which are a specific spot color. CMYKformulas are as follows:

PMS123 PC PMS Process Black PC

PMS123 PC

C -

0

M -

0

C M -

0 21

Y

0

Y

-

88

K -

0

-

K - 100

Black circle: 0.0.0.100 Yellow circle: 0.5.100.0 Cream circle: 0.5.18.0 Blue circle: 30.0.0.0 Green leaf: 95.24.100.10 Green berry: 20.0.25.0 Leaf acorn (dark): 20.20.21.50 Leaf acorn (light): 20.20.20.20 Star (dark) & Ribbon: 0.20.75.0 Star (light): 0.10.37.0

Black

PMS 280 PC

PMS8n~

n

C

- 0

C

-

100

C

M

-

M

-

78

M - D

0

-

Y

- 0

Y

-

5

Y

- ~

K

-

K

-

18

K

-

100

16

SPOT: PMS Color

1C: One Color

4C: CMYK (orIProcess")

r --

~te .;

~~~~;

,'-'tj.

-TEXAS-

-TExns-

-TEXRS-

LOTTERY

LOTTERY

~OTTERY

CMYK formulas:

2 Spot Color logo:

-TEXRS-

~OTTERY 1C options:

PMS 150 PC

PMS 280 PC

PMS 150 PC

-

100

C

M -

78

C

-

Lottery Blue C - 100

0

Lottery Orange C 0

M -

35

M -

M -

40

Y

-

5

Y

-

70

Y

-

0

Y

-

100

K

-

18

K

-

0

K

-

30

K

-

0

SPOT: PMS Color

80

LOTTERY

[OM

MISSION

I

I

r-

TEXRS

LOTTERY

[OM

TEXAS

LOTTERYCOMMI9Sl0N

TEXRS

LOTTERY

.

.

MISSION

CMYK formulas:

2 Spot Color logo:

I lack B K White 00I Y I Bingo Blue

1C: One Color

4C: CMYK (or"Process")

:. TEXRS

White

88 M C -- 123 K30 21 PC -- Bingo 94 PMS C - 100 M Y -- 43 Yellow Bingo Blue

I

1C options:

COMMISSION

SPOT: PMS Color

4C: CMYK (or "Process")

1C: One Color

TEXHS

LOTTERY

".

TEXRS

TEXRS

LOTTERY

CMYK formulas:

2 Spot Color logo:

1PMS Lotto CKJ --LOTTERY Red Y MC -options: -IYellow C 88 94 21 30 PC - Y M K 05IRed ILotto White Black Lotto 27 I123 I I I Lotto Yellow I

,

LOTTERY

-

34 94

T E X H S

SPOT: PMS Color

4C: CMYK (orIProcess")

1C: One Color

.$~'"~TexaS :TWO.Step

0"

·

f

~

:&mi

LOTtERY

T E X R S

• I

TEXRS

2 Spot Color logo:

-.

LOTTERY

CMYK formulas:

1C options:

White

,

IC - 100 C -- 485 100 20 PC KK - - 91 95 M 93 PC M - 79 Blue Y PMS 2738 PMS TXTwoStep TXTwoStep Red Y -

I

SPOT: PMS Color

-

74 M 4-15 Daily 30 000C Y 69 92 10 52

Y

-

94 M C YCYellow Y K -- 100 K M Y M -- K 100 K 0 PC K --- 340 -4 100 Green C PMS 52 Purple Daily Daily 4 - C Daily4 Daily 4I 144 Spot logo:4Orange PC I Color

•

1C: One Color

4C: CMYK (orIProce55")

Yellow CMYK

formulas:

1C options:

PMS'44PC

White

SPOT: PMS Color

.

TEXRS

-

.

.~OTTERY

TEXRS.~OTTERY
C

-

M -

PMS 123 PC

-

Pick 3

Pick3 Yellow

C

-

0

0

M

-

21

C

M -

Y

-

74

Y

-

88

K

-

0

K

-

0

10 YC -- - 100 92 M

-

100

C

-

0

0

M

-

30

Y

-

69

Y

-

94

K

-

15

K

-

0

0 PC PMS 2685 K

~s ,I.

0 T T E." Y

T E X,"

~s ,I.

0 T T E. R Y

••

Green

100

PMS 123 PC

T E X,"

CMYK formulas:

4 Spot Color logo: PMS 340 PC

1C: One Color

4C: CMYK (or lip race55")

Pick 3 Yellow

I

1C options:

Pick 3 Purple C 92 M

-

Y

-

100 0

K

-

10 White

SPOT: PMS Color

1C: One Color

4C: CMYK (orIProcess")

QP

0nm~t!n~r 0nm~~ - I I

M

10 15 -000 94 21 3 69 88 92

-74 Yellow K -- 100 YCPurple -- 100 YC Y M M M K -----It 100 00CYellow Green KY Sum Up Sum It Up formulas: CMYK C , 4 Spot logo: It Up IColorSum

IsumltUP I 340 PC

I ~B3QD~r

I ~&QU1I' ~&QU1I' 1C options:

,

•

PMS340PC

,

White

SPOT: PMS Color

4C: CMYK (orIProcess")

1C: One Color

.~

~~ SCDATCD-Drrs

-1£11$LIII£II-

2 Spot Color logo:

SCRATCH-Drrs

-1£11$ LIIHI'-

SCRATCH-crrs -IE liS LDIIEI'-

CMYK formulas:

SCPMCH-Crrs -IEIIS L.IIEU-

I

M 43 Y K 91 --- 100 0 PCY M C -- 361 75 76 PCScratch-Off C - 100 Blue 00 K -Green PMS 300 Scratch-Off PMS

1C options:

,

White

SPOT: PMS Color

4C: CMYK (orIProcess")

1C: One Color

TExns

I.OTTEny

TExns

I.OTTEny

••

TEXAS

L.OTTERY

TEXAS

L.OTTERY

CMYK formulas:

2 Spot Color logo:

Cash Five

PMS 376 PC

Green

1C options: PMS 267 PC

C -

86

PMS 376 PC

CashFive Purple

CashRve Green

C M -

56 0

0

Y

-

100

0

K

-

0

-

53

C -

94

M - 96

M -

0

M -

94

Y

-

0

Y

-

96

Y

-

K

-

0

K

-

0

K

-

C

White

-

--- K100 I 1PMC:;4~O Iformulas: PI- 430 I 93PC C 95 37 18 6 PMS M C yK1C: -Y PMS PMS 485 PC 33 M CMYK SPOT: One Color CColor options: 23 10

~

PMS 2738 \~ .:.. PC

I

I

\.~. i..... ~ttI

I 4C: ~CMYK (or"process") r MfSAPUfB I ~(~HY

SPOT: PMS Color

l.OTTERY -TEXRS-

(~~ ~ "'ore

EDOGA nON

-TEX RSl.OTTERY <;UPPOI~TS

Tha"

$11

<;UPPOI~TS

'f~xA~

4C: CMYK (orIProcess")

-

95 34 93 0 7 55 75

1~97

V

I

M C yKC PMS 485146 PCPC - 100 PMS CMYK formulas: 4 Spot Color logo: 1YKC options: PMS Process Black PC

(@&'"

b~~l rI;'f~XAS D"GA riON sl"lon

billion S;IIC~

~~ . or. Tha"

I

liCe 1997

1C: One Color

J IIHIHX3

2009 RESOLUTION

BV-I

Whereas. Article IX (Prohibited Conduct), Section 9.1(C)(6) of the Constitution and Bylaws of the National Football League governs commercial relationships between Clubs and state and municipal lotteries; and Whereas, Clubs are permitted under certain circumstances to accept general advertising for state and municipal lotteries including, without limitation, stadium sign age and advertising within all Club-controlled media, and many Clubs have done so; and Whereas, Clubs are prohibited from commercial involvement with a state or municipal lottery that (a) in any way involves a Club affiliation with or endorsement of the lottery, or (b) includes promotion of any lottery game having a sports theme; and Whereas, scratch-off lottery tickets bearing third party brands and sold at retail locations throughout the state are a growing and important source of revenue for many states; and Whereas, other major professional sports leagues, teams and entertainment entities have successfully licensed the use of their marks and logos on various state-issued scratch-off lottery tickets on a state-wide basis; and Whereas, the NFL Business Ventures Committee has determined that permitting Clubs to enter into sponsorship agreements with state and municipal lottery organizations and to otherwise authorize the use of Club marks and logos in connection with the creation and marketing of scratch-off lottery tickets could provide additional funding for state and municipal initiatives such as education and infrastructure development (potentially including stadium development), as we]) as result in incremental revenue for the participating Clubs; and Whereas, to ensure that any such activities remain consistent with long-standing League policy against advertising or promotional activities by Clubs that can reasonably be perceived as constituting affiliation with or endorsement of gambling or gambling-related activities, it is appropriate to set forth specific parameters within which Clubs may affiliate themselves with state and municipal lottery games and organizations, and to provide for certain continued oversight by the League Office; Be it Resolved, that effective immediately, 1. Any provision of the Constitution and Bylaws of the National Football League notwithstanding, the Commissioner in consultation with the Business Ventures Committee shall detennine whether and under what parameters Clubs may enter into commercial relationships involving state and municipal lottery games and organizations. 2. The term "performance in" as used in Article IX , Section 9.1 (C)(6) of the Constitution and Bylaws of the National Football League and in this Resolution shall be defined to include, without limitation, points scored, margins of victory, timing of scores, yards gained, or any other current or future recognized measure of team or individual performance in any NFL game or other actual sporting event.

3. Through June 1,2011 only, any other provision of the Constitution and Bylaws of the National Football League notwithstanding, Clubs shall be permitted to engage in commercial arrangements with state and municipal lotteries provided that the lottery organization does not offer any lottery game (with or without Club Marks) or betting scheme based on the outcome of or any perfonnance in any NFL game or in any other actual sporting event, as follows:

(i)

Each Club may authorize the use within such Club's Lottery Marketing Area (as defined below) of its trademarks and logos ("Club Marks") in connection with the marketing and promotion of any state or municipal lottery game distributed within its Lottery Marketing Area, provided that Clubs shall not authorize the use of their respective Club Marks in connection with any advertising or promotional materials that., in the Commissioner's judgment, could reasonably create the impression ofa Club affiliation with or endorsement of gambling or gambling-related activities (e.g., a lottery game based on the outcome of or performance in any NFL game); and (ii) Each Club may provide experiential and other prizing for use in connection with any state or municipal lottery game distributed within its Lottery Marketing Area, provided that such experiential and other prizing is not used, marketed, or promoted in any manner that, in the Commissioner's judgment, might reasonably be perceived as constituting an affiliation with or endorsement of any state or municipal lottery game by any coach. player or other Club employee (and such individuaJs continue to be prohibited from participating in any advertising or promotion of any lottery game or organization); and

(iii) Each Club may authorize the use of its Club Marks on scratch-off game tickets for any state or municipal lottery game distributed within such Club's Lottery Marketing Area, provided that (a) all such game tickets are submitted to and approved in advance in writing by the League Office, and (b) such game tickets are not designed, marketed or promoted in such a way that, in the Commissioner's judgment, they could reasonably be perceived as being based on the outcome of or performance in any NFL game orin any other actual sporting event; and (iv) The foregoing notwithstanding, all marketing and promotional activities ' within a Club's Lottery Marketing Area shall be subject to the provisions of2004 Resolution BV -4, provided that, for the avoidance of doubt, Clubs shaH not be prohibited from authorizing the sale at retail of their Club-themed scratch-off lottery tickets within any other Club's Home Territory within such Club's Lottery Marketing Area. 4. include:

For purposes of this Resolution, each Club's Lottery Marketing Area shall

(i) The entire State in which the city for which the Club holds a franchise is located (the "Home State"), provided that where two or more Clubs share a Home State, each Club shall have equal rights under this Resolution within such State; and (ii) The entirety of any other States within which any portion of such Club's Home Territory is located ("Adjacent States"), but excluding any other Club's Home

2

State and provided that where two or more Clubs share any Adjacent States, each Club shall have equal rights under this Resolution within such Adjacent States; and (iii) The foregoing notwithstanding, the Baltimore Ravens and the Washington Redskins shaH have equal rights under this Resolution within the entire state of Maryland, excluding the District of Columbia which shall be exclusively within the Lottery Marketing Area of the Washington Redskins. 5. Any agreement that a Club desires to enter into with a state or municipal lottery organization or any other third party in connection with the rights addressed in this Resolution must (i) be submitted to the League Office for prior written approval, (ii) incorporate a provision expressly providing that the agreement is subj ect to the rules and policies of the National Football League, as such may be amended from time to time, including, without limitation, the terms of this Resolution . .
3

scratch-off lottery tickets), (ii) samples of aU marketing and promotional materials created in connection with the activities contemplated under this Resolution, and (iu) all requested financial infom1ation regarding rights fees and other revenue generated by such Club in connection with the activities contemplated under this Resolution. 9. Failure to comply with the tenns of this Resolution or any related policies or rules shall subject the offending Club to the penalties set forth in Section 13 (Violations; Sanctions and Penalties) of 2004 Resolution BV-4. 10. Absent further action by the Commissioner in consultation with the Business Ventures Committee, the additional rights granted to the Clubs pursuant to Sections 3 and 4 of this Resolution shall expire on June 1,2011. The League Office will monitor and report on the implementation of this Resolution no later than the Annual League Meeting in 2011. Reason and Effect:

To authorize Clubs to enter into sponsorship agreements with state and municipal lottery organizations and to otherwise license the use of Club Marks and logos in connection with the creation and marketing of scratch-off lottery tickets pursuant to the parameters specified. Proposed by: Business Ventures Committee

VOTE

For Against. Abstain Absent.

DISPOSITION . . . .

4

a IIHIHX:tl

§ 466.155. DENIAL OF APPLICATION OR SUSPENSION OR REVOCATION OF LICENSE. (a) After a hearing, the director shall deny an application for a license or the commission shall suspend or revoke a license if the director or commission, applicable, fmds that the applicant or sales agent:

as

(1) is an individual who: (A) has been convicted of a felony, criminal fraud, gambling or a gambling-related offense, or a misdemeanor involving moral turpitude, if less than 10 years has elapsed since the termination of the sentence, parole, mandatory supervision, or probation served for the offense; (B) is or has been a professional gambler; (C) is married to an individual: (i) described in Paragraph (A) or (B); or (ii) who is currently delinquent in the payment of any state tax; (D) is an officer or employee ofthe commission or a lottery operator; or (E) is a spouse, child, brother, sister, or parent residing as a member of the same household in the principal place of residence of a person described by Paragraph (D); (2) is not an individual, and an individual described in Subdivision (1):. (A) is an officer"ordirector of the applicant or sales agent; . (B) holds more than 10 percent of the stock in the applicant or sales agent; (C) holds an equitable interest greater than 10 percent in the applicant or sales agent; (D) is a creditor of the applicant or sales agent who holds more than 10 percent of the applicant's or sales agent's outstanding debt; (E) is the owner or lessee of a business that the applicant or sales agent conducts or through which the applicant will conduct a ticket sales agency; (F) shares or will share in the profits, other than stock dividends, of the applicant or sales agent; or (G) participates in managing the affairs of the applicant or sales agent; (3) has been finally determined to be: (A) delinquent in the payment of a tax or other money collected by the comptroller, the Texas Workforce Commission, or the Texas Alcoholic Beverage Commission; or

(B) in default on a loan made under Chapter 52, Education Code; (C) in default on a loan guaranteed under Chapter 57, Education

Code; (4) is a person whose location for the sales agency is: (A) a location licensed for games of bingo under Chapter 2001, Occupations Code; (B) on land that is owned by:

(i) this state; or (ii) a political subdivision of this state and on which is )cated a public primary or secondary school, an institution of higher education, or an gency of the state; or (C) a location for which a person holds a wine and beer retailer's ermit, mixed beverage permit, mixed beverage late hours permit, private club ~gistration permit, or private club late hours permit issued under Chapter 25,28,29,32, r 33, Alcoholic Beverage Code; or (5) has violated this chapter or a rule adopted under this chapter. (b) If the director proposes to deny an app.lication for a license or the commission roposes to suspend or revoke a license under this section, the applicant or sales agent is ntitled to written notice of the time and place of the hearing. A notice may be served on n applicant or sales agent personally or sent by certified or registered mail, return receipt equested, to the person's mailing address as it appears on the commission's records. A lotice must be served or mailed not later than the 20th day before the date of the hearing. 'he commission shall provide for a formal administrative hearings process. (c) At a hearing, an applicant or sales agent must show by a preponderance of the vidence why the application should not be denied or the license suspended or revoked. (d) The director shall give an applicant or sales agent written notice of a denial of n application or a suspension or revocation of a license. (e) The director may not issue a license to a person who has previously had a lcense under this chapter revoked unless the director is satisfied the person will comply I'ith this chapter and the rules adopted under this chapter. The director may prescribe the ~rmsunder which a suspended license will be reissued. (f) The director may not issue a license to an applicant who fails to certify to the lirector the applicant's compliance with the federal Americans with Disabilities Act of 990 (42 U.S.C. Section 12101 et seq.). (g) For purposes of Subsection (a)(3), the comptroller, Texas Workforce ~ommission, Texas Alcoholic Beverage Commission, Texas Higher Education ~oordinating Board, and Texas Guaranteed Student Loan Corporation shall each provide he executive director with a report of persons who have been finally determined to be lelinquent in the payment of any money owed to or collected by that agency. The :ommission shall adopt rules regarding the form and frequency of reports under this ubsection.

tdded by Acts 1993, 73rd Leg., ch. 107, § 4. 03(b), elf Aug. 30,1993. Amended by Acts '995, 74th Leg., ch. 76, § 6.21, elf Sept. 1,1995; Acts 1995, 74th Leg., ch. 696, § 1, elf .ept. 1, 1995; Acts 1997, 75th Leg., ch. 1275, § 51, elf Sept. 1, 1997; Acts 2001, 77th :eg., ch. 394, § 1, elf Sept. 1, 2001; Acts 2001, 77th Leg., ch. 1420, § 14.760, elf Sept. ',2001.