-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Nx7/w+/7fkz4HsQmkG9ZIDFdNNJ6LFp9b62sotbd2a01edYX6AoS3wiW39guDveX Q78Z8VT3LLT6/lSU1yQKrQ== /in/edgar/work/20000905/0000950147-00-001366/0000950147-00-001366.txt : 20000922 0000950147-00-001366.hdr.sgml : 20000922 ACCESSION NUMBER: 0000950147-00-001366 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000818 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000905 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GLOBAL TECHNOLOGIES LTD CENTRAL INDEX KEY: 0000932021 STANDARD INDUSTRIAL CLASSIFICATION: [3663 ] IRS NUMBER: 860970492 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-25668 FILM NUMBER: 716658 BUSINESS ADDRESS: STREET 1: 1811 CHESTNUT STREET STREET 2: SUITE 120 CITY: PHILADELPHIA STATE: PA ZIP: 19103 BUSINESS PHONE: 2159728191 MAIL ADDRESS: STREET 1: 1811 CHESTNUT STREET STREET 2: SUITE 120 CITY: PHILADELPHIA STATE: PA ZIP: 19103 8-K 1 0001.txt CURRENT REPORT DATED 8/18/00 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 ---------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported) August 18, 2000 GLOBAL TECHNOLOGIES, LTD. ------------------------------------------------------------ (Exact Name of Registrant as specified in its charter) Delaware 0-25668 86-0970492 - ---------------------------- ----------- ------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) The Belgravia, 1811 Chestnut Street, Suite 120, Philadelphia, PA 19103 ---------------------------------------------------------------------- (Address of Principal Executive Offices, including Zip Code) (215) 972-8191 ---------------------------------------------------- (Registrant's telephone number, including area code) ----------------------------------------------------------- Former Name or Former Address, If Changed Since Last Report ITEM 2. ACQUISITION OR DISPOSITION ASSETS TRANSFER OF INTEREST IN INTER LOTTO (UK) LIMITED AND TERMINATION OF OPERATING AGREEMENTS On August 18, 2000, Global Technologies, Ltd. ("Global") and its wholly-owned United Kingdom subsidiaries, GlobalTech Holdings Limited ("GlobalTech Holdings") and GTL Management Limited ("GTL Management") entered into a "Deed" with Inter Lotto (UK) Limited ("Inter Lotto"), a United Kingdom company licensed pursuant to an External Lottery Manager's Certificate issued by the Gaming Board for Great Britain ("ELMC License") to operate lotteries on behalf of charities in Great Britain, and certain of its principals which, in substance, constituted a settlement agreement providing for the disengagement of Global and its subsidiaries from Inter Lotto and its operations by (i) transferring back to the other principals of Inter Lotto all of the GlobalTech Holdings' capital stock in Inter Lotto; (ii) payment to GTL Management of an amount equal to the value added tax rebate to Inter Lotto, plus interest, less an amount to be retained by Inter Lotto for salaries; (iii) termination of the Operating Agreements between GTL Management and Inter Lotto, (iv) cooperative arrangements for Global and its subsidiaries to assist in the operation of Inter Lotto through the end of the year; and (v) termination of litigation and waiver of all claims and releases. In April, 1999, Global and certain of its wholly-owned United Kingdom subsidiaries entered into an arrangement with Inter Lotto under which GlobalTech Holdings purchased 27.5% of the outstanding capital stock of Inter Lotto and GTL Management entered into an Operating Agreement with Inter Lotto to run Inter Lotto's lotteries and gaming activities. Simultaneously, GTL Leasing Limited ("GTL Leasing"), an indirect wholly-owned United Kingdom subsidiary of Global, purchased computer equipment, which it leased to GTL Management for use in such lottery and gaming operations. GTL Management entered into a further operating agreement with Inter Lotto on January 13, 2000. The lottery and gaming business under these agreements began with an official "launch" on April 4, 2000. The August 18, 2000 "Deed" effectively terminates the April, 1999 and January, 2000 arrangements and provides for a total separation of Inter Lotto and Global and its subsidiaries by the end of the year 2000. Under the "Deed", GlobalTech Holdings transferred all of its stock in Inter Lotto to the other principals of Inter Lotto, to become effective the date upon which Inter Lotto and its representatives vacate Inter Lotto's Dover Street address, which is required to occur by September 30, 2000. The "Deed" terminates the Operating Agreements and provides that Inter Lotto and GTL Management will together do whatever is necessary to manage the lottery operations through December 31, 2000, including the maintenance of Inter Lotto's ELMC License during such period. In consideration for the transfer of stock in Inter Lotto by GlobalTech Holdings, Inter Lotto and its principals have agreed not to engage in the business of the Daily Number Game or any similar three (3) or four (4) digit lottery games within the United Kingdom of Great Britain for a period of two (2) years following August 18, 2000. 2 The financial terms of the August 18, 2000 "Deed" provide for the allocation of approximately (pound)970,000 in Value Added Tax rebates, with Inter Lotto retaining (pound)220,000 (for the payment of back salaries which were the subject of disputes between Global and certain other principals of Inter Lotto) and paying to GTL Management the balance of approximately (pound)750,000. GTL Management will be paid all revenues from Inter Lotto lottery operations through December 31, 2000, after payment for prizes, charities and sales commissions. Additionally, there are provisions for the resolution for certain other outstanding debts and obligations. The August 18, 2000 "Deed" also operates as a general settlement agreement and includes waivers of all claims and releases, including the withdrawal of a "winding up petition" calling for the dissolution of Inter Lotto, filed in court by one or more of the other principals of Inter Lotto. GTL Leasing retains ownership of the computer networking hardware, software, terminals and other equipment which serves as the infrastructure of the lottery operations conducted under Inter Lotto's ELMC License and managed by GTL Management. Such lottery equipment is leased by GTL Leasing to GTL Management. In addition, GTL Management remains obligated under the agreement with International Lottery and Totalizator Systems, Inc. for certain facilities management services and technological support in connection with such lottery equipment, which Global, through Global Leasing, purchased from them. This agreement requires that GTL Management pay International Lottery and Totalizator Systems, Inc. $72,000 per week, plus additional amounts based on any terminals in excess of 3,500 which are installed and a percentage of average daily sales. Global and its subsidiaries are currently investigating alternative operating strategies for GTL Management and the use of its lottery equipment and operating network following termination of the Inter Lotto lottery operations by December 31, 2000. Such strategies include utilizing the network for operating pools, lotteries and betting for established gaming companies, and to develop a national linked bingo game in partnership with proprietary private clubs throughout the United Kingdom. Global intends to have implemented an alternative operating strategy by December 31, 2000, however, no assurance can be given that it will be successful in doing so. If we are unable to successfully implement an alternative operating strategy before the termination of Inter Lotto's lottery operations, GTL Leasing's lottery equipment assets could be deemed impaired under generally accepted accounting principals, as the carrying value of such assets may not be fully recoverable in such event. Any "write down" of the value of such assets due to such impairment could have a material adverse effect on Global's financial condition. 3 ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (b) PRO FORMA FINANCIAL INFORMATION The following pro forma unaudited financial information present Global's pro forma unaudited condensed consolidated balance sheet as of March 31, 2000 and Global's pro forma unaudited condensed consolidated statements of operations for the eight month transition period ended June 30, 1999 ("Transition Period") and nine months ended March 31, 2000. The pro forma unaudited financial information gives effect to the "Deed", including (i) transferring back to the other principals of Inter Lotto all of the GlobalTech Holdings' capital stock in Inter Lotto; (ii) payment to GTL Management of an amount equal to the value added tax rebate to Inter Lotto, plus interest, less an amount to be retained by Inter Lotto for salaries; and (iii) termination of the Operating Agreement between GTL Management and Inter Lotto. The pro forma adjustments were recorded as if they had occurred, for purposes of the pro forma unaudited condensed consolidated balance sheet, as of March 31, 2000 and, for the purposes of the pro forma unaudited condensed consolidated statements of operations, as of the beginning of the respective periods presented. This pro forma unaudited financial information does not purport to represent what Global's actual financial position and operating results would have been had such events actually occurred on the aforementioned dates. The pro forma unaudited financial information also does not purport to serve as a forecast of Global's financial position or results of operations for any future periods. The pro forma adjustments are based upon currently available information and upon certain assumptions that management believes are reasonable in the circumstances. This pro forma financial information should be read in conjunction with Global's audited consolidated financial statements as of and for the Transition Period ended June 30, 1999 appearing in the Company's Form 10-KSB for fiscal 1999, and the unaudited consolidated financial statements as of and for the nine months ended March 31, 2000 appearing in Global's Form 10-Q for the quarter then ended. 4 GLOBAL TECHNOLOGIES, LTD. AND SUBSIDIARIES PROFORMA CONDENSED CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2000 UNAUDITED
PRO FORMA ADJUSTMENTS ACTUAL DEBIT (CREDIT) PRO FORMA ------------- -------------- ------------- Assets (UNAUDITED) Current assets: Cash and cash equivalents $ 1,030,549 $ 1,193,295 (1) $ 2,223,844 Restricted cash 463,405 463,405 Investments 93,024,088 93,024,088 Accounts receivable 21,087 21,087 Inventories 5,424,359 5,424,359 Prepaid expenses 708,518 708,518 Deferred tax asset 28,797,214 28,797,214 Other current assets 2,872,501 (1,542,831)(2) 1,329,670 ------------- ------------- ------------- Total current assets 132,341,721 (349,536) 131,992,185 Investments 1,818,812 (818,812)(3) 1,000,000 Property and equipment 16,206,156 16,206,156 Intangible and other assets 8,000,709 8,000,709 ------------- ------------- ------------- Total assets $ 158,367,398 $ (1,168,348) $ 157,199,050 ============= ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 3,468,809 $ $ 3,468,809 Accrued liabilities 6,044,928 6,044,928 Deferred revenue 2,108,152 2,108,152 Other current liabilities 297,986 297,986 ------------- ------------- ------------- Total current liabilities 11,919,875 11,919,875 Non-current liabilities 1,945,765 1,945,765 ------------- ------------- ------------- Total liabilities 13,865,640 13,865,640 ------------- ------------- ------------- Minority interest 456,908 456,908 Stockholders' equity: Series C 5% Convertible preferred stock 10 10 Class A common stock 104,722 104,722 Additional paid-in capital 126,815,873 126,815,873 Accumulated other comprehensive income: Loss on foreign currency translation (196,695) (196,695) Net unrealized gain (loss) on investments 89,962,703 89,962,703 Unrealized tax benefit of NOL carryforward 28,797,214 28,797,214 Accumulated deficit (101,438,977) 1,168,348 (4) (102,607,325) ------------- ------------- ------------- Total stockholders' equity 144,044,850 1,168,348 142,876,502 ------------- ------------- ------------- Total liabilities and stockholders' equity $ 158,367,398 $ 1,168,348 $ 157,199,050 ============= ============= =============
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED); (1) To record receipt of Global's allocation of the Value Added Tax rebate. (2) To record reciept of the total Value Added Tax rebate. (3) To record sale of equity interest in Inter Lotto for nominal proceeds. (4) To record loss on sale of equity interest in Inter Lotto and payment of Inter Lotto's allocation of the Value Added Tax rebate. 5 GLOBAL TECHNOLOGIES, LTD. AND SUBSIDIARIES PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 2000 UNAUDITED
PRO FORMA ACTUAL ADJUSTMENTS PRO FORMA ------------- -------------- ------------- (UNAUDITED) Revenue: Equipment sales $ 5,597,909 $ $ 5,597,909 Service income 59,827 59,827 ------------ ------------ ------------ 5,657,736 5,657,736 ------------ ------------ ------------ COSTS AND EXPENSES: Cost of equipment sales 3,680,584 3,680,584 Cost of service income 36,292 36,292 General and administrative expenses 14,346,353 (6,332,093)(1) 8,014,260 Non-cash compensation expense 916,612 916,612 Expenses associated with investments 1,656,587 1,656,587 Depreciation and amortization expense 1,023,172 1,023,172 ------------ ------------ ------------ 21,659,600 (6,332,093) 15,327,507 ------------ ------------ ------------ Operating loss (16,001,864) 6,332,093 (9,669,771) OTHER: Interest expense (54,120) (54,120) Interest income 573,639 573,639 Equity in loss of nonconsolidated affiliates (1,120,776) 1,036,125(2) (84,651) Other income (expense) (19,697) (19,697) ------------ ------------ ------------ NET LOSS BEFORE MINORITY INTEREST AND PREFERRED STOCK DIVIDEND (16,622,818) 7,368,218 (9,254,600) Minority interest 811,739 811,739 Cummulative dividend on preferred stock (61,644) (61,644) ------------ ------------ ------------ NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS $(15,872,723) $ 7,368,218 $ (8,524,202) ============ ============ ============ BASIC AND DILUTED NET LOSS PER SHARE OF COMMON STOCK $ (1.66) $ (0.89) WEIGHTED AVERAGE SHARES OUTSTANDING 9,550,955 9,550,955
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED); (1) To eliminate the expenses associated with the launch of the lottery operations which were advanced to Inter Lotto under the Operating Agreement, but reserved for (and expensed) by Global. (2) To eliminate Global's portion of the loss of Inter Lotto for the period. 6 GLOBAL TECHNOLOGIES, LTD. AND SUBSIDIARIES PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE TRANSITION ENDED JUNE 30, 1999 UNAUDITED
PRO FORMA ACTUAL ADJUSTMENTS PRO FORMA ------------- -------------- ------------- (UNAUDITED) Revenue: Equipment sales $ 875,957 $ $ 875,957 Service income 706,504 706,504 ----------- ----------- ----------- 1,582,461 -- 1,582,461 ----------- ----------- ----------- COSTS AND EXPENSES: Cost of equipment sales 1,517,323 1,517,323 Cost of service income 445,585 445,585 General and administrative expenses 6,718,905 6,718,905 Special Charges 2,485,660 2,485,660 Expenses associated with investments 550,000 550,000 Reversal of warranty, maintenance and commission accruals (7,151,393) (7,151,393) ----------- ----------- ----------- 4,566,080 4,566,080 ----------- ----------- Operating loss (2,983,619) -- (2,983,619) OTHER: Interest expense (74,684) (74,684) Interest income 1,060,229 1,060,229 Equity in loss of nonconsolidated affiliates (195,704) 167,492(1) (28,212) Gain on sale of assets 133,396 133,396 Other income (expense) 61,252 61,252 ----------- ----------- ----------- NET LOSS BEFORE MINORITY INTEREST AND PREFERRED STOCK DIVIDEND (1,999,130) 167,492 (1,831,638) Minority interest (376,705) (376,705) Cummulative dividend on preferred stock (33,333) (33,333) ----------- ----------- ----------- NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS $(2,409,168) $ 167,492 $(2,180,424) =========== =========== =========== BASIC AND DILUTED NET LOSS PER SHARE OF COMMON STOCK $ (0.44) $ (0.40) WEIGHTED AVERAGE SHARES OUTSTANDING 5,416,124 5,416,124
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED); (1) To eliminate Global's portion of the loss of Inter Lotto for the period. 7 (c) EXHIBITS 2.1 Deed, dated August 18, 2000, relating to the transfer of stock in Inter Lotto (UK) Limited and the termination of the Operating Agreements, by and among Inter Lotto (UK) Limited, GTL Management Limited, Global Technologies, Ltd., GlobalTech Holdings Limited, The Right Honourable The Lord Mancroft, Roy Fisher, and Douglas Smith. 8 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. GLOBAL TECHNOLOGIES, LTD. Dated: September 5, 2000 By: /s/ Irwin L. Gross ------------------------------------ Name: Irwin L. Gross Title: Chairman and Chief Executive Officers 9 INDEX TO EXHIBITS Exhibit No. Description - ------------- -------------- 2.1 Deed, dated August 18, 2000, relating to the transfer of stock in Inter Lotto (UK) Limited and the termination of the Operating Agreements, by and among Inter Lotto (UK) Limited, GTL Management Limited, Global Technologies, Ltd., GlobalTech Holdings Limited, The Right Honourable The Lord Mancroft, Roy Fisher, and Douglas Smith. EX-2.1 2 0002.txt DEED DATED 8/18/00 DATED 18TH AUGUST 2000 (1) INTER LOTTO (UK) LIMITED (2) GTL MANAGEMENT LIMITED (3) GLOBAL TECHNOLOGIES LIMITED (4) GLOBALTECH HOLDINGS LIMITED (5) THE RIGHT HONOURABLE THE LORD MANCROFT (6) ROY FISHER (7) DOUGLAS SMTH DEED RELATING TO THE TERMINATION OF THE OPERATING AGREEMENTS DATED 29TH APRIL 1999 AND 13TH JANUARY 2000 CONTENTS CLAUSE 1. GLOBAL PAYMENT TO INTER LOTTO........................................... 3 2. EXTERNAL LOTTERY MANAGER'S CERTIFICATE.................................. 4 3. WAIVER OF CLAIMS - GLOBAL HOLDINGS & GTL................................ 6 4. WAIVER OF CLAIMS - INTER LOTTO.......................................... 6 5. INDEMNITIES............................................................. 7 6. TERMINATION OF OPERATING AGREEMENTS..................................... 7 7. COMMUNICATIONS WITH THE GAMING BOARD.................................... 8 8. MANCROFT, FISHER AND SMITH.............................................. 8 9. SALARIES AND RESIGNATIONS............................................... 11 10. COMPETITION............................................................. 12 11. GENERAL................................................................. 12 THIS DEED is made the 18th day of August 2000. BETWEEN: 1. INTER LOTTO (UK) LIMITED a Company incorporated in England and Wales with registration number 3036866 whose registered office is situated at Oakley Building, Broad Lane, Bracknell, Berkshire RG129GU ("Inter Lotto") 2. GTL MANAGEMENT LIMITED a Company incorporated in England and Wales with registration number 3721405 whose registered office is situated at Oakley Building, Broad Lane, Bracknell, Berkshire RG129GU ("GTL") 3. GLOBAL TECHNOLOGIES LIMITED a Company incorporated in the United States under the laws of Delaware with headquarters at The Belgravia, 1811 Chestnut Street, Suite 120, Philadelphia PA 19103 (IRS ID No. 86-0970492) ("Global") 4. GLOBALTECH HOLDINGS LIMITED a Company incorporated in England and Wales with registration number 3721699 whose registered office situated at Oakley Building, Broad Lane, Bracknell, Berkshire RG129GU ("Holdings") 5. THE RIGHT HONOURABLE THE LORD MANCROFT of the School House, Badminton, Gloucestershire GL9 1EJ ("Mancroft") 6. ROY FISHER of 502 Drake House, Dolphin Square, London, SW1V 3NW ("Fisher") 7. DOUGLAS SMITH of The Buckstone House, Stauton, Coleford, Gloucestershire GL16 8PD ("Smith") Page 2 RECITALS A Inter Lotto manages Lotteries in the United Kingdom pursuant to an External Lottery Manager's Certificate issued by the Gaming Board; B Inter Lotto entered into Operating Agreements with GTL dated 29th April 1999 ("the Initial Operating Agreement") and 13th January 2000 ("the Further Operating Agreement") (collectively "the Operating Agreements") whereby GTL agreed to provide the services described in the Operating Agreements to Inter Lotto; C Inter Lotto entered into separate Service Agreements with each of Mancroft, Fisher and Smith dated 29th April 1999; D The Parties have agreed to enter into this Deed in order to compromise the claims which each party has against the other, to record the termination of the Operating Agreements and the terms upon which the termination shall take place. IT IS AGREED as follows: 1. GLOBAL PAYMENT TO INTER LOTTO 1.1 Inter Lotto shall pay to GTL the sum of(pound)751,064.87 (being the balance remaining from the Value Added Tax rebate plus interest accrued currently held by Inter Lotto and which Inter Lotto hereby acknowledges and agrees it holds for GTL after retention by Inter Lotto of the sum of(pound)220,000) upon the signing of this Deed by cleared funds, subject to 1.2 below. Such payment shall be made by CHAPS payment to the account of GTL at Barclays Bank Plc, London Corporate Banking, PO Box 544, 1st Floor, 54 Lombard Street, London EC3V 9EX sort code 20 67 59, account number 30373621. Page 3 1.2 Mancroft shall ensure that the winding up petition presented to the court on 11th August 2000 under action number 4997 of 2000 shall be withdrawn on 18th August 2000. Inter Lotto, Mancroft, Smith and Fisher shall ensure that (1) immediate notice is given to Inter Lotto's bank, Barclays Bank Plc of 54 Lombard Street, London EC3V 9EX of the withdrawal of the winding up petition and (2) all steps are taken to ensure that the (pound) 751,064.87 referred to in paragraph 1.1 above is credited to the account of GTL aforesaid by close of banking business on 18th August 2000. 2. EXTERNAL LOTTERY MANAGER'S CERTIFICATE ("ELMC") 2.1 Inter Lotto and GTL shall do all that is reasonably necessary to manage lotteries operated by GTL under Inter Lotto's ELMC until close of business on 31st December 2000 or when GTL cease to operate the Games if sooner (collectively "the Games" or, individually, a "Game"). Inter Lotto and each of Mancroft, Fisher and Smith shall, subject to compulsion of law and regulatory requirements of the Gaming Board: (i) take all reasonable steps to ensure that the ELMC remains in full force and effect until 31st December 2000 or the date on which GTL cease to operate the Games if sooner and (ii) shall not make any act or omission which would or may jeopardise the continuance of the ELMC or cause any conditions attached thereto to be changed or varied in any material respect. Page 4 2.2 For as long as Inter Lotto continues to manage and report to the Gaming Board on the Games Global shall promptly reimburse and pay to Inter Lotto all Gaming Board filing fees and all other reasonable proper expenses relating to such management and reporting including, without prejudice to the generality of the foregoing, postage, courier charges and bank charges which relate solely to the operation of the Games incurred before or during this Agreement upon receipt of appropriate receipts, statements or invoices evidencing these expenses. Expenses shall however specifically exclude any and all travelling, entertainment and mobile telephone expenses save that in relation to travel expenses the reasonable cost of travelling between the Dover Street premises and the Bracknell premises on Inter Lotto/Global business shall be met by Global subject to presentation of relevant receipts. 2.3 All monies received from the sale of lottery tickets in relation to the Games ("the Revenue") shall be paid into the Inter Lotto Society Suspense Account at Barclays Bank account no. 00444642 ("the Society Suspense Account"). 2.4 GTL shall prepare Inter Lotto statements showing the Revenue to be received into the Society Suspense Account and disbursements from that account and shall submit the same to Inter Lotto at such intervals and in such a media as the Parties may determine, and with hard copy at such times and for such period as the Parties deem appropriate. The format of the statements shall be in accordance with current practise. Page 5 2.5 20% of the Revenue shall be paid to GTL after payment of 50% thereof to the Prize Fund Trust Account, 20% to the Society Trust Account and 10% to Lottery Sales Company Limited ("LSC") (which includes 6% already paid to retailers). 2.6 The 20% payable to GTL as referred to above and the 10% payable to LSC shall be paid by Inter Lotto to GTL and LSC respectively by way of CHAPS payment on the same day as the Revenue is received into the Society Suspense Account or no later than 24 hours thereafter. LSC undertakes to repay to Inter Lotto the total value of all direct debit monies credited initially to the Society Suspense Account that are subsequently dishonoured. 3. WAIVER OF CLAIMS - GLOBAL AND GTL Save as expressly provided otherwise in this Agreement, Global, GTL and Holdings (for itself and as trustee for the benefit of every other member of its group from time to time), their associates and subsidiaries and all directors, officers, employees and agents thereof hereby waive and provide an indemnity in respect of all claims whether actual or contingent which they may have against Inter Lotto its associates and subsidiaries and all directors, officers and employees thereof of whatever nature and howsoever arising which exist at the date of this Deed. 4. WAIVER OF CLAIMS - INTER LOTTO Save as expressly provided otherwise in this Deed, Inter Lotto (for itself and as trustee for the benefit of every member of its group from time to time) associates and subsidiaries and all directors, officers, employees and agents thereof hereby waive and provide an indemnity in respect of all claims whether actual or contingent which they may have against Global, Page 6 GTL, Holdings, their associates and subsidiaries and all directors, officers and employees thereof of whatever nature and howsoever arising which exist at the date of this Agreement. 5. INDEMNITIES 5.1 Each of Inter Lotto, Mancroft, Fisher and Smith and GTL, Global and Holdings hereby irrevocably and unconditionally - (a) release and discharge the other from all liabilities and obligations (present or future) under or pursuant to the Operating Agreements and from all actions, claims, proceedings, demands, costs and expenses in respect thereof; (b) undertakes to the other not to raise, pursue or make any claim under the Operating Agreements against the other; and (c) waives any claim which it has or may at any time have against the other arising out of or in connection with the Operating Agreements. 6. TERMINATION OF OPERATING AGREEMENTS 6.1 The Operating Agreements are hereby terminated. 6.2 Each of Global, GTL and Holdings, their associates or subsidiaries warrants and provides an indemnity to Inter Lotto as a condition of this Deed being executed that no liabilities of Inter Lotto have been created by them as a consequence of their dealings with persons other than the parties to this Deed including, without prejudice to the generality of the foregoing, any bank instruments. Page 7 6.3 Each of Mancroft, Fisher and Smith, and Inter Lotto and its associates or subsidiaries warrants and provides an indemnity to GTL, Global, Holdings and its associates or subsidiaries as a condition of this Deed being executed that no liabilities of GTL, Global, Holdings and its associates or subsidiaries have been created by them as a consequence of their dealings with persons other than the parties to this Deed including, without prejudice to the generality of the foregoing, any bank instruments. 7. COMMUNICATIONS WITH THE GAMING BOARD Global and Inter Lotto (and their respective directors, officers, employees and agents) will each provide the other promptly with minutes of any discussion (in any form or context) with the Gaming Board concerning the Games and which has taken place in the absence of the other party, together with copies of any correspondence or other documentation sent to or received from the Gaming Board in relation to the said Games. 8. MANCROFT, FISHER AND SMITH 8.1 Holdings shall transfer all shares held or to which it may be entitled in Inter Lotto to each of Mancroft, Fisher and Smith in the proportions set out in Schedule 1 (or as directed) for (pound)1. A date will be inserted into the stock transfer forms upon vacation by Inter Lotto of the Dover Street premises. Global, Inter Lotto, Mancroft, Smith and Fisher will use their reasonable endeavours to obtain any consents, agreements, certificates or other documents that may be required to implement and give effect to this transfer. Page 8 8.2 Holdings undertakes to deliver to Mancroft, Fisher and Smith or as they may direct upon Completion of this Deed duly executed stock transfer forms in relation to the transfer at Clause 8.1 together with the original share certificates as soon as reasonably practicable thereafter and not later than Tuesday 22nd August 2000. 8.3 Each of the parties to this Agreement agrees that they shall not make any adverse or prejudicial comments either verbally or in writing, and either directly or indirectly by any means whatsoever about any other party to this Agreement, their associates or subsidiaries or any directors, officers, employees, agents or subcontractors thereof to the Gaming Board or any of their employees, representatives, directors and members thereof from time to time or to any third parties save only to the extent demanded by compulsion of law or to comply with regulatory requirements of the Gaming Board. 8.4 Global, GTL and Holdings their associates and subsidiaries hereby agree to assign all right title and benefit to all such debts as may be owed or claimed to be owing to them by Inter Lotto at the time of this Deed to Mancroft, Fisher, Smith for the sum of (pound)1 which sum is payable upon signing this Deed. 8.5 Inter Lotto agrees and accepts GTL credit notes IL001CN, IL002CN, IL003CN and IL004CN totalling (pound)1,490,318.31 plus VAT and will accept a further final credit note for (pound)103,201.20 invoiced for June 2000 plus VAT. Page 9 8.6 Mancroft, Fisher and Smith undertake that they will properly and effectively manage the affairs of Inter Lotto. 8.7 In the event that (1) Inter Lotto shall be placed into any form of insolvency proceeding be that liquidation (whether voluntary or compulsory) receivership, administrative receivership, voluntary receivership, administration, company voluntary arrangement or arrangement with creditors before 1st January 2001 or the date, if earlier, on which GTL cease to operate the Games or (2) the Gaming Board does not permit the ELMC to be used in the manner outlined in this Deed through action taken by Inter Lotto, Mancroft, Fisher and/or Smith, Global, GTL, Holdings (as trustees for the benefit of every other member of its group from time to time) or any of their associates and subsidiaries, shall be entitled to call for the immediate reassignment of all rights, title and benefit of the debts assigned under clause 7.3 of this Deed for the sum of(pound)1. 8.8 The parties hereby agree that each of Mancroft, Fisher and Smith shall be: (i) permitted to retain three 64MB personal computers which are currently used at Inter Lotto's Dover Street premises together with a printer common to all personal computers and all necessary cabling. (ii) be given access to or provided with copies of all relevant documentation, data or information strictly necessary for the purpose of managing and reporting to the Gaming Board on the Games. Page 10 8.9 The parties hereby agree that each of Mancroft, Fisher and Smith shall be permitted to remain at Inter Lotto's Dover Street premises until 30th September 2000 at which time they and any other employees, directors or representatives of Inter Lotto will vacate the premises. Prior to vacation of the premises GTL confirms that it will have responsibility for and pay all rent, rates, service charges, dilapidations (excluding wilful damage) and other ordinary and reasonable costs relating to the said premises but excluding, for the avoidance of doubt, those costs and other office overheads which have routinely been invoiced by Inter Lotto to GTL prior to this Agreement and for which Global is now responsible under Clause 2.2 of this Agreement. 9. SALARIES AND RESIGNATIONS 9.1 GTL shall be responsible for paying the salaries of Tim Sargeant and Celia Treacy prior to and from the date of this Agreement until 31st August 2000. 9.2 GTL shall be responsible for the payment of the following sums net to PAYE and NIC (to be paid by GTL) to each of Mancroft ((pound)3,738.45), Fisher ((pound)3,742.05) and Smith ((pound)3,792.05) representing their salaries to the signing of this Agreement to be paid as part of the August payroll in the usual manner. 9.3 Holdings shall procure upon this Agreement being signed that: (i) Messrs Gross, Fox, Condy and Steat shall have resigned as directors of Inter Lotto by executing notice in the form attached to this Deed at Schedule 2 and will obtain or provide all necessary Page 11 consents, agreements or other documentation necessary to give full legal effect to the above matters. (ii) That Messrs Gross and Fox are fully authorised to executed such powers of attorney as may be necessary or appropriate to facilitate execution of stock transfer forms to give effect to the transfer at clause 8.1 above. 10. COMPETITION 10.1 In consideration of the share transfer at clause 8.1 each of Inter Lotto, Mancroft, Fisher and Smith undertakes with GTL, Holdings and Global (for itself and as trustee for the benefit of every other member of its group from time to time) that it will comply with the provisions of Schedule 3. 10.2 GTL, Holdings and Global and each of Inter Lotto, Mancroft, Fisher and Smith acknowledge and agree that the restrictions contained in Schedule 3 (each of which shall be construed as a separate undertaking) are fair and reasonable in all the circumstances. 11. GENERAL 11.1 Each party shall pay its own costs and expenses in connection with and incidental to this Agreement. 11.2 Except as required by law or the requirements of any securities exchange or regulatory or governmental body (including the Gaming Board for Great Britain) each party shall keep the terms of this Deed confidential. Page 12 11.3 This Agreement together with any documents referred to in it constitutes to the fullest extent permitted by law the whole agreement of the parties in relation to its subject matter and supersedes any previous agreement, representation, statement, warranty or arrangement (whether in writing or oral) between any of them in relation to that matter. Each of the parties agrees and acknowledges that in entering into this Agreement it has not relied on any agreement, representation, statement or warranty not set out in this Agreement (or the other documents referred to herein) and that, in the absence of fraud, it will not have any right or remedy arising out of any of such agreement, representation, statement or warranty. 11.4 No modification or variation of this Agreement shall be effective unless it is made in writing and signed by or on behalf of each of the parties hereto. 11.5 The exercise, or partial exercise, of or any delay or omission in exercising any right conferred by this Agreement or any party shall not constitute a waiver of that or any other right or remedy available to that party and the rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law. 11.6 If any provision of this Agreement is held by a competent authority to be invalid or unenforceable in whole or in part, this Agreement shall continue to be valid as to its other provisions and the remainder of the affected provision. If, at any time any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect under any law but would be or become valid, illegal or enforceable if some part of the provision were deleted or amended, the provision in question shall remain in force with such deletion or with such amendment as may be necessary to make the provision valid, legal and enforceable. Page 13 11.7 This Agreement may be executed in more than one counterpart and shall come into force once each party has executed such a counterpart in identical form and exchanged it with the other parties. 11.8 This Agreement is personal to the parties and none of the parties may assign, mortgage, charge or seek to deal or purport to deal in any way with any of its rights or obligations under this Agreement. 11.9 This Agreement shall be binding on and shall ensure for the benefit of the respective successors in title of each party to this Agreement. 11.10 The rights of any party hereto shall not be prejudiced or restricted by any indulgence or forbearance extended to any other party. 11.11 A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Agreement but this does not affect any right or remedy of a third party which exists or is available apart from that Act. 11.12 The obligations of GTL, Global and Holdings hereunder shall be joint and several. Page 14 11.13 The obligations of Inter Lotto, Mancroft, Fisher and Smith hereunder shall be joint and several. 11.14 The provisions of this Agreement insofar as they have not been performed at or are capable of taking effect after completion shall remain in full force and effect notwithstanding completion and shall not merge on completion. 11.15 The headings to the clauses of this Agreement are for convenience of reference only and shall not affect its meaning or construction. 11.16 This Agreement shall be interpreted and operated in accordance with the Law of England and the parties to this Agreement submit themselves to the non-exclusive jurisdiction of the English Courts. 11.17 This Agreement supersedes any previous arrangement between the parties in relation to the matters dealt with in and represents the entire understanding between the parties in relation to them. 11.18 Any notice given under or pursuant to this Agreement shall be effectively served on each of the parties if given to each of the parties or to the solicitor acting for the relevant party at completion. 11.19 Any such notice will be deemed well served on the person to whom it is addressed if it is served personally or sent by first class recorded delivery post addressed to such person at his or its usual or last known address in England and in the case of service of any notice on any person by recorded delivery first class post the date Page 15 of service of that notice on that person shall be the day following the date of posting (unless such following day be a Saturday or Sunday or public holiday) when service shall be deemed to be effected on the first day after the date of posting which is not a Saturday, Sunday or public holiday). 11.20 Each of Global, GTL, Holdings and Inter Lotto undertakes to procure and provides an indemnity that the terms of this Deed will be honoured by their associates, and subsidiaries and all directors, officers, employees and agents thereof. 11.21 In this Deed references to "group companies" shall have meaning given by the Companies Act 1989 and "associates" or "subsidiaries" shall have the meaning given in Section 736 of the Companies Act 1985. Page 16 IN WITNESS of which the parties have executed and delivered this document as a Deed the year and date stated above: Signed by Globaltech Holdings ) Limited by two directors or a ) director and secretary ) and witnessed by ) SIGNED by Inter Lotto (UK) ) Limited by two directors or a ) director and secretary and witnessed ) by ) SIGNED by GTL Management ) Limited by two directors or a ) director and secretary and witnessed ) by ) SIGNED by Global Technologies ) Limited by two directors or a ) director and secretary and witnessed ) by ) Page 17 SIGNED by the Right Honourable ) The Lord Mancroft and ) witnessed by ) by ) SIGNED by Roy Fisher ) and witnessed ) by ) SIGNED by Douglas Smith ) and witnessed ) by ) Page 18 SCHEDULE 1 "B" Shares Deferred Shares ---------- --------------- Mancroft 1,264 2,069 Fisher 1,264 2,069 Smith 1,265 2,069 Page 19 SCHEDULE 2 To the Directors, Inter Lotto (UK) Limited (`the Company') In consideration of the agreement to terminate the Operating Agreements made between (1) Inter Lotto (2) Global Technologies Limited and (3) GTL Management Limited (4) Globaltech Holdings Limited I hereby resign from the office of director of the Company and confirm that I have no claim against the Company or its officers directors employees or agents whether for loss of office or otherwise. Dated: August 2000 - -------------------------- Page 20 SCHEDULE 3 COMPETITION PART 1 - INTERPRETATION In this Schedule - `Restricted Business' means the Daily Number Game or any similar 3 or 4 digit lottery game and `the Restricted Territory' means the United Kingdom of Great Britain. PART 2 - RESTRICTIONS Inter Lotto, Mancroft, Fisher and Smith will not and in the case of Inter Lotto will procure that every other member of its group from time to time will not - within the Restricted Territory and for a period of 2 (two) years from the date of this Deed within the Restricted Territory directly or indirectly carry on or be engaged or interested in any way (whether as a director, shareholder or consultant or by agreement or otherwise) in any Restricted Business; for a period of 2 years from the date of this Deed directly or indirectly (whether in conjunction with or on behalf of some other person) solicit or entice, or endeavour to solicit or entice, away from GTL and Global or any other member of its group any of its or their directors or employees. Page 21 -----END PRIVACY-ENHANCED MESSAGE-----