STANDARD CONTRACT FOR CALIFORNIA LOTTERY GAME RETAILERS
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1 STANDARD CONTRACT FOR CALIFORNIA LOTTERY GAME RETAILERS 1. GENERAL a. Parties. The parties to this Contract are the California Lottery (Lottery) and Retailer. b. Scope. By entering into this Contract, Retailer agrees to be bound by these terms and conditions as well as the Lottery Act, Lottery regulations, and Lottery policies, instructions and directives, any of which may be amended, issued, or reissued from time-to-time. Retailer agrees that it is an independent contractor and not an employee or agent of the Lottery. c. Law, Jurisdiction, and Venue. The parties agree that California law controls the interpretation of this Contract. The parties further agree that any action, at law or in equity, relating to this Contract, shall be filed in a court of competent jurisdiction in Sacramento, California. d. Term. The parties agree that this Contract shall remain in effect until terminated according to the Termination clause. The parties further agree that this Contract is effective as follows: (1) The parties agree that this Contract supercedes all other contracts between the Lottery and Retailer. e. Waiver. The parties agree that the Lottery, at its discretion, may provide the Retailer a written waiver for compliance with a Contract provision after which Retailer is relieved of complying with the provision to the extent provided by the terms of the waiver. f. Amendments and Addenda. (1) Amendments. Lottery may unilaterally amend the Contract, including its terms and conditions, upon ten calendar days written notice to the Retailer. The parties agree that an Amendment will be effective the calendar day following the tenth day, unless otherwise noted in the Amendment. (2) Effect. The parties agree that Amendments and/or Addenda shall remain in effect until terminated by the Lottery, at its discretion, or the date this Contract is terminated by either party. g. Certificate of Authority. The parties agree that if Retailer s Contract term is described in Section 1.d.(1), the Certificate of Authority previously issued by the Lottery shall remain in effect. Retailer must prominently display the Certificate Retailer Application Package Document 8 Revised 6/08
2 where Scratchers game tickets and/or computerized Lottery game tickets (collectively referred to in this Contract as Lottery products ) are sold. h. Assignment and Transfer. Retailer agrees that this Contract, any compensation due from the Lottery to Retailer and/or any Lottery equipment installed in Retailer s premises are not assignable or transferable (for a fee or no fee) to any person, entity or other location owned, in whole or in part, by Retailer. i. Indemnification. Retailer must defend, protect, indemnify and hold harmless the State of California, the Lottery Commission, the Lottery and their officers and employees from and against all claims, suits or actions arising from any act or omission of the Retailer, its employees, officers, members or agents while carrying out the terms of this Contract. Retailer shall be held responsible for the acts and/or omissions of its employees, officers, representatives or agents relating to this Contract, including but not limited to use of Lottery equipment. j. Compliance with Laws and Rules. Retailer must comply with all applicable federal, state and local laws and rules including, without limitation, the Lottery Act, nondiscrimination laws, Workers Compensation laws, the Americans with Disabilities Act, any and all applicable Lottery regulations and promotion rules, and all Lottery policies, instructions and/or directions, any of which may be amended from time-to-time. 2. COMPENSATION, PAYMENTS, AND CREDITS. a. Retailer s Compensation. The Lottery will pay Retailer the compensation approved by the Lottery Commission as stated in the Lottery s compensation and/or incentive bonus regulations and/or promotion rules applicable to the Retailer, as amended or issued from time-to-time. Retailer will not receive compensation from any other Lottery operation or organization. b. Retailer s Payments; Disputes. (1) Account. Retailer must maintain an account with a financial institution, which is a member of an Automated Clearing House Association. (2) EFT. Retailer must authorize the Lottery to initiate electronic fund transfers (EFT) to or from Retailer s designated account for the net balance due from Retailer to the Lottery for the sale of Lottery products. If funds are due and owing to the Lottery after the EFT account is closed, the Lottery will pursue collection of the funds and all other damages and remedies available. Retailer must reimburse the Lottery a fee of $25 for each EFT or other payment dishonored by Retailer s financial institution. (3) Sufficient Funds. Retailer agrees to maintain a sufficient balance in the EFT account to satisfy any and all obligations Retailer owes the Lottery on the designated sweep day. The parties agree that sweep day means the day specified by the Lottery on which funds are electronically transferred, via EFT, from Retailer s financial institution to the Lottery. 2
3 (4) Sweeps - Scratchers Games. Retailer s sweep day for payment, via EFT, for the sale of Scratchers products will be on Thursday for the net balance due as of the close of business on the previous Saturday, unless the Lottery otherwise specifies in writing. (5) Sweeps Computerized Games. Retailer s sweep day for payment, via EFT, for the sale of computerized Lottery games will be on Wednesday for the prior week s sales (i.e., Sunday through Saturday), unless the Lottery otherwise specifies in writing. (6) Key Account. A Key Account may, at the Lottery s discretion, be swept from a single or regional corporate headquarters account for multiple locations with a financial institution established pursuant to this section. Past Due Account. Retailer is responsible for any and all costs and fees the Lottery incurs associated with the collection of a past due account. Retailer agrees to pay interest on any past due balances in excess of 50 days at the rate of 1% above the rate accrued on June 30 th of the prior year of the Pooled Money Investment Fund, but not to exceed 15%. If so required, Retailer shall remit a monetary security deposit, amount to be determined by the Lottery, for future Lottery purchases. Disputes. Retailer must comply with this dispute provision before initiating an action at law. The parties agree that if a dispute arises regarding the amount of a payment due to the Lottery from Retailer: (a) (b) (c) Retailer will submit the disputed payment in the manner and by the date the Lottery specifies; otherwise the Lottery, in its discretion, may take steps to restrict Retailer s ability to sell Lottery products and/or redeem winning tickets until payment is made. Retailer s failure to make payment will result in waiving its right to exercise this dispute process; Retailer may submit a written dispute to the Lottery s Finance Division, Revenue Collection Section, within 15 days of the Lottery s sweep of the payment in dispute, and provide all facts and documentation, if any, supporting its position; and The Lottery will credit Retailer s account if Lottery agrees with Retailer s position or notify Retailer that its position is unfounded and the payment will remain with the Lottery. c. Credits Misprinted, Damaged Products. (1) Retailer may request, and the Lottery may provide at the Lottery s discretion, a credit for the cost of Lottery products which were misprinted, damaged, or otherwise unable to be sold at the time of delivery to the Retailer, due to no fault of the Retailer. When seeking an adjustment, Retailer must provide evidence of the exact nature of the loss, and evidence the Retailer promptly complied with the reporting requirements located herein, along with any additional information the Lottery requires. 3
4 (2) In no case will the Lottery provide an adjustment for stolen On-Line Game tickets, except for Hot Spot, in which case the Lottery may, in its discretion, adjust a Retailer s account. The Lottery may credit Retailer up to 100% of the cost of stolen Scratchers tickets in its sole discretion. To qualify for an adjustment for stolen Scratchers, Retailer must comply with all reporting requirements, be able to identify the exact products stolen with reasonable certainty and not have more than two claims for credit within the preceding two years or such other period as the Director may establish from time to time. In no case will the Lottery insure or otherwise act as a source of indemnification against such losses. In the event a Retailer whose account has been adjusted for stolen Scratchers subsequently recovers all or a portion of the loss, Retailer must immediately notify the Lottery. The Lottery may offset Retailer s account to reflect the Lottery s share of any such recovery. 3. PRODUCT PRODUCTION. a. Signage. Retailer is expected to participate in the Lottery s signage programs and only display signs (i.e., banners, posters, freestanding Lottery game signs, etc.) the Lottery provides or Retailer-obtained Lottery signage which the Lottery approves. Retailer is responsible for determining if signage complies with local sign ordinances or chain store/corporate policy guidelines and/or affects the Retailer s standing in the community of operation. Retailer is expected to obtain up-to-date Lottery materials from the Lottery and make the materials available to players. b. Point-of-Sale. Retailer must display Lottery-provided point-of-sale materials, advertising and how-to-play brochures consistent with Lottery policies and instructions. c. Identifying Marks. In all other cases, Retailer must obtain the Lottery s written approval to use Lottery-owned identifying marks (i.e., logos, slogans, trademarks, service marks, etc.) before using them in any advertising or other medium. 4. LOTTERY SALES. a. Sale of Lottery Products. Retailer must sell Lottery products in person, across the counter or through approved vending and/or game terminals or machines. Retailer must not sell Lottery products over the telephone, by computer or any other electronic means or through the mail. Retailer must sell Lottery products for only those games authorized by the Lottery at the business stated in Section 1 and for the duration of the Lottery game (i.e., the announced beginning through the announced end of game dates). Retailer must sell California Lottery products at all times during Retailer s regular business hours and during the Lottery s operation of the computerized gaming system. Retailer must not sell any Lottery products which are non-california Lottery products. 4
5 b. Price, Fair Chance, and Prize Payment. (1) Price. Retailer will sell Lottery products at the price set by the Lottery. Retailer agrees to: not sell any Lottery products at a price greater or less than the price authorized by the Lottery; not redeem a Lottery prize in an amount greater or less than the authorized amount; not condition the sale of a Lottery product upon the purchase of any other item or service; and not charge a fee, accept compensation, or impose any restriction upon the sale or redemption of a Lottery product. (2) Fair Chance. Retailer will conduct the sale of Lottery products in a manner that adheres to the principle that every ticket sold has an equal and random chance of winning prize(s) for the game. (3) Prize Amount. Retailer will redeem or cash winning tickets with prizes of $599 or less unless Retailer and the Lottery enter into an Addendum excusing or limiting Retailer cashing activity. If a Retailer pays a prize in error, Retailer is solely responsible for the prize payment. Retailer is prohibited from redeeming or cashing tickets with prizes of $600 or more. c. Persons Authorized to Sell Lottery Products. Retailer and authorized employee(s) may sell Lottery products at the business address stated in Section 1. Retailer understands and agrees that an employee under age 18 may sell Lottery products if he/she is under the continuous supervision of a person 21 years of age or older. Retailer is responsible for the acts or omissions of its employees, members (if a fraternal organization) and agents who sell Lottery products. d. Purchasers Must be 18 Years of Age or Older. Retailer will not sell Lottery products to persons under the age of 18. Retailer must establish safeguards to ensure Lottery sales, whether sold across the counter or via Lottery equipment, are not made to minors. e. Sales Requirements. (1) Retailer must comply with the minimum volume of sales requirements established by the Lottery, at its discretion, for Retailer. Retailer agrees to sell all Lottery products the Lottery requires, unless exempted by the Lottery. (2) Retailer agrees to sell Scratchers tickets pursuant to the Lottery s Scratchers distribution policy, as may be amended from time-to-time. f. Scratchers Pack Purchase Price. The parties agree that the general rule for Retailer s purchase price for each pack of Scratchers tickets will be the retail price of the ticket pack, less the applicable Retailer compensation, unless the Lottery announces otherwise. 5
6 g. Lottery Services. Retailer must provide all necessary Lottery services including but not limited to, providing players Winning Numbers Reports, Lottery claim forms and validating Lottery tickets. 5. TERMINATION; APPEAL. a. Termination. (1) Termination by Retailer. Retailer may terminate this Contract upon thirty (30) calendar days prior written notice to Lottery Sales Division at Headquarters or at the Lottery District Office closest to the Retailer. Retailer s notice must state the effective date of the Contract termination. (2) Termination by Lottery. The Lottery may terminate the Contract upon thirty (30) calendar days prior written notice unless exigent circumstances exist, as determined by the Lottery, in which case the Lottery, at its discretion, may terminate the Contract with a shorter notice period or without notice. The Lottery s notice of termination to Retailer must state: the effective date of the Contract termination; the law, regulation(s) and or contract provision(s) relied upon; the facts upon which the Lottery relied for its decision to terminate; the option to submit a written appeal as provided herein; and, the final date for submitting the appeal. The parties agree that the reasons for the Lottery s termination of Retailer s Contract may include, but are not limited to, the following: (a) Retailer s failure to follow any Lottery policy, instruction, directive, rule, requirement, condition and/or Contract provision; (b) Retailer s failure to meet financial obligations owed to the Lottery; (c) Retailer s failure to meet sales requirements established by the Lottery, as amended from time-to-time, for the Retailer; (d) Retailer s failure to maintain Lottery equipment and property in a condition acceptable to the Lottery; (e) Retailer and/or any of its employee(s), member(s) (if fraternal organization) or agent(s) engages or engaged in or permits or permitted conduct, on or off the business premises, which may or does affect, undermine, compromise, endanger or unfavorably reflect upon the security, integrity, honesty and/or fairness of the operation and/or administration of the Lottery and/or Lottery game(s); (f) A change(s) in the Lottery s operations and/or administration of the Lottery including, but not limited to, policies, marketing, sales plans or strategies. (3) Retailer s Responsibilities. Unless the parties otherwise agree, at the close of business on the effective date of the termination, Retailer must: 6
7 stop selling Lottery products; return all equipment and Lottery materials to the Lottery or a Lottery contractor or allow the Lottery or a Lottery Contractor to retrieve the equipment and materials; and remit to the Lottery all funds, including but not limited to, outstanding sales revenue and/or purchase price of Lottery products, due and owing at the date of termination. After the termination date, if the Lottery determines any funds are due and owing to the Lottery, the Lottery will notify Retailer of the amount and Retailer will promptly remit funds due to the Lottery. b. Written Appeal of Termination. Retailer, at its option, may submit a written appeal of the Lottery s decision to terminate Retailer s Contract by the date specified in the notice of termination. Retailer understands that a written appeal, if submitted, will not affect or stay the Lottery s decision to terminate the Contract on the date specified in the notice of termination. Retailer understands the appeal may include any information and/or documents, including mitigating and/or rehabilitation information, if any. The Lottery will provide Retailer a written response within 60 calendar days of receiving the appeal, unless the Lottery exercises its right to extend the response date for up to 15 additional calendar days. The Lottery s written response shall be the Lottery s final decision on the termination. The parties agree that the Lottery s decision to place Retailer on probation is at the Lottery s discretion and is subject to such terms and conditions as the Lottery determines. In accepting probation, Retailer agrees that Retailer s failure to comply with the terms and conditions of probation will result in termination with no right of appeal. 6. MISCELLANEOUS. a. Lottery Equipment. (1) No Ownership Interest. Retailer agrees that it has no ownership interest and shall not acquire any ownership rights in any Lottery-owned or Lottery contractor-owned equipment provided to Retailer. Retailer agrees that any equipment provided to Retailer will be returned to the Lottery or a Lottery contractor immediately upon request. Retailer acknowledges that all equipment is subject to inspection by the Lottery and/or a Lottery contractor. For damaged equipment, Retailer may be charged, at the Lottery s discretion, for any labor and materials necessary to bring the equipment back to the standard acceptable to the Lottery. (2) No Non-Lottery Products. Retailer will not sell non-california Lottery products via Lottery equipment or otherwise utilize any Lottery equipment for non-california Lottery products. Retailer will ensure that appropriate labels, as the Lottery requires, are consistently displayed on the equipment and will report to the Lottery or a Lottery contractor if the required labels are missing, destroyed, or vandalized. (3) Equipment Addenda. Retailer agrees to enter into Addenda with the Lottery governing Lottery equipment which is assigned to and installed in Retailer s business location and Retailer must: pay any and all fees 7
8 specified by the Lottery, at its discretion, associated with the equipment including, but not limited to, an installation fee, a weekly administrative fee and a weekly equipment/monitor fee, etc.; and, comply with Lottery installation requirements, etc., as stated in this Contract and/or on the Addenda. Retailer will forfeit the applicable installation fee if it refuses to allow installation of equipment. The Lottery, at its sole discretion, will determine the equipment appropriate for Retailer. (4) Vending Machines. Retailer must allow the Lottery or a Lottery contractor to install instant ticket vending machines in a Lottery-approved, high traffic area inside the business location. The Retailer will monitor the vending machine and area. Retailer must take readily achievable steps to place vending machines in locations which are wheelchair accessible for a side reach (e.g., the customer has sufficient clear floor space to align himself/herself parallel with the vending machine to select and purchase Scratchers products from the machine). (5) Scratchers Dispensers. Retailer must allow the Lottery or a Lottery contractor to install Scratchers dispenser(s) in a Lottery-approved area within Retailer s business location. Retailer must display Lottery Scratchers products and no other state or organization s Lottery or other products, in Scratchers dispensers(s) or container(s) provided to Retailer by the Lottery. (6) Computerized Games Terminal. Retailer will allow installation of computerized game terminals (i.e., RCT, SST, etc.) in a Lottery-approved area inside Retailer s business location. Retailer must: not move a terminal without the prior written consent of the Lottery; and/or, not reduce the space allotted to the terminal. Retailer must operate the terminal(s) pursuant to training and/or instructions provided by the Lottery or a Lottery contractor. (7) Lottery Playcenter. Retailer must allow installation of a playcenter in a Lottery-approved area inside the business location and in close proximity to the Vending Machine, SST, or RCT. If a clipboard is attached to the playcenter when originally installed in Retailer s premises, Retailer will ensure that the clipboard remains attached to the playcenter and is easily accessible to individuals with disabilities. Retailer is financially responsible for the vandalism, theft, damage, and/or destruction of the playcenter and clipboard. The Lottery, in its discretion, may assess Retailer for cost of repairs to the playcenter and/or for the replacement cost of the clipboard and Retailer agrees to pay such cost. (8) Monitor. Retailer, if authorized by the Lottery to sell specified computerized game(s), will allow installation of a Lottery monitor in a Lottery-approved area inside the business location that is within 300 feet from the computerized game terminal. Retailer must pay weekly fees in accordance with Lottery policy and/or an equipment addendum for use of the monitor. Retailer agrees to restrict the use of the monitor to Lottery products and information during the period that Lottery computerized gaming system is in operation. 8
9 b. Reporting Requirements. (1) Retailer s Reporting Requirements. Retailer agrees to report the following event(s) to the Lottery during the timeframe(s) specified: (a) Any proposed or actual change in tradestyles, ownership, location, partnership, officers, directors, and/or issuance or transfer of shares of stock, which results in a person not previously approved by the Lottery owning ten percent or more, by contacting the Lottery s Sales Division at the local District Office or Lottery Headquarters at least thirty (30) calendar days before the event. (b) Any claim, allegation or knowledge of unlawful activity and/or other impropriety that concerns the sale of Lottery products at their location or elsewhere, by immediately contacting the Lottery s Security/Law Enforcement Division at the Lottery District Office or at Lottery Headquarters. (c) Any change in financial condition including, but not limited to, tax delinquency owed to a federal, state or local agency and/or tax liens on Retailer s business, by immediately contacting the Lottery s Finance Division, Revenue/Collection Section. (d) Any proposed change in financial institution, by completing and submitting an electronic fund transfer authorization form as may be amended from time-to-time, reflecting the change(s), to the Lottery s Financial Division, at least thirty (30) calendar days before the event. (e) Any change in taxpayer name and/or identification number, by immediately contacting the Lottery s Sales Division, Retailer Contract Section. (f) Any theft of Lottery products stolen from Retailer, by immediately reporting the incident to local law enforcement and immediately contacting the Lottery s Security/Law Enforcement Division at the Lottery District Office or at Lottery Headquarters. The Retailer must provide the Lottery with the pack and ticket number of all stolen Scratchers tickets to be considered for an adjustment to its account for partial cost for lost Scratchers tickets pursuant to Section 2.c of this contract. (g) Any damaged or misprinted tickets delivered to Retailers, by immediately contacting the Lottery s Sales Division at the local District Office or Lottery Headquarters. (h) Any of the information as may from time-to-time be requested by the Lottery, such as information about equipment, service, access to Retailer s locations, records, or payment. 9
10 (2) Lottery s Reporting Requirements. The Lottery will comply with applicable law or regulation to report to the Federal Internal Revenue Service income from the Retailer s sale of Lottery products or the value of merchandise awarded to Retailer when the total payments to the Retailer are $600 or more in a tax year. c. Personal Conduct. Retailer agrees that in relation to the Retailer s services in the sale and redemption of Lottery products, Retailer, its employee(s), representative(s) and/or agent(s) will conduct themselves in a professional and courteous manner to the public, players, Lottery representative(s) and Lottery contractor(s) and their employees, representatives, and agents. d. Cooperation with Lottery Representatives. Retailer agrees to fully cooperate with the Lottery or other State agency employees or agents and with law enforcement agencies in matters involving Lottery products and/or games. Retailer will allow access to its premises during business hours for inspection, monitoring, evaluation, examining records and/or collecting information pertaining to Retailer s responsibilities in carrying out the terms of this Contract. e. EDI Trading Agreement. Retailer may apply to the Lottery to receive data from the Lottery by electronic means. The Lottery, at its discretion, may approve Retailer for this process. If approved, Retailer must execute an EDI Trading Agreement Addendum with the Lottery. 10
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