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Home My WebLink About01-2506Larry L. Miller, Esquire Pa. Supreme cou=t I.D. No. 28122 1423 State Road Duncannon, PA 17020 Telephone: [717] 957-2828 Attorney for Plaintiff: NATIONAL GPJ~NGE ~PrUAL INSURANCE COMPANY NATIONAL GRANGE MUTUAL = IN THE COURT OF COMMON PLEAS INSURANCE COMPANY : CUMBERLAND COUNTY, PENNSYLVANIA 55 West Street = CIVIL ACTION - LAW Keene, NJ 03431-7000 Plaintiff v. : OCKET KAUKAB I. BUTT t/d/b/a EVEREST: GENEP. AL STORE and EVEREST : GENEPJ~L STORE II : 603 Franklin Street : Carlisle, PA 17013 : EHUR~AM M. BD'~A' t/d/b/a : EVEREST GENERAL STORE and : EVEREST GENERAL STORE II 603 Franklin Street : Carlisle, PA 17013 KAUKAB I. BUTT 231 Meals Drive Carlisle, PA 17013 DILSHAD BUTT 231 Meals Drive : Carlisle, PA 17013 KHUI~PJ~MN. BUTT 231 Meals Drive Carlisle, PA 17013 Defendants : YOU HAVE BEEN SUED IN COURT. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this Complaint and Notice are ed b entering a written appearance personally or by a~torney serv ...Y ...... ~ ~ Court your defenses or objections ~o an~ ng .......... v,, ~e warned that ~f you fa~l the claims se~ Tor~n agaln~ ~u~ ---.-- ~ - ~-~---nt ~a~ be to do so the case may proceed wlth~u= you an~ a ~uu~ _ ~ entered a ainst you by the Court w~thout fur=net no~ce =or ~ny - ~ ~ ~- ~- ~----laint or for any other claim or relief requested by the Plaintiff. You may lose money or property or other rights important to you. ~T FORTH B~LOW TO ~i~D OUT ~I~E YOU ~AN GET L~a?. N~LP. cumberland County Bar Association 2 Liberty Avenue Carlisle, PA 17013 800.990.9108 DATE= April 26, 2001 By= ~ L. MILLER Attorney I.D. ~28122 Attorney for Plaintiff Larry L. Miller, Esquire Pa. Supreme Court I.D. No. 28122 1423 State Road Duncannon, PA 17020 Telephone= [717] 957-2828 Attorney ~or Plaintiff: NATIONAL GRANGE ~ INSURANCE COMPANY NATIONAL GRANGE MUTUAL : IN THE COURT OF COMMON PLEAS INSURANCE COMPANY : CUMBERLAND COUNTY, PENNSYLVANIA 55 West Street : CIVIL ACTION - LAW Keene, NJ 03431-7000 : Plaintiff v. KAUKAB I. BUTT t/d/b/a EVEREST: GENERAL STORE and EVEREST : GENERAL STORE II 603 Franklin Street : Carlisle, PA 17013 KHURRAM N. BUTT tldlbla : EVEREST GENERAL STORE and EVEREST GENERAL STORE II : 603 Franklin Street : Carlisle, PA 17013 KAUKAB I. BUTT 231 Meals Drive : Carlisle, PA 17013 DILSHAD BUTT 231 Meals Drive : Carlisle, PA 17013 : KHURRAMN. BUTT : 231 Neals Drive Carlisle, PA 17013 : Defendants : Plaintiff, National Grange Mutual Insurance Company, by its undersigned attorney, hereby sues the Defendants, Kaukab I. Butt trading and doing business as Everest General Store and Everest General Store II, Khurram N. Butt trading and doing business as Everest General Store and Everest General Store II, and Kaukab I. Butt, Dilshad Butt and IQlurram N. Butt, individually, and in support thereof, says: 1. Plaintiff, National Grange Mutual Insurance Company ('National Grange' or 'Plaintiff' or "Surety"), is a corporation incorporated under the laws of the State of New Hampshire that maintains its principal place of business at 55 West Street, Keene, NJ 03431-7000. 2. Defendants, Kaukab I. Butt trading and doing business as Everest General Store and Everest General Store II, and Kaukab I. Butt, individually, is an adult individual who resides at 231 Meals Drive, Carlisle, PA 17013. 3. Defendants, ~hurram N. Butt trading and doing business as Everest General Store and Everest General Store II, and Khurram N. Butt, individually, is an adult individual who resides at 231 Meals Drive, Carlisle, PA 17013. At all times relevant hereto, Khurram N. Butt was an owner of Everest General Store II. 4. Defendant, Dilshad Butt, is an adult individual who resides at 231 Heals Drive, Carlisle, PA 17013. 2 A. THE INDEMNITY AGREEMENT 5. On March 24, 1999, Kaukab I. Butt and Dilshad Butt, individually, and Kaukab I. Butt on behalf of Everest General Store II, (hereinafter collectively referred to as the 'Indemnitore'), executed a Specific indemnityAgreement (the 'ind~nityAgreement')- A copy of the IndAmnity Agreement ie attached hereto as Exhibit 'A' and it is incorporated herein by reference. The Indemnitors executed the Indemnity Agreement as essential consideration for National Grange~s issuance of bonds on behalf of Everest General Stores, II ('Everest') and Indemnitors. 6. Under the Indemnity Agreement, the Indemnitors agreed to exonerate, hold harmless and indemnify National Grange from and against all claims, losses, and expenses incurred as a result of having executed bonds on behalf of Everest and Indemnitors. The Indemnity Agreement provides= 5. That the Indemnitor(s) shall at all times inde~nify, save the Company harmless from, and place the Company in funds to meet any claim, demand, loss, liability, cost, charge, attorneys~ fee, expense, suit, order, judgment, or adjudication arising from the existence of the Bond. 7. That the Company shall have the exclusive right to determine for itself and the Indemnitor(s) whether any claim or suit brought against the Company or the Principal, as a result of the existence of the Bond, shall be settled or defended and its decision shall be binding and conclusive upon the Indemnitor(s). 7. In reliance upon the executed Indemnity Agreement, National Grange executed a permit bond on behalf of Defendants. B. THE BOND 8. National Grange exeouted a permit bond, Bond No. S- 412-628 (hereinafter 'the Bond'). A true and correct copy of the Bond is attached hereto as Exhibit 'B.' The bond was required by the commonwealth of Pennsylvania, Department of Revenue, Pennsylvania Lottery for Defendants! Application for Lottery Retailer License to sell lottery tickets. C. LOSSES AND EXPENSES 9. On October 24, 2000, National Grange received a claim in the amount of $15,326.55 from the Commonwealth of Pennsylvania, Department of Revenue, Pennsylvania Lottery ('PA Lottery'). A true and correct copy of the claim letter is attached hereto as Exhibit 'C' and it is incorporated herein by reference. 10. By letters dated November 7, 2000, National Grange notified Defendants of the claim of the PA Lottery. The November 7, 2000 letters requested written confirmation from Defendants, by December 7, 2000, thatthematter had been resolved. True and correct copies of the November 7, 2000 letters to Defendants are collectively attached hereto as Exhibit 'D' and incorporated herein by reference. 11. National Grange made demands on the Indemnitors for protection from the claims, but the Indemnitors have completely ignored these demands. 4 12. Because D~fendants failed and refused to respond to the Noven~er 7, 2000 letters, on April 19, 2001, National Grange was forced to pay the claim of the PA Lottery, pursuant to the Indemnity Agreement, for the penal amount of $10,000. 13. Also, due to the failure of the Indemnitors to protect it from these claims, National Grange has incurred substantial expenses, including investigative costs and attorney~s fees and will continue to incur such costs in the future. ~OU~T ON~ NATIONAL ~NGE ~AT. INS~CE CO~Y ~ I. B~ t/d/b/a ~RRT G~ STO~ and KVKwRRT O~ S~R~ II. ~ N. ~U'Z~ tldlbla ~B I. B~. DILS~ Bu'~-r and ~u~ N. 14. Paragraphs i through 13 above are incorporated herein by reference as if set forth in full. 15. The Bo~was executed a~ issued by National Grange at ~e re,est of Defendants a~ in consideration for and reliance upon the Inde~ity Agreement. 16. Inde~itors are in default of the Ind~ity Agreement as they have refused to inde~ify National Grange. 17. Upon such default, ~e ind~ityAgreement provides that Ind~itors ~all, ~~, indemnify National Grange from and against any and all liabilities, losses and e~enses imposed upon, sustained, or incurr~ ~ National Grange ~ reason of having executed the Bond. 5 18. The Indemnity ~cj~ee~nt was in full force and effect at the time of the execution and delivery of the Bond and is presently in full force and effect. National Grange has complied with all conditions precedent set forth in the Indemnity ~reement. 19. National Grange~elieves and therefore avers that it has and will continue to incur significant losses and expenses including but not limited to investiqative fees, consultants' fees, court costs, and attorney's fees, all of which Indemnitors are responsible to National Grange for under the Indemnity Agreement. 20. Because all of said liabilities, losses and expenses are continuing and are not presently capable of exact calculation, National Grange cannot, at this time, reduce its losses to an exact liquidated sum, but it reasonably anticipates them to be in excess of $20,000.00. 21. By reasons of the foregoing, National Grange has demanded that Indemnitors reimburse it the claim paid to the PA Lottery pursuant to the Indemnity Agreement. 22. To date, National Grange's demands have not been complied with by Indemnitors. On the contrary, Indemnitors have refused to comply with National Grangews demands for indemnification. As a result, Indemnitors are in breach of the promises and covenants set forth in the Indemnity Agreement. 23. Indemnitors are otherwise in default under the Indemnity Agreement as they have failed and refused to cooperate with National Grange. ~EREFORE, National Grange Mutual Insurance Company prays that your Honorable Court enter judgment in its favor and against Defendants. COW~T TWO NATIONAL ~ANGE ~LJ'TTT&T. INST~ANCE ~OM1D~Y KAUKAB I. BUTT t/d/b/a ~-~KT GEN~aT. STORE and Wq,.'~T G~NEI~AL STORE II. KHU~XM N. Bu'l-&' t/d/bla Wq~T GF~aT. STORE and EV~T G~JwAL~ II. KAUI~AB I. BUTT. DILSHAD BI~I~. and F~MN. UUT~ 24. Paragraphs i through 23 above are incorporated herein by reference as if set forth in full. 25. As a factual and legal result of its execution of the Bond on behalf of Defendants, National Grange has incurred losses and expenses as described above. 26. The Indemnitors have failed to protect National Grange from such losses and expenses despite their obligations as set forth in the IndemnityAgreement. WHEREFORE, Plaintiff, National Grange Mutual Insurance Company, respectfully requests that judgment be entered in its favor and against Defendants, jointly and severally, for compensatory damages in an amount exceeding the Jurisdictional amount requiring arbitration referral pursuant to Local Rules of Court and for such other and further relief as this Court deems just and appropriate. 7 NA~&T. GRANG~ ~3t~'T&T. ~N~T~I~CE I,r~TJ'~.~%B X. ~ ~/d/b/a ~ G~AT' ~R~ and ~v~ ~ ~0~ ~. ~ N. Ru.~-r ~ I. B~. DIT.~w~ B~T. and ~u~ N. BuTx 27. Paragraphs 1 through 26 above are incorporated herein by reference as if set forth in full. 28. Rational ~range obtained an assi~ent of the PA Lottery's claim against Defendants as part of the settl~ent. 29. Defendants owe the PA ~ttery, and now National Grange, $15,326.55 as described in E~ibit 'C" attached hereto. ~EREFORE, Plaintiff, National Grange ~tual Insurance Company, respectfully requests that jud~ent ~ entered in its favor and against Defe~ants, jointly and severally, in the amount of $15,326.55, plus attorney's fees, costs, a~ such f~er relief as this Court deems just and appropriate. ~O~ FO~ NATION~ G~GE ~ INS~CE ~Y ~B I. B~ and ~ N. B~ 30. Paragraphs i through 29 above are incorporated herein by reference as if set forth in full. 31. Defendants had an~eement for Sale of Pennsylvania Lottery Tickets wi~ the PA ~ttery. A t~e and correct copy of the Agreement is attached hereto as Exhibit 'E" and incorporated herein by reference. 8 32. Pursuant to Defendants~ Agreement with the PA Lottery, they agreed to be personally liable for all proceeds from the sale of tickets. 33. Additionally, Defendants agreed to save and hold the PA Lottery harmless of all losses including all consequential damages and reasonable attorney~s fees. 34, National Grange has paid the claim of tho PA Lo~tsry and is now equitably subrogated to the rights of the PA Lottery under the Agreement. 35. Defendants, Kaukab I. Butt and Khurram N. Butt, owe National Grange $15,326.55, plus all related compensatory damages, interest, and attorney*s fees. WHEREFORE, Plaintiff, National Grange Mutual Insurance Company, respectfully requests that judgment be entered in its favor and against Defendants, Kaukab I. Butt and Khurram N. Butt, in the amount of $15,326.55, plus compensatory damages, interest, attorney*s fees, costs, and such further relief as this court deems just and appropriate. ~ DATE: April 26, 2001 By: '~ LARRY L. MILLER Attorney I.D. $28122 SPECIFIC INDEMNITY AGREEMENT NOW, THEREFORE, the undersigned, hereinafter called the Indemnitor(s) (if there be mere than one Indemnitor they jointly and severally and .for ~ach ether do) hereby undertake, represent, warrant and agree as follows: 1. That the foregoing statements made and answers given in this application are the truth without reservahon, and are made for the purpose of inducing the National Grange Mutual Insurance Company. hereinafter referred to as the Company, to execute or procure the execution et a certain Pond or undertaking herein apal~ed for. '2. That this Agreement shall apply to the bend or undertaking herein applied for, and any and all extensions, increases, modifications or renewals thereof, or eddd~one or substitutions therefore, any and all such instruments separately and collectively being hareinafor called the 3. That the Company is hereby authorized to confirm the bank balance claimed in the financial statement and to verify all other items in said statement. (all such premiums shall be in accord with the applicable schedule of rates pubhshed by the Company) as may become due untd the Company shall Po discharged and released from any and all liability and responsibility under the Bond and until the Indemnttor(s) shall deliver to the Company competent written evidence satisfactory to the Company of such discharge end release. 5. That the Indemnlfor(s) shall at all times Inderhnlfy, save the Company harmless from, and place the Company in funds to meet any claim, demand, loss, liability, cost, charge, attorneys' fee, expense, suit, order, Judgment, or adjudication arising from the existence of the Bond. 6. That If the Company shall set up a reserve to cover any claim, demand, lOSS, liability, cost charge, attorneys' fee, expense, suit, order, judgement or adJucllcation arising from the existence of the Bond the Indemndor(s) shall, immediately upon demand, deposit with the Company a sum of money equal to such reserve, such sum to he held by the Company ss COllateral security for the Bond obligation. 7. That the Company shall have the a~clusive right to determine for Itself and the Indemnitor(s) whether any claim or suit broegnt against the Company or the Prluclpal, as a result of the ex~stonca of the Bond, shall be settled or defended and Its decision shall be binding and conclusive upon the Indomniter(s). 8. That this Agreement shall bind the heirs, executors, admlnstrators, successors and assigns of the Indemnltor(s). 9. That nethlng herein contained shall be In derogation of any right or rentedy which the Company might have Independently horeet. 10. That if the Bond he given in connection with a bid or contract, the Company Is hereby authorized, but net required, to consent to any change In the contract or in the plans or specifications relating thereto; to make or guarantee advances or leans /or the purposes of the contract withoet the necessity of seeing to the apollcation thereof, it being understood that the amount of ell such edveness or leans, unless repaid with legal Interest to the Company when due, shall de conclusively presumed to he a loss hereunder; In the event of the abandonment, forfeiture or breach of the contract, or the breach of any Ix~d given In connentlon therewith, or the failure, neglect or refusal to pay for labor or matorlels used in the prosecution of the contract, to take possession of the work under the contract and, st the expense of the Indemnttor(s) to complete the contract, or eauae, or consent, to the completion therof. The Indemnltor(s) hereby aeslgns, transfers, and sets over to the Company (to be of~lve as of the deth of the Bond, but only in the event of a default as aforesaid), all right, title and interest of the Indemnitor(e) tn and to all the tools, plant, equipment and materials of every nature and description that the Indemnitor(s) may have upon the wMlc provided for In tbs contract covered by the Bond, or in, on or about the site thereof, Including as well materials purchased for, or chargeable to suc~ contract, which may PO in process of construction, In storage elsewhere, or in transportation to said site, and the Indemnitor(s) rights In and to all sub-contracts which may be entered Into and the materials embraced therein appertaining to said contract; end the Indemndor(s) further egress in the event of any breach or default on Its part in any of the provisions of the contract or tbs Bond that the said Company shall be suhregated to all the rights and properties of the Indemnltor(s) in such contract, including deferred and reserved payments, current and earned estimates and final payments, and any and all moneys and securities that may be due and payable at the time of Such default on this or any ether contract of the Indemnifor(s) or any one or more of them on which the Company Is or may become Surety, or on account of extra work or materials supplied in connectfon therewith, or that may thereafter become due and payable on account of said contract or any ether contract of the Indemnitor(e) or any one or more of them on which the Company is or may beeoma Surat~. And the Indemnltor(s) he~.~oy authorize the Company to endorse in. the name of the payee, and to collect ar~y check, draft, warrant or ether instrument mede or issued In payment of any moneys due on such contracts and to disburse the proceeds thereof. 11. That the word Indemnitor(s) es used herein, or personal pronouns used to refer to seld work, shall al~ly regardless of number or gender, and to Individuals, partnerships or corporatloee, as the circumstances require. ANY PERSON WHO KNOWINGLY AND WITH INTENT TO DEFRAUD ANY INSURANCE COMPANY OR OTHER PERSON FILES AN APPLICATION FOR INSURANCE OR STATEMENT OF CLAIM CONTAINING ANY MATERIALLY FAt.~E INFORMATION OR CONCEAI.~ FOR THE PURPOSE OF MISLEADING INFORMATION CONCERNING ANY PACT MATERIAL THERETO COMMITS A FRAUDULENT INSURANCE ACT, WHICH I$ A CRIME. AND SUBJECTS SUCH PERSON TO CRIMINAL AND CIVIL PENALTIES. Signed, Sealed and DATED this 26, th day of tiarch , lg 99 · General Store II Everest $IG#ED' * '~ (Seal) ~T~ (INDEMNtTOR TypaName&Titta: Kaukab T. Butt, O~ner (1ND EM NITO IIK~IDUALLY) ~ Type Individual Indemnitor Name: Kaukab I, But£ Individual Indamnttor Address: 23 1 Meals Dr ire, Car lisle, Pa. 17013 $IGNED~ WITNESS ( Type Individual foderonltor Neme: IndlvtdubilndenmltorAcldre~: ?'~t Mp~le: Tjx'ire. Carlisle Pa. 17Ul INDEMNITY AGREEMENT MUST BE SIGNED, DATED AND WITNESSED .. · ,... ! EXHIBff Nationa! Grange Mutual Insurance Company BOND NO. S 412 - 628 ~c~ ALL M~N MY THESE pRE~£WrS, Tb~at we Kaukab I Butt, T/a Everest General Store II ~f 603 Franklin Street, Carlisle~ pa. 17013 a~ Frinci~al~ {hereafter cali~ Principal), and ~I~ ~ ~ ~N~ ~N~ a corpo~ti~ oc~niz~ u~- tP~ la'~ cf Lhe S~te of M~ ~=-~s~r~ and author~ to do ~iness in ~e C~Ealth of ~sy1va~a, with its ~ ~fice lo the City of Ke~qe, N.H. (h~einafter called S~ty), are held a~ fi~ly ~d ~to: ~m~n~zal~ 0f Penn~l~n,a Oe~ent of R~venue 28~Iumpike {ndu~ial Middle[ow~. Pennsf~nia ~7057 as ~li~, in the full and ~ust s'=m of Ien-Thousand Dollars Even .......... Dol~rs, lawful ~ of the Unit~ States cf ~T. eri~, to ~ ~id tc t~ said Obligee, successors o~ assigns, oP. ~m~nd fcr and ~ acc~t of any f~ds ~=e f~ the Pri~ipal as a revolt of the sale of lotte~ tic~et= to w~ch the Pr~ciFel has fa[[~ to ~ke tLmely pa~,~ts ~ the Obli~ee$ for which ~)~[, ~11 ~ t~y to ~ ~e, '~ bind ourselves, c~ he~s, ~_x~tors, [tarots, succ~sors ~ assi~s, jc~tly and severally, fi~ly ~.the~ presets. W~R~S th~ Pr~ci~l has en%~, or la a~t to enter, ~to a written Agreement with the ~lig~ to ~ fin~cially res~sible to the ~tt~' for alk r~nues d~i~d f~ the sale of ?~ylvania ~tt~ Tickets as Is m~re s~if!ca!ly set f~ in said Agr~nt, to ~ truly ~rfo~ ~ ~r~ o~ the c~v~ts, te~, a~ co~itioM of said %hirty (30) da~s ~ advance of ~he date of ca~ellatl~. ~al~ ~th ~ s~is ~d dat~ ~is 24~h ~ay of March .: [9 99 · Witness: (S~) Kaukab [. At[est~ ~o: NAT[~ G~GE ~ ~U~Z C~ Georse R. Nune~ket Commonwea th o Pennsylvania Department o{ Revenue PENNSYLVANIA LO YI'I~RY October 24, 2000 P~oce~s Benef~ Older Pemsylva~ar~ 2850 Turnpike Industrial Drive Middletown. PA 17057-,5491 Nat ,~nal G 'ange lnsurmlce ~otnpa~,y Arm: Cldms 5010 C~p~wood Drive P.O. Box 4742 S~cuse, NY 13221~742 ~: Nation~ G~ge Mu~ Insur~ce Comfy Lo~ Bond~ S 412 - 628 Ra~l~ 390526 Ka~b I Bu~ DBA Ev~st General Store II We ge hereby fi~g a claim in the ~o~t of $15,326.55 ag~t the a~ve mf~nced ~nd w~ch lists ~b I. Bu~ DBA Everest Oene~ Store II ~ the ~ncipd ~d the Pe~sylv~ia Lo~e~ ~ &e obligee. On M~h 20, 2000 c~llafion ~m ~e Nmbers O~es Nawork took place due to del~quency. ~e following is a bre~do~ of the ~o~ts due: See a~ch~ Mdger Sheet. To~ Inset G~es ~e: 12,155.75 To~ On-line ~es D~: 3,170.80 To~ D~: $15,326.55 Chim Amount: $10,000.00 , I have enclos~ ~e follo~ng: compu~r ~ lis~ on-line ~ents, computer m~s listing m~ items, ~d a copy of ~e m~ler license application ~d con~t. If you ~ve ~y qu~ons ~nc~ing ~s ~r, pl~e contact T~y F~ick at (71 ~ 9864704. Budg~ Di~ion C~,f LBB/TLF/tf 11/0~'00 H 0 12LlClll~ Enclosure ~ ] I~ltlnd | PHONE 717-98B-4899 FAX 717-98~-47B7 National Grange. Mutual ss West Street Insurance P.o. Box 2300 Company Keene, NH 03431-7000 (603) 352-4000 Tuesday, November 07, 2000 Kankab & Dilshad Butt 231 Meals Drive Carlisle, PA 17013 RE: Principal: Kankab Butt d/b/a Everest General Store Bond #: S-412628 Obligee: Commonwealth of PA Retailer No.: 390526 Dear Sir: Please fmd enclosed copies of con'espondence from the PA Lottery notifying National Grange Mutual of a claim on our bond provided on your behalf. Please review the attached documentation and advise as to what action you intend to take to resolve this outstanding matter. If I do not recoive written confu-mation that this matter has been resolved by December 7, 2000, National Grange Mutual will proceed to issue payment of our full bond amount. In ~nt event we shall look to you for full reimbursement of any amounts paid. If you have any questions concerning any of the above please correspond directly with the undersigned. Sincerely, Anthony Montecaivo Bond Claims Manager Enclosure: Cc: Pennsylvania Department of Revenue Atm. Larry Beard, Budget Division Chief Pennsylvania Lot~'y 2850 Turnpike Induslrial Drive Middletown, PA 17057-5491 National Grange. ss West Street Mutual P.o. Box 3oo Insurance Keene, NH 03431-7000 Company (603) 35:~-4000 Tuesday, November 07, 2000 Everest General Store Atm. Kaukab Butt 603 Franklin Street Carlisle, PA 17013 RE: Principal: Kaukab Butt d/b/a Everest General Store Bond #: S-412628 Obligce: Commonwealth of PA Retailer No.: 390526 Dear Sir: Please fmd enclosed copies of enrrespondence from the PA Lottory notifying National Orange Mutual of a claim on our bond provided on your behalf. Please review the attached documentation and advise as to what action you intend to take to resolve this outstanding mat~er. If I do not receive written confirmation that this maUer has been resolved by December 7, 2000, National Grunge Mutual will proceed to issue payment of our full bond amount. In that event we shall look to you fur full reimbursement ofeny emounts paid. If you have eny questions concerning any of the above plces~ co~espond directly with the undersigned. Sincerely, AnthOny Montecalvo Bond Claims Manager Enclosure: Pennsylvania Depmtmcnt of Revenue Atm. Lany Beard, Budget Division Chief Pennsylvania Lottery 2850 Turnpike Industrial Drive Middletown, PA 1'/057-5491 AGREEMENT FOR SALES OF PENNSYLVANIA LOTTERY TICKETS at Li~nse Lo~tion Co,orate Name .... .~: .,=.. ......... ......~...~........~.. :.. .... ~ ......... REI~I~:~ .. ~ ,.: ~.~.~...........~,~ ~...... ~= ...... :.... :.:.~,..~: ~,~: ~.,.:..=,~ This Agreement is by and between the Commonwealth of Pennsylvania, Department of Revenue, Pennsylvania Lottery, hereinafter referred to as "Depa~ b.ent" and hereinafter referred to as "Retailer". The Depa~l~.ent of Revenue has as one of its responsibilities, in accordance with 72 P.S. §3761-1 et see. and 61 PA Code §801.1 et seq., the authority to select retailers for the sale of Pennsylvania Lottery tickets. Under the law and regulations, the Department is empowered to enter into contracts with persons to sell Pennsylvania Lottery tickets and to pay such persons a commission as set forth in the Lottery law and regulations. I.,~i".~'~ .. '~.':'~'!i'~ '. ?' ?':'~!.~ ~.::'¥ ::.'"':'~' ~:"~'~ ,'.'": ~.~ ~ m=u~'~,'~ ~i?~ ~,,:~:!".~' ..'~."?~'~'~'~..~.' .'~;'~t NOW, THEREFORE, in consideration of the foregoing recitals and of the mutual prom- ises hereinafter set forth, and intending to be legally bound, the parties hereto agree as fOIIoINs: A. Definitions As used in this Agreement, the term: 1. "Agreement" shall mean this Agreement for the sale of Pennsylvania Lottery tickets. The term shall apply to all contractual and license rights, duties and obligations of the parties. 2. "Effective Date" shall mean the date affixed to this Agreement by the Executive Director as set forth on page 10 herein. 3. "Secretary" shall mean the Secretary of Revenue. 4. "Executive Director'' shall mean the Executive Director of the Penn- sylvania Lottery. 5. "Retailer" shall mean such person or persons authorized by this Agreement to sell Pennsylvania Lottery tickets. The term shall include [ho-cs F~;'scns listed on th~ "App~ic~f.i.~n fci License ~.~ Seil Lottery Tickets" (''Application") which application is incorporated by reference as a part of this Agreement. 6. "Lottery Games" shall mean all those games, including instant and numbers games, authorized for sale by Retailer on behalf of the Lottery. 7. "Lottery" shall mean the Pennsylvania Lottery of the Pennsylvania Department of Revenue. 8. "Lottery Law' shall mean Act of March of 1971 (P.L. 6, No. 2), 72 P.S. §3761-1 et seo. 9. "Lottery Regulations" shall mean 61 PA Code §801.1 et seq. 10. "Term" of this Agreement shall include the pedod hereinafter provided for and any renewals thereto. 11. "Substantial Change of Ownership" shall mean a transfer of 50% or more of the equity of the Retailer's business. B. Retailer's Obli<3ations 1. Sales Retailer agrees to sell such Pennsylvania Lottery tickets as may be authorized by the Department. Retailer agrees that pdrsuant to 61 PA Code ~09.35, Lottery tickets shall not be sold to any person under eighteen (18) years of age. 2. Controlling Provisions Retailer agrees to abide by all provisions of the Lottery law, and any rules and regulations, procedures or insthJctions issued by the De- parb~ent, the Secretary of Revenue, the Lottery, or the Executive Direc- tor, as are now in effect or which hereinafter may be promulgated or published. Such Lottery law, rules and ragulatJons, procedures and in- structions are incorporated herein by reference as a part of this Agree;. ment. 2 3. Warranty of Financial Responsibility Retailer warrants that it is financially responsible and will provide evi- dence in support of such fact upon demand by the Department. Such evidence may include, but is not limited to. edicl_=s of incorpo,~tion, by- laws, pal'tr~ersn~p agreements, certified financial statements, bank refer- ences, credit references and business references. 4. Records Retailer agrees to maintain current and accurate records, in confor- mance with generally accepted accounting principles, of all transactions dealing with ticket sales. Retailer further agrees to retain all accounting records pertaining to ticket sales, including but not limited to bank state- ments and canceled checks, for a period of not less than three (3) years. All records required to be maintained by Retailer shall be available to representatives of the Department, upon request, for inspection and audit during regular business hours. 5. Fiduciary Responsibility Retailer agrees that with respect to the proceeds from the sale of tickets, it acts in a fiduciary capacity with respect to such funds until such funds are paid into the Lottery Fund as required. Retailer shall be personally liable for all proceeds from the sale of tickets. 6. Independent Contractor Stetus Retailer agrees that, except with respect to the proceeds from the sale of tickets, it shall render its service under this Agreement as an independ- ent contractor and, as such, shall further agree that any contractual or tortious liability it may incur in cennection therewith shall be its sole re- sponsibility. 7. Non-Discrimination Provision Retailer agrees that dudng its performance under this Agreement, the Retailer will comply with the non-discrimination provisions attached hereto and made a part hereof as Appendix A. 8. Promotional Material and Training Retailer agrees to prominently post current point-of-sale and other pro-. motional material supplied by the Department. Retailer agrees to attend such training sessions as the Department shall provide to ensure that the Retailer and its employees are properly trained in the sale of Lottery tickets. 3 9. Minimum Sales Requirements Retailer agrees to be bound by the minimum sales requirements con- tained in the provisions of Appendix B for instant Games Only Retailers, ~.pp~dix C fc,~ ;.,'umber~ Gan',~.s Re[aiiers, an<~ Appendix D for Instant Ticket Vending Machine Retailers. 10. Instant Terminal Requirements If the Retailer is authorized to sell Lottery tickets for Instant Games only, the Retailer agrees to the provisions of Appendix B, incorporated by ref- erence hereto. 11. Instant Ticket Vending Machine (ITVM) Requirements If the Retailer is authorized to sell Lottery tickets through an ITVM, the Retailer agrees to the provisions of Appendix D, incorporated by refer- ence hereto. 12. Numbers Games Requirements If the Retailer is authorized by the Department to sell Lottery tickets for Numbers Games, in addition to Instant Games, the Retailer agrees to the provisions of Appendix C, incorporated by reference hereto. 13. Claim Services If the Retailer is authorized by the Department to provide claim services, it agrees to be bound by the previsions of Appendix B, for Instant Games Only Retailers and Appendix C for Numbers Games Retailers, incorpo- rated by reference hereto. 14. Notice of Business Changes Retailer agrees to give the Department a minimum of ten (10) days ad- vance notice of Retailer's intent to: a. sell its business, b. cease operations of business either temporarily (including vacations) or permanently, c. move to a new location, or d. of any substantial change in ownership. Retailer shall notify the Depa~b.ent within tan (10) days of: a. any change in business hours, b. any change in financial condition, 4 c. any change in type of primary business, or d. any event which alters any information disclosed in the "Application". 15 ~-..qreem..? iT Non-Assignable This Agreement for the sale of Lottery tickets is non-assignable. Any such unauthorized assignment shall constitute a breach of this Agree- ment. 16. Sole Business Retailer warrants that, pursuant to 61 PA Code §805.2(a), it is not in the exclusive business of sel ng Lottery tickets. 17. Sale of Pennsylvania Lottery Tickets The Retailer agrees that it shall sell Pennsylvania Lottery tickets only. The Retailer understands the sale of any other Lottery tickets shall con- stituta a breach of this Agreement and this contra~t shall be revoked im- mediately in the event that the Retailer violates this provision. C. Department's Obliqafions 1. Commission The Department agrees to pay Retailer a commission for all valid sales, plus or minus any adjustments and less a weekly line service charge, if applicable. The rata of commission shall be as designated in the regula- tions for each Lottery game. 2. Equipment The Department agrees to provide such equipment and supplies as · listed in Appendix B for Instant Retailers, Appendix C for Numbers Games Retailers, and Appendix D for Instant Ticket Vending Machine Retailers, incorporated by reference hereto. 3. Materials, Supplies, Advertising The Department agrees to provide necessary Lottery related materials to Retailer including point-of-sale material, manuals, procedures and in- structions. 5 The Department agrees to use its best efforts to provide Retailer with current tickets, as available, and any other necessary equipment, as more fully enumerated in Appendix B for Instant Retailers, Appendix C fer I'Jumb~rs Games Retailers, ai~d Appendix D for Iqstant Ticket Vend- ing Machine Retailers. The Department agrees to promote and advertise all Lottery games. 4. Additional Retailers The Department reserves the dght to approve and establish new Retail- ere with or without Numbers Games capabilities in any part of the Com- monwealth, as it deems appropriate. 5. Termination of Agreement This Agreement may be terminated by the Department for any of the following: a. Failure to comply with any of the terms of this Agreement, the Lottery law, its rules and regulations or instructions, including - but not limited to 61 PA Code §805.17, issued by the Execu- tive Director of the Pennsylvania Lottery or the Secretary of Revenue may result in immediate suspension or termination of this Agreement, in whole or in part, at the sole discretion of the Department. Upon such suspension or termination, the Re- tailer's authority to sell Lottery tickets of all types shall imme- diately cease. b. Failure to make full settlement on the required settlement date or failure to have float cash monies available or failure to meet the average minimum sales volume requirement shall also constitute a breach of this Agreement and may result in im- mediate suspension or termination of the Agreement in whole · or in part at the sole discretion of the Department. c. Any misrepresentation or omission in Retailer's application to sell Lottery tickets or any renewal application will result in im- mediate suspension of this Agreement, in whole or in part, and may result in termination of the Agreement, in whole or in part, at the sole discretion of the Department. d. This Agreement may be terminated, in whole or in part, by either party for the convenience of either party and for reasons other than those detailed in sub-paragraphs a, b and c, upon fourteen (14) days wdtten notice by the terminating party. 6 D. Disputes terms, breach thereof, or performance required of the Retailer or the De- partment under this Agreement, or with regard to the suspension or pro- posed termination of this Agreement, the Retailer shall be given an op- portunity to be heard through the presentation of wdtten representations of its position to the Department within seven (7) days. At the time of maldng its written representation tq the Department, the Retailer shall present such facts, evidence, statements and other relevant information as it shall desire for the consideration of the Department in reaching its final determination. Such notice to the Department shall not affect the Department's authority to suspend Retailer's authority to sell Lottery tickets pending final determination. The Secretary of Revenue or the Secretary's designee shall make a final determination in writing with re- gard to the dispute and shall send same to the Retailer within thirty (30) days of receipt of Retailer's written presentation. The Retailer's sole options with respect to any such decision shall be either. 1. accept said decision as a correct and binding interpretation of the Agreement, or 2. to make such claim as it may deem appropriate to the Com- monwealth's Board of Claims pursuant to the ACt of May 20, 1937, P.L. 728, No. 193, as amended (72 P.S. ~4651-1 et seq.) Retailer agrees that Lottery funds shall not be withheld by Retailer pending resolution of any dispute. · E. Term This Agreement shall automatically terminate on March 15 of the year following the effective date on page 10 unless othenNtse renewed, ex- tended or terminated; provided, however, that this Agreement shall automatically renew upon receipt and approval by the Department of Retailer's "Application for Renewal" and payment of the required fee. This Agreement will terminate upon the expiration of Retailer's temporbry license, if the Department denies Retailer a permanent license for any reason, or if tarminatad pursuant to paragraph C5 of this Agreement. Retailer agrees not to conduct any business or hold itself out as a seller of tickets unless or until this Agreement is renewed. 7 Renewal of this Agreement for additional terms shall be at the sole dis- cretion of the Secretary of Revenue. The Secretary may, pursuant to 61 Pi~, Code ~'805.7, £05,.15, a!t~ th~ te;m cf the Agr,~.ment by issuing temporary extensions pending administrative determination. F. Statute and Re;lulations Retailer acknowledges the receipt of the applicable statute and regula- tions governing the sale of Lottery tickets. Retailer will be deemed to have actual notice of future regulations upon publication in the Pennsyl- vania Bulletin. Such future rules and regulations shall be incorporated by reference into this Agreement upon publication. G. Sianatures All owners, partners, and corporate officers of Retailer must sign this Agreement and must acknowledge that they fully understand and con- sent to the terms of this Agreement. -- This Agreement does not become effective until fully executed. H. Indemnification/Hold Harm!~=_$_~ Clause. The Retailer shall save and hold harmless the Commonwealth and its officers, agents and employees or any of them from any and all claims, demands, actions or liability (including, but not limited to, consequential damages and reasonable attorney's fees) of any nature based upon or adsing out of: 1. Any services performed by the Retailer, its agents or employ- ees, except such services as are properly performed at the ex- press direction of the Department. 2. The use by the Retailer of any copyrighted or uncopyrighted composition, security, deed, process, patented invention, arlf- cie or appliance furnished or used in the performance of any services under the contract. 3. The negligent, o.r equally or more culpable, conduct by the Retailer, its agents, subcontractors and employees during the term of or in connection with the performance of the contract. 8 I. Waiver The failure of the Department to insist upon strict adherence to any term of this Agreement shall not be considered a waiver or depdve the De- partment of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. , .This Agreement shall be governed by and construed according to the laws of the Commonwealth of Pennsylvania. This Agreement constitutes the entire agreement between the DepaK~nent and the Retailer with re- spect to all contractual and licensed rights, duties and obligations of the parties. The Agreement shall not be amended or modified unless such amendment or modification is in writing and signed by both par'des. -- If a court of competent jurisdiction determines that any portion of this Agreement is invalid, that part shall be severed and the remaining por- tions shall control. (THIS PORTION OF PAGE INTENTIONALLY LEFT BLANK) 9 IN WITNESS WHEREOF, the par'des hereto have caused this Agreement to be exe- cuted, intending to be legai;~ bound hereby. Owner/Interested Party , BY /~/-)Z/rJ~;~7?~ 11u ~('~ TITLE /)"/~,~..' Owner/Interested Party BY TITLE Owner/Interested Party BY TITLE Owner/Interested Party BY TITLE Owner/Interested Party BY TITLE Owner/Interested Party BY TITLE Owner/Interested Party BY TITLE Owner/Interested Party BY TITLE Owner/Interested Party BY TITLE · Owner/Interested Party APPROVED BY Executive Dimctor Pennsylvania Lottery Department of Revenue Commonwealth of Pennsylvania EFFECTIVE DATE 10 APPENDIX A NON-DISCRIMINATION C[_AUSF During the term, of thi~', contract, Retailer agrees as fc!iows: 1. Retailer shall not discriminate against any employee, applicant for employ- ment, independent contractor or any other person because of rece, color, relig- ious creed, ancestry, national odgin, sex, age, disability, sexual orientation or union membership. Retailer shall take affirmative action tO ensure that applicants are employed, and that employees or agents are treated during employment without regard to race, color, religious creed, ancestry, national origin, sex, age, disability, sex- ual orientation or union membership. Such affirmative action shall include, b~t is not limited to, the following: employment, upgrading, demotion, transfer, re- cruitment or recruitment adver~sing, layoff or termination, rates of pay or other forms of compensation, and, selection for training. Retailer shall post in conspicuous places, available to employees, agent, applicants for employment and other persons, a notice to be provided by the contracting agency setting forth the provisions of this Non-discrimination Clause. 2. Retailer shall, in advertisements or requests for employment placed by it or on its behalf, state that all qualified applicants will receive consideration for em- ployment without regard to race, color, religious creed, ancestry, national od- gin, sex, age, disability, sexual orientation or union membership. 3. Retailer shall send each labor union or worker's representative with which it has a collective bargaining agreement or other conffact or understanding, a notice advising said labor union or worker's representative of its commitment to this Non-discrimination Cia. use. Similar notice shall be sent to every other source of recruitment regularly utilized by Retailer. 4. ,It shall be no defense to a finding of noncompliance with the contract com- pliance regulations issued by the Pennsylvania Human Relations Commission or this Non-discrimination Clause that Retailer had delegated some of its em- ployment practices to any union, training program or other source of recruit- ment that prevents it from meeting its obligations. However, if the evidence indicates that the Retailer was not on notice of the third party discrimination or made a good faith effort to correct it, such factor shall be considered in mitiga- tion in determining apprepriata sanctions. 11 5. Where the practice of a union or of any training program or other source of re- cruitment will result in the exclusion of minority group persons, so that Retailer will be unable to meet its obligations under the contract compliance regulations issued b~. [i-;e ?er,,',s~,val-,i~ Human Reia[icr;s C(~lnmission, or this Non- discrimination Clause, Retailer shall then employ and fill vacancies through other non-discriminatory employment procedures. 6. Retailer shall comply with the contract compliance regulations of the Penn- sylvania Human Relations Commission, 16 PA Code Chapter 49 and with all laws prohibiting discrimination in hidng or employment opportunities. In the event of Retailer's noncompliance with the Non-discrimination Clause of this contract or with any such laws, this contract may, after hearing and adjudica- tion, be terminated or suspended, in whole or in part, and Retailer may be de- clared temporarily ineligible for further Commonwealth contracts, and such other sanctions may be imposed and remedies invoked as provided by the contract compliance regulations. 7. Retailer shall furnish all necessary employment documents and records, and permit access to its books, records, and accounts by the contracting agency and the Human Relations Commission, for purposes of ~e conic'act compli- ance regulations, pursuant to ~49.35 of these regulations. If Retailer does not possess documents, or records, reflecting the necessary information re- ' quested, it shall furnish such information on reporting forms supplied by the contracting agency of the Commission. 8. Retailer shall actively recruit minority subcontractors or subcontractors with substantial minority representation among their employees. 9. Retailer shall include the provisions of this Non-discrimination Clause in every subcontract so that such provision will be binding upon each subconfl'actor. 10. The terms used in this Non-discrimination Clause shall be the same as in the contract compliance regulations issued by the Pennsylvania Human Relations Commission, 16 PA Code Ch. 49. 11. Retailer obligations under this clause are limited to the Retailer's facilities within Pennsylvania, or, where the contract is for purchase of goods manufac- tured outside of Pennsylvania, the facilities at which such goods are actually produced. 12 APPENDIX B INSTANT GAMES REQUIREMENTS 1. Retailer Checldng Acc,~;n.'. Reta~ier agrees to maintain a checking account that is accessible to the Lottery for the drafting of funds owed to the Lottery from the sales of Instant Games Lottery tickets. The Retailer may establish a separate Lottery account or use a current business account. Any charges associated with the Retailer checking account ara wholly the responsibility of the Retailer. Thera can be no limitations on the number or amount of deposits, withdrawals or checks that can be made. Retailer agrees to make prompt settlement at fts assigned bank or at such other locations as may be diracted by the Department and to pay all those amounts due and owing according to procedures established by the Department and incorporated by raferance herato. "FAILURE TO COMPLY WITH ANY OF THE PROVISIONS OF THIS PARAGRAPH WILL RESULT IN IMMEDIATE SUSPENSION OF THE RETAILER'S AUTHORITY TO SELL TICKETS AND MAY BE CONSTRUED AS A BREACH OF THIS AGREEMENT WARRANTING TERMINATION." 2. Minimum Sales Requirements This Agraement may be terminated in whole or in part if the Retailer fails to meet the average minimum sales volume of Instant Games tickets. The minimum sales volume requirement for Instant Games Retailers shall be 30% of the average weekly Instant Games ticket sales for all Instant Games Retailers in the Retailers sales araa for the previous quarter or for the current quarter, whichever is less. If the Retailer does not meet the applicable Instant Games minimum sales require- ment during any quarter, the following procedura will be undertaken: a. As soon as possible after the end of a quarter in which the Retailer does not meet the minimum sales raquirament, the Retailer will be noti- fied in writing by the Lottery that the sales did not meet the minimum sales raquirement.' The Retailer shall be given one additional quarter to meet or exceed the minimum sales raquirament. The Lottery will ex- ert its best efforts to provide marketing support and assistenca to Re- tailers identified, as they attempt during the next quarter to meet or ex- ceed the minimum sales raquirement. If the Retailer does not meet the minimum sales raquirament for two (2) consecutive quarters, the Re- tailer's contract and license for the sale of instant tickets may be ra- yoked pursuant to their terms. 3. Claim Services The Retailer agrees to provide all authorized and requirad claim services including but not limited to the following: 13 a. Payment of all valid Instant Games winning ticket claims providing that proper pdze validation steps have been taken, without regard to where the ticket was purchased, with payoffs to be made in cash, check, or money order drawn on the proceeds from ticket sales. b. Completing claim forms for Instant Games winning tickets in excess of ~500, and fc~Icwin[; prop,zr steps t~ ~ac;:rc.; .*.;-,d transmit said claim forms to Lottery. c. Acting in the capacity of a claim center if appointed by the Department to perform such service. 4. Terminal Requirements a. The Retailer agrees to provide a grounded three (3) prong electrical outlet for use with grounded plugs. It is to be Iocetad within seven and one-half unobstructed feet (7~') from the Instant Terminal and have a clearance of three inches (3") below the AC outiet. b. The Retailer agrees to provide a space (approved by the Depart- ment) of at least six and one-half inches (6~") wide, thirteen inches (13") deep and eleven inches (11") in height for the Instant Terminal to allow for proper ventilation, maintenance, and material loading and re- moval. c. The Retailer shall meet such training standards as shall be established by the Department. d. The Retailer agrees to purchase and install a RJll telephone jack within fourteen unobstructed feet (14') of the Instant Terminal. The In- stant Terminal will be connected to a standard single business tele- phone line. The telephone line does not need to be for the exclusive use of the Instant Terminal and may be used by the Retailer for other purposes when not in use by the Instant Terminal. e. All equipment and supplies provided to the Retailer by the Department or its vendors shall remain the property of the Department or its ven- , dors, and shall be used for their intended purpose and not for any other purpose. The Retailer shall acquire no interest whatsoever in the equipment. f. All expenses, whether fixed or recurring associated with the items re- quired to be fumished by the Retailer, shall be the sole responsibility of the Retailer. g. To have the computer terminal available for the sale of Lottery tickets during all hours and days that the Retailer's business is open and sales .- authorized. 14 h. To exercise diligence in the operation of the terminal, to provide physi- cal security for the terminal, replace paper stock and to immediately notify the vendor of any phone line or terminal malfunction. i. To refrain from performing any mechanical or electrical repairs to the terminal. j. To be responsible for custodial care of the terminal. The Department reserves the right to terminate this Agreement in the event of repeated malicious abuse, and/or negligent care of the terminal. Abuse is de- fined as, but not limited to, accidents such as liquid spills, breakage or other Retailer caused problems resulting in the need for the terminal to ~ be replaced. k. Retailer is responsible for loss or damage of the equipment in excess of normal wear and tear. Retailer must report any "out of order' condi- tion of the equipment to the vendor in accordance with current Lottery procedure. 15 APPENDIX C NUMBER GAMES REQUIREMENTR 1. I~,itial Sec,.J, rJty Retailer agrees to provide a Surety Bond, Irrevocable Letter of Credit or other surety satisfactory to the Department in the amount requested by the Department and for the term requested by the Department as a conclition of this agreement or any renewal hereof. 2. Additional Security Retailer agrees to pay for and maintain a Surety Bond or Irrevocable Letter of Credit in an amount not to exceed one and one-half (1~) times the Retailer's aver- age weekly Lottery sales, for cause, upon notification by the Lottery. Failure to comply with the provisions for maintaining the Lottery account as outlined in Pare- graph 3, Appendix C, of this Agreement orthe Lottar~s receipt of adverse financial infdrmation may result in permanent surety requirement. 3. Lottery Retailer Checking Account Retailer agrees to open and pay the cost of maintaining a separate Lottery Retailer checking account at the Retailer's assigned bank. All recaipts from the sale of tickets and instant settlements, minus Retailer's commission and money kept on Retailer's premises to p.~y winning tickets, must be deposited in this account. Funds in the account must be accessible at all times. There can be no limitations on the number or amount of deposits, checks, or withdrawals that can be made. Retailer also agrees to make prompt seffiement at its assigned bank or at such other locations as may be directed by the Deparlment and to pay all those amounts due and owing according to procedures established by the Department and incor- poratad by reference hereto. FAILURE TO COMPLY WITH ANY OF THE PROVISIONS OF THIS PARAGRAPH WILL RESULT IN IMMEDIATE SUSPENSION OF THE R~"r'AILER'S AUTHORITY TO SELL TICKETS AND MAY BE CONSTRUED AS A BREACH OF THIS AGREEMENT WARRANTING ,TERMINATION. 4. Retailer Checking Account Deposits Deposits must be made a minimum of every other business day. A Retailer may keep no more than 20% of the amount of the average weekly sales at the retail lo- cation for payment of winning tickets unless given specific authorization by the Lottery. 17 5. Minimum Sales Requirement Numbers Games This AGree,.me,~t ma~r be termina',ed in whole or in part if Retailer fails to meet the average minimum sales volume requirement of $ per week of Number Games tickets. This average minimum sales volume requirement is a ten (10) week floating sales average and is established after data collection review and analysis of factors that may include, but are not limited to the following: ~ a. Demographic and socio-economic marketing information b. Customer patterns c. Products and/or services provided d. Product volume e. Proximity to work, residential and commuter sites f. Hours of operation -- g. Convenience to the public h. Financial stability i. Willingness to promote and advertise Lottery ticket sales j. Proximity to other Numbers Games retailers in the marketing area If the Retailer fails to meet the above average minimum sales requirement, the fol- . lowing procedures will be implemented: a. New Retailers (Numbers Games sales less than six [6] months) · * On week 13, if 10 week sales average is not 50% of average minimum sales requirement, Retailer will receive written noti- fication. · On week 20, if 10 week sales average is not 75% of average minimum sales requirement, Retailer will receive written nofi- flcetion. · On week 26, if 10 week sales averege is not 100% of averag~ minimum sales requirement, Retailer will receive written notifi- -- cation. 18 · On week 30, if sales still have not reached 100% of average minimum sales requirement, a full examination and evaluation will be made to determine disposition of the terminal. b. Established Retailer (Numbers Games sale; mo;,~ ~.han six [6] months) · If 10 week sales average falls below average minimum sales requirement, Retailer will receive wdtten notification. ·If sales do not improve within thirty (30) days of first letter, Re- tailer will receive written notification. · If sales do not improve within thirty (30) days of second letter, a full examination and evaluation will be made to determine dis- position of the terminal. Instant Games This Agreement may be terminated in whole or in part if the Retailer fails to meet the average minimum sales volume requirement of Instant Games tickets which shall be 30% of the average weekly Instant Games ticket sales for Numbers Games Retailers in the Retailer's sales area, excluding the 10% of the Numbers Games Retailers in the sales area having the highest average weekly Instant _ Games ticket sales, for the previous quarter or for the current quarter, whichever is less. If the Retailer fails to meet the above average minimum sales requirement, the fob lowing procedures will be implemented: a. As soon as possible after the end of the quarter in which the Retailer does not meet the Instant Games ticket minimum sales requirement as specified by the contract, the Retailer will be notified in writing by the Lottery that the sales did not meet the minimum sales requirement. The retailer shall b~ given one additional quarter to meet or exceed the minimum sales requirement. b. If a Numbers Games Retailer does not meet the minimum sales ra- quirament for Instant Ticket sales for two (2) consecutive quarters, but its Number Games ticket sales meet or exceed the average Numbers Games ticket sales of its sales area, the effort to sell Instant Games tickets put forth by the Retailer may be reviewed by the Lottery. The Lottery will exert its best efforts to provide marketing support and assis- tance to the Retailer identified, as it attempts during the next quarter to meet or exceed the minimum sales raquirament. If the Retailer dem- onstrates to the Lottery that it is making a good faith effort to sell In- stant Games tickets, the Lottery may consider a waiver of the Instant Games ticket sales requirement for the quarter under consideration. If the Re{ailer is unable to demonstrate that it is making a good faith ef- fort to sell Instant Games tickets, the Retailer will be notified in writing 19 by the Lottery that its contract and license have been terminated or re- voked pursuant to their terms. Good faith effort shall include, but not be limited to, the following cdteda: · The Retailer has Instant Games tickets prominently displayed in its Retailer location. · The Retailer has displayed the corresponding Instant Game ticket point-of-sale materials in its Retailer location. c. If the Retailer does not meet the minimum sales requirement for Num- bers Games ticket sales for two (2) consecutive quarters, but meets the ~ ' minimum sales requirement for' Instant Games Retailers within its sales area for the same two (2) consecutive quarters, the Retailer's On-line contract may be terminated, and the terminal removed, pursuant to the terms of the contract. If the Retailer does not meet the minimum sales requirement for Numbers Games Retailers and Instant Games Retail- ers for two (2) consecutive quarters, the Retailer's contract and license for Instant and On-line tickets shall be terminated or revoked pursuant to their terms. The Instant Games Retailer minimum sales requirement for Instant Games tickets shall apply dudng the calendar quarter in which Number Games sales commence unless it is the same quarter in which Instant Games tickets are first delivered. 6. Claim Services The Retailer agrees to provide all authorized and required claim services including but not limited to the following: a. All instant game requirements agreed to in Appendix B, Section 3, Claim Services. b. Ascertaining and posting winning numbers as soon as possible fol- lowing the drawing of the winning numbers. c. Payment of all valid winning ticket claims providing that proper prize · validation steps have been taken without regard to where the ticket was purchased, with payoffs to be made in cash, check, or money order drawn on the proceeds from ticket sales. d. Issuing claim tickets for winning tickets in excess of $600.00. e. Acting in the capacity of a claim canter if appointed by the Department to perform such s~rvica. 2O 7. Terminal Requirements The Retailer agrees to the following provisions with regard to the terminal to be in- stalled upon the Retailer's premises: a. To r2ay for telecommunicaticqs d~fa lin~ ~stallation costs in an amour~t to be determined by the Department. In addition, to pay for telecom- municafions weekly line charge in an amount to be determined by the Department. In all cases of interruptions of service whether it be vaca- tions, remodeling/construction, NSF/delinquency conditions, suspen- sions, etc., On-line Lottery Retailers will be liable for the weekly line charge and will be required to have sufficient funds in their Lottery ac- ~ counts so that the line charge amount can be drafted on a weekly ba- sis. b. To provide, prior to installation of the terminal, an electrical 4-way grounded outlet on a separate and dedicated circuit that remains on 24 hours a day. c. The Department will supply forms, ticket stock, ribbons, accounting re- ports and other related supplies. d. To provide sufficient space for the terminal with requirements as de- scribed in "Space Requirements and Equipment Specifications". Re- -- taller will provide a duly signed copy of "Space Requirements and Equipment Specifications" pdor to installation. e. To be solely responsible for costs incurred in site prapamtion. f. That the terminal shall be located within the Retailer's premises only at a point of sale approved by Lottery and cannot be moved without prior written approval by Lottery. If approved to relocate the terminal, the Retailer will pay the costs incurred from the telephone company. The · Retailer will be responsible for providing an electrical 4-way grounded outlet on a separate and dedicated circuit at the new location. · g. To be responsible for payment of all electrical utility charges incurred in the operation of the terminal. h. To provide a telephone at the location of the terminal in order to make and receive telephone calls for maintenance assistance or administna- live needs. i. To have the computer terminal available for the sale of Lottery tickets during all hours and days that the Retailer's business is open and '-.ales authorized. Retailer's business location and hours are described in the site survey, which is hereby incorporated by reference as part of this .. Agreement. 21 To exemise diligence in the operation of the terminal, to provide physi- cal security for the terminal and paper stock, to replace dbbons and ticket stock and clear paper jams as required and to immediately notify the vendor of telephone communications or terminal malfunction, such as, but r,~. limited to, the issuance of a non-valid ticket, the inability to cancel a ticket or the non-issuance of a ticket. k. To refrain from performing any mechanical or electrical repairs to the terminal. v I. To be responsible for custodial care of the terminal. The Department reserves the fight to terminate this Agreement in the event of repeated malicious abuse and/or negligent care of the terminal. Abuse is de- fined as, but not limited to, accidents such as liquid spills, breakage or other Retailer caused problems resulting in the need for the terminal to be replaced. 8. Equipment The Department agrees to provide Retailer with a computer terminal in working or- der and to install the required telecommunications line for the operation of the ter- minal. 9. Stock All equipment, manuals, tapes, cards, computer pdnteuts, ticket stock and other items furnished to the Retailer in connection with its functions as Retailer, shall re- main at all times the sole property of the Deparlment; it being understood that such equipment is not leased by Retailer, but is in Retailer's custody solely as a seller of tickets and such equipment shall be surrendered upon termination of this Agree- merit. Retailer is responsible fo~'loss or damage of the equipment in excess of normal wear and tear. Retailer must report any "out of order" condition of the equipment to the vendor in accordance with current Lottery procedura. 22 APPENDIX D !NSTANT TICKET VENDING MACHINE (ITVM) REQUIREMENT,°, Instant Games Requirements Retailer must be a licensed Instant Game Retailer pursuant to the provisions of Appendix B (Instant Game Requirements). 2. Minimum ITVM Sales Requirement This Agreement may be terminated in whole or in part if the Retailer fails to meet the average minimum sales volume of ITVM sales. The minimum sales volume requirement for each ITVM shall be an average of $500 per week for each calendar quarter. If the Retailer does not meet the applicable I'FVM minimum requirement dudng any quarter, the following procedure will be undertaken: a. As soon as possible after the end of a quarter in which the Retailer does not meet the minimum ITVM sales requirement, the Retailer will be notified in writing by the Lottery that the sales did not meet the .. minimum ITVM sales requirement. The Retailer shall be given one (1) additional quarter to meet or exceed the minimum ITVM sales re- quirement. The Lottery will exert its best efforts to provide marketing support and assistance to Retailers identified, as they attempt, dudng the next quarter, to meet or exceed'the minimum ITVM sales require- ment. If the Retailer does not meet the minimum ITVM sales require- ment, the ITVM may be removed. 3. Instant ~cket Vending Machine Requirements a. The Retailer agrees to provide a grounded three (3) prong electrical AC outlet for use with grounded plugs located within ten unobstructed feet (10') from the ITVM. b. The Retailer agrees to provide a space (approved by Department) for the ITVM to allow for proper ventilation, maintenance, and matedal loading and removal. c. The Retailer shall meet such training standards as shall be established by the Department. d. All equipment and'supplies provided to the Retailer by the Department or its vendors shall remain the property of the Department or its ven- dors, and shall be used for their intended purpose and not for any other purpose. The Retailer shall acquire no interest whatsoever in the equipment. 23 e. All expenses, whether fixed or recurring associated with the items re- quired to be furnished by the Retailer, shall be the sole responsibility of the Retailer. f. The Retailer agrees to have the I'I'VM available for the sale of Loffery tickets= dudng ~-JJ hours and days that the Retailer's bus,ness is open. g. The Retailer agrees to exercise diligence in the operation and care of the ITVM, to provide physical security for the I'I'VM, and to immediately notify the vendor of any malfunction. ~ h. The Retailer agrees to refrain from performing any mechanical or elec- trical repairs to the ITVM. i. The Retailer agrees to be responsible for custodial care of the ITVM. The Department reserves the right to terminate this Agreement in the event of malicious abuse and/or negligent care of the ITVM. Abuse is defined as, but not limited to, accidents'such as liquid spills, breakage or other Retailer caused problems resulting in the need for the ITVM to be replaced. j. Retailer is responsible for loss or damage of the equipment in excess of normal wear and tear. Retailer must report any "out of order" cendi- " tion of the equipment to the vendor in accordance with currant Loffery procedure. k. Retailer is responsible for maintaining the appearance of the I'rVM in a clean and neat manner. The exterior of the machine must be regularly cleaned. . I. Retailer agrees that the ITVM shall be secured or weighted with sand- bags or other medium at the Lottar~s option. The means to be used shall be agreed to by the Retailer and Lottery. m. Retailer agrees to be solely responsible for costs incurred in site prepa- ration. n. The Retailer agrees to be responsible for payment of all electrical utility charges incurred in the operation of the ITVM. o. The Retailer agrees to maintain the access keys to the ITVM on the li- censed premises at all times. Failure to do so may result in the re- moval of the ITVM. 24 4. Location of ITVM The ITVM shall be located within the Retailer's premises only at a point of sale ap- proved by Lottery and cannot be moved without Lottery's prior written approval. If given approval to relocate the I'FVM, the Retailer will pay all costs incun'ed for the move. Relocation without prior approval of the Lottery will result in termination of that Retailer's right to use an I'I-VM at its location. 5. Instant Games Requirements a. Retailer is required to maintain an adequate supply of Pennsylvania Lottery instant tickets. The I'I'VM must sell as many different games as ~ _ the machine has ticket bins, i.e., if it has four (4) ticket bins, four (4) different games must be sold. Retailer must also sell all games avail- able at a minimum of one other location in the business facility other than in an I'I'VM. b. Retailer agrees to utilize to the fullest extent possible all point-of-sale materials provided by the Lottery. c. Retailer agrees to regularly fill the ITVM to avoid empty ticket bins. d. Retailer shall remove all instant game tickets and money from the ITVM .. prior to any equipment maintenance or repair service. e. Retailer shall make available to the Lottery technician, or the Lottery designated technician, the equipment and keys during normal business hours for maintenance, repairs and inspection. 25 I, LARRY L. MILLER, have prepared the foregoing Complaint. The factual statements contained therein are true and correct. I am authorized to make this Verification on behalf of.my client, National Grange Mutual Insurance Company, who is outside the Jurisdiction of this Court. The facts set forth in the pleading are based upon my review of the documents and information furnished bY Anthony Montecalvo, Bonds Claims Manager for National Grange MUtual Insurance Company. This Verification is made subject to the penalties of 18 Pa. Cons. Stat. Section 4904 relating to unsworn falsification to authorities, which provides that if I knowingly make false averments, I may be subject to criminal penalties. Date~ April 26, 2001 ' ,~ SHERIFF'S RETURN - NOT FOUND CASE NO: 2001-02506 P COMMONWEALTH OF PENNSYLVANIA COUNTY OF CUMBERLAND NATIONAL GRANGE MUTUAL INS CO VS BUTT KAUKAB I ET AL R. Thomas Kline ,Sheriff or Deputy Sheriff, who being duly sworn according to law, says, that he made a diligent search and inquiry for the within named defendant, DEFENDANT BUTT KAUKAB I T/D/B/A E¥-EREST GENERAL STORE/EVST. GEN STR II but was unable to locate Him in his bailiwick. He therefore returns the COMPLAINT & NOTICE , , NOT FOUND , as to the within named DEFENDANT , BUTT KAUKAB I T/D/B/A EVEREST GENERAL STORE/EVST. GEN STR II, DEFENDANT NO LONGER OWNS BUSINESS NEW OWNER IS SU Sheriff's Costs: So answ :. Docketing 18.00 Service 3.10 ' Affidavit .00 R. Thomas Kline Surcharge 10.00 Sheriff of Cumberland County .00 31.10 LARRY MILLER 05/02/2001 Sworn and subscribed to before me this xl~ day of ~ Prot~o~ot ary SHERIFF'S RETURN - NOT FOUND CASE NO: 2001-02506 P COMMONWEALTH OF PENNSYLVANIA COUNTY OF CUMBERLAND NATIONAL GRANGE MLVI/IAL INS CO VS BUTT KAUKAB I ET AL R. Thomas Kline ,Sheriff or Deputy Sheriff, who being duly sworn according to law, says, that he made a diligent search and inquiry for the within named defendant, DEFENDANT BUTT KHURRAM T/D/B/A EVEREST GENERAL ST/EVST GEN STORE II but was unable to locate Him in his bailiwick. He therefore returns the COMPLAINT & NOTICE , , NOT FOUND , as to the within named DEFENDANT , BUTT KHURRAM T/D/B/A EVEREST GENERAL ST/EVST GEN STORE II , DEFENDNATS NO LONGER OWN BUSINESS NEW OWNER IS SUN Sheriff's Costs: So ' Docketing 6.00 ~~'-' ' i./~---5.._---'''~ Service .00 --~~-' Affidavit .00 R.-Thomas Kline' Surcharge 10.00 Sheriff of Cumberland County .00 16.00 LARRY MILLER 05/02/2001 Sworn and subscribed to before me this .;/.~ day of ~ PrOthonotary ' SHERIFF'S RETURN - NOT FOUND CASE NO: 2001-02506 p COMMONWEALTH OF PENNSYLVANIA COUNTy OF CUMBERLAND NATIONAL GRANGE MUTUAL INS CO VS BUTT KAUKAB I ET AL R. Thomas Kline ,Sheriff or Deputy Sheriff, who being duly sworn according to law, says, that he made a diligent search and inquiry for the within named defendant, DEFENDANT BUTT KAUKAB I but was unable to locate ~im in his bailiwick. He therefore returns the COMPLAINT & NOTICE , NOT FOUND , as to the within named DEFENDANT , BUTT KAUKAB I DEFENDNAT MOVED TO 1384 FLATBUSH AVENUE, BROOKLYN, Sheriff,s Costs: So answe3~-- Docketing 6.00 Service .00 Affidavit .00 R~ ' .~ Thomas Kline Surcharge 10.00 Sheriff of Cumberland County .00 16.00 LARRY MILLER 05/02/2001 Sworn and subscribed to before me this 2 ~,.~- day of ~! A.D. Pr6thonotary · SHERIFF'S RETURN - NOT FOUND CASE NO: 2001-02506 p COMMONWEALTH OF PENNSYLVANIA COUNTY OF CUMBERLAND NATIONAL GRANGE MUTUAL INS CO VS BUTT KAUKAB I ET AL R. Thomas Kline ,Sheriff or Deputy Sheriff, who being duly sworn according to law, says, that he made a diligent search and inquiry for the within named defendant, DEFENDANT BUTT DILSI{AD but was unable to locate Him in his bailiwick. He therefore returns the COMPLAINT & NOTICE # · NOT FOUND , as to the within named DEFENDANT , BUTT DILSHAD DEFENDANT MOVED TO 1394 FLATBUSH AVENUE, BROOKLYN, Sheriff,s Costs: So an: Docket ing 6.00 ..-" .~.~-. . ~..... -. Affidavit .00 Tho~s Kline Surcharge 10.00 Sheriff of Cu~erland County .00 16.00 ~RRY MILLER 05/02/2001 Sworn and subscribed to before me this ~/~ day of A.D. otary ' - - SHERIFF'S RETURN - NOT FOUND CASE NO: 2001-02506 p COMMONWEALTH OF PENNSYLVANIA COUNTy OF CUMBERLAND NATIONAL G~RANGE M_UTUAL INS CO VS BUT____TTKAUKAB~IET AL R. Thomas Kline ,Sheriff or Deputy Sheriff, who being duly sworn according to law, says, that he made a diligent search and inquiry for the within named defendant, D_D_EFENDANT B~UTT KHURRAMN -- but was unable to locate Hi___~_m in his bailiwick. He therefore returns the C~OMPLAINT & NOTICE ~, NOT FOUND , as to the within named DEFEND~ _, B_~T F~HURPJ~MN D ' _EFENDANT MOVED TO 1384 FLATBUsH AVENUE, BROOKLYN Sheriff,s Costs: Docketing So an~ .._~ / Service 6.00 ~ Affidavit .00 t ~-- ' ..... ~/-~--'-- Surcharge .00 10.00 Sheriff of Cumberland County .00 16.00- LARRY MILLER 05/02/2001 Sworn and subscribed to before me this ~;.~ day of ~ r~thono~ry ' , ~ Larry L. ~11er, Es~ire Pa. S~reme Court I.D. No. 28122 1423 State Road Duncannon, PA 17020 Telephone: [717] 957-2828 Attorney for Plaintiff= ~TIONAL GRANGE MUTUAL INSURANCE CC~4PANY NATIONAL GRANGE ~uTuAL = IN ='~ COURT OF COMMON PLEAS INSURANCE COMPANY = CUMBERLAND COUNTY, PENNSYLVANIA 55 West Street = CIVIL ACTION - LAW Keene, NJ 03431-7000 Plaintiff : KAUKAB I. BUTT t/d/b/a EVEREST: GENERAL STORE and EVEREST GENERAL STORE II : 603 Franklin Street Carlisle, PA 17013 : KHURRAMN. BUTT t/d/h/a : EVEREST GENERAL STORE and : EVEREST GENERAL STORE II : 603 Franklin Street : Carlisle, PA 17013 : KAUF-AB I. BUTT : 231 Meals Drive : Carlisle, PA 17013 : DILS ) EUT : 7RUE COPY FROM RECORD 231 Meals Drive : Carlisle, PA 17013 : ~.~-.-~,,i~a~aunto~sitmy~:,~..a KHUlUU~N. BUTT 231 Meals Drive Carlisle, PA 17013 : Defendants : YOU HAVE BEEN SUED IN COURT. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this Complaint and Notice are served by entering a written appearance personally or by attorney and filing in writing with the Court your defenses or objections to the claims set forth against you. You are warned that if you fail to do so the case may proceed without you and a Judgment may be entered against you by the Court without further notice for any money claimed in the Complaint or for any other claim or relief requested by the Plaintiff. You may lose money or property or other rights important to you. Cumberland County Bar Association 2 Liberty Avenue Carlisle, PA 17013 800.990.9108 DATE: April 26, 2001 By: LARRY L. MILLER Attorney I.D. 228122 Attorney for Plaintiff Larry L. Miller, Esquire Pa. Supreme Court I.D. No. 28122 1423 State Road Duncannon, PA 17020 Telephone: [717] 957-2828 Attorney for Plaintiff: NATIO~ALGBANGE~JTUALINSURANCECOMP~Ny NATIONAL GRANGE ~UTuaL = IN Tn~ COURT OF COMMON PLEAS INSURANCE COMPANY = CUMBERLAND COUNTY, PENNSYLVANIA 55 West Street = CIVIL ACTION - LAW Keene, NJ 03431-7000 Plaintiff v. : DOCKET KAUEAB I. BUTT t/d/b/a EVEREST: GENERAL STORE and EVEREST GENERAL STORE II 603 Franklin Street : Carlisle, PA 17013 KHURRAM N. BUTT t/d/b/a : EVEREST GERF~AL STORE and : EVEREST GENERAL STORE II 603 Franklin Street : Carlisle, PA 17013 KAUKAB I. BUTT : 231 Meals Drive : Carlisle, PA 17013 DILSHAD BUTT 231 Meals Drive : Carlisle, PA 17013 : KHURRAM N. BUTT : 231 Meals Drive : Carlisle, PA 17013 Defendants Plaintiff, National Grange Mutual Insurance Company, by its undersigned attorney, hereby sues the Defendants, Kaukab I. Butt trading and doing business as Everest General Store and Everest General Store II, Khurram N. Butt trading and doing business as Everest General Store and Everest General Store II, and Kaukab I. Butt, Dilshad Butt and Khurram N. Butt, individually, and in support thereof, says: 1. Plaintiff, National Grange Mutual Ineurance Company ('National Grange' or 'Plaintiff' or "Surety.), is a corporation incorporated under the laws of the State of New Hampshire that maintains its principal place of business at 55 West Street, Keene, NJ 03431-7000. 2. Defendants, Kaukab I. Butt trading and doing business as Everest General Store and Everest General Store II, and Kaukab I. Butt, individually, is an adult individual who resides at 231 Meals Drive, Carlisle, PA 17013. 3. Defendants, Khurram N. Butt trading and doing business as Everest General Store and Everest General Store II, and Khurram N. Butt, individually, is an adult individual who resides at 231 Meals Drive, CaFlisle, PA 17013. At all times relevant hereto, ~hurram N. Butt was an owner of Everest General Store II. 4. Defendant, Dilshad Butt, is an adult individual who resides at 231 Meals Drive, Carlisle, PA 17013. 2 A. THE INDEMNITY AGREEMENT 5. On March 24, 1999, Kaukab I. Butt and Dilshad Butt, individually, and Kaukab I. Butt on behalf of Everest General Store II, (hereinafter collectively referred to as the #Inde~nitors'), executed a Specific Indemnity Agreement (the 'IndemnityAgreement'). A copy of the Indemnity Agreement is attached hereto as Exhibit and it is incorporated herein by reference. The Indemnitors executed the Indemnity Agreement as essential consideration for National Grangers issuance of bonds on behalf of Everest General Stores, II ('Everest') and Indemnitors. 6. Under the Indemnity Agreement, the Indemnitors agreed to exonerate, hold harmless and indemnify National Grange from and against all claims, losses, and expenses incurred as a result of having executed bonds on behalf of Everest and Indemnitors. The Indemnity Agreement provides: 5. That the Indemnitor(s) shall at all times indemnify, save the Company harmless from, and place the Company in ~s to meet any claim, demand, loss, liability, cost, charge, attorneysw fee, judgment, expense, suit, order, or adjudication arising from the existence of the Bond. 7. That the Company shall have the exclusive right to determine for itself and the Indemnitor(s) whether any claim or bro -- ' suit ugh= against the Company or the Principal, a? .a. ~esult of the existence o~ the Bond, snail De settled or defended and 1ts decision shall be binding and conclusive upon the ' Indemnitor(s). 3 7. In reliance upon the executed Indemnity Agreement, National Grange executed a permit bond on behalf of Defendants. B. THE BOND 8. National Grange executed a permit bond, Bond No. S- 412-628 (hereinafter 'the Bond'). A true and correct copy of the Bond is attached hereto as Exhibit 'B.' The bond was required by the Commonwealth of Pennsylvania, Department of Revenue, Pennsylvania Lottery for Defendants~ Application for Lottery Retailer License to se1! lottery tickets. C. LOSSES AND EXPENSES 9. On October 24, 2000, National Grange received a claim in the amount of $15,326.55 from the Commonwealth of Pennsylvania, Department of Revenue, Pennsylvania Lottery ("PA Lottery'). A true and correct copy of the claim letter is attached hereto as Exhibit 'C' and it is incorporated herein by reference. 10. By letters dated November 7, 2000, National Grange notified Defendants of the claim of the PA Lottery. The November 7, 2000 letters requested written confirmation from Defendants, by December g, 2000, that the matter had been resolved. True and correct copies of the November 7, 2000 letters to Defendants are collectively attached hereto as Exhibit 'D' and incorporated herein by reference. 11. National Grange made demands on the Indemnitors for protection from the claims, but the Indemmitors have completely ignored these demands. 4 12. Because Defendants failed and refused to respond to the November 7, 2000 letters, on April 19, 2001, National Grange was forced to pay the claim of the PA Lottery, pursuant to the Indemnity Agreement, for the penal amount of $10,000. 13. Also, due to the failure of the Indemnitors to protect it from these claims, National Grange has incurred substantial expenses, including investigative costs and attorneyts fees and will continue to incur such costs in the future. COUNT ONE NATIONAL GRANG~ ~OTUAL INSURANC~ KAUKAB I. B~T t/d/b/a ~T G~L S~RE and ~EREST G~ S~R~ II. ~ N. B~ t/d~b/a EV~EST ~L ~RE and ~R~T G~L S~ II ~B I. Bu'l~. DILS~D B~ and ~ N. 14. Paragraphs i through 13 above are incorporated herein by reference as if set forth in full. 15. The Bond was exerted and issued ~ National Grange at the re~est of Defendants a~ in consideration for and reliance upon the Ind~nity Agre~ent. 16. Inde~it~rs are in default of the Indemnity Agreement as they have refused to inde~ify National Grange. 17. Upon su~ default, ~e Ind~ity Agreement provides t~t Ind~itors shall, ~~, indemnify National Grange from and against any and all liabilities, losses and expenses imposed upon, sustained, or incurr~ ~ Nation1 Grange by reason of having executed the Bond. 5 18. The IndemnityAgreement was in full force and effect at the time of the execution and delivery of the Bond and is presently in full force and effect. National Grange has complied with all conditions precedent set forth in the Indemnity Agreement. 19. National Grange believes and therefore avers that it has and will continue to incur significant losses and expenses including but not limited to investigative fees, consultants~ fees, court costs, and attorney,s fees, all of which Indemnitors are responsible to National Grange for under the Indemnity Agreement. 20. Because all of said liabilities, losses and expenses are continuing and are not presently capable of exact calculation, National Grange cannot, at this time, reduce its losses to an exact liquidated sum, but it reasonably anticipates them to be in excess of $20,000.00. 21. By reasons of the foregoing, National Grange has demanded that Indemnitors reimburse it the claim paid to the PA Lottery pursuant to the Indemnity Agreement. 22. To date, National Grangers demands have not been complied with by Indem~itors. On the contrary, Indemnitors have refused to comply with National Grangers demands for indemnification. As a result, Indemnitors are in breach of the promises and covenants set forth in the Indemnity Agreement. 23. Indemnitors are otherwise in default under the Indemnity Agreement as they have failed and refused to cooperate with National Grange. WHEREFORE, National Grange Mutual Insurance Company prays that your Honorable Court enter Judgment in its favor and against Defendants. COONT TNO NATIONAL GRANGE MUTUAL INSURANCE COMPANy KAUKAB I. BUTT t~d/b~a EVRI~T G~NI~AL STORE ~ EVEREST GENERAL STO~ II. ~ N. BIITT t~d]b~a ~¥~EST GRNRRAL STORE and EVEREST GENERAL STORE II KAUIiAB I. Bu'l-r. DI?.R~AD BUTT. and I(HURRANN. BUTT 24. Paragraphs i through 23 above are incorporated herein by reference as if set forth in full. 25. As a factual and legal result of its execution of the Bond on behalf of Defendants, National Grange has incurred losses and expenses as described above. 26. The Indemnitors have failed to protect National Grange from such losses and expenses despite their obligations as set forth in the Indemnity Agreement. WHEREFORE, Plaintiff, National Grange Mutual Insurance Company, respectfully requests that judgment be entered in its favor and against Defendants, jointly and severally, for compensatory damages in an amount exceeding the Jurisdictional amouJt requiring arbitration referral pursuant to Local Rules of Court and for such other and further relief as this Court deems Just and appropriate. 7 NATIONAL GRANGE MUTUAL INSURANCE COMPANy X. KAUF, AB I. BUTT t/d/b/a ~VEREST GENERAL STORE and EVEREST GF24ERAL STORE II. KHUR~AM N. BUTT t/d~b/a ~v~EST GENERAL STOR~ and EVEN~ST G~NERAL STORE II. KAUKAB I. BUTT. DILSHAD BUTT. and KHURRAM N. BUTT 27. Paragraphs i through 26 above are incorporated herein by reference as if set forth in full. 28. National Grange obtained an assignment of the PA Lottery's claim against Defendants as part of the settlement. 29. Defendants owe the PA Lottery, and now National Grange, $15,326.55 as described in Exhibit "C" attached hereto. WHEREFORE, Plaintiff, National Grange Mutual Insurance Company, respectfully requests that judgment be entered in its favor and against Defendants, jointly and severally, in the amount of $15,326.55, plus attorney's fees, costs, and such further relief as this Court deems just and appropriate. COUNT FOUR NATIONAL GI~ANGE MUTUAL INSURANCE COMPANy KAUKAB 2. BUTT and I(HUI~D~N N. BUTT , 30. Paragraphs I through 29 above are incorporated herein by reference as if set forth in full. 31. Defendants had an Agreement for Sale of Pennsylvania Lottery Tickets with the PA Lottery. A true and correct copy of the Agreement is attached hereto as Exhibit 'E' and incorporated herein by reference. 8 32. Pursuant to Defendants! Agreement with the PA Lottery, they agreed to be personally liable for all proceeds from the sale of tickets. 33. Additionally, Defendants agreed to save and hold the PA Lottery harmless of all losses including all consequential damages and reasonable attorney,s fees. 34. N~tiono1 Grange has paid the claim of the PA Lottery and is now equitably subrogated to the rights of the PA Lottery under the Agreement. 35. Defendants, Kaukah I. Butt and Khurram N. Butt, owe National Grange $15,326.55, plus all related compensatory damages, interest, and attorney,s fees. WHEREFORE, Plaintiff, National Grange Mutual Insurance Company, respectfully reguests that Judgment be entered in its favor and against Defendants, Kaukab I. Butt and. Khurram N. Butt, in the amount of $15,326.55, plus compensatory damages, interest, attorney's fees, costs, and such further relief as this Court deems just and appropriate. DATE: April 26, 2001 LAP~Y L. MILLER Attorney I.D. $28122 9 SPECIFIC INDEMNITY AGREEMENT NOW, THEREFORE, the undersigned, hereinafter called the Indemnitor(s) (it mere be more than one Indemndor they jointly and severally and · for each other do) here~y undertake, represent, warrant and agree as Iollows: 1. That the foregoing statements made and answers given ~n th~s applicaiion are the truth without reservalion, and are made for the purpose of inducing the National Grange Mutual Insurance Company, hereinafter referred to as the Company, to execute or procure the execution of a certain Pond or undertaking herein applied for. 2. That this Agrseme~t Shall apply to the bond or undertaking herein applied for, and any and all extensions, Increases, medlficatlons or renewals thereof, or additions or subshtutions therefore, any and all such instruments separately and coitectively being hersloafer callerl the Bond. 3. Thai the Company Is hereby authorized to confirm the bank balance claimed In the financial statement and to verif~ all other ~tems In said statement. (all suc~ premiums sfia]l be in accord with the applicable schedule br rates publ~she~ by toe Company) as may become due Umll me Company Shall be dischargeq eno reJosseq from any and all liability and responsibility Under the ~ and until the Indemndor(s) shall deliver to the Company competent written evidence nstlsfectory to the Company of such discharge and release. $. 'l~at the Indemnitor(s) shall et all times Inde~flnlfy, save the Company harmless from, and place the Company In funds to meet any claim, demand, loss, liability, cost, cpa~ge, attorneys' fee, expense, suit, order, Judgment, or adjudication arising from the e~dstenca of the Bond. 6. That If the Company shall sat up a reserve to cover any claim, demand, loss, liability, cost charge, attorneys' fee, expense, suit, order, Judgement or adJudicabon arising from the exJstsnce of the Bond the Indemnitor(s) shall, immediately upon demand, deposit With the Company a sum of money equal to such reserve, such sum to be held by the Company as Collateral security for the Bond obhgatlon. 7. That the Company shall have the e~cluslve right fo'determine for Itself and the Indamnltor[s) whether any claim or suit brought against the Company or the Principal, up~m the Indemnlto~{s). as · result of the existence of the Bond, shall be sattted er defe~deq and Its decision shell be binding and conclusive 6- That this Agreement shell bind the heirs, executors, aclminstrators, successors and assigns of the Indemnifor(e). 6- That nothing hereto contalrtno shall be in derogation of any right or remedy which the Company might have Inoepandontly hereof. the purposes of the contract without the necessity of seeing to the appllcatio~ thereof, It helng understood trmt the amount of all such advances or loans, unless repaid with legal interest to the Company when due, shall be conclusively presumno to be a lose bereunoer; In the event of the abandonment, fodattum or breach of the co~troct, or the breac~ of any bend given In connection therewith, or the failure, negiec~ or refusal to pay for labor or materiels used In the prosesutlon of the contract, to take paesassion of the work under the Contract and, at the expense of the Indemnlfor(s) to complete the contract, or cause, or consent, to the completion therof. The ]nbemnitor(s) hereby assigns, transfers, and sets over to the Company (to he effective as of the date of the Bond, but only In the event of a default as afonsSald), all right, title and Interest of the Inbemnlter(e) In and to ell the to~s, plant, equipment and nmterlals of every nature end description that the Indemnitor(s) may have upon the work provided for In the contract cowed by the Bond, or In, on or about the site thereof, Including es Well msterlals purchased for, or chergesbJe to such contract, which may be in process of construction, th storage elsewhere, or in transportation to said site, and the Indemnltor(s) rights In end to ell sub-contracts which may be entered Into and the materials embraced therein appertaining to said centract; and the Indemnltor(s) further agrees in the event of any breach or default on its part in any of the provisions of the contrac~ or the Bond that xhe said Company shall be subrogated to all the rights and properties of the Indemnltor(s) In such contract, includleg deferred and reserved payments, current and earned estimates end final Payments, and any and all moneys and securities that may be due and payable at the time of such delauit on this or any other cootrsct of the Jndemnltor(s) or any one or more of them on which the Company Is or may become Surety, er on account of extra work or materials supplied in connection therewith, er that may thereafter become due and payable on aCCOunt of said Contract er any ether Contract of the Inoemntter(s) or any o~e or more of them on which the Company Is or may become Surety. And the Indemniter(s) heredy authorize the Company to en0orse in. the name of the payes, and to Collect any check moneys due on such contracts and to disburse the pro~_~ed__s therefor. ,drstt, warrant or other Instrument made or Issued in payment of any 11. That the WOrd Iheemnltor(s) as used t.t.~ein, or parsgmal pronouns used to refer to said work, shall apply regardless of number or gender, enO to Individuals, partnerships or corporations, as the circumstances requlrs. ANY PERSON WHO KNOWINGLY AND WITH INTENT TO DEFRAUD ANY INSURANCE COMPANY OR OTHER PERSON FILES AN APPLICA'IION FOR INSURANCE OR STATEMENT OF CLAIM CONCEALS FOR THE PU CONTAINING ANY MATERIALLY FALSE INF F"AUD -"O--sE*-°-"-- MISLEADI.G I""ORMA=ON CONCER. .G UL ........... a A~T ~ CH IS A CRIME CT AND SUBJECTS SUCH PERSON TO CRIMINAL AND C VIL PENAL'lIES. Signed, Sesieq and DATED this 2&' Ch Hatch · dayof ,lg 99 Eye,est ~euera! .ql:o~e ~[~ (INDEMNt~ (Seal) Kaukab !. Type Name & Title: Bulzl:, SIGNED;~~ ; (INDEMNITO IN DU~,.I.~) Type Individual Inoemnitor Name: . ~8,U[CB, D ]'. ~tjf-t1 Indlv;duallndem~ltorAddrsss: 231 Nea[$ D~'J.~e, (~Gt'].~.S[e, Pa. ]7OI3 Wi]Ncaa ttlGNED'~ Ty~e InOivldual Indemnitor Name: InOlviduellndemnltorA4XIress; ~'~1 ll~4dan~G: TJT'~VL=~ (~l~J.G;'le P~,. 17013 INDEMNITY AGREEMENT MUttT BE SIGNED, DATED AHD WITNESSED .. · ,aa..,a. Grange Mutual Insurance_ Company ~ NO. S 412 - 628 ~N~ ALL ~ BY TMF. SB PRE~£hTS, That we Kaukab I Butt, T/a Everest General Store II of 603 Franklin Street, Carlisle, pa. 170]3 a.~ F~inci~al. {hereinafter calle~ Principal), and ~ATIC~AL GRA~C~ P.o'i~.L ~N~ ~AN~ a corpo~ti~ or~ni~ u~- fha la~ of ~he S~te of H~ ~sb~re and author~ to do ~iness in ~e CGv~Ealth of ~sylva~a, wi~h its ~ ~fice tn the City of Ke~ne, (h~elnafter called S~ty), are held a~ fi~ly ~d ~to: ~m~n~al~ 0f Penn~l~ma De~ent of Rff;enue 28~ Turnpike Indu~al Middle[0w~. Pennsf~n~a 17057 a~ ~llg~, in the full and Just s~m of Ten-Thousand Dollars Even .......... DolOrs, lawful lotte~ tic, et= to w~ch tke Pr~ci~i has fai!~ ~o ~ke tLmely pa~/s tc the Obligee; for [rators, succ~sors ~ ass!~s, jc~tly and several?f, fi~ly ~.the~ presets. ~R~S the Pr~ci~l has en%~, or ia a~t to enter~ ~to a written Agree~nt w~th the ~llg~ ~o ~ fin~cially res~sib!e to the ~tt~. for all' r~nues d~l~d f~ t~ sale ~ t~ly ~rfo~ ~ ~r~ o~ the cc~ts, te~, a~ co~ltlo~ of said Agr~k, thicty (3C) da~ ~ advance of ~he date of ca~ellatl~. ~al~ ~th ~ s~ls ~d dat~ ~ls 24th day of March .: 19 99 . Wi~ne~s: By: At~es~ ~o: Kaukab I. Butt George R. ~unemake~ Commonwealih of Pennsylvania Department o1' Revenue PENNSYLVANIA LO'I-I'ERY 2850 Turnpike Industrial Drive ~ Middletown, PA 17057-5491 P~oce~ds Beflehl Older PertlSyK. an~s NafionM G!'ange ] nsuralice k-Olllpaj~./ A~: Clams 5010 C~puswood Drive P.O. Box 4742 S~acuse, NY 13221~742 Re: National ~ge Mum~ l~cc Comply Lo~c~ Bond~ S 412 - 628 Retried 390526 ~b I Bu~ DBA Eye,st General Sto~ II We a~ he,by fili~ a claim in ~e ~o~t of $15,326.55 agai~t the above ~nced ~nd w~ch lis~ ~b I. Bu~ DBA Everest General Store II ~ ~e p~ci~! ~d the Pe~ylv~ia Lo~ ~ ~e obligee. On M~h 20, 2000 c~cellafion ~m ~e N~ G~es Network rook pla~ due to delinquency. ~:e following is a bre~do~ of~c amours due: See a~ched ~dger S~t. To~l I~t ~ Due: 12,155.75 To~ On-li~ G~es Due: 3,170.80 To~ D~: $15,326.55 Claim Amount: S 10,~0.00 , I have enclosed ~e follo~ng: ~mputer ~o~ li~ on-l~ ~emen~, com~ter ~po~s ' ' · con~. hstmg m~ items, ~d a copy of ~e ~ler license appli~fion ~d If you ~ve ~y q~sfions concem~g ~s ~, plebe ~n~t T~y F~ck at (717) 986~7~. Budget Division Chief LBB/TLF/ff [~s~ll/01F00 H 0 (l.qlli5 Enclosure PHONE 717-986-4699 FAX 717-986-4767 National range. utual ss West Street Insurance P.O. Box 2300 Company Keene, NH 03431-7000 .~ (603) 352-4000 Tuesday, November 07, 2000 Kankab & Dilshed Butt 231 Meals Drive Carlisle, PA 17013 RE: Principal: Kaukab But~ d/b/a Everest General Store Bond #: S-412628 Obligee: Commonwealth of PA Retailer No.: 390526 Dear Sir: _?e.ese find en, clos. ed copies ofcon'espondeace from the PA Lotte~ noti in cmtm on our oono fY g National Grange Mutual ora provided on your behalf. Please review the attached documentation and advise as to what action you intend to take to resolve this ouLqtanding matter. IfI do not receive written conflrmatinn that this matter has be~n rezolved by December 7, 2000, N~tioeal Otanga Mutual will proc~d to issue I~ymem of our full bond ~ount. In that ~veat we ~flndl look to you for full mimbur~mcot of any mnount~ paid. If you have any questions concerning .any of the above please corre~ond directly with the undersigned. Sincerely, Anthony Montecalvo Bond Claims Manager Enclosure: Cc: Pennsylvania Department of Revenue Atm. Larry Beard, Bud~t Division Chief . Pennsylvania Lottery · 2850 Turnpike Industrial Drive Middletown, PA 17057-5491 National Grange. Mutual ss w~st Street Insurance e.o. Box 2300 Keener NH 03431-'/000 CO m pa n y ¢60z) 3s2-4ooo Tuesday, November 07, 2000 Everest General Store Attn. IOtuknb Butt 603 Franklin Street Cnrlisle, PA 17013 RE: Principal: Kaukab Butt d/b/a Everest General Store Bond #: S-412628 Obligee: Commonwealth of PA Retailm- No.: 390526 Dcas Sir: Please f'md enclosed copies o~corraspondence from the PA Lot~ry notifying National Orange Mutual ora claim on our bond provided on your behalf. Please review the at~acbed documentation and advise as to whnt action you intend to take to re~olve this outstanding matter. Ill do not receive writ~n conf'~mation that this matter has been resolved by December 7, 2000, Natiunnl Grange Mutunl will proceed to issue payment of our full bond nmount. . for full reimbursement of any amounts paid. In that event we shall look to you If you havn any questions concerning any of the above please correspond directly with the undersigned. Sincerely, Anthony Montecalvo Bond Claims Manager Enclosure: ~c: Pcnns),lvania Department or'Revenue Atm. Larry Beard, Budget Division Chief Pennsylvania Lottery . . 2850 Turnpike Industrial Drive Middletown, PA 17057-5491 AGREEMENT FOR SALES OF PENNSYLVANIA LOTTERY TICKETS .................. ' ............... at License Lo~tion Co,orate Name. This Agreement is by and between the Commonwealth of Pennsylvania, Department of Revenue, Pennsylvania Lottery, hereinafter referred to as "Department" and -' hereinafter referred to as "Retailer". -- The Department of Revenue has as one of its responsibilities, in accordance with 72 P.S. §3761-1 et seo. and 61 PA Code §801.1 et seq., the authority to select retailers for the sale of'~ennsylvania Lottery tickets. Under the law and regulations, the Department is empowered to enter into contracts with persons to sell Pennsylvania Lottery tickets and to pay such persons a commission as set forth in the Lottery law and regulations. NOW, THEREFORE, in consid~retion of the foregoing recitals and of the mutual prom- ises hereinafter set forth, and intending to be legally bound, the par0es hereto agree as follows: A. Definitions As used in this Agreement, the term: 1. "Agreement' shall mean this Agreement for the sale of Pennsylvania Lottery tickets. The term shall apply to all contractual and license rights, duties and obligations of the parties. 2. "Effective Date" shall mean the date affixed to this Agreement by the Executive Director as set forth on page 10 herein. 3. "Secreta~' shall mean the Secretary of Revenue. 1 4. "Executive Director" shall mean the Executive Director of the Penn- sylvania Lottery. 5. "Retailer" shall mean such person or persons authorized by this Agreement to sell Pennsylvania Lottery tickets. The term shall include .... .~,~ ..... ~u u,, f.% 'Appl;sati~n fc~ Licen-~e tv Sell Lottery Tickets" ("Application") which application is incorporated by reference as a part of this Agreement. 6. "Lottery Games" shall mean all those games, including instant and numbers games, authorized for sale by Retailer on behalf of the Lottery. 7. "Lottery" shall mean the Pennsylvania Lottery of the Pennsylvania Department of Revenue. 8. "Lottery Law" shall mean Act of March of 1971 (P.L. 6, No. 2), 72 P.S. §3761-1 et see. 9. "Lottery Regulations" shall mean 61 PA Code §801.1 et se(3. 10. 'q'erm" of this Agreement shall include the period hereinafter provided for and any renewals thereto. 11. "Substantial Change of Ownership" shall mean a transfer of 50,% or more of the equity of the Retailer's business. B. Retailer's Obliqation,~ 1. Sales Retailer agrees to sell such Pennsylvania Lottery ~ckets as may be authorized by the Deparlment. , Retailer agrees that pdrauant to 81 PA Code §809.35, Lottery tickets shall not be sold to any person under eighteen (18) years of age. 2. Controlling Provisions Retailer agrees to abide by all provisions of the Lottery law, and any rules and regulations, procedures or instru~ons issued by the De- partment, the Secretary of Revenue, the Lottery, or the Executive Direc- tor, as are now in effect or which hereinafter may be promulgated or published. Such Lottery law, rules and regulations, procedures and in- sfl'uctions are incorporated herein by reference as a part of this Agree=. ment. 2 3. Warranty of Financial Responsibility Retailer warrants that it is financially responsible and will provide evi- dence in support of such fact upon demand by the Department. Such evidence mey include, but is not limited to. ad~cl~s of incorpo,"ation, by- laws, pa~'tr~ersil~p agreements, ce~fJed financial statements, bank refer- ences, credit references and business references. 4. Records Retailer agrees to maintain current and accurate records, in confor- mance with generally accepted accounting principles, of all transactions dealing with ticket sales. Retailer further agrees to retain all accounling records pertaining to ticket sales, including but not limited to bank state. ments and canceled checks, for a pedod of not less than three (3) years. All records required to be maintained by Retailer shall be available to representatives of the Department, upon request, for inspection and audit dudng regular business hours. 5. Fiduciary Responsibility Retailer agrees that with respect to the proceeds from the sale of tickets, it acts in a fiduciary capacity with respect to such funds until such funds - are paid into the Lottery Fund as required. Retailer shall be personally liable for all proceeds from the sale of tickets. 6. Independent Contractor Status Retailer agrees that, except with respect to the proceeds from the sale of tickets, it shall render its service under this Agreement as an independ- ent contractor and, as such, shall further agree that any conlmctual or tortious liability it may incur in connection therewith shall be its sole sponsibility. 7. Non-Discrimination Provision Retailer agrees that during its performance under this Agreement, the Retailer will comply with the non-discrimination provisions attached hereto and made a part hereof as Appendix A. 8. Promotional Material and Training Retailer agrees to preminenfly post current point-of-sale and other pr~, mofional matedal supplied by the Department. Retailer agrees to attend such training sessions as the Department shall provide to ensure that the Retailer and its employees are propedy trained in the sale of Lottery tickets. 3 9. Minimum Sales Requirements Retailer agrees to be bound by the minimum sales requirements con- tained in the provisions of Appendix B for Instant Games Only Retailers, Appendix C '-- ' ' ...... I~ ~l. Jl'~,ut=,~ ~.3ar.'~S Rei, E,d(~l'$, a~'l~ Appendix D for Instant Ticket Vending Machine Retailers. 10. Instant Terminal Requirements · If the Retailer is authorized to sell Lottery tickets for Instant Games only, ' the Retailer agrees to the provisions of Appendix B, incorporated by ref- erance hereto. 11. Instant Ticket Vending Machine (ITVM) Requirements If the Retailer is authorized to sell Lottery tickets through an I'I'VM, the Retailer agrees to the provisions of Appendix D, incorporated by refer- ence hereto. 12. Numbers Games Requirements If the Retailer is authorized by the Department to sell Lottery tickets for - Numbers Games, in addition to Instant Games, the Retailer agrees to the provisions of Appendix C, incorporated by reference hereto. 13. Claim Services If the Retailer is authorized by the Department to provide claim services, it agrees to be bound by the provisions of Appendix B, for Instant Games Only Retailers and Appendix C for Numbers Games Retailers, incorpo- rated by reference hereto. 14. Notice of Business C. hanges Retailer agrees to give the Department a minimum of ten (10) days ad- ,, vance notice of Retailer's intent to: a. sell its business, b. cease operations of business either temporarily (including vacations) or permanently, c. move to a new location, or d. of any substanti.al change in ownership. Retailer shall notify the Department within ten (10) days of: '. -- a. any change in business hours, b. any change in financial condition, 4 c. any change in type of pdmary business, or d. any event which alters any information disclosed in the UApplication". 15 ~.o. ree~.,~..,t Non-Assignable This Agreement for the sale of Lottery tickets is non-assignable. Any such unauthorized assignment shall constitute a breech of this Agree- ment. 16. Sole Business Retailer warrents that, pursuant to 61 PA Code §805.2(a), it is not in the exclusive business of selling Lottery tickets. 17. Sale of Pennsylvania Lottery Tickets The Retailer agrees that it shall sell Pennsylvania Lottery tickets only. The Retailer understands the sale of any other Lottery tickets shall con- stitute a breach of this Agreement and this contra~t shall be revoked im- mediately in the event that the Retailer violates this provision. .. _C. Department's Obliqafion~ 1. Commission The Department agrees to pay Retailer a commission for all valid sales, plus or minus any adjustments and less a weekly line service charge, if applicable. The rate of commission shall be as designated in the regula- tions for each Lottery game. 2. Equipment The Department agrees to provide such equipment and supplies as · listed in Appendix B for Instant Retailers, Appendix C for Numbers · Games Retailers, and Appendix D for instant Ticket Vending Machine Retailers, incorporated by reference hereto. 3. Materials, Supplies, Advertising The Department agrees to provide necessary Lottery related materials to Retailer including point-of-sale material, manuals, procedures and in- structions. 5 The Department agrees to use its best efforts to provide Retailer with current tickets, as available, and any other necessary equipment, as more fully enumerated in Appendix B for instant Retailers, Appendix C .-, ~',,..,,,b~,:> ~,T,e.5 ~tailers, a~,d Appendix D for ir~st.~nt Ticket Vend- ing Machine Retailers. The Department agrees to promote and advertise all Lottery games. 4. Additional Retailers The Department reserves the right to approve and establish new Retail- ers with or without Numbers Games capabilities in any part of the Com- monwealth, as it deems appropriate. 5. Termination of Agreement This Agreement may be terminated by the Department for any of the following: a. Failure to comply with any of the terms of this Agreement, the Loffery law, its rules and regulations or instructions, including - but not limited to 61 PA Code §805.17, issued by the Execu- tive Director of the Pennsylvania Lottery or the Secretary of Revenue may result in immediate suspension or termination of this Agreement, in whole or in part, at the sole discretion of the Department. Upon such suspension or termination, the Re- tailer's authority to sell Loffery tickets of all types shall imme- diately cease. b. Failure to make full set'dement on the required settlement date or failure to have float cash monies available or failure to meet the average minimum sales volume requirement shall also constitute a brea~ of this Agreement and may result in im- mediate suspension or termination of the Agreement in whole · · or in part at the sole discretion of the DepartmenL c. Any misrepresentation or omission in Retailer's application to sell Loffery tickets or any renewal application will result in im- mediate suspension of this Agreement, in whole or in part, and may result in termination of the Agreement, in whole or in part, at the sole discre..tion of the Department. d. This Agreement may be terminated, in whole or in part, by '. either party for the convenience of either party and for reasons other than those detailed in sub-paragraphs a, b and c, upon fourteen (14) days written notice by the terminating party. 6 .D. Disputes_ . ...,. .. ~i'7'~p~ b~,,.~.~. ,~.! ..,,?-~i..-. f '.'.';fh ~'~'.'-~',"~* PO fl-~- terms, breach thereof, or performance required of the Retail'er or the De- partment under this Agreement, or with regard to the suspension or pre- posed termination of this Agreement, the Retailer shall be given an op- portunity to be heard through the presentation of written representations of its position to the Department within seven (7) days. At the time of making its wdtten representation to the Department, the Retailer shall present such facts, evidence, statements and other relevant information as it shall desire for the consideration of the Department in reaching its final determination. Such notice to the Department shall not affect the Department's authority to suspend Retailer's authority to sell Lottery tickets pending final determination. The Secretary of Revenue or the Secretary's designee shall make a final determination in writing with re- gard to the dispute and shall send same to the Retailer within thirty (30) days of receipt of Retailer's written presentation. The Retailer's sole options with respect to any such decision shall be either. 1. accept said decision as a correct and binding interpretation of the Agreement, or 2. to make such claim as it may deem appropriate to the Com- monwealth's Board of Claims pursuant to the Act of May 20, 1937, P.L. 728, No. 193, as amended (72 P.S. ,~4651-1 et seq.) -- Retailer agrees that Lottery funds shall not be withheld by Retailer pending resolution of any dispute. · _.E.. Term This Agreement shall automatically terminate on March 15 of the year following the effective date on page 10 unless otherwise renewed, ex- tended or terminated; provided, however, that this Agreement shall automatically renew upon receipt and approval by the Department of Retailer's "Application for Renewal" and payment of the required fee. This Agreement will terminate upon the expiration of Retailer's temporary license, if the Department denies Retailer a permanent license for any reason, or if terminated pursuant to paragraph C5 of this Agreement. Retailer agrees not to conduct any business or hold itself out as a seller of tickets unless or until this Agreement is renewed. 7 Renewal of this Agreement for additional terms shall be at the sole dis- cretion of the Secretary of Revenue. The Secretary may, pursuant to 61 - - .... , ,.... ~-, a~t-'-r the te;m of the Agr~.*.-me~;t by issuing temporary extensions pending administrative determination. F~Statute and Reclulation,~ Retailer acknowledges the receipt of the applicable statute and regula- tions governing the sale of Lottery tickets. Retailer will be deemed to have actual notice of futura regulations upon publication in the Pennsyl- vania Bulletin. Such future rules and regulations shall be incorporated by reference into this Agreement upon publication. All owners, partners, and corporate officers of Retailer must sign this Agreement and must acknowledge that they fully understand and con- sent to the terms of this Agreement. - This Agreement does not become effective until fully executed. .H.. Indemnification/Hold Harmless The Retailer shall save and hold harmless the Commonwealth and its officers, agents and employees or any of them from any and all claims, demands, actions or liability (including, but not limited to, consequential damages and reasonable attorney's fees) of any nature based upon or adsing out of: 1. Any services peh'ormed by the Retailer, its agents or employ- ees, except such services as are propedy performed at the ex- , press direction of the Department. 2. The use by the Retailer of any copyrighted or uncopyrighted composition, security, deed, process, patented invention, ar'6. cie or appliance furnished or used in the Performance of any services under the contract. 3. The negligent, or equally or more culpable, conduct by the Retailer, its ager~ts, subcontractors and employees dudng the , term of or in connection with the performance of the confl'act. · 8 I. Waiver The failure of the Department to insist upon strict adherence to any term of this Agreement shall not be considered a waiver or deprive the De- partment of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. · This Agreement shall be governed by and construed according to the laws of the Commonwealth of Pennsylvania. This Agreement constitutes .~ .censeo rignts, au'des and obligations of the parties. The Agreement shall not be amended or modified unless such amendment or modification is in writing and signed by both pa~es. If a court of competent jurisdiction determines that any portion of this Agreement is invalid, that part shall be severed and the remaining por- tions shall control. (THIS PORTION OF PAGE INTENTIONALLY LEFT BLANK) 9 iN WITNESS WHEREOF, the parties hereto have caused this Agreement to be exe- cuted, intending to b~ I~;~':>, bcund he~'eby. Owner/Interested Party Owner/Interested Party Owner/Interested Party TITLE BY TITLE Owner/Interested Party BY - Owner/Interested Party TITLE BY TITLE Owner/Interested Party BY Owner/interested Party TITLE BY Owner/interested Party TITLE BY Owner/Interested Part~. TITLE BY · Owner/Interested Party TITLE APPROVED BY Executive Director: Pennsylvania Lotte~ Department of Revenue Commonweall~ of Pennsylvania EFFECTIVE DATE 10 APPENDIX A NON-DISCRIMINATION CLAUSF Durin§ the term, of thi~ contract, Retailer aarees as t%,~ows 1. Retailer shall not discriminate against any employee, applicant for employ- ment, independent contractor or any other person because of race, color, relig- ious creed, ancestry, national origin, sex, age, disability, sexual orientation or union membership. · Retailer shall take affirmative action to ensure that applicants ara employed, ' and that employees or agents are treated during employment without regard to race, color, religious creed, ancestry, national origin, sex, age, disability, sex- ual orientation or union membership. Such affirmative action shall include, but is not limited to, the following: employment, upgrading, demotion, transfer, m- cruitrnent or recruitment advertising, layoff or tehnination, rates of pay or other forms of compensation, and, selection for training. Retailer shall post in conspicuous places, available to employees, agent, applicants for employment and other persons, a notice to be provided by the contracting agency setting forth the provisions of this Non-discrimination Clause. 2. Retailer shall, in advertisements or requests for employment placed by it or on its behalf, state that all qualified applicants will receive consideration for em- p!oyment without regard to race, color, religious creed, ancestry, national g~n, sex, age, disability, sexual orientation or union membership. 3. hRaesta_il~.~leh~.lvSee~ad_e_:inc~i labor union orworker's representative wfth which it rg rang agreement or other contract or understanding, a notice advising said labor union or worker's representative of its commitment to this Non-discrimination Clause. Similar notice shall be sent to every other source of recruilment regularly utilized by Retailer. 4. ,It shall be no defense to a finding of noncompliance with the contract com- pliance regulations issued by the Pennsylvania Human Relations Commission or this Non-discrimination Clause that Retailer had delegated some of its em- ployment practices to any union, training Program or other source of recruit- ment that prevents it from meeting its obligations. However, if the evidence indicates that the Retailer was not on notice of the third party discrimination or made a good faith effort to correct it, such factor shall be considered in mitiga- tion in determining appropriate sanctions. 11 5. Where the practice of a union or of any training program or other source of re- cruitment will result in the exclusion of minority group persons, so that Retailer will be unable to meet its obligations under the contract compliance regulations ~5~cu~d by [~',~ ~'e,-,,',~j ;v.~ni~ ~";~m~n Reia~ic~';s C(~missicn, or this Non- discrimination Clause, Retailer shall then employ and fill vacancies through other non-discriminatory employment procedures. 6. Retailer shall comply with the contract compliance regulations of the Penn- sylvania Human Relations Commission, 16 PA Code Chapter 49 and with all laws prohibiting discrimination in hidng or employment opportunities. In the event of Retailer's noncompliance with the Non-discrimination Clause of this contract or with any such laws, this contract may, after hearing and adjudica- tion, be terminated or suspended, in whole or in part, and Retailer may be de- clared temporarily ineligible for further Commonwealth contracts, and such other sanctions may be imposed and remedies invoked as provided by the contract compliance regulations. 7. Retailer shall furnish all necessary employment documents and records, and permit access to its books, records, and accounts by the contracting agency and the Human Relations Commission, for purposes of the contract compli- ance regulations, pursuant to {49.35 of these regulations. If Retailer dcea not possess documents, or records, reflecting the necessary information re- ' quested, it shall furnish such information on reporting forms supplied by the contracting agency of the Commission. 8. Retailer shall actively recruit minority subcontractors or subcontractors with substantial minority representation among their employees. 9. Retailer shall include the provisions of this Non-discrimination Clause in every subcont]-act so that such provision will be binding upon each subcontractor. 10. The terms used in this NoD-discrimination Clause shall be the same as in the ~:ontract compliance regulations issued by the Pennsylvania Human Relations Commission, 16 PA Code Ch. 49. 11. ·Retailer obligations under this clause are limited to the Retailer's facilities within Pennsylvania, or, where the contract is for purchase of goods manufac- tured outside of Pennsylvania, the facJIJties at which such goods are actually produced. 12 APPENDIX B INSTANT GAMES REQUIREMENT,~ 1. Retai~er Che~..ng Ac,.~o,~ Reta~ier agrees to maintain a checking account that is accessible to the Lottery for the drafting of funds owed to the Lottery from the sales of Instant Games Lottery tickets. The Retailer may establish a separate Lottery account or use a current business account. Any charges associated with the Retailer checking account are wholly the responsibility of the Retailer. There can be no limitations on the number · or amount of deposits, withdrawals or checks that can be made. Retailer agrees to ~ make prompt settlement at its assigned bank or at such other locations as may be directed by the Department and to pay all those amounts due and owing according to procedures established by the Department and incorporated by reference hereto. "FAILURE TO COMPLY WITH ANY OF THE PROVISIONS OF THIS PARAGRAPH WILL RESULT IN IMMEDIATE SUSPENSION OF THE RETAILER'S AUTHORITY TO SELL TICKETS AND MAY BE CONSTRUED AS A BREACH OF THIS AGREEMENT WARRANTING TERMINATION." 2. Minimum Sales Requirements This Agreement may be terminated in whole or in part if the Retailer falls to meet .. the average minimum sales volume of Instant Games tickets. The minimum sales volume requirement for Instant Games Retailers shall be 30% of the average weekly Instant Games ticket sales for all Instant Games Retailers in the Retailer's sales area for the previous quarter or for the current quarter, whichever is less. If the Retailer does not meet the applicable Instant Games minimum sales require- ment during any quarter, the following procedure will be undertaken: a. As soon as possible after the end of a quarter in which the Retailer does not meet the minimum sales requirement, the Retailer will be noti- fied in writing by the Lottery that the sales did not meet the minimum sales requirement.' .The Retailer shall be given one additional quarter to meet or exceed the minimum sales requirement. The Lottery will ex- ert its best efforts to provide marketing support and assistance to Re- tailera identified, as they attempt during the next quarter to meet or ex- ceed the minimum sales requirement. If the Retailer does not meet the minimum sales requirement for two (2) consecutive quarters, the Re- tailer's contract and license for the sale of instant tickets may be re- voked pursuant to their terms. 3. Claim Services The Retailer agrees to provide all authorized and required claim services including but not limited to the following: 13 a. Payment of all valid Instant Games winning ticket claims providing that proper prize validation steps have been taken, without regard to where the ticket was purchased, with payoffs to be made in cash, check, or money order drawn on the proceeds from ticket sales. b. Completing claim forms for instant Games winning tickets in excess of "-"'~, ....... ~,.,~ ProF'~; s~,ep~ io ~.=c;;rc, -'- ' transmit said ciairz~ forms to Lotted. c. Acting in the capacity of a claim center if appointed by the Department to perform such service. 4. Terminal Requirements a. The Retailer agrees to provide a grounded three (3) prong electrical outlet for use with grounded plugs. It is to be located within seven and one-half unobstructed feet (7~') from the Instant Terminal and have a clearance of three inches (3") below the AC outlet. b. The Retailer agrees to provide a space (approved by the Depart- ment) of at least six and one-half inches (6~") wide, thirteen inches (13'3 deep and eleven inches (11'3 in height for the Instant Terminal to allow for proper ventilation, maintenance, and matedal loading and re- moval. c. The Retailer shall meet such training standards as shall be established by the Department. d. The Retailer agrees to purchase and install a R J11 telephone jack within fourteen unobstructed feet (14') of the Instant Terminal. The In- stant Terminal will be connected to a standard single business tele- phone line. The telephone line does not need to be for the exclusive use of the Instant Terminal and may be used by the Retailer for other purposes when not in use by the Instant Terminal. e. All equipment and ~upplies provided to the Retailer by the Department or its vendors shall remain the property of the Department or its ven- · , dors, and shall be used for their intended purpose and not for any other purpose. The Retailer shall acquire no interest whatsoever in the equipment. f. All expenses, whether fixed or recurring associated with the items re- quired to be furnished by the Retailer, shall be the sole responsibility of the Retailer. g. To have the computer terminal available for the sale of Lotta~j tickets during all hours and days that the Reteileds business is open and sales -- authodzed. 14 h. To exemise diligence in the operation of the terminal, to provide physi- cal securit7 for the terminal, replace paper stock and to immediately notify the vendor of any phone line or terminal malfunction. i. To refrain from performing any mechanical or electrical repairs to the terminal. j. To be responsible for custodial care of the terminal. The Depa~b,ent reserves the right to terminate this Agreement in the event of repeated malicious abuse, and/or negligent care of the terminal. Abuse is de- fined as, but not limited to, acc/dents such as liquid spills, breakage or other Retailer caused problems resulting in the need for the terminal to ~ be replaced. k. Retailer is responsible for loss or damage of the equipment in excess of normal wear and tear. Retailer must report any "out of order" condi- tion of the equipment to the vendor in accordance with currant Lottery procedure. 15 APPENDIX C NUMBER GAMES REQUIREMENTR 1. I:';itial Secud~'y Retailer agrees to provide a Surety Bond, Irrevocable Letter of Credit or other surety satisfactory to the Department in the amount requested by the Department and for the term requested by the Department as a conc~itlon of this agreement or any renewal hereof. 2. Additional Security Retailer agrees to pay for and maintain a Surety Bond or Irrevocable Letter of Credit in an amount not to exceed one and one-half (1~) times the Retailer's ever- age weekly Lottery seles, for cause, upon notification by the Lottery. Failure to comply with the provisions for maintaining the Lottery account as outlined in Pare- graph 3, Appendix C, of this Agreement or the Lottery's receipt of adverse financial infdrmatlon may result in permanent surety requirement. 3. Lottery Retailer Checking Account Retailer agrees to open and pay the cost of maintaining a separate Lottery Retailer .. checking account at the Retailer's assigned bank. All receipts from the sale of tickets and instant settlements, minus Retailer's commission and money kept on Retailer's premises to pay winning tickets, must be deposited in this account. Funds in the account must be accessible at all times. There can be no limitations on the number or amount of deposits, checks, or withdrawals lhat can be made. Retailer also agrees to make prompt settlement at its assigned bank or at such other locations as may be directed by the Department end to pay ell those amounts due and owing according to procedures established by the Department and incor- poreted by reference hereto. FAILURE TO COMPLY WITH ANY OF THE PROVISIONS OF THIS PARAGRAPH WILL RESULT IN IMMEDIATE SUSPENSION OF THE R~:r'AILER'S AUTHORITY TO SELL TICKETS AND MAY BE CONSTRUED AS A BREACH OF THIS AGREEMENT WARRANTING ,TERMINATION. 4. Retailer Checking Account Deposits Deposits must be made a minimum of every other business day. A Retailer may keep no more than 20% of the amount of the average weekly sales at the retail Io- cation for payment of winning tickets unless given specific authorization by the Lottery. 17' 5. Minimum Sales Requirement Numbers Games This A~reeme,~t may be te,,'mina'.ed in whole or in part if Retailer fails to meet the average minimum sales volume requirement of $ per week of Number Games tickets. This average minimum sales volu~e requirement is a ton (10) week floating sales average ' and is established after data collection review and analysis of factors that may include, but are not limited to the following: ~ a. Demographic and socio-economic marketing information b. Customer pattoms c. Products and/or services provided d. Product volume e. Proximity to work, residential and commuter sites f. Hours of operation " g. Convenience to the public h. Financial stability i. Willingness to promote and advertise Lottery ticket sales J. Proximity to other Numbers Games retailers in the marketing area If the Retailer fails to meet the above average minimum sales requirement, the fol- . lowing procedures will be implemented: a. New Retailers (Nur~bers Games sales less than six [6] months) · · On week 13, if 10 week sales average is not 50% of average · minimum sales requirement, Retailer will receive written noti- ficat/on. · On week 20, if 10 week sales average is not 75% of average minimum sales requirement, Retailer will receive written no~. ficauon. · On week 26, if 10 week sales average is not 100% of averag~ ' minimum sales requirement, Retailer will receive written nolffi- " cation. 18 · On week 30, if sales still have not reached 100% of average minimum sales requirement, a full examination and evaluation will be made to determine disposition of the terminal. b. Estab~ish¢.d Retailer (Numbers Games sa~: mo:',: than six [6i months) · If 10 week sales average falls below average minimum sales requirement, Retailer will receive wdtten notification. ·If sales do not improve within thirty (30) days of first letter, Re- taller will receive written notification. · If sales do not improve within thirty (30) days of second letter, a full examination and evaluation will be made to determine dis- position of the terminal. Instant Games This Agreement may be terminated in whole or in part if the Retailer fails to meet the average minimum sales volume requirement of Instant Games tickets which shall be 30% of the average weekly Instant Games ticket sales for Numbers Games Retailers in the Retailer's sales area, excluding the 10% of the Numbers Games Retailers in the sales area having the highest average weekly Instant Games ticket sales, for the previous quarter or for the current quarter, whichever is less. If the Retailer falls to meet the above average minimum sales requirement, the fol- lowing procedures will be implemented: a. As soon as possible after the end of the quarter in which the Retailer does not meet the Instant Games ticket minimum sales requirement as specified by the contract, the Retailer will be notified in writing by the Lottery that the sales did not meet the minimum sales requirement The retailer shall b~given one additional quarter to meet or'exceed the minimum sales requirement. · b. If a Numbers Games Retailer does not meet the minimum sales re- quirement for Instant Ticket sales for two (2) consecutive quarters, but its Number Games ticket sales meet or exceed the average Numbers Games ticket sales of its sales area, the effort to sell Instant Games tickets put forth by the Retailer may be reviewed by the Lottery. The Lottery will exert its best efforts to provide marketing support and assis- tance to the Retailer identified, as it attempts during the next quarter to meet or exceed the minimum sales requirement. If the Retailer dem,- onstratas to the Lottery that it is making a good faith effort to sell In-' stant Games tickets, the Lottery may consider a waiver of the Instant Games ticket sales requirement for the quarter under consideration. If the Retailer is unable to demonstrate that it is making a good faith ef- fort to sell Instant Games tickets, the Retailer will be notffied in writing 19 by the Lottery that its contract and license have been terminated or re- voked pursuant to their terms. Good faith effort shall include, but not be limited to, the following cdteda: · The Retailer has Instant Games tickets prominentJy displayed in its Retailer location. · The Retailer has displayed the corresponding Instant Game ticket point-of-sale matadals in its Retailer location. c. If the Retailer does not meet the minimum sales requirement for Num- . hers Games ticket sales for two (2) consecutive quarters, but meets the ~ minimum sales requirement for' Instant Games Retailers within its sales area for the same two (2) consecutive quarters, the Retailer's On-line contract may be terminated, and the terminal removed, pursuant to the terms of the contract. If the Retailer does not meet the minimum sales requirement for Numbers Games Retailers and Instant Games Retail- ers for two (2) consecutive quarters, the Retailer's contract and license for Instant and On-line tickets shall be terminated or revoked pursuant to their terms. The Instant Games Retailer minimum sales requirement for Instant Games tickets shall apply during the calendar quarter in which Number Games sales commence _ unless it is the same quarter in which Instant Games tickets are first delivered. 6. Claim Services The Retailer agrees to provide all authorized and required claim services including but not limited to the following: a. All instant game requirements agreed to in Appendix B, Section 3, Claim Services. b. Ascertaining and posting winning numbers as soon as possible fol- lowing the drawing of the winning numbers. · c. Payment of all valid winning ticket claims providing that proper prize · validation steps have been taken without regard to where the ticket was purchased, with payoffs to be made in cash, check, or money order drawn on the proceeds from ticket sales. d. Issuing claim tickets for winning tickets in excess of $600.00. e. Acting in the capacity of a claim center if appointed by the Department to perform such service. 20 7. Terminal Requirements The Retailer agrees to the following provisions with regard to the terminal to be in- stalled upon the Retailer's premises: a. To pay for telecommunications d.=.~a lin.: :'~stallation costs in an amo~:nt to be determined by the Depsnment. In addition, to r. ay for telecom- munications weekly line charge in an amount to be determined by the Department. In all cases of interruptions of service whether it be vaca- ti?ns, remodeling/construction, NSF/delinquency conditions, suspen- sions, etc., On-line Lottery Retailers will be liable for the weekly line charge and will be required to have sufficient funds in their Lottery ac- ~ ' counts so that the line charge amount can be drafted on a weekly ba- sis. b. To provide, prior to installation of the terminal, an electrical 4-way grounded outlet on a separate and dedicated circuit that remains on 24 hours a day. c. The Department will supply forms, ticket stock, dbbons, accounting re- ports and other related supplies. d. To provide sufficient space for the terminal with requirements as de- scribed in "Space Requirements and Equipment Specifications". Re- - taller will provide a duly signed copy of "Space Requirements and Equipment Specifications" prior to installation. e. To be solely responsible for costs incurred in site preparation. f. That the terminal shall be located within the Retailer's premises only at a point of sale approved by Lottery and cannot be moved without prior written approval by Lottery. If approved to relocate the terminal, the Retailer will pay the costs incurred from the telephone company. The · Retailer will be rasp. onsible for providing an electrical 4.-way grounded outlet on a separate and dedicated circuit at the new location. · , g. To be responsible for payment of all electrical utility charges incurred in the operation of the terminal. h. To provide a telephone at the location of the terminal in order to make and receive telephone calls for maintenance assistance or administ~'a- five needs. i. To have the computer terminal available for the sale of Lottery tickets during all hours and days that the Retailer's business is open and ~ales authorized. Retailer's business Ioca~on and hours are described in the site survey, which is hereby incorporated by ratamnce as part of this .. Agreement. 21 To exemise diligence in the operation of the terminal, to provide physi- cal security for the terminal and paper stock, to replace ribbons and ticket stock and clear paper jams as required and to immediately notify the vendor of telephone communications or terminal malfunction, such &s, but n~,f. limited to, the issuance of a non-valid ticket, the inability to cancel a ticket or the non-issuance of a ticket. k. To refrain from performing any mechanical or electrical repairs to the terminal. ~ I. To be responsible for custodial care of the terminal. The Department reserves the right to terminate this Agreement in the event of repeated malicious abuse and/or negligent care of the terminal. Abuse is de- fined as, but not limited to, accidents such as liquid spills, breakage or other Retailer caused problems resulting, in the need for the terminal to be replaced. 8. Equipment The Department agrees to provide Retailer with a computer terminal in woridng or- der and to install the required telecommunications line for the operation of the ter- minal. 9. Stock All equipment, manuals, tapes, cards, computer printouts, ticket stock and other items fumished to the Retailer in connection wi~ its functions as Retailer, shall re- main at all times the sole property of the Department; it being understood that such equipment is not leased by Retailer, but is in Retailer's custody solely as a seller of tickets and such equipment shall be surrendered upon termination of this Agree- ment Retailer is responsible for'lpss or damage of the equipment in excess of normal wear and tear. Retailer must report any "out of order" condition of the equipment to the vendor in accordance with current Lottery procedure. 22 APPENDIX D INSTANT TICKET VENDING MACHINE (I'I'VM) REQUIREMENT~ I Instant Games Requirements Retailer must be a licensed Instant Game Retailer pursuant to the provisions of Appendix B (Instant Game Requirements). 2. Minimum ITVM Sales Requirement This Agreement may be terminated in whole or in part if the Retailer fails to meet the average minimum sales volume of I'I'VM sales. The minimum sales volume requirement for each ITVM shall be an average of $500 per week for each calendar quarter. If the Retailer does not meet the applicable ITVM minimum requirement during any quarter, the following procedure will be undertaken: a. As soon as possible after the end of a quarter in which the Retailer does not meet the minimum I'TVM sales requirement, the Retailer will be notified in writing by the Lottery that the sales did not meet the .. minimum ITVM sales requirement. The Retailer shall be given one (1) additional quarter to meet or exceed the minimum ITVM sales re- quirement. The Lottery will exert its best efforts to provide marketing support and assistance to Retailers identified, as they attempt, during the next quarter, to meet or exceed'the minimum ITVM sales require- ment. If the Retailer does not meet the minimum I~'VM sales require- ment, the ITVM may be removed. 3. Instant'ncket Vending Machine Requirements a. The Retailer agree~.to provide a grounded three (3) prong electrical AC outlet for use with grounded plugs located within ten unobstructed feet (10') from the ITVM. b. The Retailer agrees to provide a space (approved by Department) for the I'FVM to allow for proper ventilation, maintenance, and matedal loading and removal. c. The Retailer shall meet such training standards as shall be established by the Department. d. All equipment and'supplies provided to the Retailer by the Department or its vendors shall remain the property of the Department or its ven- dors, and shall be used for their intended purpose and not for any other -* purpose. The Retailer shall acquire no interest whatsoever in the equipment. 23 e. All expenses, whether fixed or recurring associated with the items re- quired to be furnished by the Retailer, shall be the sole responsibility of the Retailer. f. The Retailer agrees to have the I'J'VM available for the sale of Lottery tick~t--- dudng all hours and days that the Retailer's bus,ness is open. g. The Retailer agrees to exercise diligence in the operation and care of the I'I'VM, to provide physical security for the I'i'VM, and to immediately notify the vendor of any malfunction. ~ h. The Retailer agrees to refrain from performing any mechanical or elec- trical repairs to the ITVM. i, The Retailer agrees to be responsible for custodial care of the I'I'VM. The Department reserves the right to terminate this Agreement in the event of malicious abuse and/or negligent care of the I']'VM. Abuse is defined as, but not limited to, accidents'such as liquid spills, breakage or other Retailer caused problems resulting in the need for the ITVM to be replaced. Retailer is responsible for loss or damage of the equipment in excess of normal wear and tear. Retailer must report any "out of order" condi- tion of the equipment to the vendor in accordance with current Lottery procedure. k. Retailer is responsible for maintaining the appearance of the ITVM in a clean and neat manner. The exterior of the machine must be regularly cleaned. I. Retailer agrees that the I'I'VM shall be secured or weighted with sand- bags or other medium at the Lottar~s option. The means to be used shall be agreed to by the Retailer and Lotte;7. m. Retailer agrees to [~e solely responsible for costs incurred in site prepa- ration. n. The Retailer agrees to be responsible for payment of all electrical utility charges incurred in the operation of the ITVM. o. The Retailer agrees to maintain the access keys to the ITVM on the li- censed premises at all times. Failure to do so may result in the re- moval of the ITVM. 24 4. Location of ITVM The ITVM shall be located within the Retailer's premises only at a point of sale ap- proved by Lottery and cannot be moved without Lottery's prior written approval. If given approval to relocate the I'I'VM, the Retailer will pay all costs incurred for the move. Relocation without prior approval of the Lottery will result Jn termination of that Retailer's r~gnt to use an I'i-VM at its location. 5. Instant Games Requirements a. Retailer is required to maintain an adequate supply of Pennsylvania Lottery instant tickets. The ITVM must sell as many different games as ~ _. the machine has ticket bins, i.e., if it has four (4) ticket bins, four (4) · different games must be sold. Retailer must also sell all games avail- able at a minimum of one other location in the business facil~ other than in an ITVM. b. Retailer agrees to utilize to the fullest extent possible all point-of-sale materials provided by the Lottery. c. Retailer agrees to regularly fill the ITVM to avoid empty ticket bins. d. Retailer shall remove all instant game tickets and money from the ITVM .. prior to any equipment maintenance or repair service. e. Retailer shall make available to the Lottery technician, or the Lottery designated technician, the equipment and keys during normal business '~ hours for maintenance, repairs and inspection. 25 I, LARRY L. MILLER, have prepared the foregoing Complaint. The factual statements contained therein are true and correct. I am authorized to make this Verification on behalf of my client, National Grange Mutual Insurance Company, who is outside the jurisdiction of this Court. The facts set forth in the pleading are based upon my review of the documents and information furnished by Anthony Montecalvo, Bonds Claims Manager for National Grange Mutual Insurance Company. This Verification is made subject to the penalties of 18 Pa. Cons. Stat. Section 4904 relating to unsworn falsification to authorities, which provides that if I knowingly make false averments, I may be subject to criminal penalties. Date= April 26, 2001 / ~ LARRY'L. MILLER Larry L. ~/ller, EsqUire Pa. Supreme Court I.D. No. 28122 1423 State Road Duncannon, PA 17020 Telephone: [717] 957-2828 Attorney for Plaintiff: NATIoHAL GRANGE ~TUAL INSURANCE C(~fP~Ny aR.~URANCE COMPANy : IN THE COURT OF COMMON PLeAs Plaintiff : V. : GENERAL STORE and EVEREST : GENERAL STORE II 603 Franklin Street : Carlisle, PA 17013 KHURRAM N. BUTT t/d/b/a : EVEREST GENE~%L STORE and : EVEREST GENERAL STORE 603 Franklin Street : Carlisle, PA 17013 RAUKAB I. BUTT : 231 Heals Drive ~rlisle, PA 17013 z~.SRAD ~UT~. . ~T~-Fi~.E COPY FROM RECORD Carlisle, PA 17013 im~ ~t~ ~ ~ .4g~} :~..,:~ ~, ~ ,. - "" '--- 231 .~eals Dr~ve Carlisle, PA 17013 _ Defendants : YOU HAVE BEEN SUED IN COURT. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this Complaint and Notice are serve~ ~y e?er~ a written appearance personall and filing an wrltln wi or the claims .~ ~-_~[g t~. the Court your ~-~-- Y .BY attorney entered a,ain.~ __ -~ m-~eeu Without you ._~ ~ ~"~ ~ you fail mo- .... u _~ yuu Dy the Court ~_12 _'"~ e ]uugment may b~ onner rights 4 ...... - .... ~ou may lose ..... - ~ ~ezze~ = -~,p~r=an= to you. ~-~y or property or Cumberland County Bar Association 2 Liberty Avenue Carlisle, PA 170~3 800.990.9108 DATE: April 26, 2001 By: LAI~Ry L. MILLER Attorney I.D. ~28122 Attorney for Plaintiff Larry L. M~ller, Esquire Pa. Supreme Court I.D. No. 28122 1423 State Road Duncannon, PA 17020 Telephone: [717] 957-2828 Attorney for Plaintiff: NATIOHAL GRANGE ~3TUAL INSURANCE COMPANy · NSURANcE COMPAny . ~_THE COURT OF CO~ON PLEAS 55 West Street ~ cU~IBERLAND COUNTy, PENNSYLVANIA Keene, NJ 03431-7000 = CIVIL ACTION - LAW Plaintiff v. L STORE and EVEREST GENERAL STORE II 603 Franklin Street Carlisle, PA 17013 I(HURRAMN. BI.,1TT t/d/b/a EVEREST GENERAL STORE and EVEREST GENERAL STORE II 603 Franklin Street Carlisle, PA 17013 KAUKAE I. BUTT : 231 Meals Drive Carlisle, PA 17013 DILSHAD BUTT 231 Meals Drive Carlisle, PA 17013 I~N. BUTT : 231 Meals Drive : Carlisle, PA 17013 Defendants ~lainttff, Nationa! Grange Mutual Insurance Company, by its undersigned attorney, hereby sues the Defendants, Kaukab I. Butt trading and dOing business as EVerest Genera! Store and Everest General Store II, Khurram N. Butt trading and doing business as ~erest General Store and ~erest General Store II an a~ab I. Butt, Dilshad Butt and ~ram W. Butt, indiv~ · n support thereof, says: ~uuu~ly, aha C at ona! Grange or P aintiff or "Surety~), is a CO~oration maintains its principal place of business at 55 West Street, Keene, NJ 03431-7000. · . al St~re and ~erest G~neral Store II, and Kaukab I. Bu~t, Individually, is an adult i-divldual who resides at 231 Meals Dr~ve, Carlisle, PA 17013. . ~al Store a~d ~verest General Store II, and ~urram N. Butt,.lndividu~lly, is an adult individual who resides at 23! Meals Drive, CaFl~sle, PA 17013. At all times relevant here~, Khurram N. Butt wa~ an owner of Everest General Store II. 4. Defendant, D~lshad Butt, is an adult individual who resides at 231 Meals Drive, Carlisle, PA 17013. A. THE INDEMNITy AGREEMENT · .5. On March 24, 1999, XatLkab I. Butt and Dilshad B . Individually, and Xaukab I. Butt on behalf o~ ~ utt. ~ ~ereet General S II, (hereinafter collectively referred ~ ~m ~_ ,_ . tore executed a Specific Indemn4~.. ~--- ~ -° ~"~ ~naemnitors,), ~ ~=~ement (the 'Inde~nity Agreement'). A cop~ of the Indemnity Agreement ~s attached hereto as EXhibit ' · and It is incorporated herein by reference. T~ ..... A Agreement as essent~a! consideration for nce of bonds on behalf of Everest General Stores, II ('Everest') and Indemnitors. 6. Under the Indemnity Agreement, the Indenmito greed to exonerate, hold harmless and indemnify Natio .... rs zrom and against all claims, losses an~ . ,uA ~range · , u expenses incurred result of having executed as a bonds on behalf of Everest and Indemnitors. The Indemnity Agreement provides: ~. That the Indemnitor(s) shall at · l~demnify, save the Com~a~.- ~---- all times . ~--.,~ ,~rmless from, and p~ace the Company ~n fu~s to meet any claim, demand, loss, liability, cost, attorneys~ _ charge, fe~ .expense, suit. judgment, _o~r.~d]udlcat[on arising' order, existence v~ =ne Bond. from the 7~ That the Company shall h~ve the exclusive right to determine for itself and the Indemnitor(?) whether any claim or .suit brought against the Company or the Principal, as a result of the existence s~a}} be settled or de~--~-~ __~o~. the Bond, 7. In reliance Upon. the executed Indemnity Agreement, National Grange executed a permzt bond on behalf of Defendants. B. THE BOND . 8. National Grange executed a permit bond, Bond No. - 412-628 (hereinafter 'the Bond'). Atr S · ue and Correct cop of t Bond zs attached hereto as Exhibit 'B ' -- Y he · 'me bond was required the Commonwealth of Pennsylvania, De a ' by P r=ment of Revenue, Pennsylvania Lottery for Defendants~ Applicat~on for Lottery Retailer License to sell lottery t~ckets. C. LOSSES AND EXPENSES 9. On October 24, 2000, National Grange received a claim in the amount of $15,326.§5 from the Commonwealth of Pennsylvania, Department of Revenue, Pennsylvania Lottery (~PA Lottery'). A true and correct copy of the claim letter is attached hereto as Exhibit ' · · . C and it ks incorporated here~n by reference· 10. By letters dated NOvember 7, 2000, National Gran notified Defendants of the claim o- ge £ the PA Lottery. T ~O~em~er 7, 2000 letters requested written conf~rmatio, ue~en~ants, by December ~, 2000, that the ~atter had ~--- · ~nresolved. True, and Correct copies of the NOVember 7, 2000. ~etters to efendants are c~llectlvely attached hereto as Exhibit 'D' and · ncorporated herezn by reference. · ll. National Grange ~ade demands on the Indemnttore protection from the claims, but the Inde ..... for . mnl=ors ~ave cOmpletely · gnored these demands. 4 12. Because Defendants failed and refused to respond to the November ?, 2000 letters, on April 19, 2001, National was f~ced to pay the claim of the PA Lottery, pursuant Grange Indemnity Agreement, for the penal amount of $10,000. to the .13. Also, due to the failure of the Indemnitors t protect it from these claims, National G o . . range has incurred substantial expenses, inclu~ing Investigative costs and attorneyts fees and wi1! continue to Incur SUch costs in the future. 14. Paragraphs 1 throug~ 13 above are incorporated herein by reference as if set forth in full. ~5. The Bond was executed and issued by National Grange 16. Indemn/t~rs are in default ~f the Indemnity Agreement as they have refused to indemnify National Grange. · Upon such default, the Indemnity Agreement roy' that Indemnltors shall, ~,~., .,~_ . P ides . -~-~, Indemnify National Gren e and against ...... . g from . -..~ ~nu all liabilities, lOSses and expenses Upon, sustained, or incurred by Nationa! - - ~range ~y reason of ha ' e~ecuted the Bond. ring .18, The Inde~nityAgreament was in full force and e at the t~me of the execution and deliver,, o- -~ ffect presently in full force and effec- . . . ~ - ~ne Bond and is ~- Ra~lonal Grange has eom · with all conditions precedent set ~-~ 4_ ~. plied ~--~.. ~n ~ne Indemnity Agreement. 9. National Grange believes and therefore avers the ' as and will continue to incur significant los ...... t it InCluding but not .... --o ~nu expenses alml=ed to investigative fees, consultantst fees, court costs, and attorney.s fees, all of whic= - - · n l~Qemnltors are responsible to National Grange for Under the Indemnity Agreement. 20. Because all of Said liabilities, losses and e e are continuing and are not presently ca-ab1 .... X~nses · . ~ = u= exac= calculation, National Grange cannot, at this t~me, reduce its losses to an liquidated sum, but it reasonably anticipates the- -- ~ - exact of $20,000.00. - uu ~e In excess 2~. By re,sons of. the foregoing, National Grange has demanded that Inde~u~ltors reimburse it the claim Paid to the PA Lottery pursuant to the Indemnity Agreement. 22. To date, National Grangers demands have not been complied With by Indemllitors. On the contrary, Indemnitors have refused to comply With National Grangers demands for inde~nification. As a result, I~demnitors are in breach of promises the and covenants set forth ~n the Indemnity Agreement. 23. Indemn~tors are otherwise in default under the Indemnity Agreement as they have failed and refused to cooperate With National Grange. 6 WHEREFORE, National Grange Mutual Insurance Compan that your Honorable Court enter =u~ Y prays J ugment in its favor and against Defendants. COUNT TWO herein by reference as if set forth in full. 25. As a factual and legal ~esult of its the Bond on behalf of Defendants, National execution of losses and expenses as described above. Grange has incurred 26. The Indemnitors have fai~ed to protect N~tional Grange fro~ such losses and expenses despite their obligations as set forth ~n the Indemnity Agreement. WHEREFORE, Plaintiff, National Grange l~/tual Insurance Company, respectfully requests that judgment be entered in its favor and against Defendants, jointly and Sever - . .ally,. for compensatory ~amages in an amount exceeding the Jurlsdic amount requiring arbitration referral t~onal pursuant to Local Rules of ourt and for S~ch other and further relief as this Court lust and appropraate, deems Paragra. s throu. abcve are inccr, ora ted herein by reference as zf set forth zn full. 28. National Grange obtained an assignment of the PA Lottery,s claim against Defendants ss part of the settlement. 29. Defendants Owe the PA Lottery, and now National Grange, $15,326.55 as described in Exhibit 'C' attached hereto. WHEREFORE, Plaintiff, National Grange Mutual InSurance Company, respectfully requests that Judgment be entered in its favor and against Defendants, Jointly and severally, in the amount of $1~,326.55, plus attorney,s fees, costs, and such further tel as this Court deems just and appropriate. CO~ 30. Paragraphs i through 29 above are incorporated herein by reference as if set forth in full. 31. De~endants had an Agreement for Sale of Pennsylvania Lottery Tickets with the PA Lottery. A true and Correct copy of the Agreement is attached hereto as Exhibit "E" and inc~rporated herein by reference. 32. Pursuant to Defendants, Agreement With the PA Lottery, they agreed to be personally liable for all proceeds from the sale of tickets. mages and reasonable attorneyts fees. 34. National Grange has paid the claim of the PA Lottery and is now equitably subrogated to the rights of the PA Lottery Under the Agreement. 35. Defendants, Kaukab I. Butt and ICnurram N. Butt, owe National Grange $15,326.55, Plus all related compensatory damages, interest, and attorneyts fees. WHEREFORE, Plaintiff, National Grange Mutual Insurance ~_Y_,~ respectfully requests that Judgment be entered in its . ~ ~nu against Defendants, Kaukab I. Butt and Khurram. N. Butt, in the amount of $15,326.55, plus compensatory damages, Interest attorney,s fees, costs, and such further relief as this Court deem~ Just and appropriate. ~ DATE: April 26, 2001 By:__ "1' ~'-"'~ LARRY L. MILLER -- · Attorney X.D. $28122 9 SPECIFIC INDEMNITY AGREEMENT ' NOW. THEREFORE, the undersigned, hereinalter called Ihe Inclemnilor(s) (if there be more than one IndemnJtor they . for each ether do) hereby undertake represent Warrant and agree as follows: jointly and severally and tnclucJng the NalfonaJ Grange MUtual Insurance Company, hereinailer relerred to as the Company, to execute or procure the execution et a certain bond or undertaking herein applied for. 2. That this Agreement shall apply to the bond or undertaking herein applied for, and any and all ex~enslons, Increases, modilicellons or renewals thereof, or additions or substitutions therefore, any and all SUCh instruments separately and BOnd. Collectively being hereinafer Called the 3. That the Company is hereby aUthorize0 to confirm the bank balance ctaimed In the financial statement and to ver~fy all Other ~tems In said statement. (all such ~"emiums Shall he In accord with the applicable schedule et rates pubhshed by Ina Company) as may become due until the Company ~-~mllpal~ny=m~l~rteg~ Wa~er~nle~vi~n~fr s~aYctao~ t~lthlleab_ility and responsi.b, llity under the BOnd and until the I'n ac~a,t,on;i prer=.:,,.,m Charges u,y ~.;ompony or Such dmcherge and release, demnltor(s) shall deliver to the 5. Tha~ the Indemnttor{s) she, at a times nderfinlty save the Co demand, loss, liability, cost, cha e, attorneus, fe~ ----- mpany harmless from, and place the Company in fonds to meet any claim, ~g ~ ---, ;.~k'~nce, suit, order, judgment, or adjudiCation arising from [he exJeleoce of the Bond 8. That if the Company shell set up · reserve to Cover any claim, demand, loss ab~ i judgement or adjudication arising from the ex~ , '1 t . ' e sum of money equal to SUCh reset ...... cie. rice of the Bond the ndemnitor(,=~ .h.. ,Y-..' ._c~? cha~ge, attorneys tse ~ ~,,, -~.~, 7. That the Company Shall ...... ,,~,,=.y aa Collateral sesurltv ~,~'-.~':'--:-'J'"'"~' u=poSlt With the Company have the exclusive right to'determine for Itself end the Indemnltor(s) whether any claim or suit brought against the Company or the Principal, as · result of the existence or the Bond, shall he settled or defended ulxxt the Indemnltor(s). and its deCJslofl Shell he binding and conrdualve 8. That this Agreement shelt IMnd the heirs, executors, edmlnstrators, successors and assigns of the Indemndor(s). g. That nothing herein contelned shell be In derogation of any right or remedy ,1.0. That if the BOnd he given In Connection wi which the Company might have inda~ndently hereof ~n the contract or in th a bid or contract · wit the plans or spaclltcatl , the Company Is hereb a haut the necessity of seeln,~ *- o,-- --.. one relating thereto; to reek' ~ - y uthorlzed, but not ronufred ~ ~--~. legal interest to the Company when dee sh ----" '~ ~,ng understood that the amount ~,'~-.~,_,~a mr the purposes of tJ'~ breach of the contract, or the breach of,..~.al,[__l~co, ncfuslvely presumed to he a I ...... ' .... =uvaN:es or loans, Unless' repaid With ........ erewlth, or the fatlure, n~'~tect ~r'~":~'~'.:'-"' e~ondonment, forl~ture or tehl~'~v~t~he proeesutlon of tJ~e contract, to take Possession of the Work under the contract and, a'sct'~h~Saet~ = ~lSi~o%,tol~t~onlC~v ~ple~ion therof. The Indemnltor(s her -- .=luau, [o pay for labor or materiels at the e~nse of the Indemnltsr(s) the tecta, pJeht, equilxneat end ;~'~*~,-,-~'~-;-Y ,ri the event of a default as a?~s)--,-,,e~-,,as.sI-gnu' transfers, and sets over t'" *'-- '"-- to complete ,,,-.~,.,a or every nature and descr,-~..-,'~='=.'.-~?,m~ right, title and Interest of -.- ~.-~-~--'~;= .~.~.mpany (to he wC~iitr~act Covered by the Bor~l, or In, on or P ...... =~ me mdemnttor(s) may have u,v.-'.'~-".~-= .mn=or[S) In end to all Sul~confracts Which may he entered Into and the elseWhere, or Ih fransportetion to said ~t~, -h~l~e~.--fo~.' or chemeabie to such Contra in the event of any breach or default on I~'-- -- - materJels embraced therein a ' - . ...... -m mdemoltor(s) rlOhts In end to to ell the rights .nd prpp.rti, of the .'ny et the pro.signs of the ;o, Sa.d contract, and th. ,ndemnl . ..... ~a) m such contract InctUdl ....... __ .he Bond tod [he said C ( ) fUrther agrees colYract of the Indemnitor(s) or any one or more of them on r ..... veyments, current and earned ~_.ell~ln~.~ materiels supplied in Connection thereV~th or t which the Company Is or may become Surely, the Indernnlte s or , hat mey thereafter or r( ) any one or more of them on which the Com~b~nyn~s ~,~ue_a.n..d~_l~yable on account of said Cont°rn account of extraany ether Company to endorce in. the name of the pa end "- - '" ',,o~' uecome Surety. And the Ind-.---,~-ec:t-.-or, ?ny ether correct of moneys due on such Contracts and ~ .-~-.-.. -Y-es'--' to Cohect any check, dralt, . --,-,,,uqs) noreby authorize the 11. That the wo~ Indemnttor(s) as used herein, or Personei pronouns used to refer to said WOrk, Shall apply regardless of number or gender, and to Indlvfduels, partnerships or Corporations, as the circumstances require. CONCEALs FO RANCE OR ~I'AI~MENT OF ¥ INSURANCE COMPANY OR R THE PURPOSE . CLAIM CONTAINING . OTHER PERSON FILES OF MISLEADING INFORMATION CO '"=D",~-',A-N-Y.-M-A-TERIALL¥ FALSE INFOR AN A CRIME,. AND SUBJECTS SUCH PERSON TO CRIMINAL AND CIVIL PENALTIES. SJgnsd, ~eeled and DATED this _2~ th day of Hatch (INDEMNITOR.._ ESe) (Seal) l~peName&Title: _[(au]caD T, Gu, c/'~ Ovzler SIGNED~ ' (tNDEMNITO IN DUALLY) 'l'~/pa IndivIduel Indemnitor Name: [(~aukaT~ Z. RUf-J- IndlvtclusllndemnJtorAdclress: 23] ~eale Dt'J. ve, (~az:~.~.ele~ ~'a. ]7013 Type Indivlduel Indemnttor Neme: Indiv~doellndemnHorAGIdress: ~1 ?~,~'~q: 1~?'~vf*~ (:-~]-~e].e ?~. 17013 INDEMN/TY AGREEMENT MUST BE SIGNED, DATED AND WITNESSED SY~t BONO DEPT. APR 1 5, Naticnal Grange Mutual Insurance_ Company ~ NO. S 412 - 628 ~ ~ ~ ~ T~E P~Eh~S, ~t we Kaukab I Butt, T/a Everest General St,,~e II mf 603 Franklin Street, Carlisl~]3 {hereafter cali~ Principal), and ~ ~ ~ ~N~ ~NXs a corpo~tion or~niz~ u~- t~ la'.= cf ~%e S~te of ~ N~Sb~re amd a'~thor~ C~w~ealth of ~sylva~a, with its ~ ~fice l~ t~e City of Ke~e, (h~elnafter called S~ty), are held a~ fi~ly ~d ~to: ~m~n~al~ of Penn~l~n,a De~ent of R~,~nue 28~ Turnpike Indu~ial Dr~ Middletown, Penn~fE~nia ~7057 as ~llg~ in ~he full a~d Jus~ s~ off Ten-Thousand Do[lars Even .......... Dol~s~ lawful o~ ~ma~d fa~ a~d cn acco~ of any ~ds ~e ~ ~he Pri~lpal as e ~e~41~ [hi¢[y (30) da~ ~ a~v~nce oE ~e da~e of ca~ellatl~. Witness: GeotEe R. ~une~ker Commonwea]th el Pennsylvania Department o! Revenue PENNSYLVANIA LOTTERY 2850 Turnpike Industrial Drive ~ Middletown, PA 17057-$491 Proceeds ILmers Okler Pe~r6 National Gmn._c,e/'.':,:~D~I ]nsura~l¢¢ L, Olllpa~./ Attu: Claims 5010 Campnswood Drive P.O. Box 4742 Syracuse, NY 13221-4742 Re: National Grange Mutual Insurance Company Lottery Bond# S 412 - 628 Retaller~ 390526 Kaulmb I Butt DBA Everest General Store II We are hereby filing a claim in the amount of $15,326.55 against the above referenced bond which lists Kaukab I. Butt DBA Everest General Store II as the principal and the Pennsylvania Lottery as the obligee. On March 20, 2000 cancellation from the Numbers Oames Network took place due to delinquency. The following is a breakdo~ oftbe amounts due: See attached Ledger Sheet. Total Instant Games Due: 12,155.75 Total On-liue Games Due: 3,170.80 Total Due: $15,326.55 Claim Amount: $ I0,000.00 · ! have ~closed the following: computer report listing on-lL~o settlements, computer reports listing return items, and a copy o£ the retailer license application and contract. ffyou have any questions · · (717) 986-4704. concerning this matter, please contact Tammy Fasick at Budget Division Chief LBB/TLF/ff Enclosure ~ll/OF~O0 H 0 CL~ZIIS PHONE 717-986-4699 FAX 717'.g86-4767 National Grange Mutual In s ura n ce ss WestStreet Company P.o. ]~ox 2soo Keene, NH 03431-7000 ~ (603) 352-4000 Tuesday, November 07, 2000 Kauhab & Dilshad Butt 231 Meals Drive Carlisle, PA 17013 RE: Principal: Kaukab Butt d/b/a Everest General Store Bond #: S-412628 Obligce: Commonwealth of PA Retailer No.: 390526 Dear Sir: Please fred enclosed copies of correspondance from the PA Lottery notifying National Grange Mutual of a claim on our bond provided on your behalf. Please review the atlached documentation and advise as tu what action you intend to take to resolve this outstanding matter. lfl do not receive written confirmation that this matter has been resolved by December 7, 2000, National Grange Mutual will proceed to issue payment or'our full bond amount. for full reimbursement of any amounts paid. In that event we shall look to you Ifyun have any questions cOncerning .any of the above please correspond directly wi~ the undersigned. Since~ly, Antbo~y ~onteealvo Bond Claims Manager Enclosure: Cc: Pennsylvania Department of Revenue Attn. Larry Beard, Budget Division Chief Pennsylvania Lottery '. 2850 Turnpike Industrial Drive Middletown, PA 17057-5491 National lrange. utual ss West Street insurance P.o. Box 2300 Company Keene, 1VH 03431-7000 (603) 352-4000 Tuesday, November'07, 2000 Everest General Store Atm. Knukab Butt 603 Franklin Street Carlisle, PA 17013 RE: Principal: Kaukab Butt d/b/a Everest General Store Bond #: S-412628 Obligee: Commonwealth of PA Retailer No.: 390526 Deer Sir: P[ense find enclosed copies ofcorrespandence from the PA Lottery notifying Netienal Orange Mutual ora claim on our bond provided on your behalf. Please review the attached docunlentatien and advise as lo what actm outstanding matter ' n you intend to lake to resolve this lfl do · · . not rece,ve wmten cont]rmat~on that this matmr has been resolved by December 7, 2000, National Grange Mutual will proceed to issue payment of our full bond amount. fur full reimbursement ofeny amounts paid. In that event we shall look to you If you have any questions concerning any oftha above please con'espond directly with the undersigned. Sincerely, AnthOny Montecalvo Bond Claims Manager Enclosure: Cc: Pennsylvania Department of Revenue At~. Larry Beard, Budget Division Chief Pennsylvania Lottery . 2850 Turnpike lndumrial Drive ' Middletown, PA 17057-5491 .--------. AGREEMENT FOR SALES OF PENNSYLVANIA LOTTERY TICKETS Address ~~ ~ Corporate Name This Agreement is by and between the Commonwealth of Pennsylvania, Department of Revenue, Pennsylvania Lottery, hereinafter referred to as "Department" and -- hereinafter referred to as "Retailer". -- The Department of Revenue has as one of its responsibilities, in accordance with 72 P.S. §3761-1 ~ and 61 PA Code §801.1 et seo., the authority to select retailers for the sale of Pennsylvania Lottery tickets. - Under the law and regulations, the Department is empowered to enter into contracts with Persons to sell Pennsylvania Lottery tickets and to pay such persons a commission as set forth in the Lottery law and regulations. NOW, THEREFORE, in consideration of the foregoing recitals and of the mutual prem- ises hereinafter set forth, and intending to be legally bound, the parties hereto agree as follows: A. Definitions As used in this Agreement, the term: 1. "Agreement" shall mean this Agreement for the sale of Pennsylvania Lottery tickets. The term shall apply to all contractual and license fights, duties and obligations of the parties. 2. "Effective Date" shall mean the date affixed to this Agreement by the Executive Director as set forth on page 10 herein. 3. "Secretary, shall mean the Secretary of Revenue. 4. "Executive Director" shall mean the Executive Director of the Penn- sylvania Lottery. Retailer' sha mean such person or persons authorized by this Agreement to sell Pennsylvania Lottery ticl;ets. The term shall include th~ ,~,~- ,.-.=,,.~,~ fo,; License to Sell Lottery Tickets" ("Application") which application is incorporated by raferance as a part of this Agreement. 6. "Lottery Games" shall mean all those games, including instant and numbers games, authorized for sale by Retailer on behalf of the Lottery. 7. "Lottery" shall mean the Pennsylvania Lottery of the Pennsylvania Department of Revenue. 8. "Lottery Law" shall mean Act of March of 1971 (P.L. 6, No. 2), 72 P.S. §3761-1 ~ 9. "Lottery Regulations" shall mean 61 PA Code §801.1 ~ 10. 'q'erm" of this Agreement shall include the period hereinafter provided for and any renewals thereto. 11. "Substantial Change of Ownership" shall mean a transfer of 50% or more of the equity of the Retailer's business. 1. Sales Retailer agrees to sell such Pennsylvania Lottery tickets as may be authorized by the Department. P ;rsuant to PA Code Lotte ck,ts ~, not ne solo to any person under eighteen (18) years of~ge · 2. Controlling Provisions Retailer agrees to abide by all provisions of the Lottery law, and any rules and regulations, ProCedures or instructions issued by the De- parl~nent, the Secretary of Revenue, the Lottery, or the Executive Direc- tor, as are now in effect or which hereinafter may be promulgated or published. Such Lottery law, rules and regulations, procedures and in- structions ara incorporated herein by reference as a part of this Agree=. ment. 2 3. Warranty of Financial Responsibility Retailer warrants that it is financially responsible and will provide evi- dence in support of such fact upon demand by the Department. Such evidence may inc!ude, but is not limited to. a.dicl~s of incorporation, by- laws, p&~'[r~ersh~p agreements, certified financial statements, bank refer- ences, credit references and business references. 4. Records Retailer agrees to maintain current and accurate records, in confor- mance with generally accepted accounting principles, of all transactions dealing with ticket sales. Retailer further agrees to retain all accounting records pertaining to ticket sales, including but not limited to bank state- merits and canceled checks, for a period of not less than three (3) years. All records required to be maintained by Retailer shall be available to representatives of the Department, upon request, for inspection and audit dudng regular business hours. 5. Fiduciary Responsibil/ty Retailer agrees that with respect to the proceeds from the sale of tickets, it acts in a fiduciary cepadty with respect to such funds until such funds are paid into the Lottery Fund as required. Retailer shall be personally liable for all proceeds from the sale of tickets. 6. Independent Contractor Status Retailer agrees that, except with respect to the proceeds from the sale of tickets, it shall render its service under this Agreement as an independ- ent contractor and, as such, shall further agree that any contractual sponsibility. . w, ,.,,,.uu. ulwrew~u'l snail De Its sole 7. Non-Discrimination Provision Retailer agrees that dudng its performance under this Agreement, the Retailer will comply with the non-discrimination provisions attached hereto and made a part hereof as Appendix A. 8. Promotional Material and Training Retailer agrees to prominently post current point-of-sale and other pr~. motional material supplied by the Department. Retailer agrees to attend such training sessions as the Department shall Provide to ensure that the Retailer and its employees are properly trained in the sale of Loffery tickets. 3 9. Minimum Sales Requirements Retailer agrees to be bound by the minimum sales requirements con- tained in the provisions of Appendix B for Instant Games Only Retailers, Appendix C fc~ ;,'umbers Gsr¥;~;s Re~;~(~-s, an,~ Appendix D for Instant Ticket Vending Machine Retailers. 10. Instant Terminal Requirements If the Retailer is authorized to sell Lottery tickets for Instant Games only, the Retailer agrees to the provisions of Appendix B, incorporated by ref- erence hereto. 11. Instant '13cket Vending Machine (I'I'VM) Requirements If the Retailer is authorized to sell Lottery tickets through an I'I'VM, the Retailer agrees to the provisions of Appendix D, incorporated by refer- ence hereto. 12. Numbers Games Requirements If the Retailer is authorized by the Department to sell Lottery tickets for Numbers Games, in addition to Instant Games, the Retailer agrees to the provisions of Appendix C, incorporated by reference hereto. 13. Claim Services If the Retailer is authorized by the Department to provide claim services, it agrees to be bound by the provisions of Appendix B, for Instant Games Only Retailers and Appendix C for Numbers Games Retailers, incorpo- rated by reference hereto. 14. Notice of Business C. hanges Retailer agrees to give the Department a minimum of ten (10) days ad- vance notice of Retailer's intent to: a. sell its business, b. cease operations of business either temporarily (including vacations) or Permanently, c. move to a new location, or d. of any substantial change in ownership. Retailer shall notify the Department within ten (10) days of: '. a. any change in business hours, b. any change in financial condition, 4 c. any change in type of primary business, or d. any event which alters any information disclosed in the "Application". 1F t~greern.,~:~? Non-Assqnable This Agreement for the sale of Lottery tickets is non-assignable. Any such unauthorized assignment shall constitute a breach of this Agree- ment. 16. Bole Business Retailer warrants that, pursuant to 61 PA Code §805.2(a), it is not in the exclusiye business of selling Lottery tickets. 17. Sale of Pennsylvania Lottery Tickets The Retailer agrees that it shall sell Pennsylvania Loffery tickets only. The Retailer understands the sale of any other Lottery tickets shall con. stitute a breach of this Agreement and this contra~t shall be revoked im- mediately in the event that the Retailer violates this provision. _ C. Depa,'[,,ent's Obliqationr. 1. Commission The Department agrees to pay Retailer a commission for all valid sales, plus or minus any adjustments and less a weekly line service charge, if applicable. The rate of commission shall be as designated in the regula- tions for each Lottery game. 2. Equipment The Deparb.ent agrees to provide such equipment and supplies as listed in Appendix B for Instant Retailers, Appendix C for Numbers · . Games Retailers, and Appendix D for Instant Ticket Vending Machine Retailers, incorporated by reference hereto. 3. Materials, Supplies, Advertising The Department agrees to provide necessary Lottery related materials to Retailer including point-of-sale material, manuals, procedures and in. structions. 5 The Department agrees to use its best efforts to provide Retailer with current tickets, as available, and any other necessary equipment, as more fully enumerated in Appendix B for Instant Retailers, Appen(Jix C '-. ,,~,,,~,:,= ,.=~,T, es ~',eta~lers, a~;d Appendix D [or instant Ticket Vend- ing Machine Retailers. The Department agrees to promote and advertise all Lottery games. 4. Additional Retailers The Department reserves the right to approve and establish new Retail- ers with or without Numbers Games capabilities in any part of the Com- monwealth, as it deems appropriate. 5. Termination of Agreement This Agreement may be terminated by the Department for any of the following: a. Failure to comply with any of the terms of this Agreement, the Lottery law, its rules and regulations or instructions, including - but not limited to 61 PA Code §805.17, issued by the Execu- tive Director of the Pennsylvania Lottery or the Secretary of Revenue may result in immediate suspension or termination of this Agreement, in whole or in part, at the sole discretion of the Department. Upon such suspension or termination, the Re- tailer's authority to sell Lottery tickets of all types shall imme- diately cease. b. Failure to make full settlement on the required settlement date or failure to have float cash monies available or failure to meet the average minimum sales volume requirement shall also constitute a brea~ of this Agreement and may result in im- mediate suspension or termination of the Agreement in whole · · or in part at the sole discretion of the Department. c. Any misrepresentation or omission in Retailer's application to sell Lottery tickets or any renewal application will result in im- mediate suspension of this Agreement, in whole or in part, and may result in termination of the Agreement, in whole or in part, at the sole discretion of the Department. d. This Agreement may be terminated, in whole or in part, by ' · either party for the convenience of either party and for reasons --' other than those detailed in sub-pamgrephs a, b and c, upon fourteen (14) days wdtten notice by the terminating party. 6 erms, breach thereof, or performance required of the Retailer or the De- partment under this Agreement, or with regard to the suspension or pro- posed termination of this Agreement, the Retailer shall be given an op- portunity to be heard through the presentation of written representations of its position to the Department within seven (7) days. At the time of making/ts wdffen representation to the Department, the Retailer shall present such facts, evidence, statements and other relevant information as it shall desire for the consideration of the Department in reaching its final determination. Such notice to the Department shall not affect the Department's authority to suspend Retailer's authority to sell Lottery tickets pending final determination. The Secretary of Revenue or the Secretary's designee shall make a final determination in writing with re- gard to the dispute and shall send same to the Retailer within thirty (30) days of receipt of Retailer's wdtten presentation. The Retailer's sole options with respect to any such decision shall be either". 1. accept said decision as a correct and binding interpretation of the Agreement, or 2. to make such claim as it may deem appropriate to the Corm monwealth's Board of Claims pursuant to the ACt of May 20, 1937, P.L. 728, No. 193, as amended (72 P.S. §4651-1 et seq.) Retailer agrees that Lottery funds shall not be withheld by Retailer pending resolution of any dispute. · ,E. Term This Agreement shall automatically terminate on March 15 of the year following the effective date on page 10 unless otherwise renewed, ex- tended or terminated; provided, however, that this Agreement shall automatically renew upon receipt and approval b the D R . · Y epartrnent of eteller's App cation for Renewal" and payment of the required fee. This Agreement will terminate upon the expiration of Retailer's temporary license, if the Department denies Retailer a permanent license for any reason, or if terminated pursuant to paragraph C5 of this Agreement. Retailer agrees not to Conduct any business or hold itself out as a seller of tickets unless or until this Agreement is renewed. Renewal of this Agreement for additional terms shall be at the sole dis- cretion of the Secretary of Revenue. The Secretary may, pursuant to 61 ..-.,~.., S ..... , ~..=, the ts,,'n~ of the Agreement by issuing temporary extensions pending administrative determination. F. Statute and Requlation,~ Retailer acknowledges the receipt of the applicable statute and regula- tions governing the sale of Lottery t~ckets. Retailer will be deemed to have actual notice of future regulations upon publication in the Pennsyl- vania Bulletin. Such future rules and regulations shall be incorporated by reference into this Agreement upon publica~Jon. All owners, partners, and corporate officers of Retailer must sign this Agreement and must acknowledge that they fully understand and con- sent to the terms of this Agreement. This Agreement does not b~come effective until fully executed. H. Indemnification/Hold Harmless Cla-~ The Retailer shall save and hold harmless the Commonwealth and its officers, agents and employees or any of them from any and all Uaims, demands, actions or liability (including, but not limited to, consequential damages and reasonable attorney's fees) of any nature based upon or arising out of:. 1. Any services ps/formed by the Retailer, its agents or employ- ees, except such services as are properly performed at the ex- , press direction of the Department. 2. The use by the Retailer of any copyrighted or uncopyrlghted composition, security, deed, process, patented invention, arti- cle or appliance furnished or used in the Performance of any services under the contract. 3. The negligent, or equally or more culpable, conduct by the Retailer, its ager~ts, subcontractors and employees during the , term of or in connection with the Performance of the contract. · 8 I. W~iv~r The failure of the Department to insist upon strfct adherence to any term of this Agreement shalJ not be considered a waiver or deprive the De- partment of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. ,' ~ .This Agreement shall be governed by and construed according to the laws of the Commonwealth of Pennsylvania. This Agreement constitutes the entire agreement between the Department and the Retailer with re- spect to all contractual and licensed rights, duties and obligations of the parties. The Agreement shall not be amended or modified unless such amendment or modification is in writing and signed by both parties. - If a court of competent jurisdiction determines that any portion of this Agreement is invalid, that part shall be severed and the remaining por- tions shall control. (THIS PORTION OF PAGE INTENTIONALLY LEFT BLANK) g IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be exe- cuted, intending to b~ ,~,.y bound hereby. Owner/l~temsted Party Owner/interested Party BY TITLE Owner/Interested Party BY "Owner/Interested Party TITLE BY Owner/interested Part7 TITLE BY - Owner/Interested Party TITLE BY Owner/interested Party TITLE BY ' Owner/Interested Party TITLE BY Owner/Interested Part~. TITLE BY TITLE · Owner/Interested Party APPROVED BY Executive Director Pennsylvania Lotte~j Department of Revenue Commonwealth of Pennsylvania " EFFECTIVE DATE 10 APPENDIX A NON-DiSCRIMINATION CLAUSF Durin~ ~,he term, of thi~ contract, Retailer agrees as fo,lows 1. Retailer shall not discriminate against any employee, applicant for employ- ment, independent contractor or any other person because of race, color, relig- ious creed, ancestn/, national odgin, sex, age, disability, sexual orientation or union membership. · Retailer shall take affirmative action to ensure that applicants ara employed, ~ and that employees or agents ara treated dudng employment without regard to race, color, religious creed, ancastzy, national origin, sex, age, disability, sex- ual orientation or union membership. Such affirmative action shall include, b~t is not limited to, the following: employment, upgrading, demotion, transfer, re- cruitment or recruitment advertising, layoff or termination, rates of pay or other forms of compensation, and, selection for training. Retailer shall post in conspicuous places, available to employees, agent, applicants for employment and other persons, a notice to be provided by the contracting agency setting forth the provisions of this Non-discrimination Clause. 2. Retailer shall, in advertisements or requests for employment placed by it or on its behalf, state that all qualified applicants will receive consideration for em- ployment without regard to race, color, religious creed, ancesb7, national ori- gin, sex, age, disability, sexual orientation or union membership. 3. Retailer shall send each labor union or worker's representative with which it has a colle~ve bargaining agreement or other contract or understanding, a notice advising said labor union or worker's representative of its commitment to this Non-discrimination Clause. Similar notice shall be sent to evenj other source of recruitment regularly utilized by Retailer. 4. ,It shall be no defense to a finding of noncompliance with the contract com. pliance regulations issued by the Pennsylvania Human Relations Commission or this Non-discrimination Clause that Retailer had delegated some of its ern- ployrnent practices to any union, training program or other source of recruit- ment that prevents it from meeting its obligations· However, if the evidence indicates that the Retailer was not on notice of the third party discrimination or made a good faith effort to correct it, such factor shall be considered in mitiga- tion in determining appropriate sanctions. 11 5. Where the practice of a union or of any training program or other source of re- cruitment will result in the exclusion of minority group persons, so that Retailer will be unable to meet its obligations under the contract compliance regulations ,s_u~u EL .~;,= ?en,',5~.Nania H:,man P. ela~ic~-~s Commission, or this Non- discrimination Clause, Retailer shall then employ and fill vacancies through other non-discriminatory employment procedures. 6. Retailer shall comply with the contract compliance regulations of the Penn- sylvania Human Relations Commission, 16 PA Code Chapter 49 and with all laws prohibiting discrimination in hiring or employment opportunities. In the event of Retailer's noncompliance with the Non-discrimination Clause of this contract or with any such laws, this contract may, after hearing and adjudica- tion, be terminated or suspended, in whole or in part, and Retailer may be de- clared temporarily ineligible for further Commonwealth contracts, and such other sanctions may be imposed and remedies invoked as provided by the contract compliance regulations. 7. Retailer shall furnish all necessary employment documents and records, and permit access to its books, racerds, and accounts by the contracting agency and the Human Relations Commission, for purposes of the conic'act compli- ance regulations, pursuant to ~49.35 of these regulations. If Retailer does not possess documents, or records, reflecting the necessary information m- ' quested, it shall fumish such information on reporting forms supplied by the contracting agency of the Commission. 8. Retailer shall actively recruit minority subcontractors or subcontractors with substantial minority representation among their employees. 9. Retailer shall include the previsions of this Non-discrimination Clause in every subcontract so that such provision will be binding upon each subcentmctor. 10. The terms used in this No.n-diacrimination Clause shall be the same as in the conl~act compliance regulations issued by the Pennsylvania Human Relations Commission, 16 PA Code Ch. 49. 11. Retailer obligations under this clause are limited to the Retailer's facilities within Pennsylvania, or, where the conb'act is for purchase of goods manufac- tured outside of Pennsylvania, the facilities at which such goods are actually produced. 12 APPENDIX B J.N. STANT GAMES REQUlREMENT~ 1. Retai~er Checking Accc~,nt Reta~ier agrees to maintain a checi(ing account that is accessible to the Lottery for the drafting of funds owed to the Lottery from the sales of Instant Games Lottery tickets. The Retailer may establish a separate Lottery account or use a current business account. Any charges associated with the Retailer checking account are wholly the responsibility of the Retailer. There can be no limitations on the number or amount of deposits, withdrawals or checks that can be made. Retailer agrees to ~ make prompt settlement at its assigned bank or at such other locations as may be directed by the Deparlment and to pay all those amounts due and owing according to procedures established by the Department and incorporated by reference hereto. "FAILURE TO COMPLY WITH ANY OF THE PROVISIONS OF THIS PARAGRAPH WILL RESULT IN IMMEDIATE SUSPENSION OF THE RETAILER'S AUTHORITY TO SELL TICKETS AND MAY BE CONSTRUED AS A BREACH OF THIS AGREEMENT WARRANTING TERMINATION." 2. Minimum Sales Requirements This Agreement may be terminated in whole or in part if the Retailer fails to meet .. the average minimum sales volume of Instant Games tickets. The minimum sales volume requirement for Instant Games Retailers shall be 30% of the average weekly Instant Games ticket sales for all Instant Games Retailers in the Retailer's sales area for the previous quarter or for the current quarter, whichever is less. If the Retailer does not meet the applicable Instant Games minimum sales require- ment dudng any quarter, the following procedure will be undertaken: a. As soon as possible after the end of a quarter in which the Retailer does not meet the minimum sales requirement, the Retailer will be noti- fied in writing by the Lottery that the sales did not meet the minimum sales requirement.' .The Retailer shall be given one additional quarter to meet or exceed the minimum sales requirement. The Lottery will ex- ert its best efforts to provide marketing support and assistance to Re- , toilers identified, as they attempt during the next quarter to meet or ex- ceed the minimum sales requirement. If the Retailer does not meet the minimum sales requirement for two (2) consecutive quarters, the Re- tailer's contract and license for the sale of instant tickets may be re- voked pursuant to their terms. 3. Claim Services The Retailer agrees to provide all authorized and required claim services inCluding but not limited to the following: 13 a. Payment of all valid Instant Games winning ticket claims providing that proper prize validation steps have been taken, without regard to where the ticket was purchased, with payoffs to be made in cash, check, or money order drawn on the proceeds from ticket sales. b. Completing claim forms for Instant Games winning tickets in excess of SE00, an,~ fc~?.,.~ .... , - ,-~,-,, ,~ Frop6r step~ to ~eccrc --.;'.C t~ans.,mit said claJn~ forms to Lottery. c. Acting in the capacity of a claim center if appointed by the Department to perform such sen/ica. 4. Terminal Requirements a. The Retailer agrees to provide a grounded three (3) prong electrical outlet for use with grounded plugs. It is to be located within seven and one-half unobstructed feet ('7~') from the Instant Terminal and have a clearance of three inches (3") below the AC outlet. b. The Retailer agrees to provide a space (approved by the Depart- ment) of at least six and one-half inches (6~") wide, thirteen inches (13") deep and eleven inches (11") in height for the Instant Terminal to allow for proper ventilation, maintenance, and material loading and re- moval. c. The Retailer shall meet such training standards as shall be established by the Department. d. The Retailer agrees to purchase and install a R J11 telephone jack within fourteen unobstructed feet (14') of the Instant Terminal. The In- stant Terminal will be connected to a standard single business tele- phone line. The telephone line does not need to be for the exclusive use of the Instant Terminal and may be used by the Retailer for other purposes when not in use by the Instant Terminal. e. All equipment and {upplies provided to the Retailer by the Department or its vendors shall remain the propert7 of the Department or its yen- ·, dots, and shall be used for their intended purpose and not for any other purpose. The Retailer shall acquire no Interest whatsoever in the equipment. f. All expenses, whether fixed or recurring associated with the items re- quired to be furnished by the Retailer, shall be the sole responsibility of the Retailer. g. To have the computer terminal available for the sale of Lottery tickets during all hours and days that the Retailer's business is open and sales authorized. 14 h. To exemise diligence in the operation of the terminal, to provide physi- cal security for the terminal, replace paper stock and to immediately notify the vendor of any phone line or terminal malfunction. i. To refrain from performing any mechanical or electrical repairs te the terminal. j. To be responsible for custodial care of the terminal. The Department reserves the right to terminate this Agreement in the event of repeated malicious abuse, and/or negligent care of the terminal. Abuse is de- fined as, but not limited to, accidents such as liquid spills, breakage or other Retailer caused problems resulting in the need for the terminal to ~' be replaced. k. Retailer is responsible for loss or damage of the equipment in excess of normal wear and tear. Retailer must report any "out of order" condi- tion of the equipment to the vendor in accordance with current Lottery procedure. 15 APPENDIX C NUMBER GAMES RECIUIREMENTR 1. I::itial Secudt'y Retailer agrees to provide a Surety Bond, Irrevocable Letter of Credit or other surety satisfactory to the Department in the amount requested by the Depa~rnent and for the term requested by the Department as a condition of this agreement or any renewal hereof. 2. Additional Secudty Retailer agrees to pay for and maintain a Surety Bond or Irrevocable Letter of Credit in an amount not to exceed one and one-half (1~) times the Retailer's aver- age weekly Lottery sales, for cause, upon notification by the Lottery. Failure to comply with the provisions for maintaining the Lottery account as outlined in Para- graph 3, Appendix C, of this Agreement or the Lottery's receipt of adverse financial i ' nfdrmafion may resu t in permanent surety requirement. 3. Lottery Retailer Checking Account Retailer agrees to open and pay the cost of maintaining a separate Lottery Retailer checidng account at the Retailer's assigned bank· All receipts from the sale of tickets and instant settlements, minus Retailer's commission and money kept on Retailer's premises to pay winning tickets, must be deposited in this account. Funds in the account must be accessible at all times. There can be no limitations on the number or amount of deposits, checks, or withdrawals that can be made. Retailer also agrees to make prompt settlement at its assigned bank or at such other locations as may be directed by the Department and to pay all those amounts due and owing according to procedures established by the Depamnent and incor- porated by reference hereto. FAILURE TO COMPLY WITH ANY OF THE PROVISIONS OF THIS PARAGRAPH WILL RESULT IN IMMEDIATE SUSPENSION OF THE R~'AILER'S AUTHORITY TO SELL TICKETS AND MAY BE CONSTRUED AS A BREACH OF THIS AGREEMENT WARRANTING .TERMINATION. 4. Retailer Checking Account Deposits Deposits must be made a minimum of every other business day. A Retailer may keep no more than 20% of the amount of the average weekly sales at the retail lo- ca§on for payment of winning tickets unless given specific authorization by the Lottery. 5. Minimum Sales Requirement Numbers Games This Agreeme.~t may be te.'minsted in whole or in part if Retailer fails to meet the average minimum sales volume requirement of $ Games tickets, per week of Number This average minimum sales volu~ne requirement is a tan (10) week floating sales average and is established after data collection review and analysis of factors that may include, but are not limited to the following: ~ ' a. Demographic and socio-economic marketing information b. Customer paffems c. Products and/or services provided d. Product volume e. Proximity to work, residential and commuter sites f. Hours of operation " g. Convenience to the public h. Financial stability i. Willingness to promote and advertise Lottery ticket sales J. Proximity to other Numbers Games retailers in the marketing area If the Retailer fails to meet the above average minimum sales requirement, the fol- . lowing procedures will be implemented: a. New Retailers (Nut, hers Games sales less than s/x [6] months) · · On week 13, if 10 week sales average is not 50% of average · minimum sales requirement, Retailer will receive written noti- fication. · On week 20, if 10 week sales average is not 75% of average minimum sales requirement, Retailer will receive written noti- fication. · On week 26, if 10 week sales average is not 100% of averag~ ' minimum sales requirement, Retailer will receive written notifl- / cation. 18 · On week 30, if sales still have not reached 100% of average minimum sales requirement, a full examination and evaluation will be made to determine disposition of the terminal. b. Estab~ish~c.' Retailer (Numbers Gan:es sa~.~ mo;'~ than six [6] months) · If 10 week sales average falls below average minimum sales requirement, Retailer will receive written notification. ·If sales do not improve within thirty (30) days of first leffer, Re- tailer will receive written notification. · If sales do not improve within thirty (30) days of second letter, a full examination and evaluation will be made to determine dis- position of the terminal. This Agreement may be terminated in whole or in part if the Retailer fails to meet the average minimum sales volume requirement of Instant Games tickets which shall be 30% of the average weekly Instant Games ticket sales for Numbers Games Retailers in the Retailer's sales area, excluding the 10% of the Numbers Games Retailers in the sales area having the highest average weekly Instant Games ticket sales, for the previous quarter or for the current quarter, whichever, is less. If the Retailer fails to meet the above average minimum sales requirement, the fol- lowing procedures will be implemented: a. As soon as possible after the end of the quarter in which the Retailer does not meet the Instant Games ticket minimum sales requirement as specified by the contract, the Retailer will be notified in writing by the Lottery that the sales did not meet the minimum sales requirement The retailer shall b~-given one additional quarter to meet or exceed the minimum sales requirement. · b. If a Numbers Games Retailer does not meet the minimum sales re- quirement for Instant Ticket sales for two (2) consecutive quarters, but its Number Games ticket sales meet or exceed the average Numbers Games ticket sales of its sales area, the effort to sell Instant Games tickets put forth by the Retailer may be reviewed by the Lottery. The ' Lottery will exert its best efforts to provide marketing support and assis- tance to the Retailer identified, as it attempts during the next quarter to meet or exceed the minimum sales requirement. If the Retailer dem- onstrates to the Lottery that it is making a good faith effort to sell In-' stant Games tickets, the Lottery may consider a waiver of the Instant Games ticket sales requirement for the quarter under consideration. If " the Retailer is unable to demonstrate that it is making a good faith ef- fort to sell Instant Games tickets, the Retailer will be notified in writing 19 by the Lottery that its contract and license have been terminated or re- voked pursuant to their terms. Good faith effort shall include, but not be limited to, the following cdteda: · The Retailer has Instant Games tickets prominentJy displayed in its Retailer location. · The Retailer has displayed the corresponding Instant Game ticket point-of-sale materials in its Retailer location. c. If the Retailer does not meet the minimum sales requirement for Num- . bers Games ticket sales for two (2) consecutive quarters, but meets the ~ minimum sales requirement for'Instant Games Retailers within its sales area for the same two (2) consecutive quarters, the Retailer's On-line contract may be terminated, and the terminal removed, pursuant to the terms of the contract. If the Retailer does not meet the minimum sales requirement for Numbers Games Retailers and Instant Games Retail- ers for two (2) consecutive quarters, the Retailer's contract and license for Instant and On-line tickets shall be terminated or revoked pursuant to their terms. The Instant Games Retailer minimum sales requirement for Instant Games tickets shall apply during the calendar quarter in which Number Games sales commence unless it is the same quarter in which Instant Games tickets are first delivered. 6. Claim Services The Retailer agrees to provide all authorized and required claim services including but not limited to the following: a. All instant game requirements agreed to in Appendix B, Section 3, Claim Services. b. Ascertaining and posting winning numbers as soon as possible fol- lowing the drawing of the winning numbers. c. Payment of all valid winning ticket claims providing that proper prize · · validation steps have been taken without regard to where the ticket was purchased, with payoffs to be made in cash, check, or money order drawn on the proceeds from ticket sales. d. Issuing claim tickets for winning tickets in excess of $600.00. e. Acting in the capacity of a claim center if appointed by the Department to perform such service. 20 7. Terminal Requirements The Retailer agrees to the following provisions with regard to the terminal to be in- stalled upon the Retailer's premises: a. To l~ay for telecommunic~.tic.~s d~-fa line '~stallation cost~, in an emount to be determined by the Department. In addition, to l~ay for telecom- munications weekly line charge in an amount to be determined by the Department. In all cases of interruptions of service whether it be vaca- tions, remodeling/construction, NSF/delinquency conditions, suspen- sions, etc., On-line Lottery Retailers will be liable for the weekly line charge and will be required to have sufficient funds in their Lottery ac- ~ counts so that the line charge amount can be drafted on a weeldy ba- sis. b. To provide, pdor to installation of the terminal, an electrical 4-way grounded outlet on a separate and hours a day. dedicated circuit that remains on 24 c. T~e Department will supply forms, ticket stock, ribbons, accounting re.- ports and other related supplies. d. To Provide sufficient space for the terminal ' - scribed in "Snace r~....= ........ vath raqu~rements as de- ,- "~'.1~, =men~s ano Equipment Specifications-. Re- tailer will provfde a duly signed copy of "Space Requirements and Equipment Specifications" prior to installation. e. To be solely responsible for costs incurred in site Preparation. f. That the terminal shall be Iocetad wfthin the Retailer's premises only at a point of sale approved by Lottery and cannot be moved without prior written approval by Lottery. If approved to ralocata the terminal, the Retailer will pay the costs incurred from the telephone company. The · Retailer will be resRonsible for providing an electrical a-way grounded outlet on a separate and dedicated circuit at the new location. · , g. To be responsible for payment of all electrical utility charges incurred in the operation of the terminal. h. To Provide a telephone at the location of the terminal in order to make and receive telephone Calls for maintenance assistance or administre- tive needs. i. To have the computer terminal available for the sale of Lottery tickets during all hours and days that the Retailer's business is open and ~ales authorized. Retailer's business location and hours are described in the site survey, which is hereby incorporated by reference as part of this -. Agreement. 21 j. To exemise diligence in the operation of the terminal, to provide physi- cal secudty for the terminal and paper stock, to replace ribbons and ticket stock and clear paper jams as required and to immediately notify the vendor of telephone communications or terminal malfunction, such as, but r~i. limited to, the issuance of a non-valid ticket, the inability to cancel a ticket or the non-issuance of a ticket. k. To refrain from performing any mechanical or electrical repairs to the terminal. ~ I. To be responsible for custodial care of the terminal. The Department reserves the right to terminate this Agreement in the event of repeated malicious abuse and/or negligent care of the terminal. Abuse is de- fined as, but not limited to, accidents such as liquid spills, breakage or other Retailer caused problems resulting in the need for the terminal to be replaced. 8. Equipment The Department agrees to Provide Retailer with a computer terminal in working or- der and to install the required telecommunications line for the operation of the ter- minal. 9. Stock All equipment, manuals, tapes, cards, computer printouts, ticket stock and other items ' furnished to the Retailer in connection with its functions as Retailer, shall re- main at all times the sole property of the Department; it being understood that such equipment is not leased by Retailer, but is in Retailer's custody solely as a seller of tickets and such equipment shall be surrendered upon termination of this Agree- ment Retailer is responsible fo~'lpss or damage of the equipment in excess of normal wear and tear. Retailer must report any "out of order" condition of the equipment · to the vendor in accordance with current Lottery Procedure. 22 APPENDIX D IN~STANT TICKET VENDIN~ MACHINE (rTVM) REQUIREM_EN'~ ,,; I Instant Games Requirements Retailer must be a licensed Instant Game Retailer pursuant to the provisions of Appendix B (Instant Game Requirements). 2. Minimum ITVM Sales Requirement This Agreement may be terminated in whole or in part if the Retailer fails to meet the average minimum sales volume of~ ITVM sales. The minimum sales volume requirement for each I'T'VM shall be an average of $500 per week for each calendar quarter. If the Retailer does not meet the applicable I'rvM minimum requirement during any quarter, the following procadura Will be undertaken: a. As soon as possible after the end of a quarter in which the Retailer does not meet the minimum ITVM sales requirement, the Retailer Will be notified in writing by the Lottery that the sales did not meet the minimum I'I'VM sales requirement. The Retailer shall be given one (1) additional quarter to meet or exceed the minimum ITVM sales re- quirement. The Lottery will exert its best efforts to provide marketing support and assistance to Retailers identified, as they attempt, during the next quarter, to meet or exceed'the minimum ITVM sales require- ment. If the Retailer does not meet the minimum ITVM sales require- ment, the ITVM may be removed. 3. Instant Ticket Vending Machine Requirements a. The Retailer agree~J, to provide a grounded three (3,1 prong electrical AC outlet for use With grounded plugs located Within ten unobstmctad feet · (10') from the ITVM. b. The Retailer agrees to provide a space (approved by Department) for the I'TVM to a/Iow for Proper ventilation, maintenance, and matedal loading and removal. c. The Retailer shall meet such training standards as shall be established by the Department. d. All equipment and'supplies provided to the Retailer by the Department or its vendors shall remain the property of the Department or its ven- d°rs, and Shall be used for their intended purpose and not for any other PUrpose. The Retailer shall acquire no interest whatsoever in the equipment. 23 e. All expenses, whether fixed or recurring associated with the items re- quired to be furnished by the Retailer, shall be the sole responsibility of the Retailer. f. The Retailer agrees to have the ITVM available for the sale of Lottery tick~t~ during all hours and days that tile Retailer's bus;ness is open. g. The Retailer agrees to exercise diligence in the operetJon and care of the ITVM, to provide physical secudty for the ITVM, and to immediately notify the vendor of any malfunction. h. The Retailer agrees to refrain from performing any mechanical or elec- trical repairs to the ITVM. i. The Retailer agrees to be responsible for custodial care of the ITVM. The Department reserves the dght to terminate this Agreement in the event of malicious abuse and/or negligent care of the ITVM. Abuse is defined as, but not limited to, accidents'such as liquid spills, breakage or other Retailer caused problems resulting in the need for the ITVM to be replaced. J. Retailer is responsible for loss or damage of the · ul of norma . q 'pment in ex I wear and tear. Retailer must reno,+ --,, .-.-, .... cess tion of the equipment to the vendor in accordance with current Lottery procedure. k. Retailer is responsible for maintaining the appearance of the ITVM in a clean and neat manner. The extedor of the machine must be regularly cleaned. I. Retailer agrees that the ITVM shall be secured or weighted with sand- bags or other medium at the Lottery's option. The means to be used shall be agreed to by the Retailer and Lottery. m. Retailer agrees to 6e solely responsible for costs incurred in site prepa- ration. n. The Retailer agrees to be responsible for payment of all electrical utility charges incurred in the operation of the IT'VM. o. The Retailer agrees to maintain the access keys to the I'I'VM on the li- censed Premises at all times. Failure to do so may result in the re- moval of the I'I'VM. 24 4. Location of I'I'VM The ITVM shall be located within the Retailer's premises only at a point of sale ap- proved by Lottery and cannot be moved without Lottery's prior written approval. If given approval to relocate the I'i'VM, the Retailer will pay all costs incur'red for the move. Relocation without prior approval of the Lottery will result in termination of that Retailer's right to use an ITVM at its location. 5. Instant Games Requirements a. Retailer is required to maintain an adequate supply of Pennsylvania Lottery instant tickets. The I'I'VM must sell as many different games as ~ _. the machine has ticket bins, i.e., if it has four (4) ticket bins, four (4) different games must be sold. Retailer must also sell all games avail- able at a minimum of one other location in the business facility other than in an ITVM. b. Retailer agrees to utilize to the fullest extent possible all point-of-sale materials Provided by the Lottery. c. Retailer agrees to regularly fill the ITVM to avoid empty ticket bins. d. Retailer shall remove all instant game tickets and money from the I'I'VM .. prior to any equipment maintenance or repair service. e. Retailer shall make available to the Loffery techn/ciar~, or the Lottery designated technician, the equipment and keys during normal business hours for maintenance, repairs and inspection. 25 I, LAR~Y L. MILLER, have prepared the foregoing Complaint. The factual statements contained therein are true and correct. I am authorized to make this Verification on behalf of my client, National Grange Mutual Insurance Company, who is outside the jurisdiction of this Court. The facts set forth in the pleading are based upon my review of the documents and information furnished by Anthony Montecalvo, Bonds Claims Manager for National Grange Mutual Insurance Company. This Verification is made subject to the penalties of 18 Pa. Cons. Stat. Section 4904 relating to unsworn falsification to authorities, which provides that if I knowingly make false averments, I may be subject to criminal penalties. Date~ April 26, 2001 / LARRY L. MILLER Larry L. l~ller, Esquire Pa. Supreme Court I.D. No. 28122 1423 State Road Duncannon, PA 17020 Telephone: [717] 957-2828 Attorney for Plaintif£: NATIONAL GRANGE ~JTUAL INSURANCE C(IMPANy · NSU mCE COmPAny : ~5 West Street . ~u~ _ ' CIVIL A~ION - ~W ~eene, NJ 0343~ 7000 P~aintiff ~B I. B~ t/d/b/a ~EST~ DO~ G~L STORE and ~EST : G~ STORE II 603 Franklin Street : Carlisle, PA 170~3 ~ N. B~ t/d/b/a ~EREST GEN~L S~ and : EV~EST ~E~ STORE II 603 Franklin Street Carlisle, PA 17013 231 ~eals Dr~ve Carlisle, PA 17013 DILS~D B~T Carlisle, PA 17013 ~ ' '~" ~'~l~i0~ 231 ~eals Drive [~- ~ Carlisle, PA 17013 ~[ '[ ' Defendants YOU HAVE BEEN SUED IN COURT. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20} days after this Complaint and Notice are serve~ by entering a wri~ ..... and flli-- in wr ..... t~~ appearance personall o the clai~ a-~ ~g Wl=~ the Court your clef----- ~- r,~y ~torney ~_ ~ -- o~ ~rsn against you. Yo ..... -..o~ ~r oD]et=ions to ~ uo so the case ma ........... ~ ar= warned that if ,,o- ~-~- =u ~galns= you b'- ~ .... z~u unu a Jud.g~.ent may be ~ z u~ =our= Without further no~lce for any money claimed in the C~--~-~-~ 'T~ain= or for requested by the Plaintiff. You may ~e°ther claim or relief other rights important to you. money or property or Cumberland County Bar Association 2 Liberty Avenue Carlisle, PA 17013 800.990.9108 DATE: April 26, 2001 By:_ Attorney I.D. ~28122 Attorney for Plaintiff Larry L. Miller, Esquire Pa. Supreme Court I.D. No. 28122 1423 State Road Duncannon, PA 17020 Telephone: [717] 957-2828 Attorney for Plaintiff: NATION~ G~ANGE ~nUAL INSm~NC~ COMPANY NATIONAL GRANGE hUTUAL : IN Tn~ COURT OF COMMON PLEAS INSURANCE COMPANY = CUMBERLAND COUNTY, PENNSYLVANIA 55 West Street : CIVIL ACTION - LAW Keene, NJ 03431-7000 Plaintiff v. : DOCKET KAUKAB I. BUTT t/d/b/a EVil, EST: GENERAL STORE and EVEREST GENERAL STORE II : 603 Franklin Street : Carlisle, PA 17013 : KHURRAM N. BUTT t/d/b/a EVEREST GENERAL STORE and EVEREST GENERAL STORE II : 603 Franklin Street : Carlisle, PA 17013 : KAUKAB I. BUTT : 231 Meals Drive : Carlisle, PA 17013 : DILSHAD BUTT 231 Meals Drive : Carlisle, PA 17013 KHURRAMN. BUTT : 231 Meals Drive : Carlisle, PA 17013 Defendants : Plaintiff, National Grange Mutual Insurance Company, by its undersigned attorney, hereby sues the Defendants, Kaukab I. Butt trading and doing business as Everest General Store and Everest General Store II, Khurram N. Butt trading and doing business as Everest General Store and Everest General Store II, and Kaukab I. Butt, Dilshad Butt and Khurram N. Butt, individually, and in support thereof, says: 1. Plaintiff, National Grange Mutual Insurance Company ('National Grange' or 'Plaintiff" or "Surety.), is a corporation incorporated under the laws of the State of New Hampshire that maintains its principal place of business at 55 West Street, Keene, NJ 03431-7000. 2. Defendants, Kaukab I. Butt trading and doing business as Everest General Store and Everest General Store II, and Kaukab I. Butt, individually, is an adult individual who resides at 231 Meals Drive, Carlisle, PA 17013. 3. Defendants, Khurram N. Butt trading and doing business as Everest General Store and Everest General Store II, and Khurram N. Butt, individually, is an adult individual who resides at 231 Heals Drive, CaFlisle, PA 17013. At all times relevant hereto, Khurram N. Butt was an owner of Everest General Store II. 4. Defendant, Dilshad Butt, is an adult individual who resides at 231 Meals Drive, Carlisle, PA 17013. 2 A. THE INDEMNITY AGREEMENT 5. On March 24, 1999, Kaukab I. Butt and Dilshad Butt, individually, and Kaukab I. Butt on behalf of Everest General Store II, (hereinafter collectively referred to as the 'Indemnitors'), executed a Specific IndemnityAgreement (the 'Indemnity Agreement'). A copy of the Indemnity Agreement is attached hereto as Exhibit 'A" and it is incorporated herein by reference. The Indemnitors executed the Indemnity Agreement as essential consideration for National Grange's issuance of bonds on behalf of Everest General Stores, II ('Everest') and Indemnitors. 6. Under the Indemnity Agreement, the Indemnitors agreed to exonerate, hold harmless and indemnify National Grange from and against all claims, losses, and expenses incurred as s result of having executed bonds on behalf of Everest and Indemnitore. The Indemnity Agreement provides= ~. That the Indemnitor(s) shall at all times indemnify, save the Company harmless from, and place the Company in funds to meet any claim, demand, loss, liability, cost, charge, attorneys~ fee, expense, suit, order, judgment, or adjudication arising from the existence of the Bond. 7: That the Cemp~ny shall have the exclusive right . to determine for itself and t~e Indemnltor(e) whether any claim or suit brought against the Company or the Principal, result of the existence of the ond, be settled or defended and its decision shall be binding and conclusive upon the · Indemnitor(e). 7. In reliance upon the executed Indemnity Agreement, National Grange executed a permit bond on behalf of Defendants. B. THE BOND 8. National Grange executed a permit bond, Bond No. S- 412-628 (hereinafter 'the Bond'). A true and correct copy of the Bond is attached hereto as Exhibit 'B.' The bond was required by the Commonwealth of Pennsylvania, Department of Revenue, Pennsylvania Lottery for Defendants~ Application for Lottery Retailer License to sell lottery tickets. C. LOSSES AND EXPENSES 9. On October 24, 2000, National Grange received a claim in the amount of $15,326.55 from the Commonwealth of Pennsylvania, Department of Revenue, Pennsylvania Lottery ('PA Lottery"). A true and correct copy of the claim letter is attached hereto as Exhibit 'C' and it is incorporated herein by reference. 10. By letters dated November 7, 2000, National Grange notified Defendants of the claim of the PA Lottery. The November 7, 2000 letters requested written confirmation from Defendants, by December g, 2000, that the matter had been resolved. True and correct copies of the November 7, 2000 letters to Defendants are collectively attached hereto as Exhibit 'D' and incorporated herein by reference. 11. National Grange made demands on the Indemnitors for protection from the claims, but the Indemmitors have completely ignored these demands. 4 12. Because Defendants failed and refused to respond to the November 7, 2000 letters, on April 19, 2001, National Grange was forced to pay the claim of the PA Lottery, pursuant to the Indemnity Agreement, for the penal amount of $10,000. 13. Also, due to the failure of the Indemnitors to protect it from these claims, National Grange has incurred substantial expenses, including investigative costs and attorney,s fees and will continue to incur such costs in the future. CO0~l~ ON~ NATIONAL GRANG~ MUTUAL INSURANCE COMPANV KAUKAB I. BUTT t!d/b/a ~V~EST G~NERAL STORE and ~v~RT G~F~AL STORR II. KHURRAM N. BUTT t/d!b/a ~VEREST GE~AL STORE and EV~T GENEI~AL STORE II KAUEAB I. BUTT. DILSHAD BUTT and I(HURRAM N. BUTT 14. Paragraphs 1 through 13 above are incorporated herein by reference as if set forth in full. 15. The Bond was executed and issued by National Grange at the request of Defendants and in consideration for and reliance upon the Indemnity Agreement. 16. Indemnit~rs are in default of the Indemnity Agreement as they have refused to indemnify National Grange. 17. Upon such default, the Indemnity Agreement provides that Indemnitors shall, ~nteral~a, indemnify National Grange from and against any and all liabilities, losses and expenses imposed upon, sustained, or incurred by National Grange by reason of having executed the Bond. 5 18. The IndemnityAgreement was in full force and effect at the time of the execution and delivery of the Bond and is presently in full force and effect. National Grange has complied with all conditions precedent set forth in the Indemnity Agreement. 19. National Grange believes and therefore avers that it has and will continue to incur significant losses and expenses including but not limited to investigative fees, consultantst fees, court costs, and attorneyts fees, all of which Indemnitors are responsible to National Grange for under the Indemnity Agreement. 20. Because all of said liabilities, losses and expenses are continuing and are not presently capable of exact calculation, National Grange cannot, at this time, reduce its losses to an exact liquidated sum, but it reasonably anticipates them to be in excess of $20,000.00. 21. By reasons of the foregoing, National Grange has demanded that Indemnitors reimburse it the claim paid to the PA Lottery pursuant to the Indemnity Agreement. 22. To date, Nationa! Grangers demands have not been complied with by Indem~itors. On the contrary, Indemnitors have refused to comply with National Grangers demands for indem~ification. As a result, Indemnitors are in breach of the promises and covenants set forth in the Indemnity Agreement. 23. Indemnitors are otherwise in default under the Indemnity Agreement as they have failed and refused to cooperate with National Grange. 6 WHEREFORE, National Grange Mutual Insurance Company prays that your Honorable Court enter Judgment in its favor and against Defendants. CO~'~T TNO NATIONAL Gl~NG~ MUTTTaT. INST/~ANCE COMi~ANy EAT~CA~ I. BUTT t/d/b/a ~VER~ST G~N~tL STO~ ~,~ EV~T GkN~AL STO~ II. ~ N. B~TT t/d!b/a ~¥~RRRT ~AL STOR~ and ~F~EST G~N]~L STOR~ II~ KAUKAB I. BU'~-r. DILSHAD BUTT. and K}~U~D~MN. BUTT 24. Paragraphs i through 23 above are incorporated herein by reference as if set forth in full. 25. As a factual and legal result of its execution of the Bond on behalf of Defendants, National Grange has incurre~ losses and expenses as described above. 26. The Indemn~tors have failed to protect National Grange from such losses and expenses despite their obligations as set forth in the Indemnity Agreement. WHEREFORE, Plaintiff, National Grange MUtual Insurance Company, respectfully requests that judgment be entered in its favor an~ against Defendants, Jointly and severally, for compensatory damages in an amount exceeding the jurisdictiona! amount requiring arbitration referral pursuant to Local Rules of Court and for such other and further relief as this Court deems just and appropriate. 7 NATIONAL GRANGE MUTUAL INSURANCE COMPANy X. KAUKAB I. BUTT t~d~b/a EVEREST G~ERAL STORE and EVEREST GF~AL STORR II. ~ N. BUTT tld/b/a ~V~T GENERAL STORE and EVER~RT GRN~ S'i~RE II. IfAUF~AB I. uu'l-r. DILSHAD BUTT. and KHURRAM N. 27. Paragraphs i through 26 above are incorporated herein by reference as if set forth in full. 28. National Grange obtained an assignment of the PA Lottery's claim against Defendants as part of the settlement. 29. Defendants owe the PA Lottery, and now National Grange, $15,326.55 as described in Exhibit "C" attached hereto. WHEREFORE, Plaintiff, National Grange Mutual Insurance Company, respectfully requests that judgment be entered in its favor and against Defendants, Jointly and severally, in the amount of $15,326.55, plus attorney's fees, costs, and such further relief as this Court deems just and appropriate. COUNT FOUR NATIONAL GRANGE MUTUAL INSURANCE COMPANV KAIIKAB ~. BUTT and I(HURRAMN. BUTT · 30. Paragraphs I through 29 above are incorporated herein by reference as if set forth in full. 31. Defendants had an Agreement for Sale of Pennsylvania Lottery Tickets with the PA Lottery. A true and correct copy of the Agreement is attached hereto as Exhibit 'E" and incorporated herein by reference. 8 32. Pursuant to Defendants~ Agreement with the PA Lottery, they agreed to be personally liable for all proceeds from the sale of tickets. 33. Additionally, Defendants agreed to save and hold the PA Lottery harmless of all losses including all consequential damages and reasonable attorney,s fees. 34. National Grange has paid the claim of the PA Lottary and is now equitably subrogated to the rights of the PA Lottery under the Agreement. 35. Defendants, Kaukab I. Butt and Khurram N. Butt, owe National Grange $15,326.55, plus all related compensatory damages, interest, and attorney,s fees. WHEREFORE, Plaintiff, National Grange Mutual Insurance Company, respectfully requests that judgment be entered in its favor and against Defendants, Kaukab I. Butt and'Khurram N. Butt, in the amount of $15,326.55, plus compensatory damages, interest, attorney's fees, costs, and such further relief as this Court deems just and appropriate. ' DATE: Apr~l 26, 2001 By: :'"1' ~'~. LARRY L. MILLER Attorney I.D. $28122 9 SPECIFIC INDEMNtTy AGREEMENT NOW, THEREFORE, the undersigned, hereinafter called the IndemnJtor(s) (if there be more than one Indemnitor they jointly and severally and · for each Other do) hereby undertake, represem, warrant and agree as fOllOWs: 1. That the foregoing statements mace and answers given in th~s applica[~on are the truth wi:haut reservation, and are mede for the purpose of inducing the National Grange Mutual Insurance Company, hereinafter referred to as the Company, to execute or procure the execution at a certain Ix)nd or undertaking horeln applied for. 2. That this Agreement shell sppy to the bond or undertakln herein · renewals thereof, or additions or substitutions thor . .. g apphed for, and any and all extensions, increases · · 5. That the In~emnitor(s) she at all times I..r~,erhntfy, save the Company harm ess from and Upon the Iheernnltor{e). I~ the contract or In the plans or epaclflcations relating ther ' to m w,thout the necessity of seeing to the application thereof, It be~e~to;undera~ke.~°~*~g-,ua, ra-ntoe a?.va.n? or loans for the purposes of the contract _the~<~?ntract, .or_cause, or consent, to the cOmplotlon therof. The ndamnltor s harsh the tOOls, plant, , · ,. u,= =ve.~ or a eerault as aforesaid), all right, tJtle and Int~rae~ sets over to the Company (to he of the Indamnltor(e) In and to all the Indemnltor(s) or any one or mere of them on which the Company ia or may become Surety. And the Indornnltor(e) hereby authorize tho 11. That the word Indemnltor{s) ' ANY PERSON WHO KNOWINGLY AND WITH INTENT TO DEFRAUD ANY INSURANCE COMPANY OR OTHER PE APPLICATION FOR INSURANCE OR STATEMENT OF CLAIM RSON FILES AN CONCEALS FOR THE PU CONTAINING ANY MATERIALLY F RPOSE OF MISLEADING INFOR Al. SE INFORMATION OR FRAUDULENT INSURANCE A MATt .O_N CONCERNING ANY FACT MATERIAL THE CT, WH CH IS A CRIME, AND SUBd RE'K) COMMITS A ECT$ SUCH PERSON TO CRIMINAL AND CIVIL PENALTIES. Signed, Sealed and DATED this 24 th " day of March · Everest General Store T! 8IGNED~~P~ (iNDEMNITOR. E~S) (Seal) Type Name & Title: Kaukab !. Butt, O~ner ( (INDEMNITO IN IDUALLY) Type Individual Indemnitor Name: , Kaukab ]:. But.t IndlVidual lndemnitorAddrese: 231 MeaIs Driver ~arlisle, Fa. 17013 IndiMdualindemnltorAddrnss: 2'41 Menlo: l~-;v~. Car]~.sle Pa. 17013 INDEMNITY AOREEMENT MUST BE SIGNED. DATED AND WITNESSED .. · SYE DEPT. APR 1 5, · U ,abc ...... an=~ MUlL, al Insurance_ Company _BOND NO. S 412 - 628 ~~ ~T~E P~Eh~S, T~t we Kaukab I Burr, T/a Everest General S~o,e Il ~f 603 Franklin 5~reet, Carlisle, pa. 17013 a~ (hereafter call~ Principal), and ~ ~ ~ ~ ~ a corpo~ti~ o~niz~ ~ ~ha la~ ~f ~he S~te of M~ H=~r- and ~,,~h ~ . C~ealth of [~sylva~a, with its ~ ~fice iff the City of Kedge, N.H. as (h~einafter called S~ty), are held a~ fi~ly ~d ~to: ~m~a I~ of Penn~l~m a De~ent of R~,~nue 28~ Turnpike Indu~ia I D[k~ Middle[ow~, Penn~fE3nia ~7057 as ~ltg~, in the full and Just s'~m of Ten-Thousand Dollars Even .......... Do~rs, lawful ~e~/ of the Dnit~ States ef ~;eri~, to ~ ~Id ~: t~ said Obligee, successors oc asstgns, on ~mmnd for and cn accost cf any f~ds ~ce fc~ %he Fri~ipal as a revolt o~ the ssle lotte~ tic, ets to w~ch tke Pr~iFel h~s fsil~i to ~ke tL~ely pa~ts tc the Obligee; for which ~)~, ~ll ~ [~y [~ ~ m~e, ~ bluff ~ur~e[ves, c~ he~s, ~-x~tors~ trators, succ~sors ~ assi~s, jc~tly a~ severally, fi~ly ~. the~ presets. ~R~S the ~r~ci~l has en%~, or l~ a~t to ~nter, ~to a written Agreement with the ~lig~ to ~ fin~cially res~sib!e to the ~%t~' for a~Z' r~nues d~i~d ~ the of P~ylvania ~tt~ Tickets as is r~re s~iflca!ly set fo~ ir. said Agr~t, to which ~ t~ly ~rfo~ ~ ~r~ o~ the cc~ts, te~, a~ co~itio~ of said Agr~t, t~s obligation to ~ void; otbe~se t6 r~n In ~11 fc~e ~ eff~. The S~ty ~y C~el ~s ~d ~ writt~q ~ice to ~ ~r~nci~31 ~d Oblige, ~ Certifl~ ~il, at least thirty (30) da~ ~ advance of ~he dat~ of ca~ellatl~. ~al~ ~th ~ s~l~ ~d dat~ ~is 2& Ch day of March .: 19 99 . Witness: Kaukab I. Butt Attest~ {o: NATi~ G~GE ~O~ D~U~E George R. Nunemaker 5. Commonwea]lh ol Pennsylvania Department of Revenue PENNSYLVANIA LOTTERY 2~0 Turnpike Industrial Drive Oc[ober 24, 2000 Middletown, PA 17057-5491 Proceeds ~e~ef~f OJder PennsyfValliafl~ Nation~! Grange ? r,.rluaI Insurance ~-o,npm~y Attn: Claims 5010 Campuswood Drive P.O. Box 4742 Syracuse, NY 132214742 Re: National Grange Mutual Insurance Company Lottery Bond# $ 412 - 628 Retailer~ 390526 Kaukab I Butt DBA Everest General Store II We are hereby filing a claim in the amount of.$15,326.55 against the above referenced bond which lists Kaukab I. Butt DBA Everest General Store II as the principal and the Pennsylvania Lottery as the obligee. On March 20, 2000 cancellation from the Numbers Games Network took place due to delinquency. The following is a breakdown of the amounts due: See attached Ledger Sheet. Total Instant Games Due: 12,155.75 Total On-liue Games Due: 3,170.80 Total Due: $15,326.55 Claim Amount: $10,000.00 · I have enclosed the following: computer report listing on-line settlements, computer reports listing return items, and a copy of the retailer license application and euntraet. If you have any questions eoueeming this matter, please contact Tammy Fasick at (717) 986-4704. Budget Division Chief. LBB/TLF/tf Enclosure ~ll/OIT~'O0 PHONE 717-g86.4599 FAX 717-986-4767 National l lrang,e utual Insurance ss West Street Company P.O. Box 2300 Keene, NH 03431-?000 ~ (603) 352-4000 Tuesday, November 07, 2000 Kaukab & Dilshad Butt 231 Meals Drive Carlisle, PA 17013 RE: Principal: Kaukab Butt d/b/a Everest General Store Bond #: S=412628 Obligee: Commonwealth of PA Retailer No.: 390526 Dear Sir:. Please f'md enclosed copies ofanrrespondeace from the PA LoUe~ noti~in§ National Grange Mutual ora claim on our bond provided on your behalf. Please review the attached documentation and advise as to what action you intend to take to resolve this outstanding malter. If! do not ~celve wrlttan conf'mnatmn that ~hts matter has bean resolved by December 7, 2000, National Grange Mutual will proceed to issue payment of our full bond amount. In that evant we shall look to you fur full reimbursemant of any amounts paid. If you have any questions Concerning .any of the above please corr~pand directly with the andorsigned. Sincerely, Anthony Montecalvo Bond Claims Manager Enclosure: Cc: Pennsylvania Department of Revenue Attn. Larry Beard, Budget Division Chief Pennsylvania Lottery '. 2850 Turnpike Industrial Drive Middletown, PA 17057-5491 National l~,lra n ge. utual 55 west Street Insurance P.o. Box :aoo Company Keene, NH 03431=7000 ~ (603) 352-1000 Tuesday, November 07, 2000 Everest General Store Atm. Kaukab Butt 603 Frankl/n $~eet Carlisle, PA 17013 RE; Principal: Kaukab Butt d/b/a Everest General Store Bond #: 5-412628 Obligee: Commonwealth of PA R~tiler No.: 390526 Dear Sir: Please f'md enclosed copies ofenrrespondence from the PA Lottery notif'y/ng National Grange Mutual ora claim on our bond provided on your behalf, Please review the attached documentatien and advise as t outstanding matter, o what action you intend to take to resolve this If I do not receive wr/tten confirmation that this matter has been resolved by December 7, 2000, Natiomd Gnmge Mutual will proceed to iSSue paymeot of our full bond emotmt. fur full reimbursement of any amounts Paid. In that event we shall look to you If you have uny questiena ennceraing any of the above please correspond directly with the unders/gned. sfi~-rely, AnthOny Mont~calvo Bond Claims Manager ~tclosura.' Pennsylvan/a Department of Revenue Attn. Larry Beard, Budget Division Ch/el Pennsylvarda Lottery 2850 Turnpike Indusa-iai Drive Middletown, PA 17057-549! Retailer# ~.~ * .- -- ................. Te~. ~ *~.y_~p , '- ' .... ,..: at License ko~tion - Address "/ Co~o~te Name This Agreement is by and beiween the Commonwealth of Pennsylvania, Department of Revenue, Pennsylvania Lottery, hereinafter referred to as "Department', and ~ hereinafter referred to as "Retailer". -- The Department of Revenue has as one of its responsibilities, in accordance with 72 P.S. §3761-1 ~ and 6'/PA Code §801.1 et.~., the authority to select retailers for the sale of Pennsylvania Lottery tickets. Under the law and regulalions, the Department is empowered to enter into contracts with persons to sell Pennsylvania Lottery tickets and to pay such persons a commission as set forth in the Lottery law and regulations. ~es hereinafter set for~, and intendin-. ,- ,. .... _g,,o_ing recita!s and of the mutual rom- follows: u ,,~ uu ~ugany bound, tr~e parties hereto agPree as A. Definitions As USed in this Agreement, the tan-n: 1. "Agreement" shall mean this Agreement for the sale of Pennsylvania Lottery tickets. The term shall apply to all contractual and license rights, duties and obligations .of the parties. 2. "Effective Date" shall mean the date affixed to this Agreement by the Executive Director as set forth on page 10 herein. 3. "Secretary" Shall mean the Secretary of Revenue. 4. "Executive Director'' shall mean the Executive Director of the Penn- sylvania Lottery. 5. "Retailer" shall mean Such person or persons authorized by this Agreement to sell Pennsylvania Lottery tickets. The term shall incdude Tickets" ("Application") which application is incorporated by reference as a part of this Agreement. 6. "Lottery Games" shall mean all those games, including instant and numbers games, authorized for sale by Retailer on behalf of the Lottery. 7. "Lottery" shall mean the Pennsylvania Lottery of the Pennsylvania Department of Revenue. 8. "Lottery Law" shall mean Act of March of 1971 (P.L. 6, No. 2), 72 P.S. §3761-1 ~ 9. "Lottery Regulations- shall mean 61 PA Code §801.1 ~ 10. "'l'erm" of this Agreement shall include the period hereinafter provided for and any renewals thereto. 11. "Substantial Change of Ownership', shall mean a transfer of 50% or more of the equity of the Retailer's business. B~Retailer's Obliqation~' 1. Sales Retailer agrees to sell such Pennsylvania Lottery tfckets as may be authorized by the Department. Retailer agrees that P~rsuant to 61 PA Code ~809.35, Lottery tickets shall not be sold to any person under eighteen (18) years of age. 2. Controlling Provisions Retailer agrees to abide by all Provisions o1' the Lottery law, and any rules and regulations, ProCedures or instruction partment, the Secre,--- -- -- s issued by the De- . ,-,~, ut ne. venue, .the Lottery, or the Executive Direc- tor: ..as. ar.e n_ow in effect or which heremaftar may be Promul ated o _p.uo~.s. nea. Such Lottery law rul ~ a.., ..... g r sa'uctions are inco ...... J ?. ,.u ,ugu~auons ProCedures ~,,,,~ =- men[ ,~,,~,,=t-, nerem Dy referenCe as a part of this 2 3. Warranty of Financial Responsibility Retailer warrants that it is financially responsible and will provide evi- dence in support of such fact Upon demand by the Department. Such evidence may include, but is not limited, to. a~icl~s of incorpo,mt/on, by- *aws, pa~'dler~r~p agreements, ce~fied financial statements, bank refer- ences, credit references and business references. 4. Records Retailer agrees to maintain current and accurate records, in confor- manca with generally accepted accounting Principles, of all transac~ona dealing with ticket sales. Retailer further agrees to retain all accounling records pertaining to ticket sales, including but not limited to bank state. merits and canceled checks, for a period of not leas than three (3) yearn. All records required to be maintained by Retailer shall be available to representatives of the Department, upon request, for inspection and audit during regular business hours. 5. Fiduciary Responsibility Retailer agrees that with respect to the proceeds from the sale of tickets, it acts in a fiduciary cepacity with respect to such funds until such f~nda are paid into the Lottery Fund as required. Retailer shall be Personally liable for all Proceeds from the sale of tickets. 6. Independent Contractor Status Retailer agrees that, except with respect to the proceeds from the sale of tickets, it shall render its service under this Agreement as an independ. ent contractor and, as such, shall further agree that any contractual or tortious liability it may incur in connection therewith shall be its sole ra. sponsibility. · 7. Non-Discrimination Provision Retailer agrees that during its performance c~nder this Agreement, the Retailer wfll comply with the non-discrimination Provisions attached hereto and made a part hereof as Append/x A. 8. Promotional Material and Training Retailer agreea to prominently post current point-of-sale and other pro~. motional material supplied by the Department. Retailer agrees to attend Such training sessions as the Department shall provide to ensure that the Retailer and its employees are Preperiy trained in the sale of Lottery tickets. 3 9. Minimum Sales Requirements Retailer agrees to be bound by the minimum sales requirements con- tained in the provisions of Appendix B for Instant Games Only Retailers, · ~PPe. ndix C tc~ ,, ~- .... ,,umu~, ~=ar~' ~s Re[a[~e~.s, an~ Appendix D for Instant Ticket Vending Machine Retailers. 10. Instant Terminal Requirements If the Retailer is authorized to sell Lottery tickets for Instant Games only, the Retailer agrees to the provisions of Appendix B, incorporated by ref- erence hereto. 11. Instant Ticket Vending Machine (I'I'VM) Requirements If the Retailer is authorized to sell Lottery tickets through an I'I'VM, the Retailer agrees to the Provisions of Appendix D, incorporated by refer- ence hereto. 12. Numbers Games Requirements If the Retailer is authorized by the Department to sell Lottery tickets for Numbers Games, in addition to Instant Games, the Retailer agrees to the Provisions of Appendix C, incorporated by reference hereto. 13. Claim Services If the Retailer is authorized by the De it agrees to be b .. partment to provide · ,., ...... OUnd by the Provisions of A · claim ~.n~y .~erar~ers and Appendix ~ ~,,. ~, .... P_pendlx B, for Instant Games ra;ed I~y reference hereto '-' ,,,, ~umuers Games Retailers, incorpo- 14. Notice of Business C. hanges Retailer agrees to give the Department a minimum of ten (10) days ad- ,, vance notice of Retailer's intent to: a. sell its business, b. cease operations of business either temporarily (including vacations) or Permanently, c. move to a new location, or d. of any substanti.al change in ownership. Retailer shall notify the Department within ten (10) days of: .. '~ a. any change in business hours, b. any change in financial COndition, 4 c. any change in type of primary business, or d. any event which alters any information disclosed in the "Application,,. 15 ~.o. re~m~:.-. Non-Assign=hie This Agreement for the sale of Lottery tickets is non-assignable. Any such unauthorized assignment shall constitute a breach of this Agree- ment. 16. Sole Business Retailer warrents that, PUrsuant to 61 PA Code §805.2(a), it is not in the excJusive business of selling Lottery tickets. 17. Sale of Pennsylvania Loffery Tickets The Retailer agrees that it shall sell Pennsylvania Lottery tickets only. The Retailer understands the sale of any other Lottery l~ckets shall con- stilute a breach of this Agreement and this contra~t shall be revoked im- mediately in the event that the Retailer violates this provision. _ ~C. Department's Obliqation,_. 1. Commission The Department agrees to pay Retailer a commission for all valid sales, plus or minus any adjustments and less a weekly line service charge, if applicable. The rate of commission shall be as designated in the regula- tions for each Lottery game. 2. Equipment The Department agrees'to provfde such equipment and supplies as · listed in Appendix B for Instant Retailers, Appendix C for Numbers · Games Retailers, and Appendix D for Instant Ticket Vending Machine Retailers, incorporated by reference hereto. 3. Materials, Supplies, Advertising The Department agrees to provide necess Retailer including point-of-s-, ....... ary Lottery related matedal struction$. =~= material, manuals, procedures and in-s to 5 The Department agrees to use its best efforts to provide Retailer with current tickets, as available, and any other necessary equipment, as more fully enumerated in Appendix ~-. ~, ..... B for Instant Retailers, Appendix C · - ,,~,,,b~rs .- --.. ~. . _. G:me& ,".::o~le, s, c. ,d Appendix ~ t'or Jr~s~ant Ticket Vend- ing Machine Retailers. The Department agrees to promote and advertise all Lottery games. 4. Additional Retailers The Department reserves the dght t~ approve and establish new Retail. ers with or w/thout Numbers Games capabilitie ' monwealth, as it deems appropriate s in any part of the Cam- S. Term/nation of Agreement This Agreement may be terminated by the Department for any of the following: a. Fa/lure to comply with any of the terms of this Agreement, the Lottery law, its rules and regulations or instructions, including but not limited to 61 PA Code §805.17, issued by the Execu- tive D/rector of the Pennsylvania Lottery or the Secretary of Revenue may result in immediate suspension or termination of this Agreement, in whole or in part, at the sole discretion of the Department. Upon Such suspension or termination, the Re- tailer's authorfty to sell Lottery tickets of all tYpes shall imme- diately cease. b. Failure to make full se~ement on the required settlement date or failure to have float cash monies available or failure to meet the average minimum sales volume requirement constitute a brea ' ~ +k.' ....... shall also ch .,, .,,a ,~gmement ann may result in im- mediate suspension or termination of the Agreement in whole ·. or in part at the sole discretion of the DepaArnent. c. Any misrepresentation or omission in Retailer's application to sell Lottery tickets or any renewal application will result in im- mediate suspension of this Agreement, in Whole or in part, and ~ay result Jn termination of the Agreement, in whole or in part, the sole discre..tion of the Department. d. This Agreement may be terminated, in whole either party for the convenience of or in part, by either party and for reasons other than those detailed in sub-paragraphs a, b and c, upon fourteen (14) days written notice by the terminating party. 6 terms, breach thereof, L.....~.....~ ~ -~ ,..~.~. ~..~. .~ ' '~f~ ~"~-~' ~ '..; ~O f.?.? or pedo~ance required of the Re~i~er or the D~ pa~ent under ~is Agreement, or ~th regard to the suspension or pm- posed te~ination of this Agreement, the Retailer shall be given an o~ po~uni~ to be heard through the Presentation of ~Een mpresen~fions of its position to the Depa~ment ~in seven (7) days. At the time of making i~ wdEen mPmsen~fion to the ~pa~ment, ~e Re~Jler shall Present su~ fa~s, evidence, s~te~en~ and other relevant inflation as ~ shall desire ~r ~e ~nsidem~on of~e Depa~ent in roaching i~ final dete~inafion. Such nofi~ to ~e Depa~ent shall not aff~ ~e Depa~enfs au~o~ to suspend Retailers auffiod~ ~ sell Lo~ tickets pending final dete~ination. ~e Se~ of Revenue or ~e Se~e~'s designee shall make a final dete~ination in ~6ng ~ ~ ga~ ~ ~e dispu~ and shall Send same ~ ~e ReViler wi~in ~i~ (30) days of m~ipt of ReVilers ~Ren Present,on. The ReVilers sole options ~ mspe~ ~ any su~ derision shall be ei~e~ 1.accept said decision as a co~ and binding inte~retafion of · e Agreement, or 2. ~ make such ~aim as ~ may deem appropriate ~ the Co~ mondaY's Boa~ of Claims pumuant to ~e A~ of May 20, 1937, P.L. 728, No. 193, as amended ~ p S. ~51-1 ~ ReViler agrees ~at Lo~ funds shall not ~ ~held by Re~iler pending msol~on ~ ahy disp~. ~is Agreement shall au~mati~lly te~inate on Mamh 15 of yoll~g ~e eff~ve date on ~a-~ ,~ --, .... ~e year ~ m.~ app~val ~y ~e ~Pa~ent of ~etailefs 'Appli~fion ~r Rene~p and ~yment of ~e required fee. ~Js Ag~ement ~11M~ina~ upon ~e e~im6on of EeMilefs tempo~ hmnse, ~f ~e Decadent denies Eemiler a pe~anent limnse for any mason, or ~ ~mated PUmuant ~ Paragraph C5 of ~is AgmemenL ReViler agrees not to mndu~ any business or hold ~self out as a seller of ~ets unless or until ~is Agreement is rene~d. 7 Renewal of this Agreement I'or additional terms shall be at the sole dis- cretion of the Secretary of Revenue. The Secretary may, pursuant to 61 P~. Ccd~ ~$95 ? £05. !5, ~..~, the te;m cf t,,e Ag, ~,~me~-,~ by ~ssu ng temporary extensions pending administrative determination. E.. Statute and Ref:lulatio~,. Retailer acknowledges the receipt of the applicable statute and regula. tions governing the sale of Lottery tickets. Retailer will be deemed to have actual notice of future ragulations upon publication in the Permsyl* vanla Bulletin. ,Such future rules and regulations shall be incorporated by reference into this Agreement upon publica~fon. Ali owners, partners, and corporate officers of Retailer must sign this Agreement and must acknowledge that they fully understand and con- sent to the terms of this Agreement. This Agreement does not become effective until fully executed. H. Indemnification/Hold Harmless Cle~ The Retailer shall save and hold harmless the Commonwealth and.its officers, agents and employees or any of them from any and all clams, demands, actions or liability (including, but not limited to, consequential damages and reasonable attorney's fees) of any nature based upon or adsing out of: 1. Any services Performed by the Retailer, its agents or employ- ees, except such services as are propedy performed at the ex- · press direction of the Department. 2. The use by the Retailer of any copyri hted or - composition, secu ' dee g_ .u.ncopynghted rfty. d, process, patente(3 Invention, arti- cJe or appliance furnished or used in the Performance of any services under the contract. 3. The negligent, or equally or more culpable, conduct by the Retailer, its agerits, subcontractors and employees during the term of or in connection with the performance of the contract. ' · 8 The fa/Jure of the Department to insist upon strict adherence to any term of this Agreement shaJl not be considered a w ' partment of the right thereaft . . a?.ve.r or deprive the De- er to Insfst upon strict adherence to that term or any other term of this Agreement. J. General Previsi ns · This Agreement shall be governed by and construed according to the laws of. the Commonwealth of Pennsylvania. This Agreement constitutes the entire agreement betwe..en the Department and · · spect to all contractual and Ifcens · . the R.e. tafler vath re- ed rights, duties and obligations of the parties. The Agreement shall not be amended or mod/f/ed Such amendment or modification is unless in writing and signed by both Par'des. -' If a court of competent Jurisdiction determines that any portion of this Agreement is invalid, that part shall be severed and the remaining por- tions shall control. (THIS PORTION OF PAGE INTENTIONALLy LEFT BLANK) 9 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be exe- cuted, intending tc b~ ~i~y bound he;'eby. Owner/l'ntemsted Pa~y _ TITLE ~?g~JY~c/Y' ' ~er/In~erested Par~ TITLE ~.~ BY ~er~n~=msted Pa~ _ TI~E _ BY ~er~n~r=s~d Pa~ TITLE ~ BY ~er~n~mAed Paf~ TffLE ~ - BY ~edlntemsted Pa~ TITLE ~ BY ~er/Inte~s[ed Pa~ _ TITLE ~ BY ~er/ln~ms~d Pa~ TITLE ~ BY ~er/r~m~d Pa~ TITLE ~ B~, ~er/Intemsted Pa~ TI~E ~ APPROVED BY ~e~ve Dim~ Penn~ania Lo~ ~pa~ent of Revenue Commomal~ ~ Penns~vania EFFECTIVE DATE 10 APPENDIX A NON-DISCRIMINATiON CLAUSE Dudng t~e term, of thi~. contract, Retailer agrees as fc~iows: 1. Retailer shall not discriminate against any employee, applicant for employ_ ment, independent contractor or any other person because of race, color, relig. ious creed, ancestry, national odgin, sex, age, disability, sexual orientation or union membership. ~ · Retailer shall take affirmative action to ensure that applicants ara employed, and that employees or agents are treated dudng employment without re a israCe, color, religious creed, ancestry, national origin, sex, age, disability, g_~erdx,to ual orientation or union membership. Such affirmative action shall JnCJude, bM not limited to, the following: employment, upgrading, demotion, lransfer, re- cruitment or recruitment advertising, layoff or termination, rates of pay or other forms of compensation, and, selection for training. Retailer shall post in conspicuous la applicants for em,,I ....... P ces, available to e,~,-~ ..... contractinn a,e,,~?_'~.~n~ _aha other Persons, a n,~,-- ~,_,?~,yees,..agent, Clause ° ~' "~'x =emng forth the provisions of ;~'-"'~,-~- ~e. P~vlaed by the · ""° '"un'alscrimination 2. Retailer shall, in advertisements or requests for employment placed by it or on its behalf, stats that all qualified applicants will receive consideration for em- ployment without regard to race, co/or, religious creed, gin, sex, age, disability, sexual orientation or union anceslzy, national ori- membership. 3. Retailer shall send each labor union or WOrker's representative with which it has a collective bargaining agreement or other contract or understanding, a notice advising said labor union or WOrker's representative of its commitment to this Non-discrimination Clause· Similar notice shall be sent to every other source of recruitment regu'lariy utilized by Retailer. 4. ,It shall be no defense to a finding of noncompliance with the contract com- pliance regulations issued by the Pennsylvania Human Relations Commission or this Non-disc. J'imination Clause that Retailer had delegated some of its ern- ployment PraCtices to any union, training program or other source of recruit- ment that Prevents it from meeting its obligations· However, if the evidence indicates that the Retailer was not on notice of the third party discriminafJon or made a good faith effort to correct it, such tion in determining appropriate sanctions, factor shall be considered in mitiga- 11 5. Where the practice of a union or of any training program or other source of re- cruitment will result in the exclusion of minority group persons, so that Retailer w~lJ be unable to meet/ts obligations under the contract compliance regulations discrimination Clause, Retailer shall then employ and fill vacandes through t'~eia~.~c,.~s Col'~t~lJssJon, or ~,hJs NOn- other non-discrfminatory employment ProCedures. 6. Retailer shall comply with the contract compliance regulations of the Penn- sylvania Human Relations Commission, 16 PA Code Chapter 49 and with all laws Prohibiting discdminat/on in h/ring or employment opportunities. In the event of Retailer's noncompliance with the Non-discdm/nat/on Clause of this contract or with any such laws, this contract may, after headng and adjudica. tion, be terminated or suspended, in whole or in part, and Retailer may be clared temporarily ineligible for furthe other sanctions may be imposed and rreC~°m'-m°n.weal~ contracts, and suchde' contract compliance regulations, medles invoked as provided by the 7. Retailer shall furnish all necessary employment documents and records, and permit access to its books, records, and accounts by the contracting agency and the Human Relations Commission, for purposes of the contract corn · _ ance regulations, pursuant to ,~49 35 possess documents o .... ._ o..f these regulations , r,~,.u~us, reflecting the nec- ..... : '.",-~,erooes not quested, it shall furnish such information ~°°~y reformat/on re- · contracting agency of the Commission. on reporting forms supplied by the 8. Retailer shall actively recruit minodty subcontractors substantial minority rePresentation or subcontractors ,, among their employees, with 9. Retailer shall include the Provisions of this Non-discrimination Clause in every subcontract so that such provision will be binding upon each subcontractor. 10. The terms used in thi- ~,-- ~- · salon, 16 PA Code Ch. 49. 11. 'Retailer obligatJohs under this clause are limited to the Retailer's facilities within Pennsylvania, or, where the conf~act is for purchase of goods manufac,. lured outside of Pennsylvania, the Produced. facilities at which such goods are actually 12 APPFNDIX B I~NSTANT GAMES REQUIREMENT~ 1. Retei~er Ch-=cking I~eta~ier agrees to maintain a chec,~ing account that is accessible to the Lottery for the drafting of funds owed to the Lottery from the sales of Instant Games Lottery tickets. The Retailer may establish a separate Lottery business account. Any charges ass ' · account or use a current Wholly the responsibility of th-, = ..... ocmted with the Retailer chec · ._ or = ,~=~aller. r/~ere can be no "---'---- king account are , · amount of deposits, withdrawals or checks that can be made. Retailer agrees to ,,,,~aaons on the number make prompt settlement at its assigned bank or at Such other locations as may be directed by the Department and to pay all those amounts due and owing according to procedures established by the Department and incorPorated by raferanca hereto. "FAILURE TO COMPLY WITH ANY OF THE PROVISIONS OF THIS PARAGRAPH WILL RESULT IN IMMEDIATE SUSPENSION OF THE RETAILER,S AUTHORITY TO SELL TICKETS AND MAY BE CONSTRUED AS A THIS AGREEMENT WARRANTING TERMINATION.,, BREACH OF 2. Minimum Sales Requirements This Agreement may be terminated in Whole or in if the Retailer fails to meet the average minimum sales volume of Instant GamPeasrt volume requirement for Instant Games Retailers tickets. The minimum sales shall be 30% of the average weekly Instant Games ticket sales for all Instant Games Retailers in the Retailer's sa~es area for the previous quarter or for the current quarter, Whichever is less. If the Retailer does not meet the applicable Instant Games minimum Sales require- ment during any quarter, the following ProCedure will be undertaken: a. As soon as possible after the end of a quarter in which the Retailer does not meat the minimum sales requirement, the Retailer will be noti- fied in writing by the Lottery that the sales did not meet the minimum sales requirement.' .The Retailer shall be given one additional quarter to meet or exceed the minimum sales requirement The Lottery will ex- · ert its best efforts to Provide marketing support and assistance to Re- , tailers identified, as they attempt during the next quarter to meet or ex- ceed the minimum sales requirement. If the Reteiler does not meet the minimum sales requirement for two (2) consecutive quarters, the Re- teiler's contract and license for the sale of instant tickets may be m- yoked PUrsuant to their terms. 3. Claim Services The Retailer agrees to Provide all authorized and required claim services including but not limited to the following: 13 a. Payment of al/valid Instant Games winning ticket claims providing that Proper prize validation steps have been taken, without regard to where the ticket was purchased, with payoffs to be made in cash, money order drawn on the Proceeds from t/cket check, or sales. b. Completing claim forms for Instant Games $~00, and fc~c,.vi.~, ,- ...... winning tickets in excess of forms to Lottery. ~ ~''''~'=' s:sp: ~ ;ecc;'C -..-. · -- . _.. ~, c t, Gns,,mlt s~JG ciai[~ c. Acting in the capacity of a claim center if appointed by the Department to perform such service. 4. Terminal Requirements a. The Retailer agrees to Provide a grounded three (3) Prong electrical out/et for use With grounded plugs. It is to be located within seven and one-half unobstructed feet (7~') from the Instant Terminal and have a c/earenca of three inches (3") below the AC out/et. b. The Retailer agrees to ProVide a space (approved by the Depart- ment) of at least slx and one-half inches (6~") wide, thirteen inches (13") deep and eleven inches (11") in height for the instant Terminal to a/Iow for Proper ventilation, maintenance, and matadal leading and re- moval. c. The Retailer shall meet SUch treinJng standards as shall be established by the Department. d. The Retailer agrees to purchase and install a RJ11 te/ephone jack within fourteen unobstructed feet (14') of the Instant Terminal. The In- stant Terminal will be connected to a standard single business tele- phone line. The telephone line does not need to be for the exc/usive use of the Instant Terminal and may be used by the Retailer for other purposes when not in use by the Instant Terminal. e. All equipment and'supplies ProVided to the Retailer by the Department or its vendors shall remain the Property of the Department or its yen- ·, dore, and shall be used for their intended purpose and not for any other purpose. The Retailer shall acquire no interest whatsoever in the equipment. f. Al/expenses, whether fLxed or recurring associated with the items re- quired to be furnished by the Retailer, shall be the sole responsibility of the Retailer. g. To have the computer terminal available for the sale of Lottery tickets dudng all hours and days that the Retailer's business is open and sales " authorized. 14 h. To exercise diligence in the operation of the cai secudty for the terminal, terminal, to provide physi- replace paper stock and to immediately notify the vendor of any phone line or terminal malfunction. i. To refrain from performing terminal, any mechanical or elect.~cel repeirs to the J. To be responsible for custodial care of the terminal. The Department reserves the right to terminate this Agreement in the event of repeated malicious abuse, and/or negligent care of the terminal. Abuse is de- fined as, but not limited to, aCC/dents Such as liquid spills, breakage or other Retailer caused problems resulting in the need for the terminal to ' be replaced. k. Retailer is responsible for loss or damage of the equipment in excess of normal wear and tear. Retailer must report any "out of order' COndi- tion of the equipment to the vendor in accordance with current Lottery procedure. APPENDIX C 1. I:':itialSecurity NUMBER GAMES REQUIREMENTS Retailer agrees to provide a Surety Bond, Irrevocable Letter of Credit or other surety satisfactory to the Department in the amount requested by the Department and for the term requested by the Department as a conclition of this agreement or any renewal hereof. ~ . 2. Additional Security Retailer agrees to pay for and maintain a Surety Bond or Irrevocable Letter of Credit in an amount not to exceed one and one-half ('1~) times the Retailer's aver- age weekly Lottery sales, for cause, upon notification by the Lottery. comply with the provisions for mainta' · .g.mph 3, ApPendix C of "-.'- - Inlng the L6tterv acc,,--, ..... Failure to ,nTormation may res it inC'---ag-re*,ment or the Lott /s tI'ned in Pare- ~'o,,.anent surety requirement. .-~,~, ur aDverse financ/al 3. Lottery Retailer OheckJng Account Retailer agrees to open and pay the cost of maintaining a separate Lottery Retailer .. checking account at the Retailer's assigned bank· All receipts from the sale of tickets and instant serdements, minus Retailer's commission and money kept on Retaile.r's premises to pay winning tickets, must be deposited in this account. Fun. ds m the account must be accessible at all times. There can be no limitations on ~e number or amount of deposits, checks, or w~thdrewals that can be made. Retailer also agrees to make rom · ~other locations as m-,. '-- 4. p pt settlement at its -,-; ...... aue and ~,,~. ..... _~ ue.a~reCted by the De -.,,_~,u-eu Dank or at such ----,w -~arein to partment and to a POreted by g ProCedures established bv th- ~-PJ .y~alJ th?se amounts reference hereto. FAILURE TO - - '.'~panment and incor- COMPLY WITH ANY OF THE PROVISIONS OF THIS PARAGRAPH WILL RESULT IN IMMEDIATE SUSPENSION OF THE R~q'AILE , BE CONSTRUED AS A B R S AUTHORITY TO SELL ,,TERMINATION. REACH OF THIS AGREEMENT ~fATIRCRK~ ~ET~ AND MAY ~r~ru~NTING 4. Retailer Checking Account Deposits Deposjta must be made a minimum of ever~ other business da A keep no more than 20% of the am - - Y. R · .ca?.on for payment of win-~ ....... o. unt .or the average weekl eta~ler .may · ~'~.c au~orfzation by the Lottery. ',,-u u~ecs unless given s,,--:~-- Y...sa/es at the retail Io- 17 5. Minimum Sales Requirement This Agreement m~-y be te,,'rnina:ed i~, Whole or in part if Relailer fails to average minimum sales volume requirement of $ meet the ~ per week of Games tickets. This average minimum sales Volume requirement is a ton [Nl~mber week tloat/ng sa/es average and is established after data Collection review and analysis of factors that may include, but are not limited to the following: a. Demographic and socio-economic marketing information b. Customer patterns ~ PrOducts andlor services provided d. Product volume e. Proximity to work, residential and COmmuter sites f- Hours of operation g- Convenience to the public h. Financial stability i. Willingness to Promote and advert/se Lottery t~cket sales ]. ProxJrn/ty to other Numbers Games retailers in the · If the Retailer fail, t,, ....... marketing area will be implemented: the fol. . Iowingprocedure~'"'""e~mea~oveaverageminirnurnsalesrequirement, a. New Retailers (Nu'n~bers Games sales less than slx [6] months) · On Week '13, if '10 week sales average is not 50% of averege sales requiramen e i,er wi,, raceive nob · On Week 20, if '10 week sales average is not 7'$% of average minimum Sales requirement ficat/on . Retailer wil · On week 26, if '10 week sales average is not '100% of averag~ ~ minimum sa/es requirement, Retailer will receive written notifi- cation. ' · On Week 30, if sales still have not reached 100% of average minimum sales requirement, a full examination and evaluation Will be made to determine disposition of the terminal. b. Established Retailer (Numbsrs Gan:es s~-~.; mo;-~ ;;'~an six [6~ months) · Jf 10 week sales average falls below average minimum sales requirement, Retailer will receive wrfttan notification. · Jf sales do not improve within thirty ('30) days of first letter, Re- tailer will receive written notification. · If sales do not improve within thirty (30) days of second letter, a fLJll examination and evaluation will be made to determine POSition of the terminal, dis- Instant Games This Agreement may be terminated in whole or in part if the Retailer falls to meet the average minimum sales volume requirement of instant Games tickets which shall be 30% of the average wee/dy Instant Games ticket sales for Numbers Games Retailers in the Retailer's sales area, excluding the 10% of the Numbers Games Retailers in the sales area having the highest average wee/dy Instant .. Games ticket sales, for the Previous quarter or for the current quarter, whichever is less. If the Retailer fails to meet the above average minimum sales requirement, the foi- l°wing Procedures will be implemented: a. As soon as possible after the end of the quarter in which the Retailer does not meet the Instant Games ticket minimum sales requirement as specified by the contract, the Retailer will be notified in writing by the Lottery that the sales did not meet the minimum sales requirement. ,. The retailer sha~l b~-given one additional quarter to meet or'exceed minimum sales requirement, the · b. If a Numbers Games Retailer does not meet the minimum sales re- quirement for Instant Ticket sales for two (2) consecutive quarters, but its Number Games ticket sales meet or exceed the average Numbers Games ticket sales of its sales area, the effort to sell Instant Games tickets put forth by the Retailer may be reviewed by the Lottery. The ' Lottery wfll exert its best efforts to Provide marketing support and assis- tance to the Retailer identified, as it attempts dudng the next quarter to meet or exceed the minimum sales requirement. If the Retailer dem- onstrates to the Lottery that it is making a good faith effort to sell In: slant Games tickets, the Loltery may cons/der a waiver of the Instant Games ticket sales requirement for the the Retailer is unab~-. ,- -. . quarter Under COnsideration. If ,~ ~u uemonstrate that it is making a good faith ef- fort to sell Instant Games tic.kets, the Retailer will be notffied in writing 19 by the Lottery that its contract and license have been terminated or re- v°keri pursuant to their terms. GOod faith effort shall include, but not be limited to, the following criteria: · The Retailer has Instant Games tickets prominently displayed in its Retailer location. · The Retailer has displayed the corresponding Instant Game ticket point-of-sale materials in its Retailer location. c. I/' the Reta,er does not meet the minimum sales requirement for Num- , · bets Games ticket sales for two (2) consecutive quarters, but meets the minimum sales requirement for' Instant Games Retailers within its sales area for the same two {'2) consecutive quarters, the Retailer's On-line contract may be terminated, and the terminal removed, pursuant to the terms of the contract. If the Retailer does not meet the minimum sales requirement for Numbers Games Retailers a ers for two (2) cons~.-..~ .... nd Instant G ,,a. ,, .... for Instant and On-I/ne tickets Shall be terminated or revoked PUrsuant to their terms. ,,-,.,,uts contract and license The Instant Games Retailer minimum sales requirement for Instant shall apply dur/ng the Calendar quarter in which Games tickets Number Games sales commence unless it is the same quarter in which Instant Games tickets are first delivered. 6. Claim Services The Retailer agrees to provide all authorized and required claim services including but not limited to the fo/lowing: a. All instant game requirements agreed to in Appendix B, Section 3, Claim Se~ces' b. Ascertaining and posting winning numbers as soon as possible foi- l°wing the drawing of the winning numbers. c. Payment of all valid winning ticket claims Providing that Proper prize · · validation steps have been taken without regard to where the ticket was PUmhasad, with payoffs to be made in Cash, check, or money order drawn on the Proceeds from ticket sales. d. Issuing claim tickets for winning tickets in excess of $600.00. e. Acting in the Capacity ol~ a c/aim center if appointed by the Department to perform such s&rvice. 2O 7. Terminal Requirements The Retailer agrees to the following provisions with regard to the terminal to be in- stalled upon the Retailer's Premises: a. To pay for telecommunicat c*~s d~.f=, lin.. to be ~etermJned by the Department. I~ "~staliation costs ;n an amount addition, to pay for telecom. municalions weekly line charge in an amount to be determined by the Department. In all cases of interruptions of service whether it be vaca- tions, rem°deJing/construcl~on, NSF/delinquency COnditions, suspen- sions, etc., On-I/ne Lottery Retailers ~ · will be liable for the Weekly line charge and will be required to have sufficient funds in their Lottery ac- counts so that the line change amount can be drafted on a weekly ba- sis. b. To PrOvide, prior to installation of the terminal, an electrical &way grounded Outlet on a separate and dedicated circuit that remains on 24 hours a day. c. The Department will supply forms, ticket stock, ribbons, accounting re- ports and other related supplies. d. To Provide sufficient space for the terminal with requirements as de- scribed in "Space '- - r~equirements and Equipment Specifications.. Re- tailer will provide a duly signed Copy of "Space Requirements and Equipment Specifications,, pdor to installation. f~. To be solely responsible for coats incurred in site Preparation. That the terminal shall be/ocate .,.. sale 'PProV, d b.. the Reta,,r'a Premis,s --,, wn;en approva r,,. ,_,._; .~.'~e~7 ancl cannot b= ........ I "~' ~-u~e~y. ;r approved to relo~.~,.",,,.u_v=, u ~out prior ,~ me ~ermmal, the Retailer will pay the costs.incurred from the telephone COmpany. The Retailer Will be responsible for providing an electrical 4-way grounded outlet on a separet~ and dedicated circuit at the new location. ; g. To be responsible for payment of all electrical utility charges incurred in the operation of the terminal. h. To Provide a telephone at the location of the and receive telephone calla terminal in order to make live needs, for maintenance assistance or administre. i. To have the computer terminal available for the sale during all hours and days that the Retailer's business is open and ~ales of Lottery tickets author/zed. Retailer's business location and hours are described in the site survey, which is hereby incorporated by reference as part of this Agreement. 21 J. To exercise diligence in the operation of the terminal, to provide physi- cal secudty for the terminal and paper stock, to replace dbbons and ticket stock and clear paper.jams as required and to immediately noti~j the vendor of telephone communications or terminal malfunction, Such as, bu[ nu~. timited to, the issuance of a non-valid ticket, the inability to cancel a ticket or the non-issuance of a ticket. k. To refrain from per~orming any mechanical or electrical repairs to the terminal. ~ I. To be responsible for custodial.care of the terminal. The Department reserves the right to terminate this Agreement in the event of repeated malicious abuse and/or negligent care of the terminal. Abuse is de- fined as, but not limited to, accidents such as liquid spills, breakage or other Retailer caused problems resulting in the need for the terminal to be replaced. 8. Equipment The Department agrees to Provide Retailer wfth a COmputer terminal in Working or- der and to install the required teleCOmmunications line for the operation of the tar- _ minal. 9. Stock Al/equipment, manuals, tapes, cards, computer printouts, ticket stock and items furnished to the Retailer in connectio · O~er main at all times the sole Pro-e ..... ~_on wfth its functions as Retail equipment is ~ r[y or me ue artm · - er, shall re- ,: ..... not leased by Rete~-- ,-.~- . P- ant, it being Unders*,--,-, -,.- - . merit. SU ..... ~, ~ u~[1 tarm/netlol3 of this Agree. f Retailer is responsible fo~'loss or damage of the equipment in excess of normal wear and tear. Retailer m~st report any 'out of order" COnd~on of the equipment · to the vendor in accordance wfth current Lotte~j Procedure 22 APPENDIX D INSTANT TICKET VENDING MACHINE ITVM RE UIREMENTS !. Instant Games Reqcirements Retailer must be a licensed Instant Game Retailer pursuant to the provisions of ApPendix B (Instant Game Requirements). 2. Minimum ITVM Sales Requirement This Agreement may be terminated in Whole or in part if the Retailer fails to meet the average minimum Sales volume of I"rvM sales. The minimum Sales volume requirement for each I'I'VM shall be an average $500 per week for each calendar quarter, of If the Retailer does not meet the applicable ITVM minimum requirement during any quarter, the following Procedure Will be undertaken: a. As soon as possible after the end of a quarter in which the Retailer does not meet the minimum I'rvM sales requirement, the Retailer Will be notified in va'/ting by the Lottery that the minimum ITVM sales reo.~--,, ...... sa/es did not ~t ~. additJonal quarter to meet or exceed the minimum ITVM sales re. .... o.au De given one quirement. The Lottery will exert its best efforts to ('1) Provide market~ng support and ass/stance to Retailers identified, as they attempt, during the next quarter, to meet or exceed'the minimum ITVM sales ment. If the Retailer does not meet require- ment the ITVM may be removed, the minimum ITVM sales require. 3. Instant Ticket Vending Machine Requirements a. The Retailer agree~.to provide a grounded three ('3) prong electrical AC outlet for use With grounded plugs located Within ten Unobstructed feet ('10') from the ITYM. b. The Retailer agrees to Provide a space ('approved by Department) for the ITVM to allow for Proper ventilation, maintenance, and material loading and removal. c. The Retailer shall meet such training standards as shall be established by the Department. d. All equipment and'supplies provided to the Retailer by the or its vendors shall remain ~he property of the Deper~ant dots, and Shall be Department or its Yen- PUrpose. The USed for their intended PUrpose and not for any other equipment Retailer shall acquire no interest whatsoever in the 23 e. All expenses, whether fixed or recurring associated With the items re- tqhu~r~de tt~lebre' furnished by the Retailer, shall be the sole responsibi,ity of f. The Retailer agrees to have the I'/'VM available for the sale of Lottery tickets during all hours and days that the Retailer's business is open. g. The Retailer agrees to exerc/se diligence in the operation and care of the ITVM, to provide physical security notify the vendor of any ma/function, for the ITVM, and to immediately ~ h. The Retailer agrees to refrain from performing any mechanical or elec- trical repairs to the ITVM. i. The Retailer agrees to be responsible for custodial care of the IT'VM. The Department reserves the dght to terminate this Agreement in the event of malicious abuse and/or negligent care of the ITVM. Abuse is defined as, but not limited to. acc/dents 'such as liquid spills, breakage be replaced. or other Retailer caused prol~lems resulting Jn the need for the ITVM to ]. Retailer is responsible for loss or dama e of .. of normal wear and tear -,----. g the equinme.., .._ · ,~-raller must report an,, "..:.~ _.-, f.n _excess t~on of the equipment to the vendor in ~ ,,ut ur oraer' COndi- Procedure. accordance with current Lottery k. Retailer is responsible for main · · c!ean and neat manner ',',- taming the appearance -., .... cleaned. · ~ ne exterior of th,, -.--,-. w~ me ITVM in a · - ',,-~me must be regularly I. Retailer agrees that the ITVM Shall be secured or weighted with sand- bags or other medium at the Lottary's opf~on. The means to be used Shall be agreed to by the Retailer and Lottery. m. Retailer agrees to' ration. [~e solely responsible for costs incurred in '. s/te Prepa- n. The Retailer agrees to be responsible for payment of all electr/ca! utility charges incurred Jn the operetfon of the I'/'VM. o. The Retailer agrees to maintain the access keys to the I'I'VM on the I/- censed Premises at all times. Fa/lure to do so may result in the re- m°va/ of the IT'VM. 24 4. Location of I'TVM The ITVM shall be located Within the Retailer's premises Only at a point of proved by Lottery and cannot be moved Without Lottery's prior written appr~avlael ap- gtven approval to relocate the ITVrv/, the Retailer will pay all costs incurred for move. Relocation Without Prior · If that Retailer's durst to Use approval of the Lottery Wfll the an ITVM at its location, result in termination of 5. Instant Games Requirements a. Retailer is required to maintain an adequate supply of Pennsylvania ~ Lottery instant tickets. The ITVM must sell as many different games as -. the machine has ticket bins. i.e.. if it has four (4) ticket bins, four (4) different games must be soid. J~etailer must also seil all games avail able at a minimum of one other location than in an ITVM. Jn the business facility other b. Retailer agrees to Utilize to the fullest extent POSsible all Point-of-sale mater/als provided by the Lottery c. Retailer agrees to regularly fill the ITVM to avoid empty ticket bins. d. Retailer shall remove all instant · Prior to any · u/nm ,,o .... game tickets and mo from q ,- e,, "~am~enance or repair servicaney the ITVM e. Retailer shall make available to the Lottery technic/ar~, or the .. designated technic/an, the equipment and k.eys during rlormalLb°utts~esa hours for maintenance, repairs and inspection. 25 I, LARRY L. MILLER, have prepared the foregoing Complaint. The factual statements contained therein are true and correct. I am authorized to make this Verification on behalf of my client, National Grange Mutual Insurance Company, who is outside the jurisdiction of this Court. The facts set forth in the pleading are based upon my review of the documents and information furnished by Anthony Montecalvo, Bonds Claims Manager for National Grange Mutual Insurance Company. This Verification is made subject to the penalties of 18 Pa. Cons. Stat. Section 4904 relating to unsworn falsification to authorities, which provides that if I knowingly make false avermente, I may be subject to criminal penalties. Dater April 26, 2001 / LARRY L. MILLER Larry L. Miller, Esquire Pa. Supreme Court I.D. No. 28122 1423 State Road Duncannon, PA 17020 Telephone: [717] 957-2828 Attorney for Plaintiff: NATIONAL GRANGEMUTLU%LINSURANCE CO~4PANY NATIONAL GRANGE ~uTuAL = IN Tn~ COURT OF COMMON PLEAS INSURANCE COMPANY = CL~4BERLAND COUNTY, PENNSYLVANIA 55 West Street : CIVIL ACTION - LAW Keene, NJ 03431-7000 Plaintiff : v. : DOCKET KAUKAB I. BUTT t/d/b/a EVEREST: GENERAL STORE and EVEREST GENERAL STORE II : 603 Franklin Street : Carlisle, PA 17013 : KHURRAMN. BUTT t/d/b/a EVEREST GENEP~L STORE and : EVEREST GENERAL STORE II 603 Franklin Street : Carlisle, PA 17013 : KAUKAB I. BUTT 231 Meals Drive : Carlisle, PA 17013 DILSH D EUTT : TRUE COPY FROM RECORD Carlisle, PA 17013 : KHURRAM N. BU=u' : ~ ~ ~ 231 Meals Drive : Carlisle, PA 17013 : Defendants : YOU HAVE BEEN SUED IN COURT. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this Complaint and Notice are served by enterina a wr4.~ ..... . ~- =uur aerenses or objections tl =ne claims set forth against you~ You are warned t~at if you fail to do so t~e case may proceed W~thout entered against you bv h~ ~ .... ~ _ you and a Judgment ma · . _ ~ t_~ ~v,~u witho . y be money claimed In the Com-laint ~- ~-- ~t further ~o~lce for any requested by the Plaintiff. ,._~ ~= ~ny o=ner claim or relief other rights ~mportant to you. zuu may lose money or property or Cumberland County Bar Association 2 Liberty Avenue Carlisle, PA 17013 800.990.9108 DATE: April 26, 2001 By: '~ -""'~ \ Attorney I.D. $28122 Attorney for Plaintiff Larry L. M~ller, Esquire Pa. Supreme Court I.D. No. 28122 1423 State Road Duncannon, PA 17020 Telephone: [717] 957-2828 Attorney for NATIORAL GRANGE MUTUAL INSURANCE P~a~ntiff V. ~ I. B~ t-d-=- --- = DOCKET ~ STORE and ~EREST : G~E~L STORE II : 603 Fra~n Street : Carlisle, PA 170~3 ~ ~- B~ t/d/b/a : EV~EST G~ S~RE and : ~EST G~ S~RE II : 603 Fra~l~n Street : Carlisle, PA 170~3 ~BI.B~ : 23~ Meals Drive : Carlisle, PA 170~3 : DILS~ B~ : 231 ~als Dr~ve : Carlisle, PA ~70~3 : ~N. B~T : 23~ Meals Drive : Carlisle, PA ~70~3 : Defendants laintiff, National Orange Mutual Insurance Company, by its Undersigned attorney, hereby sues the Defendants, Kaukab I. Butt trading and doing business as Everest Genera! Store and Everest General Store II, Khurram N. Butt trading and doing business as Everest General Store and Everest General Store II, and Kaukab I. Butt, Dilshad Butt and Khurram N. Butt, individually, and in support thereof, says: 1. Plaintiff, National Grange Hutual Insurance Company ('National Grange or 'Plaintiff- or "Surety,), is a corporation maintains Its principal Place of b~slness at 55 West Street, Keene, NJ 03431-7000. 2. Defendants, Kaukab I. Butt trading and doing business as EVerest General Store and Everest General Store II, and KaUkab I. Butt, · individually, is an adult individual who resides at 231 Meals Drive, Carlisle, PA 17013. . 3. Defendants, Khurram N. Butt trading and doing bus,ness as Everest General Store and EVeres~ General Store II, and Khurram N. Butt, individu~lly, is an adult andtvidual who resides at 231 Meals Drive, Carlisle' PA 17013. At all times relevant hereto, Ehurram N. Butt was an owner of Everest General Store II. 4. Defendant, Dilshad Butt, is an adult individual who resides at 231 Meals Drive, Carlisle, PA 17013. 2 A. TRE INDEmNITy AGREEMENT · . . 5. On March 24, 1999, Ka~kab I. Butt and Dilshad . lndlvldually, and KaUkab I. Butt on behalf of Eve~--~ - _ Butt. II, ihe._~ .... . .... ~ensral Store . y Agreement (the IndemnityAgreemen~,~ a copy of the Indemntty Agreement is attac~ .... . ' '' · ~,=u hereto as Exhibit - . and it ~s incorporated herein by refer- A enos. The Indemnitors executed the Indemnity Agreement as essential consideration for National Grange,s ~ssuance of bonds on behalf of Everest General Stores, II ('Everest") and Indemnitors. 6. Under the Indemnity Agreement, the Indemnitors agreed to exonerate, hol~ harmless and indemnify Na~iona! Grange from and against all claims, losses, and expenses xncurred result of having executed as a bonds on behalf of Everest and Indemnitors. The Indemnity Agreement provides: ~. That the Indemnitor(s) shall at ' l~demnlfy, save the C ........ all times place the C-- .... ~_~,m~ harmless from- a-~ attorneys, ~-_ cost, charge, judgment, or ~T~-~'ex?~nse' ·suit, order, -x stenc. of a '°n --. from the 7: That the Company shall have the exclusive ~-ue~h~l=or s o=~£ aha the b (.) whether any cla' · fought against t~- - .... ~m or su~t as a r----~ _ --- ~um~any or the sh -- z the existence of o.,a~ .be bindina an~ ~.~,,~ ~=s aecision ~ndemnltor(s). ~ - ~unc~us~ve upon the · 3 7. ~n reliance Upon the executed ~ndemnity Agreement, National Grange executed a permit bond on behalf of Defendants. B. THE BOND 8. . Natlona! Grange executed a permit bond, 4~2-6~8 (hereinafter 'the Bondn). A true and correct Bond No. S- copy of the Bond ~e attached hereto as Exhibit ~B.~ The bond was required by the Commonwealth of Pennsylvania, Department of Revenue, PennsylVania Lottery for Defendantst Application for Lottery Retailer License to sell ~ottery tickets. C. LOSSES AND EXPENSEs · . 9. On October 24, 2000, National Grange recei Claim in .the amount of $15,326.55 from the CommonwealtVed a ~e~sY~anna, Department of Revenue, Penn,ylvania Lott-- h..of as Exhab~t C and it is incorporated herein by reference. · ~0. By letters dated November 7, 2000, Nationa! ~ ..... ~ot~fied Defendants of the claim of the PA Lottery. ~'~ ~ovember 7, 2000 letters requested written confirmation from Defendants, by December g, 2000, that the matter had been resolved. r~e. and correct copies of the November 7, 2000 lett .... uerendants are col~ectivelv ~_~_~ ~ ~ ~o ~ -~=u hereto as Exhibit "D" and incorporated herein bY reference. 11. National Grange ~ade demands on the Indemnitor- - ~r°tecti°n fr°m the claims, but the indemnitors have com_.'.~r ignored these demands, p~e=ely 4 12. Because Defendants failed the NOVember ?, 2000 letters, on April and refused t~ respond to was f~ced to pay the claim of the PA 19, 2001, National Grange Lottery, pursuant to the Indemnity Agreement, for the penal amount of $10,000. 13. Also, due to the failure of the Indemnito protect it from these claims, Nationa' - rs to · a ~range has substantial expenses, inCludina i-v--~ .... urred ~ -'--o~=lve costs and attorn fees and wlll continue to incur SUch costs in the future, ey s COUNT 14. Paragraphs i through 13 above are incorporated herein by reference as If set forth in full. 15. The Bond was executed and issued by National Gr at the request of Defendants and in cons-~ · ange · ~ueratlon for and re . Upon the Indemnity Agreement. ltance 16. Indemnit~rs ~et in default of the Indemnity Agreement as they have refus o indemnify National Grange. 17. · Upon such default, the Indemnity Agreement r ' that Indemnltors shall. ~,~., .~ .... P ovldes · ---~,w~, ln~emnlfy National Gran- and against any and all liabiliti~ ~-- _~e from --, ~ses an~ eXPenses imposed Upon, sustained, or inCUrred by National Grange by reason of having executed the Bond. 18. The Indemnity Agreement was in full force a at the time of the execution and deliver- - nd effect · ~ or the Bond and is P~esently in full force and effect. National Grange has . With all COnditions precedent set forth in ~ T~ ..... Complled t..~ -,,u~mni=y Agreement. 19. National Grange believes and therefore avers that ' nas and Will continue to incur significan~ - ~t . . . . c Losses and expenses including but not limited to Investigative fees; consultants, fees, court costs, and attorney,s fees, all of which Indemn~tor responsible to National Gran-~ ~ .... s are u- ~ unaer the Indemnity Agreement. 2.0. Because all of said liabilities, losses and expenses are continuing and are not presently capable of exact calculation, National Grange cannot, at this t~me, reduce its losses to liqUidated su~, but ~ an exact of $20,000.00. ~u reasonably anticipates them to be in excess 21. By reasons of the foregoing, National Grange has demanded that Indemnitors reimburse it the claim paid to the PA Lottery pursuant to the Indemnity Agreement. 2. To date,· National Grangers demands have not been complied With by Indem~ltors. · On. the contrary, Indemnttors ~efu~e~. to comply W~th Nat~ona! Grmnge,s deman have ~ndemn~f~cation. As a r -' . ds for · esul=, Indemn~tors are in breach promises and covenants set forth in the Indemnit- A of the ~ greement. · 23. Indemnttors. are otherwise in default un~ Indemnity Agreement as they have f -- uer the . alled and refused to with National Grange. cOOperate 6 WHEREFORE, National Grange MUtual Insurance Company prays Dt~idYa°nU~s~°n°rable Court enter Judgment in its favor and against COU~'~ T~O 24. Paragraphs ! through 23 above are incorporated herein by reference as if set forth in full. 25. As a factual and legal result of its execution of the Bond on behalf of Defendants, National Grange has incurred losses and expenses as described above. 26. The Indemnitors have failed Grange fro~ such losses and expenses despite to protect National set forth In the Indemnity Agreement. their obligations as WHEREFORE, Plaintiff, National Grange Nlltual Insurance Company, respectfully requests that judglaent be entered in its favor and against Defendants, Jointly and severally, for compensatory damages in an amount exceedtn amount re,uir~ ..... g the Jurasdictional Court and~for~carDl=rati°n referral pursuant to Local Rules of · . h other and further relief as this Court d lust and appropriate, eems 7 27. Paragraphs i through 26 above are incorporated herein by reference as if set forth in full. 28. National Grange obtained an assignment of the PA Lottery.s claim against Defendants as part of the settlement. 29. Defendamts ~we the PA .L~ttery, and now National Grange, $15,326.55 as described in Exhzblt 'C" attached hereto. WHEREFORE, Plaintiff, National Grange Mutual Insurance Company, respectfully regues~s that Judgment he entered in its favor and against Defendants, ]ointly and severally, in the amount COURT,OUR KAI/KAB ~. BUTT and ~U~RA~ N. B~.~ · 30. Paragraphs ! through 29 above are incorporated herein by reference as if set forth in full. .31. De~endants had an Agreement for Sale of Pennsylvania Lottery Tickets with the PA Lottery. A true and Correct copy of the Agreement is attached hereto as Exhibit "E" and inc~rporated herein by reference. 8 32. Pursuant to Defendants~ Agreement with the PA Lottery, they.agreed to be personally liable for all proceeds from the sale of tickets. 33. Additionally, Defendants agreed to Save and PA Lottery harmless o~ ~. ~ . hold the ~ ~ ~ ~Osses including all c ..... -~, - aamages and reasonabl ~ ....... ~.~quenuaa~ 34. National Grange has Pa~d the claim of the PA Lottery and is now equitably subrogated to the rights of the PA Lottery Under the Agreement. 35. Defendants, Kaukab I. Butt and Khurram N. Butt, owe National Grange $15,326.55, plus all related compensatory damages, interest, and attorney.s fees. WHEREFORE, Plaintiff, National Grange MUtual InSUrance Company, respectfully requests that Judgment be entered in its avor and against Defendants, ~aukab I. Butt and I(hurram N. in the amount of $15,326.55, plus com - Butt, pensa=ory damages, inter ttorney~s fees, costs, and such further retie~ ..... est, lust and appropriate. · ~ aa ~nls Court deems DATE: April 26, 2001 ~ t La_~y L. MILLER Attorney I.D. #28122 9 NOW. THEREFORE, the un- · SPEcIFiC INDEMN for each Other do} h~..=k oerslgnecL berein=e .... ,TY AGREEMENT ' ...... oy Underlake, re,.res~"_:"~.'_ ca.ed the 'ndemni or 1. That the for~-' P ~.s, warrant an- - (s) (Jr there be m .,~u~mg ,be National Grange ~,,.~a~e and answers given in k' ' nltor they Jomu¥ and se co~ta,n bond or undertaking herein applied for .... ashy, here,nartor reterr~.~,~'~r~J~he ~.~Loo~nrve. s,e~rv_at_Jon, and are made FOr the ~. That this Agreement shal, apply to the bend or undertaking herein applied for, - .... ~ecute or rocu purpose renewa,s thereof, or eddibens or eubstjfutFons therefore, any and all such and any and all extensions, increases, modifications or Bond. P re the exesulion of 3. That the COmpany is hereby _T?t..th._e_,n.d.e~...~ltor(sj aha I at a,I times lede~nlty, save the COmpany harmless fr S. That If the COmpany shall set up a reserVe to cOVer an e, ' ?. That the Compan.. s'- .... sum to be haiti h ...... n~tor~s) sha,I i,~,--~ · · rg , attorneys tee e~r.,~ . COmpanyorthepr~d[;a'~'asnaaver~t~h,e,,,,,.eX?luciVerightto'deter ' '~q,arerateecurl ~or .':2:-~,"-':~.:'u'aepoS'twithfhe nm,~' · That rn,e ~grearuent shaft bincl the he, rs, execot- , ,, .~ a~c,eo or tte~enped antt its decis,~ ~l~aml,~.s~u,l_t~?r~N egbinet the the Company m~ght have Indepenite~t,y hereof. without the ~r.,~n. _th.e plans or spaciflcatl~sa ~,d_.o.r _co~traot, the Company Is ~, legal Intsres~ ~.- .~y_or seeing to the a~lcaa~ .L~m-g [bereto: fo make ' ..;_,~.L~_.U? au~norJzed but nc~ breach of the cOntr pony whect due, ehel, be ,. being understood that the dYances or 'dans fur the eof to any Change .?ed In the pronecruta~too~,~e_i°reach of any bend glCgl°l~lveenU~Lvel, ly__Y Presumeit fo be a Inea ~me~-~ a., such advances or iPo~U~c~.e~, of the contract .~t/ectjue as of the clare -~ o,-- ?~t, to the Completion fh,~ -er~° Work Under the contr~... _t_r~ neglect or rofuea, to ,~,. ,~- ._?nt, tortbiture or .?t. tact cOvered h~. ~... ~__a~ncl mater,als of every nm .... .a. peFoutt as aforeealdt at~ ._~g.n?!..trenefers. and sets over 0- .[~ll~r_($j to comdata Whpch may be in -,~_m?., or In, on or about' t;~"-:.'_'.L'u pescript,o~l that th~'l~.."..~.~Lr[u? and interest of the FO:~.~..c_~ .c;o. mpany (to be tO all tl~';l~h'~'s aan~ °.r.eac~ or defaul, on l~a~.lll_a_terla.Is embraced the;:.~'~'~oPo~r~a, ret.?n. to eaid site and th~-'l~,~..c-°..a.r .g~.bio fo Such contr~:~-. .... ~,roberlles of fha ,nd--,-;';'~'*'-', ".'.any or ,he provisions ,,._~__~,mmmg to said COntra -,;,,,-;~or{s) rights ,n and ' the in~emn~to~'e~T~n__c~, neotlon therewith;~r'~t; ~,..,.n~m_ o_n_which ~ ~u~ ~nd payable al the time of such . Company ~.L~.._~_ a. ny one or more of I --- ~ '~-'~' marea~er bi~:ome tt,~p.a, n,~y./_s ~ may become Sure ,.. ~e~tauit on th~e or any Other ~,.~a an~ to itlsburea the ~-,~.~.~_ .e~ any check, dreW, Warrant *- ~'a? and the Indernnltor~s~ ,~..~?_~u~. nar Contfact of ANY PEREoN WHo IOIOWlNG APPLICATION FOR INIURAN~¥ AND WI'~I INTENT TO DEFRAU CONCEALS FOR THE PUR E OR ~I'ATEMENT OF CLAI D ANY INEURANcE COMPAN FRAUDULENT I .PO~?E OF /IELEADI ,M_ CONTAINING A .Y'. OR OTHER PEREO N~URANcE AcT NG INFORMATION C NY MATERIALLY F N FILEE AN , WHICH I$ A CRIME, AND ON.C. ERNING ANY FACT ALEE INFORMATION O EUBJECTS EU MATERIAL R · CH PEREON TO Cmu,, ...... THERETO COMMIT~ A Signed, Sealed and DATED this 241'11 ~ .~,m,.al. AND CIVIL PENALTIES, · day of ~_~arch ~Vereat ~enera! SCore IT _,ts 99 - (INDEMNITOR. - r~a) (Seatt · YPeName& Title: _Kaukab [. Rutt,~net ' (INDEMNITO IN DDAJ. Ly) Type IndiVidual Indemn,tor Name: Kaukab ]'. Rut J: ~ IndlvlttUa'lr~demnltorAddrese: 231 Hea].$ Dt~.ve, (~;'rl~.sle, Pa-~-7013 INDEMNiTy 7REEMENT MU~T BE 81GNED, DATED AND WITNESSED SYRBCr DEPT. APR ! · .ah,. a, Grange Mutual Insurance Company ~0. S 412 - 628 F2/~ALL~ Er THESE pR~£h, rS, ~hat we K~aukab I Butt, T/a Everest ~eneral~c~e ef 603 Franklin Street, ~arlisle, pa. 17013 a~ P~inci~al, {hereafter call~ Principal), and ~ ~ ~ ~N~ ~ a Corpo~ti~ or~niz~ u~- the la~ of ~e S~e of M~ H~s~re and ~,,~h~ ~o do ~ines~ In ~e C~"~ealth of ~syl~a~a, with its ~ ~fice In the City of Ke~e, (h~elnafter called S~t~), are held a~ fi~ly ~d ~m~n~al~ 0f Penn~l~n,a De~ent of R~nue 28~ Turnpike Indu~ial Dr~ Middle[0w~. Pe~n~fN~nia 1~057 as ~l[g~, in the full and ~, ~ ' ~us. s'~ of Ten-Thousand Dollars ~c~/ of the Uni%~ 5~ates of ~er!~ %o ~ ~id '- t~ a*~ Even .......... Dok~rs, lawful on ~mmnd for amd ~ accost of any f~ds ~co fr~ the Pri~ipal as e re~clt of the sale of lot~e~ [[c~e~= to w~ch tke Pr~ci~i has fai[~ to ~ke [Lmely Panels tc the Obligee; for which ~t, ~11 ~ %~y to ~ m~e, ~ bin~ ouraeives, c~ he~s, ~-x~tors~ a~s_ /cators~ succ~sors ~ assi~s, jo~tly a~ severally, fimly ~.the~ presets. ~R~S the Pr~ci~l has en[~ or Jm a~t to ~nter, ~to a writt~ Agreement w~/h the ~llg~ ~o ~ fin~cially res~mib!e to the ~%t~. for all' r~nues d~i~d of P~ylvanla ~tt~ Tickets as Is m~re s~iflca!ly set fe~ in said Agra%t, to which ~ ~ly ~rfo~ ~ ~r~ o~ the c=v~ts, te~, a~ co~ltio~ of said Agr~ t~s ob~ga%ion ~o ~ void; offense t~ r~L~ ~n ~11 fore ~ eff~. The S~y ~y thirty (30) da~ ~ advance of ~he ~te of ca~ellatl~. ~ai~ ~th ~ s~is ~d dat~ ~ls 2~Eh day of March .: ~9 99 . wi[aess: ~r~i~l At/est~ {o: Kaukab I. Butt Georse R. Nunemake~ Commonwealth of Penn,sylvania Department of Revenue PENNsY~VANIA LOTTERY 28,50 Turnpike Industrial Drive · Middletown. PA 17057.5491 -- "l~=)'c~o-b cr ,~4., 2000 lnsurm~ce t-ompm~y Attn: Claims 5010 Campuswood Drive P.O. Box 4742 Syracnse, NY 13221-4742 Re: National Grange Mutual Insurance Company Lottery Bond# $ 412 - 628 Retailer//390526 Kaulmh I Butt DBA Everest Oeneral Store II We are hereby filing a claim in the amount o£$15,326.$$ against the above referenced bond which lists Kanlmh I. Butt DBA Everest Oeueral Store II as the principal and the Permsylvania Lottery as the oNigee. On lVlarch 20, 2000 cancellation from the Numbers Oames Network took place due lo delinquency. The following is a breakdown of the amounts due: See attached Ledger Sheet. Total Instant Oarues Due: 12,155.75 Total On-line Oames Due: 3,170.80 Total Due: $15,326.$$ Cl-im Amoun,: $10,000.00 · I have enclosed the following: computer report listing on-line settlements, computer reports listing return items, and a copy of the retailer license application and If you have · (717) 986-4704. anY questions concerning this matter, please contact Tammy Fasick at Budget Div/s/on Chief LBB/TLF/tf Enclosure ~11/0~,'00 H 0 CLRIE PHONE 717-986-4699 National 4rang.e utual Insurance 55 West Street Company P.O. Box 2300 Keene, NH 03431-7000 ~ ('603) 352-4000 Tuesday, November 07, 2000 Kaakab & Dilshad Butt 231 Meals Drive Carlisle, PA 17013 RE: Principal: Kaukab Butt d/b/a Everest General Store Bond #: $-412628 Obligee: Commonweal& of PA Retailer No.: 390526 Dear Sir:. Please trmd enclosed copies ofcorrespendence from the PA Lottery notifying National Grange Mutual ora claim on our bond provided on your behalf. P~ue~n~i~wmnth~rn.ttuched d~cumentat.~n an~ adv~s~ as ~ what act~n y~u intend tu ~ake t~ res~ve th~s If! do not receive written conf'~nation ~tat ~is matter has been resolved by December 7, 2000, National Grange Mutual will proceed to issue payment ofour full bond amount. for full reimbursement ofeny amounts paid. In that event we shall look to you If you have any questions concerning .any of the above please correspond directly with the undersigned. Sincerely, Anthony Mootecalvo Bond Claims Manager Enclosure: Cc: Pennsylvania Department of Revenue Attn. Larry Beard, Budget Division Chief Pennsylvania Lottery '. 2850 Turnpike Industrial Drive Middletown, PA 17057-549! National rang.e utual ss West Street lnsurarlce P.O. Box 2300 Company Keene, .NH 03431-7000 (603) 352-4000 Tuesday, NOvember 07, 2000 Everest General Store Atm. Knukab Butt 603 Franklin $1reet Carlisle, PA 17013 RE: Principal: Kaukab Butt d/b/a Everest General Store Bond #: S-412628 Obligee: Commonwealth of PA Retailer No.: 390526 Dear Sir: Please find enclosed copies ofcorrespandence from the PA Lottery notifying National Grange Mutual ora claim on our bond provided on your behalf. Please review the at~ached documentation and advise as to what action you intend to take to reSOlve this outstanding matter. Ill do not receive written Confirmation that this matter has been resolved by December 7, 2000, National Grange Mutual will proceed to issue payment of our full bond amount. fur full roimbureement of any amounl~ paid. In that event we shall look to you If you i~ave any questions concerning any of the above please correspond direntiy with the undersigned. Sincerely, AnthOny Monl~calvo Bond Claims Manager Enclceure: Cc: Pennsylvania Department of Revenue Atm. Lan3, Beard, Budget Pennsylva~.a Lottery . D. ivision Chief 2850 Turnpike Industrial Drive ' ' Middletown, PA 17057-5491 T/A ~'--; · ~.-{ . . Retailer # ~ ~ ~',~:~_,..,.r~_. 2':'~-'-.'.,. /. ~' ........ 'l'el e ~71'~-~./~ , , . . .... ....~ ......:/~ .~ ~ / at License Lo~tio~ - _ .. ~ ~. Co~o~te Name This Agreement is by and helen ~e Common~aJ~ of PennsY~ania, Depa~ent of Revenue, Pennsylvania Lo~e~, hereinafter m~d ~ as "Depa~ent., and ~ hereinafter referred to as "Retailer". The Department of Revenue has as one of its responsibilities, in accordance with 72 P.S. §3761-1 et s_~.~eo, and 61 PA Code §801.1 et_q.t.seg., the authority to select retailers for the sale of Pennsylvania Lottery tickets. Under the/aw and regulations, the Department is empowered to enter into contracts with persons to sell Pennsylvania Lottery tickets and to pay such Persons a commission as set forth in the Lottery law and regulations. es here,nafte,- set and intandi--°! ! re .tats and tha follo~,s: -ii [o De legal1 OOU ,~. ...... al prom- Y ncl, L,~ parues Ilereto agree as A. Definitions As used in this Agreement, the term: 1. "Agreement'' shall mean this Agreement for the sale of Pennsylvania Lottery tickets. The term shall apply to all contractual and license rights, duties and obligations of the parties. 2. "Effective Date" shall mean the date affixed to thi Executive Director as set forth on page 10 herein, s Agreement by the 3. "Secretary,, Shall mean the SecretsFy of Revenue. 4. "Executive D/rector" shall mean the Executive D/rector of the Penn- sylvania Lottery. 5. "Retailer" shall mean ,. SUCh person or Persons authorized by this Agreement to sell Pennsylvania Lottery tickets. The term shall include Tickets" ("Application,) which application is incorporated by reference a part of this Agreement. as 6. "Lottery Games" shall mean all those games, including instant and numbers games, authorized for sale by Retailer on behalf of the Lottery. 7. "Lottery" shall mean the Pennsylvania Lottery of the Pennsylvania Department of Revenue. 8. "Lottery Law" shall mean Act of March of 1971 (P.L. 6, No. 2), 72 P.S. §3781-1 ~ 9. "Lottery Regulations, shall mean 61 PA Code §801.1 ~ 10: "Term" of this Agreement shall include the period hereinafter provided for and any renewals thereto. 11. "Substantial Change of Ownership- shall mean a transfer of 50% or more the equity of the Retailer's business, of ~B. Retailer's Obliqafion.~. 1. Sales Retailer agrees to sell Such Pennsylvania Lottery tickets as authorized by the Deparl~ent. may be Retailer agrees that Pdrsuant to 61 PA Code §809.35, Lottery tickets · shall not be Sold to any Person under eighteen (18) years of age. · 2. Controlling Provisions Retailer agrees to abide by all provisions of the rules and regulations, ProCedures or instructio Lottery law, and any partment, the Secret.- ..... ns ISsued by the · =,x ur -evenue the/,~ ...... _.- - --- tor, as are now in effect or which ' --,,,,=,y, ur me Executive Direc- hereinafter may be Promulgated or published. Such Lottery law, rules and regulations, Procedures and in- structJons ara incorporated herein by reference as a part of this Agre~ men/ 2 3. Warranty of Financial Responsibility Retailer warrants that it is financially responsible and will provide evf- dence in support of Such fact upon demand by the Department. Such ~;'idence may include, but is r~of limited to. ad;.cl.~s of incorporation, by- ~aws, P~-~'ir~ersh~p agreements, certified financial statements, bank refer. ences, Credit references and business references. 4. Records Retailer agrees to maintain current and .accu?te. records, in confor. mance with generally accepted accounting Pnnclples, of all transactions dealing w/th ticket sales. Retailer further agrees to retain records pertaining to ticket sales, inci · all accounling merits and canceled a,.u. ,__ u. dl.ng but not limited to ch..,,,o, ~ur a penoo o~ ,,^,, ....... bank state- All records required to be maintained by Retailer shall be available to - ,,,,, ,=a~ man mree (3) years. representatives of the Department, upon request, for inspe~on and audit during regular business hours. 5. Fiduciary Responsibility Retailer agrees that with respect to the PrOceeds frOm the sale of tickets, it acts in a fiduciary capacity with respect to such fUnds until such fUnds are paid into the Lottery Fund as required. Retailer shall be Personally liable for all Proceeds frOm the sale of tickets. 6. independent Contractor Status Retailer agrees that, except with respect to the proceeds from the sale of tickets, it shall render its service under this Agreement as an independ. ent contractor and, as such, shall further agree that any conlmctual or torfious liability it may incur in connect! sponsibility. . on therewith shall be its sole re- · 7. Non-Discrimination Provision Retailer agrees that dudng its performance under this Agreement, the Retailer will comply with the non-discrimination Provisions attached hereto and made a part hereof as Appendix A. 8. Promot/onal Material and Training Retailer agrees to prom/nentJy ost cu motfonal material ,,,~,~.., ,.. ? _ rrent point-of-sale and other pro- su~..,,~u uy me uepertment. Retailer agrees to atte,~ ,__,.... ' roV' ..., -u~,r~ lralnlng sessions as the Deperlment shall P Ide to ensure that the Retailer and its employees are propedy trained in the sale of Lottery tickets. 3 9. Minimum Sales Requirements Retailer agrees to be bOUnd by rained in the provisions the minimum sa!es requirements con- of Appendix B for Instant Games Only Retailers, App-c~,dix C fcr l;umbe~-~ Gar~;es Re[r~;~e,.~, an~ APpendix D for Instant Ticket Vending Machine Retailers. 10. Instant Terminal Requirements If the Retailer is authorized to sell Lottery tickets for Instant Games only, the Retailer agrees to the provisions of Appendix B, incorporated by ref. erence hereto. 11. Instant Ticket Vending Machine (ITVM) Requirements if the Retailer is authorized to sell Lottery t/ckets through an ITVM, the Retailer agrees to the provisions of Appendix D, incorporated by ence hereto, refer- 12. Numbers Games Requirements If the Retailer is authorized by the Department to sell Loffery t/ckets for Numbers Games, in addition to Instant Games, the Retailer agrees to the Provisions of Appendix C, incorporated by reference hereto. 13. Claim Services ' If the Retailer is authorized by the Department to provide c/aim services, it agrees to be bound by the Provisions of Appendix B, for Instant Games Only Retailers and Appendix C for Numbers Games Retailers, incorpo. rated by reference hereto. 14. Notice of Business C. hanges Retailer agrees to give the Department a minimum of ten (10) days ad- · vance notice of Retailer's intent to: a. sell its business, b. cease operations of business either temporarily (inc/uding vacations) or Permanently, c. move to a new location, or d. of any substantial change in ownership. Retailer shall not/fy the Department within ten (10) days of: a. any change in business hours, b. any change in financ/al Condition, 4 c. any change Jn bjpe of Pdmary business, or d. any event which alters any information disclosed Jn the "Application,,. 15 ~.~reem,~.=~:? No,n-Assi.oq~ble This Agreement for the sale of Lottery tickets is non-assignable. such unauthorized assignment shall constitute a breach of this Agree- ment. Any 16. SoIe Business Retailer warrants that, pursuant to 61 PA Code §805.2Ca), it is not in the exclusive business of se~ling Lottery tickets. 17. Sale of Pennsylvania Lottery Tickets The Retailer agrees that it shall sell Pennsylvania Lottery tickets only. The Retailer understands the sale of any other Lottery tickets shall con- stitute a breach of this Agreement and this contra~t shall be revoked Jrn- mediatety in the event lhat the Retailer violates this provision. C. De~rtment, s Oblidatior,., 1. Commission The Department agrees to pay Retailer a co · · . plus or minus an adJ fma,, ..... mmlsalorl for all raj Y =us..,,..m aria less a weab,- ,,- id sales, ·' '~,,~x .ne service charge, if applicable. The rate of commission sh . tions for each Lottery game all be as desfgnatad in the regula- 2. Equipment The Deparlment agrees 'to Provide such equipment and supplies as · listed in Appendix B for Instant Retailers, Appendix C for Numbers · Games ReteJlers, and Appendix D for Instant Ticket Vending Machine Retailers, incorporated by reference hereto. 3. Materials, Supplies, Advertising ~he Department agrees to Provide necessary Lottery related materials etailer including point-of-sale materi to atructions.. al, manuals, procedures and in- 5 The Department agrees to use its best efforts to provide Retailer with current tickets, as available, and any other necessary equipment, more fully enumerated in APPendix B for/nStant Retailers, APpendix C ~~,~ ~ ........ as mg Machine Retailers. :, ,o Appendix D for last. ant Ticket Vend- The Department agrees to promote and advertise all Lottery games. 4. Additional Retailers The Department reserves the dght to approve and establish new Retai/- ers with or without Numbers Games capabilities in any part of the Com- monwea/th, as it deems appropriate. 5. Termination Of Agreement This Agreement may be terminated by the Department for any of the fo/lowing: a. Fa/lure to comply with any of the terms of this Agreement, the Lottery law, its rules and regulations or instructions, incJuding but not limited to 61 PA Code §805.17, issued by the Execu- tive D/rector of the Pennsylvania Lottery or the Secretary of Revenue may result in immediate suspension or termination of this Agreement, in whole or in pert, at the sole discretion of the Deperl~ent. Upon Such suspension or term/nat/on, the Re- tailer's authority to sell Lottery tickets of all types shall imme- diately cease. b. Failure to make full settlement on the required settlement date or failure to have float Cash monies available or failure to meet the average rain/mum sales VOlume requirement shall also conslitute a break of this Agreement and may result in im- mediate suspension or termination of the Agreement in whole or in part at the sole discretion of the Department. c. Any misrepresentation or omission in Retailer's application to sell Lottery tickets or any renewal application will result in im- mediate suspension of this Agreement, in whole or in part, and may result in termination of the Agreement, in whole or irt at the sole discr?tion of the Department. part, d. This Agreement may be terminated, i either party for the co .... - ....n whole or m part, b o ..n-~.lence of e~ner a Y ' ther than those detailed in sub-~am.,....P~.. _r? ~and for reasons fourteen ('14) days written no,ice by the terminating party. 6 ~.~-urrnance required of the Retailer or the De- partment under this Agreement, or With regard to the suspension or pro- posed term/nation of this Agreement, the Retailer shall be given an op- portunity to be heard through the Presentation of written representations of/ts position to the Department within seven (7) days. At the time of making its written rePresentation to the Department, the Retailer shall Present such facts, evidence, state~nents and other relevant information as it shall desire for the consideretion of the Department in reaching its final determination. Such notice to the Department shall not affect the Department,s authority to suspend Retailer's authority to sell Lottary tickets pending final determination. The Secretary of Revenue or the Secretary,s designee shall make a final determination in writing wfth gard to the dispute and shall send same to the Retailer within thirty (30) days of receipt of Retailer's written Presentation. The Retailer's sole options with respect to any such decision shall be either. 1. accept said decision as a correct and binding interpretation of the Agreement, or 2. to make such claim as it may deem appropriate to the Com- monwealth,s Board of Claims pumuant to the Act of May 20, 1937, P.L. 728, No. 193, as amended (72 P.S. §4651-1 _et sac.) Retailer agrees that Lottery fUnds shall not be withheld by Retailer pending resol~on of a'ny dispute. This Agreement shall automatically terminate following the effective -'--- on March 15 of th~ ,,~o. tended or re-.-, ..... ~me..on page 10 unless othem,~o~ ,~-- ........ ,,,*.m~ea; provloed, howe .... .,- .....7 .....,~.uweo, ex- -_u~?.m. arJcally renew um~n ...,~.. __..-~,, u~ar [n~s Agreement shall ....... ,~,-.ewal ano payment of the require~l fee. This Agreement Will terminate upon the expiration of Retailer' · license, if the Department denies R ~-~, .... s temporary e...~, pemlanent license for any reason, or if terminated pursuant to paregreph CS of this Agreement. Retailer agrees not to COnduct any business or hold itself out as a seller of tickets unless or until this Agreement is renewed. 7 Renewal of this Agreement for additional terms shall be at the sole dis- cretion of the Secretary of Revenue. The Secretary may, pursuant to 61 PA Code ~'.On~ -~ £05~.!5, a~t--'; t,he te,,-n~ c~ ~ -, - ' - ..... ' b,e A~rc,.'~en~. by issuing temporary extensions pending administrative determination. F.__Statute and Requlation.~, Retailer acknowledges the receipt of the apPliceble statute and regula- tions governing the sale of Lottery tickets. Retailer will be deemed to have actual notice of futura regulations upon publication in the Pennsyl. vania Bulletin. Such future rules and regulations shall be incorporated by reference into this ^graement upon publication. All owners, partners, and corporate officers of Retailer must sign this Agreement and must acknowledge that they fully understand and con- sent to the terms of this Agreement. " This Agreement does not become effective until fully executed. H_. Inde. mnificationlHold Harmless Claus. The Retailer shall save and hold harm/ess the Commonwealth and its officers, agents and employees or any of them from any and all c/aims, demands, actions or liability (including, but not limited to, consequential damages and reasonable attorney's fees) of any nature based upon or arising out of: 1. Any services Performed by the Retailer, its agents or employ- ees, except such services as are properly performed at the ex. press · · d~rection of the Department. 2. The use by the Retailer of any copyri hted c.omposition, secu' dee nn~,-a-- g - .or.uncopyrighted cie or an,',lj~,,.,...- =. r~.. _ . d, ,-.---as, potemecl Jnvenfinn "" ""~-= rumlsnea or, ,-~.~ ~- -- - "---, -,-- services under the contract. "=~' '" me performance of any 3. The negligent, or equally or more culpable, conduct by the Retailer, its ager{ts, subcontractors and employees during the term of or in connection with the performance of the centract. ' 8 I. W;~iv~r The failure of the Department to insist upon strict adherence to any term of this Agreement shall not be considere · partment of the ria ,~,~.,, . .. d a wa,vet or de rive ,bt th~,~o, Ler to Insast u ......... P the De- term or any other term of this Agreement.r'~''' amc[ acfl~erenca to that , This Agreement shall be governed by and construed according to the laws of the Commonwealth of Pennsylvania. This Agreement constitutes the entire agreement betwe..en the Department and the Re spect to all conb'actual and lice----, ..... .. taller with re- ,,~=u ngnzs, cluues and obligations of ~e pa~es. The Agreement shall not be amended or modified unless such amendment or modification is in Wdlfng and signed by both parties. -' If a court of competent jurfsdiction determines that any portion of this Agreement is invalid, that part shall be severed and the remaining pot- tions shall control. (THIS PORTION OF PAGE INTENTIONALLY LEFT BLANK} 9 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be exe- cuted, in:ending to be I~i;~ bound hereby. BY ~"~ TITLE n ~ BY TITLE BY ~ TITLE _ BY ~ TITLE _ BY ~ TITLE _ - BY Owner/iri~erested Party TITLE _ Owner/Interested Party TITLE __ BY ~ TITLE _ BY TITLE __ APPROVED BY Executive Director~ Pennsylvania Lottery Deparl~nent of Revenue C°mm°nwealth of Pennsylvania ~-'~'~-I::CTIVE DATE 10 APPENDIX A NON-DISCRIMiNATiON CLAU~ Durin§ the term, of thi:. :ont"acf, Retailer agrees as foliows: 1. Retailer shall not discriminate against any employee, applicant for employ- merit, independent contractor or any other person because of race, color, relig. ious creed, ancestry, national odgin, sex, age, disability, sexual orientation or union membership. ~ · Retailer shall take affirmative action to ensure that applicants are employed, and that employees or agents are treated during employment without regard to race, color, religious creed, ancestry, national odgin, sex, age, disability, sex- ual orientation or union membership. Such affirmative action shall incJude, bUt is not limited to, the following: employment, upgrading, demotion, transfer, re- cruitment or recruitment adve~sing, layoff or term/nation, rates of pay or other forms of compensa~on, and, selection for training. Retailer shall post in conspicuous places, available to employees, agent, applicants for employment and other Persons, a notice to be provided by the contracting agency sattfng forth the provisions of this Non-discrimination Clause. 2. Retailer shall, in advertisements or requests for employment placed by it or on its behalf, state that all qualified applicants Will receive consideration for em- ployment without regard to race, color, religious creed, ancestry, national ori- gin, sex, age, disabilitT, sexual orientation or union membership. 3. Retailer shall sand each labor union or worker's representative with which it has a collective bargaining agreement or other contract notice advising Said labor union or understanding, a or worker's representative of its commitment to this Non-discrimination Clause. Similar notice shall be sent to every other source of recruitment reg~tady utilized by Retailer. 4. ,It shall be no defense to a finding of noncompliance with the contract com- pliance regulations issued by the Pennsylvania Human Relations Commission or this Non-discrimination Clause that Retailer had delegated some of its em- ployment Practices to any union, training Program or other source of rac~'uit- merit that Prevents it from meeting its obligations. However, if the evidence indicates that the Retailer was not on notice of the third party discrimination or made a good faith effort to correct it, such factor shall be considered in mifiga- tion in determining appropriate sanctions. 11 5. Where the practice of a union er of any training program or other source of re- cruitment will result in the exclusion of minority group persons, so that Retailer will be unable to meet its obligations under the contract compliance regulations ,=."U~ b~, ~;:6. F'e~-~,..,.%~;.~l-~i;~ ;.~;j,,...i.=n ~,eiai. Jc,.i$ C(;r,~,'l'lissJon, or this Non- discrimination Clause, Retailer shall then employ and fill vacancies through other non-discriminatory employment ProCedures. 6. Retailer shall comply with the contract compliance regular/ohs of the Penn- sylvania Human Relations Commission, 16 PA Code Chapter 49 and with all laws prohibiting discrimination in hidng or employment opportunities. In the event of Retailer's noncompliance with the Non-discrimination Clause of this contract or with any such laws, this contract may, after headng and adjudica- lion, be terminated or suspended, in whole or in part, and Retailer may be de- clared temporarily ineligible for further Commonwealth contracts, and such other sanctions may be imposed and remedies invoked as provided by the contract compliance regulations. 7. Retailer sha~l furnish all necessary employment documents and records, and permit access to its books, records, and accounts by the contracting agency and the Human Relations Commission, for purposes of the conlmct compli- _ ance ragulations, PUrsuant to ~49.35 of these regulations. If Retailer does not possess documents, or records, reflecting the necessary information re- · quested, it shall furnish such information on reporting forms supplied by the contracting agency of the Commission. 8. Retailer shall actively recruit minority subcontractors or subcontractors with substantial minodty rapresentation among their employees. " 9. Retailer shall include the Provisions of this Non-discrimination Clause in every subcontract so that such ProVision will be binding upon each subcontractor. 10. The terms used in this Nop-discrimination Clause shall be the same as in the contract compliance regulations issued by the Pennsylvania Human Relations , Commission, 16 PA Code Ch. 49. 11. Retailer obligatiohs under this clause are limited to the Retailer's facilities within Pennsylvania, or, where the contract is for pumhase of goods manufac- tured outside of Pennsylvania, the facilities at which such goods are actually produced. 12 APPENDIX B INSTANT GAME. S REQUlREMENTP, 1. Retai~er Chec~:ing Reta~ier agrees to maintain a checking account that is accessible to the Lottery for the drafting of funds owed to the Lottery from the sales of Instant Games Lottery tickets. The Retailer may establish a separate Lottery account or use a current business account. Any charges associated with the Retailer checking account are wholly the responsibility of the Retailer. There can be no limitat/ons on the number or amount of deposits, withdrawals or checks that can be made. Retailer agrees to make prompt settlement at its assigned bank or at Such other locations as ma}, be directed by the Department and to pay all those amounts due and owing according to Procedures established by the Department and incorporated by reference hereto. "FAILURE TO COMPLY WITH ANY OF THE PROVISIONS OF THIS PARAGRAPH WILL RESULT IN IMMEDIATE SUSPENSION OF THE RETAILER'S AUTHORITY TO SELL TICKETS AND MAY BE CONSTRUED AS A THIS AGREEMENT WARRANTING TERMINATION., BREACH OF 2. Minimum Sales Requirements This Agreement may be terminated in whole or in part if the Retailer fails to meet .. the average minimum sales volume of Instant Games tickets. The minimum sales volume requirement for Instant Games Retailers shall be 30% of the average weekly Instant Games ticket sales for al/Instant Games Retailers in the Retailer's sales area for the previous quarter or for the current quarter, whichever is less. If the Retailer does not meet the applicable Instant Games minimum sales require- ment during any quarter, the following procedure will be undertaken: a. As soon as POSsible after the end of a quarter in which the Retailer does not meet the minimum sales requirement, the Retailer will be noti- fied in writing by the Lottery that the sales did not meet the minimum sales requirement.' .The Retailer shall be given one additional quarter to meet or exceed the minimum sales requiremenL The Lottery will ex- ert its best efforts to Provide marketing support and assistance to Re- , taJlem identified, as they attempt during the next quarter to meet or ex- ceed the minimum sales requirement. If the Retailer does not meet the minimum sales requirement for two (2) consecutive quarters, the Re- tailer's contract and license for the sale of instant tickets may be re- yoked PUrsuant to their terms. 3. Claim Services The Retailer agrees to Provide all authorized and required claim services including but not limited to the following: 13 a. Payment of all valid Instant Games winning ticket claims providing that proper pdze validation steps have been taken, without regard to where the ticket was purchased, with payoffs to be made in cash, check, or money order drawn on the Proceeds from ticket sales. b. Completing claim forms for instant Games winning tickets in excess of $~00, and ~ forms to Lottery. c. Acting Jn the capacity of a claim center if appointed by the Department to perform such service. ~ 4. Terminal Requirements a. The Retailer agrees to Provide a grounded three (3) Prong electrical outlet for use with grounded plugs. It is to be located within seven and one-half unobstructed feet (7'~') from the Instant Terminal and have a clearance of three inches (3") below the AC outlet. b. The Retailer agrees to provide a space (approved by the Depart- ment) of at least six and one-half inches (6~") wide, thirteen inches (13") deep and eleven inches (11") in height for the Instant Terminal to allow for Proper ventilation, maintenance, and matedal loading and re- moval. c. The Retailer shall meet such training standards as shall be established by the Department. d. The Retailer agrees to purchase and install a RJll telephone jack within fourteen unobstructed feet (14'} of the Instant Terminal. The In- slant Terminal will be connected to a standard single business tele- phone line. The telephone line does not need to be for the exclusive use of the Instant Terminal and may be used purp°ses when not in use by the instant Te"drmibnYa~e Reteiler for other e. All equipment and ~upplies provided to the Retailer by the Department or its vendors shall remain the Properly of the Deparlment or its yen- ·, dots, and shall be used for their intended purpose and not for any other PUrpose. The Retailer shall acquire no interest whatsoever in the equipment. f. All expenses, whether fixed or recurring associated with the items re- quired to be furnished by the Retailer, shall be the sole responsibility of the Retailer. g. To have the computer terminal available for the sale of Lottery tickets during all hours and days that the Retailer's business is open and sales authorized. 14 h. To exercise diligence in the operation of the terminal, to provide physi- cal security for the terminal, replace paper stock and to immediately notify the vendor of any phone line or terminal ma/function. i. To refrain from performing any mechanic, a! or electrical repairs to the terminal. j. To be responsible for custodial care of the terminal. The Department reserves the dght to terminate this Agreement in the event of repeated roalic/ous abuse, and/or negligent care of the terminal. Abuse is de- fined as, but not limited to, accidents Such as liquid spills, breakage or other Retailer caused problems resulting in the need for the terminal to ~ be replaced. k. Retailer is responsible for loss or damage of the equipment in excess of normal wear and tear. Retailer roust report any "out of order" COndi- tJon of the equipment to the vendor in accordance with currant Lottery procedure. 15 APPENDIX C NUMBER GAMES REQUIREMENTR 1. I.,~,,alSecuri~ Retailer agrees to provide a Surety Bond, Irrevocable Letter of Credit or other surety satisfactory to the Department in the amount requested by the Department and for the term requested by the Department as a con(~ition of this agreement or any renewal hereof. 2. Additional Security Retailer agrees to pay for and maintain a Surety Bond or Irrevocable Letter of Credit in an amount not to exceed one and one-half (1',~) times the Retailer's aver- age weekly Lottery sales, for cause, upon notification by the Lottery. Failure to comply with the provisions for maintaining the Lottery account as outlined in Pare- graph 3, Appendix C, of this Agreement or the Lotte~s receipt of adverse financial inf6rmation may result in permanent surety requirement. 3. Lottery Retailer Checking Account Retailer agrees to open and pay the cost of maintaining a separate Lottery Retailer checking account at the Retailer's assigned bank. All receipts from the sale of tickets and instant settlements, minus Retailer's commission and money kept on Retailer's premises to pay winning tickets, must be deposited in this account. Funds in the account must be accessible at all times. There can be no limitations on the number or amount of deposits, checks, or withdrawals that can be made. Retailer also agrees to make prompt seffiement at its assigned bank or at such other locations as may be directed by the Department and to pay all those amounts due and owing according to precedures established by the Department and incor- porated by reference hereto. FAILURE TO COMPLY WITH ANY OF THE PROVISIONS OF THIS PARAGRAPH WILL RESULT IN IMMEDIATE SUSPENSION OF THE R~=i'AiLER,S AUTHORITY TO SELL TICKETS AND MAY BE CONSTRUED AS A BREACH OF THIS AGREEMENT WARRANTING ,TERMINATION. 4. Retailer Checking Account Deposits Deposits must be made a minimum of every other business day. A Retailer may keep no more than 20% of the amount of the average weekly sales at the retail lo- cation for payment of winning Lottery. tickets unless given specific authorization by the 17 5. Minimum Sales Requirement Numbers Games This Agres~ent may be te.,~mina,,ed in whole or in par[ if Retailer fails to meet the average minimum sales volume requirement of $ per week of Number Games tickets. This average minimum sales volu'r~e requirement is a tan (10) week floating sales average · · and is establfshed after data collection review and analysis of factors that may include, but are not limited to the following: a. Demographic and socio-economic marketing information b. Customer paffems c. Products and/or services provided d. Product volume e. Proximity to work, residential and commuter sites f. Hours of operation g. Convenience to the public h. Financial stability i. Willingness to promote and advertise Lottery ticket sales J. Proximity to other Numbers Games retailers in the marketing area If the Retailer fails to meet the above average minimum sales requirement, the fol- lowing procedures will be implemented: a. New Retailers (Nu'~bers Games sale-~ less than six [6] months) ·, * On week 13, if 10 week sales average is not 50% of average minimum sales requirement, Retailer will receive written noti- fication. · On week 20, if 10 week sales average is not 75% of average minimum sales requirement, Retailer will receive written noti- fication. · On week 26, if 10 week sales average is not 100% of averag~ ' mm~mum sales requirement, Retailer wilJ receive written nofirk cetion. 18 On week 30, if sales still have not reached 100% of average minimum sales requirement, a full examination and evaluation will be made to determine disposition of the terminal. b. Established Retailer (Numb-~rs Games sal..--~ mo:',~ ';.;'~an six [6j months) · If 10 week sales average falls below average minimum sales raquirament, Retailer will receive written notification. ·If sales do not improve within thirty (30) days of first letter, Re- tailer will receive written notification. · If sales do not improve within thirty (30) days of second letter, a full examination a'nd evaluation will be made to determine dis- position of the terminal. Instant Games This Agreement may be terminated in whole or in part if the Retailer fails to meet the average minimum sales volume requirement of Instant Games tickets which shall be 30% of the average weekly Instant Games ticket sales for Numbers Games Retailers in the Retailer's sales area, excluding the 10% of the Numbers Games Retailers in the sales area having the highest average weekly Instant _ Games ticket sales, for the previous quarter or for the current quarter, whichever is less. If the Retailer fails to meet the above average minimum sales requirement, the fol- lowing procedures will be implemented: a. As soon as possible after the end of the quarter in which the Retailer does not meet the Instant Games ticket minimum sales requirement as spedfied by the contract, the Retailer will be notified in writing by the Lottery that the sales did not meet the minimum sales requirement The retailer shall b~*given one additional quarter to meet or'exceed the minimum sales requirement. · b. If a. Numbers Games Retailer does not meet the minimum sales ra- qu~rament for Instant Ticket sales for two (2) consecutive quarters, but its Number Games ticket sales meet or exceed the average Numbers Games ticket sales of its sales area, the effort to sell Instant Games tickets put forth by the Retailer may be reviewed by the Lottery. The ' Lottery will exert its best efforts to provide marketing support and assis- tance to the Retailer identified, as it attempts during the next quarter to meet or exceed the minimum sales requirement. If the Retailer dem- onstrates to the Lottery that it is making a good faith effort to sell In-' stant Games tickets, the Lottery may consider a waiver of the Instant Games ticket sales requirement for the quarter under consideration. If the Retailer is unable to demonstrate that it is making a good faith ef- fort to sell Instant Games tickets, the Retailer will be notified in writing 19 by the Lottery that its contract and license have been terminated or re- voked pursuant to their terms. Good faith effort shall include, but not be limited to, the following criteria: · The Retailer has Instant Games tickets prominently displayed in its Retailer location. · The Retailer has displayed the corresponding Instant Game ticket point-of-sale materials in its Retailer location. c. If the Retailer does not meet the minimum sales requirement for Num- . bers Games ticket sales for two (2) consecutive quarters, but meets the ~ minimum sales requirement for'Instant Games Retailers within its sales area for the same two (2) consecutive quarters, the Retailer's On-line contract may be terminated, and the terminal removed, pursuant to the terms of the contract. If the Retailer does not meet the minimum sales requirement for Numbers Games Retailers and Instant Games Retail- ers for two (2) consecutive quarters, the Retailer's contract and license for Instant and On-line tickets shall be terminated or revoked pursuant to their terms. The Instant Games Retailer minimum sales requirement for Instant Games tickets shall apply during the calendar quarter in which Number Games sales commence unless it is the same quarter in which Instant Games tickets are first delivered. 6. C~aim Services The Retailer agrees to provide all authorized and required claim services including but not limited to the following: a. All instant game requirements agreed to in Appendix B, Section 3, Claim Services. b. Ascertaining and posting winning numbers as soon as possible fol- lowing the drawing of the winning numbers. · c. Payment of all valid winning ticket claims providing that proper prize · validation steps have been taken without regard to where the ticket was purchased, with payoffs to be made in cash, check, or money order drawn on the proceeds from ticket sales. d. Issuing claim tickets for winning tickets in excess of $600.00. e. Acting in the cepaclty of a claim center if appointed by the Department to perform such service. 20 7. Terminal Requirements The Retailer agrees to the following provisions with regard to the terminal to be in- stalled upon the Retailer's premises: a. To J~ey for telecommunicatic,~s d~-'.a lin.= :'~stallation costs ~n an amount to be determined by the Department. In addition, to pay for telecom- municafions weekly line charge in an amount to be determined by the Department. In all cases of interruptions of service whether it be vaca- ti.OhS, remodeling/construction, NSF/delinquency conditions, suspen- sions, etc., On-line Lottery Retailers will be liable for the weekly line charge and will be required to have sufficient funds in their Lottery ac- , counts so that the line charge amount can be drafted on a weekly ba- sis. b. To provide, pdor to installation of the terminal, an electrical 4-wey grounded outlet on a separate and dedicated circuit that remains on 24 hours a day. c. The Department will supply forms, ticket stock, ribbons, accounting m- ports and other related supplies. d. To provide sufficient space for the terminal with requirements as de- scribed in "Space Requirements and Equipment Specifications". Re- '' tailer will provide a duly signed copy of "Space Requirements and Equipment Specifications" prior to installation. e. To be solely responsible for costs incurred in site preparation. f. That the terminal shall be located within the Retailer's premises only at a point of sale approved by Lottery and cannot be moved without prior written approval by Lottery. If approved to relocate the terminal, the Retailer will pay the costs incurred from the telephone company. The · Retailer will be res .ponsible for providing an electrical 4-way grounded outlet on a separate and dedicated circuit at the new location. · , g. To be responsible for payment of all electrical utility charges incurred in the operation of the terminal. h. To provide a telephone at the location of the terminal in order to make and receive telephone calls for maintenance assistance or administra- tive needs. i. To have the computer terminal available for the sale of Lottery tickets during all hours and days that the Retailer's business is open and ~ales authorized. Retailer's business location and hours are described in the site survey, which is hereby incorporated by reference as part of this .. Agreement. 21 j. To exercise diligence in the operation of the terminal, to provide physi- cal security for the terminal and paper stock, to replace dbbons and ticket stock and clear paper jams as required and to immediately notify the vendor of telephone communications or terminal malfunction, such ~-s, but r~[ limited to, the issuance of a non-valid ticket, the inability to cancel a ticket or the non-issuance of a ticket. k. To refrain from performing any mechanical or electrical repairs to the terminal. ~ I. To be responsible for custodial care of the terminal. The Department reserves the dght to terminate this Agreement in the event of repeated malicious abuse and/or negligent care of the terminal. Abuse is de- fined as, but not limited to, accidents such as liquid spills, breakage or other Retailer caused problems resulting in the need for the terminal to be replaced. 8. Equipment The Department agrees to provide Retailer with a computer terminal in working or- der and to install the required telecommunications line for the operation of the ter- minal. 9. Stock All equipment, manuals, tepes, cards, computer pdnteuts, ticket stock and other items furnished to the Retailer in connection with its functions as Retailer, shall re- main at all times the sole property of the Department; it being understood that such equipment is not leased by Retailer, but is in Retailer's custody solely as a seller of tickets and such equipment shall be surrendered upon termination of this Agree- ment Retailer is responsible fo~'lpss or damage of the equipment in excess of normal wear and tear. Retailer must report any "out of order" condition of the equipment to the vendor in accordance with currant Lottery procedure. 22 APPENDIX D INSTANT TICKET VENDING MACHINE (I'TVM) REQUIREMENt,,; I Instant Games Requirements Retailer must be a licensed Instant Game Retailer pursuant to the provisions of Appendix B (Instant Game Requirements). 2. Minimum I'I'VM Sales Requirement This Agreement may be terminated in whole or in part if the Retailer fails to meet the average minimum sales volume of ITVM sales. The minimum sales volume requirement for each I']'VM shall be an average of $500 per week for each calendar quarter. If the Retailer does not meet the applicable ITVM minimum requirement during any quarter, the following procedure will be undertaken: a. As soon as possible after the end of a quarter in which the Retailer does not meet the minimum I']'VM sales requirement, the Retailer will be not/fled in writing by the Lottery that the sales did not meet the .. minimum ITVM sales requirement. The Retailer shall be given one (1) additional quarter to meet or exceed the minimum I'IMM sales re- quirement. The Lottery will exert its best efforts to provide marketing support and assistance to Retailers identified, as they attempt, during · e next quarter, to meet or exceed'the minimum I'TVM sales require- ment. If the Retailer does not meet the minimum ITVM sales require- ment, the I'FVM may be removed. 3. Instant Ticket Vending Machine Requirements a. The Retailer agree~.to provide a grounded three (3) prong electrical AC outlet for use with grounded plugs located within ten unobstructed feet (10') from the I'I'VM. b. The Retailer agrees to provide a space (approved by Department) for the ITVM to allow for Proper ventilation, maintenance, and matadal loading and removal. c. The Retailer shall meet such training standards as shall be established by the Department. d. All equipment and'supplies provided to the Retailer by the Department or its vendors shall remain the property of the Department or its ven- dors, and shall be used for their intended purpose and not for any other purpose. The Retailer shall acquire no interest whatsoever in the equipment. 23 e. All expenses, whether fixed or recurring associated with the items re_ quired to be furnished by the Retailer, shall be the sole responsibility of the Retailer. f. The Retailer agrees to have the ITVM available for the sale of Lottery ticket~ dudng all hours and days that the Retailer's bus;r~ess is open. g. The Retailer agrees to exercise diligence in the operation and care of the ITVM, to provide physical security for the ITVM, and to immediately notify the vendor of any malfunction. h. The Retailer agrees to refrain from performing any mechanical or elec- trical repairs to the ITVM. i. The Retailer agrees to be responsible for custodial care of the ITVM. The Department reserves the right to terminate this Agreement in the event of malicious abuse and/or negligent care of the ITVM. Abuse is defined as, but not limited to, accidents'such as liquid spills, breakage or other Retailer caused problems resulting in the need for the ITVM to be replaced. j. Retailer is responsible for loss or damage of the equipment in excess of normal wear and tear. Retailer must report any "out of order" condi- " tion of the equipment to the vendor in accordance with current Lottery procedure. k. Retailer is responsible for maintaining the appearance of the ITVM in a clean and neat manner. The exterior of the machine must be regularly cleaned. I. Retailer agrees that the I'rVM shall be secured or weighted with sand- bags or other medium at the Lotte~s option. The means to be used shall be agreed to by the Retailer and Lottery. m. Retailer agrees to I~e solely responsible for costs incurred in site prepa- ration. n. The Retailer agrees to be responsible for payment of all electrical utility charges incurred in the operation of the ITVM. o. The Retailer agrees to maintain the access keys to the ITVM on the li- censed premises at all times. Failure to do so may result in the re- moval of the ITVM. 24 4. Location of iTVM The I'I'VM shall be located within the Retailer's premises only at a point of sale ap- proved by Lottery and cannot be moved without Lottery's prior written approval. If given approval to relocate the I'i'VM, the Retailer will pay all costs incurred for the move. Relocation without prior approval of the Lottery will result in termination of that Retailer's right to use an I'I-VM at its location. 5. Instant Games Requirements a. Retailer is required to maintain an adequate supply of Pennsylvania Lottery instant tickets. The ITVM must sell as many different games as ~ _. the machine has ticket bins, i.e., if it has four (4) ticket bins, four (4) different games must be sold. Retailer must also sell all games avail- able at a minimum of one other location in the business facility other than in an ITVM. b. Retailer agrees to utilize to the fullest extent possible all point-of-sale materials provided by the Lottery. c. Retailer agrees to regularly fill the ITVM to avoid empty ticket bins. d. Retailer shall remove all instant game tickets and money from fl~e ITVM .. prior to any equipment maintenance or repair service. e. Retailer shall make available to the Loffery techniciar~, or the Lottery designated technician, the equipment and keys during normal busin " hours for maintenance, repairs and inspection, ess 25 I, LARRY L. MILLER, have prepared the foregoing Complaint. The factual statements contained therein are true and correct. I am authorized to make this Verification on behalf of my client, National Grange Mutual Insurance Company, who is outside the jurisdiction of this Court. The facts set forth in the pleading are based upon my review of the documents and information furnished by Anthony Montecalvo, Bonds Claims Manager for National Grange MUtual Insurance Company. This Verification is made subject to the penalties of 18 Pa. Cons. Stat. Section 4904 relating to unsworn falsification to authorities, which provides that if I knowingly make false averments, I may be subject to criminal penalties. / Larry L. Miller, Esquire Pa. Supreme Court I.D. No. 28122 1423 State Road Duncannon, PA 17020 Telephone: [717] 957-2828 Attorney for Plaintiff: NATIO~L GRANGE MUTUAL INSUPANCE CC~P~NY NATIONAL GRANGE ~U'£uAL : IN T~ COu~ OF COMMON pLEAS INSURANCE COMPANY : CUMBERLAND COUNTY, PENNSYLVANIA 55 West Street : CIVIL ACTION - LAW Keene, NJ 03431-7000 Plaintiff : v. : DOCKET KAUKAB I. BUTT t/d/b/a EVEREST: GENERAL STORE and EVEREST GENERAL STORE II 603 Frar~klin Street Carlisle, PA 17013 KHURRAMN. BUTT t/d/b/a EVEREST GENERAL STORE and EVEREST GENERAL STORE II Carlisle, PA 17013 KAUKAB I. BUTT 231 Meals Drive Carlisle, PA 17013 DILSHAD BUTT ' ..... 231 ~eals Drive . Carlisle, PA 17013 231 Meals Drive ..._.j~ .... ( Carlisle, PA 1701~ : Defendants : YOU HAVE BEEN SUED IN COURT. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after thie Complaint and Notice are eerve~ ~y e)teri~ a w~itten aoDearance personally or by a~torney and f~l~ng ~n writing w"~th the ~urt your defenses or object,one to the claims set forth against you~ You are warned t~at if you fail to do so the case may proceed w~th~ut you and a ]ud.g~.ent ~ay he entered aqains~ you hy the Court w~thout further no~ce for any ~oney claimed ~n the.¢?~laint or for any other claim or relief requested by the Plaintiff. You may lose money or property or other rights important to you. yOU SHOULD TAK~ THIS PA~R TO YOUR LAWY~ AT ONCe. IF YOU DO NOT HAVE A LAWYER O~ CANNOT AFFORD ON~. GO TO OR SET FORTH m~?,OW TO FIND OUT ~ YOU CAN G~T Cumberland County Bar Association 2 Liberty Avenue Carlisle, PA 17013 800.990.9108 DATE: April 26, 2001 By: LARRY L. MILLER Attorney I.D. $28122 Attorney for Plaintiff Larry L. Miller, Esquire Pa. Supreme Court I.D. No. 28122 1423 State Road Duncannon, PA 17020 Telephone: [717] 957-2828 Attorney for Plaintiff: ~TIONAL GRANGE MUTUAL INSURANCE C~MPANY NATIONAL GRANGE ~uTuAL : IN '~'~= COURT OF COMMON PLEAS INSURANCE COMPANY : CUMBE~/,~ND COUNTY, PENNSYLVANIA 55 West Street : CIVIL ACTION - LAW Keene, NJ 03431-7000 Plaintiff v. : DOCKET KAUKAB I. BUTT t/d/b/a EVEREST= GENERAL STORE and EVEREST GENERAL STORE II 603 Franklin Street : Carlisle, PA 17013 KHURRAM N. BUTT t/d/b/a : EVEREST GENERAL STORE and : EVEREST GENERAL STORE II : 603 Franklin Street : Carlisle, PA 17013 : KAUKAB I. BUTT : 231 Meals Drive : Carlisle, PA 17013 DILSHAD BUTT 231 Meals Drive Carlisle, PA 17013 KHURRAMN. BUTT : 231 Neals Drive Carlisle, PA 17013 Defendants Plaintiff, National Grange Mutual Insurance Company, by its undersigned attorney, hereby sues the Defendants, Kaukab I. Butt trading and doing business as EVerest General Store and Everest General Store II, Khurram N. Butt trading and doing business as ~erest General Store and ~erest General Store II, and Ka~ab I. Butt, Dilshad Butt and ~r~ N. Butt, individually, and in support thereof, says= at onal Grange Mu ua surance Co ny ('~ational Grange or 'Plaintiff' or "Surety-), is a corporation in~°rp~rated Un,er the laws of the State of New Hampshire that maintains /ts prIncipal place of ~siness at 55 West Street, Eeene, NJ 03431-7000. 231 Meals Drive, Carlisle, PA 17013. o n adult andiv~dual who resides at 231 Meals Drive, Ca, lisle, PA 17013. At al! times relevant here~, Ehurram W. Butt was an OWner of EVerest General Store II. 4. Defendant, Dil~ad Butt, is an adult individual who resides at 231 Meals Drive, Carlisle, PA 17013. 2 A. THE INDEMNITY AGREEMENT 5. On March 24, 1999, Kaukah I. Butt and Dtlsha~ individual~y, and Kaukab I. Butt on behalf of EVerest Gene ..... t, II, (hereinafter collectively referred ~ ....., ral Store executed a Specific Indenmit,, ~---- -v ~ une Indemnitors.), A CODy of ~h~ T,~_ ._ '~'~=¥ agreement'). -i . --~ ~-u=mnl=y Agreement ~s attached hereto as Exhibit and it as ~ncorpor~ted herein by reference· The Indemnitors bonds on behalf of Everest General Stores, II ('EVerest) and Indemnttors. 6. Under the Indenulity Agreement, the Indemnitore agreed to exonerate, hold harmless and indemnify Nation from and against all clat- - al Grange m~, lOSSes, and expenses inCUrred as a result, of having executed bonds on behalf of Ev Indemnltors. The Ind '- erest and emnl=y Agreement provides= 5. That the Indemnitor(s) s ~demnlfy, save the ~.-i_L ~hal~ at all times place the Co~.- ~.~a~ harmless from 3 dgment, or ad · . , .s~lt, order. 7: That the Company shall have the exclusive right to determine for itself and the Indemnitor(s) whether any claim or suit brought against the Company or the Principal ~_.a. ~esult of the existence of the Bond~ ~;~ ~se~ or defended and ',o ~- ._, --uemnltor(s). -,.~uSlve upon the ' 3 7. In reliance Upon the executed Indemnity Agreement, National Grange executed a permit bond on behalf of Defendants. B. THE BOND 8. National Grange executed a permit bond, Bond No. 412-628 (hereinafter 'the Bond'). A true and COrrect Copy of the Bond is attached hereto as Exhibit 'B.' The bond was required by the Commonwealth of Pennsylvania, Department of Revenue, Pennsylvania Lottery for Defendants~ Application for Lottery Retailer License to sell lottery tickets. C. LOSSES AND EXPENSEs · . 9. On October 24, 2000, National Gran e re · claim in the amount of $15,326.55 from the Colonwe~edo~ Pennsylvania, Department of Revenue, Pennsylvania Lottery'). A true and correct cony ~ ~ .... Lottery ( PA ~__ ~ . =~ vA ~ c~alm letter is attached · l~re=o as Exhibit 'C' and it is incorporated herein by reference. 10. By letters dated November 7, 2000, Natio notifled Defendants of the . . hal Grange c~alm of the PA Lottery. The ~aenr~7'=.2~00 ~etters requested written confirmation fro True .... , m~ uecem~er g, 2000, that the matter had been resolv_=m and correct copies of the cu. November 7, 2000 letters to Defendants are collectively attached hereto as Exhibit 'D' and incOrporated herein by reference. . 11. Nationa! Grange made demands on the Indemn Protection from the claims, but the I-~ .... itors for . -u~mnl~ors have c · gnored these demands, ompletely 4 12. Because Defendants fai~ed and refUSed to respond to the November 7, 2000 letters, on Apr,! 19, 2001, National Grange was £orced to pay ~he claim o£ the PA Lottery, PUrsuant the Indemnity Agreement, for the penal amount of $10,000. to .13. Also, due to the failure of the Indemnitors to Protect ~t from these claims, National Grange has substantial expenses, inCLuding investigative c - incurred . os~s and attorney,s fees and will continue to incur such costs an the future. 14. Paragraphs 1 through 13 above are incorporated herein by reference as if set forth in full. 15. The Bond was executed and issued by Nationa! Grange at the request of Defendants and In consideration for and reliance Upon the Indemnity Agreement. 16. Indemnitors are i~ default of the Agreement as they have refused to ~nde~nif¥ National Grange. · Upon Such default, the Inde~nity Agreeme · that Indemn~tors shall ~----. nt provides , ~u~/L~IA, Indemnify National ~ and against any and all liabilities 1 ~-a.~e from · osses and expenses imposed upon, sustained, or incurred by National Grange by reason of having executed the Bond. 5 · 18. The Indemnity Agreement was in full for at the time of the ex ..... ce and effect ~uu=lon and delivery of the Bond and is P~esently in full force and effect. National Gran e · with all conditions precedent set forth i ~ .... g..has complied 19 _ ._ n ~l= ~nue~l~y Agreement. · · ~a=lonal Grange believes and therefore . has and Will con ~,,.A ,_ . avers that ~t court costs, and ~ttorney s fees, all of which I~demnltors are responsible to National Grange for under the Indemnzty Agreement. 2.0. Because all of said liabilities, losses are continuln, ~-~ _ . and expenses ~ Q,u are not presently capable of ex -~ - . · . au= calculation, liquidated sum, but it reasonably anticipates them to be in excess of $20,000.00. 2~. By reasons of the foregoing, National Grange has demanded that Indemnitors reimburse it the claim paid Lottery pUrsuant to the Indemnity Agreement. to the PA complied w tN~t°nal Grange,s demands have not been · ' s. On the contrary, Indem · refuse ~- . nltors ~_~ . ~_. ~. comply With National Grange,s d ..... have anuemnlrlcatlon. As a r . .- . ~munas for . esu~=, Indemn~tors are in br promises and coy- - each of the ,nants set forth in the Indemnity Agreeme-~ 23. Indemnitors -'' are oth~rwise in default Under the I?demnit~ Agreement as they have failed and refused to cooperate with National Grange. 6 WHEREFORE, National Grange MUtual InSurance Company prays Dt~idYa°nU~s~°n°rable Court enter Judgment in its favor and against ~OU~I' ~0 24. Paragraphs 1 throug~ 23 above are incorporated herein by reference as if set forth In full. 25. As a factual and legal result of its exe · the Bond on b~h~ .... cutAon of ..... ~ u~ uerendants, National Gran~e ha- ~- losses a ~ ..... . ~ ~ zncurred n. =~p~nses as described above. 26. The Indemnitors have fai~ed to .protect National Grange fro~ such losses, and expenses despAte theAr obligations as set forth An the Inde~Aty Agreement. WHEREFORE, Plaintiff, Nationa! Grange Mutual InSUrance Company, respectfully requests that judgment be entered in its favor and against Defendants, jointly and Sere . compensatory dam ..... - rally, for · . ~ An an amount exceeding the 4ur · . amount reau ~, ........ ~ isdAct~onal ~ Ar~.,~ armA=ra=lon referral pursuant to Local Rules of Court and for SUCh other and further relief as this Court deems just and appropriate. 7 27. Paragraphs ! through 26 above are incorporated herein by reference as if set forth in full. 28.. National Grange obtained an assignment of the PA Lottery,s claim against Defendants as part of the settlement. 29. Grange, Defendants Owe t~e PA L~tt~, and now National $15,326.55 as described In Exhibit C attached hereto. Company, WHEREFORE, Plaintiff, National Grange Mutual Insurance respectfully requests that Judgment be en favor a d ,~ ....... tered in its of $15 3~= -- - , ~-*,,=ay and Several/y, in the amount ., ~u.~, Plus attorney,s fees, costs an~ as this Court deems just and appropriate.' u such further reZ~ef COU~I'~OUR 30. Paragraphs 1 throug~ 29 above are ~ncorporated herei~ by reference as ~f set forth ~n full. 31. De~endants had an Agreement for Sale of Pennsylvania 8 32. Pursuant to Defendantst __~ . Agreem=,u With the PA Lottery, they.agreed to be personally liable for all proceeds from the sale of tickets. 33. Additionally, Defendants agreed to Save and PA Lottery harmless o~ --- ~ . hold the - a~ ~sses Including all consequential damages and reasonable attorney s fees. · 34, National Grange has paid the claim of the PA Lottery and is now equitably subrogated to the rights of the PA Lottery Under the Agreement. 35. Defendants, Kaukab I. Butt and Khurram N. Butt, owe National Grange $15,326.55, plus all related compensatory damages, interest, and attorney,s fees. WHEREFORE, Plaintiff, National Grange MUtual Insurance Company, respectfully requests that Judgment be entered in its avor and against Defendants, KaUkab I. Butt and Rhurram. N. Butt, In the amount of $15,326.55, plus compensatory damages, ant ttorney,s fees, costs, and such further relief as this Co..-~e~est' lust and appropriate. ~ ~L ueems DATE: April 26, 2001 ! ! LARRY L. MILLER · Attorney I.D. $28122 9 ·" 4~SS~NUM GNV n~V(] 'G3#015 ~8 LS(III J.N~IR:J~UGv ~NOiS II a3o~s le~aUaD ~sa~aA-a · ~6~ ' · SB~qYNHd 1~10 aNY qYNIHIUD ~ NOSU3d HOflS ~gegns ONY ']HIUO Y 91 HDI~ '~V BDNYUflSNI V 9~IH~OO O~HB~ qYl~Y~ ~Yd ANY ONINH~ONOO NO~Y~MOdNI ONIG~qSiH dO HS~d ~ HOd HO NO~YH~OdNI g~V~ AqqYIH~Y~ ANY ONINIYLNOO ~1~O dO ~NIR~V~ MO ]O~SNI HOd NO~lqddY NY SBqld NOS~3d ~3~ ~O ANYd~OO aONY~flSNI ANY Gfl~flG ~ ~NI ~ GNY AqgN~ O~ N~H~ ANY oql ozite ~eJoq (s)Joguwo~l oql P~ '~Jns em~ ~w ~ si Au~ ~ ~BUM ~ Wa~ ~ OJ~ ~ ~0 Aug W (S)JOMU~i OUT S~JOe ~OU~M (S)~u~pUl ~ ~ :~eJW~ plUS 01 eUlUtg~e u!~q~ ~eJqmo sielJO~em o~ ~ ~J ~l~ ~ (S)JmlU~Ul ~1 JO Osu~ ~ ~ puc ~eJlU~ um ~.. 4 .... · (s)JOllUmO~l ~ jo suDIsSe ~e ~os~o~s 'sJO~Jl~!mPe 's~ 'sJIOq ~ pu~ II~S ~ Sl~ W~ 'g ~s m len~ ~ ~ runs · SYR. BOf~DEPT. APR 1 ''m U ,al,,~ .a. Grange Mutual Insurance_ Company ~ NO.__S 412 - 628 ~ ALL ~ ES THF. SE P~£h"r$, That we ..~.aukab [ Butt, T/a___Everest General Store ef 603 Franklin Street, Carlisle, pa. 17013 (hereinafter called Principal), and KA2TCHAL F?dl~IAL .R-N~-dRA~C~ COM~.A.Nyj a corpo~~aticrn org~nize~ und~.r the la~'s of ~,e S~ate of Hew · ~sh. ire and a,,~h,~s~.,~j ~ do ~ne~s C~v~ealth of ~sylva~a, with its ~ ~fice In the City of Ke~e, N.H. as (h~einafter called S~ty), are held a~ fi~ly ~d ~to: ~m~n~al~ 0f Penn~l~ma De~ent of R~venue 28~ Turnpike Indu~ial Middletown, Penn~fE~nia 17057 as ~ltg~, in the full and Just s~m of Ten-ThOusand Dollars Even .......... DOlOrs, lawf~l ~y of the Uni[~ States of ~zer!~ %o ~ ~id t- t~ ea ~ma~d fcr and ~ accost of any f~ds ~e fr~ the Pr!~ipal as a revolt of the sale of lotte~ tic~ets t~ w~ch tke Pr~ci~el has fa[l~ to ~ke tLmely Pa~ts tc the Obligee; for tcators, succ~sors ~ assi~s, jo~tly and severally, fi~ly ~. %he~ presets. ~R~S the ~r~ci~l has ent~, or ia a~ to enter, ~to a written Agree~n% with the ~l!g~ ~o ~ fin~cial[y res~sible to the ~tt~. for alZ' r~nues d~i~d f~ the sale of P~ylvanla ~t~ Tickets as Is ~re s~iflcelly set fe~ in said Agr~t, to which ~e is ~r~ ~e. ~ ~, T~ CO~I~I~j Or T~ 0~ ~ ~, t~t if t~ Pr~cl~l shall ~ t~ ~rfom ~d ~t~ o~ the ccv~ts, te~, a~ co~itio~ of said agr~, thirty (~0} ~m ~ advance of ~he date of Ca~ellatl~. ~a~ ~th ~ s~ls ~d dat~ ~is 24Ch day of .March .~ 19~9 . Kaukab I. Butt George R. Nunemake: Commonwealth o[ Pennsylvania Department of Revenue PENNSYLVANIA LOTTERY 2850 Turnpike Industrial Drive ~ Middletown, PA 17057..5491 Proceads Benefil Okl~, pefln~t, ba~ans National Grange ~ lnsurmlce Attn: Claims 5010 Campuswood Drive P.O. Box 4742 Syracuse, NY 132214742 Re: National Cn'ange Mutual Insurance Company Lottery Bond# S 412 - 628 Retailer~ 390526 Kankab I Butt DBA Everest General Store II We are hereby filing a claim in the amount of $15,326.55 against thc above referenced bond which lists Kaukab I. Butt DBA Everest G-eneml Store II as the principal and the Pennsylvania Lottery as the obligee. On March 20, 2000 · due to delinquency, cancellatmn from thc Numbers Games Network took place The following is a breakdown of the amounts due: See attached Ledger Sheet. Total Instant Games Due: 12,155.75 Total On-line Games Due: 3,170.80 Total Due: $15,326.55 Claim Amount: $ I0,000.00 · I have enclosed the following: computer report iisling on-line settlements, computer reports listing return items, and a copy of the retailer license application and conlract. If you have any questions concerning this matter, please contact Tmmny Fasick at (717) 9864704. Budget Division Chief LBB/TLF/tf Enclosure PHONE 717-986-4699 FAX 717-986-4767 National Grange. Mutual 55 West Street Insurance P.O. Box 2300 Company Keene, NH 03431-7000 ~ (603) 352-4000 Tuesday, November 07, 2000 Kaukab & Dilshad Butt 231 Meals Drive Carlisle, PA 17013 RE: Principal: Kankab Butt d/b/a Everest General Store Bond #: S--412628 Obligee: Commonwealth of PA Retailer No.: 390526 Dear Sir: Please fred enclosed copie~ of correspundence from the PA Lottery notifying National Grange Mutual of a claim on our bond provided on your behalf. Please ?.view the aUached documentation and advise as to what action you intend tu take to resolve this outstanding ma~er. lfl do not receive written confirrnatlun that this matter has been resolved by December 7, 2000, National Grange Mutual will proceed to issue payment of our full bond amount for full reimbursement of any emounts paid. . In that event we shall look to you If you have uny questions concerning .any of the above please ootw..npond directly with the undersigned. Sincerely, Anthony Montocalvo Bond Claims Manager Enclosure: Cc: Pennsylvania Department of Revenue Attn. La.ny Beard, Budget Division Chief Pennsylvania Lottery '. 2850 Turnpike lndustrinl Drive Middletown, PA 17057-5491 National Grange. Mutual ss West Str,et Insurance P.O. Box 2300 Company Keene, NH 03431-7000 (603) 352-4000 Tuesday, November 07, 2000 Everest General Store Atm. Kaukab Butt 603 Franklin Street Carlisle, PA 17013 RE: Principal: Kaukab Butt d/b/a Everest General Sfore Bond #: S-412628 Obligee: Commonwealth of PA Retailer No.: 390526 Dear Sir: Please find enclosed copies ofcotrnspondence from the PA Lottery notifying National Grange Mutual cfa claim on our bond provided on your behalf. Please review the attached documentation and advise as to what action you intend to take to resolve this outstanding matter. IfI do not receive written uonf'mnation that this matmr has been resolved by December 7, 2000, National Grange Mutual will Proceed to issue payment of out full bond amount. In that event we shall look to you for full reimbursement of any amounts paid.. If you bare any questions concerning any of the above please correspond directly with the undersi&ned. Sincerely, Anthony Mentecalvo Bond Claims Manager Enclosurn: cc: Pennsylvania Department of Revenue Attn. Larry Beard, Budget Division Chief Pennsylvania Lottery 2850 Turnpike Industrial Drive Middletown, PA 17057-5491 AGREEMENT FOR SALES OF PENNSYLVANIA LOTTERy TICKETS T/A .... · ..:=.. ...... .~ ..~,.,,., :.....::..~......' ~..~ at License Location Address ~ Corporate Name This Agreement is by and between the Commonwealth of Pennsylvania, Department of Revenue, Pennsylvania Lottery, hereinafter referred to as "Department" and hereinafter rafermd to as "Retailer". -- The Department of Revenue has as one of its responsibilities, in accordance with 72 P.S. §3761-1 e~t seo. and 61 PA Code §801.1 et_~.~.q., the authority to select retailers for the sale of Pennsylvania Lottery tickets. Under the law and regulations, the Department is empowered to enter into contracts wP, b persona to sell Pennsylvania Lottery tickets and to pay such Persons a commission as set forth in the Lottery law and regulations. ises hereinafter set forth, and intending to be legally bound, the parties hereto agree as A. Definitions As used in this Agreement, the term: 1. "Agreement', shall mean this Agreement for the sale of Pennsylvania Lottery tickets. The term shall apply to all contractual and license dghts, duties and obligations of the parties. 2. "Effective Date" shall mean the date affixed to this Agreement by the Executive Director as set forth on page 10 herein. 3. "Secretary" shall mean the Secretary of Revenue. 1 4. "Executive Director.' shall mean the Executive Director of the Penn- sylvania Lottery. 5. "Retailer" shall mean such person or persons authorized by this Agreement to sell Pennsylvania Lottery tickets. The term shall include ~,hc.~s ~¢~'~=,",s listed on ' -: "~ .... : ....., · t,h,~ ,-,~,~. ,,-~,,~z~ ,c: License ~.~ Sell Lo~ery T~ckets" ("Application") which application is incorporated by a part of this Agreement. reference as 6. "Lotte~ Games" shall mean all those games, including instant and numbers games, authorized for sal~ by Retailer on behalf of the Lottery. 7. "Lotta~" shall mean the Pennsylvania Lottery of the Pennsylvania Department of Revenue· 8. "Lottery Law'' shall mean Act of March of 1971 (P.L 6, No. 2), 72 P.S. §3761-1 ~ 9. "Lottery Regulations" shall mean 61 PA Code §801.1 ~ 10. "Term" of this Agreement shall include the period hereinafter provided for and any renewals thereto. " 11. "Substantial Change of Ownership" shall mean a transfer of 50% o~ more the equity of the Retailer's business, of B. Retailer.s Obli~3ation~' 1. Sales Retailer agrees to sell such Pennsylvania Lottery tickets as may be authorized by the Department. Retailer agrees that Pdrsuant to 61 PA Code §809.35, Lottery tickets · shall not be sold to any person under eighteen (18) years of age. · 2. Controlling Provisions Retailer agrees to abide by all Provisions of the Lottery law, and any rules and regulations, procedures or instructions issued b the partment, the Secreta.-. o' ..... Y De- ,! · mevenue, ~e Lottery, or the Executive Direc- tor, as are now in effect or which hereinafter may be promulgated or published. Such Lottery law, rules and regulations, procedures and in- structions are incorporated herein by reference as a part of this Agre~ men/ 2 3. Warranty of Financial Responsibility Retailer warrants that it is financially responsible and will provide evi- dence in support of such fact upon demand by the Department. Such ~vidence may i~c ude but is r~ot Iimifed to. ~-dicl~s of incorpo.,-ation, by- laws, pa~'a'~ers~3~p agreements, certified fi~ancial statements, bank refer- ences, credit references and business references. 4. Records Retailer agrees to maintain current and accurate records, in confor- mance with generally accepted accounting principles, of all transa~ons dealing with ticket sales. Retailer further agrees to retain all accounting records pertaining to ticket sales, including but not limited to bank state- ments and canceled checks, for a period of not less than three (3) yeara. All records required to be maintained by Retailer shall be available to rePresentatives of the Department, upon request, for inspection and audit during regular business hours. 5. Fiduciary Responsibility Retailer agrees that with respect to the proceeds from the sale of tickets, it acts in a fiduciary capacity with respect to such funds until such funds - are paid into the Lottery Fund as required. Retailer shall be personally liable for all proceeds from the sale of tickets. 6. Independent Contractor Status Retailer agrees that, except with respect to the proceeds from the sale of tickets, it shall render its service under this Agreement as an independ- ent contractor and, as such, shall further agree that any con,actual or tortJous liability it may incur in connection therewith shall be its sole re- sponsibility. 7. Non-Discrimination Provision Retailer agrees that during its performance Under this Agreement, the Retailer will comply with the non-discrimination provisions attached hereto and made a part hereof as Appendix A. 8. Promotional Material and Training Retailer agrees to prominently post current point-of-sale and other pro~. mofional material supplied by the Department. Retailer agrees to attend such training sessions as the Department shall ..- provide to ensure that the Retailer and its employees are preperiy trained in the sale of Lottery tickets. 3 9. Minimum Sales Requirements Retailer agrees to be bound by the minimum sales requirements con- tained in the provisions of Appendix B for Instant Games Only Retailers, .-'.pp~ndi× C fcr :~unl~,e~-~ Gar;';gs Re[=;iers, an~ Appendix D for Ir)stant Ticket Vending Machine Retailers. 10. Instant Terminal Requirements If the Retailer is authorized to sell Lottery tickets for Instant Games only, the Retailer agrees to the Previsions of Appendix B, incorporated by ref- erence hereto. 11. Instant Ticket Vending Machine (ITVM) Requirements If the Retailer is authorized to sell Lottery tickets through an ITVM, the Retailer agrees to the Provisions of Appendix D, incorporated by refer- ence hereto. 12. Numbers Games Requirements If the Retailer is authorized by the Department to sell Loltery tickets for Numbers Games, in addition to Instant Games, the Retailer agrees to the provisions of Appendix C, incorporated by reference hereto. 13. Claim Services If the Retailer is authorized by the Deparl~nent to provide claim services, it agrees to be bound by the Provisions of Appendix B, for Instant Games Only Retailers and Appendix C for Numbers Games Retailers, incorpo- rated by reference hereto. 14. Notice of Business C. hanges Retailer agrees to give the Department a minimum of ten ('10) days ad- vance notice of Retailer's intent to: a. sell its business, b. cease operations of business either temporefily (inc/uding vacations) or Permanently, c. move to a new location, or d. of any substantial change in ownership. Retailer shall notify the Department within ten (10) days of: '. a. any change in business hours, b. any change in financial COndition, 4 c. any change in type of primary business, or d. any event which alters any information disclosed in the 'Application". 15 ~greem~..t ~on-Assignable This Agreement for the sale of Lottery tickets is non-assignable. Any such unauthorized assignment shall constitute a breach of this Agree- ment. 16. Sole Business Retailer warrants that, pursuant to 61 PA Code §805.2(a), it is not in the exclusive business of selling Loffery tickets. 17. Sale of Pennsylvania Lottery 'l~ckets The Retailer agrees that it shall sell Pennsylvania Lottery tickets only. The Retailer understands the sale of any other Lottery tickets shall con- stitute a breach of this Agreement and this contm~t shall be revoked im- mediately in the event that the Retailer violates this provision. C. Department's Obliqation.-. 1. Commission The Department agrees to pay Retailer a commission for all valid sales, plus or minus any adjustments and less a Weekly line service charge, if applicable. The rate of commission shall be as designated in the regula- tions for each Lottery game. 2. Equipment The Department agrees to provide such equipment and supplies as · listed in Appendix B for Instant Retailers, Appendix C for Numbers · Games Retailers, and Appendix D for instant Ticket Vending Machine Retailers, incorporated by reference hereto. 3. Materials, Supplies, Advertising The Department agrees to provide necessary Lottery related materials to Retailer including point-of-sale matadal, manuals, procedures and in- structions. 5 The Department agrees to use its best efforts to provide Retailer with current tickets, as available, and any other necessary equipment, as more fully enumerated Jn Appendix B for Instant Retailers, Appendix C .... u,, ~,~ ,.=o,T,~s ~'~etailers, a~ ,d Appendix D for Instant Ticket Vend- ing Machine Retailers. The Department agrees to promote and advertise all Lottery games. 4. Additional Retailers The Department reserves the right to approve and establish new Retail- ere with or without Numbers Games capabilities in any part of the Com- monwealth, as it deems appropriate. 5. Term/nation of Agreement This Agreement may be terminated by the Department for any of the following: a. Failure to comply with any of the terms of this Agreement, the Lottery law, its rules and regulations or instructions, including but not limited to 61 PA Code §805.17, issued by the Execu- tive Director of the Pennsylvania Lottery or the Secretary of Revenue may result in immediate suspension or termination of this Agreement, in whole or in part, at the sole discretion of the Department. Upon such suspension or termination, the Re- tailer's authority to sell Lottery flckets of all types shall imme- diately cease. b. Failure to make full settlement on the required seffiement date or failure to have float cash monies available or failure to meet the average minimum sales volume requirement shall also constitute a breac~ of this Agreement and may result in im- mediate suspension or termination of the Agreement in whole or in part at the sole discretion of the Department. c. Any misrepresentation or omission in Retailer's application to sell Lottery tickets or any renewal application will result in im- mediate suspension of this Agreement, in whole or in part, and may result in termination of the Agreement, in whole or in part, at the sole discretion of the Department. d. This Agreement may be terminated, in whole or in part, by either party for the convenience of either party and for masons other than those detailed in sub-paragraphs a, b and c, upon fourteen (14) days written notice by the terminating party. 6 terms, breech thereof, or performance required of the Retaiier or the De- partment under this Agreement, or with regard to the suspension or pro- posed termination of this Agreement, the Retailer shall be given an op- portunity to be heard through the Presentation of written representations of its position to the Department within seven (7) days. At the time of making its written representation to the Department, the Retailer shall present such facts, evidence, statements and other relevant information as it shall desire for the consideration of the Department in reaching its final determination. Such notice to the Department shall not affect the Department's authority to suspend Retailer's authority to sell Lottery tickets pending final determination. The Secretary of Revenue or the Secretary's designee shall make a final determination in writing with re- gard to the dispute and shall send same to the Retailer within thirbj (30) days of receipt of Retailer's written Presentation. The Retailer's sole options with respect to any such decision shall be either. 1. accept said decision as a correct and binding interpretation of the Agreement, or 2. to make such claim as it may deem appropriate to the Com- monwealth's Board of Claims pursuant to the Act of May 20, 1937, P.L. 728, No. 193, as amended (72 P.S. §4651-1 et see.) Retailer agrees that Lottery funds shall not be withheld by Retailer pending resolution of a~j dispute. · ,E. Term This Agreement shall automatically terminate on March 15 of the year following the effective date on page 10 unless othen~ise renewed, tended or terminatad; Provided, however, that this Agreement shall automatically renew upon receipt and approval by the Department of Retailer's 'Application for Renewal" and payment of the required fee. This Agreement will terminate upon the expiration of Retailer's temporary license, if the Depadrnent denies Retailer a permanent license for any reason, or if terminated PUrsuant to paragraph C5 of this Agreement. Retailer agrees not to conduct any business or hold itself out as a seller of tickets unless or until this Agreement is renewed. 7 Renewal of this Agreement for additional terms shall be at the sole dis- cr~tion of the Secretary of Revenue. The Secretary may, pursuant to 61 temporary extensions pending administrative determination. F. Statute and Requlation.,- Retailer acknowledges the receipt of the applicable statute and regula- tions governing the sale of Lottery tickets. Retailer will be deemed to have actual notice of future regulations upon publication in the Pennsyl- vania Bulletin. Such future rules and regulations shall be incorporated by reference into this Agreement upon publication. All owners, partners, and corporate officers of Retailer must sign this Agreement and must acknowledge that they fully understand and con- sent to the terms of this Agreement. This Agreement does not become effective until fully executed. HA Indemnification/Hold Harmless Claus, The Retailer shall save and hold harmless the Commonwealth and its officers, agents and employees or any of them from any and all claims, demands, actions or liability (including, but not limited to, consequential damages and reasonable attorney's fees) of any nature based upon or arising out of:. 1. Any services Performed by the Retailer, its agents or employ- ees, except such services as are properly performed at the ex- press direction of the Department. 2. The use by the Retailer of any copyrighted or uncopyfightad composition, securitT, deed, process, patented invention, arli- cie or appliance furnished or used in the performance of any services under the contract. 3. The negligent, or equally or more culpable, conduct by the Retailer, its ager~ts, subcontractors and employees dudng the . term of or in connection with the performance of the contact. , 8 I. Waiver The failure of the Department to insist upon strict adherence to any term of this Agreement shall not be considered a waiver or deprive the De- Partment of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement, J. General Provisions · This Agreement shall be governed by and construed according to the laws of the Commonwealth of Pennsylvania. This Agreement constitutes ~.thpe_ e.n. tJre ..agree. ment b. etween the Department and the Retailer wi em to all contractual and licensed rights, duties and obligations otio'of ~'e pa~es. The Agreement shall not be amended or modified-unless such amendment or modlficatJon is in writing and signed by both par'des. If a court of competent jurisdiction determines that any portion of this Agreement is invalid, that part shall be severed and the remaining por- tions shall control. (THIS PORTION OF PAGE INTENTIONALLY LEFT BLANK) 9 IN WITNESS WHEREOF. the parties hereto have caused this Agreement to be exe- cuted, in~snding to ~,-- ..... '. . Owner/ihtere$[ed Party _ Owner/J~[~.sted Party BY Owner/intere~[ed Party Tm.E BY O~,~e~An~erested Party TITLE . BY -- Owner/Interested Party TITLE - BY Owner/Interested Party TITLE BY Owner~';~i.,~sted Party TITLE _. BY - Owner/Interested Party TITLE _ BY Ov-~er/;nterested Part~. TITLE BY · Owner/Interested Party TITLE APPROVED BY Executive Director: Pennsylvania Lottery Department of Revenue C .ommonweal~ of Pennsylvania EFFECTIVE DATE 10 APPENDIX A N~ON-DISC.R. MINATION CLAU. _St During fha term, ot' thi~ contract, Retailer agrees as t'ciiows: 1. Retailer shall not discriminate against any employee, applicant for employ- ment, independent contractor or any other person because of race, color, ralig- ious creed, ancesby, national origin, sex, age, disability, sexual orientation or union membership. ~ · Retailer shall take affirmative action to ensure that applicants ara employed, and that employees or agents are trea~d during employment without regard to race, color, religious creed, ancest~j, national odgin, sex, age, disability, sex- .ual orientation or union membership. Such affirmative action shall include, bUt ,s not limited to, the following: employment, upgrading, demotion, transfer, re- cruitment or recruitment adved~sing, layoff or termination, forms of compensation, and, selection for training, rates of pay or other Retailer shall post in conspicuous places, available to employees, agent, applicants for employment and other Persons, a notice to be provided by the contracting agency setting forth the provisions of this Non-discrimination Clause. 2. Retailer shall, in advertisements or requests for employment placed by it or on its behalf, state that all qualified applicents Will receive consideration for em- p!oyment without regard to race, color, religious creed, ancestry, national ori- gin, sex, age, disability, sexual orientation or union membership. 3. Retailer shall send each labor union or worker's raPresentatNe with which it has a collective bargaining agreement or other conVact or understanding, a notice edvlsmg said labor umon or worker's representative of its commitment to this Non-discrimination Clause. Similar notice shall be sent to every other source of recruitment regularly utilized by Retailer. 4..It shall be no defense to a finding of noncompliance with the contract com- I~liance regulations issued by the Pennsylvania Human Relations Commission or this Non-discrimination Clause that Retailer had delegated some of its em- ployment practices to any union, training program or other source of recruit- ment that Prevents it from meeting its obligations. However, if the evidence indicates that the Retailer was not on notice of the third party discrimination or made a good faith effort to correct it, such factor shall be considered in mitiga- tion in determining appropriate sanctions. 11 5. Where the practice of a union or of any training program or other soume of re- cruitment will result in the exclusion of minority group persons, so that Retailer will be unable to meet its obligations under the contract compliance regulations Js-"u~ b~ t;',~ ,~- e,~,,.,~.,v~ni~ ~i,~m~.n ~eia~ic~ is GOh~£TlJss~oll, or J~lJS Non- discrimination Clause, Retailer shall then employ and fill vacancies through other non-discriminatory employment procedures. 6. Retailer shall comply with the contract compliance regulations of the Penn- sylvania Human Relations Commission, 16 PA Code Chapter 49 and with all laws Prohibiting discrimination in hidng or employment opportunities. In the event of Retailer's noncompliance with the Non-discrimination Clause of this contract or with any such laws, this contract may, after hearing and adjudica- tion, be terminated or suspended, in whole or in part, and Retailer may be de- clared temporarily ineligible for further Commonwealth contracts, and such other sanctions may be imposed and remedies invoked as Provided by the contract compliance regulations. 7. Retailer shall furnish all necessary employment documents and records, and permit access to its books, records, and accounts by the contractJng agency and the Human Relations Commission, for purposes of the contract compli- ance regulations, pursuant to ~49.35 of these regulations. If Retailer does not possess documents, or records, reflecting the necessary information re- · quested, it shall furnish such information on reporting forms supplied by the contracting agency of the Commission. 8. Retailer shall actively recruit minodty subcontractors substantial minority rePresentation or subcontractors with among their employees. 9. Retailer shall include the Provisions of this Non-discrimination Clause in every subcontract so that such Provision will be binding upon each subcontractor. 10. The terms used in this No.n-discrfminafion Clause shall be the same as in the ~:ontract compliance regulations issued by the Pennsylvania Human Relations , Commission, 16 PA Code Ch. 49. 11. 'Retailer obligatiohs under this clause are limited to the Retailer's facilities within Pennsylvania, or, where the contract is for purchase of goods manufac- tured outside of Pennsylvania, the facilities at which such goods are actually Produced. 12 APPENDIX B I~NSTANT GAMES REQUiREMENT,O, 1. Retailer Chec~.:in.o Reta~ier agrees to maintain a chec~;ing account that is accessible to the Lottery for the drafting of funds owed to the Lottery from the sales of Instant Games Lottery tickets. The Retailer may establish a separate Lottery account or use a current business account. Any charges associated with the Retailer checking account are wholly the responsibility of the Retailer. There can be no limitations on the number · or amount of deposits, withdrawals or checks that can be made. Retailer agrees to ~ make prompt settlement at its assigned bank or at such other locations as may be directed by the Department and to pay all those amounts due and owing according to procedures established by the Department and incorporated by raferance hereto. "FAILURE TO COMPLY WITH ANY OF THE PROVISIONS OF THIS PARAGRAPH WILL RESULT IN IMMEDIATE SUSPENSION OF THE RETAILER'S AUTHORITY TO SELL TICKETS AND MAY RE CONSTRUED AS A BREACH OF THIS AGREEMENT WARRANTING TERMINATION.,, 2. Minimum Sales Requirements This Agreement may be terminated in whole or in part if the Retailer fails to meet the average minimum sales volume of Instant Games tickets. The minimum sales volume requirement for Instant Games Retailers shall be 30% of the average weekly Instant Games ticket sales for all Instant Games Retailers in the Retailer's sales area for the previous quarter or for the current quarter, whichever is less. If the Retailer does not meet the applicable Instant Games minimum sales require- ment dudng any quarter, the following procedure will be undertaken: a. As soon as possible after the end of a quarter in which the Retailer does not meet the minimum sales requirement, the Retailer will be noti- fied in writing by the Lottery that the sales did not meet the minimum sales requirement.' .The Retailer shall be given one additional quarter to meet or exceed the minimum sales requirement The Lottery will ex- ert its best efforts to provide marketing support and assistance to Re- tailers identified, as they attempt during the next quarter to meet or ex- ceed the minimum sales requirement. If the Retailer does not meet the minimum sales requirement for two (2) consecutive quarters, the Re- tailer's contract and license for the sale of instant tickets may be re- voked pursuant to their terms. 3. Claim Services The Retailer agrees to provide all authorized · but not limited to the following: and requ~rad claim services including 13 a. Payment of all valid Instant Games winning ticket claims providing that proper pdze validation steps have been taken, without regard to where the ticket was purchased, with payoffs to be made in cash, check, or money order drawn on the Proceeds from ticket sales. b. Completing claim forms for Instant Games winning tickets in excess of ........ ,. ,~ Proper steps :c ~ec-";'d c:'.C t,-ans.,~it said ciain~ forms to Lottery. c. Acting in the capacity of a claim center if appointed by the Department to perform such service. 4. Terminal Requirements a. The Retailer agrees to provide a grounded three (3) prong electrical outiet for use with grounded plugs. It is to be located within seven and one-half unobstructed feet (7~3 from the Instant Terminal and have a clearance of three inches (3'~ below the AC outiet. b. The Retailer agrees to Provide a space (approved by the Depart- ment) of at least six and one-half inches (6~") wide, thirteen inches ('13") deep and eleven inches (11'7 in height for the Instant Terminal to allow for Proper ventilation, maintenance, and materfal loading and re- moval. c. The Retailer shall meet such training standards as shall be established by the Department. d. The Retailer agrees to purchase and install a RJll telephone jack within fourteen unobstructed feet (14') of the Instant Terminal. The In- stent Terminal will be connected to a standard single business tele- phone line. The telephone line does not need to be for the exclusive use of the Instant Terminal and may be used by the Retailer for other purposes when not in use by the Instant Terminal. e. All equipment and'supplies Provided to the Retailer by the Department or its vendors shall remain the property of the Department or its yen- ·, dors, and shall be used for their intended purpose and not for any other purpose. The Retailer shall acquire no interest whatsoever in the equipment. f. All expenses, whether fixed or recurring associated with the items re- quired to be furnished by the Retailer, shall be the sole responsibility of the Retailer. g. To have the computer terminal available for the sale of Lottery tickets during all hours and days that the Retailers business is open and sales authorized. 14 h. To exercise diligence in the operation of the terminal, to provide physi- cal security for the terminal, replace paper stock and to immediately notify the vendor of any phone line or terminal malfunction. i. To refrain from performing any rnechan~caJ or electrical repairs to the terminal. j. To be responsible for custodial care of the terminal. The Department reserves the right to terminate this Agreement in the event of repeated malicious abuse, and/or negligent care of the terminal. Abuse is de- fined as, but not limited to, accidents such as liquid spills, breakage or other Retailer caused problems resulting in the need for the terminal to ; be replaced. k. Retailer is responsible for loss or damage of the equipment in excess of normal wear and tear. Retailer must report any "out of order' COndi- tion of the equipment to the vendor in accordance with current Lottery procadura. 15 APPENDIX C _NUMBER GAMES RECIUIREMENT~ 1. h':itJal Secudty Retailer agrees to provide a Surety Bond, Irrevocable Letter of Credit or other surety satisfactory to the Department in the amount requested by the Department and for the term requested by the Department as a conclifion of this agreement or any renewal hereof. 2. Additional Securk'y Retailer agrees to pay for and maintain a Surety Bond or Irrevocable Letter of Credit in an amount not to exceed one and one-half (1~) times the Retailer's aver- age weekly Lottery sales, for cause, upon notification by the Lottery. Failure to comply wffh the provisions for maintaining the L6ttery account as outlined in Pare- graph 3, Appendix C, of this Agreement or the Lottan/s receipt of adverse financial infdrmatlon may result in permanent surety requirement. 3. Lottery Retailer Checking Account Retailer agrees to open and pay the cost of maintaining a separate Lottery Retailer .. checidng account at the Retailer's assigned bank. All receipts from the sale of tickets and instant settiements, minus Retailer's commission and money kept on Retailer's premises to pay winning tickets, must be deposited in this account. Funds in the account must be accessible at all times. There can be no limitations on the number or amount of deposits, checks, or withdrawals that can be made. Retailer also agrees to make prompt seffiement at its assigned bank or at such other locations as may be directed by the Department and to pay all those arno due and owing according to procedures establi ........ unts ~nea Dy ~ne Department and incor- poretad by reference hereto. FAILURE TO COMPLY VVlTH ANY OF THE PROWS ONS OF TH S W LL RESULT MED AT .S_.US..P_E..N_S_ION OF THE R~'I'AILER'S AUTHORITY TO SELL TI~--k"T:~E ,TERMINATION. A BREACH OF THIS AGREEMENT WARRANTING 4. Retailer Checking Account Deposits Deposits must be made a minimum of every other business day. A Retailer may keep no more than 20% of the amount of the averege weekly sales at the retail lo- cation for payment of winning tickets unless given specific authorization by the Lottery. 17 5. Minimum Sales Requirement Numbers Games This Agreement may be te,,"mina',ed in whole or in part if Retailer fails to meet the average minimum sales volume raquirament of $ -- per week of Number Games tickets. This average minimum sales volume requirement is a ten (10) week floating sales average and is established after data collection review and analysis of factors that may include, but ara not limited to the following: ~ a. Demographic and socio-economic marketing information b. Customer patterns c. Products and/or services provided d. Product volume e. Proximity to work, residential and commuter sites f. Hours of operation " g. Convenience to the public h. Financial stability i. Willingness to Promote and advertise Lottery ticket sales J. Proximity to other Numbers Games retailers in the marketing area If the Retailer fails to meet the above average minimum sales requirement, the roi- · lowing Procedures will be implemented: a. New Retailers (Nur{~bers Games sales less than six [6] months) ·, · On week 13, if 10 week sales average is not 50% of average minimum sales raquirament, Retailer will receive written noti- fication. On week 20, if 10 week sales average is not 7',5% of average minimum sales raquirament, Retailer will receive written no& ficafion. · On week 26, if 10 week sales average is not 100% of averag~ ' minimum sales requirement, Retailer will receive written noflfi- ~' Cation. 18 On week 30, if sales still have not reached 100% of average minimum sales requirement, a full examination and evaluation will be made to determine disposition of the terminal. b. Estab~ishec: Retailer ('Numbers Games sa~e.~ mo:'~ ~;'~an six [6J months) · If 10 week sales average falls below average minimum sales requirement, Retailer will receive written notification. ·If sales do not improve within thirty (30) days of first letter, Re- tailer will receive written notification. · If sales do not improve within thirty (30) days of second letter, a full examination and evaluation will be made to determine dis- position of the terminal. Instant Games This Agreement may be terminated in whole or in part if the Retailer fails to meet the average minimum sales volume requirement of Instant Games tickets which shall be 30% of the average weekly Instant Games ticket sales for Numbers Games Retailers in the Retailer's sales area, excluding the 10% of the Numbers Games Retailers in the sales ama having the highest average weekly Instant Games ticket sales, for the previous quarter or for the current quarter, whichever is less. If the Retailer fails to meet the above average minimum sales raquirament, the foi- l°wing procedures will be implemented: a. As soon as possible after the end of the quarter in which the Retailer does not meet the Instant Games ticket minimum sales requirement as specified by the contract, the Retailer will be notified in wrffing by the Lottery that the sales did not meet the minimum sales requirement. · The retailer shall b~-given one additional quarter to meet or'exceed the minimum sales requirement. · b. If a. Numbers Games Retailer does not meet the minimum sales re- quirement for Instant Ticket sales for two (2) consecutive quarters, but its Number Games ticket sales meet or exceed the average Numbers Games ticket sales of its sales area, the effort to sell Instant Games tickets put forth by the Retailer may be reviewed by the Lottery. The ' Lottery will exert/ts best efforts to provide marketing support and assis- tance to the Retailer identified, as it attempts during the next quarter to meet or exceed the minimum sales requiremenL If the Retailer dem- onstrates to the L~ttery that it is making a good faith effort to sell In-' stant Games tickets, the Lottery may Consider a waiver of the Instant Games ticket sales requirement for the quarter under consideration. If the Retailer is unable to demonstrate that it is making a good faith ef- fort to sell Instant Games tickets, the Retailer will be notified in writing 19 by the Lottery that its contract and license have been terminated or re- yoked pursuant to their terms. Good faith effort shall include, but not be limited to, the following crftefia: · The Retailer has Instant Games tickets prominently displayed in its Retailer location. · The Retailer has displayed the corresponding Instant Game ticket point-of-sale materials in its Retailer location. c. If the Retailer does not meet the minimum sales requirement for Num- , · bers Games ticket sales for two (2) consecutive quarters, but meets the minimum sales requirement for' Instant Games Retailers within its sales area for the same two (2) consecutive quarters, the Retailer's On-I/ne contract may be terminated, and the terminal removed, pursuant to the terms of the contract. If the Retailer does not meet the minimum sales requirement for Numbers Games Retailers and Instant Games Retail- ers for two (2) consecutive quarters, the Retailer's contract and license for Instant and On-I/ne tickets shall be terminated or revoked PUrsuant to their terms. The Instant Games Retailer minimum sales requirement for Instant Games tickets shall apply during the calendar quarter in which Number Games sales commence _ unless it is the same quarter in which Instant Games tickets ara first delivered. 6. Claim Services The Retailer agrees to provide all authorized and required claim services including but not limited to the following: a. All instant game requirements agreed to in Appendix B, Section 3, Claim Services. b. Ascertaining and posting winning nurnbera as soon as possible fo~- lowing the drawing of the winning numbers. c. Payment of all valid winning ticket claims Providing that Proper prize ', validation steps have been taken without regard to where the ticket was purchased, with payoffs to be made in cash, check, or money order drawn on the Proceeds from ticket sales. d. Issuing claim tickets for winning tickets in excess of $600.00. e.Acting in the capacity of a claim center if appointed by the Department to perform such s~rvice. 20 7. Terminal Requirements The Retailer agrees to the following provisions with regard to the terminal to be in- stalled upon the Retailer's premises: a. To I~a.v for telecommunicatic,~s d~fa lin~ "~stallation costs in an amount to be determined by the Deparu'nent. In addition, to pay for telecom- munications weekly line charge in an amount to be determined by the Department. In all cases of interruptions of service whether it be vaca- tions, remodeling/construction, NSF/delinquency conditions, suspen- sions, etc., On-line Lottery Retailers will be liable for the weekly line · charge and will be required to have sufficient funds in their Lottery ac- ~ counts so that the line cha~ge amount can be drafted on a weekly ba- sis. b. To provide, prior to installation of the terminal, an electrical 4-way grounded outlet on a separate and dedicated circuit that remains on 24 hours a day. c. The Department will supply forms, ticket stock, ribbons, accounting re- ports and other related supplies. d. To provide sufficient space for the terminal with requirements as de- scribed in "Space Requirements and Equipment Specifications". Re- - tailer will provide a duly signed copy of "Space Requirements and Equipment Specifications" prior to installation. e. To be solely responsible for costs incurred in site preparation. f. That the terminal shall be located within the Retailer's premises only at a point of sale approved by Lottery and cannot be moved without prior written approval by Lottery. If approved to relocate the terminal, the Retailer will pay the costs incurred from the telephone company. The · Retailer will be responsible for providing an electrical &way grounded outlet on a separat~ and dedicated circuit at the new location. · , g. To be responsible for payment of all electrical utility charges incurred in the operation of the terminal. h. To provide a telephone at the location of the terminal in order to make and receive telephone calls for maintenance assistance or administra- tive needs. i. To have the computer terminal available for the sale of Lottery tickets during all hours and days that the Retailer's business is open and ~ales authorized. Retailer's business location and hours are described in the site survey, which is hereby incorporated by reference as part of this ~ Agreement. 21 j. To exercise diligence in the operation of the terminal, to provide physi- cal securfty for the terminal and paper stock, to replace dbbons and ticket stock and clear paper jams as required and to immediately notify the vendor of telephone COmmunications or terminal malfunction, such as, but r~c~. limited to, the issuance of a non-valid ticket, the inability to cancel a ticket or the non-issuance of a ticket. k. To refrain from performing any mechanical or electrical repairs to the terminal. ~ I. To be responsible for custodial care of the terminal. The Department reserves the right to terminate this Agreement in the event of repeated malicious abuse and/or negligent care of the terminal. Abuse is de- fined as, but not limited to, accidents such as liquid spills, breakage or other Retailer caused problems resulting in the need for the terminal to be replaced. 8. Equipment The Department agrees to provide Retailer with a computer terminal in working or- der and to install the required telecommunications line for rite operation of the ter- minal. 9. Stock All equipment, manuals, tapes, cards, computer printouts, ticket stock and other items fumished to the Retailer in connection with its functions as Retailer, shall m- main at all times the sole property of the Department; it being understood that such equipment is not leased by Retailer, but is in Retailer's custody solely as a seller of tickets and such equipment shall be surrendered upon termination of this Agree- ment. Retailer is responsible for'lpss or damage of the equipment in excess of normal wear and tear. Retailer must report any "out of order" condition of the equipment to the vendor in accordance with current Lottery procedure. 22 APPENDIX D INSTANT TICKET VENDING MACHINE I'r'VM RE UIREMENTS I. Instant Games Requirements Retailer must be a licensed Instant Game Retailer pursuant to the provisions of Appendix B (instant Game Requirements). 2. Minimum I'r'VM Sales Requirement This Agreement may be terminated in whole or in part if the Retailer fails to meet the average minimum sales volume of ITVM sales. The minimum sales volume requirement for each ITVM shall be an average of $500 per week for each calendar quarter. If the Retailer does not meet the applicable ITVM minimum requirement dudng any quarter, the following procedure will be undertaken: a. As soon as possible after the end of a quarter in which the Retailer does not meet the minimum ITVM sales requirement, the Retailer will be notified in writing by the Lottery that the sales did not meet the minimum ITVM sales requirement. The Retailer shall be given one (1) additional quarter to meet or exceed the minimum ITVM sales re- quirement. The Lottery will exert its best efforts to provide marketing support and assistance to Retailers identified, as they attempt, dudng the next quarter, to meet or exceed'the minimum ITVM sales require- ment. If the Retailer does not meet the minimum ITVM sales require- ment, the ITVM may be removed. · 3. Instant Ticket Vending Machine Requirements a. The Retailer agree~.to provide a grounded three (3) prong electrical AC outlet for use with grounded plugs located within ten unobstructed feet (10') from the ITVM. b. The Retailer agrees to provide a space (approved by Department) for the ITVM to allow for proper ventilation, maintenance, and matedal loading and removal. c. The Retailer shall meet such training standards as shall be established by the Department. d. All equipment and'supplies Provided to the Retailer by the Depart~ent or its vendors shall remain the property of the Department or its ven- dors, and shall be used for their intended purpose and not for any other purpose. The Retailer shall acquire no interest whatsoever in the equipment. 23 e. All expenses, whether fixed or recurring associated with the items re- quired to be furnished by the Retailer, shall be the sole responsibility of the Retailer. f. The Retailer agrees to have the ITVM available for the sale of Lottery tickst.~ during a~l hours and days that the Retailer's bus,floss is open. g. The Retailer agrees to exercise diligence in the operation and care of the ITVM, to provide physical security for the ITVM, and to immediately notify the vendor of any malfunction. h. The Retailer agrees to refrain from performing any mechanical or elec- trical repairs to the I'I'VM. i. The Retailer agrees to be responsible for custodial care of the ITVM. The Deparlment reserves the dght to terminate this Agreement in the event of malicious abuse and/or negligent care of the J'TVM. Abuse is defined as, but not limited to, accidents'such as liquid spills, breakage or other Retailer caused problems resulting in the need for the ITVM to be replaced. · J. Retailer is responsible for loss or damage of the equipment in excess of normal wear and tear. Retailer must report any "out of order" Condi- " tion of the equipment to the vendor in accordance with current Lottery procedure. k. Retailer is responsible for maintaining the appearance of the ITVM in a clean and neat manner. The exterior of the machine must be regularly cleaned. ,~.l.,~j at uae Lot~ery's Option. ~13e means to be used shall be.agreed to. by the Retailer and Lottery. m. Retailer agrees to ~)e solely responsible for costs incurred in site prepa- ration. n. The Retailer agrees to be responsible for payment of al/electrical utility charges incurred in the operation of the I'I'VM. o. The Retailer agrees to maintain the access keys to the I'I'VM on the li- censed Premises at all ames. Failure to do so may result in the re- moval of the ITVM. 24 4. Location of I'rVM The ITVM shall be located within the Retailer's premises only at a point of sale ap- proved by Lottery and cannot be moved without Lottery's prior written approval. If given approval to relocate the ITVM, the Retailer will pay all costs incurred for the move. Relocation without prior approval of the Lottery will result in termination of that Retailer's dgnt to use an I'I-VM at its location. 5. Instant Games Requirements a. Retailer is required to maintain an adequate supply of Pennsylvania Lottery instant tickets. The ITVM must sell as many different games as ~ _. the machine has ticket bins, i.e., if it has four (4) ticket bins, four (4) different games must be sold. Retailer must also sell all games avail- able at a minimum of one other location in the business facility other than in an ITVM. b. Retailer agrees to utilize to the fullest extent possible all point-of-sale materials provided by the Lottery. c. Retailer agrees to regularly fill the ITVM to avoid empty ticket bins. d. Retailer shall remove all instant game tickets and money from the ITVM prior to any equipment maintenance or repair service. e. Retailer shall make available to the Lottery technician, or the Lottery . designated technician, the equipment and keys during normal business · hours for maintenance, repairs and inspection. 25 Com-lain- I, LARRy L. MILLER, have prepared the fore oin · . , mationa! Grange Mutual Insurance Company, who is the ]urisdiction of this Court. The fac~ _._ ~. ns set forth ~n the Paea~lng are based upon my review of the d~cuments and infor~ation furnished by Anthony Hontecalvo, Bonds Claims Manager for Grange MUtual Insurance Company. National This Verification is made subject to the penalti 18 Pa. Cons. Stat. Section 4904 relatin, ~ ..... es of ~ ~ unsWorn £alsifica · authorities, which t~on to provides that if I knowingly make false averments, I may be subject to criminal penalties. Date= April 26, 2001 //' LARRy. L. MILLER