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Consulting Agreement between Pedro Alfonso and Robert Newell, North Atlantic Investments
May 12, 2004




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This Consulting Agreement (the "Agreement") is entered into as of this 12th day of May, 2004 by and between North Atlantic Investment, LLC, a Delaware limited liability company (the "Company"), and Pedro Alfonso, on behalf of and through a political action committee formed solely to perform the Services contemplated by this Agreement ("Consultant").

1. Consulting Relationship. During the term of this Agreement, Consultant will provide consulting services and take such actions necessary in Consultant's sole discretion so that (i) the District of Columbia Board of Elections and Ethics will place the initiative known as "Jobs, Education and Healthcare Lottery Expansion Initiative of 2004" (the "Initiative") on the. ballot in the November, 2004 general election in the District of Columbia, (the "Election") as well as publicizing such Initiative and encouraging citizens of the District of Columbia to vote in favor of such Initiative in the Election ("Election Approach"); or (ii) approval of VLT gaming by the Chief Financial Officer ("CFO") or the D.C. Lottery and Charitable Games Board ("Administrative Approach"). Whether the Company selects to pursue either the Election Approach or the Administrative Approach, either approach shall be referred to herein as the "Services". Consultant represents that it has the qualifications, the experience and the ability to perform the Services and shall use its best efforts to perform the Services.

2. Compensation: In consideration for the Services to be provided by the Consultant, the Company will pay fees, to the Consultant as follows:

(a) Execution Fee; Monthly Retainer. Upon execution of this Agreement, the Company shall pay Consultant a fee in the amount of Ten Thousand Dollars ($10,000). Thereafter, commencing on June 1, 2004 and on the 1st of every month through and including November 1 (or the first business day following the first day of each month as set forth herein), the Company shall pay Consultant a retainer in the amount of Eight Thousand Dollars ($8,000) if it follows the Election Approach or Six Thousand Dollars ($6,000) per month if it follows the Administrative Approach.

(b) Success Fee. Consultant's success shall be measured if the Initiative is passed in the Election under the Election Approach or if the CFO approves the unsolicited proposal under the Administrative Approach. Upon passage of the Initiative in the Election Approach or approval of the unsolicited proposal in the Administrative Approach, a success fee shall be payable in two components (the "Success Fee"): (i) Within two (2) business days following the successful passage of the Initiative under the Election Approach, the Company shall pay to Consultant a portion of the Success Fee in the amount of One Million Dollars ($1,000,000). Upon approval of the unsolicited proposal in the Administrative Approach, the Company shall pay to Consultant a portion of the Success Fee in the amount of One Million Dollars ($1,000,000) on the later of (a) November 1, 2004; or (b) the date the CFO approves the unsolicited proposal. In Consultant's sole discretion, he may request that the Company pay the portion of the Success Fee referred to in subsection (b)(i) in January 2005 (or later as appropriate under the Administrative Approach) and to any assignee or designee he may select. (ii) Assuming passage of the Initiative or approval of the unsolicited proposal, following licensure from the appropriate District of Columbia official(s) of the "Video Lottery Terminals" which comprise a portion of the Initiative and/or proposal; the balance of the Success Fee, an amount of Two Million Dollars ($2,000,000), shall be due and owing the Consultant. On or before November 10, 2004, or as soon thereafter as practical following approval of the unsolicited proposal, whether or not prior to licensure, the Consultant and the Company shall meet in person with the intent of agreeing upon the timing and method of paying (i.e., in increments or in one lump sum) the balance of the Success Fee. The parties agree to conduct these discussions in good faith and to fully resolve any issues concerning the timing and method of payment, and to reduce such discussions to a written agreement. Notwithstanding anything to the contrary herein, if more than a majority of the member or ownership interests in the Company or a majority of its assets are transferred or sold prior to payment in full of either component of the Success Fee, and such Success Fee is payable to Consultant as set forth herein, such transfer or sale shall accelerate payment of any increments of the Success Fee to the Consultant. In such event, Company agrees that it shall instruct the purchaser of the assets or membership or ownership interests as described herein to directly pay all or that portion of the Success Fee due Consultant at closing of the sale or purchase by means of an irrevocable authorization to disburse proceeds. This Paragraph 2(b) shall survive the termination of the Agreement as set. forth in Paragraph 3(d), :below..

3. Term and Termination.

(a) Term. Unless sooner terminated, Consultant shall serve as a consultant to the Company for a period commencing on the date of this Agreement and his services shall terminate upon 'the date of the Election.

(b) Termination for Cause. Either of the parties may terminate this Agreement in the event of a material breach which remains uncured ten (10) days after receipt of written notice by the other party.

(c) Termination Without Cause. Either party may terminate this Agreement at any time upon thirty (30) days' written notice to other.

(d) Effect of Termination Upon Consultant's Compensation. In the event of a Termination for Cause by the Company or a Termination Without Cause by the Consultant, and the Initiative is passed in the Election or the unsolicited proposal is approved, Consultant shall be paid the Success Fee described in Paragraph 2(b)(i) above, as well as the monthly retainer due before the effective date of a Termination for Cause. In the event of a Termination Without Cause by the Company, and the Initiative is passed in the Election or the unsolicited proposal is approved, Consultant shall be paid the Success Fee described in Paragraph 2(b)(i), as well as the monthly retainer due for the remaining Term of this Agreement. Additionally, if the "Video Lottery Terminals" are licensed following the passage of the Initiative in the Election or the approval of the unsolicited proposal, Consultant also shall be paid the Success Fee described in Paragraph 2(b)(ii), above, on the terms and conditions set forth therein.

4. Independent Contractor:. Consultant's relationship with the Company will be that of an independent contractor and not that of an employee.

(a) No Authority to Bind Company. Neither Consultant, nor any partner, agent or employee of Consultant, has authority to enter into contracts that bind the Company or create obligations on the part of the Company without the prior written authorization of the Company.

(b) No Benefits. Consultant acknowledges and agrees that Consultant will not be eligible for any Company employee benefits and, to the extent Consultant otherwise would be eligible for any Company employee benefits but for the express terms of this Agreement, Consultant hereby expressly declines to participate in such Company employee benefits.

(c) Withholding; Indemnification. Consultant shall have full responsibility for applicable withholding taxes for all compensation paid to Consultant under this Agreement, and for compliance with all applicable labor and employment requirements with respect to Consultant's self-employment, sole proprietorship or other form of business organization.

5. Supervision of Consultant's Services. Consultant shall report to the Company concerning the Services performed under this Agreement. The nature and frequency of these reports will be left to the discretion of the Company.

6. Competing Services. Consultant represents and warrants that it is not engaged to perform during the term of the Agreement, Services of the type described in this Agreement for any person, company or entity other than the Company, nor will it provide such Services for any entity other than Company for a period of two (2)-years following the date of termination of this Agreement. The Company represents :and warrants that it has not entered into any agreements with any person, company or entity other than Consultant for the provision of the Services- as described herein, and agrees that following the Election, if the Initiative either is not on the ballot or is not passed, or if the CFO does not approve the unsolicited proposal, the Company will enter into good faith negotiations with Consultant for an agreement for the provision of the. Services as described herein for the next citywide election or reasonable period of time such that the Consultant may obtain approval of the unsolicited proposal.

7. Confidentiality. Consultant and Company agree at all times during the term of this Agreement and thereafter, to hold in strictest confidence, and not to use, except for the benefit of the Company to the extent necessary to perform Consultant's obligations under the Agreement, or to disclose to any person, firm, corporation or other entity, any Confidential Information of the Company which Consultant obtains or creates in connection with the Initiative. The parties understand that "Confidential. Information" means any proprietary information, trade secrets or know-how, including, without limitation, products, services, software and inventions and finances, customer lists, budgets or other Company business information disclosed to Consultant either directly or indirectly. The parties understand that Confidential Information does not include any of the foregoing items which has become publicly and widely known and made generally available through no wrongful act of mine or of others who were under confidentiality obligations as to the item or items involved.

8. Miscellaneous.

(a) Amendments and Waivers. Any term of this Agreement may be amended or waived only with the written consent of the parties.

(b) Sole Agreement. This Agreement, including the Exhibits hereto, constitutes the sole agreement of the parties and supersedes all oral negotiations and prior writings with respect to the subject matter hereof.

(c) Assignment. In the event that Company agrees to sell or transfer a majority of the ownership or membership interests of the Company, or a majority of its assets, it shall assign its obligations hereunder to any purchaser of the interests or assets and shall require as a condition of any sale that the purchaser assume Company's obligations. As stated herein, Consultant may assign its rights to receive any compensation due under this Agreement to any other person or entity.

(d) Notices. Any notice required or permitted by this Agreement shall be in writing and shall. be deemed sufficient upon receipt, when delivered personally or by courier, overnight delivery service or. confirmed facsimile, 48 hours after being deposited in the regular mail as certified or registered mail (airmail if sent internationally) with postage prepaid, if such notice is addressed to the party to be notified at such party's address or facsimile number as set forth below, or as subsequently modified by written notice.

(e) Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the District of Columbia, without giving effect to the principles of conflict of laws.

(f) Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms.

(g) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.

(h) Arbitration. Any dispute or claim arising out of or in connection with any provision of this Agreement will be finally settled by binding arbitration in Washington, D.C., in accordance with the rules of the American Arbitration Association by one arbitrator appointed in accordance with said rules. The arbitrator shall apply District of Columbia law, without reference to rules of conflicts of law or rules of statutory arbitration, to the resolution of any dispute. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Notwithstanding the foregoing, the parties may apply to any court of competent jurisdiction for preliminary or interim equitable relief, or to compel, arbitration in accordance with this paragraph, without breach of this arbitration provision.


[Signature Page Follows]

The parties have executed this Consulting Agreement on the respective dates set forth below. 

By: Robert Newell 5/12/04
Name: Robert Newell
Title: North Atlantic Investment, LLC

CONSULTANT: Pedro Alfonso
Address: 1809 Parkside Drive, NW
               Washington, D.C. 20012

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