STRATEGIC ALLIANCE AGREEMENT
THIS STRATEGIC ALLIANCE AGREEMENT (this "Agreement") is executed as of the
1st day of November, 2000, by and between MDI ENTERTAINMENT, INC., a Delaware
corporation ("MDI"), and ELOT, INC., a Virginia corporation ("ELOT").
WITNESSETH:
WHEREAS, MDI is engaged primarily in the business of securing the rights to
and developing innovative and entertaining games and promotions for use in
conjunction with lottery games (the "MDI Business");
WHEREAS, ELOT is engaged primarily in the business of providing a full
range of Internet services and support services to legally licensed lotteries
providing promotional games and related services and providing a variety of
lottery information to the general public (the "ELOT Business");
WHEREAS, to further expand both the MDI Business and the ELOT Business to
the general public, ELOT and MDI desire to form a strategic alliance (the
"Alliance"); and
WHEREAS, the Alliance shall provide that MDI will, on the terms and subject
to the conditions hereinafter set forth, market the Products (as defined in
Section 2 herein) to MDI's Customers (as defined in Section 2 herein) and others
in the lottery industry in consideration of the payments to be made by ELOT to
MDI as hereinafter set forth.
NOW, THEREFORE, in consideration of the promises herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto mutually agree as follows:
1. Recitals. The recitals are hereby incorporated into this Agreement and
made a part hereof.
2. Scope of Duties. ELOT desires to utilize, and MDI desires to provide,
MDI's marketing and sales force to market, on a non-exclusive basis, license and
sell ELOT products and deliverables as described in Exhibit 1 attached hereto
and made a part hereof and as such Exhibit is updated from time to time (the
"Products") to MDI's Customers (as defined below). MDI shall use commercially
reasonable efforts to market and sell the Products to its customers, which
consist of the government-operated lotteries throughout the world ("MDI's
Customers"). Additionally, MDI shall, to the extent required to perform its
obligations under this Agreement, act as a liaison between ELOT and MDI's
Customers. The terms of this Agreement shall be limited to the Products set
forth in Exhibit 1 and shall not include any products it may market for itself,
for Scientific Games or its parent, Autotote, or any other party. The
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terms of this Agreement shall specifically not include the marketing of Internet
lottery games to MDI Customers and others.
3. Term. Subject to the provisions of termination as hereinafter provided,
the term of this Agreement shall commence on October 20, 2000 and terminate on
October 19, 2005; provided, however, that this Agreement shall automatically be
renewed for successive one (1) year terms thereafter, unless either party gives
the other notice to terminate the Agreement at the expiration of any term at
least ninety (90) days prior to the expiration of said term.
4. Training/Literature. MDI and ELOT shall, to the extent required for each
party to successfully perform its obligations hereunder, establish a training
program to familiarize MDI's employees with the Products. Such training program
shall be rendered at ELOT's expense in Norwalk or Hartford, Connecticut, or at
such other location as the parties mutually agree. ELOT shall provide MDI and
its employees, at ELOT's expense, with sufficient literature and samples of the
Products to enable MDI to perform its obligations hereunder.
5. Commissions and Incentive Program.
5.1. Commissions. For the sale or license of Products and their related
intellectual property rights to MDI's Customers or others in the lottery
industry during each year of the term of this Agreement, per Customer, MDI shall
be paid a commission according to the schedule contained in Exhibit 2.
5.2. Payment of Commissions. At such time as MDI reaches agreement for or
as to the sale of a Product, MDI will promptly provide ELOT with a term sheet
describing such sale. ELOT will be responsible for providing the necessary
contract for the sale of the Product, and MDI and ELOT will mutually determine
whether the contracting party shall be MDI or ELOT. If the contracting party is
ELOT, ELOT shall pay MDI its commission. If the contracting party is MDI
(whether under a new or existing contract), MDI shall retain its pro rata
commission, if applicable, from the revenues and remit the balance to ELOT. ELOT
shall maintain books and records for the foregoing receivables and payables, and
ELOT shall notify MDI on a monthly basis of the account balances for each
customer. This information shall be provided to MDI by the fifth working day of
each month or as otherwise agreed by both parties. If any commissions are paid
in ELOT stock, ELOT agrees to immediately register these shares for sale.
5.3. MDI's Incentive Program. MDI agrees to establish an incentive program
which, among other things, provides for MDI's sales employees to receive an
incentive bonus for each sale of the Products. Such incentive program shall be
designed to motivate MDI's sales force to market, sell and promote the Products.
MDI shall set the incentives in its sole discretion and nothing herein shall
prohibit MDI from offering other incentive programs to its employees unrelated
to ELOT.
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6. Customer Contracts/Pricing.
6.1. Customer Contacts. Within thirty (30) days of the commencement date of
this Agreement, ELOT shall provide MDI with a report on the status of its
contacts with MDI's Customers for the sale of Products. MDI shall use
commercially reasonable efforts to keep ELOT informed of its contacts with MDI's
Customers regarding the Products and invite ELOT to participate in meetings and
presentations when the Products are discussed.
6.2. Reports/Updates. ELOT shall provide MDI with monthly updates setting
forth any changes to the Products offered by ELOT. MDI shall provide ELOT with
quarterly reports setting forth the marketing activities of MDI's employees, the
Products sold by MDI and the terms of such sales. ELOT shall provide to MDI new
marketing materials and training updates on all products.
7. Customers/Confidential Information.
7.1. Customers. Upon termination or expiration of this Agreement, ELOT may
continue to sell the Products to MDI's Customers without having to pay any
commission to MDI for Customer contracts entered into from and after the date of
termination or expiration. All customer contracts entered into prior to the date
of termination or expiration, and any non-competitive renewals or extensions of
such contracts, shall be subject to payment of commissions.
7.2. Confidential Information. All confidential or proprietary pricing and
customer information provided by either party to the other shall remain strictly
confidential. Neither party shall sell, rent, transmit or otherwise give access
to such information to any third person, except to their personnel, for the
purposes of carrying out this Agreement or with the other party's written
consent. The provisions of this paragraph shall not apply to information of
either party which is (a) in the public domain; (b) already known to the party
to whom it is disclosed at the time of such disclosure as documented by records
in its possession prior to such disclosure; (c) subsequently received by the
party in good faith from a third party having prior right to make such
subsequent disclosure; (d) independently developed by the party without use of
the information disclosed pursuant to this Agreement; (e) approved in writing
for unrestricted release or unrestricted disclosure by the party owning or
disclosing the information; or (f) produced or disclosed pursuant to applicable
laws, regulations or court order.
8. Termination. This Agreement shall terminate immediately upon the
occurrence of any of the following events:
(i) the breach by either party of any material term of this Agreement,
and the breaching party has failed to cure such breach following thirty
(30) days' written notice thereof from the non-breaching party;
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(ii) the appointment of a receiver or trustee to manage the assets of
either party;
(iii) the assignment for the benefit of creditors of the assets of
either party; or
(iv) the occurrence of any act of bankruptcy by either party.
9. General.
9.1. Force Majeure. Neither party shall be considered in default of this
Agreement if the fulfillment of all or part of its obligations are delayed or
prevented due to "force majeure." "Force majeure" is an external unforeseeable
and irresistible event, making it absolutely impossible to fulfill an
obligation.
9.2. Severability. If any section, paragraph or provision (in all or in
part) in this Agreement is held invalid or unenforceable, it shall not, in any
way, have any effect on any other section, paragraph or provision in this
Agreement, nor on the remaining section, paragraph or provision unless otherwise
clearly provided for under this Agreement.
9.3. Notices. Any notice intended for either party is deemed to be validly
given if it is done in writing and sent certified mail, return receipt
requested, or by courier service to such party's address as stated in this
Agreement, or to any other address that the concerned party may have notified in
writing to the other party in accordance with the provisions hereof.
If to ELOT: ELottery, Inc.
301 Merritt 7 Corporate Park
Norwalk, CT 06851
Telecopy Number: (203) 840-8639
Attention: Ed McGuinn, President & CEO
With a copy to: Cahill, Gordon & Reindel
80 Pine Street
New York, NY 10005
Telecopy Number: (212) 269-5420
Attention: Richard E. Farley, Esquire
If to MDI: MDI Entertainment, Inc.
201 Ann Street
Hartford, Connecticut 06103
Telecopy Number: (860) 527-5920
Attention: Mr. Steven M. Saferin, President and CEO
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With a copy to: Mintz Levin Cohen Ferris Glovsky and Popeo,
P.C.
Chrysler Center, 666 Third Avenue
New York, NY 10017
Telecopy Number: (212) 983-3115
Attention: Kenneth Koch
9.4. Headings. The headings in this Agreement are used only for reference
and convenience purposes; they do not modify in any manner the significance or
the object of the provisions they designate.
9.5. Schedules. Whenever the Exhibits, including updates, of this Agreement
are duly initialed by both MDI and ELOT, such Exhibits shall be considered as an
integral part of the Agreement.
9.6. Entire Agreement. This Agreement constitutes the entire agreement
entered into between the parties concerning the subject matter hereof.
Declarations, representations, promises or conditions other than those stated in
this Agreement shall not be construed in any way as to contradict, modify or
affect the provisions of this Agreement.
9.7. Amendment. This Agreement cannot be amended or modified except by
another written document duly signed by both parties hereto.
9.8. Non-Transfer. Neither of the parties shall assign, transfer nor
convey, in any way, its rights in this Agreement to any third party without
first obtaining the written consent of the other.
9.9. Jurisdiction. This Agreement shall be construed in accordance with the
laws of the State of New York, and any action brought in regard to this contract
or matters arising as a result of this contract are exclusively within the
jurisdiction of the State of New York. MDI and ELOT each represents to the other
that it is qualified to do business in the State of New York and is amenable to
service of process in the State of New York.
9.10. Waiver. The failure of any party at any time to require performance
of any provision of this Agreement shall in no manner affect the right of that
party at a later time to enforce that or any other provision. No waiver by any
party of any condition or of any breach of any term, covenant, representation or
warranty contained in this Agreement, in any one or more instances, shall be
deemed to be or construed as a further or continuing waiver of that or any other
condition or breach. All waivers must be in writing.
9.11. Counterparts. This Agreement may be executed in counterparts, each of
which when so executed shall be deemed to be an original and all of which shall
together constitute one document.
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IN WITNESS WHEREOF, the parties hereunder have duly caused this Agreement
to be executed as of the day and year first above written.
MDI ENTERTAINMENT, INC. ELOT, INC.
By: /s/ Steven M. Saferin By: /s/ Edward McGuinn
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Steven M. Saferin, President & CEO Edward McGuinn, President
& CEO
Date: November 1, 2000 Date: November 1, 2000
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