Exhibit 99.1
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STRATEGIC ALLIANCE AGREEMENT
THIS STRATEGIC ALLIANCE AGREEMENT (this "Agreement") is executed as of the
21st day of September, 1999, by and between MDI ENTERTAINMENT, INC., a Delaware
corporation ("MDI"), and SCIENTIFIC GAMES, INC., a Delaware corporation ("SGI").
W I T N E S S E T H:
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, SGI is engaged primarily in the business of providing a full range
of premium-quality lottery products, integrated systems and support services to
legally licensed lotteries as well as providing promotional games and related
services to companies in the private sector (the "SGI Business");
WHEREAS, to further expand both the MDI Business and the SGI Business, SGI
and MDI desire to form a strategic alliance (the "Alliance"); and
WHEREAS, the Alliance shall provide that SGI will, on the terms and subject
to the conditions hereinafter set forth, market the Products (as defined in
Section 2 herein) to SGI's Customers (as defined in Section 2 herein) in
consideration of the payments to be made by MDI to SGI as hereinafter set forth.
NOW, THEREFORE, in consideration of the premises 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. MDI desires to utilize, and SGI desires to provide,
SGI's marketing and sales force to market, license and sell MDI's 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 SGI's
Customers. SGI shall use commercially reasonable efforts to market and sell the
Products to its customers which consist of the State operated lotteries and
promotional game customers as described in Exhibit 2 attached hereto and made a
part hereof and as such Exhibit is updated from time to time ("SGI's
Customers"). Additionally, SGI shall, to the extent required to perform its
obligations under this Agreement, act as a liaison between MDI and SGI's
Customers.
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3. Term. Subject to the provisions of termination as hereinafter
provided, the term of this Agreement shall commence on September 1, 1999 and
terminate on August 31, 2001; 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 SGI shall, to the extent required for
each party to successfully perform its obligations hereunder, establish a
training program to familiarize SGI's employees with the Products. Such training
program shall be rendered in Hartford, Connecticut, in the greater Atlanta,
Georgia metropolitan area or at such other location as the parties mutually
agree. MDI shall provide SGI and its employees with sufficient literature and
samples of the Products to enable SGI to faithfully 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 SGI's Customers during each year of the term of
this Agreement, whether such sale of license is procured by SGI or MDI, SGI
shall be paid a commission according to the following schedules:
a. Merchandise
Gross Revenues Received Commission
from the sale of
Merchandise Products
by MDI in one year
$1 - $10,000,000 5%
$10,000,001 - $20,000,000 7.5%
over $20,000,000 10%
b. License and Royalty Fees - Commission of 10% of gross
revenues received from license and royalty fees
Sales of any of the Products subsequent to the commencement date of this
Agreement to any of SGI's Customers shall be subject to a commission.
Commissions shall be paid following termination or expiration of this Agreement
for any contracts entered into prior to the date of termination or expiration.
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5.2. Payment of Commissions. At such time as SGI reaches agreement for
the sale of a Product, SGI will promptly provide MDI with a term sheet similar
in form to that contained in Exhibit 3 attached hereto and made a part hereof.
MDI will be responsible for providing the necessary contract for the sale of the
Product, and SGI and MDI will mutually determine whether the contracting party
shall be MDI or SGI. The contracting party will receive the gross revenues from
all such contracts. If the contracting party is MDI, it shall pay SGI its pro
rata commission from the revenues. If the contracting party is SGI (whether
under a new or existing contract), it shall retain its pro rata commission from
the revenues and remit the balance to MDI. MDI shall maintain books and records
for the foregoing receivables and payables, and MDI shall notify SGI on a
monthly basis of the account balances for each customer. This information shall
be proved to SGI by the fifth working day of each month or as otherwise agreed
by both parties.
5.3. SGI's Incentive Program. SGI agrees to establish an incentive
program which, among other things, provides for SGI's sales employees to receive
an incentive bonus for each sale of the Products. Such incentive program shall
serve to motivate SGI's sales force to market, sell and promote the Products.
6. Customer Contacts/Pricing.
6.1. Customer Contacts. Within thirty (30) days of the commencement date
of this Agreement, MDI shall provide SGI with a report on the status of its
contacts with SGI's Customers for the sale of Products. SGI shall use
commercially reasonable efforts to keep MDI informed of its contacts with SGI's
Customers regarding the Products and invite MDI to participate in meetings and
presentations when the Products are discussed.
6.2. Product Pricing. SGI and MDI hereby agree to adhere to the pricing
schedule set forth on Exhibit 4 attached hereto and made a part hereof, as such
schedule is updated from time to time by MDI, when either submitting proposals
or providing quotes to existing or prospective customers.
6.3. Reports/Updates. MDI shall provide SGI with monthly updates setting
forth any changes to the Products offered by MDI. SGI shall provide MDI with
monthly reports setting forth the marketing activities of SGI's employees, the
Products sold by SGI and the terms of such sales.
7. Customers/Confidential of Information.
7.1. Customers. Upon termination or expiration of this Agreement, MDI
may continue to sell the Products to SGI's Customers without having to pay any
commission to SGI 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 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 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 (i) produced or disclosed
pursuant to applicable laws, regulations or court order.
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8. Termination. This Agreement shall terminate immediately upon the
occurrence of any of the following events:
(1) 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;
(2) The appointment of a receiver or trustee to manage the assets
of either party;
(3) The assignment for the benefit of creditors of the assets of
either party; or
(4) 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 provision hereof.
If to SGI: Scientific Games, Inc.
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Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to: Scientific Games, Inc.
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Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: C. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇., Esq.
General Counsel
If to MDI: MDI Entertainment, Inc.
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Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and CEO
With a copy to: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
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Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. Fine, Esquire
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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 SGI, such exhibits shall be
considered as an integral part of this 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 SGI 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.
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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.
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. SCIENTIFIC GAMES, INC.
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President and CEO President and CEO
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