EXHIBIT 10.1
JOINT VENTURE AGREEMENT
dated as of
October 12, 2004,
between
SCIENTIFIC GAMES INTERNATIONAL, INC.,
as SciGames,
AND
ELECTRONIC GAME CARD, INC.,
as EGC
JOINT VENTURE AGREEMENT
THIS JOINT VENTURE AGREEMENT (this "Agreement") is made and entered into
this 12th day of October, 2004, to be effective as of the date of the Closing
(as defined in Article 2 below), by and among SCIENTIFIC GAMES INTERNATIONAL,
INC., a Delaware corporation ("SciGames"), and ELECTRONIC GAME CARD, INC., a
Nevada corporation ("EGC").
W I T N E S S E T H:
WHEREAS, EGC is in the business of developing and manufacturing electronic
game cards, as are generally described in Exhibit A attached hereto and
incorporated herein by this reference ("Electronic Game Cards"), for use in
lottery and promotional industries worldwide; and
WHEREAS, SciGames is in the business of printing, marketing and selling
lottery and promotional scratch cards and associated products to customers
worldwide; and WHEREAS, EGC has made that certain United States Patent
Application No. 10/754,349 titled "Game Device" (the "Patent Application"); and
WHEREAS, EGC and SciGames have entered into that certain Exclusive
Marketing and Distribution Agreement, dated as of May 20, 2003 (the
"Distribution Agreement"), pursuant to which EGC appointed SciGames as the
exclusive distributor of Electronic Game Cards to the lottery industry
worldwide; and
WHEREAS, EGC heretofore granted to SciGames in the Distribution Agreement
certain rights to purchase up to an aggregate of ten percent (10%) of its issued
shares (the "Option"), which rights were amended and extended by the parties
pursuant to that certain Amendment No. 1 and Letter of Intent, dated April 8,
2004 (as heretofore extended, the "Amendment"), which Option has expired, but,
simultaneously with the execution by the Parties hereof, SciGames desires to
subscribe to EGC for Two Million One Hundred Seventy-One Thousand Five Hundred
Ninety-Five (2,171,595) shares of EGC's common stock at $0.50 per share (the
"Subscribed Shares"); and
WHEREAS, EGC and SciGames desire to terminate the Distribution Agreement
and enter into a joint venture (the "Joint Venture"); and
WHEREAS, EGC desires to manufacture and sell completed Electronic Game
Cards to the Joint Venture and to grant to SciGames on behalf of the Joint
Venture exclusive rights to distribute Electronic Game Cards to the lottery
industry worldwide, and SciGames desires to provide distribution, marketing and
promotional services worldwide for the Electronic Game Cards to the Joint
Venture, in each case on the terms and conditions hereinafter set forth;
NOW, THEREFORE, for and in consideration of the premises, the mutual
promises, covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto (individually, a "Party" and collectively, the "Parties") hereby
agree as follows:
ARTICLE 1
CONDUCT OF BUSINESS
1.1 MANAGEMENT OF OPERATIONS; REPORTS.
(a) The Parties hereby appoint EGC and SciGames as managers of the
Joint Venture (the "Executive Managers"). The Executive Managers shall have the
right, authority, power and discretion to control, direct, manage and administer
the business and affairs of the Joint Venture and to do all things necessary or
proper to carry on the business and purposes of the Joint Venture. Each of the
Executive Managers may from time to time delegate the authority granted
hereunder to manage the day-to-day operations of the Joint Venture to its
employees or such other individuals of its choosing. Except as expressly set
forth in this Agreement, the Executive Managers shall act on behalf of the Joint
Venture only with the affirmative approval of both Executive Managers, without
the need for any consent or approval of the other Parties, and any deadlocks in
decisions to take such action shall be resolved in accordance with Section 9.13
hereof. Actions approved by both of the Executive Managers shall bind the
Parties when taken within the scope of their authority and discretion granted
hereunder.
(b) Consistent with the powers granted in Section 1.1(a) above, the
Executive Managers hereby delegate the authority to manage the sales and
marketing activities of the Joint Venture to two sales managers (the "Sales
Managers") who shall operate under the supervision of the Executive Managers.
Each of SciGames and EGC shall have the right to appoint one (1) of the Sales
Managers. Only the party entitled to appoint a Sales Manager shall be entitled
to remove him or her, with or without cause, and to fill any vacancy created by
the death, resignation or removal of such Sales Manager. The Sales Managers
shall act on behalf of the Joint Venture only with the affirmative approval of
both Sales Managers, and any deadlocks in decisions to take such action shall be
resolved by the Executive Managers. Actions approved by both of the Sales
Managers shall bind the Parties when taken within the scope of their authority
and discretion granted in this paragraph (b) or by written resolution of the
Executive Managers. The initial Sales Managers are hereby appointed as follows:
Xxxxxxx Xxxxx shall be the appointee of SciGames, and Xxxxxx Xxxx shall be the
appointee of EGC.
(c) The Executive Managers shall prepare and distribute to the
Parties on or before June 1st of each year an annual budget for the Joint
Venture for the following year consisting of the period from July 1st through
the succeeding June 30th (the "Annual Budget") which shall provide details, on a
quarterly basis, of such income and expense items as are determined by agreement
of the Executive Managers. The Parties acknowledge and agree that the Parties
have heretofore prepared in writing and exchanged with each other the Annual
Budget for the period from July 1, 2004 through June 30, 2005 for the Joint
Venture. The Sales Managers shall prepare and distribute to the Parties a
monthly report, promptly following the end no more than seven (7) days after the
last day of each month, that summarizes in sufficient detail: (i) the sales and
marketing activities undertaken on behalf of the Joint Venture during the
previous month, the revenues from such activities and the profit thereupon; (ii)
those activities projected to be undertaken on behalf of the Joint Venture
during the ninety (90) day period commencing after the date of such report;
(iii) the costs of EGC for producing and delivering Electronic Games Cards
during the previous month; (iv) the costs of SciGames for services and
delivering Electronic Game Cards during the previous month; and (v) any other
expenses of the Joint Venture during the previous month.
1.2 GRANT OF EXCLUSIVE RIGHTS. Subject to the provisions of Article 4
hereof, EGC hereby grants to SciGames on behalf of the Joint Venture the
exclusive, worldwide rights to promote, market, sell and otherwise distribute,
in compliance with all applicable laws, Electronic Game Cards to all persons,
entities and governmental bodies in connection with the conduct of legal
national- or state-operated lotteries or similar games (the "Target Market");
provided that, unless otherwise agreed to by the Parties, the Target Market
shall not include lotteries conducted by non-public or charitable entities;
provided further that SciGames shall immediately disclose to EGC in writing if
SciGames or any of its affiliates, directly or indirectly, sells or agrees to
sell to any person or entity electronic game cards other than Electronic Game
Cards for use in the Target Market, and if such a sale should be made or there
should be an agreement to make such a sale, EGC shall have the right, upon
thirty (30) days prior written notice to SciGames, to terminate this Agreement
and the Joint Venture.
1.3 MANUFACTURE OF ELECTRONIC GAME CARDS.
(a) Throughout the term of this Agreement, EGC shall sell to the
Joint Venture, and the Joint Venture shall purchase from EGC, all of the Joint
Venture's requirements for Electronic Game Cards at a price approved by the
Executive Managers not to exceed EGC's actual cost for producing and delivering
each Electronic Game Card (including "Excess Cards," as such term is hereinafter
defined). The elements of such pricing are set forth on Exhibit B attached
hereto and incorporated herein by this reference. Except in the event
modifications are made under paragraph (d) of this Section 1.3 to the version of
Electronic Games Cards then distributed by the Joint Venture, EGC shall
immediately notify SciGames of any increase anticipated by EGC in its actual
cost for producing and delivering Electronic Game Cards.
(b) SciGames shall place orders on behalf of the Joint Venture for
Electronic Game Cards pursuant to separately numbered, written purchase orders
in the form to be agreed upon by the parties to this Agreement, except as
otherwise agreed by EGC and SciGames, which purchase orders shall include
complete and accurate information with respect to the quantity of Electronic
Game Cards ordered, the shipment date, the site of delivery (if other than as
set forth in paragraph (f) of this Section 1.3) and such other terms and
conditions of sale as are specified by SciGames and EGC therein.
(c) Throughout the term of this Agreement, EGC, on behalf of the
Joint Venture, with the full cooperation of SciGames and EGC and in consultation
with the Executive Managers, shall, at its sole cost and expense, make all
applicable decisions regarding the design and manufacture of Electronic Game
Cards sold to the Joint Venture, in each case in accordance with the
Specifications (as hereinafter defined) mutually agreed to by the Executive
Managers for the respective purchase order of Electronic Game Cards and
including, without limitation, hiring, retaining, managing, compensating,
removing and negotiating contracts with consultants, engineers, software
developers and manufacturers, and directing research and development efforts.
Throughout the term of this Agreement, EGC shall be responsible at its sole cost
and expense for carrying out the directives of the Executive Managers, on behalf
of the Joint Venture, for the design and manufacture of Electronic Game Cards
and for taking all actions necessary or proper to maintain the highest quality
control standards for the design and manufacture of Electronic Game Cards.
Notwithstanding the foregoing, EGC shall not be required to take any action
pursuant to this paragraph to invalidate or incur any liability in relation to
its current arrangements with suppliers.
(d) The specifications for each separate purchase order for the
manufacture, packaging and labeling of Electronic Game Cards shall be mutually
agreed to by the Executive Managers and shall be set forth substantially in the
form of the example of the set of specifications for the initial Electronic Game
Cards being sold by the Joint Venture, which example set of specifications is
set forth in Exhibit C attached hereto and incorporated herein by this
reference, as the same may be amended in writing by EGC and SciGames from time
to time (the "Specifications"). To the extent any change made by the Executive
Managers to the Specifications modifies the version of the Electronic Game Cards
then being distributed by the Joint Venture, the Executive Managers shall also
mutually agree to adjust the terms upon which the Joint Venture will purchase
and distribute such modified Electronic Game Cards, including, without
limitation, any necessary or appropriate adjustments to delivery schedules, the
cost to the Joint Venture of acquiring such modified units, and the price
charged by the Joint Venture for such modified units. (e) EGC hereby covenants
that (i) the Electronic Game Cards delivered to the Joint Venture in respect of
each purchase order shall at all times conform to the Specifications of the
Executive Managers for such purchase order and shall have been manufactured in
accordance with all applicable international, federal, state and local laws,
rules and regulations (excluding gaming or lottery laws, as to which EGC makes
no representation or warranty), and (ii) EGC shall comply with all
international, federal, state and local laws, rules and regulations applicable
to the importing, transportation of and delivery of the Electronic Game Cards
(excluding gambling, gaming or lottery laws, as to which EGC makes no
representation, warranty, covenant or agreement whatsoever).
(f) For each purchase order of Electronic Game Cards received by
EGC, EGC shall ship to SciGames such number of Electronic Game Cards equal to
one hundred and five percent (105%) of the number of such Electronic Game Cards
set forth in the applicable purchase order against payment therefor in
accordance with the applicable purchase order, with such five percent (5%)
overrun (the "Excess Cards") to be held by SciGames on behalf of the Joint
Venture for use in testing and replacement (pursuant to paragraphs (g) and (h)
of this Section 1.3) of Electronic Games Cards or for such other purposes as are
mutually determined by the Executive Managers. EGC shall ship Electronic Game
Cards ordered hereunder to the address of SciGames set forth in Section 9.1
hereof, or to such other address as SciGames shall direct in its purchase order.
EGC, on behalf of and at the cost and expense of the Joint Venture, shall at all
times maintain insurance with a financially sound and reputable insurer on such
Electronic Game Cards while in transit, with any proceeds from such insurance
payable solely to the Joint Venture. Title to the Electronic Game Cards shipped
by EGC shall pass to SciGames (on behalf of the Joint Venture) upon delivery to
SciGames' designated location.
(g) Promptly following delivery to SciGames, SciGames shall notify
EGC in writing of any Electronic Game Card which does not conform to the
Specifications or which contains obvious defects. For any Electronic Game Cards
sold to the Joint Venture hereunder which do not conform to the Specifications
and for which proper notice has been given in accordance with this paragraph
(g), EGC shall accept such Electronic Game Cards for return and replacement or
credit, at the sole election of SciGames, at the applicable invoiced cost and
pay the reasonable expenses associated therewith, including, without limitation,
any freight and shipping charges; provided that any such replacement of
Electronic Game Cards shall first be satisfied out of and to the extent of any
Excess Cards delivered pursuant to paragraph (f) of this Section 1.3 that are of
the same version as and conform to the same Specifications applicable to those
to be replaced. In addition to conforming to the Specifications, the aggregate
number of Electronic Game Cards distributed to any one customer of the Joint
Venture shall at no time experience a failure rate greater than two and one-half
percent (2.5%) (in either case, a "Batch Failure").
(h) In the event that following delivery to a customer of the Joint
Venture or SciGames, any Electronic Game Card is subject to a recall or
rejection as a result of a failure of the Electronic Game Card to conform to the
Specifications or as a result of a Batch Failure, EGC agrees to reimburse the
Joint Venture or SciGames, as the case may be, for the applicable invoiced cost
of, and to pay reasonable freight and shipping charges associated with, the
recall or replacement, as applicable, of any such Electronic Game Cards;
provided, that any replacement of Electronic Game Cards permitted under such
recall or rejection shall first be satisfied out of and to the extent of any
unused Excess Cards delivered pursuant to paragraph (f) of this Section 1.3 that
are of the same version as and conform to the same Specifications applicable to
those to be replaced; provided further, that EGC shall be entitled to seek
recovery through insurance which it shall seek to obtain; provided still
further, that EGC, at its sole cost and expense, shall be responsible for
performing all acts that are required to be performed or completed under
applicable law in respect of any such recall and shall conduct the recall in
compliance with all applicable laws, with the reasonable cooperation of
SciGames; and provided still further, that EGC shall not be required to pay
liquidated damages under any sales agreement for Electronic Game Cards made on
behalf of the Joint Venture unless SciGames (as the contracting party on behalf
of the Joint Venture) or the Joint Venture is required to pay such liquidated
damages thereunder, and in no event shall EGC's liabilities or obligations in
this regard be greater than those incurred by SciGames (as the contracting party
on behalf of the Joint Venture) or the Joint Venture in respect of the contract
with the customer except as otherwise expressly set forth in this Agreement.
Each Party shall promptly notify the others of any recall or rejection of the
Electronic Game Cards for any reason whatsoever of which it is aware. Such
notice shall identify the reason for the recall or rejection and all relevant
details thereof.
(i) Upon the reasonable advance request of SciGames, EGC shall cause
any manufacturer of the Electronic Game Cards to permit a representative of
SciGames to inspect the facilities where the Electronic Game Cards are
manufactured and observe the manufacturing process. SciGames shall comply with
the provisions of Section 9.2 hereof during any such inspection.
(j) The Joint Venture shall be responsible for the capital
investment required to purchase, rent, or outsource, as may be deemed most
prudent by the Executive Managers, the equipment used for printing the barcode
on the paper stock which will be affixed to the back of Electronic Game Cards.
The cost of obtaining such equipment shall be included in the first Annual
Budget. Any purchase, rent or outsourcing of such equipment shall be on terms
mutually satisfactory to the Executive Managers (including, without limitation,
arrangements as to title to the equipment and arrangements for disposition of
the equipment upon lapse or termination of this Agreement) and such equipment
shall be used only for the business of the Joint Venture, unless the Executive
Managers otherwise agree in writing and the Joint Venture is reasonably
compensated for such use.
1.4 MARKETING AND DISTRIBUTION OF ELECTRONIC GAME CARDS. Throughout the
term of this Agreement, SciGames, with the full cooperation of EGC and in
consultation with the Sales Managers, shall, at its sole cost and expense, use
its commercially reasonable best efforts to provide the following services to
the Joint Venture (the "Services"):
(a) developing marketing materials and presentations for introducing
Electronic Game Cards to the Target Market;
(b) designing and executing marketing and sales plans (including,
without limitation, making sales calls) and press releases regarding Electronic
Game Cards;
(c) contracting with customers of the Joint Venture within the
Target Market for the purchase of Electronic Game Cards;
(d) quality control testing of Electronic Game Cards;
(e) arranging for delivery of Electronic Game Cards from SciGames'
facilities to the Target Market;
(f) prize structure development for customer gaming programs;
(g) arranging for the printing of custom labels and faceplates for
Electronic Game Cards, including barcoding , and branding Electronic Game Cards
with the name and marks of EGC or the customers of the Joint Venture as
determined by the Sales Managers; provided that such use of the name or marks of
EGC shall be approved in advance by EGC, with such approval not to be
unreasonably withheld;
(h) assembly/labeling of Electronic Games Cards;
(i) responding to requests for proposals issued by potential
customers of the Joint Venture and providing any performance bonds required
thereby;
(j) obtaining any and all permits or other approvals necessary or
appropriate to market and distribute Electronic Game Cards to the Target Market;
and
(k) certain administrative services incidental to the foregoing.
Notwithstanding anything in this Section 1.4 to the contrary: (i) any sale of
Electronic Game Cards made on behalf of the Joint Venture, and any agreements
entered into on behalf of the Joint Venture to do the same, shall be approved by
the Executive Managers, with such approval not to be unreasonably withheld by
either Executive Manager; and (ii) the cost of the Services borne by SciGames
shall not include any actual out-of-pocket costs charged by third parties to
SciGames to the extent that the same are covered by the Annual Budget for the
relevant period, all of which costs shall be promptly reimbursed by the Joint
Venture to SciGames in accordance with the applicable Annual Budget. By way of
example only, and not of limitation, actual out-of-pocket costs of SciGames to
be reimbursed by the Joint Venture shall include: fees paid for bid bonds,
litigation bonds, fidelity bonds and performance bonds obtained by SciGames on
behalf of the Joint Venture; printing charges for labels to be affixed to
Electronic Game Cards; fees paid to third parties for quality control testing of
Electronic Game Cards; charges for advertising services performed by third
parties; and physical delivery of Electronic Game Cards to customers of the
Joint Venture. At the request of the Executive Managers, SciGames may provide
additional services to the Joint Venture from time to time other than the
Services, and the Joint Venture shall compensate SciGames for such additional
services at a price agreed to in advance by the Executive Managers.
1.5 PROTECTION OF INTELLECTUAL PROPERTY. EGC hereby agrees to use its
commercially reasonable best efforts to take any and all actions necessary at
its sole cost to diligently: (a) protect and maintain all intellectual property,
both domestic and foreign, including patent, trademark, trade name, service
xxxx, copyright, trade secret, licenses and other rights, and their foreign
equivalents, related to the Electronic Game Cards, including, without
limitation, the Patent Application and the "Other Patent Applications," as that
term is hereinafter defined (collectively, the "Intellectual Property"); and (b)
prosecute, pursue to issue and maintain after issue the Patent Application, the
Other Patent Applications and any and all patents claiming benefit to any of the
foregoing. EGC hereby agrees that SciGames shall be entitled, but is under no
obligation, to pay for the account of EGC any and all prosecution and
maintenance fees and other expenses associated with the protection and
maintenance of the Intellectual Property.
1.6 TERMINATION OF DISTRIBUTION AGREEMENT AND AMENDMENT. The Parties shall
mutually terminate the Distribution Agreement in its entirety effective as of
the date of the Closing, without penalty or any payment to any Party in respect
of such mutual termination, with all rights thereunder revoked and cancelled in
their entirety and of no further force or effect from and after the Closing.
1.7 BUSINESS CONTACTS. To facilitate the conduct of business by the Joint
Venture, each of EGC and SciGames, in their respective roles as Parties and as
Executive Managers, shall from time to time appoint an individual representative
as its contact for all matters regarding the Joint Venture, and each such Party
hereby appoint the following as their respective initial representatives:
EGC: Xxxx Xxxxxxx
SciGames: Xxxxxx X. Xxxxxxx
ARTICLE 2
CLOSING; SUBSCRIPTION; CONTRIBUTION OF FUNDS
(a) Upon the terms and subject to the conditions contained herein,
the closing of the transactions contemplated by this Agreement and the exhibits
and attachments hereto (the "Closing") shall take place at 10:00 a.m. (Eastern
Time) on October 15, 2004, or such later date that EGC and SciGames shall
mutually agree upon.
(b) Contemporaneously with the execution of this Agreement by the
Parties, SciGames subscribes for the Subscribed Shares pursuant to and on the
terms and subject to the conditions set forth in that certain Subscription
Agreement, attached hereto as Exhibit D and incorporated herein by this
reference (the "Subscription Agreement"). Unless the Subscription Agreement is
earlier withdrawn and revoked by SciGames, (i) all of the transaction
contemplated by the Subscription Agreement, including, without limitation, the
acceptance by EGC of the Subscription Agreement, shall be consummated at the
Closing and (ii) the Parties shall execute at Closing the Registration Rights
Agreement attached to the Subscription Agreement. In the event that the
Subscription Agreement is withdrawn and revoked by SciGames prior to the
Closing, or in the event SciGames does not deliver the Investment (as that term
is defined in the Subscription Agreement) to EGC at the Closing in accordance
with the Subscription Agreement, then this Agreement shall be null and void ab
initio notwithstanding anything to contrary in this Agreement.
(c) At Closing, EGC shall deposit the sum of One Million Dollars
($1,000,000), in immediately available funds, into a bank account established by
the Parties for use by the Parties solely in the conduct of the Joint Venture in
accordance with this Agreement. The Parties hereby authorize either of EGC and
SciGames to withdraw monies from time to time from such account on behalf of the
Joint Venture with the affirmative approval of both of the Executive Managers.
At any time, and from time to time, the Executive Managers may direct the
Parties to make additional contributions into the Joint Venture's bank account
(each, an "Additional Contribution") in such amounts as are provided in the
Annual Budget for the then-current budget period, or to meet the Joint Venture's
obligations as they come due, or in the event that the Joint Venture requires
additional funds to continue to conduct its business in the ordinary course, or
to pursue other objectives mutually agreed to by the Executive Managers.
(d) In the event that either of the Parties fails to contribute its
Additional Contribution, then EGC, in the event such failure is by SciGames, or
SciGames, in the event such failure is by EGC, may elect to contribute to the
Joint Venture the Additional Contribution of the other Party which amount shall
have the priority of return to the contributing Party as described in Article 3;
provided, however, that the party which has not failed to contribute the
Additional Contribution may, in lieu of contributing such underpayment,
terminate this Agreement; and provided further, that in the event such failure
is by EGC then, at the sole election of SciGames, the parties shall enter into
good faith negotiations for a license for SciGames to use such items of the
Intellectual Property in the Target Market, on such terms, including, without
limitation, territorial scope, exclusivity or non-exclusivity, guaranty and
up-front payment, royalty rate, performance criteria, quality control,
maintenance of intellectual property and term, as may be mutually agreeable to
SciGames and EGC.
ARTICLE 3
DISTRIBUTIONS
The amount of (a) all receipts of the Joint Venture, calculated on a cash
basis, from the conduct of its business less (b) all cash expenditures of any
kind made in accordance with this Agreement and the applicable Annual Budget in
conducting the Joint Venture, including, without limitation, such sums as are
deemed reasonably necessary by the vote of the Executive Managers as a reserve
to be retained for the conduct of the Joint Venture's business, shall be
distributed as and when determined by the mutual agreement of the Executive
Managers, but not less frequently than quarterly, as follows: (i) fifty percent
(50%) to SciGames; and (ii) fifty percent (50%) to EGC; provided however, that
either Party shall be paid a preferential return of any Additional Contribution
paid by it on behalf of the other Party, which preferential return shall bear
interest at the rate of six percent (6%) per annum and shall be paid before any
other distributions to the Parties. Each of the Parties shall be responsible for
paying and filing all returns in respect of all federal, state, local and other
taxes on its respective share of the monies distributed pursuant to this Article
3.
ARTICLE 4
EXCLUSIVITY
Notwithstanding any provision of this Agreement to the contrary:
(a) EGC hereby agrees that, throughout the term of this Agreement,
neither EGC nor any of its subsidiaries or affiliates will promote, market, sell
or otherwise distribute Electronic Game Cards to any person, entity or
governmental body anywhere in the world within the Target Market other than to
the Joint Venture or SciGames on behalf of the Joint Venture;
(b) EGC has and shall have the right to promote, market, sell or
otherwise distribute Electronic Game Cards outside of the Target Market;
(c) each of SciGames and EGC reserves the right to directly or
indirectly promote, market, sell or otherwise provide services in connection
with any products other than Electronic Game Cards worldwide within or without
the Target Market without any accounting to the Joint Venture, and neither
SciGames, on the one hand, nor EGC, on the other hand, shall have any right
whatsoever to the proceeds received by the other in the conduct of any such
services.
ARTICLE 5
TERMINATION
5.1 INITIAL TERM. The initial term of this Agreement shall be for five (5)
years, commencing on the Effective Date and expiring on the fifth-year
anniversary of such date, with automatic renewals thereafter for successive
one-year terms until terminated by either party hereto with written notice to
the other party given at least ninety (90) days prior to the end of the then
current term, such termination to be effective on the last day of such then
current term.
5.2 TERMINATION BY EITHER PARTY. Notwithstanding any provision of this
Agreement to the contrary, EGC or SciGames may at any time terminate this
Agreement effective immediately in the event that: (a) the other Party breaches
a material term of this Agreement (which shall include, without limitation, such
other Party's failure to take an action at the Closing that it is required to
take pursuant to Article 2 above) and fails to cure such breach within thirty
(30) days after receipt of written notice from the Party requesting such breach
to be cured; (b) the other Party shall (i) apply for or consent to the
appointment of a receiver, trustee or liquidator, (ii) admit in writing an
inability to pay debts as they mature, (iii) make a general assignment for the
benefit of creditors, or (iv) file a voluntary petition or have filed against it
a petition for an order of relief under the federal bankruptcy code, as the same
may be amended, so as to take advantage of any insolvency laws or to file an
answer admitting the general obligations of an insolvency petition; or (c) the
other Party shall have been prevented from exercising normal managerial control
over all or any substantial part of its property by any person or agent or by
reason of the entry of any order, judgment or decree by any court or
governmental agency of competent jurisdiction approving a petition seeking the
reorganization of such Party, or appointment of a receiver, trustee, liquidator
or the like over such Party or a substantial part of its assets.
5.3 OTHER TERMINATION RIGHTS.
(a) Notwithstanding any provision of this Agreement to the contrary,
SciGames may terminate this Agreement immediately with notice to EGC in the
event that the Patent Application or any of the Other Patent Applications is
withdrawn or canceled by EGC or rejected in a final action of the applicable
national patent office at any time.
(b) Either party may terminate this Agreement pursuant to Section
2(b) hereof.
(c) EGC may terminate this Agreement upon notice to SciGames (i)
pursuant to Section 1.2 hereof or (ii) if SciGames shall assert or cause the
assertion of any interest in the Patent Application (or the patent to which it
relates) or other Intellectual Property (other than through this Agreement) or
infringe or cause infringement upon the same, or shall oppose or cause the
opposition of the approval of the Patent Application and issuance of a patent
pursuant thereto.
5.4 CONTINUATION OF PAYMENT OBLIGATIONS. Neither the expiration nor the
termination of this Agreement, for any reason, shall release the Joint Venture
from obligations to make distributions of funds pursuant to this Agreement or
either Party from any obligation under this Agreement to pay any sum then owing
to the other Party or the Joint Venture to pay any sum then owing to the other
Party or which will be owed upon completion of delivery under outstanding
purchase orders, provided that the Joint Venture shall be permitted to set-off
amounts owed to either Party against amounts owed by such Party.
5.5 SELL-OFF OF INVENTORY. Upon termination of this Agreement for whatever
reason, SciGames shall have the right and license to market and sell in the
Target Market Electronic Game Cards already purchased by SciGames on behalf of
the Joint Venture in an orderly fashion consistent with the Joint Venture's
then-current sales practices (including, without limitation, pricing) for a
reasonable period of time not to exceed six (6) months provided that SciGames
shall take no action which would materially impair the value of the Intellectual
Property or the Electronic Game Cards.
5.6 WINDING DOWN OF JOINT VENTURE. Within thirty (30) days of the
termination of the Joint Venture, all equipment and replacement parts acquired
pursuant to any Annual Budget shall be disposed of for the equal benefit of the
Parties and all funds on deposit in the bank account of the Joint Venture or
otherwise held for the benefit of the Joint Venture (less the payment of
expenses of the Joint Venture incurred in accordance with this Agreement and
such reserves as the Executive Managers shall mutually agree to retain) shall be
distributed to the Parties in accordance with Article 3 hereof. All records
pertaining to the Joint Venture and its operations shall be maintained by
whichever party then has possession of the same for a period of at least three
years, and such Party shall permit the other Party to have access to such
records, and to make copies of the same, during reasonable business hours on
reasonable notice without undue disruption of the Party's business, during such
time period, and no Party will dispose of any such records without first giving
notice of its intention to do so to the other Party and offering to turn such
records over to the other Party, shipment to be at the other Party's expense.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF EGC ENTITIES
To induce SciGames to enter into this Agreement and to consummate the
transactions contemplated hereby, EGC hereby represents and warrants to SciGames
as of the date hereof and as of the date of the Closing as follows and
acknowledges that SciGames is relying upon the following representations and
warranties in connection with its entering into this Agreement:
6.1 ORGANIZATION. EGC is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada. EGC has all power
and authority to enter into and perform its obligations under this Agreement.
6.2 AUTHORIZATION. This Agreement has been duly authorized by all
necessary action on the part of EGC and does not require notice to or the
consent or approval of any equity interest held in EGC, any trustee or holder of
any indebtedness, or any other individual or entity.
6.3 EXECUTION. This Agreement has been duly executed and delivered by EGC
and constitutes the legal, valid and binding obligation of EGC enforceable
against it in accordance with its terms, except as such enforceability may be
limited by: (a) bankruptcy, insolvency, moratorium, reorganization and other
similar laws affecting creditors' rights generally; and (b) general principles
of equity, regardless of whether asserted in a proceeding in equity or at law.
6.4 NO VIOLATION. Neither the execution, delivery or performance by EGC of
this Agreement, nor the consummation by EGC of the transactions contemplated
hereby, nor the compliance by EGC with the provisions hereof, will conflict with
or violate its governing documents or any applicable law binding it, nor will
result in the breach of, a default under, or the creation of any right of any
party to accelerate, terminate or cancel any provision of any indenture,
mortgage, permit, contract, lease or other instrument to which such entity is a
party or by which it or any of its property is bound.
6.5 LITIGATION; PERMITS. There is no charge, complaint, action, order,
writ, injunction, judgment, decree, claim, suit, litigation, proceeding, labor
dispute, arbitral action or investigation pending or, to its knowledge,
threatened against EGC before any court, arbitrator or administrative or
governmental body. EGC has all licenses, permits, authorizations and approvals,
each of which is currently valid and in full force and effect, necessary to
carry on its respective business as currently conducted.
6.6 INTELLECTUAL PROPERTY; NO INFRINGEMENT. EGC has filed the Patent
Application, and has obtained assignments of the following additional patent
applications (the "Other Patent Applications"):
International Patent Application Serial No. PCT/GB2002/03053 (the "International
Patent Application")
European Patent Application Number 02745568.2 (the "European Patent
Application")
Japanese Patent Application Number 2003-513658 (the "Japanese Patent
Application"); and
British Patent Application Number 0328153.2 (the "British Patent Application").
EGC has heretofore delivered to SciGames true, correct and complete copies of
such assignments of the Other Patent Applications and the official filing
receipts therefor obtained from the applicable national patent offices. EGC has
registered such assignment of the British Patent Application Number, and has
taken all steps necessary to register such assignments of the remaining Other
Patent Applications with applicable authorities under applicable law, except for
the International Patent Application. The International Patent Application is
the patent from which the Patent Application, the European Patent Application
and the Japanese Patent Application derived, and the International Patent
Application terminated upon their register with the applicable authorities. EGC
owns the Intellectual Property free and clear of any and all liens, claims and
encumbrances. EGC does not have actual notice that any of its items of
Intellectual Property infringes or has infringed upon or unlawfully or
wrongfully uses or used any other patent, trademark, trade name, service xxxx,
copyright, license or other intellectual property owned or claimed by another
person, and has not received any notice of any other claim or proceeding with
respect to any Intellectual Property. No other person or entity owns or has any
proprietary, financial or other interest, direct or indirect, in whole or in
part, including any right to royalties or other compensation, in any of the
Intellectual Property, or in any application therefor.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF SCIGAMES
To induce EGC to enter into this Agreement and to consummate the
transactions contemplated hereby, SciGames hereby represents and warrants to EGC
as of the date hereof and as of the date of the Closing as follows and
acknowledges that EGC is relying upon the following representations and
warranties in connection with its entering into this Agreement:
7.1 ORGANIZATION. SciGames is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware. SciGames
has all corporate power and authority to enter into and perform its obligations
under this Agreement.
7.2 AUTHORIZATION. This Agreement has been duly authorized by all
necessary corporate action on the part of SciGames and does not require notice
to or the consent or approval of any stockholders of SciGames, any trustee or
holder of any indebtedness or any other individual or entity, except such as
have been duly given or obtained.
7.3 EXECUTION. This Agreement has been duly executed and delivered by
SciGames and constitutes the legal, valid and binding obligation of SciGames
enforceable against SciGames in accordance with its terms, except as such
enforceability may be limited by: (a) bankruptcy, insolvency, moratorium,
reorganization and other similar laws affecting creditors' rights generally; and
(b) general principles of equity, regardless of whether asserted in a proceeding
in equity or at law.
7.4 NO VIOLATION. Neither the execution, delivery or performance by
SciGames of this Agreement, nor the consummation by SciGames of the transactions
contemplated hereby, nor compliance by SciGames with the provisions hereof, will
conflict with or violate the governing documents of SciGames or any applicable
law binding SciGames, nor will result in the breach of, a default under, or the
creation of any right of any party to accelerate, terminate or cancel any
provision of any indenture, mortgage, permit, contract, lease or other
instrument to which SciGames is a party or by which it or any of its property is
bound.
7.5 LITIGATION; PERMITS. There is no charge, complaint, action, order,
writ, injunction, judgment, decree, claim, suit, litigation, proceeding, labor
dispute, arbitral action or investigation pending or, to its knowledge,
threatened against SciGames before any court, arbitrator or administrative or
governmental body and which, if decided adversely to the interests of SciGames,
would have an adverse effect upon the ability of SciGames to perform its
obligations under this Agreement. SciGames has all licenses, permits,
authorizations and approvals, each of which is currently valid and in full force
and effect, necessary to carry on its business as currently conducted.
ARTICLE 8
INDEMNIFICATION
8.1 INDEMNIFICATION BY EGC. EGC shall indemnify, promptly defend and hold
harmless SciGames, and its affiliates, directors, officers, employees, agents
and representatives, from and against any and all claims, costs, expenses
(including costs of investigation, attorneys' fees and court costs), judgments,
actions, suits, proceedings, penalties, fines, damages, losses and liabilities
of any kind or nature relating to, resulting from or arising out of: (i) any
material breach of any representation or warranty made by EGC contained in this
Agreement; (ii) any material breach of any covenant or agreement of EGC
contained in this Agreement, including, without limitation, Sections 1.3 (g) and
(h) hereof and any failure by EGC to take action at the Closing that it is
required to take pursuant to Article 2 above hereof; (iii) except to the extent
replaced in accordance with paragraphs (g) and (h) of Section 1.3 above, the
failure of any Electronic Game Card as a result of any manufacturing defect as a
result of a failure to conform to the Specifications or a Batch Failure,
including, without limitation, any damages and losses from any recall thereof,
whether voluntarily or involuntarily, and any liquidated damages paid to
customers of SciGames or the Joint Venture as a result of such failure, provided
that EGC shall not be required to pay liquidated damages under any sales
agreement for Electronic Game Cards made on behalf of the Joint Venture unless
SciGames (as the contracting party on behalf of the Joint Venture) or the Joint
Venture is required to pay such liquidated damages thereunder, and in no event
shall EGC's liabilities or obligations in this regard be greater than those
incurred by SciGames (as the contracting party on behalf of the Joint Venture)
or the Joint Venture in respect of the contract with the customer except as
otherwise expressly set forth in this Agreement; (iv) any claim that the
Intellectual Property infringes on the rights of a third party; and (v) any
fraud, willful misconduct or bad faith of EGC in connection with the
transactions contemplated by this Agreement.
8.2 INDEMNIFICATION BY SCIGAMES. SciGames shall indemnify, promptly defend
and hold harmless EGC and its affiliates, directors, officers, employees, agents
and representatives, from and against any and all claims, costs, expenses
(including costs of investigation, attorneys' fees and court costs), judgments,
actions, suits, proceedings, penalties, fines, damages, losses and liabilities
of any kind or nature relating to, resulting from or arising out of: (i) any
material breach of any representation or warranty made by SciGames contained in
this Agreement; (ii) any material breach of any covenant or agreement of
SciGames contained in this Agreement, including, without limitation, SciGames'
failure to take an action at the Closing that it is required to take pursuant to
Article 2 hereof; (iii) an error by SciGames or any person or entity authorized
to act on its behalf in creating the game file for the prize structure
associated with Electronic Game Cards delivered to customers; (iv) an error by
SciGames or any person or entity authorized to act on its behalf in creating the
data contained in the barcode applied by SciGames to Electronic Game Cards
delivered to customers; (v) any negligence by SciGames or any person or entity
authorized to act on its behalf in encoding the price mix of Electronic Game
Cards; and (vi) any fraud, willful misconduct or bad faith of SciGames in
connection with the transactions contemplated by this Agreement.
8.3 CLAIM FOR INDEMNIFICATION. In the event a Party entitled to
indemnification under this Article 8 (an "Indemnified Party") claims a right to
payment from any of the other Parties (each, an "Indemnifying Party") pursuant
hereto, such Indemnified Party shall send written notice of such claim to the
appropriate Indemnifying Party. Such notice shall specify the basis for such
claim. The failure by any Indemnified Party so to notify the Indemnifying Party
shall not relieve the Indemnifying Party from any liability that it may have to
such Indemnified Party with respect to any claim made pursuant to this Article
8. In the event the Indemnifying Party has timely disputed its liability with
respect to such claim as provided above, as promptly as possible, such
Indemnified Party and the appropriate Indemnifying Party shall establish the
merits and amount of such claim (by mutual agreement, litigation, arbitration or
otherwise) and, within five (5) business days following the final determination
of the merits and amount of such claim, the Indemnifying Party shall pay to the
Indemnified Party in immediately available funds an amount equal to such claim
as determined hereunder. ANYTHING TO THE CONTRARY HEREIN NOTWITHSTANDING, EXCEPT
FOR DAMAGES RESULTING FROM UNAUTHORIZED USE OR DISCLOSURE OF CONFIDENTIAL
INFORMATION, UNDER NO CIRCUMSTANCES SHALL EGC OR SCIGAMES BE LIABLE TO EACH
OTHER OR ANY OTHER PERSON OR ENTITY FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL OR
INDIRECT DAMAGES.
ARTICLE 9
MISCELLANEOUS
9.1 Notices. Any notice, request, consent or communication (collectively a
"Notice") under this Agreement shall be effective only if it is in writing and
(i) personally delivered, (ii) sent by certified or registered mail, return
receipt requested, postage prepaid, (iii) sent by a nationally recognized
overnight delivery service, with delivery confirmed or (iv) telexed or
telecopied, with receipt confirmed, addressed as follows:
If to SciGames, to:
Scientific Games International, Inc.
0000 Xxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Senior Vice President
Fax: (000) 000-0000
If to an EGC Entity, c/o:
Electronic Game Card, Inc.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxx Xxxxxxx
Fax: (000) 000-0000
or such other persons or addresses as shall be furnished in writing by any Party
to the other Parties. A Notice shall be deemed to have been given (w) as of the
date when personally delivered, (x) four (4) days after deposited with the
United States Postal Service, postage prepaid, properly addressed, (y) the next
day when delivered during business hours to said overnight delivery service
properly addressed or (z) when receipt of the telex or telecopy is confirmed, as
the case may be, unless the sending party has actual knowledge that a Notice was
not received by the intended recipient. In each case where notice is provided by
telex or telecopy, in order for Notice to be properly given, the Party providing
such Notice shall also send notice by first class mail, postage prepaid, by a
nationally recognized overnight carrier or by personal delivery. All Notices
shall specifically state: the provision (or provisions) of this Agreement with
respect to which such Notice is given and the relevant time period, if any, in
which the Party given such Notice must respond.
9.2 Confidential Information. Each of the Parties hereto acknowledges and
agrees that, in connection with the transactions contemplated by this Agreement,
it (the "Receiving Party") has been furnished with and will be furnished with
proprietary and confidential data or information and trade secrets of the other
Parties and their respective affiliates (the "Disclosing Parties") which is of
tangible or intangible value to the Disclosing Parties and is not generally
known by or available to the competitors of the Disclosing Parties. Therefore,
each Receiving Party shall regard and treat each item of such confidential data
or information and each trade secret as strictly confidential and wholly owned
by the Disclosing Parties and that it will not use, distribute, disclose,
reproduce or otherwise communicate any such item of confidential data or
information or trade secret to any individual or entity for any purpose other
than in furtherance of the transactions contemplated by this Agreement.
Information that is generally known in respective industries of the Disclosing
Parties or has been disclosed to the Receiving Party by third parties who have a
right to do so shall not be deemed confidential or proprietary information for
these purposes. In the event that the Parties fail to consummate the
transactions contemplated by this Agreement or this Agreement is terminated, the
Receiving Party agrees to promptly return to the Disclosing Parties all
materials (and all copies thereof) that have been furnished to the Receiving
Party in connection with such transactions, including without limitation all
documents, reports, contracts, customer lists, accounts, records, tax returns,
data, plans, processes and trade secrets. The Receiving Party hereby
acknowledges that its covenants contained in this Section 9.2 are special,
unique and of extraordinary character and that any violation of such covenants
will cause the Disclosing Parties immediate and irreparable harm that monetary
damages cannot adequately remedy, and the Receiving Party agrees that, upon any
actual or impending violation of any such covenant, the Disclosing Parties shall
be entitled to equitable relief, including injunctive relief and specific
performance, without bond or proof of damages and in addition to any other
remedies that such parties may have at law or in equity. The covenants in this
Section 9.2 shall expressly supersede that certain Confidentiality/Nondisclosure
Agreement, dated April 10, 2003, among the Parties, which is hereby terminated
in its entirety and of no further force or effect.
Notwithstanding any provision in this Section 9.2 to the contrary, the
parties (and their respective representatives and other agents) may disclose to
any and all persons, without limitation of any kind, the tax treatment and tax
structure of the transactions contemplated by this Agreement and all materials
of any kind (including opinions or other tax analyses) that are provided to
either party relating to such tax treatment or tax structure. Furthermore, each
of the parties hereby acknowledges and agrees that it does not know or have
reason to know that the use or disclosure of information relating to the tax
treatment or tax structure with respect to the transactions contemplated by this
Agreement is limited in any other manner for the benefit of any other person.
SciGames acknowledges and agrees that neither SciGames nor any parent or
other affiliate of SciGames has any ownership interest in the Intellectual
Property, and covenants and agrees that SciGames shall not assert or cause the
assertion of any interest in the Patent Application or the Other Patent
Applications (or the patents to which they relate) or other Intellectual
Property other than through this Agreement or infringe or cause the infringement
upon the same, or shall oppose or cause the opposition of the approval of the
Patent Application or Other Patent Applications and issuance of patents pursuant
thereto.
9.3 Amendments and Waivers.
(a) Any provision of this Agreement may be amended or waived if, but
only if, such amendment or waiver is in writing and is signed, in the case of an
amendment, by each Party, or in the case of a waiver, by the Party against whom
the waiver is to be effective.
(b) No failure or delay by any Party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
9.4 Severability. If any provision of this Agreement shall be held void,
voidable, invalid or inoperative, no other provision of this Agreement shall be
affected as a result thereof, and, accordingly, the remaining provisions of this
Agreement shall remain in full force and effect as though such void, voidable,
invalid or inoperative provision had not been contained herein.
9.5 Expenses. The Parties hereto shall be responsible for their own
respective costs and expenses, including fees and expenses of their counsel, in
connection with the preparation and negotiation of this Agreement.
9.6 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the Parties and their respective
successors and assigns.
9.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the
conflict of laws rules thereof.
9.8 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
9.9 Counterparts; Third Party Beneficiaries. This Agreement may be
executed in any number of counterparts and by the Parties hereto in separate
counterparts, each of which, when so executed, shall be deemed to be an
original, and all of which, taken together, shall constitute one and the same
agreement. Any signature page of any such counterpart, or any electronic
facsimile thereof, may be attached or appended to any other counterpart to
complete a fully executed counterpart of this Agreement, and any telecopy or
other facsimile transmission of any signature shall be deemed an original and
shall bind such Party. No provision of this Agreement is intended to confer upon
any person other than the Parties any rights or remedies hereunder.
9.10 Entire Agreement. This Agreement constitutes the entire agreement
between the Parties with respect to the subject matter hereof and thereof and
supersede all prior agreements and understandings, both oral and written,
between the Parties with respect to the subject matter hereof and thereof.
9.11 Cumulative Remedies. All rights and remedies of each Party are
cumulative of each other and of every other right or remedy such Party may
otherwise have at law or in equity, and the exercise of one or more rights or
remedies shall not prejudice or impair the concurrent or subsequent exercise of
other rights or remedies.
9.12 Interpretation. This Agreement shall not be construed more strongly
against any Party regardless of which Party is responsible for its preparation,
it being agreed that this Agreement was fully negotiated by each of the Parties.
9.13 Resolution of Conflicts; Arbitration.
(a) In the event that any dispute arises between the Parties
concerning the interpretation or performance of this Agreement, the
objecting party shall serve upon the non-objecting parties written notice
of its objection. Each of the Parties shall attempt in good faith to
resolve such dispute within thirty (30) days after receipt by the
non-objecting party of such written notice. If the Parties should
successfully resolve their dispute, a memorandum setting forth such
agreement shall be prepared and signed by such Parties.
(b) If no such agreement can be reached after a good faith
negotiation during the thirty (30) day period provided in subparagraph (a)
above, then either the objecting party or any of the non-objecting parties
may, by written notice to the other, demand arbitration of the matter. Any
such arbitration shall be administered by the American Arbitration
Association (the "AAA"). The arbitration shall be conducted in accordance
with the Commercial Rules of Arbitration of the AAA in effect at the time
of the arbitration, except as they may be modified by agreement of the
Parties. The sole arbitrator shall be selected by the AAA and shall be
experienced in commercial transactions and arrangements similar to those
comprising the subject matter of the arbitration. The decision of the sole
arbitrator shall be final, binding and conclusive upon the Parties. This
agreement to arbitrate and any order or judgment rendered by the sole
arbitrator pursuant hereto shall be specifically enforceable in any court
of competent jurisdiction. Jurisdiction of such sole arbitrator shall be
exclusive as to any dispute arising hereunder. The arbitration shall be
conducted in New York, New York. The counsel fees, witness costs and
expenses, and all other costs and expenses incurred, directly or
indirectly, by the Parties in connection with said arbitration shall be
divided between the Parties pro rata in accordance with the extent to
which they have prevailed on their claims, unless the sole arbitrator for
good cause determines otherwise in his or her order. The Parties agree to
cooperate in the timely conduct of any such arbitration proceedings.
(c) The terms of this Section 9.13 shall not apply to any claim for
indemnification pursuant to Article 8 hereof, and such claims shall be
resolved in accordance with the terms of said Article 8.
9.14 Co-Venturers Only. It is expressly understood and agreed that the
relationship between the Parties in connection with this Agreement, and the
transactions and documents contemplated hereby, is as co-venturers solely for
the purpose of conducting the business of the Joint Venture in accordance with
this Agreement, and that neither SciGames, on the one hand, nor EGC, on the
other hand, nor their respective employees, agents or representatives, are the
servants, agents, employees or representatives of the other. No Party shall be
responsible for the payment of any taxes, benefits, workers' compensation or
unemployment compensation to the other Parties or their respective employees,
officers, directors, manager, agents or representatives.
9.15 Public Announcements. The Parties agree to consult with each other
before issuing any press release or making any public statement with respect to
this Agreement or the transactions, agreements or documents contemplated hereby
and, except as may be required by applicable law or any listing agreement with
any national securities exchange, will not issue any such press release or make
any such public statement prior to such consultation.
9.16 Compliance With Gaming Laws. EGC hereby specifically acknowledges
that SciGames is subject to the gaming and licensing requirements of various
jurisdictions and is obliged to take reasonable efforts to determine the
suitability of its business associates. EGC therefore agrees to cooperate fully
with SciGames in providing SciGames with any information, of whatever nature,
that SciGames deems necessary or appropriate in assuring itself that EGC
possesses the good character, honesty, integrity, and reputation applicable to
those engaged in the gaming industry, and EGC hereby specifically represents
that there is nothing in its background, history, or reputation that would be
deemed unsuitable under standards applicable to the gaming industry. If, during
the term of this Agreement, SciGames is notified in writing by any regulatory
agency that the conduct of business with EGC will jeopardize SciGames' gaming
license or its ability to be so licensed, or if SciGames reasonably concludes
that any such entity fails to meet the above criteria, then SciGames shall be
entitled to terminate this Agreement in its entirety upon written notice.
9.17 Further Assurances. Upon the reasonable request of any Party, each
Party agrees to take any and all actions, including, without limitation, the
execution of certificates, documents or instruments, necessary or appropriate to
give effect to the terms and conditions set forth in this Agreement.
9.18 Survival Upon Termination of Agreement. Notwithstanding anything to
the contrary set forth in this Agreement, Sections 2(b), 5.4, 5.5 and 5.6 of
this Agreement, Article 8 and this Article 9 shall survive the termination of
this Agreement.
IN WITNESS WHEREOF, each of the Parties has caused it duly authorized
representative to execute this Agreement as of the day and year first above
written.
"SciGames"
SCIENTIFIC GAMES INTERNATIONAL, INC.
By: /s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx, Senior Vice President
"EGC"
ELECTRONIC GAME CARD, INC.
By: /s/ Xxxx Xxxxxxx
Xxxx Xxxxxxx, President
