Exhibit 10.5
MARKETING AND SUPPLY AGREEMENT
THIS MARKETING AND SUPPLY AGREEMENT is entered into as of October 2002,
between TRANSLUCENT TECHNOLOGIES, LLC, doing business as SLOT-TICKETS(TM) (the
"Supplier") and LASERLOCK TECHNOLOGIES, INC, ("Laserlock").
RECITALS
A. The Supplier is in the business of manufacturing and printing coinless
slot machine tickets ("Slot-Tickets") for the casino and gaming industry.
B. Laserlock is experienced in marketing slot-tickets with third-party
advertising thereon ("Promotional Slot-Tickets") to casinos and others engaged
in the gaming business in the United States ("Gaming Operators").
C. Laserlock is interested in obtaining from the Supplier certain rights
to market and sell Promotional Slot-Tickets to Gaming Operators pursuant to the
terms and conditions of this Agreement, and the Supplier is interested in
providing Laserlock with such rights pursuant to the terms and conditions of
this Agreement.
AGREEMENTS
In consideration of the Recitals and the mutual covenants contained
herein, the parties agree as follows:
1. Marketing by Laserlock. During the term of this Agreement, Laserlock
will (a) market and sell advertising rights to third-parties (other than Gaming
Operators) for the placement of advertising on the back of Promotional
Slot-Tickets and (b) market Promotional Slot-Tickets for sale to and use by
Gaming Operators. Laserlock will be responsible for all creativity, artwork,
specifications and fitness of need for the Promotional Slot-Tickets to be
produced by the Supplier under this Agreement.
2. Supply of the Promotional Slot-Tickets. The Supplier agrees to use
reasonable commercial efforts to manufacture and supply the Promotional
Slot-Tickets for sale to Gaming Operators pursuant to the terms of this
Agreement. Sales of Promotional Slot-Tickets to any existing customer of
Laserlock or any customer originally introduced by Laserlock to the Supplier
(the "Laserlock Customers") will be made to such Laserlock Customer through
Laserlock as a distributor and Laserlock will be responsible for billing and
collecting from such
Laserlock Customer. For such sales to Laserlock Customers,
the Supplier will sell Promotional Slot-Tickets to Laserlock for resale by
Laserlock to such Laserlock Customers at a price not to exceed the price at
which such Promotional Slot-Tickets are sold by the Supplier to Laserlock in
accordance with section 3(a) below. Sales of Promotional Slot-Tickets to any
Gaming Operator that is not a Laserlock Customer (the "Supplier Customers")
shall be made to such Supplier Customer directly by the Supplier and the
Supplier will be responsible for billing and collecting from such Supplier
Customer. For each order of Promotional Slot-Tickets for a sale to be made
through Laserlock to a Laserlock Customer, Laserlock will deliver a separate
purchase order to the Supplier and, for each order of Promotional Slot-Tickets
for a sale to be made directly by the Supplier to a Supplier Customer, such
Supplier Customer will deliver a separate purchase order directly to the
Supplier (any such order of Promotional Slot-Tickets pursuant to this Agreement
with respect to any Gaming Customer is referred to herein as an "Order"). Each
Order will set forth the following terms: the quantity, type and specifications
of the Promotional Slot-Tickets being ordered, requested delivery dates and
shipping instructions. The Supplier will ship the Promotional Slot-Tickets
pursuant to the specifications contained in each Order at agreed upon times and
pursuant to the terms of this Agreement. All terms of any Orders or other
documents which are inconsistent with or add to this Agreement are superseded by
this Agreement and will have no force or effect.
3. Pricing: Payment.
(a) Pricing for Slot-Tickets. All pricing for sales of Promotional
Slot-Tickets shall be based on the lowest standard (volume discount) price the
Supplier is then charging its other customers, excluding special pricing
arrangements negotiated by the Supplier with large customers (the "Standard
Price"). The Standard Price structure as of the date of this Agreement is set
forth on Schedule 3(a). From time to time during the term of this Agreement,
upon request by Laserlock, the Supplier shall update and provide a written
quotation of the Standard Price then in effect, which price quotation shall be
good for 60 days from the date of quotation. The parties acknowledge that sales
of Promotional Slot-Tickets may be made at a price below the Standard Price with
the prior approval of the Supplier and Laserlock to meet reasonable competition.
To the extent that any Promotional Slot-Tickets are sold under this Agreement
(whether to Laserlock for resale to any Laserlock Customer or directly by the
Supplier to any Supplier Customer) at a price less than the Standard Price then
in effect, Laserlock will pay to the Supplier an amount (the "Subsidy Payments")
equal to the difference between the Standard Price and the actual sales price of
the applicable Promotional Slot-Tickets within 45 days after the receipt by
Laserlock of an invoice from the Supplier setting forth the amount of Subsidy
Payments due.
2
(b) Payment by Laserlock for Promotional Slot-Tickets. Laserlock will pay
for each Order of the Promotional Slot-Tickets made by Laserlock for resale to
Laserlock Customers within 45 days of the receipt by Laserlock of an invoice
from the Supplier setting forth the total price of the Promotional Slot-Tickets
delivered pursuant to such Order in accordance with section 3(a) above. The
Supplier will deliver such invoice on or after the date of shipment of the
Promotional Slot-Tickets to Laserlock.
(c) Sharing of Advertising Revenues. On a quarterly basis within 15 days
after the end of each month during the term of this Agreement, Laserlock shall
pay to the Supplier an amount equal to 10% of all Adjusted Advertising Revenues
(as defined below) received by Laserlock with respect to all of the Promotional
Slot-Tickets sold (whether to Laserlock for resale to any Laserlock Customer or
directly by the Supplier to any Supplier Customer) during such month. The final
such payment shall be made within 15 days after the end of the term of this
Agreement for any reason pursuant to section 7 below. For purposes of this
Agreement, "Adjusted Advertising Revenues" mean, with respect to any Promotional
Slot-Tickets sold pursuant to this Agreement, (i) revenues actually received by
Laserlock for the sale of any advertising appearing on such Promotional
Slot-Tickets, minus (ii) any bona fide out-of-pocket costs or expenses paid by
Laserlock to unaffiliated third parties in connection with the production or
sale of such advertising, minus (iii) any Subsidy Payments previously paid to
the Supplier in connection with the sale of such Promotional Slot-Tickets.
Laserlock shall keep accounts and records of sales of advertising and related
costs and expenses in sufficient detail for the Supplier to verify the
calculation of payments pursuant to this section 3(c). Laserlock shall make such
records available to the Supplier or its authorized agents, during normal
business hours, for inspection and audit at such times as the Supplier may
reasonably request for the purpose of verifying the proper calculation of
payments pursuant to this section 3(c).
4. Shipment. For sales of Promotional Slot-Tickets to Laserlock for
resale to Laserlock Customers, the Supplier will ship the Promotional
Slot-Tickets in accordance with the quantities and destinations specified in the
applicable Order and title and risk of loss shall pass to Laserlock at the time
the Supplier delivers the Promotional Slot-Tickets to the shipper at the
Supplier's facility. Shipment of Promotional Slot-Tickets by the Supplier
directly to any Supplier Customer shall be made in accordance with any terms and
conditions as may be agreed upon by the Supplier and such Supplier Customer.
3
5. Exclusivity.
(a) Laserlock. During the term of this Agreement, neither Laserlock nor
any of its affiliates may purchase or obtain any Promotional Slot-Tickets from
any supplier other than the Supplier pursuant to the terms of this Agreement or
market or sell any Promotional Slot-Tickets except for Promotional Slot-Tickets
purchased from the Supplier pursuant to this Agreement.
(b) The Supplier. During the term of this Agreement and pursuant to the
terms of this Agreement, Laserlock shall have the exclusive right to market and
sell third-party advertising for placement on the back of any Promotional
Slot-Tickets sold by the Supplier or any of its affiliates to any Gaming
Operator and neither the Supplier nor any of its affiliates may sell Promotional
Slot-Tickets to any Gaming Operator other than pursuant to the terms of this
Agreement. Nothing in this Agreement shall affect any sales by the Supplier or
any of its affiliates of Slot-Tickets without third-party advertising thereon.
6. Warranty and Limitation of Damage. The Supplier warrants that the
Promotional Slot-Tickets will be manufactured in accordance with and will meet
all specifications set forth in each Order accepted by the Supplier pursuant
hereto.
THE SUPPLIER MAKES NO OTHER WARRANTIES OR, REPRESENTATIONS EITHER EXPRESSED OR
IMPLIED WITH RESPECT TO THE PROMOTIONAL SLOT-TICKETS INCLUDING THEIR DESIGN,
QUALITY, PERFORMANCE, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
7. Term and Termination.
(a) Term of Agreement. This Agreement shall begin on the effective date
hereof and shall continue for a period of two years therefrom and shall
automatically renew for additional two years terms at the expiration of the
initial term and each subsequent term for so long as Supplier has sold at least
$1,000,000 of Promotional Slot-Tickets pursuant to this Agreement during the
12-month period prior to the expiration of the then-current term.
(b) Termination of Agreement. Notwithstanding the foregoing, this
Agreement will terminate upon the occurrence of any of the following:
(i) Mutual Agreement. The mutual, written agreement of the
Supplier and Laserlock;
(ii) Breach. Either party may terminate this Agreement (the
"Terminating Party") in the event of a material breach by the other party (the
4
"Breaching Party") of any of its obligations under this Agreement. The
Terminating Party must provide the Breaching Party with written notice of the
reason for termination. The Breaching Party shall have 30 days from the date of
delivery of such notice to cure such breach to the reasonable satisfaction of
the Terminating Party and, if the breach is not so cured, the Terminating Party
has the right to terminate this Agreement immediately upon written notice to the
Breaching Party at the end of such 30 days and at any time thereafter during the
continuation of such breach.
8. Miscellaneous.
(a) Assignment. Neither party shall transfer or assign this Agreement in
whole or in part without the prior written consent of the other party. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
(b) Independent Contractor. This Agreement does not create any
partnership, joint venture; trust or agency between the parties. This Agreement
shall not cause either party to be considered an agent or legal representative
of the other for any purpose, nor shall this Agreement cause either party's
officers, directors, employees or agents to be considered agents or employees of
the other party. This Agreement shall not give either party or any of its
officers, directors, employees or agents any authority to bind the other party
in any contract with any third party on behalf of or in the name of that third
party.
(c) Waivers. The failure of either party to insist, in any one or more
instances, upon full performance of the terms, covenants and conditions of this
Agreement shall not be construed as a waiver or a relinquishment of any right
granted hereunder or a waiver of future full performance of any such term,
covenant or condition.
(d) Severability. If any provision of this Agreement is held to be
invalid or unenforceable for any reason whatsoever, the parties agree that such
invalidity or unenforceability shall not affect any other provision of this
Agreement, the remaining provisions hereof shall remain in full force and effect
and any court of competent jurisdiction may so modify the objectionable
provision as to make it valid and enforceable.
(e) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Wisconsin without giving effect to any
choice of law provision or rule (whether of the State of Wisconsin or
5
any other jurisdiction) that would cause the application of any of the laws of
any jurisdiction other than the State of Wisconsin.
(f) Notice. All notices end other communications given or made pursuant
to this Agreement shall be in writing and shall be deemed to have been duly
given or made upon receipt, if delivered personally, on the third business day
following deposit in the U.S. mail if mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
changes of address) or the next business day following electronic transmission
to the telecopier number specified below with receipt acknowledged:
If to the Supplier: Translucent Technologies, LLC
0000 Xxxxxxxxx Xxxxxx
Xxxxxx, X0 00000-0000
Attn: President
Facsimile: 000-000-0000
If to Laserlock: Laserlock Technologies, Inc.
000 Xxxxx Xxxx.
Xxxx Xxxxxx, XX 00000
Attn: President
Facsimile: ________________
or to such other address as the parties may designate in writing.
(g) Entire Agreement. This Agreement and the exhibits hereto constitute
the entire agreement between the parties and supersede all prior agreements,
understandings and arrangements, oral or written, between the parties with
respect to the subject matter hereof. The Marketing Agreement entered into in
August 2001 between the Supplier and Entertainment Marketing Technology, LLC is
hereby terminated. In the event of conflict between any term of this Agreement
and any term in a party's purchase orders, quotations, acknowledgments,
invoices, licenses or other communications to the other party, this Agreement
shall govern. This Agreement shall not be amended or modified unless set forth
in a written instrument signed by both parties.
(h) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
6
(i) Arbitration. Any dispute or controversy between the parties arising
out of or relating to this Agreement, including without limitation a dispute or
controversy relating to the construction of any provision or the validity or
enforceability of any term or condition (including this section) or of the
entire Agreement, or any claim that all or any part of this Agreement (including
this provision) is void or voidable, shall be submitted to arbitration before a
single arbitrator in accordance with the Commercial Rules of Arbitration of the
American Arbitration Association then in effect at an office of the American
Arbitration Association in Milwaukee, Wisconsin. The arbitrator shall be a
person who is familiar with the printing industry and who is not an employee or
agent or former employee or agent of either party. In connection with any such
arbitration proceeding, the parties shall be bound by the provisions of the
Federal Rules of Civil Procedure with respect to compulsory counterclaims (as
the same may be amended from time to time), provided any such compulsory
counterclaim shall be filed within 30 days after submission of the dispute to
arbitration. The award of the arbitrator shall be the sole and exclusive remedy
between the parties regarding a dispute. The arbitrator shall have the right to
award or include in his award any relief which he or she deems proper in the
circumstances, including, without limitation, money damages (with interest on
unpaid amounts from the due date), specific performance, injunctive relief and
attorneys' fees and costs; provided, however, that the arbitrator shall not
award exemplary or punitive damages. The award and decision of the arbitrator
shall be conclusive and binding upon the parties and judgment upon the award
shall be in the courts of the State of Wisconsin. Notwithstanding the foregoing,
however, the consent to arbitration shall not preclude either party from taking
or requesting any judicial or other authority to order any provisional or
conservatory measure, including attachment, temporary restraining order or
preliminary injunction, prior to the institution of the arbitration proceeding
or during the proceeding, for the preservation of its rights and interests. The
costs assessed by the American Arbitration Association shall be borne equally by
each of the parties, except that each party shall pay its own attorneys and its
own expenses.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
TRANSLUCENT TECHNOLOGIES, LLC
BY /s/ [graphic of signature]
--------------------------
Its: President
-------------------------
LASERLOCK TECHNOLOGIES, INC.
7
BY /s/ [graphic of signature]
----------------------
Its: Exec. VP
----------------------
8
