General Agreement - Autotote Systems Inc. and Sisal Sport Italia SpA
GENERAL AGREEMENT
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FEBRUARY 19, 1998
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between
Autotote Systems, Inc., a corporation with its main offices at 100 Bellevue
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Road, P.O. Box 6009, Newark, DE 19714 (hereinafter "Autotote"), duly represented
by its Vice President, Richard WEIL,
and
Sisal Sport Italia SpA, a corporation with its main offices at 6 Via Paleocapa,
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20121 Milano, Italy (hereinafter "Sisal"), duly represented by its Managing
Director, Mr. Giorgio SANDI,
whereas:
* Autotote is engaged in the design, development, manufacture and sale of
terminal and computer systems;
* Sisal is active in Italy in the field of betting and is looking for a new,
updated and effective computer hardware and software system;
* Autotote has agreed to assist Sisal in the development of a new computer
hardware and software system, in the manufacture of the entire Terminal
requirements of Sisal and in directly suppling to Sisal prototypes and a pre-
production amount of such equipment;
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* Autotote and Sisal have agreed that a larger, production amount of such
equipment shall be supplied to Sisal by the exclusive distributor in Italy of
Autotote's products, Elettronica Ingegneria Sistemi SpA (hereinafter "EIS");
Now therefore, in consideration of the mutual covenants and agreements set forth
herein, Autotote and Sisal agree as follows:
2 DEFINITIONS
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As used in this Agreement, the following capitalized terms shall have the
meanings set forth below:
2.1 "Affiliate" of any party shall mean any corporation or other
business entity controlling, controlled or under common control
with such party;
2.2 "Agreement" shall mean this Agreement and all Exhibits hereto;
2.3 "Business" shall mean the business, operations and activities of
Sisal relating to the field of betting;
2.4 "Information" shall mean all information regarding the know-how of
Autotote in computer hardware and software systems and the
requirements, needs, activities, organization, and programs of
Sisal related to the Business;
2.5 "System" shall mean equipment and related software and/or firmware;
2.6 "Intellectual Property Rights" shall mean all the rights for the
complete and absolute ownership of the project, ideas and patents
related to the Terminal (including prototypes);
2.7 "Terminal" shall mean the computer hardware, to be utilized for the
exploitation of the Business, having the main features,
characteristics and functions listed in Exhibit 1 of the Agreement;
the Terminal shall consist of hardware and firmware (as understood
in the trade) as described in Exhibit 1;
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2.8 "Territory" shall mean the Republic of Italy, San Marino and
Vatican State;
2.9 "Trademarks" shall mean the trademarks developed by Sisal and
registered in Italy by Sisal to distinguish the Terminals used in
the Territory.
3 OBJECT OF THE AGREEMENT
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2.1.a. Subject to the terms and conditions of this Agreement,
Autotote shall develop and manufacture for Sisal five (5)
laboratory prototypes of the Terminal and one (1) working
prototype in final assembly form. The laboratory prototype
shall perform the appropriate functions (except the scanner
shall be 3.25 inches wide without printer) and shall not be
in final assembly form. Autotote will own the Intellectual
Property Rights to all said prototypes.
2.1.b. The working prototype of the Terminal shall be deemed
accepted by Sisal if said working prototype performs all
the material functions and has the features, charateristics
and functions described in Exhibit 1.
2.2. Autotote grants to Sisal the right to use the ideas, patents and
other rights embodied in the Terminal. The Terminals, except for
the pre-production amount, shall be supplied to Sisal by the
exclusive distributor in Italy of Autotote's products, EIS.
Sisal shall have the rights, as owner of the Terminals bought
from Autotote or EIS, to use, adapt and make available such
Terminals for the exploitation of the Business in the Territory
and to sell them also in other countries.
2.3. Autotote grants to Sisal hereby a perpetual, irrevocable, non
exclusive, apart from what is provided in art. 7, royalty free
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license to use the Autotote "Software" (defined in Exhibit 1)
and Autotote firmware solely in connection with the Terminals.
Autotote warrants that Sisal shall be provided with any upgrades
to said Software made available to its customers generally. No
license is granted with respect to Autotote's source code for
the Software. Autotote, if the parties agree, shall have Sisal
supplied with software enhancements, training and support.
2.4. Autotote sublicenses to Sisal Autotote's license interest
in, under and to each and every third party Software, which
sublicense shall be subject to the terms hereof.
2.5. Sisal, prior to acceptance of the working prototype and of
this date, hereby orders the manufacture and supply of two
hundred (200) pre-production Terminals, having the
features, characteristics and functions described in
Exhibit 1, and Autotote agrees to manufacture and directly
supply and deliver the said amount of Terminals to Sisal.
Sisal shall directly order to EIS the supply of nineteen
thousand eight hundred (19,800) Terminals and Autotote
shall manufacture and make available such Terminals to
Sisal, through EIS. Autotote shall be directly responsible
to Sisal for the obligations and warranties for the entire
twenty thousand (20,000) Terminals, as per the provisions
of this Agreement. Sisal shall have on all the Terminals
supplied by Autotote or by EIS all of the rights provided
in this art. 2.
Notwithstanding what is provided in this art. 2.5., Sisal
shall have the one-time option, after 7,000 Terminals have
been supplied by Autotote, to confirm, by written notice to
Autotote, the order for the precise amount of Terminals,
over 10,000, to be manufactured by Autotote and supplied
through EIS.
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2.6 Sisal will provide Autotote with a copy of Sisal's
agreement with EIS.
3. INFORMATION - CONFIDENTIALITY
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The parties shall exchange all Information necessary in order to make possible
and facilitate the development of the prototypes of the Terminal and the
manufacture of the Terminals and shall keep strictly confidential all
Information.
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4. TERMS
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4.1. Autotote shall develop and make available for Sisal a quantity
of five (5) laboratory prototypes of the Terminal by February
23, 1998, based on the foam model and the design of the
Terminal already approved by Sisal.
4.2. Autotote shall make available to Sisal one (1) working
prototype of the Terminal by May 1, 1998.
4.3. The Parties shall complete the check provided in art. 2.1.b
and execute a confirmatory acknowledgement within 10 days
from the delivery of the working prototype of the Terminal
to Sisal. Such approval notification shall not be
unreasonably withheld by Sisal.
4.4. In case of non-acceptance of said prototype, Autotote shall
be allowed to remedy the defects within 10 days from the
notification of Sisal and Sisal shall check if the
prototype, after the remedy, is acceptable within 10 days
from the delivery of the mended working protype.
4.5. Autotote shall deliver the pre-production Terminals ordered
by Sisal, as per art. 2.5, within the following date, at the
Autotote's factory indicated:
DATE QUANTITY FACTORY
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. May 29, 1998 200 Delaware
It is agreed that the Terminals to be supplied by EIS shall
be delivered by Autotote to EIS within the following dates,
at the Autotote's factory indicated:
DATE QUANTITY FACTORY
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. July 10 - July 31, 1998 100/week Ireland
. from August 7, 1998 *200/week Ireland
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* it is agreed that if Sisal wishes to increase or decrease
the weekly quantity by no more than 20 percent Autotote and
EIS will comply within fifteen (15) days upon receiving such
request in writing.
5. COMPENSATION AND PRICES
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5.1. To compensate the activity of Autotote provided by art. 2.1,
Sisal has paid in advance to Autotote the sum of
U.S.$50,000.00 (consisting of U.S.$8,000.00 for each of 5
laboratory prototypes and U.S.$10,000.00 for 1 working
prototype), U.S.$700,000.00 for development and tooling and
U.S.$175,000.00 for firmware as described in Exhibit 1,
sec.XX, items A. through N.;
5.2. Sisal shall pay as the price for the supply of the 200
pre-production Terminals ordered as per art. 2.5, the
following amount per Terminal: U.S.$4,600.00
5.3. Sisal shall pay the compensation provided in art. 5.2 as
follows:
* 5% (total of U.S.$46,000.00) within 15 days from the
execution of the present Agreement;
* the remainder, 60 days after the shipment of specific
Terminals from Autotote's factory less the 5% deposit;
5.4. Autotote retains a right of property, as provided in art.
1523 of the Italian Civil Code, in the Terminals ordered as
per art. 2.5. until the full price thereof is paid by Sisal.
5.5. Prices do not include any taxes or duties, now or hereafter
enacted, applicable to the Terminals supplied by Autotote or
to this transaction, all of which taxes and duties shall be
the responsibility of Sisal, except for Autotote's franchise
taxes
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and Autotote's income taxes.
5.6. Liability for loss or damages shall pass to Sisal when
Autotote shall put the Terminals ordered as per art. 2.5.
into possession of a carrier for shipment to Sisal, the
carrier beeing deemed to be an agent for Sisal.
Accordingly, freight and insurance for the shipment shall be
the responsibility of Sisal.
5.7. Final price and other conditions of the supply of the
remaining 19,800 Terminals from EIS to Sisal, will be
directly agreed to between EIS and Sisal.
6. POSSIBLE REIMBURSEMENT OF THE COMPENSATION
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In case Autotote will not be able to develop or deliver the laboratory
prototypes or the working prototype of the Terminal as per the features,
characteristics and functions listed in Exhibit 1, Autotote shall:
i) reimburse to Sisal 75% of the total sum advanced as per art. 5.1 within 30
days from the notification of definitive non acceptance provided in art.
4.3. - 4.4.;
ii) repay at the same time the down payment (5%) specified in art. 5.3.;
iii) repay at the same time any down payment received for the manufacture of
19,800 Terminals, as per art. 2.5., to either EIS or Sisal, depending upon
which entity made the down payment.
These shall be Autotote's only obligations for failure, for any reason, to
deliver the Terminals because the prototypes have not been accepted.
7. EXCLUSIVITY
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Subject to the requirements of law and/or any applicable regulatory review
("Government Approval"), and except for sales by Autotote to EIS
contemplated by this agreement, Autotote shall, in the future, not supply
Terminals in the Territory or destined to the Territory to any third party,
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or grant rights on Terminal for use in the Territory, unless Sisal agrees
and Autotote and Sisal regulate all the conditions of such a supply or
grant of rights in a written agreement duly signed by the parties. This
clause does not apply to such firmware and/or software which Autotote has
currently supplied in the Territory.
8. INTELLECTUAL PROPERTY RIGHTS
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8.1. Autotote shall be the sole owner of the Intellectual
Property Rights. Sisal shall have the rights provided in
art. 2.2., 2.3., 2.4. This clause shall be amended to
comply with any required Government Approval.
8.2. Sisal shall remain the sole owner of the Trademarks in the
Territory. Autotote shall have the right to approve the
Trademarks, which approval shall not be denied unless for
good and serious reasons.
8.3. If EIS for any reason, is not able to perform under the
Agreement, then Sisal may deal directly with Autotote. If
Autotote in unable, for any reason, to perform to Sisal's
satisfaction, Sisal can terminate the Agreement and demand
that Autotote provide to Sisal, on astrictly confidential
basis, with all the documents, instructions, schematics,
necessary in order to allow Sisal to manufacture such
Terminals.
9. DELIVERY AND FORCE MAJEURE
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Autotote shall strictly comply with the delivery terms provided in art. 4.5.
Sisal shall provide EIS and Autotote with three (3) months rolling
forecasts of shipments. All parties shall strictly comply with such
shipment requirements.
Autotote shall not be liable for any delay in performance or for non-
performance, in whole or in part, caused by the occurrence of any
contingency beyond the control of Autotote, including, but not limited to,
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acts of God, and non performance by Sisal of any of its obligations under
the present Agreement.
10. ACCEPTANCE
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Sisal shall perform inspection and final acceptance testing within 30 days after
receipt of shipment of Terminals supplied directly by Autotote or by EIS.
If, within 30 days after receipt of shipment, Autotote or EIS do not
receive notification of non-conformity, then said shipment shall be deemed
to have been accepted. Sisal shall have the option to substitute for the
above mentioned procedure, a procedure where Sisal, upon reasonable notice,
shall be allowed to conduct acceptance testing at Autotote's plant for a
period not exceeding one (1) week.
11. WARRANTIES
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11.1. Autotote warrants all Terminals directly supplied by
Autotote or supplied by EIS against defects in material and
workmanship under normal use and service for a period of
thirteen (13) months from the date of shipment, provided,
however, that Autotote's liability under said warranty
shall be limited, at Autotote's cost, to, within three (3)
weeks of determination of entitlement to a warranty remedy,
replacing or commencing repair, at Autotote's option,
Terminals or parts thereof (including subassemblies) which
shall be disclosed to be defective in the form in which it
was shipped by Autotote, prior to its use in further
manufacture or assembly. This warranty is applicable only
if Autotote receives, directly or through EIS, written
notice of such defect mailed to its office within said
thirteen (13) month period and is given adequate
opportunity to verify the existence of a claimed defect.
This warranty shall not apply to Terminals of parts thereof
that have been (a) subjected to
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misuse, neglect, accident, damage in transit, abuse or unusual
hazard; (b) repaired, altered or modified by anyone other than
Autotote or EIS unless Sisal is authorised by Autotote to make
repair; (c) used in violation of instructions furnished by
Autotote.
11.2. Where Autotote or EIS, following acceptance of the working
prototype, fails to make delivery or repudiates or breaches
any other material provisions of this Agreement (other
than the warranty against patent infringement), including,
without limitation, obligations with respect to
nonconforming items, Autotote's liability to both Sisal and
EIS, collectively, shall not exceed the amount of
U.S.$3,300.00 per Terminal. The foregoing are in lieu of
all warranties, express, implied or statutory, including,
but not limited to, any implied warranty of merchantability
or fitness for a particular purpose and any other
warranty obligation on the part of Autotote. Autotote's
warranties extend to Sisal and to no other person or
entity. In no event will Autotote be liable to anyone for
incidental or consequential damages for breach of any of
the provisions of this Agreement, such excluded damages to
include, without limitation, loss of goodwill, loss of
profits or loss of use.
12. PATENT INDEMNITY
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12.1. Autotote shall defend any suit or proceeding brought
against Sisal to the extent that such suit or proceeding is
based on a claim that Terminals manufactured and sold by
Autotote or by EIS to Sisal constitute direct infringement
on any valid Italian patent and Autotote shall pay all
damages and costs awarded by final judgement (from which no
appeal may be
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taken) against Sisal, on condition that Autotote (i) shall be
promptly informed and furnished a copy of each communication,
notice or other action relating to the alleged infringement,
(ii) shall be given authority, information and assistance
necessary to defend or settle such suit or proceeding, (iii)
shall be in control of the defense (including the right to
select counsel), and shall have the sole right to compromise and
settle such suit or proceeding. Autotote shall not be obligated
to defend or be liable for costs and damages if the infringement
arises out from a combination with, an addition to, or
modification of, the Terminals after delivery by Autotote, or
from a misuse of the Terminals, or any part thereof.
12.2. If any Terminal manufactured and supplied by Autotote or by
EIS to Sisal shall be held to directly infringe any valid
Italian patent and Sisal is enjoined from using the same,
or if Autotote believes such infringement is likely,
Autotote shall, at its option and at its expense, have the
right: (i) to procure for Sisal the right to use infringing
substitute otherwise complying substantially with all the
requirements provided by this Agreement, or (iii), if (i)
and (ii) are not reasonably available, upon return of the
goods, refund the purchase price and the transportation
cost of such Terminals.
12.3. The foregoing states the sole and exclusive liability of
Autotote hereto for infringement of patents, whether direct
of contributory, and is in lieu of all warranties, express,
implied or statutory in regard thereto.
12.4. Autotote represents to Sisal that it conducts its business
operations so as not to infringe upon any third party
proprietary rights.
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13. GENERAL PROVISION
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Autotote and Sisal confirm that the provisions of arts. 9., 10., 11., 12.,
16., may be enforced by Sisal directly against Autotote with respect to all
Terminals, including the Terminals supplied by EIS, and Sisal may directly
claim from Autotote all the possible damages incurred by Sisal covered
under said articles.
14. NO CONFLICT
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Neither the execution of this Agreement and the performance by the Parties of
their obligations, nor the use of the Terminals for the exploitation of the
Business will violate, conflict with, result in any breach of, or
constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under any contract or judgement to which
Autotote or Sisal is party or by which it is bound, or violate any
applicable law, statute, rule, ordinance or regulation of any Governmental
Body.
15. COMPLIANCE
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Each party specifically acknowledges that the other party 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. Each party agrees to cooperate fully with the other party by
providing it with any information, of whatever nature, that the other party
deems necessary or appropriate in assuring itself that the party furnishing
information possesses the good character, honesty, integrity and
reputation applicable to those engaged in the gaming industry and
specifically represents that there is nothing in each party's background,
history, or reputation that would be deemed unsuitable under the standards
applicable to the gaming industry. This Agreement is subject to the
approval of Autotote Corporation's Corporate
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Compliance Committee and Sisal's Compliance Committee or equivalent body.
If, during the term of the Agreement, a party is notified by any regulatory
agency that the conduct of business with the other party will jeopardize
the first party's license or ability to be licensed or if a party
concludes, on the basis of serious evidence, that the other party fails to
meet the above criteria, this Agreement shall terminate upon written notice
by the complaining party.
16. TERMINATION
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16.1. (a) Except as specifically provided in this art.16., this Agreement and
the agreement with EIS for the supply of 19,800 Terminals shall not
be terminated by Sisal or EIS without the prior written consent of
Autotote. If Sisal defaults, Autotote, in addition to its other legal
remedies, shall be reimbursed for all its documented, non-cancelable
costs (reduced by Autotote's resale of inventory items undertaken in
good faith) incurred to fill the order.
(b) Notwithstanding the above, in case Sisal, directly or through EIS,
has already ordered at the moment of the cancellation more than
10,000 Terminals, Autotote shall not be entitled to claim any
reimboursment or remedy for non-cancellable costs incurred or others
damages.
16.2. Sisal may, by written notice to Autotote, terminate, respectively
this Agreement in whole or, from time to time, in part if any one of
the following occurs:
a) Autotote repeatedly fail to meet delivery dates;
b) Terminals do not conform to the requirements
specified in Exhibit 1;
c) Autotote fail to comply with any material obligations
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contained in this Agreement;
d) Autotote become insolvent or commits an act of
bankruptcy.
Autotote shall have thirty (30) days to cure any default
hereunder. In case of failure, Sisal shall be entitled to
manufacture, directly or through a third party, the Terminals
and to use, adapt, make them available in the Territory and
to sell them also in other countries. In case EIS becomes
insolvent or repeatedly fails to comply with it's material
obligations Autotote shall directly supply Sisal with the
Terminals ordered by EIS. In case of failure the above
provision shall apply.
16.3. Autotote may, by written notice to Sisal, terminate this
Agreement if Sisal does not conform to the payment terms
hereunder. Sisal shall have thirty (30) days to cure any
default hereunder.
17. NOTICES
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All notices or communications required by the provisions of this Agreement or
desired to be given thereunder shall be in writing and given by registered
mail, return receipt requested to the addreess stated above or such other
duly notified address.
18. ASSIGNMENT
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Autotote or Sisal shall not assign this Agreement or any portion of this
Agreement, or any interest hereunder, to any third party, except to one of
their Affiliates, without the advance written consent of the other Party.
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19. ENTIRE AGREEMENT
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This Agreement constitutes the final written expression of all terms of the
Agreement relating to the transactions described herein and a complete and
exclusive statement of those terms. This agreement supersedes all previous
communications, representations, agreements, promises or statements, either
oral or written, with respect to such transactions and no communications,
representations, agreements promises or statements of any kind made by any
representative of the Parties which are not stated herein, shall be
binding on a Party. No addition to or modificaton of any provision of this
Agreement will be binding unless made in writing and signed by an
authorized representative. No course of dealing or usage of trade or course
of performance will be deemed relevant to explain or supplement any term
expressed in this Agreement.
20. GOVERNING LAW
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This Agreement shall be governed by the Italian Law.
21. ARBITRATION
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21.1. All disputes between the Parties arising out of or in relation to
this Agreement (including any questions as to the validity and
enforceability of this arbitration clause), shall be exclusively and
finally resolved through arbitration in compliance with the law and in
accordance with the Arbitration Rules of the International Chamber of
Commerce by three arbitrators, the first of whom shall be appointed by
the Party initiating the arbitration proceedings simultaneously with
its demand of arbitration, the second of whom shall be appointed by
the other Party within 15 (fifteen) days from the date on which it
received notice of the demand for arbitration, and the third of whom
(who shall act as Chairman of the Arbitration Panel) will be
designated by agreement of the first two arbitrators within 20
(twenty) days from the appointment of the second arbitrator or,
falling such
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agreement, by the Court of Arbitration of the International Chamber of
Commerce of Paris acting as appointing authority for purposes of such
Rules. Such Court shall also designate the second arbitrator (or any
arbitrator who may die, resign, or otherwise cease to be an
arbitrator) in the same manner, if the party required to make such
designation does not do so within the period indicated.
21.2. The arbitration proceedings shall take place in Paris, France, and
shall be conducted in the English language.
21.3. The expenses of the arbitration proceedings shall be borne by the
Parties in accordance with the determination of the Arbitration Panel.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their duly empowered representatives as follows, on February
19, 1998.
Autotote Systems, Inc. Sisal Sport Italia SpA
By :__________________ By:__________________
Name: Richard M.Weil Name: Giorgio Sandi
Title: Vice President Title: Managing Director