GAME MANUFACTURER CASHLESS LICENSE AGREEMENT
Exhibit
10.1
GAME
MANUFACTURER CASHLESS LICENSE AGREEMENT
THIS
GAME MANUFACTURER CASHLESS LICENSE AGREEMENT
(hereinafter “Agreement”)
is
entered into this 1st day of October, 2006 (hereinafter “Effective
Date”)
by and
between IGT, a Nevada corporation, with principal offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, and WMS Gaming, Inc., a Delaware corporation, with
principal offices at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇.
WHEREAS
Licensor
(defined below) has authority to license certain intellectual property rights,
such rights being offered as an Intellectual Property Package (“IPP”)(defined
below);
WHEREAS
Licensee
(defined below) is desirous of obtaining a license to use the intellectual
property rights contained in the IPP; and
WHEREAS
Licensor
is desirous of granting Licensee a license to such IPP for use in connection
with, among other things, a Cashless Gaming System.
NOW
THEREFORE,
in
consideration of the foregoing, the covenants hereafter set forth, for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
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1.
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DEFINITIONS
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(1.1) “Affiliate”
means,
as to a particular party, any corporation or other business entity that directly
or indirectly Controls, is Controlled by, or is under common Control with a
party. “Control” means direct or indirect ownership of or other beneficial
interest in fifty percent (50%) or more of the voting stock, other vesting
interest, or income of a corporation or other business entity.
(1.2) “Cashless
Gaming System”
means
a
system employing tickets, coupons, tokens, cards or other instruments of
identification to add credits or funds to, or remove credits or funds from,
a
Gaming Machine in order to eliminate or reduce the use of government issued
bills and/or coins.
(1.3) “Gaming
Machine”
means
gaming machines, gaming devices, slot machines, video lottery terminals, and
the
like as set forth in NRS 463.0155, .0191, and all other relevant provisions
of
the Nevada Gaming Control Act (NRS Chapter 463), and comparable provisions
of
other jurisdictions where such machines, devices and terminals are legal,
including but not limited to Class II, Class III and casino style machines,
devices and terminals.
(1.4) “Intellectual
Property Package”
or
“IPP”
means
the patents set forth in Schedule A attached hereto, as well as any
continuations, continuations-in-part, divisionals, reissues, reexaminations,
and
foreign counterparts thereof.
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(1.5) “IPP
Parties”
means
owners of, or holders of the right to license, the patents comprising the IPP.
As of the Effective Date, the IPP Parties include IGT, International Game
Technology, Bally Technologies, Inc. and MGM Mirage.
(1.6) “License
Tag”
means
a
physical tag for which a License Fee is paid or payable, that will be provided
by Licensor for display on Royalty Bearing Products.
(1.7) “Licensed
Cashless Gaming System”
means
a
Cashless Gaming System that has been licensed under the IPP.
(1.8) “Licensor”
means
IGT.
(1.9) “Licensee”
means
WMS Gaming Inc. and any and all Affiliates of WMS Gaming Inc.
(1.10) “Royalty
Bearing Product”
means
a
Gaming Machine that either alone, or in connection with a Cashless Gaming
System, would, absent a license under this Agreement, infringe one or more
subsisting claims of any patent within the IPP and for which a License Fee
(as
defined below) is paid or payable to Licensor. [*]
*
Information has been omitted from this document and filed separately with the
Securities and Exchange Commission under a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
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[*]
(1.11) “Place,”
“Placed,” “Placement” (or any form of the word “Place”) means the provision of a
Gaming Machine by Licensee to a customer, whether by sale, lease, or otherwise.
(1.12) For
purposes of this agreement, references to the “United States” and “Canada” shall
include their respective possessions, protectorates and
territories.
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2.
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GRANT
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(2.1) Licensor
grants to Licensee a non-exclusive, non-transferable license, without the right
to sublicense, under the IPP to make, have made, use, offer to Place, Place,
have Placed, import, export, and otherwise dispose of Royalty Bearing Products
or components of Royalty Bearing Products. For each Placed Royalty Bearing
Product, Licensee agrees that it will incorporate those conditions set forth
in
Schedule B either verbatim or verbatim with formatting changes (unless otherwise
agreed upon in writing by the Parties) in at least one of (i) a blanket
acknowledgement signed by its customer and is enforceable for as long as it
is
relied upon to satisfy this condition, and (ii) the Placement agreement
associated with such Royalty Bearing Product; provided, however, that if
Licensee previously obtained from that customer a signed blanket acknowledgement
or signed agreement incorporating such blanket acknowledgement (which blanket
agreements must be enforceable for as long as it is relied upon to satisfy
this
condition) pursuant to the Cashless License Agreement of September 18, 2000,
then Licensee shall, to the extent commercially reasonable (e.g., upon entering
new or renewed master agreements with a customer), obtain an updated
acknowledgement consistent with Schedule B of this Agreement. All rights not
expressly granted by Licensor are hereby reserved.
(2.2) Unlicensed
Gaming Machines.
It is
understood and agreed between the parties that with regard to any Gaming Machine
for which a License Fee (defined below) is not paid by Licensee, that such
Gaming Machine is not licensed under the IPP and that this Agreement and license
granted herein does not extend to any such Gaming Machine. If Licensee fails
to
pay a License Fee for a Gaming Machine where a License Fee is otherwise required
(and does not cure such failure pursuant to Section 4.2) on the grounds that
a
Gaming Machine is not a Royalty Bearing Product (hereafter a “Disputed Product
Issue” - and each such Gaming Machine that is subject to the dispute that is
placed from the Effective Date through the date that the Disputed Product Issue
is decided in arbitration or subsequent legal proceeding as provided below,
being a “Disputed Product”), then Licensor shall have the right to submit the
Disputed
Product Issue to Dispute Resolution in accordance with Section 11.
[*]
*
Information has been omitted from this document and filed separately with the
Securities and Exchange Commission under a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
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If
Licensor submits the Disputed Product Issue to arbitration, then Licensee can
elect to put the License Fees for all Disputed Products into an escrow account
within thirty (30) days of written notice from Licensor of the Disputed Product
Issue and continue to fund such escrow account monthly within 10 days of the
end
of each month for all Disputed Products during the pendency of the arbitration.
If the Disputed Product Issue goes to arbitration and the arbitration panel
determines by a preponderance of the evidence that the Disputed Product is
a
Royalty Bearing Product, Licensee shall pay [*] the normal License Fee(s) for
the Disputed Products (which amount is equal to [*] the escrow amount provided
that the escrow is fully funded) within forty-five (45) days of receipt of
the
panel’s decision. If Licensee did not elect to put money into an escrow account
or does not, in fact, put such monies into said escrow account within the thirty
(30) days specified, including the monthly fundings, then Licensor shall have
the additional right to terminate this Agreement by providing written notice
to
Licensee within forty-five (45) days of the panel’s decision. If Licensee did
elect to escrow the License Fee(s) for the Disputed Products, and did, in fact,
fund such escrow pursuant to this paragraph, then no such termination right
in
favor of Licensor shall exist. If the arbitration panel determines by a
preponderance of the evidence that the Disputed Product is not a Royalty Bearing
Product, Licensor shall nonetheless have the right to bring a legal proceeding
regarding the Disputed Product Issue within ninety (90) days of the panel’s
decision. If there is a finding in such legal proceeding that the Disputed
Product is a Royalty Bearing Product (contrary to the determination of the
arbitration panel), Licensee shall pay [*] the normal License Fee(s) for the
Disputed Products (which amount is equal to [*]
the
escrow amount provided that the escrow is fully funded) within forty-five
(45)
days of such finding. If Licensee did not elect to put money into the escrow
account or did not actually fund such escrow pursuant to this paragraph and
continue with the monthly fundings within 10 days of the end of each month,
then
Licensor shall have the additional right to terminate this Agreement by
providing written notice to Licensee within forty-five (45) days of the panel’s
decision. If Licensee did elect to escrow the License Fee(s) for the Disputed
Products and did actually fund such escrow pursuant to this paragraph, then
no
such termination right in favor of Licensor shall exist. Licensee agrees that
the payment of [*] fees is reasonable and necessary as consideration for the
right to enter into such dispute resolution procedures because Licensor is
conceding and foregoing its normal right to terminate as opposed to arbitrate
such instances. The parties further acknowledge and agree that the arbitration
panel only has the authority to determine whether the Disputed Product is a
Royalty Bearing Product. In addition, such arbitration panel’s decision shall be
precedential as between the parties hereto for all future like Gaming Machines
Placed as were analyzed under that particular Disputed Product Issue, unless
a
legal proceeding was brought by Licensor, in which case, such legal proceeding
shall control. Any License Fee(s) for Disputed Products in the escrow account
shall be returned to Licensee if it is determined by the arbitration panel
that
the Disputed Product is not a Royalty Bearing Product, unless a legal proceeding
is timely brought by Licensor, in which case such legal proceeding shall control
whether the License Fee(s) for Disputed Products in the escrow account are
returned to Licensee. For the avoidance of doubt, Disputed Products are subject
to the [*] License Fees until the arbitration or legal proceeding is resolved.
However, after the arbitration or legal proceeding is resolved, Gaming Machines
containing the same issue that was resolved, which are Placed after the
resolution of the arbitration or legal proceeding, shall be subject to the
[*]
License Fees. In the event Licensee is involved in any infringement action
or
claim (e.g., arbitration) not arising under or related to the IPP or this
Agreement, Licensee shall not seek to introduce this Agreement or any drafts
thereof into evidence nor disclose the terms of this Agreement or tender copies
of this Agreement or any drafts to a third party, except to Licensee’s legal
counsel or advisors or as may be required by law, rule, regulation or in
connection with any court order, subpoena or valid process of law. In the event
that an arbitrator or judge makes a finding that a Gaming Machine is a Royalty
Bearing Product, the minimum damages for such finding are agreed to be pursuant
to Section 3.2 for each Gaming Machine.
*
Information has been omitted from this document and filed separately with the
Securities and Exchange Commission under a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
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(2.3) License
Limitations.
Licensee acknowledges and agrees that use of an unlicensed Gaming Machine with
a
licensed Cashless Gaming System or use of a Royalty Bearing Product with an
unlicensed Cashless Gaming System are both unlicensed uses and that no rights
or
license contained in this Agreement permits or licenses such use by them or
any
other person. Notwithstanding the foregoing, Licensee shall owe no additional
License Fee (as defined in Section 3.2) resulting from a particular Placement
of
a Royalty Bearing Product
once such License Fee has been paid pursuant to this Agreement.
*
Information has been omitted from this document and filed separately with the
Securities and Exchange Commission under a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
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(2.4) Responsibility
for Affiliates.
WMS
Gaming Inc. shall be responsible and liable for all acts of its Affiliates
with
respect to this Agreement.
(2.5) Release
and Settlement for Previously Placed Machines.
[*] Licensor hereby releases for itself, the IPP Parties, their Affiliates,
subsidiaries, predecessors, successors and assigns, and their respective
officers, owners, directors, shareholders, attorneys, insurers, agents and
employees (collectively the "Releasing Parties"), Licensee and any and all
of
its existing (as of the Effective Date) Affiliates, subsidiaries, predecessors,
and their respective parents, officers, directors, agents, owners, employees,
attorneys, licensors and insurers (collectively the "Released Parties"), from
any and all rights, claims, demands, causes of action, obligations, damages,
penalties, fees, costs (including reasonable attorneys' fees and costs),
expenses, and liabilities of any nature whatsoever which the Releasing Parties
have, had or may have had against the Released Parties, only in connection
with
any payments or failure to make payments under the Cashless License Agreement
of
September 18, 2000 (the “9/2000 Agreement”) and any infringement of the IPP by
Gaming Machines Placed prior to the Effective Date. For the avoidance of doubt,
this release does not cover any other rights, claims, demands, causes of action,
obligations, damages, penalties, fees, costs (including reasonable attorneys’
fees and costs), expenses and liabilities which the Releasing Parties have,
had
or may have had against the Released Parties for any other matter, and by way
of
example, does not release the Released Parties from its obligations to
incorporate the customer language in Schedule B under the 9/2000 Agreement
for
all Gaming Machines Placed prior to the Effective Date.
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3.
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LICENSE
FEES
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(3.1) [*]
(3.2) Computation
of License Fee.
Licensee agrees to pay license fees (“License Fee(s)”) to Licensor pursuant to
the schedule below for each Placed Royalty Bearing Product. Each
License Fee and Used Sale Price in the schedule shall be increased by [*]
relative to the schedule’s initial License Fee and initial Used Sale Price after
[*] years from the Effective Date; by [*] relative to the schedule’s initial
License Fee and initial Used Sale Price after [*] from the Effective Date;
by
[*] relative to the schedule’s initial License Fee and initial Used Sale Price
after [*] from the Effective Date; and so on until this Agreement expires or
terminates. Once a License Fee has been paid for a Royalty Bearing Product
that
has been placed with a customer by lease or participation, no additional License
Fee shall be owed upon sale of such Royalty Bearing Product to the same
customer; provided that any applicable Transfer Fee pursuant to Section 3.3
shall still apply.
*
Information has been omitted from this document and filed separately with the
Securities and Exchange Commission under a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
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[*]
(3.3) Transfer
Fee for Participation Games.
The
licenses granted hereunder for Royalty Bearing Products are granted only for
Royalty Bearing Products by single serial number at a single casino location.
Notwithstanding this, Licensee shall be permitted to move (from one casino
to
another) such Royalty Bearing Products that are continuously owned by Licensee
and rented or leased by Licensee for use at third party properties as
recurring-revenue products, provided that Licensee shall remit to Licensor,
in
addition to the initial License Fee, a Transfer Fee of [*] per such Royalty
Bearing Product [*]. A recurring-revenue Royalty Bearing Product is one which
Licensee places in casinos or other lawful gaming establishments on a
recurring-revenue model (e.g. lease or participation) and to which Licensee
retains, at all times, title and ownership.
(3.4) License
Tag.
Licensor shall provide to Licensee a License Tag to be affixed to each Royalty
Bearing Product. Licensee shall promptly affix the License Tag in close
proximity to the serial number tag on the specified Royalty Bearing Product.
Licensee agrees not to affix a License Tag to any Gaming Machine for which
a
License Fee has not been accrued or paid and agrees to affix the supplied
License Tag only to the specified Royalty Bearing Product.
*
Information has been omitted from this document and filed separately with the
Securities and Exchange Commission under a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
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(3.5) Payment
and Reporting Schedule.
Licensee will pay all License Fees owed to Licensor within forty-five (45)
calendar days following the end of the calendar quarter in which the Royalty
Bearing Product was Placed with a third party. All License Fees in this
Agreement will be paid by Licensee to Licensor in United States dollars. Any
amount due Licensor hereunder that is not paid will thereafter bear interest
until paid at a rate per annum equal to twelve percent (12%). Within forty-five
(45) calendar days following the end of each calendar quarter, and at the same
time Licensee makes payment of the License Fees hereunder, Licensee shall
furnish to Licensor a full and complete statement, duly certified by an officer
of Licensee to be true and accurate, showing: (a) the number of Royalty Bearing
Products that Licensee Placed with third parties during the calendar quarter
in
question; (b) the serial number of each such Royalty Bearing Product; (c) the
customer that purchased, leased or received each Royalty Bearing Product; (d)
the property at which the Royalty Bearing Product is licensed; (e) the date
of
Placement or shipment of each Royalty Bearing Product, and (f) the amount of
License Fees due, including Transfer Fees.
Licensor
shall not terminate this Agreement for Licensee’s non-compliance with the
foregoing sentence if Licensee uses best efforts to comply with such sentence.
Licensee deems such reported information to be proprietary, and Licensor shall
only use such information for the purpose of enforcing its rights under this
Agreement and for no other purpose.
(3.6) Taxes.
License
Fees, and any other charges described in this Agreement, do not include federal,
state or local sales, use, property, excise, service, or similar taxes (“Taxes”)
now or hereafter levied, all of which shall be for Licensee’s account and shall
be paid by Licensee. If Licensor is required to pay Taxes as a result of this
license grant, Licensor shall invoice Licensee for such Taxes. Licensee hereby
agrees to indemnify and hold harmless Licensor for any Taxes and related costs,
interest and penalties paid or payable by Licensor. Licensee shall not be
required to indemnify or otherwise pay for any of Licensor’s income taxes from
Licensee’s payment of License Fees.
(3.7) Trials.
The
parties acknowledge that it is customary in the gaming industry for Gaming
Machines to be Placed on a trial basis, meaning that the customer has, for
a
limited time period, the right to return the machines and unwind the transaction
(“Trial Period”). For any Royalty Bearing Product Placed on such trial basis and
for which Licensee has not received any remuneration for such Placement, the
License Fee thereon shall be deemed to accrue upon Placement of such Royalty
Bearing Product; however, in the event that such Royalty Bearing Product is
returned by the customer to Licensee within the Trial Period, not to exceed
ninety (90) days, Licensee shall be entitled to a refund of the License Fee
from
Licensor.
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4.
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TERM
AND TERMINATION
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(4.1) Term.
Unless
terminated sooner in accordance with this Section, Section 7 or Section 8
below, the term of this Agreement will commence on the Effective Date and will
continue in full force and effect until all patents in the IPP have expired.
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(4.2) Termination.
If
either party breaches any of its obligations under this Agreement, and fails
to
cure such breach within sixty (60) days after receiving written notice from
non-breaching party specifying such breach, the non-breaching party may
terminate this Agreement; provided, however, that if after using commercially
reasonable efforts such breach could not be cured by the breaching party within
such sixty (60) day period, the cure period for such breach shall be extended
for an additional ninety (90) days (provided such breach is capable of cure
and
the breaching party continues to diligently pursue such cure using its best
efforts), unless otherwise agreed in writing. Further, if Licensee challenges
the validity or enforceability of the patents within the IPP in any legal or
administrative proceeding, or aids or assists in the prosecution of any such
challenge, Licensor may, at its option, immediately terminate this Agreement
by
providing written notice of said termination to Licensee. Notwithstanding the
termination of this Agreement for any reason, each Royalty Bearing Product
for
which a License Fee has been paid shall be licensed in perpetuity subject to
the
terms and conditions under which each was licensed.
(4.3) Customer
Rights Upon Termination.
The
termination of this Agreement for any reason shall not impair the right of
any
customer with which Royalty Bearing Products have been Placed prior to such
termination, provided Licensee has paid the License Fee and Transfer Fees,
as
applicable, to Licensor for such Royalty Bearing Products.
(4.4) No
Refund.
In the
event of termination of this Agreement for any reason, Licensor shall have
no
obligation to refund any amounts paid to it under this Agreement.
(4.5) Unpaid
Royalty.
In
addition to any other rights or remedies that Licensor may have, Licensor may,
at its option upon termination or expiration of this Agreement, compel Licensee
to pay any unpaid License Fee for any Royalty Bearing Product Placed by Licensee
during the term of the Agreement.
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5.
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PROPRIETARY
RIGHTS
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Licensee
acknowledges that ownership of and title in and to the patents listed in
Schedule A are and shall remain with the IPP Parties.
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6.
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WARRANTIES
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(6.1) General
Warranty.
Each
party represents and warrants that it has the right, power and authority to
enter into this Agreement and that the persons executing this Agreement have
the
authority to act for and to bind each respective party.
(6.2) Further
Warranty.
Licensor represents and warrants that the IPP Parties own or control the patents
listed in Schedule A and have authorized Licensor to grant the license described
herein.
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7.
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REGULATORY
LICENSES AND APPROVALS
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Performance
of this Agreement is contingent on any necessary initial and continuing licenses
and approvals from any regulatory authorities having jurisdiction over the
parties or the subject matter of this Agreement.
Each
party shall promptly apply to the appropriate regulatory authorities for any
licenses and approvals, if any, necessary for that party to perform under this
Agreement. Each shall diligently pursue its applications and pay all associated
costs and fees for its application, and shall otherwise cooperate with any
requests, inquiries, or investigations of any regulatory authorities or law
enforcement agencies in connection with each party, their affiliates, or this
Agreement. If any license or approval necessary for either party to perform
under this Agreement is denied, suspended, or revoked, this Agreement may be
terminated by the other party for cause pursuant to Section 4
hereof;
provided, however, that if the denial, suspension, or revocation affects
performance of the Agreement in part only, the parties may by mutual agreement
continue to perform under this Agreement to the extent it is unaffected by
the
denial, suspension, or revocation.
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8.
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COMPLIANCE
PROGRAM
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The
Licensor and Licensee conduct business in a highly regulated industry under
privileged licenses issued by gaming regulatory authorities both domestic and
international. The Licensor and Licensee maintain compliance programs that
have
been established to protect and preserve the name, reputation, integrity, and
good will of the Licensor and Licensee and to monitor compliance with the
requirements established by gaming regulatory authorities in various
jurisdictions around the world. Performance of this Agreement is contingent
upon
the following:
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a)
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Any
necessary initial and continuing approvals and/or licenses required
by any
regulatory agency with jurisdiction over the Licensor, Licensee,
or the
subject matter of this Agreement. Both the Licensor and the Licensee
agree
to cooperate with requests, inquiries, or investigations of any gaming
regulatory authorities or law enforcement agencies in connection
with the
performance of this Agreement, including the disclosure of information
to
gaming regulatory agencies that would otherwise be considered confidential
under other sections of this Agreement. If any approval and/or license
necessary for performance of this Agreement is denied, suspended,
or
revoked, this Agreement shall terminate immediately and neither party
shall have any additional rights hereunder; provided, however, that
if the
denial, suspension, or revocation affects performance of this Agreement
in
part only, the parties may by mutual agreement continue to perform
under
this agreement to the extent it is not affected by the denial, suspension,
or revocation;
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b)
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The
continued suitability of the Licensor and Licensee in jurisdictions
throughout the term of this Agreement. The Licensor and
Licensee agree
to fully cooperate and provide each other with any information reasonably
necessary in order to determine the continued suitability of the
other
party throughout the term of this Agreement.
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c)
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The
continued approval by the Vice President of Compliance of the Licensor,
the Licensor’s Compliance Committee, the Director of Compliance of the
Licensee, or the Licensee’s Compliance Committee. Either
party may terminate this agreement in the event that either party
discovers facts with respect to the other party or this Agreement
that
would, in the reasonable opinion of that party, jeopardize the gaming
licenses, permits or status of that party or any of its affiliates,
with
any gaming regulatory agency or similar regulatory or law enforcement
authority (“Regulatory Development”). If reasonable and appropriate, the
parties may provide notice of, and attempt to resolve, any problems
and
concerns relating to such Regulatory Development providing a reasonable
timeframe to comment on and take action to cure the basis for said
Regulatory Development. If such Regulatory Development is not cured
to
either party’s satisfaction, such that a reasonable risk remains that
jeopardizes the status of either party with any gaming regulatory
authority, either party may terminate this Agreement
immediately.
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d)
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The
Agreement cannot be transferred or assigned by the Licensee, except
to an
Affiliate, without
prior notice to the Licensor and the successful completion of a background
due diligence investigation of the transferee/assignee prior to the
transfer or assignment of the Agreement by the Licensee. Prior notice
must
also be provided to the Licensor of any proposed material change
in
ownership of the Licensee and the successful completion of a background
due diligence investigation of the proposed new owner must occur
prior to
the change in ownership.
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9.
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DISCLAIMER
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LICENSOR
EXPRESSLY DISCLAIMS ALL, AND LICENSEE ACKNOWLEDGES AND AGREES THAT THERE ARE
NO
WARRANTIES, GUARANTEES, CONDITIONS, COVENANTS OR REPRESENTATIONS BY LICENSOR
OR
THE IPP PARTIES AS TO MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NON-INFRINGEMENT OR OTHER ATTRIBUTES, WHETHER EXPRESS OR IMPLIED (IN LAW OR
IN
FACT), ORAL OR WRITTEN.
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10.
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RETENTION
OF RECORDS AND AUDIT
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(10.1) Records.
Licensee shall keep at Licensee’s principal office for the term of [*] from the
date created, full and accurate books of account and copies of all documents
and
other materials
relating to this Agreement, including, but not limited to all Placement
agreements of Royalty Bearing Products. Notwithstanding the foregoing, any
documents and other materials that are the subject of an audit pursuant to
Section 10.2 shall be retained until such audit is
completed.
*
Information has been omitted from this document and filed separately with the
Securities and Exchange Commission under a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
-11-
(10.2) Audit.
Licensee agrees to keep true and accurate records for the purpose of making
the
reports described in Section 3.5 of the Agreement. Licensor shall have the
right, not exercisable more than [*] per [*], to nominate a certified public
accountant (“auditor”) acceptable to and approved by Licensee, which approval
shall not be unreasonably withheld, who shall have access to the records of
Licensee during reasonable business hours for the purpose of verifying
compliance with the reporting obligations set forth in Section 3.5 as well
as such other books and records as are reasonably required to verify Licensee’s
compliance with all of the terms and conditions of this Agreement. Licensor
shall provide Licensee with no less than sixty (60) days written notice of
its
intent to audit the Licensee’s books and records as provided under this
Agreement, and Licensee shall be ready for such audit. Such notice shall
indicate the period to be audited, the identity of the auditor and the proposed
scope for the audit. The auditor shall only disclose to Licensor
information necessary to determine Licensees compliance with the terms and
conditions of this Agreement. If any audit or examination of Licensee’s books
and records reveals that Licensee has failed properly to account for and pay
Licensee Fees owing to Licensor hereunder, such owed amount will bear interest
until paid at a rate per annum equal to twelve percent (12%). If the unpaid
amount exceeds the total amount reported under the reporting obligations set
forth in Section 3.5 by [*] or more in any given year under the Agreement,
Licensee will reimburse Licensor for [*].
(10.3) Licensee’s
books and records pertaining to any particular royalty report may be examined
as
aforesaid only within [*] after the date rendered and Licensee shall have no
obligation to permit Licensor to so examine such books and records relating
to
any particular royalty report more than once for any one report, unless in
connection with a civil action filed by Licensor against Licensee.
(10.4) Licensor
shall be deemed to have consented to all royalty reports and all other
accountings rendered by Licensee hereunder and each such royalty report or
other
accounting shall be conclusive, final, and binding, shall constitute an account
stated, and shall not be subject to any questions for any reason whatsoever
unless specific objection in writing, stating the basis thereof, is given by
Licensor to Licensee within [*] after the date rendered.
*
Information has been omitted from this document and filed separately with the
Securities and Exchange Commission under a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
-12-
|
11.
|
DISPUTE
RESOLUTION
|
(11.1) Discussions.
Prior
to either party commencing any proceeding against the other party to enforce
any
rights or seek any remedy arising out of any dispute under this Agreement,
the
parties shall attempt to resolve any dispute as set forth in this Section 11.1.
Any dispute between the parties shall first be referred to the principal
executives having responsibility for performance of this Agreement. Such
executives will attempt in good faith promptly to resolve such dispute. If
such
dispute is not resolved within ten (10) days of written notice to the other
party of the existence of such dispute, the dispute shall be referred to senior
executives of Licensor and Licensee, who will attempt in good faith to promptly
resolve such dispute. If the dispute is not resolved within twenty (20) days
of
being so referred, the parties may institute legal proceedings except that
the
Disputed Product Issue referenced in Section 2.2 shall first be resolved using
arbitration as provided for in that Section 2.2 using the procedures outlined
in
this Section 11. This Section 11.1 shall not survive a change in Control of
Licensee.
(11.2) Arbitration.
If the
Disputed Product Issue cannot be resolved in the discussions provided for in
Section 11.1, then it shall be resolved through arbitration. Arbitration shall
be conducted under the then current rules and procedures of the American
Arbitration Association (AAA), except to the extent the provisions of this
Agreement provide otherwise.
(11.3) Panel.
The
arbitration shall be heard and determined by a panel of three arbitrators,
all
of which must be approved by the parties. Such arbitrators shall be patent
attorneys registered to practice before the U.S. Patent and Trademark Office
and
experienced in evaluating patent infringement.
(11.4) Expedited
Schedule.
The
arbitration shall be conducted such that the arbitration panel renders a
decision on the Disputed Product Issue within six (6) months after the parties
refer the Disputed Product Issue to arbitration.
(11.5) Discovery.
The
parties shall be entitled to discovery of all document and information
reasonably necessary for a full understanding of the Disputed Product Issue.
The
parties may use all methods of discovery available under the United States
Federal Rules of Civil Procedure, including depositions, requests for admission
and requests for production of documents. The time periods applicable to such
discovery methods shall be set by the panel so as to permit compliance with
the
expedited schedule of Section 11.4.
(11.6) Arbitration
Venue.
The
location of any arbitration that occurs pursuant to this Agreement shall be
in
Nevada.
(11.7) Performance
During Arbitration.
Performance of each and every obligation and covenant under the Agreement shall
continue if reasonably possible during any disagreement or arbitration
proceedings.
-13-
(11.8) Prevailing
Party.
The
prevailing party in arbitration shall recover its reasonable attorneys fees
and
costs from the other party.
(11.9) Not
Admissible and No Effect on IPP rights.
The
panel’s findings and decision shall not be admissible as evidence in any other
legal or administrative proceeding and shall not affect the interpretation
and
scope of the patents within the IPP. Further, the panel’s findings and/or
decision shall not be disclosed by either party to a third party, except to
a
party’s legal counsel or advisors or as may be required by law, rule, regulation
or in connection with any court order, subpoena or valid process of law, without
the express prior written consent of the other party, provided however that
the
party asked to disclose the findings or decisions shall, under all
circumstances, promptly notify the other party so that the non-disclosing party
shall have the opportunity to seek a protective order, file a motion to quash,
or seek other appropriate remedy as applicable. The party being requested to
disclose shall cooperate with the other party with respect to its seeking of
a
protective order, motion to quash, etcetera.
|
12.
|
PATENT
MARKINGS
|
Licensee
shall affix to each Royalty Bearing Product a patent marking notice consistent
with 35 U.S.C. §287 that identifies all applicable patent numbers. Licensee also
agrees to ▇▇▇▇ all Royalty Bearing Products with any other applicable
proprietary legends as may be reasonably requested by Licensor to ensure that
the rights under the IPP are fully protected under all applicable laws.
|
13.
|
RELATIONSHIP
OF PARTIES
|
The
relationship between the parties under this Agreement is one of
licensor-licensee. Nothing in this Agreement shall be construed or interpreted
to create a relationship between Licensor and Licensee of partner, joint
venturer, principal and agent, or employer and employee.
|
14.
|
ASSIGNMENT
|
This
Agreement shall be binding on the parties and their respective successors and
assigns. However, Licensee may not assign this Agreement or any of its rights
or
duties hereunder without the prior written consent of the Licensor, in
Licensor’s sole discretion; provided, however, that if all or substantially all
the ownership interest in or business of Licensee is purchased by a third party,
or if Licensee merges with a third party, Licensor’s consent shall not be
required and the rights and obligations of the Licensee (subject to Section
11.1) shall inure to the third party or to the entity formed by the merger
with
the Licensee. If such third party is challenging or has challenged the validity
or enforceability of any of the patents within the IPP in a legal or
administrative proceeding pending at or before the time of the purchase or
acquisition, then Licensor shall have the right to terminate this Agreement.
At
Licensee’s written request, Licensor shall inform Licensee, within thirty (30)
days of receipt of Licensee’s written request, as to whether or not Licensor
intends to exercise such right to terminate. If, in response to Licensee’s
written request, Licensor informs Licensee that it does not intend to exercise
such right to terminate, then Licensor shall not be permitted to exercise the
termination right afforded in this Section 14.
-14-
|
15.
|
AMENDMENT/WAIVER
|
No
amendment or waiver of any term or condition of this Agreement will be valid
or
binding on a party unless the same has been mutually assented to in writing
by
both parties. The failure of a party to enforce at any time any of the
provisions of this Agreement, or the failure to require at any time performance
by the other party of any of the provisions of this Agreement, will in no way
be
construed to be a present or future waiver of such provisions, nor in any way
affect the ability of a party to enforce each and every provision
thereafter.
|
16.
|
GOVERNING
LAW
|
This
Agreement shall be deemed to be executed and performed in the State of Nevada
and shall be governed by and construed in accordance with the laws of the State
of Nevada, without regard to any conflicts of law provisions, as to all matters,
including, but not limited to, matters of validity, enforceability,
construction, effect and performance.
|
17.
|
SEVERABILITY
|
If
any
provision of this Agreement is found or held to be invalid or unenforceable,
the
meaning of said provision will be construed, to the extent feasible, so as
to
render the provision enforceable, and if no feasible interpretation shall save
such provision, it will be severed from the remainder of this Agreement, as
appropriate. The remainder of this Agreement shall remain in full force and
effect unless the severed provision is essential and material to the rights
or
benefits received by either party. In such event, the parties will use their
best efforts to negotiate, in good faith, a substitute, valid and enforceable
provision or agreement, which most nearly affects the parties’ intent in
entering into this Agreement, as appropriate.
|
18.
|
USE
OF PARTY’S NAME
|
The
parties to this Agreement shall not use the name of the other party in
publicity, advertising or similar activity without obtaining the prior written
consent of the other party, which shall not be unreasonably
withheld.
|
19.
|
CONFIDENTIALITY
OF AGREEMENT.
|
Each
Party shall maintain the terms and conditions of this Agreement in confidence
and shall not disclose, confirm or otherwise discuss such with any third party,
except as may be necessary to their respective accountants, Affiliates, legal
counsel, tax advisors, insurance carriers, bankers, gaming jurisdiction
regulators, and IPP Parties; or as may be otherwise required by law, rule,
or regulation; or as may be required in connection with any court order,
subpoena or valid process of law. Information regarding this Agreement that,
through no fault of either Party, has either been disclosed publicly or becomes
available from a source without obligation of confidentiality shall not be
considered confidential.
-15-
|
20.
|
COUNTERPARTS
|
This
Agreement may be signed in two counterparts, each of which shall be deemed
an
original and which shall together constitute one Agreement.
*
* * *
*
IN
WITNESS WHEREOF,
the
parties have caused this Agreement to be executed by their duly authorized
officers or representatives.
|
LICENSEE
|
LICENSOR
|
|
|
By:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
|
By:
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
|
|
|
Name:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
|
Name:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
|
|
|
Title:
Executive
Vice President and Chief
Operating Officer
|
Title: IPP Licensing Agent | |
| Date: 9/26/06 | Date: 9/27/06 | |
-16-
SCHEDULE
A
This
Schedule A is intended to show the applicable patents and patent applications
of
the IPP, but it may have errors or omissions, which errors or omissions are
not
being represented or warranted by the IPP Parties. This Schedule A is subject
to
further modification.
|
▇▇▇▇▇▇▇▇▇
et al.
|
5,265,874
|
11/30/1993
|
United
States
|
Cashless
Gaming Apparatus Method
|
|
▇▇▇▇▇▇▇▇▇
et al.
|
BRPI9303372-9
|
8/12/1993
|
Brazil
|
Aparelho
e processo para jogar um jogo
|
|
▇▇▇▇▇▇▇▇▇
et al.
|
▇▇▇▇▇▇▇▇▇
|
5/11/1999
|
Canada
|
Cashless
Gaming Apparatus Method
|
|
▇▇▇▇▇▇▇▇▇
et al.
|
JP216151/93
|
4/4/1995
|
Japan
|
Cashless
game play system and its method
|
|
▇▇▇▇▇▇▇
et al.
|
5,290,033
|
3/1/1993
|
United
States
|
Gaming
Machine and Coupons
|
|
▇▇▇▇▇▇▇
et al.
|
CA2150723
|
5/16/2004
|
Canada
|
Gaming
Machine and Coupons
|
|
Raven
|
5,429,361
|
7/4/1995
|
United
States
|
Gaming
machine information communication and display system
|
|
Raven
|
AT0146617
|
1/15/1997
|
Austria
|
INFORMATIONS-,
KOMMUNIKATIONS- UND ANZEIGESYSTEM FUER SPIELAUTOMATEN
|
|
Raven
|
AU664384
|
8/19/2001
|
Australia
|
Gaming
machine information, communication and display system
|
|
Raven
|
CA2078936
|
9/23/1992
|
Canada
|
Gaming
machine information communication and display system
|
|
Raven
|
DE69216029
|
5/19/2005
|
Germany
|
Informations-,
Kommunikations- und Anzeigesystem für Spielautomaten
|
|
Raven
|
EP534718
|
9/8/2004
|
EPO
|
Gaming
machine information, communication and display system
|
|
Raven
|
3/1/2005
|
Spain
|
SISTEMA
DE INFORMACION, COMUNICACIONES Y VISUALIZACION PARA MAQUINAS ▇▇
▇▇▇▇.
|
|
|
Raven
|
GR3022859T
|
6/30/1997
|
Greece
|
GAMING
MACHINE INFORMATION, COMMUNICATION AND DISPLAY SYSTEM
|
|
Raven
|
JP7024144
|
1/27/1995
|
Japan
|
GAME
MACHINE INFORMATION, COMMUNICATION, AND DISPLAY SYSTEM
|
|
Raven
|
NZ0244274
|
12/21/1995
|
New
Zealand
|
CASHLESS
GAMING: CENTRAL CONTROLLER AND TERMINALS
|
|
Raven
|
ZA9207244
|
8/7/1993
|
South
Africa
|
GAMING
MACHINE INFORMATION, COMMUNICATION AND DISPLAY
SYSTEM.
|
-▇▇-
|
▇▇▇▇▇▇▇▇▇
|
▇,▇▇▇,▇▇▇
|
▇▇/▇▇/▇▇▇▇
|
▇▇▇▇▇▇
▇▇▇▇▇▇
|
Game
machine information communication and display system
|
|
LeStrange
|
AT0173851
|
12/15/1998
|
Austria
|
SYSTEM
ZUM ABRECHNEN UND UEBERWACHEN EINES SPIELAUTOMATEN
|
|
LeStrange
|
AU702021
|
2/11/1999
|
Australia
|
GAME
MACHINE ACCOUNTING AND MONITORING SYSTEM
|
|
LeStrange
|
CA2151990
|
5/11/1999
|
Canada
|
Game
machine accounting and monitoring system
|
|
LeStrange
|
DE69506175D
|
4/15/1999
|
Germany
|
SYSTEM
ZUM ABRECHNEN UND UEBERWACHEN EINES SPIELAUTOMATEN
|
|
LeStrange
|
DK0688003
|
8/9/1999
|
Denmark
|
SYSTEM
TIL AFREGNING OG OVERVAAGNING AF EN SPILLEAUTOMAT
|
|
LeStrange
|
EP0688003
|
11/25/1998
|
EPO
|
Game
machine accounting and monitoring system
|
|
LeStrange
|
ES2124464
|
2/1/1999
|
Spain
|
SISTEMA
DE CONTABILIDAD Y MONITORIZACION PARA UNA MAQUINA DE
JUEGO.
|
|
LeStrange
|
HK1,012,107
|
3/24/200
|
Hong
Kong
|
GAME
MACHINE ACCOUNTING AND MONITORING SYSTEM
|
|
LeStrange
|
JP8,180,115
|
7/12/1996
|
Japan
|
ACCOUNTING
AND MONITORING SYSTEM FOR GAME MACHINE
|
|
LeStrange
|
NZ0272244
|
10/24/1997
|
New
Zealand
|
ACCOUNTING
AND DATA COLLECTION FOR A GAMING MACHINE
|
|
▇▇▇▇▇
et al.
|
6,048,269
|
4/11/2000
|
United
States
|
Coinless
Slot Machine System and Method
|
|
▇▇▇▇▇
et al.
|
▇▇▇▇▇▇▇▇▇
|
4/15/2000
|
Austria
|
SYSTEM
SOWIE VERFAHREN FUER MUENZLOSEN SPIELAUTOMATEN
|
|
▇▇▇▇▇
et al.
|
CA2132019
|
12/14/2004
|
Canada
|
Coinless
Slot Machine System and Method
|
|
▇▇▇▇▇
et al.
|
CA2458502
|
4/5/2005
|
Canada
|
Coinless
Slot Machine System and Method
|
|
▇▇▇▇▇
et al.
|
CA2458503
|
11/30/2004
|
Canada
|
Coinless
Slot Machine System and Method
|
|
▇▇▇▇▇
et al.
|
CA2459152
|
4/5/2005
|
Canada
|
Coinless
Slot Machine System and Method
|
|
▇▇▇▇▇
et al.
|
CA2479392
|
8/4/1994
|
Canada
|
CHANGE
STATION FOR PROVIDING CURRENCY
|
|
▇▇▇▇▇
et al.
|
DE69423555
|
11/9/2000
|
Germany
|
SYSTEM
SOWIE VERFAHREN FUER MUENZLOSEN SPIELAUTOMATEN
|
|
▇▇▇▇▇
et al.
|
639,998
|
3/22/2000
|
Great
Britain
|
Coinless
Slot Machine System and Method
|
|
▇▇▇▇▇
et al.
|
639,998
|
3/22/2000
|
EPO
|
COINLESS
SLOT MACHINE SYSTEM AND METHOD
|
-18-
|
▇▇▇▇▇
et al.
|
639,998
|
3/22/2000
|
Ireland
|
Coinless
Slot Machine System and Method
|
|
▇▇▇▇▇
et al.
|
ES2073387
|
8/16/1995
|
Spain
|
SISTEMA
Y METODO PARA MAQUINA TRAGAPERRAS SIN MONEDAS.
|
|
▇▇▇▇▇
et al.
|
GR95300045
|
7/31/1995
|
Greece
|
COINLESS
SLOT MACHINE SYSTEM AND METHOD.
|
|
▇▇▇▇▇
et al.
|
JP2002-127610
|
2/25/2003
|
Japan
|
Coinless
Slot Machine System and Method
|
|
▇▇▇▇▇
et al.
|
6,729,957
|
5/4/2004
|
United
States
|
Gaming
method and host computer with ticket-in/ticket-out
capability
|
|
▇▇▇▇▇
et al.
|
10/838,461
|
1/27/2005
|
United
States
|
Slot
machine with ticket-in/ticket-out capability
|
|
▇▇▇▇▇
et al.
|
6,736,725
|
5/18/2004
|
United
States
|
Gaming
method and host computer with ticket-in/ticket-out
capability
|
|
▇▇▇▇▇
et al.
|
6,729,958
|
5/4/2004
|
United
States
|
Gaming
system with ticket-in/ticket-out
capability
|
-19-
SCHEDULE
B
Each
gaming machine obtained hereunder with cashless capability (a “Licensed Cashless
Gaming Machine”) is provided under a limited license to one or more of the
following U.S. Patent Nos. 5,290,033; 5,265,874; 5,429,361; 5,470,079;
6,048,269; 6,729,957; 6,729,958 and 6,736,725. Any use of a Licensed Cashless
Gaming Machine constitutes the acknowledgement of and agreement to the following
“Limited
License”:
|
1.
|
Licensed
Cashless Gaming Machine License Rights.
Licensed Cashless Gaming Machines are licensed for use solely in
connection with a cashless gaming system that is separately licensed
under
these patents (a “Licensed Cashless Gaming System”). The use of a Licensed
Cashless Gaming Machine with an unlicensed gaming system that has
cashless
capability is an unlicensed use.
|
|
2.
|
Other
License Limitations.
Each Limited License is expressly limited to the original Licensed
Cashless Gaming Machine (i.e.,
one serial number per license) and personal to the Customer. A license
may
not be transferred from one gaming machine to another or from one
Customer
(e.g.,
casino) to another. Any unauthorized transfer voids this
license.
|
|
3.
|
Permitted
Transfers to Affiliated Properties for gaming machines.
Upon payment of a transfer fee (which fee is $50 per gaming machine
per
transfer - and is subject to change), a Customer may obtain authorization
to transfer a Licensed Cashless Gaming Machine between Affiliated
Properties by obtaining a transfer authorization certificate from
IGT. For
purposes of this Limited License, Affiliated Properties are properties
with a common owner who has a majority interest in both properties.
|
-20-