EXHIBIT 10.2
FORM OF
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (the "AGREEMENT") is made and entered into effective as
of March ___, 2002 (the "EFFECTIVE DATE"), by and between Coinless Systems,
Inc., a Nevada corporation having its principal place of business at 0000 X.
Xxxxxxx Xxxx, Xxx Xxxxx, Xxxxxx 00000 ("LICENSOR"), and a Nevada Corporation,
having its principal place of business at ("LICENSEE").
RECITALS
A. Licensor is in the business of, among other things, developing associated
equipment for use in the casino and gaming industry. Licensor is the holder of
United States Patents No. 6,012,832 and No. 6,340,331, Cashless Peripheral
Device for a Gaming System, issued January 11, 2000 (the "LICENSED PATENTS").
B. Licensee is in the business of, among other things, manufacturing and selling
products for use in the casino and gaming industry.
C. Licensee wishes to license from Licensor rights under the Licensed Patents
and Licensor is willing to grant such rights, upon the terms and subject to the
conditions set forth in this Agreement
NOW, THEREFORE, in consideration of the mutual promises set forth in this
Agreement, Licensor and Licensee agree as follows:
AGREEMENT
1. DEFINITIONS. In this Agreement (unless the context otherwise requires), the
following expressions shall have the following meanings:
1.2 "AFFILIATE" means an incorporated or unincorporated entity,
wherever organized, which controls, is controlled by or is under common control
with Licensor or Licensee as the context of usage indicates. For this purpose,
"control" means the direct or indirect legal, equitable or factual power to
select a majority of the members of, or otherwise to direct the decisions made
by, the directors or other governing authorities of an organization (determined
without regard to events of default of fiduciary obligations which might limit
or restrict exercise of such power).
1.3 "AGREEMENT" means this document, including any amendments hereto
that are made by written instrument executed by or on behalf of both parties.
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1.4 "BACKGROUND INTELLECTUAL PROPERTY RIGHTS" means those intellectual
property rights which vest in, belong to and are the exclusive property of the
Licensee as evidenced by written documentation at the date of this Agreement.
1.5 "FOREIGN COUNTERPARTS" means foreign applications or issued foreign
patents, which claim priority from, or share common priority with, an identified
United States patent or patent application, and the inventions covered thereby.
1.6 "LICENSED EQUIPMENT" means printers and printer systems which
incorporate a cashless peripheral device and are connected to a gaming system
which if made, used, offered for sale or sold in the absence of the license
granted in this Agreement would infringe the Licensed Patents.
1.7. "PATENT RIGHTS" means rights in and to inventions, methods and
devices which are described and claimed in the Licensed Patents and all Foreign
Counterparts of the Licensed Patents, or described and claimed in any
reexaminations, reissues, renewals or extensions of any of the foregoing.
1.8 "VALID CLAIM" means a claim of an issued patent that has not been
held or declared invalid, unpatentable or unenforceable by the United States
Patent and Trademark Office, a foreign patent office, or a court of competent
jurisdiction from which no appeal can be or has been taken.
2. PATENT LICENSE.
2.1 GRANT. Licensor hereby grants to Licensee and its Affiliates during
the term of this Agreement the non-exclusive right and license in and to the
Patent Rights to make, have made, use, offer for sale, sell, have sold and
otherwise dispose of Licensed Equipment for use in the casino and gaming
industry to only slot manufacturers who have signed a licensing agreement with
Licensor.
2.2 IMPROVEMENTS. Licensee shall have the right, in its own discretion,
to make improvements to the Patent Rights for its own use subject to the terms
of this Agreement. Licensee shall promptly disclose to Licensor all inventions
or improvements related to or concerning the Patent Rights. Licensor
acknowledges and agrees that title to all Background Intellectual Property
Rights and any improvements that are acquired or developed by Licensee which do
not incorporate any material part of the Licensed Patents will belong to and
remain with the Licensee. Conversely, Licensee agrees to assign, and hereby does
assign, inventions and improvements which rely on, were developed as a result
of, or otherwise incorporate any material part of the licensed patents.
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3. ROYALTIES.
3.1 AMOUNT. In consideration of the licenses granted under Section 2,
Licensee agrees to pay Licensor royalties at a rate of _____ dollars ($_______)
per unit of Licensed Equipment sold, leased or otherwise disposed of by Licensee
and its Affiliates during the term of this Agreement. Licensee's obligation to
pay royalties shall survive the termination of this Agreement with respect to
all units of Licensed Equipment sold, leased or otherwise disposed of during the
term of this Agreement.
3.2 PAYMENT. Royalties under Section 3.1 shall be due and payable to
Licensor by Licensee within 30 days after the last business day of each January,
April, July and October during the term of this Agreement with respect to all
royalties that accrued during the preceding calendar quarter. Provided, in
addition, that the first royalty payment hereunder shall include all royalties
with respect to sales, leases, or other transfers of Licensed Equipment made
since the Effective Date of this Agreement. Notwithstanding the foregoing,
except as otherwise provided in Section 8.6, all royalties with respect to
sales, leases or other transfers made prior to the date of termination of this
Agreement shall accrue on the date of termination and the final royalty payment
hereunder shall be due and payable on or before the thirtieth (30th) day after
the termination of this Agreement.
3.3 REPORTING. Each royalty payment shall be accompanied by a written
royalty report, which report shall set forth the following information for
Licensee: (i) the number and description of units of Licensed Equipment sold,
leased or otherwise disposed of during the applicable reporting period; and (ii)
the royalty payments due Licensor for the applicable reporting period. The first
such written royalty report shall include the foregoing information with respect
to all Licensed Equipment sold, leased or otherwise disposed of since the
Effective Date of this Agreement.
3.4 RECORDS. Licensee shall at all times keep accurate accounts and
maintain complete records of all Licensed Equipment manufactured and sold,
leased or otherwise disposed of by Licensee in sufficient detail to enable the
royalties payable hereunder to be properly ascertained. Licensee agrees that
Licensor's authorized accounting representative shall have the right to examine
and audit such records upon reasonable notice during normal business hours. In
the case of any dispute as to the sufficiency or accuracy of the records or the
amounts owed by Licensee, Licensor may have any independent certified public
accountant examine and certify such records. Licensee shall make prompt
adjustment to compensate for any errors or omissions disclosed by such an audit.
Any examination or audit performed shall be at Licensor's expense unless a
discrepancy greater than or equal to 5% is discovered.
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4. AGREEMENTS OF LICENSOR.
4.1 NO CONFLICT. Licensor shall not grant any right or license, and
shall not consent to any transfer of any right or license, that conflicts with
the rights and licenses granted to Licensee under this Agreement.
4.2 MAINTENANCE OF PATENT RIGHTS. Licensor shall, during the term of
this Agreement, act diligently at its own cost and expense to obtain, sustain,
reissue, reexamine or extend the Licensed Patents and any Foreign Counterparts,
so as to ensure that the protection provided thereby does not lapse. Failure on
the part of Licensor to maintain the Patent Rights, or should the patent Rights
terminate for any reason, Licensee shall have no further royalty or other
payments liability to Licensor except as provided in Section 8.2.
5. ENFORCEMENT OF PATENTS.
5.1 THIRD PARTY INFRINGEMENT. If Licensee discovers that the Patent
Rights are being infringed by a third-party, it shall promptly communicate the
details to Licensor. Licensor shall have the right, but not the obligation, in
its sole discretion to take whatever action it deems necessary, including the
filing of lawsuits to terminate such infringement. Licensee shall reasonably
cooperate with Licensor if Licensor takes any such action. If Licensor recovers
any damages or compensation for any action it takes, Licensor shall retain 100%
of such damages. To the extent that Licensor is unable or refuses to terminate
an infringement of the Licensed Patents, Licensee shall have the right, in its
sole discretion, to take whatever action it deems appropriate to end such
infringement. In such event, Licensee shall be entitled to any damages or
compensation recovered. During the pendency of an action to terminate an
infringement, whether by Licensor or Licensee, Licensee's obligation to make
royalty payments shall be handled in accordance with Section 8.2.
5.2 MARKING. Licensee shall xxxx all units of Licensed Product with the
legend: Licensed Under US Patents # 6,012,832 and #6,340,331.
6. REPRESENTATIONS AND WARRANTIES.
6.1 BY LICENSOR.
6.1.1 Licensor warrants and represents that the execution and
delivery of this Agreement on behalf of Licensor, and Licensor's performance of
its obligations under this Agreement, have been duly authorized by all necessary
corporate action.
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6.1.2 Licensor warrants and represents that subject only to any
required governmental consents or approvals, Licensor's performance of its
obligations under this Agreement is not in conflict with, and will not result in
a breach of or constitute a default under, any other contract, instrument, rule
of law or order of any court or governmental agency to which Licensor is a party
or by which Licensor or its property is bound.
6.1.3 Licensor warrants that as at the date of its provision, the
Licensed Patents, and all necessary technical data to manufacture and implement
the Licensed Patents provided are complete and the then current version is
supplied by Licensor without alteration or update and, that Licensor has the
right to disclose the Licensed Patents, and all necessary technical data to
manufacture and implement the Licensed Patents.
6.1.4 If the technical data supplied by Licensor is shown not to
be correct or complete in the then current version, then Licensor shall
dispatch, free of charge and within ten (10) days notification by the Licensee
the correct and complete technical data.
6.1.5 Licensor warrants that with respect to the Licensed
Patents:
6.1.5.1 it has the right to license the Licensed Patents
to the Licensee in the manner contemplated by this Agreement;
6.1.5.2 Licensor, as of the Date of this Agreement, is not
infringing and in carrying out its duties under this Agreement, will not
infringe any non-patent intellectual property right of any third party and has
received no assertion of such infringement from any third party; and
6.1.5.3 Licensor, as of the Date of this Agreement, is not
infringing and, in carrying out its duties under this Agreement, will not
infringe any patent of any third party, and has received no assertion of such
infringement from any third party.
6.1.6 Licensor shall indemnify, defend and hold harmless Licensee
from and against any and all losses, expenses, claims, costs, liabilities and
charges arising from any claim, suit or proceeding brought against Licensee or
its customers, insofar as it is based on any infringement claim.
6.2 BY LICENSEE.
6.2.1 Licensee warrants and represents that the execution and
delivery of this Agreement on behalf of Licensee, and Licensee's performance of
its obligations under this Agreement, have been authorized by all necessary
corporate action.
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6.2.2. Licensee warrants and represents that subject only to any
required governmental consents or approvals, Licensee's performance of its
obligations under this Agreement is not in conflict with, and will not result in
a breach of or constitute a default under, any contract, instrument, rule of law
or order of any court or governmental agency to which Licensee is a party or by
which Licensee or its property is bound.
6.3 DISCLAIMER OF ALL OTHER WARRANTIES AND REPRESENTATIONS. The express
warranties and express representations, if any, set forth in this agreement are
in lieu of, and the parties disclaim any and all other warranties, conditions,
or representations (express or implied, oral or written), with respect to the
Patent Rights and licensed equipment or any part thereof, including any and all
implied warranties, merchantability, or fitness or suitability for any purpose
(whether or not the other party knows, has reason to know, has been advised, or
is otherwise in fact aware of any such purpose), whether alleged to arise by
law, by reason of custom or usage in the trade, or by course of dealing. In
addition, the parties expressly disclaim any warranty or representation to any
person other than Licensor or Licensee with respect to the subject matter
herein.
6.4 EXCLUSION OF INCIDENTAL AND CONSEQUENTIAL DAMAGES. Neither party
will be liable to the other party (nor to any person claiming rights derived
from the other party's rights) for consequential damages of any kind, including
lost profits, loss of business, or other economic damage, and including injury
to property, as a result of any breach of any warranty, representation or other
term of this Agreement or arising out of the Patent Rights, the Licensed
Equipment, or the subject matter of this Agreement, regardless of whether the
party liable or allegedly liable was advised, had other reason to know, or in
fact knew of the possibility thereof.
6.5 MAXIMUM AGGREGATE LIABILITY. In no event shall Licensor's aggregate
liability to Licensee (including liability to any person or persons whose claim
or claims are based on or derived from a right or rights claimed by Licensee),
with respect to any and all claims at any and all times arising from or related
to the subject matter of this Agreement, in contract, tort, or otherwise, exceed
the amount of three million dollars or of royalties received by Licensor,
whichever is greater.
7. GOVERNMENT APPROVALS AND REPORTING.
7.1 APPROVALS. Each party hereunder is responsible for obtaining any
consents or approvals from all governmental agencies, which are necessary for
its performance hereunder.
7.2 REGISTRATION OR REPORTING. If the terms of this Agreement are such
as to require or to make it appropriate that this Agreement, or any portion
hereof, be registered with or reported to any governmental agency having
jurisdiction in any country in which the Patent Rights are licensed hereunder,
Licensor will, promptly after execution of this Agreement and at the parties'
equally shared expense, undertake such registration or report. Licensor shall
comply with reasonable requests of Licensee in connection with such registration
or report. Prompt notice and appropriate verification of (i) the act of
registration or reporting; and (ii) any agency ruling resulting from such
registration or report, will be given by Licensor to Licensee.
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8. TERM OF THE AGREEMENT; DEFAULT AND TERMINATION.
8.1 TERM. The term of this Agreement shall be for a term of ten (10)
years. Notwithstanding the foregoing, upon the expiration, invalidation or
unenforceability of the Licensed Patent, this Agreement shall terminate and,
except as otherwise expressly provided in this Section 8, all licenses, rights
and privileges hereunder shall cease and terminate immediately.
8.2 EFFECT OF TERMINATION. Except as otherwise expressly provided in
this Section 8, all licenses, rights and privileges hereunder shall cease and
terminate immediately in the event of any termination or expiration of this
Agreement; provided, however, that no termination of this Agreement by
expiration or otherwise shall release Licensee from its duty and obligation to
pay all royalties on Licensed Equipment sold or otherwise disposed of by
Licensee and its Affiliates prior to the date of such expiration or termination.
8.3 TERMINATION ON BREACH. Upon the breach or default by either party
with respect to any term, condition or provision of this Agreement, the other
party shall have the right to terminate this Agreement upon sixty (60) days
written notice to the breaching or defaulting party. Said notice shall become
effective, and this Agreement shall terminate, on the sixtieth (60th) day after
the giving of such notice, unless all breaches and defaults specified in the
notice have been cured prior to that time.
8.4 TERMINATION ON CERTAIN EVENTS. Licensee shall have the right to
terminate this Agreement, effective immediately upon written notice of
termination to the Licensor, at any time after the filing by or against the
Licensor of any petition in bankruptcy which is not dismissed within one hundred
eighty (180) days; the filing by or against the Licensor of any petition seeking
judicial reorganization, readjustment or arrangement of its business under any
law relating to bankruptcy or insolvency which is not dismissed within one
hundred eighty (180) days; or the institution of any proceedings or passage of
any resolution for the liquidation or dissolution of the Licensor's business or
for termination of its organizational existence.
8.5 RIGHTS AFTER TERMINATION. Upon termination or expiration of this
Agreement, Licensee shall have the right to complete delivery of Licensed
Equipment on all binding commitments and to dispose of finished Licensed
Equipment units then on hand, provided that royalties are paid thereon within
thirty (30) days after such delivery or disposal.
8.6 SURVIVAL. Notwithstanding any other provision of this Section 8,
the provisions of Sections 3.1, 3.2, 3.3, 3.4, 6, 8.2, 8.5 and 9 shall survive
any termination of this Agreement to the degree necessary to permit their
complete fulfillment and discharge.
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9. MISCELLANEOUS.
9.1 ASSIGNMENT. This Agreement may be assigned or otherwise transferred
by Licensor or Licensee with the prior written consent of the other party, which
shall not be unreasonably withheld or delayed. Any attempted assignment or
transfer, by operation or law or otherwise, without such consent shall be void.
9.2 GOVERNING LAW. This Agreement is being delivered and is intended to
be performed in the State of Nevada, and shall be construed and enforced in
accordance with the laws of the State of Nevada. Any difference or dispute
arising out of or in connection with this Agreement shall be referred to
arbitration under the Rules of the American Arbitration Association by one or
more Arbitrators appointed in accordance with the Rules, such arbitration is to
be held in Xxxxx County, Nevada. The decision of the Arbitrator shall be final
and binding on the parties. The costs of such arbitration shall be borne as
determined by the Arbitrator.
9.3 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which shall
constitute one agreement, and a signature of any party to any counterpart shall
be deemed to be the signature to any and may be appended to any other
counterpart.
9.4 WAIVER. Any waiver of a right under this Agreement must be in
writing executed by or on behalf of the waiving party. Any waiver of a
particular default shall constitute a waiver of such default only and not of any
other default by the nonwaiving party (whether similar or dissimilar in nature).
Any waiver of a specific right or remedy under this Agreement shall constitute a
waiver of such right only and not of any other right or remedy of the waiving
party under this Agreement.
9.5 ENTIRE AGREEMENT. This Agreement contains the entire understanding
between the parties and supersedes any prior or contemporaneous understandings,
agreements, proposals and all other communications between the parties relating
to the subject matter of this Agreement, whether such be oral or written. This
Agreement may be amended only by a written instrument duly authorized and
executed by or on behalf of both Licensor and Licensee.
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9.6 SEVERABILITY. If any provision of this Agreement or the application
thereof to any person or circumstances shall, for any reason and to any extent,
be invalid or unenforceable, the remainder of this Agreement and the application
of such provision to other persons or circumstances shall not be affected
thereby, but rather shall be enforced to the greatest extent permitted by law.
9.7 NOTICES. Any notice required or desired to be given by a party
hereto in connection with or arising out of this Agreement shall be in writing
and, except as otherwise provided below, shall be deemed to have been given
either (i) when delivered by private courier service with receipt of delivery or
(ii) five (5) days after being deposited in certified or registered mail,
postage prepaid, to the parties at the address set forth below or at such other
address as a party may designate by written notice to the other party from time
to time:
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IF TO LICENSOR, TO: IF TO LICENSEE, TO:
COINLESS SYSTEMS, INC. COMPANY NAME
0000 X. Xxxxxxx Xx, Xxx 000 Xxxxxxx
Xxx Xxxxx, XX 00000
XXX.XXXXXXXXXXXXXXX.XXX
-----------------------
9.8 NO JOINT VENTURE. Nothing contained in this Agreement shall be
construed as creating a joint venture or partnership between the parties hereto.
Except as otherwise expressly provided, neither party is by virtue of this
Agreement authorized as an agent, employee or legal representative of the other
party, and their status is, and at all times will continue to be, that of
independent contractors with respect to each other. Neither party shall have, or
shall hold itself out as having, any power or authority to bind or commit the
other.
9.9 TRADEMARKS. No right is granted by this Agreement to either party
to use any registered or unregistered trademark or trade name of the other
party, except as expressly provided in Section 5.2.
9.10 PUBLICITY. Neither the existence of this Agreement nor its terms
shall be disclosed by either party without the prior written approval of the
other; provided, however, that either party may disclose on a confidential basis
the existence of this Agreement and such of its terms as necessary to any of its
bankers, investors (including prospective investors), investment bankers,
attorneys, accountants and the like for any reasonable business purpose.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives.
LICENSOR LICENSEE
COINLESS SYSTEMS, INC.
BY: /S/ Xxxxxx X. Xxxxxxxx BY:
------------------------ -----------------------------
Xxxxxx X. Xxxxxxxx
ITS: PRESIDENT/C.E.O. ITS:
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