LICENSE AGREEMENT
THIS LICENSE AGREEMENT the ("Agreement"), entered into by and between
XXXXX X. XXXXXXX, XX. ("Owner") and TRANS WORLD GAMING CORP. ("TWG"), a
Nevada corporation having its principal place of business at Xxx Xxxx Xxxxx,
Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000-0000 ("Licensee") effective this 15th
day of April, 1997, determines the rights and obligations of the parties
hereto.
RECITALS
A. Simultaneously with the execution of this Agreement, Licensee has
acquired the sole proprietorship of Owner known as "Multiple Application
Tracking System, doing business as MATS of Colorado," which business
immediately upon closing shall be transferred in whole to Multiple
Application Tracking System, Inc. ("MATS"), which is wholly owned by Licensee.
B. Owner developed the Licensed Product and is also being employed as
President of MATS effective as of the date first above written.
C. Owner shall retain the right, title and interest in and to patents,
copyrights, trade secrets and know-how, related to the Licensed Product
unless and until Licensee pays One Million Four Hundred Thousand Dollars and
No/100 Cents ($1,400,000.00) in Royalties (hereinafter defined) to Owner
pursuant to the terms hereof, at which time all right, title and interest in
and to all copyrights, inventions, patents, trade secrets and know-how in the
Licensed Product shall revert and be transferred to Licensee.
NOW, THEREFORE, in consideration of the foregoing and the following
agreements and payments, the parties agree as follows:
AGREEMENT
1. DEFINITIONS. As used in this License Agreement, the following
definitions shall apply:
(a) "Copyright Transfer Payment" shall mean royalties of One
Million Four Hundred Thousand Dollars and No/100 Cents ($1,400,000.00) or
equivalent royalty payments to Owner pursuant to the terms hereof.
(b) "End User" shall mean any third party including, without
limitation, casinos and other gambling establishments which acquire the right
to use the Licensed Product or equipment utilizing the Licensed Software as
an end user.
(c) "Gross Revenue" shall mean all revenues generated by the sales
and service agreements of the Licensed Product and related equipment less any
returns, allowances, sales and use taxes, freight and insurance on freight,
sold equipment costs, discounts and uncollected receivables.
(d) "Licensed Documentation" shall mean all documentation, other
than the Licensed Software, related to the Licensed Software that is
identified on Exhibit B, attached hereto and made a part hereof.
(e) "Licensed Products" shall mean collectively the Licensed
Software (hereinafter defined) and Licensed Documentation.
(f) "Licensed Software" shall mean the software including, without
limitation, the copyrights (the "Copyrights") identified in Exhibit A,
attached hereto and made a part hereof, in object code and source code form,
in the form and content existing as of the date of this Agreement and all
trade secrets, updates, revisions and enhancements and know-how thereto
supplied by Owner or developed by Licensee or Owner prior to or during the
term hereof.
(g) "Reserved Assets" shall mean those assets retained by Owner
and not licensed to Licensee which are scheduled on attached Exhibit C.
2. LICENSE
(a) Owner hereby grants to Licensee and Licensee hereby accepts a
personal, exclusive, worldwide and non-transferable license to use, develop,
enhance, manufacture, market, distribute, demonstrate, sell and install the
Licensed Product to End Users during the term hereof subject to the terms and
conditions of this Agreement.
(b) Owner consents to sublicensing of this license without
restriction by Licensee to MATS, its wholly-owned subsidiary (for purposes of
this Agreement, upon notice to Owner of such sublicense from TWG to MATS,
MATS shall be deemed "Licensee" and execution by MATS of this Agreement shall
be deemed notice to Owner). Upon sublicensing, MATS shall agree in writing
to be bound by the terms of this Agreement. The execution hereof by MATS
shall constitute such agreement in writing. Any violation of this Agreement
by a sublicensee shall be deemed a violation by Licensee, except to the
extent caused by the act or omission of Owner.
3. ROYALTY.
(a) In consideration for the grant of the license set forth in
Section 2 above, Licensee agrees to pay to Owner a royalty equal to ten
percent (10%) of the annual Gross Revenues from the Licensed Product and
related equipment and services of MATS (the "Royalties"). At such time as
Royalties total Two Million Seven Hundred Fifty Thousand Dollars and No/100
Cents ($2,750,000.00) (the "Maximum Royalty") have been paid to Owner, (i)
this Agreement shall terminate without any further obligations to the
parties, (ii) no further Royalties shall be payable by Licensee to Owner, and
(iii) Licensee shall retain (as of payment equaling the Copyright Transfer
Payment) all right, title and interest in the Licensed Product pursuant to
Section 4 below.
(b) Royalties shall be estimated based upon actual collections of
Gross Revenue at the end of each calendar year and paid within forty-five
(45) days after year end.
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Adjustments shall be made upon Licensee's final audit and paid to Owner (in
the event of underpayment) within thirty (30) days of completion of audit or
returned to Licensee (in the event of overpayment) within a like period after
notice of adjustment.
4. TRANSFER OF COPYRIGHTS.
(a) Upon payment of Royalties equaling, in the aggregate during
the term hereof, of One Million Four Hundred Thousand Dollars and No/100
Cents ($1,400,000.00) (the "Copyright Transfer Payment"), Owner shall
transfer all right, title and interest in and to all copyrights including the
Copyrights, patents, trade secrets, inventions and know-how to the Licensed
Product to Licensee free and clear of all liens, encumbrances or
restrictions. Owner shall therefore have no ownership rights, or any
security interest, lien, encumbrance or the like in the Licensed Software,
Licensed Products or copyright (including, without limitation, the
Copyrights). Owner agrees to promptly execute any and all documents and take
any and all reasonable actions requested by Licensee to consummate such
transfer including, without limitation, the Copyright Assignment attached
hereto as Exhibit D and made a part hereof, or other equivalent instrument
and any necessary governmental filings Licensee may deem necessary,
convenient or advisable. Royalty payments shall continue to be paid after
the transfer set forth above until the Maximum Royalty obligation has been
paid.
(b) At any time during the term of this Agreement, or within
thirty (30) days after termination of this Agreement by any party, Licensee
may acquire the right, title and interest in and to all inventions, patents,
copyrights, trade secrets and know-how to the entire Licensed Products
including, without limitation, the Licensed Software and Copyrights by: (i)
electing to pay Owner the balance of the Copyright Transfer Fee, with credit
for previously paid Royalties; (ii) acknowledging Licensee's obligation to
continue making Royalty payments as provided in this Agreement; and (iii)
satisfying any obligations of Licensee under that certain Employment
Agreement of even date herewith between Owner (as employee of MATS) and MATS
as employer.
(c) Royalty payments shall continue notwithstanding transfer of
title and copyrights to Licensee up to the Maximum Royalty.
5. LICENSE FEES AND TAXES. The parties shall pay personal property
taxes, sales and use taxes, and excise taxes, if any, and all taxes based on
or in any way measured by this Agreement, the sale and marketing of the
Licensed Product, the Licensed Products or any portion thereof, or any
services related thereto (excluding only taxes based on the net income of
Owner which shall be owner's sole responsibility), as are customarily paid by
a licensor or licensee, as the case may be.
6. DUTIES OF LICENSEE.
(a) During the term hereof, Licensee shall market, demonstrate,
develop, distribute, sell and install the Licensed Product to End Users.
Licensee shall make such contributions of capital and other resources as it
may deem reasonable to support, develop and exploit the world wide market for
the Licensed Product.
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(b) During the term of this Agreement, Licensee shall maintain
accurate records, consistent with this Agreement and its current practices,
of all recipients of the Licensed Software, including all details of each
purchase, and shall make such records reasonably available to Owner for
inspection and copying during normal business hours upon reasonable advance
written notice.
(c) Each party shall promptly inform the other of any unauthorized
use by End Users or others of the Licensed Product or any portion thereof
when such party is made so aware, and shall assist the other party in the
enforcement of any rights it may have against such End Users or others.
(d) Except as otherwise set forth herein, Licensee shall not
pledge, encumber, assign, transfer or sublicense the Licensed Product or the
license granted by this Agreement without Owner's prior written consent which
may be withheld in Owner's sole discretion prior to transfer of ownership
pursuant to Section 4 above. Upon transfer of the Copyrights and title of
the Licensed Product and Licensed Software to Licensee, Licensee may pledge
or assign or license the Licensed Product subject to the obligations to
continue paying royalties as provided in this Agreement. Licensee may
sublicense the Licensed Product to MATS as set forth above.
(e) Except as otherwise set forth herein, Owner shall not pledge,
encumber, assign, transfer or sublicense the Licensed Product or the license
granted by this Agreement without Licensee's prior written consent which may
be withheld in Licensee's sole discretion.
7. TERM OF AGREEMENT AND LICENSE.
(a) Unless otherwise terminated or canceled as provided herein,
the term of this Agreement and the licenses granted hereunder shall commence
on the date first above written, and shall continue until canceled or
terminated pursuant to the terms hereof.
(b) The effective date of this Agreement shall be the date first
above written.
(c) If it has not already done so, Licensee may acquire the right,
title and interest in and to all patents; inventions; copyrights including
the Copyrights; trade secrets; and know-how to the Licensed Product including
the Licensed Software by notifying Owner in writing of its intent to do so
and making payment to Owner of the Copyright Transfer Payment at any time
prior to the termination hereof. In such event, Licensee shall continue to
pay the remaining Royalty balance up to the Maximum Royalty as provided by
this Agreement.
8. REPRODUCTION AND MODIFICATION OF LICENSED PRODUCT. Licensee may
manufacture, reproduce or modify the Licensed Product or any portion thereof
solely for the purpose of sale to End Users. Licensee shall own all right,
title and interest in any enhancement or modification that Licensee makes
during the term hereof.
9. WARRANTY. Owner represents and warrants to Licensee that Owner is the
sole owner of the Licensed Product, free and clear of any license, sublicense,
assignment, pledge, security interest, sale, encumbrance or restriction. Owner
further warrants to Licensee
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that Owner owns all the copyrights (including the Copyrights) to the Licensed
Product and the Licensed Software programs, free and clear of any license,
sublicense assignment, pledge, security interest, sale, encumbrance or
restriction. Owner warrants that the Licensee Software does not infringe
upon any other patent, copyright or other third party intellectual property
right. In the event any of the other Licensed Software or enhancement is
patented or copyrighted, such patents or copyrights are to be included in and
subject to this Agreement and the licenses granted hereby without further
obligation to Licensee.
10. PROPRIETARY RIGHTS INDEMNITY.
(a) Owner shall indemnify Licensee from and against all losses,
liabilities, expenses (including reasonable attorneys' fees) or for damages
suffered or incurred by Licensee for any untrue representation or breach of
any warranty or other provision hereof including, without limitation,
infringement of the Licensed Product or portion thereof including the
Licensed Software, Copyrights or any third party rights.
(b) Owner shall promptly inform Licensee of any unauthorized use
by End Users or others of the Licensed Product or any portion thereof and
shall assist Licensee in the enforcement of any rights of either party
against such End Users or others.
11. TERMINATION OR CANCELLATION.
(a) Either Party may terminate or cancel this Agreement by serving
written notice of termination to the other party upon the occurrence of any
of the following:
(1) Either party is in default of any provision hereof
including, without limitation, any representation, warranty or covenant, and
such default is not cured within thirty (30) days after receipt of written
notice thereof;
(2) Substantial cessation of the business of marketing the
Licensed Product;
(3) Either party become insolvent or seeks protection,
voluntarily or involuntarily, under any bankruptcy law;
(4) Either party makes an assignment of its business for the
benefit of creditors;
(5) Ether party is in default of any provision of the terms
of the Employment Agreement which is terminated pursuant to its terms;
(b) In the event of any termination or cancellation of this
Agreement, Owner may require Licensee to:
(1) Immediately destroy or return to Owner all copies of the
Licensed Product in Licensee's possession or control, at Owner's sole
discretion if Copyright Transfer
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Payment was not already made as of the termination date and Licensee has not
exercised its right to do so;
(2) Cease all further demonstration, marketing, distribution,
sale, installation and use of the Licensed Product if Copyright Transfer
Payment was not already made as of the termination date and Licensee has not
exercised its right to do so;
(c) In the event this Agreement is terminated for any reason,
Licensee shall pay Owner within thirty (30) days thereof all royalties
accruing through the date of termination.
(d) The foregoing rights and remedies of the parties shall be
cumulative and in addition to all other rights and remedies available to the
parties in law and in equity.
(e) Notwithstanding anything in this Agreement to the contrary,
upon any termination of this license or this Agreement, Licensee shall have
the right to acquire the title and copyright to the Licensed Product by
electing to pay the Copyright Transfer Payment and other arrangements
required at Section 4(b) of this Agreement. Licensee shall have access to
all Escrow Items held in Escrow.
12. GENERAL.
(a) Except to the extent that the parties have certain obligations
and rights under the Employment Agreement, this Agreement is the sole
agreement between the parties relating to the subject matter hereof and
supersedes all prior understandings, writings, proposals, representations or
communications, oral or written, of either party, except for the employment
agreement, which is separately enforced. This Agreement may be amended only
by an instrument executed by the authorized representatives of both parties.
(b) This Agreement shall be controlled by and interpreted in
accordance with the substantive laws (and not the law of conflicts) of the
State of New York as to all matters, including without limitation, matters of
validity, construction, effective, performance and remedies.
(c) Owner's right to royalty payments and the license granted or
created hereunder shall not be assigned or transferred to any other party
without the prior written consent of the other party, which consent may be
withheld at the party's sole discretion. In the event Owner consents to an
assignment or transfer of Licensee's rights hereunder, the assignee shall
assume all obligations of Licensee hereunder and shall execute any agreement
or other documentation as required by Owner to affect the assumption of such
obligations. Any assignment, transfer or assumption of Licensee's rights
hereunder shall not act as a release of Licensee's obligations hereunder
unless such release is expressly stated in a writing executed by Owner.
(d) The parties intend that all warranty and indemnification claims
hereunder be made as promptly as practicable by the party making the claim (the
"Claimant"). Whenever any such claim arises, the Claimant shall promptly notify
the other party, the "Indemnifying
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Party", of the claim and, when known, the facts constituting the basis for
such claim. When any such claim results from or is in connection with any
claim or legal proceedings of a third party, the notice to the Indemnifying
Party shall specify, if known, the amount or an estimate of the amount of the
liability arising therefrom. The Claimant shall not settle or comprise any
claim by a third party for which it is entitled to indemnification hereunder
without the prior written consent of the Indemnifying Party, which shall not
be unreasonably withheld. If the Indemnifying Party is of the opinion that
the Claimant is not entitled to indemnification, or is not entitled to
indemnification in the amount claims in such notice, it shall delivery,
within ten (10) business days after the receipt of such notice, a written
objection to such claim and written specifications in reasonable detail of
the aspects or details objected to and the grounds for such objection. if
the Indemnifying Party shall file timely written notice of objection to any
claim for indemnification, the validity and amount of such claim shall be
mediated. If timely notice of objection is not delivered or if a claim by
Claimant is admitted in writing by an Indemnifying Party, the Claimant, as a
nonexclusive remedy, shall have the right to set off the amount of such claim
or award against any amount yet owed, whether due or to become due, by the
Claimant or any subsidiary thereof to any Indemnifying Party by reason of
this Agreement or any agreement or arrangement or contract entered into at
the closing of the transaction which resulted in the grant of this License
Agreement.
(e) Nothing in this Agreement shall entitle any person or entity
(other than a party hereto and his, her or its respective successors and
assigns permitted hereby) to any claim, cause of action, remedy or right of
any kind.
(f) All notices, requests, demand and other communications
required or permitted hereunder shall be made in writing and shall be deemed
to have been duly given and effective: (i) on the date of delivery, if
delivered personally; (ii) on the earlier of the fourth (4th) day after
mailing or the date of the return receipt acknowledgment, if mailed, postage
prepared, by certified or registered mail, return receipt requested; or (iii)
on the date of transmission, if sent by facsimile, telecopy, telegraph, telex
or other similar telegraphic communications equipment:
If to Licensee: Trans World Gaming Corp.
Xxx Xxxx Xxxxx, Xxxxx 0000
Xxx Xxxx Xxx Xxxx 00000-0000
Attn: Xx. Xxxxxxxx Xxxxxxxxx
Fax: (000) 000-0000
with copy to:
Xxxxxxxxxxx Xxxxx & Xxxxxxxx
One Citicorp Center
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
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or to such other person or address as Licensee shall furnish to the other
parties hereto in writing in accordance with this subsection.
If to Owner: Xxxxx X. Xxxxxxx, Xx.
00000 Xxxx 0xx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
or such other person or address as Owner shall furnish to the other parties
hereto in writing in accordance with this subsection.
(g) This Agreement may be executed simultaneously in one or more
counter parts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(h) Owner and Licensee agree that failure to exercise or delay in
exercising any right, power, or privilege hereunder by either party shall not
operate as a waiver of any right, power or privilege. Owner and Licensee
further agree that no single or partial exercise of any right, power or
privilege hereunder shall preclude its further exercise.
(i) This provision shall be construed as applicable to the entire
Agreement.
(j) If any part of this Agreement is adjudged by any court of
competent jurisdiction to be invalid, that judgment shall not affect or
nullify the remainder of this Agreement and the effect shall be confined to
the part immediately involved in the controversy adjudged.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
OWNER:
/s/ Xxxxx X. Xxxxxxx, Xx.
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XXXXX X. XXXXXXX, XX.
LICENSEE:
TRANS WORLD GAMING CORP.
By: /s/ Xxxxxx Tottenham
-----------------------------------------------
Name: Xxxxxx Tottenham
Title: President and Chief Executive Officer
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SUBLICENSEE:
MULTIPLE APPLICATION
TRACKING SYSTEM, INC.
By: /s/ Xxxxxx Tottenham
-----------------------------------------------
Name: Xxxxxx Tottenham
Title: Chairman
ATTACHMENTS:
Exhibit A - Licensed Software
Exhibit B - Licensed Documentation
Exhibit C - Reserved Assets
Exhibit D - Copyright Assignment
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