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LICENSE AGREEMENT
THIS AGREEMENT is entered into as of the 16th day of March, 1995, by and
between THE UNITED STATES PLAYING CARD COMPANY, an Ohio corporation,
whose address is 0000 Xxxxx Xxxxxx, Xxxxxxxxxx, Xxxx 00000 (herein called
"USPCC") and SHARPS INTERNATIONAL, a Nevada limited partnership, whose address
is 000 X. Xxxxx Xxxxxx, Xxx Xxxxx, Xxxxxx 00000 (herein called "Sharps")
WITNESSETH:
WHEREAS, USPCC is engaged in the business of manufacturing,
producing and selling playing cards and has developed a sales force to market
its products;
WHEREAS, Sharps has exclusive rights in an improved playing
card design layout for playing the game referred to as "Blackjack" or
"Twenty-One" and has claims to patent rights (as described in U.S. Patent
Application Serial No. 08/165,302 filed December 9, 1993, entitled "Cards and
Methods for Playing Casino 21 or Blackjack"), copyrights, trademarks and
other proprietary information related thereto and described in Appendix A,
attached hereto and incorporated herein by reference (the "Proprietary
Information");
WHEREAS, Sharps desires to utilize the sales force
developed by USPCC to market products manufactured pursuant to a license of
the Proprietary Information, and USPCC desires to serve as a manufacturer and
distributor of playing cards which utilize the Proprietary Information;
NOW, THEREFORE, the parties agree as follows:
1. License and Manufacture.
(a) Sharps hereby grants to USPCC the right and license during
the term of this Agreement to manufacture and sell to the customers in the
sales territory set forth in this Agreement, decks of playing cards (as
described in Appendices A and B, attached hereto, and referred to herein as
the "Playing Cards") which utilize the Proprietary Information. USPCC agrees
to use the Proprietary Information only for the purposes set forth herein,
and will not disclose the Proprietary Information to any third party or use
it in any other manner without the prior written consent of Sharps.
(b) Notwithstanding Paragraph 1(a) hereof, USPCC acknowledges that the
Proprietary Information has been licensed to Gemaco, whose address is 000 X.
Xxxxx Xxxxxx, X.X. Xxx 000, Xxxxxxxxxxxx, Xxxxxxxx 00000, and that the
granting of such license by Sharps does not constitute a breach of the terms
of this Agreement and that the exclusivity is subject to the rights granted
to Gemaco.
2 Patent and Trademark Notices. Sharps will provide USPCC
with all appropriate patent and trademark notices. USPCC shall incorporate
such notices and Sharps' trademarks, as shown in Appendix C attached hereto,
into insert cards in each deck of Playing Cards. USPCC further agrees to
incorporate all patent and trademark notices into sales and promotional
materials produced by USPCC relating to the Playing Cards.
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3. Ownership. Sharps represents and warrants that the Proprietary
Information is not in the public domain, that is, members of the public may
not copy and exploit the Proprietary Information without authorization from
Sharps, that it is rightfully owned by Sharps, and that Sharps has the sole
and exclusive right to grant to USPCC this license. Sharps further
represents and warrants that incorporation of the Proprietary Information
into the manufacture, sale, advertising and distribution of the Playing Cards
will not by itself conflict with any agreement or commitment of Sharps nor
cause conflict with the rights of any third party. All applicable rights to
patents, copyrights, trademarks and trade secrets in the Proprietary
Information, and any improvements, enhancements and additional inventions
relating thereto, are and shall remain in Sharps.
4. Infringement.
(a) in the event a claim of infringement of a patent, copyright,
trademark, license or other proprietary right, which directly results from
incorporation of the Proprietary Information into the Playing Cards, is
brought against USPCC, USPCC agrees to inform Sharps by written notice as
soon as is practical and in any event within thirty (30) days. Sharps agrees
to defend at its own expense any such suits against USPCC, its officers,
employees and agents, and Sharps further agrees to indemnify and hold
harmless USPCC, its officers, employees and agents from any and all damages,
liability or expenses arising out of such claims of infringement of a patent,
copyright, trademark, license or other proprietary right which is directly
caused by use of the Proprietary Information in the Playing Cards.
(b) In the event of a claim of infringement against USPCC arising from
USPCC's use of the Proprietary Information, USPCC shall have the option to
terminate this Agreement upon delivery of written notice to Sharps.
(c) If, as a result of any claim of infringement of a patent,
copyright, trademark, license or other proprietary right which directly
results from incorporation of the Proprietary Information into the Playing
Cards, USPCC is temporarily restrained or enjoined from using the Proprietary
Information, USPCC can not be terminated pursuant to the terms of paragraph
14(b) hereof and no further royalties shall accrue while such temporary
restraining order or injunction is in effect, unless USPCC continues to sell
the Playing Cards utilizing the Proprietary Information, in which case
royalties shall continue. In the event a permanent, nonappealable,
injunction is granted enjoining USPCC from manufacturing and selling the
Playing Cards, this Agreement shall terminate upon the issuance of such
permanent injunction. The provisions of this Section shall apply only if the
infringement is caused directly by use of the Proprietary Information. USPCC
agrees to take any reasonable actions required to be taken if by taking such
action infringement can be avoided.
(d) USPCC agrees to inform Sharps by written notice as soon as
is practical, and in any event within thirty (30) days, of any party which
USPCC believes is using the Proprietary Information to manufacture and sell
playing cards without authorization from Sharps. Sharps shall have two (2)
months from receipt of the written notice to investigate the claim and either
stop the unauthorized use or take legal action to stop the unauthorized use.
If Sharps chooses not to bring an action against the unauthorized use, it
shall so notify USPCC in writing within thirty (30) days. If in USPCC's
reasonable judgment, such use by a third party materially impairs the
benefits accruing to USPCC hereunder, USPCC shall have the right to terminate
this Agreement after written notice to Sharps. If legal action is taken by
Sharps, and at the conclusion of the legal proceedings Sharps is unable to
stop said unauthorized use, USPCC shall have the right to terminate this
Agreement after written notice to Sharps.
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5. USPCC Licensure. Sharps agrees to disclose to USPCC the identity of
all partners of Sharps and all other information which USPCC is required to
disclose to any state regulatory agency, gaming jurisdiction or other body
which regulates the gaming industry and its suppliers. The parties agree
that if such disclosure reveals information which, in USPCC's judgment, would
subject USPCC to the loss of a state license or disqualification from doing
business in any state or gaming jurisdiction, then Sharps agrees to either
(a) reorganize to eliminate the partner whose background threatens USPCC's
state licensure/qualification; or (b) assign ownership of the Proprietary
Information to USPCC or another assignee which will not result in such loss
of license or disqualification. Following any such assignment, payment of
royalties hereunder by USPCC will be made to the assignee or other designee.
6. USPCC Design. USPCC shall provide Sharps with the appropriate copy
and art ("C-Prints") for use in designing the faces of the Playing Cards, but
Sharps acknowledges that such C-Prints constitute confidential, proprietary,
and copyrighted information and will not be used by Sharps for any other
purpose without the prior written consent of USPCC. Upon completion of the
work to design the faces of the Playing Cards, Sharps will immediately return
all C-Prints and any copies to USPCC. Further, upon termination of this
Agreement for any reason, Sharps will immediately remove all USPCC designs
from all computer memory and certify to USPCC in writing that it has done so.
7. Sales Territory. The territory for the license granted hereunder
shall be worldwide. The parties agree that there shall be no restrictions on
USPCC with respect to the types of customers to which USPCC may sell the
Playing Cards or the sales territory in which USPCC may offer the Playing
Cards.
8. Term. This Agreement shall commence upon the date it is executed by
both parties and shall remain in effect until terminated pursuant to the
terms of Paragraph 4, 9 or 14 hereof or until the term of any valid patent
for the Proprietary Information shall have expired or shall become invalid as
a result of a final, nonappealable judgment by a court of competent
jurisdiction. This Agreement and the rights of USPCC hereunder shall not be
modified, affected or terminated by reason of the insolvency, bankruptcy,
receivership, or assignment for the benefit of creditors of Sharps or by any
action or proceeding pertaining to the financial condition of Sharps.
9. Royalties.
(a) USPCC shall pay Sharps a royalty on the invoice for shipment of the
Playing Cards by USPCC in the amount of Four (4) Cents for each deck of
Playing Cards sold by USPCC. Sharps shall not be entitled to a royalty f or
any deck of Playing Cards which is returned to USPCC by the customer, and to
the extent that royalties have been paid to Sharps for returned decks, USPCC
shall be entitled to offset the amount of all such royalties paid on returned
decks against the next royalty payment due Sharps.
(b) In the event Sharps, U.S. Patent Application Serial No. 08/165,302
or any other patent application to the Proprietary Information is denied,
expires or is judicially determined to be invalid, and, in USPCC's reasonable
judgment, such denial, expiration, or invalidity materially impairs the
commercial benefits accruing to USPCC hereunder, USPCC shall have the right
to terminate this Agreement after written notice to Sharps. Any such
termination shall be without prejudice to Sharps' right to object to USPCC's
use of the Proprietary Information which is not the subject of the denial,
expiration or judicial declaration of invalidity referred to above.
(c) Sharps acknowledges that USPCC has, prior to the execution of this
Agreement, manufactured decks of playing cards to be used for "peeking"
purposes, and that the sale of any such decks of playing cards by USPCC
during the term of this Agreement is not part of this Agreement and shall not
result in any obligation on the part of USPCC to pay royalties to Sharps for
the sale of such playing cards, unless such playing cards are modified to use
the Proprietary Information.
10. Most Favored Royalty. Sharps agrees that the royalty rate specified
in Paragraph 9 shall be revised to match a more favorable rate granted to
Gemaco or any other licensee of the Proprietary Information while this
Agreement remains in effect.
11. Sales and Promotion. USPCC agrees that during the term of this
Agreement it will have its sales personnel make calls on customers to sell
and promote the Playing Cards and will use its best efforts to market the
Playing Cards.
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12. Payment of Royalties. USPCC shall pay Sharps the royalties due under
this Agreement within thirty (30) days after the end of each calendar quarter
(March 31, June 30, September 30, December 31) while this Agreement is in
effect. Each payment of royalties shall be accompanied by a written itemized
statement prepared by USPCC showing the number of decks of Playing Cards
invoiced and the amount of the royalties by account. Each listing shall show
the customer's name, the number of decks invoiced during the preceding
quarter, and the calculation of the royalty due. Sharps agrees to treat this
information as confidential, proprietary information of USPCC and further
agrees not to disclose this information to any other person, organization or
firm.
13. Audit.
(a) Sharps shall have the right, during regular business hours and with
reasonable notice, to hire an independent accounting firm to perform an audit
of USPCC's books and records not more than two (2) times per calendar year
while this Agreement is in effect to verify the accuracy of sales statements
provided and royalties paid to Sharps by USPCC; provided, however, that such
independent accounting firm shall not be allowed to disclose any of USPCC's
pricing information to Sharps which is revealed during such audit, and USPCC
may refuse to allow such audit to be performed until the independent
accounting firm retained by Sharps to perform such audit enters into a
nondisclosure agreement with USPCC agreeing to be bound by the restriction
set forth in this Paragraph.
(b) In the event that the audit reveals an underpayment by USPCC, then
USPCC shall, within ten (10) business days of Sharps providing notice of such
underpayment, pay to Sharps the amount of such underpayment. The fees and
costs incurred by Sharps in performing the audit shall be the
responsibility of Sharps, unless the audit reveals an underpayment by USPCC
in any calendar quarter of $1,000 or more, in which case the fees and costs
of the audit shall be paid by USPCC.
14. Termination. This Agreement may be terminated by either party
immediately upon written notice to the other party for cause. For purposes
of this Agreement, the parties agree that "cause" shall be defined as:
(a) material breach of any term or condition of this Agreement which is
not cured within ninety (90) calendar days after receipt of written notice
from the non-breaching party, except with respect to payment of royalties, in
which case USPCC shall have ten (10) business days to cure such default after
delivery of written notice by Sharps; or
(b) beginning July 1, 1995, failure of USPCC to sell 100,000 or more
decks of Playing cards in any calendar year.
15. Quality of Playing Cards. It is agreed by the parties that the
quality of the Playing Cards upon which the Proprietary Information will be
used will be the same as USPCC's BEE brand or ARISTOCRAT brand playing cards.
16. Inspection of Sales. USPCC agrees that, upon request of Sharps,
USPCC will either (i) ship to Sharps a sample card (joker) with a hole
drilled through the center, or (ii) make available for Sharps' inspection at
USPCC's facility in Cincinnati, Ohio, a sample deck with a hole drilled
through the center, for each different model of the Playing Cards which is
manufactured by USPCC.
17. Notices. All notices required to be sent under this Agreement shall
be sent by overnight delivery service or by certified or registered mail to
the addresses listed in the first paragraph of this Agreement, unless a party
notifies the other party in writing of any change of address. Notice shall
be effective upon receipt if delivered, and three (3) business days after
mailing if mailed.
18. Governing Law. This Agreement shall be construed under and in
accordance with the laws of the State of Nevada.
19. Entire Agreement. This Agreement constitutes the entire agreement of
Sharps and USPCC with respect to the subject matter of this Agreement. This
Agreement may only be modified in writing, signed by both parties.
20. Successors and Assigns. The license granted hereunder is and shall
be personal to USPCC and shall not be assignable by either party without the
prior written consent of the nonassigning party.
21. No Waiver. No waiver by either party of a breach or default
hereunder shall be deemed a waiver by such party of a subsequent breach or
default of a like or similar nature.
22. Severability. In the event any term or provision of this Agreement
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not effect any
other term or provision of this Agreement and shall be interpreted and
construed as if such term or provision, to the extent it shall have been held
to be invalid, illegal or unenforceable, had never been contained herein.
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23. Arbitration. Any claim, dispute or controversy arising out of or in
connection with or relating to the interpretation or enforcement of this
Agreement shall be settled, insofar as possible, by mutual consultation and
consent of the parties. If the parties are unable to resolve such claim,
dispute or controversy, then such claim, dispute or controversy shall be
submitted by the parties to arbitration by the American Arbitration
Association under the Commercial Arbitration Rules then in effect for that
Association. The arbitration award may be entered in any court having
competent jurisdiction with respect to this Agreement. The cost of such
arbitration shall be paid by the non-prevailing party unless otherwise
determined by the arbitrator or arbitrators.
THIS LICENSE AGREEMENT CONTAINS A BINDING
ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.
IN WITNESS WHEREOF, USPCC and Sharps have executed duplicate originals of
this License Agreement as of the day and year first above written.
SHARPS INTERNATIONAL "Sharps"
By:
Partner
THE UNITED STATES PLAYING CARD COMPANY
By:
Name:
Title:
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APPENDIX A
Description of Proprietary Information
1. The playing cards and methods described in the materials of Appendix
B or subsequently filed patents or patent applications on
substantially the same technology.
2. The trademarks of Appendix C and other trademarks agreed to between
the parties for use with the Playing Cards.
3. All designs protected under copyright prepared in whole or in part
by Sharps and used in the Playing Cards manufactured by United
States Playing Card Company.
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APPENDICES B1-B4
Description of Playing Cards
See attached copies of U.S. patent applications Bl-B3:
Bl U.S. Patent Application Serial No. 08/165,302 filed
December 9, 1993;
B2 U.S. Patent Application Serial No. 29/028,882 filed
September 23, 1994;
B3- U.S. Patent Application Serial No. 08/353,526 filed
December 8, 1994.
See attached copy of descriptive publication prepared by Sharps as
Appendix B4.
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APPENDIX C
Sharps' Trademarks
1. "Safety Peek"
2. "Sharps"
3. "Sharps International"
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APPENDICES B1-B4
Description of Playing cards
See attached copies of U.S. patent applications Bl-B3:
BI U.S. Patent Application Serial No. 08/165,302 filed
December 9, 1993;
B2 U.S. Patent Application Serial No. 29/028,882 filed
September 23, 1994;
B3 U.S. Patent Application Serial No. 08/353,526 filed
December 8, 1994.
See attached copy of descriptive publication prepared by Sharps as Appendix
B4.
