AGREEMENT
THIS AGREEMENT dated as of this 25th day of June, 1997, is by and between
GTECH CORPORATION ("GTECH"), a Delaware corporation with its corporate
headquarters at 00 Xxxxxxxxxx Xxx, Xxxx Xxxxxxxxx, Xxxxx Xxxxxx 00000, and PNGI
Xxxxxxx Town Gaming, LLC, ("PNGI"), a West Virginia Limited Liability Company
with a place of business at 000 Xxxxxxxxx Xxxxxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx
00000 ("PNGI").
W I T N E S S E T H:
WHEREAS, PNGI desires to acquire a video lottery system to be operated at
the Xxxxxxx Town Racetrack in Xxxxxxx Town, West Virginia; and
WHEREAS, GTECH is experienced in the design and operation of video
lottery systems and desires to provide such a system to PNGI; and
WHEREAS, GTECH and PNGI desire to set forth in writing the terms of their
agreements with respect to such a system.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and covenants contained herein, the parties hereto, intending to be legally
bound, agree:
1. Definitions.
1.1 "Aggregate Amortization" means, as of any given day, the sum
of Amortization for all items of equipment comprising the VLS System through
that day.
1.2 "Aggregate Equipment Value" means, as of any given day, the
sum of the Equipment Values for all items of equipment comprising the VLS System
as of that day.
1.3 "Amortization" means, with respect to an item of equipment
comprising the VLS System as of any given date, the aggregate sum of all
principal payments that would have been paid from the date that item of
equipment was placed in service through that given date, on the theoretical
assumption that the Equipment Value of such item of equipment had been financed
over sixty consecutive monthly level payments, the first of which is due one
month after the date such item of equipment is placed in service (x) at a five
percent per annum borrowing rate of interest if that item of equipment was
placed in service during months one through twenty-four, or (y) an eight percent
per annum borrowing rate of interest if that item of equipment was placed in
service at any time after the twenty-fourth month following the Start-Up Date.
1.4 "Central Site" shall mean the site(s) where the VLS System
and its component parts shall be located which shall be specified by PNGI,
subject to the requirements of the West Virginia Lottery Commission, and the
approval of GTECH, which approval shall not be unreasonably withheld or delayed.
1.5 "Central Computer System Hardware" means the hardware having
the specifications set forth in Attachment A.
1.6 "Communications Network Equipment" means the equipment
having the specifications
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set forth in Attachment B.
1.7 "Confidential Information" shall have the meaning given that
term in subsection 18.2.
1.8 "Equipment Value" means, with respect to an item of equipment
comprising the VLS System, its value calculated as follows:
A. If such item of equipment was placed in service
during months one through twelve following the Start-Up Date, the actual cost
of that equipment to GTECH;
B. If such item of equipment was placed in service
during months thirteen through twenty-four following the Start-Up Date, the
actual cost of that equipment to GTECH, plus a twenty percent xxxx up; and
C. If such item of equipment was placed in service
during months twenty-five through sixty following the Start-Up Date, the actual
cost of that equipment to GTECH, plus a twenty percent xxxx up plus one percent
for each month, or portion thereof, after the twenty-fourth month through
the date it was placed in service.
1.9 "GTECH Services" means the following tasks and
responsibilities, all of which shall conform to reasonable standards prevailing
in the industry:
A. Acquiring, installing and making operational the
technical infrastructure of the VLS System;
B. Acquiring, installing and making operational the
Communications Network for the VLS System;
C. Acquiring, installing and making operational the
Video Lottery Terminals and other third party Software and licenses from
vendors designated by PNGI and agreed to by GTECH which consent shall not
be unreasonably withheld or delayed;
D. Installing and making operational the VLS System.
E. Providing or causing to be provided the Maintenance
Services for the VLS System following installation;
F. Providing or causing to be provided the Marketing
Services;
G. Expanding the VLS System to include additional Video
Lottery Terminals ("VLT's") within thirty (30) days following receipt of such
additional VLT's and GLI approved software provided that approval by the
West Virginia Lottery Commission and any other required governmental
approvals shall have been obtained; and
H. Providing post-installation supplemental programming
and modifications to the Software as may be necessary to fine tune the VLS
System and provide properly formatted accounting data, player tracking data
and all reports and reporting requirements of the West Virginia Lottery
Commission.
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1.10 "Maintenance Services" means the maintenance services for
the VLS System described on Attachment F.
1.11 "Marketing Services" means the provision of three
ambassadors, each for a period of twenty-four hours for each week during the
term of this Agreement who shall provide customer assistance and orientation
subject to the management, direction and control of PNGI.
1.12 "Net Terminal Income" or "Net Win" means the total of all
cash inserted into or game credits played on all Video Lottery Terminals and
Slot Machines, if any, minus the total value of all prizes paid in cash, by game
credits or otherwise.
1.13 "Net Unamortized Residual Value" means, as of any given day,
Aggregate Equipment Value less Aggregate Amortization as of that day.
1.14 "Player Tracking System" means the software and hardware
that will enable PNGI to operate and maintain a customer data base.
1.15 "Progressive Jackpots" means jackpots offered by a Video
Lottery Terminal and/or Slot Machine which, along with other Video Lottery
Terminals and/or Slot Machines, is linked to a central computer system under an
arrangement in which each Video Lottery Terminal and/or Slot Machine so linked
contributes a percentage of play to such jackpots.
1.16 "Slot Machine" means any gaming device that pays winners in
coin or token rather than issuing credit receipts or scrip.
1.17 "Software" means the GTECH and third party software having
the specifications set forth in Attachment C, and all documentation and licenses
related thereto, and all additional software and related documentation that
GTECH may provide to PNGI during the term of this Agreement for use in
connection with the VLS System.
1.18 "Start-Up Date" means the first date that operations on the
VLS System commence and Net Win is generated.
1.19 "Validation and Management Terminals" means the hardware
having the specifications set forth on Attachment D.
1.20 "Video Lottery Terminals" means the electronic computerized
video game machines having the specifications set forth on Attachment E.
1.21 "VLS System" means, collectively, the Central Computer
System Hardware, the technical infrastructure of the VLS System, the
Communications Network Equipment, the Video Lottery Terminals, Slot Machines
(subject to paragraphs 3.8, 3.9, and 3.10 below), the Validation and Management
Terminals, the Software and the Player Tracking System that comply with the
specifications and requirements set forth in the Attachments to this Agreement
including but not limited to Attachment H.
2. Management Control.
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2.1 PNGI shall have management control over all aspects of the
VLS System including but not limited to the VLS Central System provider, VAT
vendors (subject to GTECH's consent which shall not be unreasonably withheld or
delayed), VAT servicing, floor layout and design; provided, however, that GTECH
shall have access to, and control over, such aspects of the VLS System
(including without limitation the Central Computer System Hardware and Software
and the Validation and Management Terminals) as may be necessary or appropriate
to permit it to perform its obligations under this Agreement.
3. Scope of Work to be Performed.
3.1 The VLS System shall be delivered and installed so as to
comply with all the specifications set forth on Attachments A through E hereof.
3.2 GTECH shall cause the installation of the VLS System to be
complete and the VLS System to be operational as soon as possible but in no
event later than five days after delivery of Video Lottery Terminals to the
Xxxxxxx Town Race Track, receipt of approval from the West Virginia Lottery
Commission and GLI, and the completion of West Virginia Lottery Commission and
GLI on-site acceptance testing of the VLS System; provided, however, that GTECH
shall not be responsible for delays attributable to or caused by PNGI or other
third parties beyond GTECH's control including without limitation third party
Video Lottery Terminal vendor delivery schedules.
3.3 GTECH and PNGI shall obtain and/or make all required
governmental filings and/or registrations required by the State of west
Virginia, the West Virginia Lottery Commission and any third parties in
connection with the performance of their respective obligations hereunder. The
parties shall use their respective best efforts to effect such applications,
filing and registrations and otherwise to provide for the issuance and continued
effectiveness of all such licenses, permits, consents and approvals during the
term of this Agreement.
3.4 GTECH shall perform for PNGI the GTECH Services in conformity
with all required governmental licenses, permits, consents and approvals.
3.5 In connection with GTECH providing the GTECH Services, PNGI
shall perform or shall cause to be performed the following tasks and
responsibilities, which shall conform to the reasonable standards prevailing in
the industry:
A. Providing and preparing the Central Site (inclusive
of an in-floor duct system, air conditioning and handling, security, and
surveillance);
B. Providing adequate electrical supplies to the Central
Site (but GTECH shall be responsible for the acquisition, maintenance and
installation of uninterruptible power supplies to all System computers);
C. Determining the vendors of the Video Lottery
Terminals (subject to GTECH'S consent which shall not be unreasonably withheld
or delayed);
D. Determining the quantities, distribution and
placement of the Video Lottery Terminals;
E. Providing storage rooms (not less than 1,000 square
feet in aggregate) for parts and consumables as well as for depot repair;
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F. Installing cables provided by GTECH; and
G. Operation of the VLS System (other than those
obligations to be perform by GTECH under this Agreement).
3.6 GTECH shall have the right to determine which of its staff
shall be assigned to perform the GTECH Services under this Agreement and to
replace or reassign such personnel during the term of this Agreement; provided,
however, that PNGI may request the reassignment or replacement of GTECH staff
performing GTECH Services in its reasonable discretion, and GTECH shall promptly
replace or reassign such individuals. GTECH shall consult with PNGI with respect
to the placement, replacement or reassignment of all GTECH employees at the
Xxxxxxx Town site.
3.7 GTECH and PNGI each shall only assign employees to perform
services or work under this Agreement who are experienced and qualified for
their respective positions and to perform their respective tasks.
3.8 GTECH warrants that the VLS System, when installed and
operational, will be compatible with the future installation of Slot
Machines, and will have the capacity to provide Progressive Jackpots and
Player Tracking during the Term; provided, however, the timing and cost
of any proposed installation of Progressive Jackpots and Player Tracking
are not included in the GTECH Services but will be provided by GTECH for such
additional compensation which shall be negotiated in good faith by the
parties.
3.9 In the event Slot Machines are approved by the West Virginia
Legislature and if PNGI so elects, GTECH shall purchase and, not later than five
days after delivery of the Slot Machines to the Xxxxxxx Town Race Track, install
Slot Machines for PNGI at Xxxxxxx Town; provided, however, PNGI shall provide
not less than ninety days prior written notice of its decision to install Slot
Machines and will pay for all hardware and software acquisition costs. GTECH
shall be responsible for all installation costs and all costs associated with
the integration of the Slot Machines into the VLS System except for third party
vendor services and parts as to which GTECH's liability shall be limited in
amount to the sum of $100,000 00.
3.10 The obligation on the part of GTECH to provide the GTECH
Services and to install and make operational Slot Machines, Progressive Jackpots
and/or Player Tracking is subject to the issuance and continued effectiveness of
all required governmental and other licenses and approvals, other than licenses
and/or approvals related to the failure or inability of GTECH to be licensed as
a vendor or which are unavailable or revoked as a result of any matter, reason
or thing within GTECH's control.
3.11 PNGI agrees that GTECH shall be the exclusive provider of
the VLS System including, without limitation, the Video Lottery Terminals and
Slot Machines, if any, at the Xxxxxxx Town Race Track during the Term. PNGI
represents and warrants to GTECH that, apart from this Agreement, neither it nor
any of its affiliates has entered into any agreement with any third party for
the provision of video lottery systems (or any component thereof) or services at
Xxxxxxx Town Race Track, other than the purchase order which it placed with
Video Lottery Technologies, Inc. on May 15, 1997 for the purchase of 152 Video
Lottery Terminals (the '"Purchase Order it) as to which a down payment of
$277,218.00 has been advanced by PNGI (a copy of which has been previously
supplied to GTECH). Promptly after execution of this Agreement, PNGI shall
assign to GTECH, or shall cause to be assigned to GTECH, the Purchase Order
whereupon GTECH shall assume all obligations with respect thereto and shall
refund to PNGI the deposit made by PNGI.
4. Change in Scope.
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4.1 If PNGI should desire a change in GTECH's obligations under
this Agreement or in the specifications for the VLS System, PNGI shall submit to
GTECH a written proposal specifying the desired changes. GTECH and PNGI shall
exercise good faith efforts to reach a mutually acceptable agreement in writing
on any and all changes or enhancements to such obligations and/or
specifications, as well as the terms and conditions (including as to
compensation and timing) respecting any such changes, in the manner provided
below.
4.2 GTECH shall submit to PNGI a written response to each change
request within fifteen (15) business days following receipt of the request.
GTECH's written response shall include a statement of the availability of
GTECH's personnel and resources, as well as any impact the proposed changes will
have (if any) on the delivery dates, the anticipated Start-Up Date, the GTECH
Services, the warranty provisions of this Agreement or the compensation to be
paid GTECH under this Agreement.
4.3 Changes to the scope of the GTECH Services or in the
specifications for the VLS System shall be evidenced by a written "Modification
Agreement". A Modification Agreement shall be signed by authorized
representatives of GTECH and PNGI, whereupon GTECH shall commence performance in
accordance with this Agreement as modified. GTECH shall not be obligated to
perform any additional services or modify the specifications for the VLS System
prior to its approval of a Modification Agreement.
4.4 GTECH shall not unreasonably withhold or delay its consent to
any change requested by PNGI or refuse to enter into a Modification Agreement;
provided, however, that GTECH shall be entitled to received reasonable
compensation (to be determined through good faith negotiations between the
parties) for any material expansion of GTECH's obligations, cost or expense as a
result of any requested change or any Modification Agreement. Should GTECH be
unwilling to approve a change or to sign a Modification Agreement as written,
GTECH will so notify PNGI within fifteen (15) business days of GTECH's receipt
of PNGI's written proposal and shall set forth with specificity it reasons for
refusing to do so.
4.5 For purposes of this Agreement, each Modification Agreement
duly authorized in writing by GTECH and PNGI shall be deemed incorporated into
and made part of this Agreement. Each such Modification Agreement shall
constitute a formal change to this Agreement.
4.6 No change to this Agreement and/or the GTECH Services shall
be effective unless and until a Modification Agreement has been executed and
delivered by the parties.
4.7 A "change" in GTECH's obligations under this Agreement shall
be any change which is, individually or in the aggregate, a material addition to
the specifications of the VLS System as set forth in the Attachments to this
Agreement and which effects a material increase to its cost, exposure or
obligations of providing the GTECH Services.
5. Compensation.
5.1 As compensation for the VLS System and the GTECH Services,
PNGI shall pay GTECH the compensation specified in Attachment G to this
Agreement.
5.2 GTECH shall submit to PNGI on a bi-weekly basis (based on
PNGI's accounting period) invoices for the charges set forth in subsection 5.1.
PNGI shall pay GTECH the amounts invoiced within ten (10) business days after
receipt of such invoice.
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6. Term Of Agreement.
6.1 Subject to the provisions of paragraph 6.3 below, the term of
this Agreement shall begin on the date first above written, and shall continue
through and including that date which is five (5) years after the first date on
which there are at least 400 Video Lottery Terminals installed, operational and
generating Net Win on the VLS System (the "Term"); provided, however, any delay
in the commencement of the Term occasioned by events or matters within GTECH's
control shall on a day-for-day basis reduce the length of the Term; and provided
further, that the Term shall be extended on a day-for-day basis for each day
during the Term that the VLS System is substantially non-operational for reasons
beyond the control of GTECH.
6.2 At the end of the Term, PNGI shall purchase from GTECH the
VLS System for a cash purchase price equal to the Net Unamortized Residual
Value. If there is no Net Unamortized Residual Value, title to the VLS System
shall pass to PNGI upon termination of this Agreement.
6.3 GTECH shall upon transfer of title of the VLS System assign
or grant, or cause to be assigned or granted, a continuing non-exclusive,
non-assignable, non-sublicensable license to PNGI for all Software required for
PNGI to use the Video Lottery Terminals and/or the Slot Machines, except for the
central system software, which assignment or license shall remain in effect for
so long as PNGI operates or otherwise uses the Video Lottery Terminals and the
Slot Machines. GTECH shall have no continuing obligation of Software maintenance
or support by virtue of this license.
6.4 For all video lottery equipment placed in service by PNGI
prior to the seventh month following the Start-Up Date, all such Video Lottery
Terminals and equipment shall be deemed to have been acquired as of the Start-Up
Date for purposes of calculating Net Unamortized Residual Value.
6.5 For all video lottery equipment placed in service by PNGI
after the sixth month following the Start-Up Date, all such Video Lottery
Terminals and equipment shall be deemed to have been acquired as of the date
they are placed in service for purposes of calculating Net Unamortized Residual
Value.
7. Termination.
7.1 PNGI shall have the right to terminate this Agreement by
giving written notice to GTECH in the event of any of the following shall occur:
A. GTECH voluntarily: (1) liquidates (except as a part
of a merger transaction in which a successor corporation has a greater net worth
and solvency), (2) enters into receivership, or (3) files a petition under any
chapter of the U.S. Bankruptcy Code;
B. GTECH is the subject of an involuntarily bankruptcy
petition and fails to have such petition dismissed, vacated, voided or otherwis
removed within sixty (60) days after its filing;
C. GTECH fails to install and make substantially
operational the VLS System as soon as possible and in accordance with sections
3.2 and 3.3, time being of the essence, unless the failure to do so is caused
or accounted for by reasons or matters beyond GTECH's control;
D. Any representation or warranty made by GTECH in this
Agreement was materially incorrect when made or GTECH commits a material breach
of any provision of this Agreement and fails to
(28)
cure such misrepresentation or breach within thirty (30) days following the
giving of written notice to GTECH by PNGI specifying such breach;
E. The west Virginia Lottery Commission orders PNGI to
terminate this Agreement;
F. GTECH fails to obtain or loses for any reason any
license or permit required or which qualifies it to conduct its business and
perform its obligations under this Agreement;
G. GTECH or any of its senior management is convicted
of a felony in connection with the performance of any of its obligations under
this Agreement or otherwise in connection with the performance of any of
its obligations under this Agreement.
H. For purposes of paragraphs C. and D. above, the
parties agree that reasons or matters beyond GTECH'S control include but are
not limited to (1) the failure of any governing body to issue any necessary
license to PNGI, (2) the failure of Video Lottery Terminal manufacturers to
deliver timely Video Lottery Terminals (so long as GTECH has exercised its
best efforts to expedite their delivery), (3) construction delays at Xxxxxxx
Town, and/or (4) the failure of any governing body to issue any necessary
license or approval required for the use of any of the Video Lottery Terminals
to be delivered pursuant to this Agreement;
7.2 GTECH may terminate this Agreement by giving written notice
to PNGI in the event of any of the following shall occur:
A. PNGI voluntarily: (1) liquidates (except as a part
of a merger transaction in which a successor corporate has a greater net worth
and solvency), (2) enters into receivership, or (3) files a petitionunder
any chapter of the U.S. Bankruptcy Code;
B. PNGI is the subject of an involuntarily bankruptcy
petition and fails to have such petition, dismissed, vacated, voided or
otherwise removed within sixty (60) days after its filing;
C. Any representation or warranty made by PNGI in this
Agreement was materially incorrect when made or PNGI commits a material breach
of any provision of this Agreement and fails to cure such misrepresentation
or breach within thirty (30) days following the giving of written notice to
PNGI by GTECH specifying such breach;
D. PNGI fails to make any payment to GTECH within thirty
(30) days of the date when such payment is due under this Agreement.
E. The West Virginia Lottery Commission orders GTECH to
terminate this Agreement;
F. PNGI fails to obtain or loses for any reason any
license or permit required for or which qualifies it to conduct its business
and perform its obligations under this Agreement; or
G. PNGI or any of its senior management is convicted of
a felony in connection with the performance of any of its obligations under this
Agreement or otherwise in connection with the performance of it obligations
under this Agreement.
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7.3 In the event of termination of this Agreement pursuant to
Section 7.1 or 7.2 neither party shall have any further obligation to the other
except that each party shall remain obligated for liabilities owed to the other
which have accrued and are due and owing as of the date of termination and:
A. In the case of a termination of this Agreement
arising out of or otherwise constituting a material misrepresentation and/or
breach of this Agreement by PNGI:
(1) PNGI shall purchase from GTECH, within thirty
(30) days of termination, the vies System on an AS-IS, WHERE-AS basis, at a
price equal to the Net Unamortized Residual Value; and
(2) PNGI shall pay to GTECH:
(a) For a termination which occurs during
the first year of the Term, the sum of $8,500,000.00;
(b) For a termination which occurs during
the second year of the Term, the sum of $6,600,000.00;
(c) For a termination which occurs during
the third year of the Term, the sum of $5,000,000.00;
(d) For a termination which occurs during
the fourth year of the Term, the sum of $3,700,000.00; or
(e) For a termination which occurs during
the fifth year of the Term, the sum of $2,500,000.00;
B. In the case of any uncured material misrepresentation
and/or breach of this Agreement by GTECH that has occurred and is continuing
thirty (30) days after the giving of written notice to GTECH of that breach:
(1) PNGI may terminate this Agreement by giving
written notice thereof to GTECH;
(2) PNGI may purchase from GTECH, within thirty
(30) days of termination, on an AS-IS, WHERE-AS basis, at a price equal
to the Net Unamortized Residual Value, the VLS System.
C. In the event this Agreement is terminated by either
party for any reason then, subject only to PNGI paying the Net Unamortized
Residual Value, PNGI shall have, and GTECH hereby grants to PNGI, a continuing
royalty free license to use all Software and other components of the VLS
System at the Xxxxxxx Town Race Track to the extent necessary to permit
PNGI to continue to use the VLS System in substantially the same manner
as prior to termination which license shall continue, as to the Video
Lottery Terminals, for so long as PNGI uses the Video Lottery Terminals,
and, as to the rest of the VLS System, until PNGI has a reasonable
opportunity, not to exceed six months, to obtain alternative software and/or
components; provided, however, GTECH shall have no further obligation to
service or support the Software.
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D. The rights and remedies set forth in this paragraph
7.3 shall be the exclusive remedies of the parties in the event of a termination
of this Agreement by either party.
8. Insurance.
8.1 Throughout the Term of this Agreement (including any
extensions thereof) GTECH and PNGI shall maintain in effect their respective
standard insurance coverages.
8.2 Upon request, each party shall provide the other with
evidence that any one or all of the insurance coverage required under this
Section are in place.
8.3 All insurance coverage required under this Section shall be
issued by companies qualified to do business in the State of West Virginia and
shall otherwise comply with the requirements of the West Virginia Code and the
rules and regulations of the West Virginia Lottery Commission.
9. Title to System.
9.1 Except as otherwise provided in this Agreement, (A) title to
the VLS System, including component hardware, equipment and Software shall not
pass to PNGI but shall remain in GTECH, and (B) PNGI does not obtain under this
Agreement any license or other interest in the VLS System or any part thereof.
10. Industrial and Intellectual Property Rights.
10.1 All industrial and intellectual property rights, including
but not limited to rights in and to patent, copyright, mask work rights,
trademark, and trade secret rights, related to the equipment, hardware, and/or
software directly or indirectly provided by GTECH under or in connection with
this Agreement at any time during the Term (including extensions thereof),
belong and shall continue to belong exclusively to GTECH.
10.2 PNGI shall immediately notify GTECH if PNGI ever becomes
aware of any impairment or infringement, or imminent threat of impairment or
infringement, of GTECH's rights. PNGI shall not take any steps against any
alleged infringer unless and until requested to do so in writing by GTECH;
provided, however, that if GTECH fails to take action as to any infringement
that has or is likely to have a material adverse effect on PNGI's capacity to
use the VLS System as contemplated by this Agreement, may, after the giving of
at least fourteen (14) days prior written notice to GTECH, take reasonable
action to stop or xxxxx the infringement at GTECH's expense and GTECH will
cooperate in any such action. PNGI shall, at GTECH's expense, join with GTECH in
taking such steps as GTECH may reasonably request to protect GTECH's rights.
10.3 This Section 10 shall survive the termination or expiration
of this Agreement without time limitation.
11. License of Software and Related Documentation.
11.1 GTECH hereby grants to PNGI in connection with the VLS
System a non-exclusive, non-transferable, non-sublicensable license to use the
VLS System at the Xxxxxxx Town Race Track throughout the Term of, and as
otherwise provided in, this Agreement. To the extent the Software is comprised
of Software provided by GTECH, PNGI shall have the right to use only the object
code (i.e., machine readable) form of such software and only on hardware and
Video Lottery Terminals provided or approved by GTECH as interfacing with the
VLS System.
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GTECH shall not unreasonably refuse or delay any requested approval of hardware
or Video Lottery Terminals.
11.2 Except as otherwise provided in this Agreement:
A. The license of the Software for the central system
shall terminate upon the expiration or earlier termination of this Agreement
except that, in the event of termination of this Agreement pursuant to Section
7 hereof, the license of the Software shall continue so as to permit
continued use of the Software and the VLS System as contemplated by that
Section;
B. PNGI may at its option elect to continue this license
after the termination of this Agreement subject to the payment to GTECH of a
royalty of two percent of Net Win, which shall be payable monthly.
11.3 PNGI acknowledges and agrees that:
A. The Software is Confidential Information;
B. The Software is a valuable and unique asset of GTECH,
and GTECH owns all right, title and interest thereto, including all intellectual
property rights therein;
C. PNGI shall not reproduce in any medium any part of
the Software; and
D. Promptly upon the termination of the license, PNGI
shall return all materials constituting or containing any part of the
Software to GTECH, except for materials reasonably necessary or
appropriate for the exercise of continuing rights under section 7.3, which
materials shall be returned when such rights terminate.
12. Warranties.
12.1 GTECH hereby warrants and represents to PNGI that:
A. The VLS System and the GTECH Services will comply in all
respects with reasonable standards prevailing in the industry; and
B. The VLS System and the GTECH Services will be
provided in accordance, and at all times shall comply, with all Federal, state
and local laws, ordinances, rules and regulations as they apply to the VLS
System and GTECH's employees and contractors in the performance of the GTECH
Services.
12.2 GTECH shall use its best efforts to cause the manufacturers
of any third party components of the VLS System to extend to the VLS System
warranties that are at least as favorable as such manufacturer's standard
warranties.
12.3 PNGI's sole remedy for GTECH's breach of any warranty
contained in this Section 12 shall be for GTECH to remedy the breach promptly at
its own expense; provided however, if GTECH can not within a reasonable time
under the circumstances (not to exceed thirty (30) days) after written notice by
PNGI remedy the breach, and the breach is material, then PNGI may thereupon
terminate this Agreement. The foregoing limitation shall not apply to breaches
by GTECH that constitute intentional misconduct or gross negligence.
12.4 THE WARRANTIES SET FORTH IN THIS AGREEMENT ARE MADE TO AND
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FOR THE BENEFIT OF PNGI AND ITS AFFILIATES ONLY. EXCEPT AS OTHERWISE PROVIDED IN
THIS AGREEMENT, GTECH MAKES NO OTHER WARRANTY OF ANY KIND WHATEVER, EXPRESS OR
IMPLIED.
13. Limitation of Liability.
13.1 EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, NEITHER
PARTY SHALL BE LIABLE TO THE OTHER FOR ANY CONSEQUENTIAL, SPECIAL, INCIDENTAL,
PUNITIVE, OR INDIRECT DAMAGES INCLUDING, BUT NOT LIMITED TO, LOSS OF ANTICIPATED
PROFITS, LOSS OF USE OR UTILIZATION OR CAPABILITIES RESULTING FROM THE PARTY'S
PERFORMANCE OR NON PERFORMANCE OF ITS OBLIGATIONS UNDER THIS AGREEMENT;
PROVIDED, HOWEVER, NOTHING HEREIN SHALL LIMIT ANY PARTY'S OBLIGATION TO
INDEMNIFY THE OTHER AS PROVIDED IN SECTIONS 14 AND 15 OF THIS AGREEMENT.
13.2 THE LIMIT OF GTECH'S LIABILITY (WHETHER IN CONTRACT, TORT,
NEGLIGENCE, OR OTHERWISE) TO PNGI CONCERNING PERFORMANCE OR NON-PERFORMANCE BY
GTECH, OR IN ANY MANNER RELATED TO THIS AGREEMENT, FOR ANY AND ALL CLAIMS SHALL
NOT IN THE AGGREGATE EXCEED THE AMOUNTS PAID BY PNGI TO GTECH UNDER THIS
AGREEMENT.
13.3 The limitations on liability contained in this Section 13
shall not apply to damage claims arising out of a party's intentional misconduct
or gross negligence.
14. Indemnity Against Infringing Use.
14.1 GTECH warrants to PNGI that the Software provided by GTECH
does not and shall not infringe any U.S. patent, U.S. copyright, or other
proprietary right of any third party.
14.2 GTECH shall defend, at its expense, any action brought
against PNGI to the extent that it is based on a claim that the Software
provided by GTECH infringes any third party's U.S. patent, U.S. copyright or
other proprietary right, provided that GTECH is given prompt notice of such
action and is given information, reasonable assistance and sole authority to
defend or settle the action. GTECH shall pay all costs and damages, including
legal fees (provided that if the action is unsuccessful and legal fees are
awarded against the plaintiff, GTECH shall be entitled to receive such legal
fees) finally awarded against PNGI arising from any such complaint. However,
GTECH is not authorized to agree to any settlement, compromise or the like which
would require PNGI to make any payment or to stop using the Software provided by
GTECH, without PNGI's prior written notice stating its approval.
14.3 In the event that PNGI is enjoined from using any material
portion of the VLS System because of an infringement, GTECH shall, at its own
expense, either:
A. Procure for PNGI the right to continue using the
Software provided by GTECH and the right to continue enjoyment of the rights
and licenses granted in this Agreement; or
B. Replace or modify the Software provided by GTECH so
that it becomes non-infringing but equivalent in function and performance; or
C. Only if the alternatives set forth in subsections A.
& B. of this Section 14.2 are not reasonably feasible, refund to PNGI all
amounts paid by PNGI to GTECH under this Agreement with interest at the
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rate of 8% per annum, in which event this Agreement shall become null and void
and of no further force or effect.
14.4 GTECH shall have no obligation under this Section 14 if
and to the extent that such claim arises from:
A. PNGI's modification, without GTECH's approval, of the
Software provided by GTECH;
B. PNGI's combination of the Software provided by GTECH
with products other than those supplied by GTECH (provided that the alleged
infringement would not have occurred without such combination); or
C. If the Software provided by GTECH is used for a
purpose other than that contemplated by this Agreement.
15. Indemnification.
15.1 GTECH shall indemnify and hold harmless PNGI, and its
affiliates, directors, officers, and employees from and against all losses,
liabilities, judgments, awards, settlements, damages and costs (including legal
fees and expenses) in connection with third party claims:
A. For personal injury (including death) or damage to
tangible personal property to the extent caused by the negligent or willful acts
or omissions of GTECH, its employees or agents;
B. Arising from any intentional breach by GTECH of its
obligations under this Agreement.
15.2 At the request of PNGI from time to time after any such
claims, GTECH shall, at its sole expense, defend with counsel reasonably
acceptable to PNGI, all claims, suits or proceedings arising out of the matters
set forth in paragraph 15.1 of this Agreement. GTECH shall be notified promptly
of any such claims, suits or proceedings in writing and, if requested to defend
such action, given full and complete authority, information and assistance for
the defense of same, provided, however, GTECH shall xxxx no authority to enter
into any settlement or compromise on behalf of PNGI without the prior written
consent of PNGI (which consent shall not be unreasonably withheld or delayed).
In all events, PNGI shall have the right to participate, at its own expense, in
the defense of any such proceedings with counsel of its own choosing.
15.3 PNGI shall indemnify and hold harmless GTECH, and its
affiliates, directors, officers and employees, from and against all losses,
liabilities, judgments, awards, settlements, damages and costs (including legal
fees and expenses) in connection with third party claims:
A. For personal injury (including death) or damage to
tangible personal property to the extent caused by the negligent or willful acts
or omissions of PNGI, its employees or agents;
B. Arising from any intentional breach by PNGI of its
obligations under this Agreement.
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15.4 At the request of GTECH from time to time after any such
claims, PNGI shall, at its sole expense, defend with counsel reasonably
acceptable to GTECH all claims, suits or proceedings arising out of the matters
set forth in paragraph 15.3 of this Agreement. PNGI shall be notified promptly
of any such claims, suits or proceedings in writing and, if requested to defend
such action, given full and complete authority, information and assistance for
the defense of same, provided, however, PNGI shall have no authority to enter
into any settlement or compromise on behalf of GTECH without the prior written
consent of GTECH (which consent shall not be unreasonably withheld or delayed).
In all events, GTECH shall have the right to participate, at its own expense, in
the defense of any proceedings with counsel of its own choosing.
16. Cooperation of the Parties; Resolution of Disputes.
16.1 The parties hereto shall use their best efforts to resolve
by mutual agreement any disputes, controversies or differences which may arise
between or among them out of or in connection with this Agreement.
16.2 If any disputes, controversies or differences cannot be so
resolved by mutual agreement, the parties agree that, other than those claims
over which a regulatory agency has exclusive jurisdiction, all such unresolved
disputes, controversy, and claims shall be resolved by arbitration in accordance
with the Commercial Arbitration Rules ("CAR") of the American Arbitration
Association ("AAA"), and judgment upon the award rendered by the arbitrator(s)
may be entered in any court having jurisdiction thereof. The parties shall
attempt, by agreement, to nominate a sole arbitrator for confirmation by the
AAA. If the parties fail to agree and nominate a sole arbitrator within thirty
(30) days from the date when the claimant's Request for arbitration has been
communicated to the other party, then the sole arbitrator shall be appointed by
the AAA in accordance with the applicable rules governing such appointment.
16.3 The place of arbitration shall be Xxxxxxx Town, West
Virginia. All expedited procedures prescribed by the CAR shall apply.
16.4 The findings and the award of the arbitrator shall be
reasonably detailed and shall set forth his findings of fact and conclusions of
law.
16.5 Any award of the arbitrator shall be final and binding on
the parties, and each party hereby waives to the fullest extent permitted by law
any right it may otherwise have under the laws of any jurisdiction to any form
of appeal.
16.6 With this arbitration agreement the parties do not intend to
deprive any court of its jurisdiction to issue a prearbitral injunction,
prearbitral attachment or other order in aid of arbitration proceedings and
enforcement of the award.
17. Independent Contractors.
17.1 The parties hereto acknowledge that they are and shall
continue to be independent contractors. Nothing contained herein shall be
construed so as to create the relationship of employer and employee,
partnership, or principal and agent between PNGI and GTECH. Neither party shall
have any authority to bind the other party as an agent or in any other capacity
for any purpose, nor shall either party directly or indirectly represent to any
person that it has such authority.
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18. Confidentiality.
18.1 Each party acknowledges a duty of confidentiality owed to
the other party, and shall not, at any time, (directly or indirectly, in whole
or in part):
A. Use or duplicate any Confidential Information of the
other party (except as necessary to effect the purposes of this Agreement); or
B. Disclose any Confidential Information of the other
party to any entity not a party to this Agreement, in addition, neither
party shall disclose Confidential Information of the other to any of its
officers, directors, employees or representatives, unless their knowledge
of such Confidential Information is necessary to effect the purposes of this
Agreement.
18.2 As used herein, "Confidential Information" shall mean any
information and any copies or records thereof, in any medium, disclosed to or
otherwise obtained by a party from the other party in connection with GTECH's
installation, implementation, operation and/or maintenance of the VLS System for
PNGI, and which is descriptive of or pertaining to any aspect of the other
party's business, products, services, equipment, technologies, know-how,
personnel, finances, sales and/or marketing (including in the case of GTECH,
without limitation, Software and information contained in GTECH's Data Exchange
Specification (the "DXS's"). Notwithstanding the foregoing sentence, the
following shall not be 'Confidential Information:
A. Information that is or has been generally available
to the public or comes into the public domain otherwise than in circumstances
giving rise to a breach of the terms of this Agreement;
B. Information already known to the receiving party at
the time it is disclosed by the other party, as documented by records in
possession of the receiving party predating such disclosure;
C. Information subsequently received by the receiving
party in good faith from an entity (other than the disclosing party) having the
prior right to make such subsequent disclosure;
D. Information independently developed by the receiving
party without use of the Confidential Information;
E. Information approved by the disclosing party in
writing for unrestricted release or unrestricted disclosure by the other party.
18.3 Each party acknowledges that all Confidential Information is
a valuable and unique asset and trade secret of the other party and that it has
no right, title or interest therein (other than such rights as may be
specifically set forth in this Agreement).
18.4 Any copy of documents or other media made by a party
containing Confidential Information of the other (to the extent copies are
permitted) shall bear all copyright, trademark, patent and other proprietary
notices appearing on the original.
18.5 Upon the expiration or earlier termination of this
Agreement, each party shall promptly, and without need for notice or demand,
deliver to the other party all records and media containing or embodying the
other party's Confidential Information within the party's possession, custody or
control.
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18.6 PNGI agrees that Confidential Information might be learned
through examination of the interior or disassembly of components of the VLS
System and, therefore, PNGI agrees that, without prior specific notice of
authorization from GTECH, PNGI shall neither permit the display of the interior
of any such components of the VLS System to others nor permit the transfer of
possession of any such components to others.
18.7 Notwithstanding anything in this Agreement to the contrary,
Confidential Information may be disclosed if, in the reasonable opinion of a
party's legal counsel, disclosure is required to be made by law or government
rule or regulation, or by court order; provided, however, that:
A. Prior to any such disclosure, the party shall provide
to the owner of the Confidential Information a written opinion of the
party's legal counsel supporting its conclusion that such disclosure is
necessary, and shall cooperate insofar as is commercially reasonable with the
party owning the Confidential Information regarding the manner of such
disclosure or with any action taken by the party owning the Confidential
Information (entirely the cost of such owning party) to challenge the validity
of such requirement; and
B. Such disclosure shall be made only to the extent
determined necessary in the written opinion of the party~s outside counsel,
or by the governmental body requiring disclosure (the latter determination to
have priority).
18.8 The provisions of this Section 18 shall continue in effect
after the expiration or termination of this Agreement, without time limitation.
19. Force Majeure.
19.1 GTECH shall not be liable for any delay in performing any
obligation hereunder resulting from the occurrence of a "Force Majeure Event",
and such delay shall not constitute a default hereunder.
19.2 A "Force Majeure Event" shall mean an event or circumstance
beyond the direct control of GTECH including, but not limited to, riots, effects
of War, civil commotion, political unrest, governmental acts, laws, order,
proclamations, and regulations, acts of God such as fires, floods, earthquakes
and lightning, labor disputes such as strikes and lockouts, the failure of
technology providers to meet delivery dates or otherwise perform in accordance
with the terms of their agreements with PNGI, construction delays at Xxxxxxx
Town, the failure of GLI or any governing body to issue any required license or
approval to PNGI or necessary for the operation of Video Lottery Terminals at
Xxxxxxx Town, and the failure of PNGI to perform in accordance with the terms of
this Agreement.
19.3 If, as a result of the occurrence of a Force Majeure Event,
GTECH is delayed in performing any obligation hereunder, GTECH shall as soon as
possible give PNGI written notice of such event and the estimated delay caused
as a result thereof.
20. Scope of Agreement; Amendments.
20.1 This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter, and supersedes
all prior agreements and understandings of the parties, written and oral,
related thereto.
20.2 This Agreement may not be amended, supplemented or modified
except by a written agreement signed by both parties.
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21. Assignment.
21.1 This Agreement shall not be assigned, in whole or in part,
by either party without the prior written notice of consent by the other party.
Notwithstanding the foregoing, it is agreed that GTECH may assign its rights and
obligations under this Agreement to an affiliate of GTECH and may subcontract
its obligations hereunder in whole or in part, provided, however, that GTECH
shall in all such events remain liable for performance hereunder. Any attempted
assignment in violation of this Section 21 shall be null and void ab initio.
22. Binding Nature of Agreement: Severability.
22.1 This Agreement shall be binding upon and inure to the
benefit of the parties and to their respective permitted successors, assigns,
heirs, executors and administrators. If any provision of this Agreement shall be
or become invalid, such invalidity shall not affect any of the remaining
provisions of this Agreement.
22.2 If any one or more of the provisions contained in this
Agreement shall for any reason be held to be excessively broad as to duration,
scope, activity or subject, it shall be construed by limiting or reducing it so
as to be enforceable to the extent compatible with the applicable law as it
shall then appear. Each party acknowledges that the duration and other
restrictions set forth therein are reasonable to protect the other party's
business interests.
23. Waivers.
23.1 No waiver of any provisions of this Agreement shall be
effective unless agreed to in writing by the party against whom such waiver is
sought to be enforced. Waiver of any default or breach hereunder shall not
constitute a waiver of any other default or breach whether similar or otherwise.
24. Governing Law.
24.1 The validity, interpretation and enforcement of this
Agreement shall be governed by the laws of the State of West Virginia, without
resort to its rules regarding conflicts of laws.
25. Notices.
25.1 All notices and other communications required or permitted
to be given under this Agreement to a party shall be in writing and (a)
personally delivered, (b) mailed by registered or certified mail, postage
prepaid, return receipt requested, or (c) sent by prepaid overnight courier
service (e.g. Federal Express, Airborne, DHL), in any case to the address of the
relevant party set forth on the first page of this Agreement, or at such other
addresses such party may, by written notice, designate as its address for
purposes of notice, hereunder. In addition, notices and communications to GTECH
shall be sent to the attention of the President, and notices and communications
to PNGI shall be sent to the attention of its Chief Operating Officer.
25.2 If mailed by registered or certified mail, notices shall be
deemed to be given five (5) days after being sent; if sent by personal delivery,
notice shall be deemed to be given when delivered; and if sent by prepaid
overnight courier service, notice shall be deemed to be given one (1) business
day following deposit with the courier.
26. Headings.
26.1 Section headings of this Agreement are for convenience only
and shall neither form a part
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nor affect the interpretation hereof.
27. Counterparts.
27.1 This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute but one instrument. This Agreement shall become
effective when such counterparts have been executed and delivered by the parties
to each other.
27.2 This Agreement may be executed and delivered by facsimile
transmission and any such facsimile copy shall have the same force and effect as
if an original had been executed and delivered.
28. Compliance With Laws. Further Assurances.
28.1 Each party represents and warrants to the other that they
shall comply in all respects with the requirements of the West Virginia Code and
the rules and regulations of the West Virginia Lottery Commission in the
performance of their respective obligations under this Agreement.
28.2 Each party shall take such acts and do such things as may be
reasonably required to carry out the terms and conditions of this Agreement.
29. Additional Representations and Warranties.
29.1 Each party represents and warrants to the other:
A. It is duly organized, validly existing and in good
standing under the laws of its state of incorporation or organization, and
has all requisite power and authority to conduct its businesses and to
own its properties, and is duly qualified and in good standing in all
jurisdictions where such qualification is required in order to perform its
respective obligations under this Agreement.
B. The execution, delivery and performance of its
respective obligations under this Agreement has been duly authorized by all
necessary action and does not and will not violate any provision of law or of
its articles of incorporation, by-laws and/or organization, or result in a
breach of or constitute a default under any agreement, indenture or instrument
to which it is a party.
C. This Agreement and its terms constitute valid,
legally binding and enforceable obligations enforceable in accordance with its
terms.
D. No governmental or other authorization, approval or
filing is required for the performance by it of its obligations hereunder and
the transaction contemplated herein.
29.2 During the Term of this Agreement, PNGI shall:
A. Deliver to GTECH copies of all financial statements
and other financial information that it routinely files with the Securities &
Exchange Commission and/or the West Virginia Lottery Commission which are
generally available to the public; and
B. Maintain a Tangible Net Worth of not less than 105%
of the dollar amounts set
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forth in paragraph 7.3 A.(2) during the time periods referred to therein;
provided, however, any funds disbursed for debt service to PNGI's ultimate
parent, at a time when PNGI's ultimate parent is unable to make such debt
service payments, shall not cause this covenant to be violated.
C. As used in paragraph B. above, Tangible Net Worth
means, as of any given day, the amount that would be properly reflected as
Shareholders' (Members') Equity on the balance sheet of PNGI if a balance
sheet were prepared for PNGI as of that day, less the amount of PNGI's
intangible assets (defined as rights or property granted by a government,
another entity or internally developed by PNGI that lack physical substance)
as of such day, assuming for such purpose that such balance sheet had been
prepared in accordance with generally accepted accounting principles
consistently applied.
D. On or before the end of each calendar quarter, PNGI
shall submit to GTECH the certification of its chief financial officer that
PNGI is or is not, as the case may be, in compliance with this paragraph 29.2.
E. At least once annually, PNGI shall cause its
certified public accountant to submit to GTECH a certification that PNGI is
or is not, as the case may be, in compliance with this paragraph 29.2.
30. Dismissal of Litigation.
30.1 Simultaneously with the execution with this Agreement,
the parties shall execute, and cause all other counsel of
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record to sign, and file of record the Stipulation of Dismissal attached hereto
as Attachment I.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PNGI XXXXXXX TOWN GAMING, LLC ATTEST:
By:/S/ Xxxxxxx X. Xxxx /S/ Xxxxxx X. Ippolito_
Title:Vice-President
GTECH CORPORATION ATTEST:
By/S/ Xxxxxxx Xxxxxxxxxx /S/ Xxxxxxx X. Xxxxx _
Title:Executive Vice-President
All attachments to Agreement have been intentionally omitted
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