Exhibit 10.53
CASHLESS LICENSE AGREEMENT
This Cashless License Agreement (hereinafter "Agreement") is entered
into this 18th day of September, 2000 (hereinafter "Effective Date") by and
between Anchor Gaming a Nevada corporation, with principal offices at 000 Xxxxx
Xxxx, Xxxxx X, Xxx Xxxxx, Xxxxxx 00000 ("Anchor"), and WMS Gaming Inc., Delaware
corporation, with principal offices at 0000 Xxxxx Xxxxxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx 00000 ("Licensee").
WHEREAS Anchor has authority to license certain intellectual property
rights relating to a Cashless Gaming System, such rights being offered as an
Intellectual Property Package ("IPP") (defined below);
WHEREAS Licensee is desirous of obtaining a license to use the
intellectual property contained in the IPP, in the event the Gaming Machines
(defined below) made, leased or sold by Licensee will be utilized in a Covered
Cashless Gaming System (defined below); and
WHEREAS Anchor is desirous of granting Licensee a license to such IPP
for such Gaming Machines.
NOW THEREFORE in consideration of the foregoing, the covenants
hereafter set forth, and for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:
1. Definitions:
1.1 "Affiliates" means all direct and indirect parents of a Party
and all direct and indirect subsidiaries of such parents. A
"parent" is a person or entity that is in Control of another
person or entity, and a "subsidiary" is a person or entity
that is under the Control of another person or entity.
1.2 "Cashless Gaming System" means a system for adding or removing
credits or funds from Gaming Machines, employing tickets,
coupons, tokens, cards or other instruments of identification
to add credits or funds on a Gaming Machine or to remove
credits or funds from a Gaming Machine, in order to eliminate
or reduce the use of government issued bills and/or coins.
1.3 "Control" means control the legal, beneficial or equitable
ownership, directly or indirectly, of 50% or more of the
aggregate of all voting equity interests in an entity.
1.4 "Covered Cashless Gaming System" means a Cashless Gaming
System covered by a patent claim of the IPP.
1.5 "Effective Date" is defined in the preamble.
1.6 "Gaming Machine" means gaming machines, gaming devices, slot
machines, video lottery terminals, and the like as set forth
in NRS 463.0155, .0191, and all other relevant provisions of
the Nevada Gaming Control Act (NRS Chapter 463), and
comparable provisions of other jurisdictions where such
devices are legal.
1.7 "Intellectual Property Package" or "IPP" means those patents
and the continuations, continuations-in-part, divisionals,
reissues, reexaminations and foreign counterparts related
thereto, relating to Cashless Gaming Systems owned by the IPP
Parties or that the IPP Parties have a right to license.
1.8 "IPP Parties" means IGT, a Nevada corporation with a place of
business at 0000 Xxxxxxxxx Xxxxx, Xxxx, Xxxxxx 00000, and
Anchor, as owners or holders of the right to sublicense the
IPP.
1.9 "Licensed IPP" means the IPP licensed by Anchor to Licensee
pursuant to this Agreement and which is set forth on Exhibit
A, which may be amended from time to time.
1.10 "Licensee Patents" means patents owned by Licensee or that
Licensee has a right to license relating to a Cashless Gaming
System.
1.11 "License Tag" means a physical tag that will be provided to
Licensee by Anchor for display on Royalty Bearing Products.
1.12 "MGM Patent" means U.S. Patent No. 6,048,269 owned by MGM
Grand, Inc.
1.13 "Royalty Bearing Product" means a Gaming Machine manufactured,
sold or distributed subsequent to June 15, 2000 and used in a
Covered Cashless Gaming System or a Gaming Machine owned by
Licensee and placed or operated(ing) in a Covered Cashless
Gaming System.
1.14 "Unaffiliated Third Party" means a third party that a Party
does not directly or indirectly Control or which does not
directly or indirectly Control a Party.
2. Grant
2.1 Grant by Anchor. Anchor grants to Licensee a non-exclusive,
non-transferable, worldwide license under the Licensed IPP to
make, use, market and sell Gaming Machines for use in a
Covered Cashless Gaming System. Anchor also grants Licensee
the right to have a third party manufacture components for
Royalty Bearing Products, but only to the extent such
components are installed in a Royalty Bearing Product.
Licensee shall have no right to sub-license the Licensed IPP.
2.2 Condition on Sales. Licensee agrees that it will incorporate
the following condition (as shall be amended from time to time
to identify additional patents added to the Licensed IPP) in
all of its sales, lease and placement agreements of Royalty
Bearing Products and that it will have each of its customers
initial the
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condition as having been read at the time of sale, lease or
placement of the Royalty Bearing Product.
"This gaming machine is licensed to utilize methods
covered by one or both of the following patents, U.S.
Patent No. 5,290,033 and 5,265,874 ('Licensed Patents').
Customer acknowledges and agrees that use of this gaming
machine with an unlicensed cashless gaming system
constitutes an unlicensed use with respect to the Licensed
Patents and that no rights or licenses contained in this
sales, lease or placement agreement permits or licenses
such use by it or any other party. Customer also
acknowledges that the license may not be transferred from
one gaming machine to another and that any sale of this
licensed gaming machined by Customer voids the license.
Customer may transfer this licensed gaming machine only
between affiliated properties by obtaining a transfer
authorization certificate. Such transfer authorization
certificate may be obtained from Anchor Gaming upon proof
that the property qualifies as an affiliated property and
payment of a transfer fee. Affiliated properties are two
properties that have a common owner and where the common
owner maintains a majority interest in both properties."
2.3 Additions to IPP. Anchor shall make commercially reasonable
good faith efforts to add patents to the IPP. Anchor shall
promptly disclose such additional IPP patents to Licensee, and
Licensee shall have the right, in its sole discretion, to add
such additional IPP patents to the list of Licensed IPP.
2.4 [*]
3. License Fees:
3.1 Initial License Fee. Licensee agrees to pay Anchor [*]
("Initial License Fee") for each Royalty Bearing Product;
provided; however, that for each such Royalty Bearing Product
sold, leased, placed or operated by Licensee prior to the MGM
Patent being added to the IPP, Licensee shall be entitled to
[*].
* INFORMATION HAS BEEN OMITTED FROM THIS DOCUMENT AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION UNDER A REQUEST FOR CONFIDENTIAL TREATMENT
PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
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3.2 License Tag. Anchor shall provide to Licensee a License Tag to
be affixed to the outside of each Royalty Bearing Product. The
License Tag shall be placed adjacent to the serial number for
the Gaming Machine.
3.3 [*]
3.4 License Fee Adjustments. After the Effective Date, if an IPP
Party expends any financial resources to acquire any patents
(by any means, including without limitation, the acquisition
of a company), or the right to grant sublicenses to any
patents, relating to a Cashless Gaming System from any
Unaffiliated Third Party (other than the MGM Patent and any
Bally Gaming, Inc. patents relating to a Cashless Gaming
System), and such patents are added to the IPP, and Licensee
desires to include such patents in the Licensed IPP (i.e.,
Exhibit A is amended to add such patents), the Parties agree
that the Initial License Fee shall be increased; provided,
however, that such increase shall in no event be greater than
the lesser of (a) [*] of the increase in the standard license
fee paid by an Unaffiliated Third Party ("Standard License
Fee"), or (b) [*].
3.5 Payment and Reporting Schedule. Licensee will pay all license
fees owed to Anchor within fifteen (15) calendar days
following the end of the calendar month in which the Royalty
Bearing Product was sold, leased or placed with a third party.
All license fees in this Agreement will be paid by Licensee to
Anchor in United States dollars. Any amount due Anchor
hereunder that is not paid will thereafter bear interest until
paid at a rate of interest equal to the lesser of [*] per
annum or the maximum interest rate allowed by applicable law.
Within fifteen (15) calendar days following the end of each
calendar month, and at the same time Licensee makes payment of
the license fees hereunder, Licensee shall furnish to Anchor a
full and complete statement, duly certified by an officer of
Licensee to be true and accurate, showing: (a) the number of
Royalty Bearing Products that Licensee sold, leased or placed
with a third party during the calendar month in question, (b)
the serial number of each such Royalty Bearing Product, (c)
the customer that purchased, leased or received each Royalty
Bearing Product, (d) the location at which the Royalty Bearing
Product is licensed, and (e) the amount of license fees due.
* INFORMATION HAS BEEN OMITTED FROM THIS DOCUMENT AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION UNDER A REQUEST FOR CONFIDENTIAL TREATMENT
PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
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3.6 Failure to Pay License Fee. If Licensee fails to pay a license
fee for any product or method within the scope of any claim of
the Licensed IPP on the grounds that such product or method is
not covered by the Licensed IPP, and if an IPP Party asserts
that Licensee's acts infringe the Licensed IPP, then Licensee
shall not be entitled to correct such alleged infringement by
asserting a right to obtain a license under this Agreement,
and the appropriate IPP Party may immediately initiate an
action against Licensee for patent infringement.
Notwithstanding this Agreement or any other agreement to the
contrary, to the extent that any patent infringement
litigation commences against Licensee as a result of such
failure, the license fee set forth in this Agreement shall not
be used by Licensee or a court in determining the appropriate
amount of damages applicable to such infringement.
3.7 Taxes. License fees, and any other charges described in this
Agreement do not include sales, use, property, excise,
service, or similar taxes ("Taxes") now or hereafter levied by
any federal, state or local entity or other applicable body,
all of which shall be for Licensee's account. If Anchor is
required to pay Taxes as a result of this license grant,
Anchor shall invoice Licensee for such Taxes. Licensee hereby
agrees to indemnify and hold harmless Anchor for any Taxes and
related costs, interest and penalties paid or payable by
Anchor. Licensee shall not be responsible for paying any
income taxes of Anchor or the IPP Parties.
4. TERM AND TERMINATION:
4.1 Term. Unless terminated sooner in accordance with this
Article, the term of this Agreement will commence on the
Effective Date and will continue in full force and effect for
an initial term of [*] ("Initial Term").
4.2 Renewal Term. To the extent Licensee desires to renew this
Agreement beyond the Initial Term, the Parties agree to
negotiate in good faith the terms of any such renewal
agreement, taking into account the prevailing rates for
comparable license fees in the market. Anchor agrees that the
royalty offered to Licensee for the [*] renewal term shall be
no greater than [*] of the highest royalty rate Anchor has
received from another licensee for the Licensed IPP.
4.3 For Cause. Each Party shall have the right to terminate this
Agreement by written notice to the other Party in the event of
the breach by the other Party of any of its material
obligations hereunder and the failure to remedy such material
breach within thirty (30) days following the receipt of
written notice of such breach from the non-breaching Party;
provided, however, that if after using commercially reasonable
efforts such breach could not be cured by the other Party
within such thirty (30) day period, the cure period for such
breach shall be extended for an additional 150 days (provided
that such breach is capable of cure and the other Party
continues to diligently pursue such cure), unless otherwise
agreed in writing.
* INFORMATION HAS BEEN OMITTED FROM THIS DOCUMENT AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER A REQUEST FOR
CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.
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4.4 [*]
4.5 Customer Rights Upon Termination. The termination of this
Agreement for any reason shall not impair the right of any
customer who has already purchased and taken title to Royalty
Bearing Products for use with a Licensed Cashless Gaming
System.
4.6 No Reimbursement. In the event of termination of this
Agreement for any reason, Anchor shall have no obligation to
refund any amounts paid to it under this Agreement. The
preceding sentence should in no way limit Licensee's ability
to collect direct damages in the event of a breach of this
Agreement by Anchor.
4.7 Unpaid Royalty. Upon termination of this Agreement, Anchor may
at its option compel payment of the license fee for any
Royalty Bearing Product made, used, sold, leased or placed by
Licensee during the term of the Agreement, if the license fee
has not been paid by Licensee and the Royalty Bearing Product
was used without a license in a Covered Cashless Gaming
System.
5. REPRESENTATIONS AND COVENANTS:
5.1 General Representation. Each Party represents that it has the
right, power and authority to enter into this Agreement, the
ability to perform its obligations under this Agreement, and
that the persons executing this Agreement have the authority
to act for and to bind each respective Party.
5.2 Consents. Each Party represents that to the extent any third
party consents are required for the performance of any of its
obligations under this Agreement, it has obtained or shall
obtain such consents.
5.3 IPP Patents. Anchor represents that, as of the Effective Date,
the IPP represents all the patent rights held by the IPP
Parties relating to Cashless Gaming Systems, and that the IPP
Parties have authorized Anchor to grant the license described
herein.
6. DISCLAIMER:
NEITHER ANCHOR NOR THE IPP PARTIES MAKE ANY WARRANTIES, AND EACH OF
ANCHOR AND THE IPP P ARTIES EXPRESSLY DISCLAIM ALL OTHER WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, ANY EXPRESS OR
IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OR ANY OTHER WARRANTY OF ANY KIND.
* INFORMATION HAS BEEN OMITTED FROM THIS DOCUMENT AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER A REQUEST FOR
CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.
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7. RETENTION OF RECORDS AND AUDIT.
7.1 Records. For the term of this Agreement and for two years
thereafter, Licensee shall keep full and accurate books of
account and copies of all documents and other materials
relating to this Agreement at Licensee's principal office.
7.2 Audit. Licensee agrees to keep true and accurate records for
the purpose of making the reports described in Section 3.5 of
the Agreement. Anchor shall have the right to nominate an
independent auditor acceptable to and approved by Licensee,
which approval shall not be unreasonably withheld, who shall
have access to the records of Licensee during reasonable
business hours for the purpose of verifying compliance with
the reporting obligations set forth in Section 3.5. The
auditor shall disclose to Anchor only information relating to
the accuracy of the royalty report and payments made according
to this Agreement. If any audit or examination of Licensee's
books and records reveals that Licensee has failed to properly
account for and pay license fees owing to Anchor hereunder,
and the amount of any license fees that Licensee has failed to
properly account for and pay in any quarterly accounting
period exceeds by five (5%) or more of the license fees
actually accounted for and paid to Anchor for such period,
Licensee will, in addition to paying Anchor such past due
license fees, reimburse Anchor for all reasonable audit costs,
fees, costs, and expenses incurred in conducting such audit or
examination, together with interest on the overdue license
fees.
8. PATENT MARKINGS.
Licensee shall affix to each Royalty Bearing Product a patent marking
notice consistent with 35 U.S.C. ss. 287 that identifies all applicable
patent numbers, and will also affix a License Tag supplied to it by
Anchor to each Royalty Bearing Product. Such License Tag shall be
affixed in such a manner that it is clearly visible on the outside of
the Royalty Bearing Product. Licensee also agrees to xxxx all Royalty
Bearing Products with any other applicable proprietary legends as may
be reasonably requested by Anchor to ensure that the rights under the
IPP are fully protected under all applicable laws.
9. REGULATORY COMPLIANCE.
9.1 Regulatory Approvals and Licenses. Performance of this
Agreement in each jurisdiction is contingent upon each Party
possessing or receiving any necessary initial and continuing
approvals and licenses from the regulatory authorities in each
of the jurisdictions where the Parties operate and that have
jurisdiction over the Parties or the subject matter of this
Agreement.
9.2 Termination. Each Party shall cooperate with any requests,
inquiries, or investigations of any regulatory authorities or
law enforcement agencies in connection with Licensee or
Anchor, their Affiliates or related companies or persons, or
this Agreement or obtaining regulatory approval. If any
license or approval necessary for either Party to perform
under this Agreement is denied, suspended, or revoked, this
Agreement shall terminate immediately and neither
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Party shall have any additional rights hereunder; provided,
however, that if the denial, suspension, or revocation affects
performance of this Agreement in part only (e.g., in a
jurisdiction), the Parties may by mutual agreement continue to
perform under this Agreement to the extent it is unaffected by
the denial, suspension, or revocation.
9.3 Compliance. Anchor and Licensee acknowledge that each Party
operates under privileged licenses in a highly regulated
industry, maintains a compliance program to protect and
preserve its name, reputation, integrity, and good will
through a thorough review and determination of the integrity
and fitness, both initially and thereafter, of any person or
company that performs work for Anchor or Licensee or their
respective Affiliates, or with which those companies are
otherwise associated, and to monitor compliance with the
requirements established by gaming regulatory authorities in
various jurisdictions around the world. Each Party shall
cooperate with the other Party and its compliance committee as
reasonably requested and provide the committee with such
information as it may reasonably request on appropriate
notice. Either Party may terminate this Agreement in the event
that either Party or its respective compliance committee
discovers facts with respect to the other Party or this
Agreement that would, in the reasonable opinion of that Party
or its committee or both, jeopardize the gaming licenses,
permits, or status of that Party or any of its Affiliates,
with any gaming commission, board, or similar regulatory or
law enforcement authority. If reasonable and appropriate, the
Parties may provide notice of, and attempt to resolve, any
problems and concerns, relating to such facts.
10. MISCELLANEOUS.
10.1 Relationship of the Parties. This Agreement does not
constitute and shall not be construed as constituting a
partnership or joint venture between WMS and Anchor, and
neither Party shall have any right to obligate or bind the
other Party in any manner whatsoever, and nothing herein
contained shall give or is intended to give any rights of any
kind to any third persons.
10.2 Headings. The Article and Section headings contained herein
are for convenience of reference only and shall not serve to
limit, expand or interpret the Articles and Sections to which
they apply, and shall not be deemed a part of this Agreement.
10.3 Confidentiality of Agreement. Each Party shall maintain this
Agreement in confidence and shall not disclose, confirm or
otherwise discuss this Agreement, or its terms and conditions,
except as may be necessary to the their respective
accountants, affiliates, legal counsel, tax advisors,
insurance carriers, shareholders, bankers, and gaming
jurisdiction regulators, or as may be required by law, rule,
regulation or in connection with any court order, subpoena or
valid process of law.
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10.4 Assignment. Licensee may not assign this Agreement or any of
its rights or duties hereunder without the prior written
consent of the Licensor; provided, however, that Licensee may
assign this Agreement to an Affiliate.
10.5 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the permitted assigns and
successors of the Parties.
10.6 Amendment Waiver. No modification, amendment, supplement to or
waiver of any provision of this Agreement will be binding upon
the Parties unless made in a writing signed by the Parties. A
failure of either Party to exercise any right provided for
herein shall not be deemed to be waiver of any right
hereunder.
10.7 Governing Law. This Agreement is entered into the State of
Nevada and shall be construed and interpreted in accordance
with its laws, without regard to conflict of law provisions.
10.8 Severability. If any provision of this Agreement is found or
held to be invalid or unenforceable, the meaning of said
provision will be construed, to the extent feasible, so as to
render the provision enforceable, and if no feasible
interpretation shall save such provision, it will be severed
from the remainder of this Agreement, as appropriate. The
remainder of this Agreement shall remain in full force and
effect unless the severed provision is essential and material
to the rights or benefits received by either party. If either
Party deems the severed provisions to be material, then that
Party may terminate this Agreement upon giving thirty (30)
days prior written notice.
10.9 Notice. If a Party is required or permitted to give notice to
the other Party under this Agreement, such notice shall be
deemed given either (a) when transmitted by facsimile or (b)
two business days after depositing the notice in the U.S.
mail, first-class postage prepaid, at the address specified
above, or at such other address or facsimile number as the
party may specify in writing in accordance with this Section.
If to Licensee: WMS Gaming Inc.
0000 X. Xxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
[*]
With a copy to: Winston & Stawn
00 X. Xxxxxx Xxxxx
Xxxxxxx, XX 00000
[*]
* INFORMATION HAS BEEN OMITTED FROM THIS DOCUMENT AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION UNDER A REQUEST FOR CONFIDENTIAL TREATMENT
PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
9
With a copy to: Shack & Xxxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
[*]
If to Anchor: Anchor Gaming
000 Xxxxx Xxxx, Xxxxx X
Xxx Xxxxx, XX 00000
[*]
With a copy to: International Game Technology
0000 Xxxxxxxxx Xxxxx
Xxxx, XX 00000
[*]
Xxxxxxxx & Xxxxx
000 X. Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
[*]
10.10 Publicity/Public Announcements. Neither party shall use the
name of the other party in publicity, advertising or similar
activity without the prior written consent of the other, which
consent shall not be unreasonably delayed or withheld.
10.11 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be considered one and the
same document.
10.12 Entire Agreement. This Agreement sets forth the entire
agreement between the Parties as it relates to the subject
matter of this Agreement, and it replaces, supersedes any and
all prior agreements, promises, proposals, representations,
understandings, negotiations, written or not relating to the
same.
* INFORMATION HAS BEEN OMITTED FROM THIS DOCUMENT AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION UNDER A REQUEST FOR CONFIDENTIAL TREATMENT
PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers or representatives.
WMS GAMING INC. ANCHOR GAMING
By: Xxxxx X. Xxxxxxx By: X. X. Xxxxxxxx
------------------------- -----------------------
Name: Xxxxx X. Xxxxxxx Name: X. X. Xxxxxxxx
Title: President and CEO Title: CEO
Date: 9/11/00 Date: 9/21/00
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EXHIBIT A
LICENSED IPP
--------------------------------------------------------------------------------
COUNTRY PATENT NO. ISSUE DATE TITLE
--------------------------------------------------------------------------------
United States 5,265,874 11/30/93 Cashless Gaming Apparatus
and Method
--------------------------------------------------------------------------------
United States 5,290,033 03/01/93 Gaming Machine and Coupons
--------------------------------------------------------------------------------
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