EXHIBIT 10.5
MASTER AGREEMENT
FOR
PRODUCT DEVELOPMENT, PURCHASE AND SALES
BETWEEN
ACRES GAMING INCORPORATED
AND
INTERNATIONAL GAMING TECHNOLOGY, INC.
DATED AS OF JANUARY 27, 1997
CONTENTS
Section 1. Definitions...........................................1
Section 2. The R&D Work..........................................5
2.1 R&D Plans.............................................5
2.2 Prototypes............................................6
2.3 Documentation.........................................7
2.4 Regulatory Approvals, Etc.............................8
2.5 Schedule..............................................8
2.6 Performance of R&D Work...............................8
2.7 Funding...............................................9
2.8 Changes...............................................9
2.9 Contributions of Equipment...........................10
Section 3. Purchase of Products.................................10
3.1 Orders...............................................10
3.2 Price................................................10
3.3 Price Limitation.....................................10
3.4 Books and Records....................................11
3.5 Product Defect Notification..........................11
3.6 No Obligation to Purchase Products...................11
Section 4. Cooperative Marketing and Distribution...............11
4.1 M&D Plans............................................11
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Section 5. Joint Technology.....................................12
5.1 Ownership............................................12
5.2 Perfection of Interests..............................12
5.3 No Right to Accounting...............................13
5.4 No Right to Improvements.............................13
5.5 Infringement by Third Parties........................13
5.6 Infringement by Joint Technology.....................13
Section 6. IGT Technology.......................................14
6.1 Reservation..........................................14
6.2 License..............................................14
6.3 Royalty..............................................15
6.4 Infringement.........................................15
Section 7. Acres Technology.....................................16
7.1 Reservation..........................................16
7.2 License..............................................16
7.3 Royalty..............................................16
7.4 Infringement.........................................17
Section 8. Term.................................................17
Section 9. Arbitration..........................................17
9.1 Selection of Arbitrator..............................17
9.2 Location.............................................18
9.3 Jurisdiction.........................................18
9.4 Discovery............................................18
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9.5 Decision.............................................18
9.6 Costs................................................19
9.7 Statute of Limitations...............................19
Section 10. Miscellaneous........................................19
10.1 No Right to Marks....................................19
10.2 Confidential Information.............................19
10.3 Compliance with Laws.................................20
10.4 Notices..............................................20
10.5 Nonwaiver............................................20
10.6 Successors and Assigns...............................21
10.7 Independent Contractor...............................21
10.8 No Partnership or Agency.............................21
10.9 Specific Performance.................................22
10.10 Applicable Law.......................................22
10.11 Entire Agreement.....................................22
PAGE iii
__________________________________________
LIST OF EXHIBITS
EXHIBIT DESCRIPTION REFERENCE
_________ ____________________________________________________ _____________
PAGE iv
MASTER AGREEMENT
FOR
PRODUCT DEVELOPMENT, PURCHASE AND SALES
This Agreement, dated as of January 27, 1997, is made and entered into by
and between: International Gaming Technology, Inc. ("IGT") and Acres Gaming,
Incorporated ("Acres"). IGT and Acres are sometimes referred to herein
collectively as the "Parties" and individually as a "Party".
RECITALS
A. Acres and IGT wish to jointly pursue business opportunities in the
gaming industry in a manner that emphasizes the strengths of each company;
B. The Parties intend that this Agreement shall be the exclusive method
of developing and marketing products for the Systems, Proprietary Games,
Enhancements to IGT Games, and Progressives and Displays (all as more fully
described on Exhibit A); and
C. In addition, the Parties wish to look to each other to develop new
games, projects, industry standards and other business opportunities.
The Parties agree as follows:
SECTION 1. DEFINITIONS
The following terms will have the following specified meanings whenever
used in this Agreement with initial letters capitalized:
1.1 "ACRES RIGHTS" means Proprietary Rights of Acres in the Acres
Technology.
1.2 "ACRES TECHNOLOGY" means any design, specification, know-how, computer
program, device, technique, algorithm, method, process, procedure, improvement,
discovery or invention, whether or not reduced to practice, that is protected or
protectable under any Proprietary Right, that is owned or controlled (e.g., by
license or otherwise) by Acres, that is furnished by Acres to IGT under this
Agreement and that is used or useful in the R&D Work or the Development, Making
or Use of Products or Tools; provided however, that Acres Technology does not
include any Joint Technology. Acres Technology may include, but is not limited
to, Acres' Confidential Information.
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1.3 "AFFILIATE" means, with respect to any Party, any Person that,
directly or indirectly (e.g., through any number of successive tiers),
controls, is controlled by or is under common control with such Party.
1.4 "CONFIDENTIAL INFORMATION" means any confidential or proprietary
information of either Party, whether of a technical, business or other nature
(including, but not necessarily limited to: trade secrets, know-how, and
information relating to the technology, customers, business plans, promotional
and marketing activities, finances and other business affairs of such Party).
Any information provided to a party hereunder shall be "Confidential
Information." IGT's Confidential Information may include, but is not limited
to, IGT Technology. Acres' Confidential Information may include, but is not
limited to, Acres Technology.
1.5 "DEVELOP" (or such conjugations thereof as the context may require)
means design, engineer, prepare, write, invent or develop (or such conjugations
thereof as the context may require).
1.6 "DISCLOSING PARTY" means the Party whose Confidential Information is
disclosed to the other Party pursuant to this Agreement.
1.7 "DISTRIBUTE" (or such conjugations thereof as the context may require)
means sell, lease, license, sublicense, grant of use rights, transfer or
distribute (or such conjugations thereof as the context may require).
1.8 "DOCUMENTATION" means the documentation described in paragraph 2.3.1
or otherwise delivered by a Party under this Agreement.
1.9 "IGT RIGHTS" means IGT's Proprietary Rights in the IGT Technology.
1.10 "IGT TECHNOLOGY" means any design, specification, know-how, computer
program, device, technique, algorithm, method, process, procedure, improvement,
discovery or invention, whether or not reduced to practice, that is protected or
protectable under any Proprietary Right, that is owned or controlled (e.g., by
license or otherwise) by IGT, that is furnished by IGT to Acres under this
Agreement and that is used or useful in the R&D Work or the Development, Making
or Use of Products; provided however, that IGT Technology does not include any
Joint Technology. IGT Technology may include, but is not limited to, IGT's
Confidential Information.
1.11 "IMPROVEMENT" means any correction, modification, alteration,
enhancement, improvement, update, revision or derivative of any Product other
than a correction, modification, alteration, enhancement or derivative made as
part of the R&D Work.
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1.12 "JOINT TECHNOLOGY" means any Product, any Tool, and any other product,
design, specification, know-how, computer program, device, technique,
algorithm, method, process, procedure, improvement, discovery or invention,
whether or not reduced to practice, that is protected or protectable under
any Proprietary Right and that is created, conceived, reduced to practice,
developed, discovered, invented, made or acquired in connection with the R&D
Work to the extent, but only to the extent, that the Parties agree that it
shall be Joint Technology.
1.13 "M&D PLAN" means a marketing and distribution plan agreed upon by the
Parties pursuant to paragraph 4.1, as the same may be amended by the Parties.
1.14 "MAKE" (or such conjugations thereof, as the context may require)
means manufacture, assemble, produce, reproduce, copy or make (or such
conjugations thereof, as the context may require).
1.15 "MANUFACTURING COST" of a Product means the sum of the following costs
reasonably incurred by a Party to Make such Product:
(a) amounts paid to Third Parties for parts, supplies, materials and
assembly incorporated in the Product;
(b) direct costs of labor to Make the Product; and
(c) an allowance for general, administrative and overhead costs equal
to fifty percent (50%) of the costs described in (b) of this paragraph.
1.16 "MARK" means any trade name, trademark, service mark or other name or
mark that is protected or protectable under the laws of the United States of
America, any state of the United States of America, any country other than the
United States of America, any political subdivision of any of the foregoing, or
any other governmental authority within the United States having jurisdiction.
1.17 "MONTH" means a calendar month.
1.18 "ORDER" means an order issued by a Party for the purchase of Products
from the other Party pursuant to Section 3 of this Agreement. All Orders will
be deemed to include and be subject to the Purchase T&Cs.
1.19 "PART" means any part, component or subassembly of any Product.
1.20 "PART SUPPLIER" means any manufacturer or other supplier of any Part.
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1.21 "PARTY'S PLANT" means any plant or facility at which any Development
Work is performed or any Product is designed, developed, Made, inspected or
tested by or for a Party.
1.22 "PERSON" means any individual, corporation, partnership, trust,
association, organization, governmental authority or other entity.
1.23 "PRODUCT" means any Product to be Developed pursuant to an R&D Plan.
1.24 "PROPRIETARY RIGHT" means any patent, copyright, mask work, trade
secret or other intellectual property right that is protected or protectable
under the laws of the United States of America, any state of the United States
of America, any political subdivision of any of the foregoing, or any other
governmental authority within the United States having jurisdiction. However,
Proprietary Rights do not include any Marks.
1.25 "PROTOTYPE" means a prototype of any Product Made or to be Made
pursuant to an R&D Plan.
1.26 "PURCHASE T&CS" means the terms and conditions set forth in the
attached Exhibit B. The Purchase T&Cs may be amended only by a written
amendment that specifically references this Agreement and that is signed by
both Parties.
1.27 "QUARTER" means a calendar quarter (i.e., any period of three
consecutive Months commencing with any of the Months of January, April, July,
or October).
1.28 "R&D PLAN" means a research and development plan agreed upon by the
Parties pursuant to subsection 2.1, as the same may be changed or amended by
the Parties pursuant to subsection 2.8.
1.29 "R&D WORK" means the research, development and other work performed or
to be performed by a Party pursuant to Section 2. The R&D Work includes, but
is not necessarily limited to:
(a) the design, engineering, development, manufacture, assembly,
production, inspection, testing and delivery of Prototypes pursuant to
paragraphs 2.2.1 and 2.2.2 and the R&D Plan;
(b) the preparation and assembly of Documentation pursuant to
paragraph 2.3.1 and the R&D Plan; and
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(c) obtaining the approvals, permits, licenses, certificates,
listings, registrations and other authorizations described in
paragraph 2.4.
1.30 "RECEIVING PARTY" means the Party to whom Confidential Information of
the other Party is disclosed pursuant to this Agreement.
1.31 "RELEASE DATE" means the date agreed upon by the Parties pursuant to
paragraph 2.2.3.
1.32 "RESPONSIBLE PARTY" means the Party responsible for a particular
project.
1.33 "SPECIFICATIONS" means the design, engineering, performance,
functional, operational and other criteria or specifications for any Product as
set forth in the R&D Plan or Documentation pertaining to such Product.
1.34 "THIRD PARTY" means any Person other than a Party.
1.35 "THIRD-PARTY RIGHT" means any Proprietary Right that is owned or
controlled (e.g. by license or otherwise) by any Third Party.
1.36 "TOOL" means any device, computer program or other tool that is used
in the R&D Work or the Development, Making, inspection or testing of any
Product and that is created, conceived, reduced to practice, developed,
discovered, invented, or made by or for a Party.
1.37 "USE" (or such conjugations thereof as the context may require) means
operate, maintain, test, repair, service or use (or such conjugations thereof
as the context may require).
SECTION 2. THE R&D WORK
2.1 R&D PLANS
2.1.1 The Parties will prepare and agree upon a written research and
development plan for each Product or Project. Each R&D Plan will include:
(a) a description of the Product subject to the R&D Plan;
(b) preliminary designs, specifications and drawings for the Product
subject to the R&D Plan;
(c) a budget for the R&D Work to be performed under the R&D Plan;
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(d) specification of the funding to be provided by each Party for the
R&D Work to be performed under the R&D Plan;
(e) schedules for performance of the R&D Work to be performed under
the R&D Plan;
(f) a description of the Prototypes to be Developed, Made and
delivered by a Party to the other Party pursuant to subsection 2.2;
(g) acceptance tests for such Prototypes;
(h) a description of the Documentation to be prepared or assembled by
a Party pursuant to paragraph 2.3.1 with respect to the Product subject to
the R&D Plan;
(i) specification of the IGT Technology to be furnished by IGT under
the R&D Plan;
(j) specification of the Acres Technology to be furnished by Acres
under the R&D Plan;
(k) specification of any royalties payable to either Party with
respect to the licenses granted under paragraphs 5.3, 6.2 or 7.2;
(l) agreement with respect to manufacturing rights and schedules;
(m) specification of any Third-Party Right that is required to
Develop, Make, Distribute or Use the Product subject to the R&D Plan and a
plan for the acquisition (e.g. by purchase, license or otherwise) of such
Third-Party Right by the Parties; and
(n) any other matter agreed upon by the Parties with respect to the
Product, subject to the R&D Plan.
2.2 PROTOTYPES
2.2.1 The Responsible Party will Develop, Make and deliver to the
other Party the Prototypes in accordance with and as otherwise specified in
the applicable R&D Plans. Prior to delivery, the Responsible Party will
conduct such inspections and tests of each Prototype as are necessary to
ensure that each Prototype complies with applicable Specifications. Without
limiting the generality of the foregoing, the Responsible Party will not
deliver any Prototype to the other Party unless and until such Prototype
passes the acceptance test set forth in the applicable
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R&D Plan or otherwise agreed upon by the Parties. The Responsible Party will
deliver a copy of the results of any such acceptance test with the applicable
Prototype.
2.2.2 Promptly after receipt of any Prototype, the other Party will
inspect and test each Prototype to determine whether or not it complies with
applicable Specifications. If the other Party determines that any Prototype
does not so comply, the other Party will give the Responsible party written
notice thereof, together with a copy of the results of the Responsible Party's
inspections and testing of the Prototype. The Responsible Party will use its
best efforts to promptly correct any noncompliance and resubmit the Prototype
for further inspection, testing and approval or disapproval by the other Party.
This procedure will be repeated until the other Party approves the Prototype.
2.2.3 Promptly after the other Party's approval of any Prototype, the
Parties will agree upon the date when Products corresponding to such Prototype
will be available for purchase by the other Party under Section 3 or other
distribution under Section 4.
2.3 DOCUMENTATION
2.3.1 The Responsible Party will prepare or assemble with respect to
each Product:
(a) detailed designs, specifications, drawings, test programs, mask
works, schematics, artwork, bills of materials, assembly procedures, lists
of all Parts, lists of all Part Suppliers and other documentation setting
forth in a complete and clear manner all of the requirements for the Making
of the Product and any related Tool;
(b) detailed source codes, files, listings and other documentation of
all programs used as part of or in conjunction with the Product;
(c) detailed procedures for the inspection and testing of the Product
to ensure quality and compliance with applicable Specifications; and
(d) detailed manuals or other instructions for the Use and servicing
of the Product.
2.3.2 Upon completion of the Development of any Product and
thereafter upon the other Party's request, the Responsible Party will deliver to
the other Party a complete master, reproducible copy of all Documentation
prepared or assembled by the Responsible Party with respect to such Product and
any related Tool.
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2.3.3 The Responsible Party warrants that the Documentation delivered
pursuant to paragraph 2.3.2 will conform to the applicable Specifications and
will be sufficient to permit the other Party to effectively Make and Use the
applicable Product and any related Tool.
2.4 REGULATORY APPROVALS, ETC.
Unless otherwise provided in the applicable R&D Plan, the Responsible Party
will obtain any and all approvals, permits, licenses, certificates, listings,
registrations and other authorizations of any governmental authority (e.g.,
state gaming regulatory authorities), independent testing organizations (e.g.,
Underwriters Laboratories or its successors) or other Third Parties specified in
the R&D Plan or required to Make, use, market, sell or distribute Products in
the United States of America.
2.5 SCHEDULE
2.5.1 The Responsible Party will use its best efforts to perform and
complete the R&D Work with respect to any Product in accordance with the
schedules set forth in the R&D Plan for such Product and any other schedules
that may be agreed upon from time to time by the Parties. The Responsible
Party will perform with reasonable diligence any R&D Work for which no
schedule is set forth in the applicable R&D Plan or otherwise agreed upon by
the Parties.
2.5.2 Neither Party will be liable for any delays in connection with
the R&D Work due to causes that are not reasonably foreseeable, that are beyond
such Party's reasonable control and that cannot be overcome by the exercise of
reasonable diligence; provided that such Party gives the other Party prompt
written notice of the circumstances causing the delay, the anticipated duration
of the delay and the action being taken to overcome or mitigate the delay. The
Parties will use their best efforts to eliminate or minimize any such delay. In
the event of any delay within the purview of this paragraph, the schedules for
performance of the R&D Work affected by such delay shall be equitably adjusted
to reflect the delay.
2.6 PERFORMANCE OF R&D WORK
2.6.1 The Responsible Party will perform the R&D Work in an orderly,
efficient, expeditious, skillful and workmanlike manner.
2.6.2 Upon the other Party's request, the Responsible Party will
cooperate with the other Party and coordinate the R&D Work with any related work
being performed by the Responsible Party or others. If any part of the R&D Work
depends on the results of work by the other Party or others, the Responsible
Party will immediately notify the other Party in writing of any actual or
apparent deficiencies or
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defects in such other work that render it unsuitable for performance of the
R&D Work in accordance with this Agreement. The Responsible Party's failure
to so notify the other Party will constitute the Responsible Party's
acknowledgment that such other work is suitable for performance of the R&D
Work in accordance with this Agreement, except as to latent defects which may
subsequently be discovered in such other work.
2.7 FUNDING
The Parties will fund the R&D Work to be performed under any R&D Plan as
provided for in such R&D Plan.
2.8 CHANGES
2.8.1 Either Party may from time to time request changes in the R&D
Work or any R&D Plan by giving the other Party written notice of such request.
Such requested changes may include, but are not limited to, changes in:
(a) the Prototypes to be delivered by the Responsible Part to the
other Party under this Agreement;
(b) the Specifications and Documentation; and
(c) the schedules for performance of any R&D Work.
No such changes will become effective unless and until they are agreed to in
writing by both Parties. Neither Party will unreasonably withhold its consent
to any change requested by the other Party.
2.8.2 If any change under paragraph 2.8.1 results in any increase or
decrease in the Parties' reasonable best estimate of the costs that will be
incurred to perform the R&D Work not then performed in accordance with this
Agreement, then the budget, funding and other applicable provisions of the
affected R&D Plan will be amended to reflect such increase or decrease.
2.8.3 If any change under paragraph 2.8.1 results in an increase or
decrease in the Parties' reasonable best estimate of the time required to
perform any R&D Work not then performed in accordance with this Agreement, then
the schedules and other applicable provisions of the affected R&D Plan will be
amended to reflect such increase or decrease.
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2.9 CONTRIBUTIONS OF EQUIPMENT
Each Party will contribute to any R&D Work a reasonable quantity of
hardware products it produces for use in the R&D Work at prices equal to
Manufacturing Cost. No such hardware may be resold except at the end of the
R&D Work and then only after first offering it back to the supplying Party.
SECTION 3. PURCHASE OF PRODUCTS
3.1 ORDERS
The Responsible Party will Make, sell and deliver to the other Party
such Products as the other Party may order from the Responsible Party under
this Agreement from time to time. Each Order will specify a description of
the Products ordered, the quantity and purchase price of the Products
ordered, the dates upon which the Products are to be shipped and delivered,
the destination to which the Products are to be shipped and any applicable
shipping instructions (e.g., as to carrier or means of shipment); provided,
however, that unless otherwise agreed by the Responsible Party, the other
Party will not specify a date for delivery of any Product less than sixty
(60) days after the date of the Order. Each Order will be deemed to include
and be subject to the Purchase T&Cs.
3.2 PRICE
The purchase price for each Product will be as agreed upon from time to
time by the Parties, subject to the limitation set forth in paragraph 3.3.
The Responsible Party's acceptance of any Order will constitute the
Responsible Party's acknowledgment that the purchase price specified in such
Order has been agreed to by the Responsible Party. The Responsible Party's
acceptance of any Order may be evidenced by the Responsible Party's written
acceptance of the Order, shipment of the Products subject to the Order, or
any other commercially recognized means of acceptance.
3.3 PRICE LIMITATION
The Responsible Party will offer to sell Products to the other
Party under this Agreement at a fair price that does not exceed
the lowest price at which the Responsible Party offers Products to
any Third Party, taking into consideration volume, payment terms, delivery
schedule and other pertinent factors.
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3.4 BOOKS AND RECORDS
The Responsible Party will keep complete and accurate books and records
of all Manufacturing Costs. Such books and records will be kept in
accordance with generally accepted accounting practices and principles,
consistently applied. Upon the other Party' request, the Responsible Party
will make such books and records available for examination, reproduction and
audit by an independent accounting firm designated by the other Party.
Unless otherwise agreed by the Parties, any such examination, reproduction
and audit will be conducted during the Responsible Party's normal business
hours and in such a manner so as not to unreasonably interfere with the
Responsible Party's business.
3.5 PRODUCT DEFECT NOTIFICATION
The Responsible Party will immediately notify the other Party of any
material or recurring defect, deficiency or nonconformity in any Product that
comes to the attention of the Responsible Party.
3.6 NO OBLIGATION TO PURCHASE PRODUCTS
Each Party acknowledges that no Party has made any commitment or
representation, express or implied, regarding any quantity of any Product to
be purchased by any Party under this Agreement.
Section 4. COOPERATIVE MARKETING AND DISTRIBUTION
4.1 M&D PLANS
The Parties will prepare and agree upon a written marketing and
distribution plan for each Product. Each M&D Plan will include:
(a) Marketing and Sales Plan for the
Product including distribution channels market forecasts;
(b) minimum volume commitments;
(c) price schedules; and
(d) forecasting and ordering process.
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SECTION 5. JOINT TECHNOLOGY
5.1 OWNERSHIP
Except as otherwise provided in the applicable R&D Plan or a separate
written agreement entered into by the Parties after the date of this
Agreement, each Party will have sole right, title and interest in all
Technology and related Proprietary Rights developed by such Party in
connection with Projects or Products for which such Party was the Responsible
Party. In the event that the Parties agree in an R&D Plan or other document
that there is Joint Technology, either Party may:
(a) Make, Use and Distribute Joint Technology in connection
with the Development, Making, Distribution or Use of Products and
Improvements;
(b) copy, modify, use, distribute and otherwise deal with
Documentation;
(c) authorize any Third Party to take any action described in
(a) or (b) above; and
(d) assign, encumber or otherwise, transfer all or part
of its rights, titles and interests in any Joint Technology.
5.2 PERFECTION OF INTERESTS
5.2.1 Each Party will take such action
(including, but not limited to, the execution, acknowledgment and delivery of
assignments, instruments of transfer and conveyance, and other documents) as
may be reasonably requested by the other Party to evidence, perfect or effect
such other Party's rights, titles and interests in any Joint Technology or
related Proprietary Rights.
5.2.2 If either Party makes any filing, application, registration
or other action with any governmental authority in order to evidence, perfect
or effect any Proprietary Right in any Joint Technology, such Party will give
the other Party the opportunity to participate in such filing, application,
registration or other action. Further, upon request of such other Party, the
Party making the filing, application, registration or action will assign or
otherwise transfer to such other Party a fifty percent (50%) undivided
interest in such filing, application, registration or action and any
Proprietary Rights evidenced, perfected or effected by the same.
5.2.3 Each Party will take appropriate steps and precautions for
the protection against any loss or diminishment of any Proprietary Rights
related to any Joint Technology. Without limiting the generality of the
foregoing, each Party will
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exercise at least the same degree of care against any unauthorized use or
disclosure of any trade secrets included in such Proprietary Rights as such
Party exercises with regard to its own trade secrets.
5.3 NO RIGHT TO ACCOUNTING
Except as otherwise provided in the applicable R&D Plan or a separate
written agreement entered into by the Parties after the date of this
Agreement, neither Party will have any right or interest in or to any
revenues, profits or other benefits derived by the other Party from such
other Party's commercial exploitation of any Joint Technology or related
Proprietary Rights.
5.4 NO RIGHT TO IMPROVEMENTS
Except as otherwise provided in the applicable R&D Plan or a separate
written agreement entered into by the Parties after the date of this
Agreement, neither Party will have any right or interest in or to any
Improvement made by the other Party.
5.5 INFRINGEMENT BY THIRD PARTIES
If either Party becomes aware of any infringement, wrongful use or
misappropriation of any Joint Technology or related Proprietary Right by any
Third Party, such Party will give the other Party notice thereof. Either
Party may commence and prosecute any legal action that it deems appropriate
on account of such infringement, wrongful use or misappropriation, and the
other Party will have the opportunity to participate in any such action. Any
recovery in such action will be applied first to reimbursement of the costs
and expenses (including, but not limited to, attorneys' fees) incurred in
connection with such action and then to the Parties in proportion to their
respective damages suffered on account of the infringement, wrongful use or
misappropriation.
5.6 INFRINGEMENT BY JOINT TECHNOLOGY
5.6.1 If any Joint Technology is held to infringe,
wrongfully use or misappropriate any Third-Party Right, the Responsible Party
will:
(a) procure for the other Party and its customers and
licensees the right to Use the item;
(b) replace the item with a substantially equal item that does
not infringe, wrongfully use or misappropriate any Third-Party Right; or
(c) modify the item so that it no longer infringes, wrongfully
uses or misappropriates any Third-Party Right.
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5.6.2 Each Party represents and warrants that the Joint Technology
developed by that Party as Responsible Party will not infringe or
misappropriate any Third-Party Right. Each Party will defend and indemnify
the other from and against any and all claims that any Joint Technology
developed by that Party as Responsible Party infringes or misappropriates any
Third-Party Right and any and all costs and expenses (including, but not
limited to, reasonable attorneys' fees) incurred in connection with the
defense, settlement or satisfaction of such claim (including, but not limited
to, any damages, liabilities or losses based upon any such claim); provided
that the other Party:
(a) gives the Responsible Party prompt written notice of
the claim;
(b) cooperates with the Responsible Party in connection
with the defense, settlement and satisfaction of the claim;
(c) permits the Responsible Party to control the defense,
settlement and satisfaction of the claim; and
(d) does not settle the claim without the prior written
consent of the Responsible Party, which consent will not be
unreasonably withheld.
5.6.3 The Parties' obligations under paragraphs 5.6.1 and 5.6.2
will not apply to the extent any Joint Technology infringes, wrongfully uses
or misappropriates any Third-Party Right solely as a result of a Responsible
Party's Use of any Technology of the other Party in accordance with the
license granted under paragraph 7.2.
SECTION 6. IGT TECHNOLOGY
6.1 RESERVATION
Except for the license granted under paragraph 6.2, IGT reserves all of
its right, title and interest in all IGT Technology and IGT Rights.
6.2 LICENSE
Unless otherwise provided in writing, the License granted hereunder is
solely for use in performance of duties under this Agreement during the term
of this Agreement. Subject to the foregoing limitations and any other
limitations set forth in the applicable R&D Plan or any separate written
agreement entered into by the Parties after the date of this Agreement, IGT
hereby grants to Acres a worldwide, nonexclusive license under the IGT Rights
to:
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(a) Develop, Make, Distribute and Use Products, Improvements
and Tools;
(b) Make, Use and Distribute the IGT Technology in connection
with the exercise of the rights granted under (a) and (c) of this
paragraph; and
(c) GRANT IRREVOCABLE, PERPETUAL sublicenses to any of the
rights granted under (a) and (b) of this paragraph to end users in
connection with the sale, lease or rental of Products or
Improvements DURING THE LIFE OF A PRODUCT OR IMPROVEMENT PROVIDED
IN ACCORDANCE WITH THIS AGREEMENT.
6.3 ROYALTY
Except as otherwise specifically provided for in an R&D Plan or a
separate written agreement entered into by the Parties after the date of this
Agreement, the license granted under paragraph 6.2 will be royalty-free and
IGT will not have any right or interest in any revenues, profits or other
benefits derived from the exercise of such license.
6.4 INFRINGEMENT
IGT represents and warrants that the IGT Technology does not infringe
or misappropriate any Third-Party Right. IGT will defend and indemnify Acres
from and against any and all claims that any IGT Technology infringes or
misappropriates any Third-Party Right and any and all costs and expenses
(including, but not limited to, reasonable attorneys' fees) incurred in
connection with the defense, settlement or satisfaction of such claim
(including, but not limited to, any damages, liabilities or losses based upon
any such claim); provided that Acres:
(a) gives IGT prompt written notice of the claim;
(b) cooperates with IGT in connection with the defense,
settlement and satisfaction of the claim;
(c) permits IGT to control the defense, settlement and satisfaction
of the claim; and
(d) does not settle the claim without the prior written consent of
IGT, which consent will not be unreasonably withheld.
PAGE 15
SECTION 7. ACRES TECHNOLOGY
7.1 RESERVATION
Except for the license granted under paragraph 7.2, Acres reserves all
of its right, title and interest in all Acres Technology and Acres Rights.
7.2 LICENSE
Unless otherwise provided in writing, the License granted hereunder is
solely for use in performance of duties under this Agreement during the term
of this Agreement. Subject to the foregoing limitations and any other
limitations set forth in the applicable R&D Plan or any separate written
agreement entered into by the Parties after the date of this Agreement, Acres
hereby grants to IGT a worldwide, nonexclusive license under the Acres Rights
to:
(a) Develop, Make, Distribute and Use Products, Improvements and
Tools;
(b) Make, Use and Distribute the Acres Technology in connection with
the exercise of the rights granted under (a) and (c) of this paragraph;
and
(c) GRANT IRREVOCABLE, PERPETUAL sublicenses to any of the rights
granted under (a) and (b) of this paragraph TO end users in connection
with the sale, lease or rental of Products or Improvements DURING THE
LIFE OF A PRODUCT OR IMPROVEMENT PROVIDED IN ACCORDANCE WITH THIS
AGREEMENT.
7.3 ROYALTY
Except as otherwise specifically provided for in an R&D Plan or a
separate written agreement entered into by the Parties after the date of this
Agreement, the license granted under paragraph 7.2 will be royalty-free and
Acres will not have any right or interest in any revenues, profits or other
benefits derived from the exercise of such license.
7.4 INFRINGEMENT
Acres represents and warrants that the Acres Technology does not
infringe or misappropriate any Third-Party Right. Acres will defend and
indemnify IGT from and against any and all claims that any Acres Technology
infringes or misappropriates any Third-Party Right and any and all costs and
expenses (including, but not limited to, reasonable attorneys' fees) incurred
in connection with the defense, settlement or
PAGE 16
satisfaction of such claim (including, but not limited to, any damages,
liabilities or losses based upon any such claim); provided that IGT:
(a) gives Acres prompt written notice of the claim;
(b) cooperates with Acres in connection with the defense, settlement
and satisfaction of the claim;
(c) permits Acres to control the defense, settlement and satisfaction
of the claim; and
(d) does not settle the claim without the prior written consent of
Acres, which consent will not be unreasonably withheld.
SECTION 8. TERM
The initial term of this Agreement shall be 5 years; provided, however,
that either Party may, after January 1, 1999, terminate this Agreement on 90
days' notice. Termination of this Agreement shall not terminate any other
agreement entered into hereunder, and shall not terminate any license granted
to third parties in connection with the sale, lease or rental of Products or
Improvements..
SECTION 9. ARBITRATION
9.1 SELECTION OF ARBITRATOR
Any controversies between the Parties arising out of or relating to
this Agreement will, upon demand of either Party, be resolved exclusively by
submission to an arbitrator or a panel of three arbitrators. If the Parties
cannot agree upon a single arbitrator, then each Party will designate one
arbitrator and the two arbitrators designated by them will designate a third
for the panel of three arbitrators. If the two arbitrators designated by the
Parties cannot agree upon the third arbitrator, then, upon request of any
party, the third arbitrator will be appointed by the Court as specified in
paragraph 9.3. No arbitrator will have any direct or indirect interest in
either Party or the matter submitted for determination.
9.2 LOCATION
The arbitration will be conducted in Portland, Oregon or such other
location as may be agreed upon by the Parties.
PAGE 17
9.3 JURISDICTION
The arbitration will be conducted pursuant to the Oregon Arbitration
Act, as the same may have been or may be amended, and will be subject to the
jurisdiction of the Circuit Court of the State of Oregon in and for the
County of Multnomah.
9.4 DISCOVERY
The arbitrators will grant discovery liberally. Without limiting the
generality of the foregoing, each Party will have:
(a) full access to the records of any other Party that pertain to
the subject matter of the controversy;
(b) the power to call for testimony of any director, officer,
employee, agent or representative of any other Party; and
(c) all other rights of discovery afforded to Parties in civil
actions under the then applicable Federal Rules of Civil Procedure
(or rules or laws applicable to federal court proceedings adopted in
lieu thereof).
A Party's failure to comply with reasonable discovery requests will be
sufficient cause for an adverse finding on an issue related to such discovery.
9.5 DECISION
The arbitrators will render a decision not later than thirty (30) days
after the matter has been submitted, and such decision will be final and
binding upon the Parties. The decision of a panel of three arbitrators will
require the concurrence of at least two arbitrators. The decision will be in
writing. The decision of the arbitrators may be entered as a final decree or
judgment in any court of competent jurisdiction or may be enforced against
the Parties and their assets wherever they are found. The arbitrators are
specifically authorized to grant injunctive relief, either as part of the
final decision or prior to the final decision. The Parties desire that the
courts promptly enforce all injunctive relief granted prior to final decision
as though it were part of a final decision, even though such enforcement may
be requested prior to final decision.
9.6 COSTS
Any costs incurred by any arbitration proceedings (such as compensation
to the arbitrators and reporter and the expense of hearing room facilities)
will be divided equally among the Parties, except that each Party will bear
its own attorneys' fees and costs of witnesses; provided, that, the
arbitrators will have the authority to require, as
PAGE 18
part of the final decision, the Party against whom the arbitrators render a
decision to reimburse any or all costs, expenses and attorneys' fees incurred
by Acres in connection with the arbitration, and such final decision may be
entered as a final decree or judgment in any court of competent jurisdiction
or may be enforced against the Parties and their assets wherever they are
found.
9.7 STATUTE OF LIMITATIONS
The arbitration of any controversy under this section will be barred if
such arbitration is not demanded by a Party in accordance with paragraph 7.1
within the period of time permitted by the statute of limitations under the
laws of the State of Oregon which would be most applicable to an action
commenced in the courts of the State of Oregon based upon such controversy.
SECTION 10. MISCELLANEOUS
10.1 NO RIGHT TO MARKS
This Agreement will not be interpreted or construed as granting or
transferring to either Party any license, right, title or interest in or to
any Mark of Acres. Neither Party will use any Mark of the other Party
without the prior written consent of such other Party.
10.2 CONFIDENTIAL INFORMATION
In the performance of or otherwise in connection with this Agreement,
the Disclosing Party may disclose to the Receiving Party certain Confidential
Information of the Disclosing Party. The Receiving Party will treat such
Confidential Information as confidential and proprietary of the Disclosing
Party and will use such Confidential Information solely for the purposes for
which it is provided by the Disclosing Party. Without limiting the generality
of the foregoing, the Receiving Party will take reasonable precautions to
prevent any unauthorized use or disclosure of such Confidential Information
and will protect such Confidential Information from unauthorized use or
disclosure at least to the same extent that it protects its own Confidential
Information of a similar nature from unauthorized use or disclosure. The
obligations under this paragraph will not apply to any:
(a) use or disclosure of any information pursuant to the exercise
of the Disclosing Party's rights under this Agreement;
(b) information that is now or later becomes part of the public
domain through no fault of the Receiving Party;
PAGE 19
(c) information that is obtained by the Receiving Party from a Third
Party (other than in connection with this Agreement) who was not under
any obligation of secrecy or confidentiality with respect to such
information;
(d) information that is independently developed by the Receiving Party
(e.g., without reference to any Confidential Information);
(e) any disclosure required by applicable law (e.g., pursuant to
applicable securities laws or legal process), provided that the Receiving
Party will use reasonable efforts to give advance notice to and cooperate
with the Disclosing Party in connection with any such disclosure; and
(f) any disclosure with the consent of the Disclosing Party.
10.3 COMPLIANCE WITH LAWS
In the performance of this Agreement, each Party will comply with all
applicable laws, regulations, rules, orders and other requirements, now or
hereafter in effect, of governmental authorities having jurisdiction.
Without limiting the generality of the foregoing, each Party will pay,
collect and remit such taxes as may be imposed with respect to any
compensation, royalties or transactions under this Agreement in accordance
with applicable laws, rules, regulations and orders of governmental
authorities having jurisdiction.
10.4 NOTICES
Any notice or other communication under this Agreement given by any
Party to any other Party will be in writing and will be delivered in person
or mailed, properly addressed and stamped with the required postage, to the
intended recipient at its address specified below its signature at the end of
this Agreement and to the attention of the individual who executed this
Agreement on behalf of such Party. Any Party may from time to time change
such address or individual by giving Acres notice of such change in
accordance with this paragraph.
10.5 NONWAIVER
The failure of either Party to insist upon or enforce
strict performance of any of the provisions of this Agreement or to exercise
any rights or remedies under this Agreement will not be construed as a waiver
or relinquishment to any extent of such Party's right to assert or rely upon
any such provision, right or remedy in that or any other instance; rather,
the same will remain in full force and effect.
PAGE 20
10.6 SUCCESSORS AND ASSIGNS
Neither Party will assign this Agreement or any of its rights, title or
interest under this Agreement (voluntarily, involuntarily, by operation of
law or otherwise) without the prior written consent of the other Party. No
assignment by either Party, with or without the consent of the other Party,
will relieve or release the Party making the assignment from any of its
obligations under this Agreement. Subject to the foregoing, this Agreement
will be binding upon, inure to the benefit of and be enforceable by each of
the Parties and their respective successors and assigns.
10.7 INDEPENDENT CONTRACTOR
Each Party is engaged in an independent business and will perform its
obligations under this Agreement as an independent contractor and not as an
agent or representative of any other Party. Neither Party will have any
right or authority to create any obligation or make any representation or
warranty in the name or on behalf of the other Party.
10.8 NO PARTNERSHIP OR AGENCY
Each Party will furnish its own facilities, contractors and employees
to fully perform its obligations under this Agreement. No Party will, by
virtue of this Agreement, have any responsibility for the payment or
performance of any obligations of the other Party. Further, no Party will
have, by virtue of this Agreement, any right, power or authority to act as
the agent of, to enter into any contract, to make any representation or
warranty or to incur any obligation or liability of any other Party. This
Agreement will not be interpreted or construed to create an association,
joint venture or partnership between the Parties or to impose any partnership
obligation or liability upon any Party.
10.9 SPECIFIC PERFORMANCE
In the event of any breach of or default under Section 10.2 of this
Agreement by either Party, the other Party may suffer irreparable harm and
have no adequate remedy at law. Consequently, in the event of any such
breach or default, or any threat of such breach or default by either Party,
then the other Party will be entitled to temporary or permanent injunctive
relief, specific performance and such other equitable relief as may be
appropriate in the circumstances in order to restrain or enjoin the breach or
default. The rights and remedies under this paragraph are in addition to,
and not in lieu of, any other right or remedy afforded under any other
provision of this Agreement, by law or otherwise, including the right to seek
and obtain temporary or permanent injunctive relief, specific performance or
other
PAGE 21
equitable relief as may be appropriate in the event of other actual or
threatened breaches or defaults under this Agreement.
10.10 APPLICABLE LAW
This Agreement will be interpreted, construed and enforced in all
respects in accordance with the laws of the State of Oregon, U.S.A., without
reference to its choice of law rules.
10.11 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement, and supersedes any and
all prior agreements, between the Parties with regard to the subject matter
hereof. No amendment, modification or waiver of any of the provisions of this
Agreement will be valid unless set forth in a written instrument signed by
the Party to be bound thereby.
IGT:
----
INTERNATIONAL GAME TECHNOLOGY, INC.
By:______________________________________
Title:___________________________________
Address: ________________________________
________________________________
Acres:
------
ACRES GAMING, INC.
By:______________________________________
Title:___________________________________
PAGE 22
Address:_________________________________
_________________________________
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