GAME MANUFACTURER CASHLESS LICENSE AGREEMENT

Exhibit 10.1

THIS GAME MANUFACTURER CASHLESS LICENSE AGREEMENT (hereinafter “ Agreement ”) is entered into this 1st day of October, 2006 (hereinafter “ Effective Date ”) by and between IGT, a Nevada corporation, with principal offices at 9295 Prototype Drive, Reno, Nevada 89521, and WMS Gaming, Inc., a Delaware corporation, with principal offices at 800 South Northpoint Blvd., Waukegan, Illinois 60085.

WHEREAS Licensor (defined below) has authority to license certain intellectual property rights, such rights being offered as an Intellectual Property Package (“ IPP ”)(defined below);

WHEREAS Licensee (defined below) is desirous of obtaining a license to use the intellectual property rights contained in the IPP; and

WHEREAS Licensor is desirous of granting Licensee a license to such IPP for use in connection with, among other things, a Cashless Gaming System.

NOW THEREFORE , in consideration of the foregoing, the covenants hereafter set forth, for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows:

(1.1)   “ Affiliate ” means, as to a particular party, any corporation or other business entity that directly or indirectly Controls, is Controlled by, or is under common Control with a party. “Control” means direct or indirect ownership of or other beneficial interest in fifty percent (50%) or more of the voting stock, other vesting interest, or income of a corporation or other business entity.

(1.2)   “ Cashless Gaming System ” means a system employing tickets, coupons, tokens, cards or other instruments of identification to add credits or funds to, or 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)   “ 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 machines, devices and terminals are legal, including but not limited to Class II, Class III and casino style machines, devices and terminals.

(1.4)   “ Intellectual Property Package ” or “ IPP ” means the patents set forth in Schedule A attached hereto, as well as any continuations, continuations-in-part, divisionals, reissues, reexaminations, and foreign counterparts thereof.

(1.5)   “ IPP Parties ” means owners of, or holders of the right to license, the patents comprising the IPP. As of the Effective Date, the IPP Parties include IGT, International Game Technology, Bally Technologies, Inc. and MGM Mirage.

(1.6)   “ License Tag ” means a physical tag for which a License Fee is paid or payable, that will be provided by Licensor for display on Royalty Bearing Products.

(1.7)   “ Licensed Cashless Gaming System ” means a Cashless Gaming System that has been licensed under the IPP.

(1.8)   “ Licensor ” means IGT.

(1.9)   “ Licensee ” means WMS Gaming Inc. and any and all Affiliates of WMS Gaming Inc.

(1.10)   “ Royalty Bearing Product ” means a Gaming Machine that either alone, or in connection with a Cashless Gaming System, would, absent a license under this Agreement, infringe one or more subsisting claims of any patent within the IPP and for which a License Fee (as defined below) is paid or payable to Licensor. [*]

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(1.11)   “Place,” “Placed,” “Placement” (or any form of the word “Place”) means the provision of a Gaming Machine by Licensee to a customer, whether by sale, lease, or otherwise.

(1.12)   For purposes of this agreement, references to the “United States” and “Canada” shall include their respective possessions, protectorates and territories.

(2.1)   Licensor grants to Licensee a non-exclusive, non-transferable license, without the right to sublicense, under the IPP to make, have made, use, offer to Place, Place, have Placed, import, export, and otherwise dispose of Royalty Bearing Products or components of Royalty Bearing Products. For each Placed Royalty Bearing Product, Licensee agrees that it will incorporate those conditions set forth in Schedule B either verbatim or verbatim with formatting changes (unless otherwise agreed upon in writing by the Parties) in at least one of (i) a blanket acknowledgement signed by its customer and is enforceable for as long as it is relied upon to satisfy this condition, and (ii) the Placement agreement associated with such Royalty Bearing Product; provided, however, that if Licensee previously obtained from that customer a signed blanket acknowledgement or signed agreement incorporating such blanket acknowledgement (which blanket agreements must be enforceable for as long as it is relied upon to satisfy this condition) pursuant to the Cashless License Agreement of September 18, 2000, then Licensee shall, to the extent commercially reasonable (e.g., upon entering new or renewed master agreements with a customer), obtain an updated acknowledgement consistent with Schedule B of this Agreement. All rights not expressly granted by Licensor are hereby reserved.

(2.2)   Unlicensed Gaming Machines . It is understood and agreed between the parties that with regard to any Gaming Machine for which a License Fee (defined below) is not paid by Licensee, that such Gaming Machine is not licensed under the IPP and that this Agreement and license granted herein does not extend to any such Gaming Machine. If Licensee fails to pay a License Fee for a Gaming Machine where a License Fee is otherwise required (and does not cure such failure pursuant to Section 4.2) on the grounds that a Gaming Machine is not a Royalty Bearing Product (hereafter a “Disputed Product Issue” - and each such Gaming Machine that is subject to the dispute that is placed from the Effective Date through the date that the Disputed Product Issue is decided in arbitration or subsequent legal proceeding as provided below, being a “Disputed Product”), then Licensor shall have the right to submit the Disputed Product Issue to Dispute Resolution in accordance with Section 11. [*]

If Licensor submits the Disputed Product Issue to arbitration, then Licensee can elect to put the License Fees for all Disputed Products into an escrow account within thirty (30) days of written notice from Licensor of the Disputed Product Issue and continue to fund such escrow account monthly within 10 days of the end of each month for all Disputed Products during the pendency of the arbitration. If the Disputed Product Issue goes to arbitration and the arbitration panel determines by a preponderance of the evidence that the Disputed Product is a Royalty Bearing Product, Licensee shall pay [*] the normal License Fee(s) for the Disputed Products (which amount is equal to [*] the escrow amount provided that the escrow is fully funded) within forty-five (45) days of receipt of the panel’s decision. If Licensee did not elect to put money into an escrow account or does not, in fact, put such monies into said escrow account within the thirty (30) days specified, including the monthly fundings, then Licensor shall have the additional right to terminate this Agreement by providing written notice to Licensee within forty-five (45) days of the panel’s decision. If Licensee did elect to escrow the License Fee(s) for the Disputed Products, and did, in fact, fund such escrow pursuant to this paragraph, then no such termination right in favor of Licensor shall exist. If the arbitration panel determines by a preponderance of the evidence that the Disputed Product is not a Royalty Bearing Product, Licensor shall nonetheless have the right to bring a legal proceeding regarding the Disputed Product Issue within ninety (90) days of the panel’s decision. If there is a finding in such legal proceeding that the Disputed Product is a Royalty Bearing Product (contrary to the determination of the arbitration panel), Licensee shall pay [*] the normal License Fee(s) for the Disputed Products (which amount is equal to [ * ] the escrow amount provided that the escrow is fully funded) within forty-five (45) days of such finding. If Licensee did not elect to put money into the escrow account or did not actually fund such escrow pursuant to this paragraph and continue with the monthly fundings within 10 days of the end of each month, then Licensor shall have the additional right to terminate this Agreement by providing written notice to Licensee within forty-five (45) days of the panel’s decision. If Licensee did elect to escrow the License Fee(s) for the Disputed Products and did actually fund such escrow pursuant to this paragraph, then no such termination right in favor of Licensor shall exist. Licensee agrees that the payment of [*] fees is reasonable and necessary as consideration for the right to enter into such dispute resolution procedures because Licensor is conceding and foregoing its normal right to terminate as opposed to arbitrate such instances. The parties further acknowledge and agree that the arbitration panel only has the authority to determine whether the Disputed Product is a Royalty Bearing Product. In addition, such arbitration panel’s decision shall be precedential as between the parties hereto for all future like Gaming Machines Placed as were analyzed under that particular Disputed Product Issue, unless a legal proceeding was brought by Licensor, in which case, such legal proceeding shall control. Any License Fee(s) for Disputed Products in the escrow account shall be returned to Licensee if it is determined by the arbitration panel that the Disputed Product is not a Royalty Bearing Product, unless a legal proceeding is timely brought by Licensor, in which case such legal proceeding shall control whether the License Fee(s) for Disputed Products in the escrow account are returned to Licensee. For the avoidance of doubt, Disputed Products are subject to the [*] License Fees until the arbitration or legal proceeding is resolved. However, after the arbitration or legal proceeding is resolved, Gaming Machines containing the same issue that was resolved, which are Placed after the resolution of the arbitration or legal proceeding, shall be subject to the [*] License Fees. In the event Licensee is involved in any infringement action or claim (e.g., arbitration) not arising under or related to the IPP or this Agreement, Licensee shall not seek to introduce this Agreement or any drafts thereof into evidence nor disclose the terms of this Agreement or tender copies of this Agreement or any drafts to a third party, except to Licensee’s legal counsel or advisors or as may be required by law, rule, regulation or in connection with any court order, subpoena or valid process of law. In the event that an arbitrator or judge makes a finding that a Gaming Machine is a Royalty Bearing Product, the minimum damages for such finding are agreed to be pursuant to Section 3.2 for each Gaming Machine.

(2.3)   License Limitations . Licensee acknowledges and agrees that use of an unlicensed Gaming Machine with a licensed Cashless Gaming System or use of a Royalty Bearing Product with an unlicensed Cashless Gaming System are both unlicensed uses and that no rights or license contained in this Agreement permits or licenses such use by them or any other person. Notwithstanding the foregoing, Licensee shall owe no additional License Fee (as defined in Section 3.2) resulting from a particular Placement of a Royalty Bearing Product once such License Fee has been paid pursuant to this Agreement.

(2.4)   Responsibility for Affiliates . WMS Gaming Inc. shall be responsible and liable for all acts of its Affiliates with respect to this Agreement.

(2.5)   Release and Settlement for Previously Placed Machines .  [*] Licensor hereby releases for itself, the IPP Parties, their Affiliates, subsidiaries, predecessors, successors and assigns, and their respective officers, owners, directors, shareholders, attorneys, insurers, agents and employees (collectively the "Releasing Parties"), Licensee and any and all of its existing (as of the Effective Date) Affiliates, subsidiaries, predecessors, and their respective parents, officers, directors, agents, owners, employees, attorneys, licensors and insurers (collectively the "Released Parties"), from any and all rights, claims, demands, causes of action, obligations, damages, penalties, fees, costs (including reasonable attorneys' fees and costs), expenses, and liabilities of any nature whatsoever which the Releasing Parties have, had or may have had against the Released Parties, only in connection with any payments or failure to make payments under the Cashless License Agreement of September 18, 2000 (the “9/2000 Agreement”) and any infringement of the IPP by Gaming Machines Placed prior to the Effective Date. For the avoidance of doubt, this release does not cover any other rights, claims, demands, causes of action, obligations, damages, penalties, fees, costs (including reasonable attorneys’ fees and costs), expenses and liabilities which the Releasing Parties have, had or may have had against the Released Parties for any other matter, and by way of example, does not release the Released Parties from its obligations to incorporate the customer language in Schedule B under the 9/2000 Agreement for all Gaming Machines Placed prior to the Effective Date.

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(3.2)   Computation of License Fee . Licensee agrees to pay license fees (“License Fee(s)”) to Licensor pursuant to the schedule below for each Placed Royalty Bearing Product. Each License Fee and Used Sale Price in the schedule shall be increased by [*] relative to the schedule’s initial License Fee and initial Used Sale Price after [*] years from the Effective Date; by [*] relative to the schedule’s initial License Fee and initial Used Sale Price after [*] from the Effective Date; by [*] relative to the schedule’s initial License Fee and initial Used Sale Price after [*] from the Effective Date; and so on until this Agreement expires or terminates. Once a License Fee has been paid for a Royalty Bearing Product that has been placed with a customer by lease or participation, no additional License Fee shall be owed upon sale of such Royalty Bearing Product to the same customer; provided that any applicable Transfer Fee pursuant to Section 3.3 shall still apply.

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(3.3)   Transfer Fee for Participation Games . The licenses granted hereunder for Royalty Bearing Products are granted only for Royalty Bearing Products by single serial number at a single casino location. Notwithstanding this, Licensee shall be permitted to move (from one casino to another) such Royalty Bearing Products that are continuously owned by Licensee and rented or leased by Licensee for use at third party properties as recurring-revenue products, provided that Licensee shall remit to Licensor, in addition to the initial License Fee, a Transfer Fee of [*] per such Royalty Bearing Product [*]. A recurring-revenue Royalty Bearing Product is one which Licensee places in casinos or other lawful gaming establishments on a recurring-revenue model (e.g. lease or participation) and to which Licensee retains, at all times, title and ownership.

(3.4)   License Tag . Licensor shall provide to Licensee a License Tag to be affixed to each Royalty Bearing Product. Licensee shall promptly affix the License Tag in close proximity to the serial number tag on the specified Royalty Bearing Product. Licensee agrees not to affix a License Tag to any Gaming Machine for which a License Fee has not been accrued or paid and agrees to affix the supplied License Tag only to the specified Royalty Bearing Product.

(3.5)   Payment and Reporting Schedule . Licensee will pay all License Fees owed to Licensor within forty-five (45) calendar days following the end of the calendar quarter in which the Royalty Bearing Product was Placed with a third party. All License Fees in this Agreement will be paid by Licensee to Licensor in United States dollars. Any amount due Licensor hereunder that is not paid will thereafter bear interest until paid at a rate per annum equal to twelve percent (12%). Within forty-five (45) calendar days following the end of each calendar quarter, and at the same time Licensee makes payment of the License Fees hereunder, Licensee shall furnish to Licensor 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 Placed with third parties during the calendar quarter 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 property at which the Royalty Bearing Product is licensed; (e) the date of Placement or shipment of each Royalty Bearing Product, and (f) the amount of License Fees due, including Transfer Fees. Licensor shall not terminate this Agreement for Licensee’s non-compliance with the foregoing sentence if Licensee uses best efforts to comply with such sentence. Licensee deems such reported information to be proprietary, and Licensor shall only use such information for the purpose of enforcing its rights under this Agreement and for no other purpose.

(3.6)   Taxes .