Exhibit 10.28
PATENT PURCHASE AND
LICENSE AGREEMENT
This Patent Purchase and
License Agreement (this “ Agreement ”) is made
as of March 22, 2005 by and between USA Payments, a Nevada
corporation having its principal place of business at 643 River
Oaks Parkway, San Jose, California 95134 (“ Seller
”), and Global Cash Access, Inc., a Delaware corporation
having its principal place of business at 3525 East Post Road,
Suite 120, Las Vegas, Nevada 89120 (“ Buyer
”).
Whereas , Seller is the
owner of the entire right, title and interest in and to the
Designated Patents;
Whereas , Buyer desires to
purchase the entire right, title and interest in and to the
Designated Patents;
Whereas , Seller desires
to sell to Buyer the entire right, title and interest in and to the
Designated Patents, subject to the retention of a non-exclusive
license under the Designated Patents outside of the Buyer Field;
and
Whereas , the parties
desire for the sale, purchase and license contained herein to
become effective upon the satisfaction of certain conditions
precedent.
Now, Therefore , in
consideration of the representations, covenants and other terms and
conditions contained herein, the parties hereto agree as
follows:
1. Definitions
For purposes of this
Agreement, the following terms shall have the following
meanings:
1.1. “ Buyer
Field ” shall mean the gaming industry, including without
limitation the business of providing cash access services
(including, without limitation, by way of automated teller
machines) to patrons of gaming establishments. For purposes of
clarification:
(a) “cash
access services,” as used in the foregoing sentence, includes
“quasi-cash” transactions whereby credit cards and
debit cards are used to purchase instruments that can be negotiated
for cash; and
(b) Buyer
Field does not include non-gaming merchant operations (including
but not limited to hotels, restaurants, retail shops, travel
agencies or car rental agencies) conducted at establishments at
which gaming activity occurs to the extent that such non-gaming
merchant operations involve the sale or provision of goods or
services other than money orders or gaming goods or services, but
Buyer Field does include such non-gaming merchant operations to the
extent that such non-gaming merchant operations (i) sell or
otherwise provide money orders or gaming goods or services, or
(ii) provide, enable, facilitate or permit ATM cash
withdrawals, credit card cash advances or debit card cash access
transactions in any establishment at which gaming activity
occurs.
1.2. “ Designated
Patents ” shall mean (a) United States Patent
No. 6,081,792 entitled “ATM and POS Terminal and Method
of Use Thereof,” (which the parties hereby acknowledge is
erroneously reflected in the records of the United States Patent
and Trademark Office as being held by “USA Payment,
Inc.”) and U.S. patent application Ser. No. 10/869754
entitled “ATM and POS Terminal and Method of Use
Thereof,” (b) any parent or provisional patent
application(s) upon which the priority of either of the foregoing
patent or patent application is based, (c) all past, present
and future divisionals, continuations, continuations-in-part,
reexaminations, substitutions, reissues, extensions and renewals of
any of the foregoing patents or patent applications in subsection
(a) or (b), (d) all foreign counterparts of any of the
foregoing patents or patent applications in subsection (a), (b), or
(c), and (e) all patents that have issued or issue in the
future (including the right to apply for such patents) from any of
the foregoing patents or patent applications in subsection (a),
(b), (c) or (d).
1.3. “ Licensed
Product ” shall mean any product or service now or
hereafter made, used, sold, provided, operated or offered by or on
behalf of Seller (including any finished product and any product
used in the manufacture of another product) that falls within the
scope of, or that utilizes any method or process which falls within
the scope of, any of the claims of any Designated Patents, or that
incorporates, or is itself, the subject invention of any Designated
Patents, other than such products and services that have
historically been provided exclusively to Buyer.
1.4. “
Subsidiary ” shall mean, with respect to a party, any
entity at least 50% of whose equity is owned directly or indirectly
by such party.
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2. Patent Transfer
2.1 Assignment . Effective
upon the Effective Date, Seller hereby irrevocably assigns,
conveys, sells, grants and transfers to Buyer, its successors and
assigns all of its rights, title and interest of every kind and
character throughout the world in and to the Designated Patents to
the full extent of its ownership or interest therein, including,
without limitation:
(a) all
rights to causes of action and remedies related thereto (including,
without limitation, the right to sue for past, present or future
infringement, misappropriation or violation of rights related to
the foregoing); and
(b) any
and all other rights and interests arising out of, in connection
with or in relation to the Designated Patents, including without
limitation the right to receive any royalties or other
consideration relating to any license or similar permission within
the Buyer Field.
2.2 Recordation; Further
Assurances . The parties shall execute and file with the United
States Patent and Trademark Office the confirmatory assignment with
respect to the Designated Patents attached hereto as
Exhibit A .
2.3 Correction of Recordation
Error . Seller represents and warrants that on or prior to the
date first set forth above, it has caused to be filed with the
United States Patent and Trademark Office a request for corrective
assignment to correct the name of the original assignee of United
States Patent No. 6,081,792 from “USA Payment,
Inc.” to “USA Payments” to correct the error
referenced in the definition of “Designated Patents”.
Following execution of this Agreement, Seller shall take all action
at its own cost and expense, including, without limitation, the
prompt execution and delivery of documents in recordable form, and
otherwise use its commercially reasonable best efforts to correct
the error referenced in the definition of “Designated
Patents” as may be reasonably necessary to vest, secure,
perfect, protect and enforce the rights and interests of Buyer in
and to the Designated Patents and other patents, patent
applications, and related rights assigned under Section 2.1
above. In any event, the foregoing recording error shall be
corrected to Buyer’s reasonable satisfaction prior to the
Effective Date.
2.4 Appointment . In the
event that Buyer is unable, after reasonable notice to Seller, for
any reason whatsoever, to secure Seller’s signature to any
document Seller is required to execute pursuant to this
Section 2 to vest, secure, perfect, protect or enforce the
rights and interests of Buyer in and to the Designated Patents,
Seller hereby irrevocably designates and appoints Buyer and its
duly authorized officers and agents as Seller’s agents and
attorneys-in-fact, to act for and on its behalf and instead of
Seller, to execute and file any such documents and to do all other
lawfully permitted acts to further the purposes of Section 2
with the same legal force and effect as if executed by Seller.
2.5 Certain Conditions
Precedent. The transfer of interests in the Designated Patents
in this Section 2 and the license grant in Section 3 are
subject to and conditioned upon both of the following conditions
precedent: (i) Seller obtaining the consent or acknowledgement
by a majority in interest of the lenders under Global Cash Access,
Inc.’s senior secured credit facilities that the consummation
of the transactions contemplated by this Agreement will not
constitute a breach of any provision of or event of default under
that certain Credit Agreement, dated March 10, 2004, as
amended, to which Seller is a party (the “Credit
Agreement”), and (ii) the consummation of an
underwritten initial public offering of equity securities by Global
Cash Access Holdings, Inc. pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the
“IPO”). The date upon which both such conditions are
first satisfied is referred to herein as the “ Effective
Date ”.
3. License Grant-Back
3.1 License Grant . Effective
upon the Effective Date, and conditioned upon Seller’s
correction of the recordation error in accordance with
Section 2.3, Buyer hereby grants to Seller a non-exclusive,
perpetual, irrevocable, fully paid up, royalty-free,
non-transferable (except as set forth in Section 6.3), right
and license under United States Patent No. 6,081,792 and U.S.
patent application Ser. No. 10/869754 entitled “ATM and
POS Terminal and Method of Use Thereof” (including any patent
that issues thereon) to (a) make, have made, use, sell, offer
to sell and import any products and services solely for use and
distribution outside of the Buyer Field, (b) practice any
methods or processes solely outside of the Buyer Field, and
(c) sublicense to third parties the rights granted to Seller
under subsections (a) and (b) above. For purposes of
clarification, Seller shall have no right to grant any sublicenses
under the Designated Patents within the Buyer Field, and nothing
contained in this Agreement shall prohibit Buyer from granting
additional licenses under the Designated Patents in any field of
use for any products or services. Seller shall use commercially
reasonable efforts to ensure that its customers and distributors,
and its
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sublicensees’ and
their respective customers and distributors, do not directly or
indirectly use such products or services to make, have made, use,
sell, offer to sell, or import any products or services in the
Buyer Field (such efforts shall include, without limitation,
contractual restrictions on use and distribution consistent with
this Agreement, and shall provide that Buyer is a third party
beneficiary for the purpose of enforcing any such contractual
restriction).
3.2 No Implied Licenses .
Except as expressly set forth in Section 3.1, Buyer grants no
rights or licenses under the Designated Patents to Seller,
including, without limitation, any implied rights or licenses that
may otherwise arise out of this Agreement or the activities of the
parties hereunder.
4. Payment
4.1 Purchase Price . Buyer
shall pay to Seller by wire transfer the sum of ten million US
dollars (US$10,000,000.00) within one (1) business day
following the actual receipt by Buyer of the proceeds of the IPO
allocable to the Buyer.
4.2 Taxes . Buyer shall pay,
and shall indemnify and hold Seller harmless from, all taxes,
duties and levies directly imposed by all federal, state, local or
other taxing authorities (including, without limitation, export,
sales, use, excise, and value-added taxes) based on the
transactions or payments under this Agreement, other than taxes
imposed or based on Seller’s net income.
5. Representations and Warranties;
Covenants
5.1 Mutual Representations and
Warranties . Each party represents and warrants that it has the
power and authority to enter into this Agreement and to perform its
obligations hereunder, that this Agreement is binding on and
enforceable against the parties in accordance with its terms, and
that compliance by each party with its obligations hereunder shall
not conflict with or result in a breach of any agreement to which
such party is a party or is otherwise bound.
5.2 Seller Representations and
Warranties. Seller represents and warrants that, as of the
Effective Date:
(a) Seller
is the lawful owner of all right, title and interest in and to the
Designated Patents, and has the unrestricted right to assign such
right, title and interest to Buyer free and clear of any
encumbrances, liens, registrations or claims of any nature.
(b) To
Seller’s knowledge, the Designated Patents are valid and
enforceable.
(c) The
Designated Patents (i) to Seller’s knowledge, are valid,
subsisting and in full force and effect, (ii) have not been
abandoned or passed into the public domain and (iii) to
Seller’s knowledge, are free and clear of any
encumbrances.
(d) Seller
has not granted any licenses of or any other rights under the
Designated Patents to any person other than to Buyer.
(e) To
Seller’s knowledge, all necessary registration, maintenance
and renewal fees in connection wi
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