Exhibit 10.1
SOFTWARE DISTRIBUTION LICENSE
AGREEMENT
This Software
Distribution License Agreement (this “Agreement”) is
made this 26th day of September, 2007 (the “
Effective Date ”) by and between Progressive Gaming
International Corporation, a Nevada corporation, with a primary
business address of 920 Pilot Road, Las Vegas, Nevada 89119, and
its Affiliates (jointly and severally “ PGIC ”
or “ Licensor ”), on the one hand, and Shuffle
Master, Inc., a Minnesota corporation, with a primary business
address 1106 Palms Airport Drive, Las Vegas, Nevada 89119, and its
Affiliates (jointly and severally “ SMI ” or
“ Licensee ”), on the other hand, for the
purpose of granting Licensee a limited license to use and
distribute the Licensed Software.
WHEREAS , PGIC and
SMI are parties (collectively the “Parties” and
individually a “Party”) to that certain Purchase
Agreement dated the same day hereof (as amended, restated, modified
or supplemented from time to time, the “ Purchase
Agreement ”), pursuant to which PGIC agreed to sell
certain assets relating to the Table Games Division (“
TGD ”) (such sold assets shall be referred to herein
as the “PGIC Transferred Products” as defined below) to
SMI and an Amended and Restated License Agreement (the “
Progressive License ”), pursuant to which PGIC agreed
to license certain patents related to the TGD to SMI;
WHEREAS , under the
terms of the Purchase Agreement, it is contemplated that PGIC and
SMI execute this Agreement, and deliver an executed version to the
other concurrently with the execution of the Purchase Agreement;
and
WHEREAS , this
Agreement states the entire agreement by which SMI obtains from
PGIC a license to use and distribute the Licensed Software and PGIC
Non-CJS System.
NOW THEREFORE, in
consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby
agree as follows:
1.
DEFINITIONS. Any capitalized terms not expressly
otherwise defined in this Agreement shall have the same meaning as
set forth in the Purchase Agreement. As used in this
Agreement:
“
Affiliate ” of any particular Party means any current
or future Person controlling, controlled by or under common control
with such Party. For purposes of this definition, “
control ” (including the terms “
controlling ,” “ controlled by ”
and “ under common control with ”) means the
possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or
otherwise, and such “control” will be presumed if any
Person owns 50% or more of the voting capital stock, assets or
other ownership interests, directly or indirectly, of any other
Person.
“ Casinolink® ” means
PGIC’s central server system which may be configured with
different modules to, among other things, do the following on slot
machines and/or Table Games: control progressives and perform
player tracking, accounting and/or reporting.
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“ Change
of Control ” means, with respect to a party, the
occurrence of any of the following events: (a) any consolidation or
merger of such party with or into any other entity in which the
holders of such party’s outstanding shares immediately before
such consolidation or merger do not, immediately after such
consolidation or merger, retain stock representing a majority of
the voting power of the surviving entity or stock representing a
majority of the voting power of an entity that wholly owns,
directly or indirectly, the surviving entity; (b) the sale,
transfer or assignment of securities of such party representing a
majority of the voting power of all of such party’s
outstanding voting securities to an acquiring party or group; or
(c) the sale of all or substantially all of such party’s
assets. Notwithstanding the foregoing, any financing of a
party by one or more venture capital firms, lenders or similar
institutions will not be considered a “Change of
Control” of such party.
“ CJS ” means PGIC’s
Casinolink® Jackpot System and/or Casinolink® Jackpot
module of Casinolink® for Table Games, and as developed in the
future by PGIC. CJS is software on a central server which
utilizes Casinolink®. CJS includes the device known as
the watchman which connects CJS to the Aquarius Controller.
Some of the computer code for CJS may be presently installed in
some of the PGIC Transferred Products.
“ Cross
Over Code ” means Licensor’s computer code
that is both a part of the Licensed Software and a part of the PGIC
Transferred Products. For the avoidance of doubt, Licensor is
transferring ownership to Licensee of certain Intellectual Property
Rights pursuant to the terms provided in the Purchase Agreement,
some of which is contained in the Licensed Software. To the
extent there is any such cross over, Licensor shall receive the
non-exclusive license rights to such Cross Over Code from Licensee
as provided in Section 2.6. Examples of such Cross Over Code
contained within the Licensed Software include, but are not limited
to, part of the code on: the item commonly referred to as the
“Aquarius Controller,” the item commonly referred to as
the “Game Manager,” and the items commonly referred to
as the “Dealer Key Pad.”
“
Customizations ” means the modifications to the
PGIC Non-CJS Systems developed by either party for SMI or
modifications to the PGIC CJS Systems developed by PGIC pursuant to
this Agreement, and all subsequent Updates to such modifications
and all systems, programming and user documentation related to any
of the foregoing.
“ Design
” means as to Table Hardware the documentation which
refers to any of the following: physical dimensions, circuit board
layout, materials used, electronic components, and bill of
materials.
“ Excluded
Table Games ” means one or more of the following:
(i) any Purchased Table Games (as defined in the Purchase
Agreement), (ii) any SMI Game Play (including, without limitation,
any versions, updates, improvements or additional orders of such
SMI Game Play) as of the Effective Date in existence, on order
and/or in inventory, unless a PGIC System is later incorporated
into such SMI Game Play, in which case, PGIC shall earn the royalty
for use of the PGIC System as provided in Section 5.2(h); and (iii)
SMI Game Play using a third party Progressive System not using the
Licensed Software (as otherwise permitted in this Agreement).
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“ End
User ” means
any customer that is a legal casino gaming venue or other
lawful gaming establishment to whom either party or its authorized
agents lease, distribute or place the Licensee Products and/or PGIC
Systems, as applicable.
“ Escrow
Agreement ” means the
Three Party Escrow Service Agreement attached hereto as Exhibit
E.
“
Executable Code ” means the fully compiled
version of a software program that can be executed by a computer
and used by an end user without further compilation.
“ Field of
Use ” means Game Play for Table Games.
“ GAAP
Recurring Revenue ” means, for any applicable period and in
accordance with GAAP, (a) the difference between amounts earned by
either Party on a Table Game before the PGIC System is added, as
compared to the revenue earned by such Party on such Table Game
after the addition of such PGIC System, and which is demonstrably
and directly attributable to such PGIC System (“Incremental
Recurring Revenue”), less (b) System Costs. Attached
hereto as Exhibit “D” are examples of Incremental
Recurring Revenue. Any service or maintenance fees
attributable to an End User by either Party after the installation
of a PGIC System or Game Manager onto Table Games are not a part of
GAAP Recurring Revenue and no royalties shall be paid from one
Party to the other for such amounts received from End Users.
Such service and maintenance fees shall be the actual labor and
materials cost to the contracting Party.
“ Game
Manager ” means the
Licensor product commonly referred to in the marketplace as Game
Manager that will be acquired by SMI under the Purchase Agreement,
and which constitutes a part of the PGIC Transferred
Products. Game Manager is
licensed back to PGIC pursuant to the terms of this Agreement as
well as the Cross Over Code, all subject to the rights granted
to PGIC under section 2.6 and
section 2.7.
“ Game
Play ” means any pay tables and methods of play
for any Table Game; provided that Game Play shall not
include any pay tables or methods of play that are in the public
domain or on any Table Games that otherwise may be used freely
without infringing Intellectual Property Rights
(collectively, “ Public Domain Games ”),
including, blackjack, craps, pai gow, roulette, baccarat, sic bo,
and poker. Game Play shall, however, include such Public
Domain Games if a pay table or additional wager is added to such
Public Domain Games, without which a table game supplier (e.g. SMI)
would not otherwise receive royalty amounts from End Users.
“ Infringe
IP ” means copyright infringement, patent
infringement (contributory, direct, inducement or otherwise),
trademark infringement, breach of contract related to ownership
and/or licensing of the Licensed Software and/or misappropriation
of trade secrets.
“
Improvements ” means all improvements,
advances, developments, modifications, enhancements, variations,
revisions, adaptations or extensions of or to any of the Licensed
Software, whether patentable or not, hereafter created or acquired
during the Term by either party.
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“
Intellectual Property Rights ” means all
present and future worldwide copyrights (registered and
unregistered), trademarks (registered and unregistered), trade
secrets, patents, patent applications, moral rights, trade dress,
contract rights, and other proprietary rights.
“ Lab
Ready ” means that in PGIC’s reasonable
discretion, a piece of software or hardware has been sufficiently
tested and/or sufficiently completed to be ready for submission to
the Technology Division of the Nevada State Gaming Control Board
and Gaming Laboratories International.
“ Licensee
Products ” means the Table Games and/or Table
Hardware manufactured by (or on behalf of) Licensee or its
suppliers with which the Licensed Software and/or PGIC Systems may
be integrated/bundled and distributed. Licensee Products
shall include Table Games incorporating SMI Game Play used within
the Field of Use. Nothing contained herein grants or licenses
to PGIC any rights to Licensee Products.
“ Licensed
Software ” means the
software program or programs that are embodied in and used with the
PGIC CJS Systems , and any modified, updated, or enhanced
versions of such programs.
“ Licensor
Marks ” means the
trademarks and trade names of Licensor used to describe the goods
or services that relate to a PGIC CJS System and/or PGIC Non-CJS
System except for the following: (a) Game Manager; or (b)
Aquarius Controller.
“ Non-SMI
Game Play ” means any Table Game (whether Game
Play or Public Domain Game) that is, in the present or the future,
neither owned, patented, trade dressed, copyrighted (registered or
unregistered), trademarked (registered or unregistered), leased,
sold, distributed or licensed, in the present or in the future by
SMI.
“
Parts ” means any of the following components
of a Progressive System: the electronic components, hardware,
integrated circuits, circuit boards, microchips, sensors, cables,
harnesses and light emitting diodes.
“
Person ” means the same as in the Purchase
Agreement.
“ PGIC CJS
Systems ” means any current or future Progressive
Systems owned by PGIC for use within the Field of Use that are
licensed, and/or leased for use by End Users by PGIC (or SMI
pursuant to this Agreement), that incorporate and/or make use of
the Licensed Software, CasinoLink and/or CJS; and which may also
incorporate and/or make use of Table Hardware (pursuant to the
license grant in section 2.10) and/or Cross Over Code, subject to
the rights granted to PGIC in Section 2.6.
“ PGIC
Non-CJS Systems ” means any current or future
Progressive Systems owned by PGIC for use within the Field of Use
that are licensed and/or leased for use by End Users by PGIC (or
SMI pursuant to this Agreement), which may also incorporate or make
use of: (1) Only pursuant to the license grant to PGIC in Section
2.7 and 2.10, Game Manager, Table Hardware; and/or (2) The
Cross Over Code, subject to the rights granted to PGIC in Section
2.6.
“ PGIC
Systems ” means the PGIC CJS Systems and the PGIC
Non-CJS Systems.
“ PGIC
Transferred Products ” means all assets acquired
by and/or transferred to SMI pursuant to the Purchase Agreement and
as further defined in the appropriate schedule to the
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Purchase Agreement, and
all PGIC assets licensed by SMI pursuant to the Progressive License
and as further defined in the appropriate schedule to the
Progressive License Patents.
“
Progressive Systems ” means the computer system
and/or hardware used to control and/or network progressive Table
Games, which includes but is not limited to the following
functionality: the calculating of current progressive amounts
and/or the receipt of wager amounts or information from progressive
Table Games in any form including without limitation coin, chips
and cards; provided , however , that the term “
Progressive Systems ” does not include any elements
that embody Game Play methods or pay tables in such a computer
system, or Table Hardware. PGIC Systems are an example of
Progressive Systems.
“ Public
Domain Games ” has the meaning ascribed in the
definition of Game Play.
“ SMI Game
Play ” means Game Play that was or is, in the
past, present or the future, either owned, patented, trade dressed,
copyrighted (registered or unregistered), trademarked (registered
or unregistered), leased, sold, distributed, licensed or otherwise
placed, in the past, present or in the future by SMI, or for which
SMI has at least exclusive commercialization rights for legal
casino gaming venues or other lawful gaming establishments in any
form in at least one country in the world or in at least one State
in the United States (“ Exclusive Commercialization
Rights ”); provided that (i) any Game Play,
which in the future, becomes either owned, patented, copyrighted
(registered or unregistered), trademarked (registered or
unregistered), leased, sold or licensed by SMI, or for which SMI
obtains Exclusive Commercialization Rights shall become an SMI Game
Play (it being understood however, that SMI has no obligation (x)
to remove any Progressive Systems from a third party provider on
such Game Play, (y) to terminate any agreement regarding a
Progressive System from a third party provider on such Game Play,
or (z) to make royalty payments to PGIC regarding a Progressive
System from a third party provider on such Game Play); and
(ii) any SMI Game Play which SMI subsequently either no longer
owns, leases, distributes, licenses or has Exclusive
Commercialization Rights, and to which SMI has lost all of its
Intellectua1 Property rights to throughout the world (whether by
transfer, expiration or invalidation) shall, as of such time, no
longer be considered a SMI Game Play (it being understood however,
that any PGIC System already installed or otherwise in use on any
such SMI Game Play that ceases to be an SMI Game Play and which is
generating revenue shall continue as if it is still an SMI Game
Play until such PGIC System is removed). SMI Game Play does
not include any Game Play of any of the Purchased Table Games.
“ Software
Assistance ” means: the programming of Source Code
and the creation of Executable Code in a Lab Ready form; and the
changing of hardware designs and/or components in a Lab Ready
form.
“ Software
Warrant Period ” has the meaning ascribed in
Section 9.2(a).
“ Source
Code ” means the human-readable version of a
software program that can be compiled into Executable Code.
“
Specifications ” means the State of the Art and
the capabilities of a PGIC System as advertised and/or marketed by
PGIC to End Users. In the case of Game Play which SMI
requests PGIC to implement a PGIC System (“ Game
Specifications ”), the Game
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Specifications shall
include the dealing procedures, pay tables and the following with
respect to any progressive award: the increment rate, the
seed amount, and any other requested distribution of the wager used
to fund a progressive award.
“ State of
the Art ” means all of the following in regards to
a PGIC System:
(a)
Capable of networking at least 100
Licensee Products, including the ability to have multi-property
linkage otherwise known as a wide area progressive;
(b)
Generate reports of a PGIC System,
including user and Licensee Product information;
(c)
Generate tax reports for each player
who wins from the progressive pool;
(d)
A reasonably skilled technician
following a published manual would be able to manually configure
progressive pay tables; and
(e)
PGIC Systems speeds and/or
capabilities existing in the most current version in End User
casinos as of August 31, 2007, and not slowed and/or restricted as
a result of Updates, Improvements, Customizations and/or the
connection of more than one Table Game to a PGIC
System.
“
Successful Install Date ” means the successful implementation of a Lab
Ready Game Manager version of the applicable Game
Specification pursuant to Section 5.1 of this Agreement.
“ System
Costs ” means, in
accordance with GAAP, actual non-recurring and recurring Table
Hardware, shipping, labor, travel, overhead, compliance/laboratory
fees, parts and service costs necessary to implement the PGIC
Systems or Game Manager onto Table Games; provided, however, that
such costs shall not include PGIC System or Game Manager
installation costs or service, which are allocated in good faith by
SMI or PGIC relating to the license, distribution or placement of
the PGIC System, Game Manager and Table Hardware . The
System Costs is further described in Exhibit A with examples
, which certain System Costs shall be subject to the Consumer Price
Index (as published by the United States Department of Labor,
Bureau of Labor Statistics) and adjusted on the anniversary of the
Effective Date.
“ Table
Game ” means any
table game, including table games that are live and/or table games
that are a multi-seat electronic methods of playing or simulating
any table game (such as those electronic tables that are similar to
SMI’s Table Master product), but which excludes for the sake
of clarity any Progressive Systems. Provided, however that,
the term Table Game shall be limited to live table games during the
Term until PGIC terminates PGIC’s previous agreements with
Table Max (attached in Exhibit F), including with a release to SMI
to SMI’s reasonable satisfaction, which must occur within
150 days of the Effective Date.
“ Table
Hardware ” means functionality located on or
within the Table Game including but not limited to the
following:
(a)
Non-RFID wagering accepting devices or methods, including but not
limited to slots and spots;
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(b) Aquarius Controller and/or any
similar table controller; but shall not include: any such
controller developed by PGIC as part of the PGIC CJS System that is
not an Aquarius Controller;
(c) dealer controls;
(d) keypad assemblies;
(e) coin return shoots or
chutes
(f) meters and/or other
methods of displaying progressive amounts; and/or
(g) wiring
and/or harnesses to connect (a) through (f)
“ Term
” has the meaning ascribed in Section 12.1.
“
Territory ” means the world.
“
Updates ” means any and all bug fixes, patches,
error corrections, work-arounds, upgrades, updates, enhancements,
compliance upgrades, major or minor or maintenance versions or
releases, improvements, revisions or other modifications of or to
the Licensed Software and/or SMI Game Play.
“ User
Documentation ” means the user documentation
furnished to Licensee by Licensor for distribution along with the
Licensed Software to End Users or the user documentation for Game
Manager and/or Table Hardware furnished to Licensor by Licensee for
distribution along with the Game Manager and Table Hardware to End
Users.
2.
LICENSES
2.1
Licensed Software and User Documentation. Licensor
grants to Licensee an exclusive (within the Field of Use; provided,
however, that except as otherwise provided herein, such exclusivity
in no way limits PGIC’s rights to develop, make, have made,
use, sell, distribute, offer for sale, lease, import, export, or
otherwise dispose of the PGIC Systems, nor shall it limit
PGIC’s ability to deal directly with End Users for the
placement, lease, license, sale, installation, maintenance, etc. of
the PGIC CJS System), non-transferable (except as permitted under
Section 14.2), terminable (but only in accordance with
Section 12.2(a)), royalty-bearing license to reproduce, use,
configure, install, perform, lease, display and/or distribute by
all means now known or hereafter discovered tangible copies of the
Licensed Software, the software associated with PGIC Non-CJS
Systems and User Documentation, in Executable Code only, on a
stand-alone basis or as integrated/bundled with the Licensee
Products and Public Domain Games, directly to End Users in the
Territory pursuant to an End User License Agreement that satisfies
the requirements of Section 2.5 and solely within the Field of
Use.
2.2
License Restrictions. Licensee acknowledges that the
Licensed Software and its structure, organization, and Source Code
constitute valuable trade secrets of Licensor and its
suppliers. Accordingly, except as expressly allowed under
Section 2.1 (if at all), Licensee and except in regards to the
PGIC Transferred Products (including but
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not limited to Game
Manager and the Table Hardware so transferred) agrees not to (a)
modify, adapt, alter, translate, or create derivative works from
the Licensed Software; (b) merge the Licensed Software with other
software; (c) distribute, sublicense, lease, rent, loan, or
otherwise transfer the Licensed Software (except to assign its
rights in accordance with Section 13.1) to any third party; or
(d) reverse engineer, decompile, disassemble, or otherwise attempt
to derive the Source Code for the Licensed Software. Licensee
must reproduce, on all copies made by or for Licensee, and must not
remove, alter, or obscure in any way all proprietary rights notices
(including copyright notices) of Licensor or its suppliers on or
within the copies of the Licensed Software and the User
Documentation furnished by Licensor to Licensee. If a Release
Condition occurs under the Escrow Agreement, then Licensee may
modify the Licensed Software to the extent necessary to maintain
existing installations with End Users.
2.3
Trademark License. Subject to the terms and
conditions of this Agreement, Licensor grants to Licensee a
non-exclusive, non-transferable (except as permitted under
Section 13.1), terminable (but only in accordance with Section
11.3), royalty-free license (without the right to grant
sublicenses) to use and reproduce the Licensor Marks solely in
connection with marketing the Licensed Software in the
Territory. Licensee agrees to state in appropriate places on
all materials using the Licensor Marks that the Licensor Marks are
trademarks of Licensor and to include the symbol ™
or ® as appropriate. Licensor grants no rights in
the Licensor Marks other than those expressly granted in this
Section 2.3. Licensee acknowledges Licensor’s
exclusive ownership of the Licensor Marks. Licensee agrees
not to take any action inconsistent with such ownership and to
cooperate, at Licensor’s request and expense, in any action
(including the conduct of legal proceedings) which Licensor deems
necessary or desirable to establish or preserve Licensor’s
exclusive rights in and to the Licensor Marks. Except for any
trademarks or trade names currently being used by or are registered
to Licensee, Licensee will not adopt, use, or attempt to register
any trademarks or trade names that are confusingly similar to the
Licensor Marks or in such a way as to create combination marks with
the Licensor Marks. Licensee will provide Licensor with
samples of all products and marketing materials that contain the
Licensor Marks prior to their public use, distribution, or display
for Licensor’s quality assurance purposes and Licensor shall
approve or disapprove of such samples within fifteen (15) business
days of Licensee’s submission. In the event Licensor fails to
disapprove of such samples within said time period, such use,
distribution, or display of Licensor Marks shall be deemed
approved. Licensee agrees to make reasonable efforts to
submit such samples as far in advance as possible. At
Licensor’s request, Licensee will modify or discontinue any
use of the Licensor Marks if Licensor determines that such use does
not comply with Licensor’s then-current trademark usage
policies and guidelines.
2.4
Ownership of Licensed Software. Nothing in this
Section 2.4 shall limit and/or detract from SMI’s ownership
rights in the PGIC Transferred Products including but not limited
to: Game Manager and the Table Hardware which is a part of the PGIC
Transferred Products. The Licensed Software, the software
associated with PGIC Non CJS-Systems, and User Documentation, and
all worldwide Intellectual Property
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Rights therein, are the
exclusive property of Licensor and its suppliers. All rights
in and to the Licensed Software and the software associated with
the PGIC Non CJS-Systems not expressly granted to Licensee in this
Agreement are reserved by Licensor and its suppliers. Except
as may otherwise be provided in the Progressive License nothing in
this Agreement will be deemed to grant, by implication, estoppel,
or otherwise, a license under any of Licensor’s existing or
future patents; Licensor agrees that it will not assert any of its
rights under such patents against Licensee based upon the use,
distribution, and sublicensing by Licensee or its licensees of the
Licensed Software and/or the software associated with the PGIC
Non-CJS Systems as permitted by this Agreement.
2.5
End User Agreements. Before distributing the Licensed
Software and User Documentation to any End User, Licensee must
enter into a binding written agreement with such End User
containing at least the items as provided in Exhibit B
(Form of End User Agreement). Licensee will enforce each such
agreement with at least the same degree of diligence that Licensee
uses to enforce similar agreements for its own products or other
software products that it distributes, but in no event less than
reasonable efforts. Licensee will immediately notify Licensor
if Licensee becomes aware of any breach of any such agreement
relating to the Licensed Software. Upon the termination of
any such agreement, Licensee will use reasonable efforts to obtain
from the End User all copies of the Licensed Software and User
Documentation in such End User’s possession or control.
2.6
Cross Over Code License. SMI hereby grants PGIC a
worldwide irrevocable, perpetual, assignable, sub-licensable
limited license to the Cross Over Code only for the limited use in
connection with PGIC Systems. Additionally, PGIC shall own
the derivative works that PGIC creates from the Cross Over Code
whether created in the past and/or in the future using the Cross
Over Code; provided that such derivative work of the Cross Over
Code is not a part of or related to the PGIC Transferred Products
acquired by SMI, in which event such derivative work will be
exclusive property of SMI, with a license to Licensor as provided
above.
2.7
Game Manager License. During the Term of this
Agreement, SMI hereby grants PGIC a worldwide, terminable (but only
in accordance with Section 12.2(b), non-assignable, and
non-transferrable (other than to an Acquirer of PGIC during the
Term) sub-licensable (only to an End User) limited license to Game
Manager transferred as part of PGIC Transferred Products (including
the Aquarius Controller) for the limited use in connection with the
PGIC Systems Field of Use.
2.8
Before distributing Game Manager and/or Table Hardware and User
Documentation to any End User, PGIC must enter into a binding
written agreement with such End User containing at least the items
as provided in Exhibit B (Form of End User
Agreement). PGIC will enforce each such agreement with at
least the same degree of diligence that PGIC uses to enforce
similar agreements for its own products or other software products
that it distributes, but in no event less than reasonable
efforts. PGIC will immediately notify SMI if PGIC becomes
aware of any breach of any such agreement relating to Game Manager
and/or Table Hardware. Upon the termination
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of any such agreement,
PGIC will use reasonable efforts to obtain from the End User all
copies of the and User Documentation in such End User’s
possession or control.
2.9
Derivative Works for Game Manager and Table Hardware:
Any derivative works
and/or Design created by PGIC pursuant to the licenses granted in
2.7:
(a)
Shall be owned by SMI;
(b)
Shall be delivered to SMI within 30 days after the Source Code,
Design and/or Executable Code is approved by any United States or
Canadian regulatory agency and/or GLI as a result of a regulatory
submission by PGIC;
(c)
For which
regulatory approval is not required shall be delivered to SMI
within 90 days of the installation at an End User.
2.10
SMI hereby grants PGIC a worldwide irrevocable, perpetual,
assignable, sub-licensable limited license to the Table Hardware
transferred to SMI as a part of the PGIC Transferred Products only
for the limited use in connection with PGIC CJS Systems.
During the Term, PGIC has a license to Table Hardware for use on
PGIC Non CJS Systems.
3.
DELIVERY
3.1
GENERALLY. PGIC shall deliver the Licensed Software
to Licensee within five (5) days after the execution of this
Agreement and the Closing of the Purchase Agreement, and pursuant
to Article 5 below, shall work with SMI to have the PGIC Systems
operational with SMI Game Play as provided herein.
3.2
SMI’S DELIVERY OBLIGATIONS. SMI shall provide
PGIC with such information and materials (“ SMI
Materials ”), and at such times, as reasonably requested
by PGIC to enable PGIC to integrate the SMI Game Play with the PGIC
Systems. The Game Specifications for several SMI Game Plays
have already been provided. Any failure by SMI to provide
such information or materials shall toll any delivery obligations
of PGIC. In any such case, PGIC shall not be responsible for
any reasonable delay in delivering items described in this Article
3 to the extent that such delay is directly attributable to
SMI’s failure to provide SMI Materials. In the event
any such failure to deliver SMI Materials would otherwise result in
the payment obligations to PGIC hereunder to be delayed due to
PGIC’s inability to meet its obligations hereunder, any such
delay for twenty (20) days shall trigger SMI’s payment
obligations hereunder and such amount shall be immediately due and
payable.
4.
SUPPORT
4.1
By Licensee. Licensee will be solely responsible for
performing, in a manner consistent with good industry practice, all
installation, training, support, and other services requested or
required by End Users who obtain Game Manager and/or Table Hardware
from Licensee. During the Term and thereafter for Game
Manager and/or
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Table Hardware
connected to Game Manager under lease to End Users until such Game
Manager and/or such Table Hardware is removed, SMI shall provide
maintenance and service of, and End User training and liaison
services with respect to such Game Manager and/or such Table
Hardware to End Users has been distributed hereunder.
4.2
By Licensor. In consideration for the royalty
payments provided for herein, Licensor will be solely responsible
for performing, in a manner consistent with good industry practice,
all installation, training, support, and other services requested
or required by End Users who obtain the PGIC Systems and Table
Hardware from Licensor. During the Term and thereafter for
PGIC Systems under lease to End Users until such PGIC Systems are
removed, PGIC shall provide, maintenance and service of and End
User training and liaison services with respect to a PGIC System to
End Users to whom a PGIC System has been distributed hereunder by
PGIC or SMI.
(a)
During the Term, PGIC shall (at no charge during the Software
Warranty Period, and at PGIC’s then-current rates after the
Software Warranty Period), promptly provide all assistance
reasonably requested by SMI to permit SMI to fully utilize its
rights under this Agreement. Such assistance shall include,
without limitation, the following: (i) ongoing telephone and
email access to knowledgeable PGIC personnel who shall provide
consultation and advice, as requested from time to time; (ii)
onsite training of SMI personnel and/or End Users by qualified PGIC
personnel, as the need requires; (iii) access to manufacturing
equipment and processes at PGIC locations for observation and
testing purposes; (iv) supervision of equipment installation at
SMI’s or End Users’ locations; (v) initial and
troubleshooting inspections by PGIC of equipment and manufacturing
processes at SMI’s locations; and (vi) lists of present and
potential suppliers.
(b)
During the Term and thereafter for PGIC Systems under lease to End
Users until such Licensed Products are removed, PGIC shall provide
(at no charge during the Software Warranty Period, and at
PGIC’s then-current rates after the Software Warranty
Period), with respect to the PGIC Systems: (i) Updates and
Improvements; (ii) any application development that enables the
PGIC Systems to operate as intended (including without limitation
the integration and mobilization of the PGIC Systems to operate the
Licensee Products, and the installation of the infrastructure to
enable End Users to utilize the PGIC Systems with the Licensee
Products); (iii) Tier 2 Support Services to SMI telephonically;
(iv) Tier 3 Support Services to SMI and/or any End User for onsite
PGIC Systems; and (v) maintenance and support as reasonably
requested by SMI from time to time. For purposes of this
Section 4.2 , “ Tier 2 Support Services ”
shall mean a Tier 1 Support Service that SMI is unable to resolve
with the training provided by PGIC, and “ Tier 3 Support
Services ” shall mean technical support, including but
not limited to source code changes, provided by PGIC with respect
to any PGIC Systems deficiencies, documentation deficiencies or
training deficiencies.
(c)
Initial Training . At no additional cost (except for
payment of expenses as provided below in subsection (d) ),
PGIC shall provide training on the use of the
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PGIC Systems, including
without limitation, any Updates, Customizations and Improvements,
to SMI’s sales representatives, programmers and technical
support personnel at SMI’s location in Las Vegas, Nevada (or
as otherwise agreed by the parties), covering sales, product and
technical support topics. Such training shall be of
sufficient quality and quantity to enable such personnel (i) to use
all functions and to understand all features of the PGIC Systems
for each Licensee Product and Public Domain Game, (ii) to copy,
promote, market and distribute the PGIC Systems for each Licensee
Product and Public Domain Game, and (iii) for technical support
employees, to provide support to SMI’s distributors,
resellers and End Users.
(d)
Expenses . In connection with training provided by
PGIC hereunder, SMI shall pay for all reasonable and documented
travel and lodging expenses, of PGIC personnel.
5.
FEES, ROYALTIES, AND PAYMENT
5.1
Advance. SMI shall pay PGIC a $3 million, fully
recoupable advance (the “Advance ”) credited against royalties that are
earned and received by SMI and that are otherwise due to
PGIC from SMI. Such Advance shall be due and payable
by SMI within ten (10) business days after the Effective
Date .
5.2
Royalties.
(a)
SMI Game Play . For SMI Game Play using the PGIC
Systems or Game Manager, during the Term, provided that PGIC has
not materially breached any of its obligations under this Agreement
and subject to Sections 5.1, 5.2(d) and 5.3(a) , SMI
shall pay to PGIC a royalty, calculated on a monthly basis, the
greater of: (i) fifteen percent (15%) of the GAAP Recurring
Revenue, or (ii) $100 per month per such SMI Game Play (i.e. per
Table Game) leased or licensed for use by an End User.
Examples of the SMI Game Play royalty calculations are set forth in
Exhibit C .
(b)
Non-SMI Game Play . For Non-SMI Game Play using
the
