License Agreement

CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED UPON A REQUEST FOR CONFIDENTIAL TREATMENT; SUCH PORTIONS HAVE BEEN FILED SEPARATELY WITH THE SEC


PRODUCT SALES, DELIVERY
AND LICENSE AGREEMENT


THIS AGREEMENT (the "Agreement") is made this 8th day of December, 2000, by and between ACRES GAMING INCORPORATED, having its principal place of business located at 7115 Amigo Street, Suite 150, Las Vegas, Nevada 89119 (hereinafter "ACRES"), and IGT, a Nevada corporation, with its principal place of business located at 9295 Prototype Drive, Reno, Nevada 89511 (hereinafter "IGT").


WHEREAS, ACRES has developed a slot linking, bonusing and casino-wide information system which includes certain computer software, hardware and firmware;


WHEREAS, IGT wishes to sell said computer hardware and sublicense said computer software and firmware ("ACRES Products") to MGM Mirage, a Delaware corporation (hereinafter "MGM Mirage"), or its affiliates which are casino end users (the "Purpose"); and


WHEREAS, ACRES is willing to provide certain computer hardware and license certain computer software and firmware, subject to the terms and conditions contained herein.


NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereby agree as follows:


1. DEFINITIONS


1.1 "Confidential Information" means any information disclosed by or relating to ACRES that generally is not known to the public, whether of a technical, business or other nature, and which may be contained in tangible materials, such as documents, reports, object code, source code, algorithms, or may be unwritten information. Confidential Information includes, without limitation, (i)


2 Documentation, (ii) Firmware and the source code thereof, (iii) Software and the source code thereof, (iv) Updates and the source code thereof, and (v) all trade secrets of ACRES related to any of the foregoing.


1.2 "Documentation" means any manuals for the Software, Hardware or Firmware.


1.3 "End-User" means each of the MGM Mirage casinos listed in Exhibit A, as amended from time to time, which sublicenses the right to use the Software and Firmware from IGT and which buys Hardware from IGT.


1.4 "Firmware" or "Firmware Products" means the firmware developed and/or marketed by ACRES and furnished to IGT that is identified in Exhibit B , which includes, but is not limited to, slot linking firmware and bonus enabling firmware.


1.5 "Hardware" or "Hardware Products" means the hardware developed and/or marketed by ACRES and furnished to IGT identified on Exhibit C and which is furnished pursuant to the Hardware Sale Terms and Conditions attached as Exhibit D and made a part of this Agreement by reference. Hardware or Hardware Products includes, but is not limited to, slot linking hardware, bank controllers and bonus servers.


1.6 "Intellectual Property Rights" means any and all patents, licenses, trademarks, trade names, inventions, and copyrights related to the authorship, origin, design, manufacture, programming, operation or service to the Software, Hardware Firmware or Updates.


1.7 "License" means the right to sell Hardware and sublicense the Software and Firmware according to the terms and conditions of this Agreement.


1.8 "Live Operation" means the first day an End User begins successful operation of Software Products as defined by a mutually agreed specification and uses the Hardware Products for live gaming at the casino.


1.9 "Slot Linking Hardware Kits" means the hardware provided by Acres to be installed in End-User slot machines, including Acres' Bonus Engine II, card reader, display, keypad, power supply and harness kits.


1.10 "Software" or "Software Products" means the software developed and/or marketed by ACRES and furnished to IGT identified on Exhibit E , which includes, but is not limited to, software applications, object code, documentation for utilization


2 3 of the Software, and all printed or magnetically encoded materials related to any of the foregoing materials.


1.11 "Update" means a modification to the Software or the Firmware that is generally offered and expressly designated by ACRES in its sole discretion as an "update" comprising a successor to a specified Software and/or Firmware program.


2. SOFTWARE/FIRMWARE LICENSE


2.1 ACRES hereby grants to IGT a nontransferable, royalty-bearing license during the term of this Agreement for the sole purpose of IGT granting a nonexclusive, nontransferable, royalty-bearing sublicense to use the Software and Firmware (neither source code nor license to use source code is provided hereunder) to End-Users, subject to the limitations set forth in Section 2.2 below.


2.2 IGT agrees to sublicense Software and Firmware only to the End-Users in conjunction with the sale or licensing of IGT's own proprietary products. Software and Firmware shall be sublicensed in object code only. IGT may not otherwise distribute, use, reproduce, display, license, sublicense, modify, exchange or make derivative works of Software or Firmware for itself or any third party. IGT agrees that it shall sublicense the Software and Firmware only to End-Users to be used only on equipment located at one location operated by each of the casinos listed on Exhibit A. IGT agrees that it shall sublicense the Software and Firmware only to End-Users on the condition that IGT will be liable to ACRES for each End-User's compliance with the following : (1) Software and Firmware shall be used only for the business of the casinos listed on Exhibit A and owned by MGM Mirage, which includes operating gaming devices for the benefit of the customers of such casinos, (2) End-Users shall not permit any third party to use the Software or the Firmware, (3) End-Users shall not use the Software or Firmware for any purpose other than in connection with operating its gaming devices, (4) End-Users shall not reverse engineer, decompile, or disassemble the Software or Firmware, except and only to the extent that such activity is expressly permitted by applicable law, (5) End-Users shall maintain all copyright notices on all copies of the Software and Firmware, and (6) End-Users shall not distribute copies of the Software or Firmware to third parties. ACRES shall be entitled, during business hours and upon reasonable notice, to inspect the relevant books and records of IGT for the sole purpose of verifying compliance with the terms of this Agreement.


2.3 Software and Firmware or any part thereof may not be duplicated by IGT.


3 4
2.4 Within eighty (80) days following the execution of this Agreement, ACRES shall: (1) Deposit with a mutually agreed upon escrow agent a complete copy all source code, header files, libraries, configuration parameters, utilities, build procedures, and all other items necessary to rebuild the software executables and modules listed in Section 11(C) of the Acres Software Maintenance Agreement as well as Exhibit E attached hereto ; (2) Enter into a written escrow agreement with the escrow agent, the terms of which such agreement shall provide, but shall not be limited to, the requirement that the escrow agent release the source code to IGT upon ACRES terminating active business, becoming insolvent or bankrupt or any event of default that is not cured within thirty (30) days written notice; or the occurrence of any other event stipulated in the escrow agreement. ACRES and IGT shall share on an equal basis all costs arising out of the escrow agreement, including, but not limited to, any and all fees charged by the escrow agent and courier services.


3. ACCEPTANCE


IGT hereby agrees to accept the Software, Hardware and Firmware and related Documentation in accordance with the terms and conditions of this Agreement.


4. FEES AND TERMS OF PAYMENT


IGT hereby agrees that during the Minimum Term (as defined in Section 10.1 below), it will pay to ACRES the prices for Hardware and royalty fees for Software according to the terms and conditions of this Agreement and as stated in Exhibit F. Any and all prices as stated on Exhibit F shall be honored for two (2) years from the date of the first complete Live Operation. The parties shall negotiate in good faith to establish pricing beyond the initial two (2) year period and for royalty fees payable upon any renewal of this Agreement. Prices do not include any taxes, now or hereafter enacted, or any other amounts payable to governmental authorities, on account of the sale of products hereunder. In the event ACRES is required to pay any tax or duty (other than taxes on its net income), IGT shall reimburse ACRES therefor.


5. CONFIDENTIALITY


5.1 IGT will keep all Confidential Information in confidence and will not disclose any item of Confidential Information to any person other than its employees, agents or contractors who need to know the same in the performance of their duties, and to End-Users in connection with the sublicense granted to End-Users by IGT. IGT will protect and maintain the confidentiality of all Confidential Information with the same degree of care as it employs to protect its own confidential information, but at least with a reasonable degree of care, including requiring employees, agents, contractors and each End-User to sign a nondisclosure of Confidential Information


4 5 agreement. IGT will be liable to ACRES for any non-compliance by its agents, contractors or any End-User to the same extent it would be liable for non-compliance by its employees.


5.2 IGT recognizes that each item of Software and Firmware (i) is considered to be a trade secret; (ii) is furnished by ACRES to IGT in confidence; and (iii) contains proprietary and confidential information, and that accordingly, such Software and Firmware constitutes Confidential Information under this Article 5.


5.3 Confidential Information does not include any data or information which (i) was in the receiving party's lawful possession prior to the submission thereof by the disclosing party; (ii) is later lawfully obtained by the receiving party from a third party under no obligation of secrecy, (iii) is, or later becomes, available to the public through no act or failure to act by the receiving party or (iv) is independently developed by the receiving party without reliance on the Confidential Information by individuals who have not reviewed the Confidential Information.


6. DEFAULT


6.1 IGT shall be deemed to be in default under this Agreement upon the occurrence of any one or more of the following: IGT (1) detrimentally affects ACRES' ability to adequately support IGT by refusing or neglecting to implement ACRES' recommendation for corrective action to resolve any on-going problem; (2) refuses or neglects to cause installation of Updates; (3) fails to remit to ACRES its royalty fees or other sums due ACRES under this Agreement; or (4) IGT, MGM Mirage or any End-User uses the Software and/or Firmware for any purpose other than as expressly permitted in this Agreement. In the event that IGT fails to perform any obligation under this Agreement within thirty (30) days after receipt of written notice of default, ACRES may, at its option, declare all amounts remaining unpaid under this Agreement immediately due and payable, and interest shall accrue on the outstanding principal and interest balance at a rate of 1.5% per month until paid in full. ACRES shall be entitled to recover attorneys' fees and any other costs of collection, and shall have all rights and remedies afforded to a secured party pursuant to the laws of the applicable jurisdiction. No waiver by ACRES, its successors or assigns of any default, including, but not limited to, acceptance of late payments after the same is due, shall be construed to be a waiver of any other default or of the same default on a future occasion.


6.2 ACRES shall be deemed in default under this Agreement upon the occurrence of any one or more of the following: ACRES (1) detrimentally affects IGT's ability to adequately support the End-User by refusing or neglecting to provide


5 6 Hardware, Software or Firmware on a timely basis and as determined pursuant to this Agreement.


7. TITLE TO AND PROTECTION OF PROPRIETARY MATERIALS


7.1 The parties hereby acknowledge and agree that the Software, Firmware and Updates provided to IGT by ACRES are proprietary to ACRES, and are being licensed and not sold to IGT by this Agreement. Nothing in this Agreement shall be construed as conferring to IGT the right to sell, lease, transfer to any third party (other than an End-User), or to otherwise dispose of the Software and/or Firmware, in whole or in part, without the prior written consent of ACRES. IGT understands and agrees that the Software and Firmware contain valuable trade secrets of ACRES, and that such Software and Firmware shall be held in confidence and not disclosed to any third party without ACRES' prior written consent.


7.2 Title to the copyright in all Software, Firmware, and Documentation is and shall remain in ACRES. IGT may use the Software and Firmware for demonstration, marketing, testing, and regulatory approval purposes. IGT may also use the Software and Firmware for the purpose of integrating such Software and Firmware with IGT's proprietary products for sublicensing to the End-Users but not for any other productive use. IGT agrees it will not distribute Software and Firmware except as set forth in Section 2.2. IGT agrees not to alter or remove any copyright notices or other proprietary notices on or in the Software, Firmware, Hardware, Documentation or other materials supplied by ACRES, and to reproduce such notices in any copies furnished to IGT's customers under this Agreement.


7.3 IGT acknowledges that ACRES may use, or require IGT to use ACRES-supplied software locks, or similar security measures, to limit the use of Software and Firmware consistent wi ...