Exhibit 10.2

 

***Confidential Treatment Requested Under 17 C.F.R. Section 240.24b-2

 

PRODUCT DEVELOPMENT AND INTEGRATION AGREEMENT

 

This Sales, Marketing, Distribution and Product Integration Agreement (the
“AGREEMENT”) is made and entered into effective as of June 13, 2005 (the
“EFFECTIVE DATE”), by and among Shuffle Master, Inc., a Minnesota corporation,
its affiliates and each of its wholly owned subsidiaries (“SMI”) located at 1106
Palms Airport Drive, Las Vegas, Nevada 89119-3730, MIKOHN GAMING CORPORATION, a
Nevada corporation doing business as Progressive Gaming International
Corporation, its affiliates and each of its wholly owned subsidiaries, (“PGIC”)
with a primary business address of 920 Pilot Road, Las Vegas, Nevada 89119, and
IGT, its affiliates and each of its wholly owned subsidiaries, (“IGT”) located
at 9295 Prototype Drive, Reno, Nevada 89510.  Each of PGIC, SMI and IGT may
hereinafter be referred to individually as a “Party” or collectively as the
“Parties.”

 

RECITALS

 

WHEREAS, PGIC and IGT have entered into a separate agreement for the development
and distribution of the Intelligent Table System (hereinafter referred to as the
“PGIC-IGT Agreement”);

 

WHEREAS, PGIC, SMI and IGT intend to enter into a relationship, the scope of
which includes using complementary capabilities, technologies, and resources of
the three parties for the sales, marketing, distribution, product integration,
service, and support associated with Table Game Systems, Smart Tables, Table
Game Bonusing, RFID, Card Recognition, Shufflers and Intelligent Shoes, and
shared reporting and analysis;

 

WHEREAS, PGIC and IGT believe that a better Intelligent Table System can be
developed that includes SMI products;

 

WHEREAS, SMI believes that a better Intelligent Table System can be developed
that includes PGIC and IGT products;

 

WHEREAS, PGIC and IGT also believe that SMI has valuable intellectual property
that is important to the development of the Intelligent Table System;

 

WHEREAS, SMI also believes that IGT and PGIC have valuable intellectual property
that is important to the development of the Intelligent Table System;

 

WHEREAS, PGIC, SMI and IGT wish to enter into an Agreement providing the
framework wherein these activities will occur, in accordance with the terms
contained herein.

 

IT IS THEREFORE AGREED AS FOLLOWS:

 

1.     Definitions: The following definitions shall have the following meanings:

 

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a.     “Appendix (Appendices)” shall mean any attached Licensed Product Appendix
mutually agreed to among PGIC, SMI and IGT and signed by all of the Parties
detailing any further areas of agreement between the Parties.

 

b.     “Card Shufflers” shall mean a mechanical device that is associated gaming
equipment (as that term is understood in the gaming industry) that shuffles
physical playing cards into a random or near random order and used for table
gaming.

 

c.     “Confidential Information” shall mean any software, documentation, data
drawings, benchmark tests, specifications, trade secrets, object code and
machine-readable copies of software, source code, financial information,
financial terms between the Parties, any information that by its nature would
reasonably be considered confidential and any other proprietary information
supplied by any Party in furtherance of this Agreement.

 

d.     “Contributing Party” shall mean a Party that materially contributes to
the creation of Jointly Developed Technology.

 

e.     “Jointly Developed Technology” shall mean all technology jointly
developed by two or more Contributing Parties pursuant to this Agreement.

 

f.      “ENPAT Patents” shall mean all patents and patent applications
identified on Exhibit A as ENPAT patents or applications, and all patents in the
same Patent Family as any of the foregoing.

 

g.     “Hill Patents” means all patents and patent applications identified on
Exhibit A as Hill patents or applications, and all patents in the same Patent
Family as any of the foregoing.

 

h.     “IGT Technology” shall mean any and all of the following: inventions,
works of authorship, technology, know-how, source or object code, algorithms,
methods, processes, procedures, work-arounds and Intellectual Property Rights
provided by or independently developed or owned by IGT.

 

i.      “IGT Scope of Product” shall be circumscribed by the SOA and be defined
to include (1) casino systems, and (2) player tracking, loyalty, reward, and
bonusing systems; including but not limited to Table Touch and systems providing
such data processing and reporting functionality.

 

j.      “Intellectual Property Rights” means any and all rights existing now or
in the future under patent law, copyright law, trade secret law, trademark law
and any and all similar proprietary rights, and any and all renewals,
extensions, and restorations thereof, relating to the Licensed Product.

 

k.    “Licensed Product(s)” means any product within the SOA that is developed
in accordance with the terms of this Agreement and/or as specified in any
Appendix(s), including but not limited to the Intelligent Table System.

 

l.      “Patent Family” means, with respect to a patent or patents, and/or a
patent application or applications (the “Reference Patents or Applications”),
(a) any and all reissues, reexaminations, continuations, continuations-in-part,
divisionals, and foreign counterparts thereof (“Derived Patents”); (b) any
patents which issue from or claim a priority date to the Reference Patents or
Applications or the Derived Patents (“Daughter Patents”); (c) any and all
patents, patent applications or provisional applications from which the
Reference Patents or Applications, the Derived Patents or the Daughter Patents
claim priority directly or through another patent or patent applications
(“Grandparent/Parent Patents or Applications”); (d) any and all reissues,
reexaminations, continuations, continuations-in-part, divisionals, and foreign
counterparts of the Grandparent/Parent Patents or Applications; (e) any patents
which issue from or claim a priority date to the Grandparent/Parent Patents or
Applications (“Sister Patents or Applications”); (f) any and all reissues,
reexaminations, continuations, continuations-in-part, divisionals, and

 

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foreign counterparts of the Sister Patents or Applications; and (g) any patents
which issue from or claim a priority to the Sister Patents or Applications.

 

m.    “PGIC Scope of Product” shall be circumscribed by the SOA and be defined
to include (1) table data collection systems, (2) bet recognition, (3) automated
chip tracking, (4) Tablelink CT/GT, (5) table/casino/cage RFID systems, and
(6) payoff recognition.  PGIC’s scope shall also include Tablelink PT to the
extent that its inclusion does not overlap with IGT’s scope, in which case,
IGT’s scope shall have precedence.

 

n.     “PGIC Technology” means any and all of the following: inventions, works
of authorship, technology, know-how, source or object code, algorithms, methods,
processes, procedures, work-arounds and Intellectual Property Rights provided by
or independently developed or owned by PGIC.

 

o.     “Shoes” shall mean a physical device that is associated gaming equipment
(as the term is understood in the gaming industry) that is placed on a gaming
table and houses playing cards, identifies (reads) the cards prior to dealing
and presents a card for dealer extraction one at a time.

 

p.     “Intelligent Table System” means the system developed in accordance with
the terms of the Agreement, which will consist of several layers of development
or integration of two or more of the IGT Scope of Product, PGIC Scope of Product
and SMI Scope of Product.

 

q.     “SMI Patents” shall mean means all patents and patent applications
identified on Exhibit A as SMI patents or applications, and all patents in the
same Patent Family as any of the foregoing.

 

r.     “SMI Scope of Product” shall be circumscribed by the SOA and be defined
to include (1) Card Shufflers and Shoes (2) card and chip sorters and verifiers
[contained in Card Shufflers and Shoes], and (3) bonusing that is performed
entirely by and within the SMI Scope of Product (1) and (2).

 

s.     “SMI Technology” shall mean any and all of the following: inventions,
works of authorship, technology, know-how, source or object code, algorithms,
methods, processes, procedures, work-arounds and Intellectual Property Rights
provided by or independently developed or owned by SMI.

 

t.      “Specifications” means the descriptions of the technical requirements,
component parts, features, functionality, performance criteria, operating
conditions, interfaces, data transfer, processing parameters and protocols
associated with any Licensed Product and agreed upon by the Management
Committee.

 

u.     “Table Link CT” refers to a system (including gaming chips) utilizing
RFID to track gaming chips to monitor all bets made at a table game, which can
be coupled with chip tray and other accessories at a table game.

 

v.     “Table Link GT” refers to card recognition using intelligent shoe that
provides data for player strategy analysis to be sent to a backend analysis
module.

 

w.    “TableLink PT” refers to PGIC table game management system software
comprised of a networked table system with a computer at the table game level to
register and collect selected data, including:  player ratings, accounting
transactions, openers, closers, markers and head count tracking. This table game
management system software will also interface to various table devices
including: tracking units, displays, and shufflers, among others. It will also
interface with backend Casino Management Systems as necessary and applicable.

 

x.     “Table Touch” refers to IGT’s table game management system software
comprised of a networked table system with a computer or tracking equipment at
the table game level to register and collect selected data, including but not
limited to one or more of the

 

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following:  player ratings, accounting transactions, openers, closers, markers
and head count tracking. This table game management system software will also
interface to various table devices including: tracking units, displays, and
shufflers, among others to be decided by the affected Parties. It will also
interface with backend Casino Management Systems as necessary and applicable.

 

y.     “Territory” shall mean all jurisdictions worldwide in which the Licensed
Products can lawfully be sold, leased, licensed or otherwise distributed.

 

z.     “Third Party” means a person or entity other than IGT, PGIC or SMI.

 

2.     Scope of the Agreement (or “SOA”):

 

The purpose of this Agreement is to create a comprehensive automated table
management solution using complementary capabilities, technologies, and
resources of the three Parties. The SOA shall be limited to the following areas:

 

a.     Data collection and processing related to all player and game activity at
the table (pit) excluding the poker room (as it is commonly known in the gaming
industry).

 

b.     Back office data processing, analysis and reporting related to those
items set forth in subsection (a) above.

 

c.     Integration and interfacing of (one or more of) shoes, shufflers, chip
readers, card readers, card and chip sorters/verifiers, table monitoring systems
and back end-processing systems in connection with those items set forth in
subsection (a) above.

 

d.     Enhancements to shoes, shufflers, chip readers, card readers, card and
chip sorters/verifiers, table monitoring systems and back end-processing systems
in connection with those items set forth in subsection (a) above.

 

e.     Automated chip recognition/reconciliation and tracking at the table and
in the cage/chip bank.

 

f.      Progressive systems (excluding “Table Level Bonusing Systems”), player
bonusing, rewards and loyalty systems that utilize real-time data facilitated by
automated data collection excluding play outcomes (only as related to
subsections (a) thru (f) above). Table Level Bonusing Systems include any
“traditional” bonus that increments via a percentage of, or a portion of the
player’s wager related to game outcomes.  This bonus may only be connected to a
stand alone table, multiple tables within a single site or multiple tables at
multiple sites.

 

Any items which are not set forth or described in the SOA shall be excluded from
the Scope of Product of all Parties unless later added in writing by the
Management Committee.

 

3.     Management Committee:

 

a.     The Parties shall establish a project executive committee consisting of
one (1) senior level employee from each Party (the “Management Committee”). All
decisions respecting any matter that is set forth in this Agreement and that
involves all three Parties shall be made by the Management Committee.  Without
limiting the generality of the foregoing, the Management Committee shall be
responsible for the following:

 

•      Overall project oversight and management

•      Establishing appropriate project leadership

•      Establishing a schedule for interfacing each Party’s Scope of Product

•      Development and approval of Specifications for jointly developed Licensed
Products

•      Resolving any matters between the parties arising under this Agreement

•      Handling the general management of the relationship created by the
Agreement

 

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b.     The Management Committee shall make such decisions and take such actions
as are necessary or desirable to carry out the purpose of this Agreement. All
issues decided by the Management Committee must be decided by […***…].

 

c.     The Management Committee shall conduct status meetings in person or
telephonically on at least a […***…] basis detailing the […***…] of the […***…]
and […***…] the […***…] and the […***…] to be […***…].

 

d.     […***…] of the Management Committee […***…] required to constitute a
quorum for any action to be taken by the Management Committee.

 

e.     Any one or more of the Parties may submit proposals for Management
Committee review and approval.  The Management Committee shall develop and
approve an Appendix to this Agreement detailing agreements specific to each new
Licensed Product.

 

f.      Although […***…] shall be permitted to […***…] from […***…] for […***…]
on the […***…], no implied license to any Intellectual Property Rights shall be
construed or conveyed by such permission.

 

g.     Notwithstanding anything contained in this Agreement to the contrary, any
and all matters and decisions associated with Jointly Developed Technology shall
be managed and determined solely by the Contributing Parties.

 

4.     Product Development and Integration:

 

a.     Each of IGT, PGIC and SMI shall use commercially reasonable efforts to
expeditiously develop and implement interfaces between their respective Scope of
Product to develop the Intelligent Table System.

 

(i)      SMI shall be primarily responsible for the development and integration
of SMI Scope of Product into the Intelligent Table Systems.

 

(ii)     PGIC shall be primarily responsible for the development and integration
of the PGIC Scope of Product into the Intelligent Table Systems.

 

(iii)    IGT shall be primarily responsible for the development and integration
of the IGT Scope of Product into the Intelligent Table Systems.

 

b.     Each Party shall designate sufficient dedicated resources to timely
perform its responsibilities hereunder.

 

c.     Each Party shall afford […***…] with respect to matters affecting the
[…***…] of the Intelligent Table System and Licensed Products.

 

(i)            Each Party shall […***…] the […***…] of its Scope of Product
[…***…] Jointly Developed Technology.

 

(ii)           Each Party shall afford […***…] to the […***…] of the Intelligent
Table System and Licensed Products.

 

(iii)          Each Party shall provide […***…] and […***…] required to […***…]
the […***…] of the Intelligent Table System and the Licensed Products.

 

(iv)          Each Party agrees to make […***…] with the Intelligent Table
System on a […***…].

 

(v)           Each Party agrees to develop integrated and innovative technology
within their Scope of Product for exclusive use with the Intelligent Table
System.

 

d.     Each Party shall use commercially reasonable efforts to satisfy the
reasonable technical requests of the other Parties so long as the requests are
within the SOA.

 

(i)            The Parties shall agree on the costs to be incurred, which
agreement shall not be unreasonably withheld or delayed.

 

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*** Confidential Treatment Requested

 

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(ii)           If a Party is unable to accommodate a request, the requesting
Party may seek to have a Third Party satisfy such request, provided that the
requesting Party does not disclose Confidential Information of the other Parties
without their approval.

 

e.     Each Party shall use commercially reasonable efforts to accommodate
special customer requests by providing assistance within its Scope of Product,
even if the results of such request do not provide a direct benefit to that
Party, provided that such results are beneficial to the Intelligent Table
System.

 

(i)            Each Party shall have the option, at its sole cost and expense to
require one or both of the other Parties to hire or provide one dedicated
qualified resource to facilitate custom development deemed necessary or
desirable. Each Party agrees to the foregoing obligation.

 

(ii)           The Parties shall agree on the costs to be incurred for the
provision of the dedicated resource, which agreement shall not be unreasonably
withheld or delayed.

 

(iii)          The requesting Party shall be responsible for the costs of the
dedicated resource.

 

f.      Each Party shall use commercially reasonable efforts to develop
interfaces to Third Party applications, including but not limited to displays,
electronic eyes, surveillance systems and scheduling software, and other host
casino management system products.  The Parties agree that such Third Party
products may be incorporated into the Intelligent Table System at such time as
an applicable Appendix is executed.

 

g.     All responsibilities defined above shall be limited to the SOA.

 

5.     Marketing and Distribution:

 

a.     Unless otherwise agreed by IGT and PGIC IGT shall distribute the IGT
Scope of Products and the PGIC Scope of Products pursuant to the PGIC-IGT
Agreement SMI agrees that PGIC may have products covered by both the original
ENPAT license and the right under the Non-Exclusive Patent License as attached
sold by IGT with PGIC’s royalty obligations as they were in the original
licenses.

 

b.     SMI shall be responsible for the distribution and pricing of SMI Scope of
Products.

 

c.     Jointly Developed Technology shall be distributed by the Contributing
Party that is in the best position to optimize the value of that Jointly
Developed Technology.

 

d.     All Parties agree to cooperate in the creation of marketing and
collateral materials.

 

(i)       Each Party shall designate a marketing contact which may be changed in
that Party’s sole and absolute discretion by providing written notice to the
other Parties.

 

e.     Each Licensed Product shall be […***…] by the […***…] for the […***…] of
[…***…] under which such Licensed Product is […***…]. Jointly Developed
Technology shall be […***…] by […***…].

 

f.      Each Party shall provide […***…] for Licensed Products falling under its
Scope of Products to the Management Committee for […***…] to […***…] of the
[…***…] for […***…].  Each Party shall, from time to time, provide […***…] of
[…***…] to the Management Committee.

 

g.     The Parties agree to […***…] their Scope of Product to Intelligent Table
System customers at […***…] those […***…] by the […***…] to […***…] of […***…]
and […***…].

 

6.     Covenants:

 

a.     Mutual Covenant. The Parties recognize that each Party is contributing
valuable technology, patents, and other know how and expertise related to its
Scope of Product

 

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*** Confidential Treatment Requested

 

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and that by combining each Party’s know how, patents, technology, and expertise,
the Parties can better develop the Intelligent Table System.  While the Parties
today do not sell identical commercial products within each other’s Scope of
Product, each Party wants to insure that another Party does not use the
Contributing Party’s technology, know how, patents, and expertise to develop and
sell products outside of the Intelligent Table System in competition with the
applicable Party.  Therefore, each Party agrees to not compete within the scope
of the other Parties’ Scope of Product without the prior written consent of the
applicable Party.

 

i.          As an exception to the foregoing, […***…] may […***…] its […***…] to
[…***…] provided that […***…] of […***…] and […***…] of the […***…] from the
[…***…] and […***…] of such […***…].  […***…] and […***…] agree to provide an
[…***…] to […***…] the transfer of […***…] to the […***…] product.  No implied
license is granted by any of SMI, IGT or PGIC by virtue of the foregoing
exception with respect to any […***…] of the […***…] product.  Furthermore,
[…***…] is […***…], by reason of the foregoing exception, from […***…] with the
[…***…] product.  Notwithstanding the foregoing, at such time as […***…] and
[…***…] with such a […***…], SMI shall be […***…] of its […***…] to […***…] and
[…***…] the […***…] of […***…]; however, at such time as […***…] or […***…] with
such a […***…] product, […***…] shall be […***…] solely of its […***…] to
[…***…] either […***…] or […***…], as the case may be, of the […***…] of
[…***…]. Furthermore, […***…] product is not the subject of this Agreement or of
this non-compete, and […***…] nor […***…] shall […***…] any […***…] therefrom or
[…***…] any […***…] thereto.

 

ii.         As a second exception to the foregoing, […***…] but […***…]
extensions thereof.

 

iii.        iv.        Notwithstanding anything contained herein to the
contrary, the Mutual Covenant not to compete shall not preclude a Party from
practicing within its Scope of Product nor shall it preclude any Party from
permitting a Third Party to compete within its Scope of Product.

 

b.     SMI Covenant. Subject to the SMI Covenant set forth in 6 (b)(i),but
subject to the provisions of section 5.4 of the Patent Purchase Agreement, IGT
and SMI both have the right to make, have made, use, sell, have sold, import,
and export products under the ENPAT Patents […***…] provided, however, if such
use avoids royalties that would otherwise be due from PGIC, then PGIC will
remain responsible for such royalties.

 

i.           Notwithstanding anything in this Agreement to the contrary, SMI
shall not, for the first three (3) years of this Agreement, make, have made,
use, sell, have sold, import, export, sublicense, or distribute, any products
that use automated chip tracking technology or technology covered by the SMI
Patents; except that SMI may internally develop such products.  This section may
be terminated and severed pursuant to the Patent Purchase Agreement.

 

ii.          After the first 3 years of this Agreement, the scope of the SMI
Covenant shall be modified.  During the second three years of this Agreement,
SMI shall not make, have made, use, sell, have sold, import, export, sublicense,
or distribute, any products that use RFID or optical chip tracking technology or
technology covered by the SMI Patents, other than pursuant to this Agreement;
except that SMI may internally develop such products. This section may be
terminated and severed pursuant to the Patent Purchase Agreement.

 

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iii.         Notwithstanding the foregoing, if after five (5) years from the
Effective Date, PGIC/IGT have not installed at least 5,000 tables with automated
chip tracking technology, then SMI may request that PGIC and IGT release SMI
from the SMI Covenant.  Upon such request, IGT will (on behalf of IGT and PGIC)
negotiate with SMI, in good faith, the terms and conditions that would be
acceptable for said release.  PGIC consents to any such release negotiated by
IGT.

 

iv.         For the avoidance of doubt, SMI is not prohibited from making, using
or selling RFID products provided that such RFID products are not within the
SOA, nor within the Scope of Product of either IGT or PGIC and provided further
that said RFID products are not prohibited by this Section 6(b).

 

c.     PGIC Covenant. Notwithstanding anything in this Agreement to the
contrary, PGIC shall retain all rights, subject to the IGT-PGIC Agreement, to
its shoe technology and shoe intellectual property, including licensing rights
and the right to protect such from any unauthorized use.  However, PGIC will not
itself make, or have made for PGIC, sell or have sold for PGIC, import,
distribute or export any Intelligent Shoe product within the SOA for a period of
[…***…].  Excepting SMI, no Party may purchase or sell any Intelligent Shoe
product from or to a Third Party during said […***…] period.  Notwithstanding
the foregoing, PGIC may […***…].

 

i.         […***…].

 

7.     Ownership and License Rights:

 

a.     Ownership of Individual IP: The Parties shall each retain all rights,
title, and interest in or to their respective technology and intellectual
property that may be utilized in the Intelligent Table Systems or any Licensed
Product.  Any and all rights not specifically granted under this Agreement are
reserved to the owner(s). No implied licenses to Intellectual Property Rights
shall be construed under this Agreement.

 

b.     Jointly Developed Technology: Each Jointly Developed Technology, and all
Intellectual Property Rights therein, shall be jointly owned by the applicable
Contributing Parties. Responsibility for the prosecution and maintenance of the
Jointly Developed Technology shall be determined by the Contributing Parties
prior to commencement of development.  Costs associated with such prosecution
and maintenance shall be shared equally by the Contributing Parties.  Decisions
regarding litigation and related actions against Third Party infringers of the
Jointly Developed Technology shall be made by the Contributing Party(ies). Any
and all rights with respect to the ownership, pricing and exploitation of
Jointly Developed Technology shall be reserved solely to Contributing Parties.

 

c.     Covenants with Respect to Jointly Developed Technology:  During the term
of this Agreement, each Contributing Party covenants not to use or license the
Jointly Developed Technology without the prior written consent of the other
Contributing Party(ies).  After the expiration or earlier termination of this
Agreement or upon termination of a Party’s rights pursuant to Section 14, each
Contributing Party shall own an equal and undivided interest in the applicable
Jointly Developed Technology with the other Contributing Party(ies), free to use
(non-exclusively) in its sole discretion, with no right or obligation of
accounting or profit-sharing to any Party. Provided however, that no
Contributing Party may sublicense Jointly Developed Technology without the prior
written consent of the other Contributing Party(ies)

 

d.     PGIC License. Although the automated chip tracking and casino and cage
portions of RFID are included within the PGIC Scope, their inclusion does not
imply a license to the SMI Patents beyond that which has already been granted in
a separate license agreement.  Notwithstanding the foregoing and provided that
no breach of the GPI license agreement is caused, SMI and IGT hereby grant PGIC
such additional license

 

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scope under the SMI patents as is necessary so that PGIC can fully perform under
this Agreement subject to the terms and conditions set forth on Exhibit B

 

e.     SMI Scope. Although an element of bonusing is included in the SMI Scope
of Product, such inclusion does not imply a license or an obligation to grant a
license to the IGT or the Acres Gaming bonusing patents.

 

f.      LIMITATIONS AND RESERVATION OF RIGHTS. Except as otherwise provided
herein, no Party may, without the express written authorization of the other
Contributing Party(ies), sub-license or authorize any Third Party to sell,
lease, license, sublicense, or otherwise dispose of Jointly Developed
Technology.

 

g.     SMI Trademark. Should the Management Committee decide to use the name
“Intelligent Table System” for the Intelligent Table System, then Shuffle Master
hereby grants a royalty free perpetual license to use the trademark “Intelligent
Table System.”

 

h.     No […***…] may, without the […***…] of the Management Committee, at any
[…***…] the […***…] of […***…] to or […***…] with any […***…] or […***…] which
[…***…] can, by reason of such […***…] or […***…],[…***…] the […***…] of or
[…***…] to the […***…] pursuant to this Agreement.  Any such unapproved […***…]
must be […***…].

 

8.     Revenue Flows:

 

a.     Revenues shall be administered, collected and enjoyed […***…].

 

i.      For purposes of clarification, revenues from the exploitation of […***…]
shall be administered, collected and enjoyed […***…].

 

ii.     For purposes of clarification, revenues from the exploitation of […***…]
shall be administered, collected and enjoyed […***…].

 

iii.    Revenues from the exploitation of […***…] shall be […***…].

 

9.     Representations, Warranties and Covenants:

 

a.     Each Party hereby covenants, represents and warrants to the others that
(i) each person assigned to perform the services and/or the development work
shall have the proper skill, training and background so as to be able to perform
the such services and/or development work by such Party in a competent and
professional manner and (ii) all services and/or development work and any work
product and other materials or documentation delivered under this Agreement by
such Party shall have been completed in a thorough and professional manner.

 

b.     Each Party hereby covenants, represents and warrants to the other Parties
that it has the corporate power and authority to execute, deliver and perform
this Agreement and other instruments and documents required or contemplated
herein.  Such execution, delivery and performance have been duly authorized by
all necessary action on the part of such party, do not and will not require the
approval of the shareholders of such Party and do not and will not contravene
the Certificate of Incorporation or By-Laws of such Party.

 

c.     Each Party represents and warrants that it has obtained all of the
necessary authority, approvals and permissions including, but not limited to,
the approval of its board of directors (if necessary) to enter into this
Agreement and to perform all of its duties and obligations pursuant to this
Agreement.

 

d.     Each Party warrants that they have the right to grant the licenses set
forth in this Section 9.  In the event any Party breaches any of these
warranties, any non-breaching Party may terminate this Agreement immediately and
the breaching party shall indemnify and hold

 

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harmless the non-breaching Parties for any claims, grievances, causes of action,
suits, demands, actions, damages, costs or losses arising out of such breach.

 

e.     EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NO PARTY MAKES ANY
REPRESENTATION OR WARRANTY WITH RESPECT TO THE LICENSED PRODUCTS OF ANY KIND,
EXPRESS, IMPLIED OR STATUTORY, INCLUDING BUT NOT LIMITED TO WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT.

 

10.  Indemnification: IGT shall defend, indemnify and hold PGIC or SMI harmless
from any claims brought by a Third Party alleging IGT’s Technology infringes on
any Third Party’s intellectual property rights, except those claims caused by
the negligence or willful misconduct of SMI or PGIC.

 

PGIC shall defend, indemnify and hold IGT or SMI harmless from any claims
brought by a Third Party alleging that PGIC’s Technology infringe on any Third
Party’s intellectual property rights, except those claims caused by the
negligence or willful misconduct of SMI or IGT.

 

SMI shall defend, indemnify and hold IGT or PGIC harmless from any claims
brought by a Third Party alleging that SMI’s Technology infringe on any Third
Party’s intellectual property rights, except those claims caused by the
negligence or willful misconduct of IGT or PGIC.

 

IGT will defend, indemnify and hold PGIC or SMI harmless from claims brought
against them by third parties arising out of the negligent performance by IGT of
its responsibilities or obligations under this Agreement, excepting those claims
caused by the negligence or willful misconduct of SMI or PGIC.

 

PGIC will defend, indemnify and hold IGT or SMI harmless from claims brought
against them by third parties arising out of the negligent performance by PGIC
of its responsibilities or obligations under this Agreement, excepting those
claims caused by the negligence or willful misconduct of SMI or IGT.

 

SMI will defend, indemnify and hold PGIC or IGT harmless from claims brought
against them by third parties arising out of the negligent performance by SMI of
its responsibilities or obligations under this Agreement, excepting those claims
caused by the negligence or willful misconduct of IGT or PGIC.

 

The above indemnifying Party shall be responsible for defending, indemnifying
and holding harmless the indemnified Party provided that the indemnifying Party
is promptly notified in writing of any such dispute as soon as is reasonably
practicable and indemnifying Party is permitted to select counsel and control
the defense and/or settlement.

 

11.  Term and TerminationThe initial term of this Agreement is six (6) years
from the Effective Date, except as otherwise specifically provided herein.
Thereafter, the Agreement shall be automatically renewed upon each anniversary
thereof for an additional year unless any Party delivers written notice of its
intent to terminate the Agreement 120 days prior to the

 

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expiration of the term. Revenue distribution and pricing will be reviewed at the
time of each renewal period.

 

a.     This Agreement may be terminated sooner in accordance with the following
provisions:

 

i.      Mutual agreement of the Parties.

 

ii.     A material breach of this Agreement and failure to cure the breach
within thirty (30) days of written notice thereof.

 

iii.    Any Party may terminate this Agreement if any other Party ceases
business operations, makes a general assignment for the benefit of creditors,
becomes insolvent, files or has filed against it a bankruptcy petition or is
required by any governmental entity to end the Agreement due to regulatory or
licensing purposes.

 

b.     In the event this Agreement is terminated, unless precluded by law, order
or regulation, the Parties shall […***…].

 

c.     In the event this Agreement is terminated, unless precluded by law, order
or regulation, the Parties may […***…].

 

12.  Confidentiality: PGIC, SMI and IGT acknowledge that each Party’s
Confidential Information constitutes valuable trade secrets and that they shall
use the Confidential Information of the other solely in accordance with the
provisions of this Agreement. No Party may disclose, either directly or
indirectly, the Confidential Information of a disclosing Party to any Third
Party without the Disclosing Party’s prior written consent, except to the extent
that a party is required to provide any such information to any governmental
regulatory authorities.  Any Party required to disclose the other Party’s
Confidential Information to any governmental regulatory authority shall first
give the disclosing Party fifteen (15) days written notice so that the other
Party can submit an appropriate objection if it so wishes. The foregoing
provisions regarding confidentiality do not apply to information that: (a) was
in the recipient’s possession before receipt from the disclosure and was not
acquired, directly or indirectly, from the disclosing Party; (b) is or becomes
available to the public through no fault of the recipient; (c) is received in
good faith by the recipient from a Third Party having no legal prohibition
preventing the Third Party from disclosing the information and is not subject to
an obligation of confidentiality owed to the Third Party; (d) is independently
developed by the recipient without reference to information received hereunder.

 

13.  Survival of Terms: The rights and obligations of the parties under
Paragraph 10 (Indemnification) and Paragraph 12 (Confidentiality) shall survive
termination of this Agreement for any reason.

 

14.  Assignment:  No party may transfer or assign any of the rights or
obligations under this Agreement by contract, operation of law or otherwise,
without the prior written authorization of the other, which may not be
unreasonably withheld. Withholding of consent to transfer or assign any rights
to a competitor of a Party shall not be deemed to be unreasonable. Any merger,
consolidation, or sale of all or substantially all of the assets of IGT, PGIC or
SMI, or any other transaction in which more than fifty percent (50%) of the
voting securities of IGT, PGIC or SMI is transferred, shall be deemed an
assignment of this Agreement by IGT, PGIC or SMI, as applicable.  Any attempt to
assign this Agreement in contravention of this provision shall be void and of no
effect at the option of the other two Parties. Each Party

 

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*** Confidential Treatment Requested

 

11

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hereto explicitly agrees, as a material inducement to enter into this Agreement
that in the event of an unauthorized attempt to assign this Agreement, including
but not limited to the acquisition of a Party by a competitor of another Party,
as described above, the remaining two Parties shall have the option to terminate
the rights of the Party attempting such assignment (“Assigning Party”), provided
however, that (1) the mutual covenant set forth in section 6 shall survive any
such termination and be binding upon the Assigning Party; (2) the right of the
Assigning Party to enforce said covenant shall terminate and (3) any Jointly
Developed Technology for which the Assigning Party is a Contributing Party shall
be deemed jointly owned by the Contributing Parties pursuant to the terms and
conditions of Section 7(c).

 

15.  Dispute Resolution:  If a dispute arises under this Agreement which cannot
be resolved by the Management Committee, the Parties shall employ the following
mechanisms in an attempt to resolve any matters over which a deadlock exists:

 

a.     The matter creating the deadlock shall be submitted in writing to the CEO
of Each Party. The deadlock must be resolved by a unanimous decision by the
CEO’s.  If the CEO’s cannot resolve the issue within 20 business days, the
Parties shall submit the dispute to binding arbitration subject to the
provisions of sections 15 (b) and (c) below.

 

b.     Except as set forth in section 15(c.) below, any controversy or claim
arising out of or related to this Agreement, or breach thereof, shall be settled
by binding arbitration administered by the American Arbitration Association
under its Commercial Arbitration Rules, and judgment on the award rendered by
the arbitrators may be entered in any court having jurisdiction thereof. The
place of the arbitration shall be the City of Reno, Nevada.  Three qualified
arbitrators shall be appointed in accordance with the Rules of the American
Arbitration Association and this Agreement.  Such qualified arbitrators shall be
members of the Nevada Bar and shall have experience in gaming law matters. The
Parties and arbitrators shall treat all aspects of the arbitration proceedings,
including, without limitation, discovery, testimony and other evidence, briefs
and the award, as strictly confidential, provided, however, that any award or
order rendered by the arbitrator(s) may be entered as a judgment or order in
court as provided herein or except as required by law or regulation.

 

c.     Notwithstanding the forgoing, the Parties shall not be obligated to
submit the following disputes to binding arbitration and may seek relief in a
court of competent jurisdiction in Nevada:

 

i.          Disputes involving substantive issues relating to the patents,
including without limitation, patent validity, enforceability and/or
infringement, except with respect to the Hill Patents for which any Party may
have the option to require arbitration in accordance with the provisions of
section 15(b).

 

ii.         Disputes for which a Party is seeking injunctive relief.

 

16.  Relationship of the Parties: The Parties agree that the relationship
between them is that of independent contractors. There is no relationship of
partnership, joint venture, employment, franchise, or agency between the
parties.  Neither IGT, SMI nor PGIC shall have the right to enter into any
commitments or relationships on behalf of the other, or to bind the other,
except to the extent allowed under this Agreement. Each Party shall be
responsible for their own taxes, fees and costs.

 

12

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17.  Entire Agreement: This Agreement, including the documents and instruments
referred to herein, constitutes the entire agreement of the parties with respect
to the subject matter hereof and all prior rights, negotiations and
representations are merged herein.

 

18.  Waiver: The failure of either party to this Agreement to insist upon the
performance of any of the terms and conditions of this Agreement, or the waiver
of any breach of any of the terms and conditions of this Agreement, shall not be
construed as thereafter waiving any such terms and conditions, but the same
shall continue and remain in full force and effect as if no such forbearance or
waiver had occurred.

 

19.  Effect of Partial Invalidity: The invalidity of any portion of this
Agreement will not and shall not be deemed to affect the validity of any other
provision.  In the event that any provision of this Agreement is held to be
invalid, the parties agree that the remaining provisions shall be deemed to be
in full force and effect as if they had been executed by both parties subsequent
to the removal of the invalid provision.

 

20.  Modification of Agreement: Any modification of this Agreement or additional
obligation assumed by either party in connection with this Agreement shall be
binding only if evidenced in writing signed by each party or an authorized
representative of each party.

 

21.  Applicable Law: This Agreement shall be governed by, and construed and
enforced in accordance with the laws of the State of Nevada regardless of the
choice of law rules of such state or any other jurisdiction. All disputes
arising out of this Agreement shall be subject to the exclusive jurisdiction of
either the state or federal courts located in Reno, Nevada, and the parties
agree and submit to the personal and exclusive jurisdiction and venue of these
courts.

 

22.  Notices: Any notice or notices which any parties hereto deems necessary,
useful or convenient to give to any other party or parties hereto, at any time
and from time to time, shall be in writing and shall be personally served upon
or mailed to the parties at the following addresses:

 

IGT

Progressive Gaming International Corporation

Attn: General Counsel

Attn: General Counsel

9295 Prototype Drive

920 Pilot Road

Reno, Nevada 89510

Las Vegas, Nevada 89119

(775) 448-0120 Fax

(702) 263-1681 Fax

 

 

With copy to:

With copy to:

IGT

Progressive Gaming International Corporation

Attn: CEO

Attn: CEO

9295 Prototype Drive

920 Pilot Road

Reno, Nevada 89510

Las Vegas, Nevada 89119

(702) 896-6992 Fax

(702) 263-1681 Fax

 

 

With copy to:

With copy to:

IGT

Progressive Gaming International Corporation

Attn: Richard Pennington

Attn: CFO

 

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9295 Prototype Drive

920 Pilot Road

Reno, Nevada 89510

Las Vegas, Nevada 89119

(775) 448-1488 Fax

(702) 263-1681 Fax

 

 

With copy to:

 

IGT

 

Attn: Richard Rowe

 

7115 Amigo Street, Suite 150

 

Las Vegas, Nevada 89119

 

 

 

(702) 263-7583 Fax

 

 

 

Shuffle Master, Inc.

 

Attn: General Counsel

 

1106 Palms Airport Drive

 

Las Vegas, Nevada 89119-3730

 

(702) 270- 5161 Fax

 

 

 

With copy to:

 

Shuffle Master, Inc.

 

Attn: CEO

 

1106 Palms Airport Drive

 

Las Vegas, Nevada 89119-3730

 

(702) 270-5130 Phone

 

(702) 270-5161 Fax

 

 

A PARTY MAY CHANGE A NOTICE ADDRESS AT ANY TIME BY PROVIDING WRITTEN NOTICE TO
THE OTHER PARTIES.

 

23.  Attorneys’ Fees and Costs: If any legal action or any arbitration or other
proceeding is brought for the enforcement of this Agreement or because of an
alleged dispute, breach, default or misrepresentation in connection with any
provisions of this Agreement, the successful or prevailing party shall be
entitled to recover reasonable attorneys’ fees and other costs incurred in that
action or proceeding, in addition to any other relief to which he may be
entitled.

 

24.  Counterparts: This Agreement may be executed in any number of counterparts,
each which shall be deemed to constitute but one and the same instrument.

 

25.  Headings: Article and paragraph headings contained in this Agreement are
inserted only as a matter of convenience and reference.  Said captions shall not
be construed to define, limit, extend or describe this agreement of the intent
of any provision hereof.

 

26.  Execution of Additional Documents: Each Party agrees to perform any further
acts and to execute and deliver any documents which may be reasonably necessary
to effectuate the provisions of this Agreement.

 

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27.  Patent Purchases:  IGT shall purchase a 50% interest in the SMI Patents
pursuant to the terms and conditions of the Patent and Technology Purchase
Agreement attached hereto as Exhibit A. In the event of a conflict between this
Agreement and the Patent Purchase Agreement (“PPA”) with respect to the subject
matter of the PPA, the PPA shall control.

 

28.  Non-Party Beneficiaries:  It is not intended, and this Agreement shall not
be construed, to provide any entity or person not a Party to this Agreement with
any benefits or to obligate the parties to this Agreement to any entity or
person not a Party to this Agreement.

 

29.  Press Release: Subject to applicable laws and regulations, each of SMI,
PGIC and IGT shall mutually agree with respect to the timing and content of all
press releases that are related to the subject matter hereof.  No Party shall
issue a press release without the prior written consent of the other Parties,
which consent shall not be unreasonably withheld or delayed.

 

30.  Execution Statement.  The undersigned individuals represent that they are
of legal capacity and authorized to sign this Agreement in a representative
capacity on behalf of the indicated party they represent.  Each party has relied
upon that representation in entering into this Agreement

 

IN WITNESS WHEREOF, the parties hereto have entered into this Agreement this
13th day of June 2005.

 

 

“IGT”

 

“PGIC”

 

 

 

IGT, a Nevada corporation

 

MIKOHN GAMING CORPORATION, a

 

 

Nevada corporation, doing business as

 

 

PROGRESSIVE GAMING

 

 

INTERNATIONAL CORPORATION

 

 

 

By:

 /s/ Rich Pennington

 

By:

 /s/ Mike Dreitzer

Name:

 Rich Pennington

 

Name:

 Mike Dreitzer

Title:

 EVP Corp Strategy

 

Title:

 EVP/GC

Date:

 6/13/05

 

Date:

 6/13/05

 

 

 

Shuffle Master, Inc., a Minnesota
corporation

 

 

By:

/s/ Paul Meyer

 

 

 

Name: Paul Meyer

 

 

Title:

President & COO

 

 

Date:

6/13/05

 

 

 

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