EXHIBIT 10.1

 

CONFIDENTIAL

 

EXHIBIT B TO MASTER SETTLEMENT AGREEMENT

 

TITO GAME MANUFACTURER LICENSE AGREEMENT

 

This TITO GAME MANUFACTURER LICENSE AGREEMENT (“Agreement”) is effective as of
June 13, 2014 (“Effective Date”) and is by and between IGT, a Nevada corporation
having a primary place of business at 6355 South Buffalo Drive, Las Vegas,
Nevada 89113 (“IGT”) and Scientific Games Corporation, a Delaware corporation
having a primary place of business at 750 Lexington Avenue, 25th Floor, New
York, New York 10022 (“SGC” and together with its Affiliates, as defined infra,
“Licensee”).  Each of IGT and SGC may be referred to in this Agreement
individually as a “Party” or together as the “Parties.”

 

R E C I T A L S

 

A.                                    IGT has the authority to grant licenses
under patents of others that cover what is commonly known in the industry as the
ticket-in ticket-out cashless gaming system.

 

B.                                    As part of the terms and conditions of the
Master Settlement Agreement by and between IGT, SGC, and WMS Gaming Inc. dated
as of the Effective Date (“Settlement Agreement”), IGT and Licensee have agreed
to enter into a license to the TITO Active Patents (as defined below) upon the
terms and subject to the conditions of this Agreement.

 

A G R E E M E N T

 

The Parties agree as follows:

 

1.              INTERPRETATION

 

1.1                                    Definitions.  Capitalized terms used in
this Agreement will have the meanings ascribed to them or referenced in
Exhibit 1.

 

1.2                                    Construction.  Except where expressly
stated otherwise in this Agreement, the following rules of interpretation apply
to this Agreement: (i) “include”, “includes” and “including” are not limiting
and mean include, includes and including, without limitation; (ii) definitions
contained in this Agreement are applicable to the singular as well as the plural
forms of such terms; (iii) references to an agreement, statute or instrument
mean such agreement, statute or instrument as from time to time amended,
modified or supplemented; (iv) references to a Person are also to its permitted
successors and assigns; (v) references to an “Article”, “Section”, “Exhibit” or
“Schedule” refer to an Article or Section of, or any Exhibit or Schedule to,
this Agreement unless otherwise indicated; (vi) the word “shall” will be
construed to have the same meaning and effect as the word “will” and vice versa;
(vii) the word “any” will mean “any and all” unless otherwise indicated by
context; (viii) the word

 

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“or” means in the alternative or together, i.e., “and/or”; and (ix) the symbol $
means United States Dollars, and all monetary amounts referenced herein refer to
United States Dollars.

 

2.              LICENSE GRANT

 

2.1                                    Grant From IGT To Licensee.  Subject to
the terms and conditions of this Agreement, IGT grants to the Licensee a
non-exclusive, non-transferable license, without the right to sublicense, under
the TITO Active Patents, to make, have made, and further subject to a Licensee’s
payment of License Fees, to use, offer to Place, Place, and have Placed, in the
Territory, TITO Capable Gaming Machines or components thereof.

 

2.2                                    Notice to Customers.  SGC will and will
cause each other Licensee to incorporate those conditions and limitations in
Exhibit 2 either verbatim or verbatim with formatting changes in at least one of
(i) a blanket acknowledgment generated after the Effective Date for signature by
customers which is enforceable for so long as it is relied upon to satisfy this
condition, or (ii) the Placement agreement associated with TITO Capable Gaming
Machine Placed in the Territory generated after the Effective Date for signature
for customers; provided however, that if Licensee previously obtained from that
customer a signed blanket acknowledgement or signed agreement incorporating such
blanket acknowledgement (which blanket agreement must be enforceable for so long
as it is relied upon to satisfy this condition) pursuant to any of the
Terminated License Agreements, then such blanket acknowledgement or agreement
shall satisfy this requirement.

 

2.3                                    Reservation of Rights.  No license is
granted under this Agreement for any copyright, trademark, trade dress, service
mark, trade secret, know-how, or other non-Patent intellectual property,
expressly, by implication, by estoppel or otherwise, by either Party under this
Agreement even if the other Party requires such license to fully exploit any
rights that have been expressly granted to such other Party under this
Agreement.  Moreover, except as expressly set forth in this Article 2, neither
Party grants any license or rights under any Patent owned by or otherwise
licensable by such Party or any of its Affiliates, by implication, by estoppel
or otherwise, even if the other Party or any of its Affiliates requires such
license or rights to fully exploit any rights that have been expressly granted
to such Party and its Affiliates under this Agreement.

 

3.              PAYMENTS; TITO CERTIFAST LICENSE TAGS; REPORTS

 

3.1                                    License Fee. Licensee will pay to IGT [*]
(“License Fee”), subject to and in

 

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* Information has been omitted from this document and filed separately with the
Securities and Exchange Commission under a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

 

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accordance with Section 3.3 below, for each TITO Capable Gaming Machine to be
Placed by or on behalf of Licensee in the Territory.

 

3.2                                    Procurement of License Tags.  Upon
receipt of payment of each License Fee, IGT will issue to Licensee one TITO
Certifast License Tag. [*]

 

3.2.1                                   Form of PO.  Licensee may use its form
of purchase order commonly used by the Licensee in its business to place orders
for TITO Certifast License Tags.  However, if Licensee orders using such form,
then, despite IGT’s acceptance of the order, either in writing or by
performance, none of the terms of such purchase order will be binding upon IGT
except (a) the number of TITO Certifast License Tags ordered under this
Agreement, (b) the corresponding License Fee, and (c) the delivery location.  NO
PREPRINTED OR OTHER TERMS OF ANY SUCH ORDER FORM WILL APPLY (OTHER THAN THE
TERMS OF THIS AGREEMENT, which are agreed by the Parties to be applicable to
each and every order from Licensee).

 

3.2.2                                   No Invoices; Shipping Documentation. 
IGT will not submit any invoice in response to any order for TITO Certifast
License Tags placed by Licensee.  IGT will include in its shipping documentation
for the TITO Certifast License Tags any purchase order number provided to IGT by
Licensee for tracking purposes only.  The shipping documentation will also
include (a) the quantity of TITO Certifast License Tags shipped, (b) the
identification numbers of such TITO Certifast License Tags included and (c) the
shipping destination and shipping method.  Other than the foregoing information,
no preprinted or other terms of any such shipping documentation from IGT or its
Affiliate will apply.

 

3.2.3                                   Multi-Player Gaming Machines.  For
purposes of paying License Fees to obtain licenses and purchasing, issuing and
reporting on TITO Certifast License Tags and TITO Existing Pre-paid License Tags
under this Agreement, to the extent that any TITO Capable Gaming Machine Placed
during the Term includes multiple player stations, each player station will be
deemed a separate such machine and each player station requires its own TITO
Certifast License Tag or TITO Existing Pre-paid License Tag to be licensed under
this Agreement.

 

3.2.4                                   Delivery of TITO Certifast License
Tags.  TITO Certifast License Tags will be shipped by IGT at the cost of IGT. 
Risk of loss will remain with

 

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* Information has been omitted from this document and filed separately with the
Securities and Exchange Commission under a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

 

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IGT until delivery to the final destination and Licensee’s acknowledgement of
receipt of the delivery.  In the [*] of the Term, IGT will process orders and
ship TITO Certifast License Tags  [*].

 

3.2.5                                   Quantity of TITO Certifast License Tags
Received; Discrepancies.  Upon receipt of any shipment of TITO Certifast License
Tags from IGT, Licensee will promptly verify the shipment received against the
shipping documentation provided by IGT, including specifically, (a) the quantity
of TITO Certifast License Tags and (b) the unique identifier of each TITO
Certifast License Tag.  Within 10 business days after delivery, Licensee shall
report any discrepancies.  If Licensee does not report any discrepancies within
10 business days after Licensee’s acknowledgement of receipt of the delivery,
then the shipping documentation provided by IGT will be deemed accurate in all
respects and not disputable, unless Licensee has reported any discrepancies.

 

3.3                                    Application of TITO License Tags.  SGC
will and will cause each other Licensee to affix or caused to be affixed a TITO
Certifast License Tag or a TITO Existing Pre-paid License Tag to each TITO
Capable Gaming Machine Placed or to be Placed by or at the behest of a Licensee
in the Territory during the Term.  No TITO license or TITO Certifast License Tag
or TITO Existing Pre-paid License Tag shall be required including, but not
limited to, for:

 

[*]

 

3.4                                    Unlicensed Gaming Machines.

 

3.4.1                                   [*]

 

3.4.2                                   [*]

 

3.4.3                                   [*]

 

3.5                                    Replacement of License Tags.  Each
Licensee may return TITO Certifast License Tags and TITO Existing Pre-paid
License Tags for replacement (but not refund) when damaged.  Each Licensee may
also obtain replacement TITO Certifast License Tags and TITO Existing Pre-Paid
License Tags in the event of a catastrophic loss such as a fire, flood, tornado,
theft, natural disaster, or act of God if the Licensee identifies the serial
numbers of the tags lost. Any TITO Capable Gaming Machine, to which any tag
previously reported as being lost, is affixed is not licensed.  Licensee

 

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* Information has been omitted from this document and filed separately with the
Securities and Exchange Commission under a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

 

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may also obtain replacement TITO Certifast License Tag in the event that
Licensee obtains used Gaming Machines without any TITO License Tag for which
Licensee can prove, from the Gaming Machines’ serial numbers after cooperating
with one another regarding their respective records, that License Fees were
previously paid.

 

3.6                                    No Refunds.  All amounts paid by Licensee
to IGT hereunder are non-refundable.  Without limiting the foregoing, if
Licensee mistakenly or purposefully affixes a TITO Certifast License Tag or TITO
Existing Pre-paid License Tag to a Gaming Machine that is not a TITO Capable
Gaming Machine, Licensee is not entitled to a refund of the associated fee paid
for such TITO License Tag but may return such TITO License Tag for replacement
pursuant to Section 3.5.  Similarly, if Licensee purports to lose or destroy a
TITO Certifast License Tag or TITO Existing Pre-paid License Tag, Licensee is
not entitled to a refund or a free or discounted replacement for such lost or
destroyed TITO License Tag but could be entitled to a replacement under
Section 3.5.

 

4.              CHANGES TO LICENSEE’S ORGANIZATION; TRANSFERS AND ASSIGNMENTS

 

4.1                                    New Affiliates. If a Licensee acquires
any other Person (by any means) after the Effective Date and such Person has its
own license for the TITO Active Patents, then such Person will not be deemed an
Affiliate of any Licensee (and so not a Licensee) for purposes of the license
granted under Section 2.1 or the right to purchase TITO Certifast License Tags
in this Agreement and shall continue to be bound by such Person’s own license
agreement for the TITO Active Patents irrespective of the fact that the Person
has been acquired by a Licensee.  If a Licensee forms or creates a new Person as
a new wholly-owned subsidiary or acquires any other Person (by any means) which
does not have its own license for the TITO Active Patents, then such new or
acquired Person shall be deemed an Affiliate of the Licensee for the purposes of
the license granted under Section 2.1 and the right to purchase TITO Certifast
License Tags in this Agreement.

 

4.2                                    Mergers of Third Parties Into Licensee. 
Upon a Licensee’s acquisition of a third party that has its own license for the
TITO Active Patents by merger, consolidation or other transaction or series of
related transactions wherein the separate existence of the third party ceases to
exist, the license granted to the Licensee and the right to purchase TITO
Certifast License Tags in this Agreement remain in effect for the Licensee after
the closing of such transaction(s); provided, however, that such license and
right to purchase do not extend to the product lines of the former third party.

 

4.3                                    Licensee Divestitures.  If SGC or another
Licensee sells, assigns or otherwise transfers (in any manner by one transaction
or a set of related transactions) either (i) a product line that includes TITO
Capable Gaming Products to a Third Party without transferring an Affiliate of
the Licensee to such Third Party or (ii) an Affiliate of the Licensee (so that
the spun-off entity is no longer an Affiliate of the Licensee), then the license
and right to purchase TITO Certifast License Tags for such product line or by
such Affiliate of Licensee pursuant to this Agreement terminate on the date

 

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such Person is no longer a Affiliate, except for the license to those Gaming
Machines Placed and affixed with a TITO License Tag while the Affiliate was an
Affiliate of Licensee and otherwise in full compliance with this Agreement.  If
SGC requests IGT in writing before or within 60 days following the closing of
the transaction(s) implementing such sale, assignment or other transfer, then
IGT will agree to a license agreement with such third party acquirer of the
product line or the ex-Affiliate (as applicable) granting a license under the
TITO Active Patents upon substantially the same terms as in this Agreement
(including the License Fee);  provided, however, that the new license agreement
will not contain a provision similar to this Section 4.3 and will be limited to
the product line divested or product line(s) of the Affiliate divested, as
applicable.

 

4.4                                    Assignments of This Agreement.  The
Parties acknowledge that the terms, conditions and consideration for this
Agreement were based on the unique characteristics of the specific Parties
hereto, and therefore the Parties agree that neither Party may assign this
Agreement, in whole or in part, to any Third Party, including in connection with
the insolvency or bankruptcy of the Party or its Affiliate.  Any attempted
assignment in derogation of the foregoing will be void.

 

4.5                                    Change of Control of SGC.  Upon a Change
of Control of SGC, its license and right to purchase TITO Certifast License Tags
hereunder will remain in effect; provided, however, that such license and right
to purchase will be limited to the product lines offered by SGC and its
Affiliates before the Change of Control.

 

5.              WARRANTIES AND DISCLAIMERS

 

5.1                                    Authority.  Each Party represents and
warrants on behalf of itself and its Affiliates that it has full right, power,
and authority to enter into this Agreement and this Agreement, once signed and
delivered, will be enforceable against the Party in accordance with its terms. 
Each Party further warrants that the individuals signing this Agreement have
full authority and are duly authorized and empowered to execute on behalf of the
Party and its Affiliates for which they are signing.  IGT further represents and
warrants to Licensee that IGT has the full right, power and authority to grant
the license under the TITO Active Patents upon the terms and conditions of this
Agreement.

 

5.2                                    DISCLAIMER.  EXCEPT AS EXPRESSLY SET
FORTH IN SECTION 5.1, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES
UNDER THIS AGREEMENT WHATSOEVER, EXPRESS, IMPLIED OR OTHERWISE.  WITHOUT
LIMITING THE FOREGOING, IGT DOES NOT MAKE ANY REPRESENTATION OR WARRANTY (A) AS
TO THE SCOPE, COVERAGE, VALIDITY, OR ENFORCEABILITY OF ANY OF THE TITO PATENTS,
OR (B) THAT ANY PRODUCT MADE OR SERVICE PERFORMED IN ACCORDANCE WITH ANY OF THE
TITO PATENTS IS OR WILL BE FREE FROM THIRD PARTY INTELLECTUAL PROPERTY CLAIMS. 
IGT DOES NOT HAVE ANY OBLIGATION TO PROSECUTE, MAINTAIN, NOT ABANDON, DEFEND
AGAINST CHALLENGES TO OWNERSHIP,

 

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INFRINGEMENT, VALIDITY OR ENFORCEABILITY, ENFORCE, LICENSE, NOT LICENSE, OR
OTHERWISE EXPLOIT OR NOT EXPLOIT ANY TITO PATENT.

 

6.              TERM

 

6.1                                    Term.  This Agreement becomes effective
on the Effective Date and, unless terminated sooner as provided in Section 6.2,
will remain in effect until no Valid Claim remains in any of the TITO Patents,
which will be not later than April 11, 2017.  The period that begins on the
Effective Date and ends upon termination of this Agreement in its entirety is
the “Term.”  This Agreement terminates with respect to each TITO Patent when
such Patent no longer has any Valid Claim.

 

6.2                                    Termination.

 

6.2.1                                   Material Breach.  If a Licensee is in
material breach of this Agreement and fails to cure such breach within 60 days
after SGC receives written notice from IGT specifying such breach, IGT may
terminate this Agreement immediately by notice to SGC; provided, however, that
if after using commercially reasonable efforts such breach could not be cured by
the Licensee within such 60 day period, the cure period shall be extended for an
additional 90 days, provided such breach is capable of cure and the Licensee
continues to diligently pursue such cure, unless otherwise agreed in writing by
the Parties. Except for a breach of Section 9.2, IGT’s only remedies in the
event of any such breach shall be termination and payment of any License Fees
owed pursuant to Section 3.

 

6.2.2                                   Patent Challenges.  If a Licensee
challenges or initiates a challenge, through any ex-parte or inter partes or
other proceeding before any governmental authority, to the patentability,
validity or unenforceability of any TITO Active Patent licensed under this
Agreement, including through any opposition, cancellation, re-examination or
other pre-grant or post-grant proceedings, or voluntarily aids any Third Party
with any of the foregoing (excluding responses to discovery or other requests of
or authorized or sanctioned by any governmental authority), IGT may terminate
this Agreement immediately by notice to SGC.

 

6.3                                    Effects of Termination.

 

6.3.1                                   Pending TITO Certifast License Tag
Orders.  If this Agreement is terminated for any reason between the time a
License Fee is paid and the time Licensee has received TITO Certifast License
Tags issued in response to that License Fee payment, IGT will cancel such order
in whole or in part and refund to Licensee any License Fee paid by Licensee to
IGT for the portion cancelled.

 

6.3.2                                   Rights Upon Termination.  Upon
termination of this Agreement, the license granted under this Agreement for each
TITO Capable Gaming

 

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Machine that properly bears a TITO Certifast License Tag or TITO Existing
Pre-paid License Tag will survive termination and remain in effect, provided
that the License Fee, if applicable under Section 3, was paid.  All TITO
Certifast License Tags and TITO Existing Pre-paid License Tags that have not yet
been affixed to a Gaming Machine as of the time of termination must be returned
to and received by IGT within 1 month after termination.

 

6.3.3                                   Survival.  All payments due before
termination but not paid remain due and payable in accordance with their terms
after termination.  Upon termination of this Agreement, the following provisions
will remain in effect as applicable:  1, 2.2, 2.4, 3.2.3, 3.2.4, 3.2.5, 3.4.1,
3.6, 4, 5.2, 6.3, 7 and 9.

 

7.              REPORTS; RETENTION OF RECORDS; AUDITS

 

7.1                                    Quarterly Reports.  Within 45 days after
the end of each calendar quarter during the Term, and once within 45 days after
the end the calendar quarter in which the Term ends, SGC must provide, on behalf
of itself and each other Licensee, a complete and accurate report, duly
certified as such by an officer of SGC, that provides for each TITO Capable
Gaming Machine bearing either a TITO Certifast License Tag or TITO Existing
Pre-paid License Tag and Placed by or on behalf of a Licensee in the Territory
during the preceding calendar quarter, of the information required to be
completed on Schedule 7.1.

 

7.2                                    Records.  SGC will keep, or will cause
each Licensee to keep, for the Term of this Agreement and for [*] year after
expiration of the Term, the documents sufficient to show the information
reported or required to be reported pursuant to the quarterly reports required
pursuant to Section 7.1 and any information specifically required to be
presented during an audit pursuant to Section 7.3 (all of the foregoing,
collectively, “Records”).  No Licensee shall have any obligation to maintain or
permit IGT to examine any Records more than once for any quarterly report unless
in connection with a civil action filed by IGT against a Licensee.  No Licensee
shall have any obligation to create or keep any Records created prior to
commencement of the Term and shall have no obligation to create any Records
after the Term.

 

7.3                                    Audits of Licensee.

 

7.3.1                                   Auditors; Frequency of Audits; Audited
Information.  IGT will have the limited right, after providing 60 days advance
written notice, to use an external auditor approved by SGC (such approval not to
be unreasonably withheld), such as McGladrey LLP, to conduct a limited audit of
each Licensee [*] during the Term and [*] after the Term.  [*] shall not be used

 

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* Information has been omitted from this document and filed separately with the
Securities and Exchange Commission under a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

 

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for any such audit.  In any such limited audit, SGC will and will cause each
such other Licensee to identify for each Gaming Machine that was Placed by the
Licensee in the Territory during the applicable time period within the Term:
(a) the tag number (if applicable), (b) the date of Placement, (c) the Gaming
Operator or third-party distributor to whom the Gaming Machine was provided, and
(d) the model and serial number of the Gaming Machine.  [*]

 

7.3.2                                   Cooperation and Arrangements.  After at
least 60 days advance written notice by IGT of its intent to conduct an audit of
a Licensee, SGC will or will cause the Licensee to provide to IGT’s auditors the
Records during reasonable business hours on dates mutually agreed between
Licensee and IGT that do not interfere with Licensee’s public reporting and
financial closing processes. Such notice will indicate the period to be audited,
the name and contact information for the lead auditor of the external auditor,
and the scope for the audit. The auditor will only disclose to IGT information
necessary for IGT to determine that License Fees were paid for TITO Capable
Gaming Machines Placed in the Territory during the Term consistent with
Section 3.

 

7.3.3                                   Audit Fees.  [*] shall bear the cost of
any audit that [*] including, but not limited to, any field audit.

 

7.4                                    Audits of Gaming Machines at Gaming
Operators.  IGT may, [*], perform a field audit of TITO Capable Gaming Machines
located at Gaming Operators in the Territory.  IGT may approach each Gaming
Operator independently of, and without any notice to, Licensee.

 

8.              REGULATORY LICENSES, APPROVALS AND COMPLIANCE

 

8.1                                    Performance.  Performance of this
Agreement is contingent on any necessary initial and continuing licenses and
approvals from any regulatory authorities having jurisdiction over the Parties
or the subject matter of this Agreement.

 

8.2                                    Approvals.  Each Party shall promptly
apply to the appropriate regulatory authorities for any licenses and approvals,
if any, necessary for that Party to perform under this Agreement.  Each Party
shall diligently pursue its applications and pay all associated costs and fees
for its application, and shall otherwise cooperate with any requests, inquiries,
or investigations of any regulatory authorities or law enforcement agencies in
connection with each Party, their Affiliates, or this Agreement.  If any license
or approval necessary for a Party or their Affiliate to perform under this

 

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* Information has been omitted from this document and filed separately with the
Securities and Exchange Commission under a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

 

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Agreement is denied, suspended or revoked, this Agreement may be terminated by
the other Party for cause pursuant to Section 6.2.1 hereof; provided, however,
that if the denial, suspension or revocation affects performance of the
Agreement in part only, the Parties may by mutual agreement continue to perform
under this Agreement to the extent it is unaffected by the denial, suspension,
or revocation.

 

8.3                                    Compliance.  IGT, SGC and their
Affiliates conduct business in a highly regulated industry under privileged
licenses issued by lottery and gaming regulatory authorities both domestic and
international.  IGT and SGC maintain compliance programs that have been
established to protect and preserve the name, reputation, integrity, and good
will of IGT, SGC, and their Affiliates and to monitor compliance with the
requirements established by gaming regulatory authorities in various
jurisdictions around the world.  Performance of this Agreement is contingent
upon the following:

 

8.3.1                                   Regulatory Agency Approval.  Both IGT
and SGC agree to cooperate with requests, inquiries, or investigations of any
lottery or gaming regulatory authorities or law enforcement agencies in
connection with the performance of this Agreement, including the disclosure of
information to gaming regulatory agencies that would otherwise be considered
confidential under other sections of this Agreement.

 

8.3.2                                   Compliance Committee Approval.  Each of
IGT and SGC have previously completed due diligence background investigations of
the other and received approval of the other Party’s compliance committee or
compliance officer. This Agreement is contingent on continued compliance
approval. If either Party receives a written or oral opinion, recommendation or
indication from a lottery or gaming regulatory authority (including a
representative thereof) or if the Party determines, based upon facts and 
evidence that would reasonably be accepted by a lottery or gaming regulatory
authorities or other licensed gaming entities, that continuation of this
Agreement would jeopardize the gaming licenses, permits or status of that Party
or any of its Affiliates with any lottery or gaming regulatory authority or
similar law enforcement authority (“Regulatory Development”), if  reasonable and
appropriate, the Party receiving such notice may provide notice to the other
Party of the Regulatory Development, including details of the opinion,
recommendation, indication or asserted facts (to the extent known), providing a
reasonable timeframe to that party to comment on or take action to cure the
basis for such Regulatory Development.  If such Regulatory Development is not
cured to the other Party’s satisfaction, such that a reasonable risk remains
that jeopardizes the status of the first party with any lottery or gaming
regulatory authority, said Party may terminate such portion of this Agreement
which would cure the Regulatory Development (leaving the remainder of this
Agreement in force and effect) or, if necessary to cure the Regulatory
Development, terminate the entire Agreement.

 

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8.3.3                                   Background Checks.  Any transfer,
assignment or Change of Control of any Licensee that would be permitted in
accordance with Article 4 is further conditioned upon the successful completion
of a background due diligence investigation of the transferee/assignee/acquiror
prior to the transfer, assignment or Change of Control.

 

9.              GENERAL

 

9.1                                    Not Confidential.  The existence of this
Agreement, its Parties and its application to the Licensees, the identity of the
TITO Patents, and the fact that IGT will receive monetary compensation for TITO
Certifast License Tags (but not the License Fee to be charged for TITO Certifast
License Tags), are not confidential.  It is understood that each Licensee may
identify the License Fee to Gaming Operators and distributors as a separate
charge that appears as a line item on an invoice.

 

9.2                                    Confidentiality.  Except as set forth in
Section 9.1 above, all terms and conditions in this Agreement and the
information disclosed by one Party (“Discloser”) to the other Party
(“Recipient”) pursuant to and in the course of negotiating this Agreement will
be kept in confidence by Recipient, and will not be disclosed to any other
Person, except:  (a) with prior written consent of the Discloser, (b) as
necessary for resolution of disputes arising under the Settlement Agreement or
this Agreement, provided, however that the disclosing Party uses reasonable
efforts to maintain the confidentiality hereof, including by seeking and
allowing each of the other Parties the opportunity to seek a protective order;
(c) as required by applicable law, regulation, decree or order of any
governmental authority, provided, however that the disclosing Party uses
reasonable efforts to maintain the confidentiality hereof, including by
redaction or filing under seal as available by law; (d) as necessary or
appropriate for reporting to the Securities and Exchange Commission, provided,
however that the disclosing Party uses reasonable efforts to maintain the
confidentiality hereof, including by redaction or filing under seal as available
by applicable regulations, (e) to its Affiliates and its and their respective
representatives, shareholders, members, trustees, officers, directors,
employees, agents, attorneys, tax advisors, auditors, partners, divisions,
parents, and actual and potential lenders, in each case on a need-to-know basis
and under an obligation of confidentiality that prohibits all further disclosure
or further disclosure on terms at least as strict as those of this provision,
(f) under confidentiality to a Person that has a bona fide intent to engage in a
merger with Recipient, a purchase or other transfer of all or substantially all
of the assets of the Recipient, a Change of Control of Recipient, any other
transaction described in and that would be permitted under Article 4, or the
assignment, sale or other transfer of any Patents that (at the time of the
assignment, sale or other transfer) are subject to the licenses granted or other
obligations in this Agreement.  The terms and conditions of this Agreement,
including the License Fee under Section 3.1 but subject to the provision of
Section 9.1, is deemed the Confidential Information of both Parties for which
each Party is the Discloser (and the other Party the Recipient).

 

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9.3                                    Independent Contractors.  The
relationship between the Parties under this Agreement is one of independent
contractors.  Nothing in this Agreement will be construed or interpreted to
create a relationship between the Parties of partner, joint venturer, principal
and agent, or employer and employee.

 

9.4                                    Third Party Beneficiaries; Affiliates. 
The rights set forth in this Agreement are for the sole benefit of the Parties
and their respective Affiliates and not for the benefit of any other Person. 
Each Party is responsible for the actions and inactions of each of its
Affiliates as if each such Affiliates were a Party.  Any action taken or
inaction not taken by an Affiliate of a Party that would be a breach of this
Agreement, if taken or not taken by such Party, is a breach of this Agreement by
such Party.

 

9.5                                    Amendment; Waiver.  No amendment or
waiver of any term or condition of this Agreement will be valid or binding on a
Party unless the same has been mutually assented to in writing by the Parties. 
The failure of a Party to enforce at any time any of the provisions of this
Agreement, or the failure to require at any time performance by the other Party
of any of the provisions of this Agreement, will in no way be construed to be a
past, present or future waiver of such provisions, nor in any way affect the
ability of a Party to enforce each and every provision thereafter.

 

9.6                                    Governing Law and Choice of Forum.  This
Agreement will be governed, interpreted and construed in accordance with the
laws of the State of Nevada, USA (without regard to its conflict of law
principles). Each Party agrees that, in regard to this Agreement, personal
jurisdiction and venue will be proper in the state and federal courts situated
in Reno, Nevada, U.S.A. and that any litigated dispute relating to this
Agreement will be conducted solely in such courts and any appellate courts with
jurisdiction over the litigated dispute.  Each of the Parties hereby irrevocably
submits with regard to any action or proceeding arising out of or related to
this Agreement, generally and unconditionally, to the exclusive jurisdiction of
such courts.  Each of the Parties hereby irrevocably waives, and agrees not to
assert, by way of motion, as a defense, counterclaim or otherwise, in any action
or proceeding with respect to this Agreement, (a) any claim that it is not
personally subject to the jurisdiction of the foregoing courts for any reason
other than the failure to lawfully serve process, (b) that it or its property is
exempt or immune from jurisdiction of any such court or from any legal process
commenced in such courts (whether through service of notice, attachment prior to
judgment, attachment in aid of execution of judgment, execution of judgment or
otherwise), and (c) to the fullest extent permitted by applicable law, that
(i) the suit, action or proceeding in any such court is brought in an
inconvenient forum, (ii) the venue of such suit, action or proceeding is
improper, and (iii) this Agreement, or the subject matter hereof, may not be
enforced in or by such courts.  Furthermore, each of the Parties hereby
irrevocably waives, and agrees not to demand, a trial by jury for any action or
proceeding arising out of or related to this Agreement.  For the avoidance of
any doubt, this Governing Law and Choice of Forum provision shall not apply to
any claim outside the scope of this Agreement.  The law and forum for any other
claim will be determined as if this provision in this Agreement does not exist.

 

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9.7                                    Severability.  If any provision of this
Agreement is found or held to be invalid or unenforceable, the meaning of said
provision will be construed, to the extent feasible, so as to render the
provision enforceable, and if no feasible interpretation will save such
provision, it will be severed from the remainder of this Agreement, as
appropriate.  The remainder of this Agreement will remain in full force and
effect unless the severed provision is essential and material to the rights or
benefits received by a Party.  In such event, the Parties will use their best
efforts to negotiate, in good faith, a substitute, valid and enforceable
provision or agreement, which most nearly effects the Parties’ intent in
entering into this Agreement, as appropriate.

 

9.8                                    Use of IGT’s Name.  SGC will not and will
cause each other Licensee not to use the name of IGT in publicity, advertising
or similar activity in connection with this Agreement (except as it appears on
any TITO Certifast License Tags, TITO Existing Pre-paid License Tags, or the
notice required under Section 2.3) without obtaining the prior written consent
to IGT.

 

9.9                                    Entire Agreement.  This Agreement,
including any exhibits, schedules and other attachments referred to in this
Agreement, each of which is incorporated herein, constitutes the entire
agreement between the Parties with respect to the subject matter hereof.  There
are no agreements, representations, warranties, promises, covenants, commitments
or undertakings other than those expressly set forth herein with respect to the
subject matter of this Agreement.  Except for the Settlement Agreement, this
Agreement supersedes all prior or contemporaneous agreements, representations,
warranties, promises, covenants, commitments or undertakings, whether written or
oral, with respect to the subject matter contained in this Agreement.

 

9.10                             Counterparts.  This Agreement may be signed in
counterparts, including by facsimile, each of which will be deemed an original
and which will together constitute one Agreement.

 

9.11                             Notice.  Any notice, communication, consent,
approval, request, waiver or statement given, made or provided for under this
Agreement will be in writing and deemed to have been duly given when (i)
personally delivered or mailed by pre-paid certified or express mail service of
the United States postal service, by Federal Express or similar overnight
delivery service, with acknowledgement of receipt, fees prepaid, to IGT at the
addresses below or to Licensee at the address(es) set forth below, or (ii) sent
by fax, with an original sent within twenty-four (24) hours by an overnight
delivery service with next day delivery to the address(es) set forth below. 
Further, courtesy copies of any such notice shall be sent via email pursuant to
this paragraph.

 

To IGT:

 

International Game Technology

6355 South Buffalo Drive

Las Vegas, Nevada 89113

Fax:  702.669.7904

 

--------------------------------------------------------------------------------

 

Email:  paul.gracey@igt.com

 

To Licensee:

 

Scientific Games Corporation

750 Lexington Avenue, 25th Floor

New York, New York 10022

Attention:  Andrew Tomback

Fax:  212.754.2463

Email:  Andrew.Tomback@scientificgames.com

 

Copies to:

Scientific Games Corporation

750 Lexington Avenue, 25th Floor

New York, New York 10022

Attention:  Jack Sarno

Email:  Jack.Sarno@scientificgames.com

 

WMS Gaming, Inc.

3401 North California Ave.

Chicago Illinois 60618

Vice President, Patents

Attention:  Michael J. Blankstein

Fax: 773.961.1237

Email:  mblankst@wms.com

 

<signature page follows>

 

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The Parties indicate their agreement to the terms and conditions of this
Agreement as set forth above by the signatures of their duly authorized
representatives below:

 

IGT

 

 

By:

/s/ David Berdan

 

 

 

 

Name:

David Berdan

 

 

 

 

Title:

Vice President Legal and Deputy General Counsel

 

 

 

 

Date:

6/13/14

 

 

 

 

 

Scientific Games Corporation

 

 

 

 

By:

/s/ Andrew Tomback

 

 

 

Name:

Andrew Tomback

 

 

Title:

General Counsel

 

 

Date:

6/13/2014

 

 

--------------------------------------------------------------------------------

 

Schedule 2.1
TITO Patents

 

INVENTOR

 

US PATENT
NO.

 

ISSUE DATE

 

TITLE

 

 

 

 

 

 

 

Dickinson, et al.

 

5,265,874

 

11/30/1993

 

Cashless Gaming Apparatus Method

 

 

 

 

 

 

 

Bittner, et al.

 

5,290,033

 

03/01/1993

 

Gaming Machine and Coupons

 

 

 

 

 

 

 

Raven, et al.

 

5,429,361

 

7/4/1995

 

Gaming machine information, communication and display system

 

 

 

 

 

 

 

LeStrange, et al.

 

5,470,079

 

11/28/1995

 

Game machine accounting and monitoring system

 

 

 

 

 

 

 

Burns, et al.

 

6,048,269 *

 

4/11/2000

 

Coinless Slot Machine System and Method

 

 

 

 

 

 

 

Burns, et al.

 

6,729,957

 

5/4/2004

 

Gaming method and host computer with ticket-in/ticket-out capability

 

 

 

 

 

 

 

Burns, et al.

 

6,729,958

 

5/4/2004

 

Gaming system with ticket-in/ticket-out capability

 

 

 

 

 

 

 

Burns, et al.

 

6,736,725

 

5/18/2004

 

Gaming method and host computer with ticket-in/ticket-out capability

 

 

 

 

 

 

 

Burns, et al.

 

7,275,991

 

10/02/2007

 

Slot machine with ticket-in/ticket-out capability

 

--------------------------------------------------------------------------------

* Last to expire of all TITO Patents.  As of the Effective Date, all TITO
Patents in the United States and Canada have expired except:  U.S. Patent No.
6,048,269 (expires April 11, 2017) and Canadian Patent No. 2151990 (expires June
16, 2015).

 

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CONFIDENTIAL

 

Schedule 7.1
Quarterly License Tag and Gaming Machine Report

 

Date of Report:  [insert date]

 

Reporting Period:  [identify calendar quarter]

 

I.                                        Tags In Possession Not Yet Applied to
a Gaming Machine (at the end of the Reporting Period)

 

Quantity of TITO Certifast License Tags and TITO Existing Pre-Paid License Tags:

 

·                  Not Yet Applied to a Gaming Machine: __________

·                  Applied to a Gaming Machine, but Not Yet Shipped: _______

 

Serial Numbers of Such TITO Certifast License Tags and TITO Existing Pre-Paid
License Tags:

 

 

 

 

 

 

II.                                   Tags Applied to a Gaming Machine for
Placement in the Territory (during Reporting Period)

 

Model Id.
of Machine

 

Serial No.
of Machine

 

Serial No. of License
Tag Applied to
Machine (if
applicable)

 

Gaming Operator at which Gaming
Machine was Placed or, if not known,
then Location to which Gaming
Machine was Shipped (such as
distributor)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

CONFIDENTIAL

 

Exhibit 1:  Definitions

 

1.1                               “Affiliate” means, with respect to a first
Person, any other Person that, as of the Effective Date (but not after the
Effective Date except as provided in Section 4.1) controls, is controlled by or
is under common control with the first Person, but only for so long as such
control exists.  A Person automatically will be deemed to control another Person
if such first Person, as of the Effective Date (except as provided in Section
4.1), owns, directly or indirectly, more than fifty percent (50%) of the
securities or other ownership interests representing the equity, the voting
stock, or general partnership interest of such other Person.  A Person
automatically will be deemed to be under common control with another Person if,
as of the Effective Date (except as provided in Section 4.1), more than fifty
percent (50%) of the securities or other ownership interests representing the
equity, the voting stock or general partnership interest of the two Persons are
directly or indirectly owned by the same Person or group of Persons.  As of the
Effective Date, WMS Gaming Inc. and SGC are Affiliates of one another.

 

1.2                               “Agreement” is defined in the preamble.

 

1.3                               “Cashless Gaming System” means a system
employing tickets, coupons, tokens, cards or other instruments of identification
to add credits or funds to or from a Gaming Machine in order to eliminate or
reduce the use of government issued bills and/or coins, as described in the TITO
Patents.

 

1.4                               “Discloser” is defined in Section 9.2.

 

1.5                               “Effective Date” is defined in the preamble.

 

1.6                               “Gaming Machine” means, (i) slot machines such
as those described in NRS 463.0155, .0191, as well as all other gaming devices
such as those described in all other relevant provisions of the Nevada Gaming
Control Act (NRS Chapter 463), and comparable provisions of other jurisdictions
where such machines, devices and terminals are legal, and (ii) other gaming
devices including without limitation video lottery terminals, class II and class
III machines as defined by statutes or regulations in other jurisdictions.

 

1.7                               “Gaming Operator” means a legally licensed
gaming establishment at or to which Gaming Machines are played, excluding any
regulatory agency or regulatory function for such Gaming Operator.

 

1.8                               “IGT” is defined in the preamble.

 

1.9                               “Licensee” is defined in the preamble.

 

1.10                        “Party” and “Parties” are defined in the preamble.

 

1.11                        “Person” means any natural person, corporation,
limited liability company, association, company, governmental authority,
partnership or other legal entity.

 

--------------------------------------------------------------------------------

 

1.12                        “Place” means any sale, installation, lease, revenue
participation, non-TITO to TITO-capable conversion or combination of any of the
foregoing of a TITO Capable Gaming Machine to or at a Gaming Operator or
distributor.  Sales or delivery of used TITO Capable Gaming Machines for parts
or scrap shall not be considered to fall within the definition of “Place” or
“Placed.”

 

1.13                        “Recipient” is defined in Section 9.2.

 

1.14                        “Records” is defined in Section 7.2.

 

1.15                        “Regulatory Development” is defined in Section
8.3.2.

 

1.16                        “Taxes” is defined in Section 3.7.

 

1.17                        “Term” is defined in Section 6.1.

 

1.18                        “Terminated License Agreements” means Cashless
License Agreement between Anchor Gaming and WMS Gaming, Inc. dated September 18,
2000 and the Game Manufacturer Cashless License Agreement between IGT and
Licensee dated 12 November 2012 together with that Game Manufacturer Cashless
License Agreement between IGT and WMS Gaming, Inc. dated 1 October 2006, as
amended.

 

1.19                        “Territory” means [*].

 

1.20                        “Third Party” means any Person that is not a Party.

 

1.21                        “TITO Active Patent” means any of the TITO Patents
that has at least one Valid Claim at the time in question.

 

1.22                        “TITO Capable Gaming Machine” means a Gaming Machine
that either alone or in connection with a Cashless Gaming System would, absent a
license under this Agreement infringe one or more Valid Claims of an TITO Active
Patent, [*].

 

1.23                        “TITO Certifast License Tag” means a physical tag
ordered by Licensee and issued by IGT pursuant to Article 3 of this Agreement
for attachment by Licensee to the outside of a TITO Capable Gaming Machine.

 

1.24                        “TITO Existing Pre-paid License Tag” means a
physical tag that (a) was acquired by Licensee under any of the Terminated
License Agreements by payment of the associated license fee before shipment of
the tag from IGT and (b) is, on the Effective Date, in the possession or control
of Licensee, whether or not affixed to a Gaming Machine.

 

--------------------------------------------------------------------------------

* Information has been omitted from this document and filed separately with the
Securities and Exchange Commission under a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

 

--------------------------------------------------------------------------------

 

1.25                        “TITO License Tag” means any TITO Certifast License
Tag or TITO Existing Pre-paid License Tag or any tag acquired from IGT under any
of the Terminated License Agreements.

 

1.26                        “TITO Patent” means any of the patents listed on
Schedule 2.1.

 

1.27                        “Valid Claim” means any claim of an issued,
unexpired patent that has not been permanently declared invalid or unenforceable
by a governmental authority of competent jurisdiction.

 

--------------------------------------------------------------------------------

 

CONFIDENTIAL

 

Exhibit 2
Notice to Customers re Cashless Gaming Systems

 

Each gaming machine obtained  hereunder with cashless capability (a “Licensed
Cashless Gaming Machine”) is provided under a limited license to one or more of
the following U.S. Patent Nos. 5,290,033; 5,265,874; 6,048,269; 5,429,361;
5,470,079; 6,729,957; 6,729,958; 6,736,725 and 7,275,991, as well as any
continuations, continuations-in-part, divisionals, reissues, reexaminations, and
foreign counterparts thereof, in each case to the extent not expired.  Any use
of a Cashless Gaming Machine constitutes your acknowledgment of, and agreement
to, the following “Limited License”:

 

1.                                      Licensed Cashless Gaming Machine License
Rights.  Licensed Cashless Gaming Machines are licensed for use solely (i) in
connection with a cashless gaming system that is separately licensed under these
patents (a “Licensed Cashless Gaming System”) or (ii) on a stand-alone basis
(not connected to a cashless gaming system). The use of a Licensed Cashless
Gaming Machine with an unlicensed gaming system that has cashless capability is
an unlicensed use.

 

2.                                      Other License Limitations.  Each Limited
License is expressly limited to the original Licensed Cashless Gaming Machine
(i.e., one serial number per license).  A license may not be transferred from
one gaming machine to another.  Any unauthorized transfer voids this license.

 

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