puredepth_posam-ex1040.htm


    Exhibit 10.40

     

    
      CONFIDENTIAL
TREATMENT REQUESTED – REDACTED COPY

    

     

    
      Amendment
No. 1

      to
the

      Patent
and Technology License and Technology Transfer Agreement

       

      This
Amendment No. 1 (“Amendment”) is by and between IGT, a Nevada corporation
with principal offices at 9295 Prototype Drive, Reno, Nevada, 89521 (“IGT”) and
PureDepth Inc., a Delaware corporation with principal offices at 230 Twin
Dolphin Drive, Suite D, Redwood City, California, 94065 (together with its
subsidiaries PureDepth Limited and PureDepth Incorporated Limited, collectively
“PureDepth”) and amends the Patent and Technology License and Technology
Transfer Agreement (the “Agreement”) between IGT and PureDepth.  The
effective date of this Amendment is the date on which the prepaid royalty of
$10,000,000 described in item 9 below (referencing Section 4.01) is delivered by
IGT to PureDepth.

       

      
        	
                1.  

              	
                Section 1.06
      (Field of Use) is hereby amended by adding the following sentence after
      the last existing sentence:

              


      

       

      “Notwithstanding
the foregoing, the Field of Use in Japan specifically excludes Pachinko and
Pashislot and related Administrative Machines for Pachinko and
Pashislot.”

      


       

      
        	
                2.  

              	
                Section 1.16
      (Territory) is hereby deleted in full and replaced with the
      following:

              


      

       

      “’Territory’
means worldwide, however with respect to Japan, the Field of Use is limited as
described in Section 1.06 (Field of Use).”

      


       

      
        	
                3.  

              	
                Section 2.01
      (Term) is hereby amended by adding the following sentence after the
      existing sentence:

              


      

       

      “Thereafter,
this Agreement shall automatically be extended for an additional ten (10) year
period (the “Second Term”).”

      


       

      
        	
                4.  

              	
                Section 2.04
      (Option for Renewal) is hereby amended by replacing the “Initial Term”
      with “Second Term” and concluding with the following new
      sentences:

              


      

       

      “To be
clear, [****] prior
to the end of the Second Term, the Parties agree to discuss a further extension
of the Agreement (Third Term) and negotiate in good faith the conditions of such
Third Term, if any, taking into account market conditions.  If the
parties are not able to agree upon the terms of a further extension prior to the
end of the Second Term, this Agreement will terminate upon expiration of the
Second Term in accordance with its terms.

       

      However
if [****] PureDepth will not [****] except as
otherwise provided for in this Section 2.04.

       

      If at any
time within [****]
PureDepth proposes to [****] then PureDepth
shall [****]

       

      [****]

      


      
        
           

        

        
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TREATMENT REQUESTED - REDACTED COPY



        

      

       

      
        	
                5.  

              	
                Section 3.01
      (Grant) is hereby amended by adding the phrase “and IGT’s Affiliates”
      after “IGT” in the first and second sentences, and by adding the following
      new sentences below the existing two
sentences:

              


      

       

      “The
parties agree that upon [****] PureDepth and IGT will negotiate in good faith to
[****].

       

      For
avoidance of doubt, PureDepth shall have no rights under the Licensed
Intellectual Property, within the Territory and within the Field of Use, while
the exclusive license to IGT under this section 3.01 remains in effect, to make,
have made, use, market, distribute, Sell, offer to Sell, license, import, or
export Gaming Machines to any person and in any manner.

       

      Nothing
in this paragraph shall affect PureDepth’s rights to make, have made, use,
market, distribute , sell, offer to sell, license, import, or export [****].

      


       

      
        	
                6.  

              	
                Section
      3.02 (Right to Sublicense) is hereby amended by adding the phrase “and
      IGT’s Affiliates” after the first occurrence of “IGT” in the first
      sentence of the first paragraph.

              


      

       

       

      
        	
                7.  

              	
                Section
      3.02 (Right to Sublicense) is hereby amended by replacing all text after
      “pay over to PureDepth” in the first sentence of the third paragraph with
      the following new text:

              


      

       

      “a Fixed
Fee as set forth in Section 4.05.”

      


       

      
        	
                8.  

              	
                Section 4.01
      (Prepaid Royalty) is hereby amended by inserting the number “$3,750,000”
      inside of the parentheses and in front of the phrase “Prepaid Royalty” at
      the end of the existing first
sentence.

              


      

       

       

      
        	
                9.  

              	
                Section 4.01
      (Prepaid Royalty) is hereby amended by inserting the following two
      sentences after the end of the existing first
  sentence:

              


      

       

      “On or
before September 16, 2008, IGT will deliver a nonrefundable ([****])
prepaid royalty of ten million dollars ($10,000,000) to PureDepth (‘$10,000,000
Prepaid Royalty’).  The $3,750,000 Prepaid Royalty and the $10,000,000
Prepaid Royalty will collectively be referred to as the ‘Prepaid
Royalty.’”

      


      
        
           

        

        
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          CONFIDENTIAL
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                10.  

              	
                Section 4.02
      (Royalty Schedule) is hereby amended by inserting the phrase “During the
      Initial Term,” at the front of the existing first
  sentence.

              


      

       

       

      
        	
                11.  

              	
                Section 4.02
      (Royalty Schedule) is hereby amended by inserting the words “, an
      Affiliate of IGT” before the text “or any sublicensee” in the existing
      first sentence.

              


      

       

       

      
        	
                12.  

              	
                Section 4.02
      (Royalty Schedule) is hereby amended by adding the following new paragraph
      below the last sentence of the existing text of the first paragraph in
      Section 4.02 (Royalty
Schedule):

              


      

       

      “During
the Second Term and only after the $3,750,000 Prepaid Royalty is exhausted as
applied to royalties due under Section 4.02, the royalty structure described in
this Section 4.02 (Royalty Schedule) will still be applicable but the
royalty rate will increase from [****] as follows:

       

      [****]

       

      [****]

       

      [****]

      


       

      
        	
                13.  

              	
                Section 4.03
      (Payments and Reporting) subsection (a) is hereby amended by adding the
      phrase “and the $10,000,000 Prepaid Royalty” after the phrase “$3,750,000
      Prepaid Royalty.”

              


      

       

       

      
        	
                14.  

              	
                Section 4.03
      (Payments and Reporting) subsection (b) is amended by adding the phrase
      “and all fees received by IGT from sublicenses as set forth in Section
      4.05” after the phrase “Sales of Licensed
  Product.”

              


      

       

       

      
        	
                15.  

              	
                Section 4.03
      (Payments and Reporting) subsection (c) is amended by adding the phrase
      “and all fees received by IGT from sublicenses as set forth in Section
      4.05” after the phrase “Sales of Licensed Products (and all Wagering
      Stations).”

              


      

       

       

      
        
           

        

        
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                16.  

              	
                Section 4.03
      (Payments and Reporting) subsection (d) is amended by adding the phrase
      “and Fixed Fees” after the word “royalties” in each of the two places
      where such term is used in the last sentence of Section 4.03
      subsection (d) (Payment and
Reporting).

              


      

       

       

      
        	
                17.  

              	
                Section 4.03
      (Payments and Reporting) subsection (e) is amended by adding the phrase
      “and Fixed Fee payments” after the phrase “Royalty payments” in the first
      sentence of Section 4.03 (Payments and Reporting) subsection
      (e).

              


      

       

       

      
        	
                18.  

              	
                Section 4.03
      (Payments and Reporting) subsection (f) is amended by adding the phrase
      “and Fixed Fee payments” after the word “royalties” in Section 4.03
      (Payments and Reporting) subsection
(f).

              


      

       

       

      
        	
                19.  

              	
                Section 4.03
      (Payments and Reporting) is amended by adding a new subsection (g) after
      existing subsection (f) as follows:

              


      

       

      “(g) IGT
will compute and pay the Fixed Fee pursuant to and as defined in
Section 4.05 (Fixed Fees for Sublicenses) to PureDepth within thirty (30)
days after the end of each quarter of the calendar year - - the quarters ending
on March 31st, June 30th, September 30th, and
December 31st.”

      


       

      
        	
                20.  

              	
                Section
      4.04 (No Royalty for Samples) is amended by adding the phrase “or Fixed
      Fee payments” after the word “royalty” in Section 4.04 (No Royalty
      for Samples).

              


      

       

       

      
        	
                21.  

              	
                New
      Section 4.05 (Fixed Fee for Sublicenses) is hereby added after
      Section 4.04 (No Royalty for Samples) as
  follows:

              


      

       

      “With
respect to sublicenses granted by IGT to third parties, other than IGT
Affiliates, for Gaming Machines and Administrative Machines pursuant to the
terms of Section 3.02 (Right to Sublicense), IGT will pay PureDepth, as set
forth below, (a) license fees for sublicensee Sales of Gaming Machines or
Administrative Machines, (b) [****] of all Net Proceeds
received by IGT from periodic fees paid by sublicensees, or (c) a negotiated fee
on participation game revenue (hereinafter collectively referred to as the
“Fixed Fee”).  Net Proceeds means IGT’s sublicense proceeds less
taxes, duties, and shipping charges.  In such cases where IGT pays
PureDepth a Fixed Fee as specified in this Section 4.05, IGT shall
[****].

       

      
        
           

        

        
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      For
avoidance of doubt, Sales by IGT to casinos or other end users do not constitute
"sublicenses" and are therefore not subject to a Fixed Fee.  Further,
IGT shall not be obligated to pay a Fixed Fee on any Sale by it or any of its
Affiliates, regardless of whether the Gaming Machine Sold provides a daily fee,
a revenue share, or like proceeds to IGT.

       

      To be
clear, the Parties agree that for each sublicense the Fixed Fee will apply
according to only one of the following structures:

       

      If a
sublicensee Sells a Gaming Machine or Administrative Machine and remits to IGT a
one time license fee, IGT will pay PureDepth the royalty rate currently in
effect as set out in the Royalty Schedule in section 4.02.

       

      If a
sublicensee places a Gaming Machine or Administrative Machine and remits to IGT
an associated daily fee (or other periodic fee) IGT will pay PureDepth [****] of
IGT’s Net Proceeds associated with the daily fee.

       

      If a
sublicensee places a Gaming Machine or Administrative Machine and remits to IGT
associated recurring revenue, IGT shall negotiate a daily fee (or other periodic
fee) due to Pure Depth concurrently with IGT entering into a sublicense with the
sublicense.

       

      To be
clear, if a Fixed Fee does not apply in respect of a Gaming Machine or
Administrative Machine, then the Royalty Schedule of Section 4.02 shall
apply.

       

      Any Fixed
Fees paid by IGT to PureDepth prior to exhaustion of the total Prepaid Royalty
under Section 4.02 will be applied against the Prepaid Royalty in the amounts of
the Fixed Fees.”

      


       

      
        	
                22.  

              	
                A
      new Section 4.06 (Option) will be added after new Section 4.05
      (Fixed Fee for Sublicenses) as
follows:

              


      

       

      “Section
4.06 Option.  If, by the end of the first three (3) years of the
Second Term (the “First Segment”), and if by the end of each subsequent year of
the Second Term thereafter (each an “ Annual Period”), IGT has not Sold and/or
sublicensed an average of [****] Wagering Stations or [****] during the then
expired portion of the Second Term, PureDepth will have the option, in
PureDepth’s sole discretion, to terminate IGT’s exclusive license under
Section 3.01 (Grant) by written notice delivered to IGT within sixty (60)
days after expiration of the First Segment or the applicable Annual Period,
subject to payment by PureDepth of a “Buy Back Payment” to IGT.  The
Buy Back Payment will be [****] Wagering Stations in the first year of the
Second Term, [****] Wagering Stations in the second year of the Second Term and
[****] Wagering
Stations in the third year of the Second Term, then IGT shall be deemed to have
met its obligation of having Sold an average [****] Wagering Stations per year
during the then expired portion of the Second Term and PureDepth shall not have
the option to terminate IGT’s exclusive license at that time.

       

      
        
           

        

        
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      In
addition, IGT shall have the right to maintain its exclusive license under this
Agreement by purchasing additional licenses ("Additional Licenses") in lieu of
Sales of Gaming Machine such that with the Additional Licenses the average
calculates to [****] Wagering Stations Sold by IGT per year during the then
expired portion of the Second Term.  Any Additional Licenses as may be
purchased by IGT shall be purchased at a royalty rate [****] per Wagering
Station.  If such Additional Licenses are to be purchased by IGT prior
to exhaustion of the total Prepaid Royalty under Section 4.02, then such
Additional Licenses will be applied against the Prepaid Royalty.

       

      If
PureDepth makes the Buy Back Payment as set forth in this Section 4.06 and IGT
does not purchase Additional Licenses as necessary to maintain exclusivity, then
the exclusive license granted by PureDepth to IGT in Section 3.01 will convert
to a non-exclusive license until the end of the Second Term.  Under
the non-exclusive license, IGT will pay PureDepth a royalty of [****] for each
Wagering Station provided with Gaming Machines that are Sold by IGT or any
sublicensee of IGT.  However, if PureDepth grants to any manufacturer
or distributor of Gaming Machines, a license that is under any Licensed
Intellectual Property and that will permit such manufacturer or distributor to
manufacture or Sell Gaming Machines licensed in this Agreement for any use
within the scope of the license granted in this Agreement, that is within the
Territory and within the Field of Use, at royalty rates that, calculated on an
equivalent basis in respect to the Licensed Intellectual Property in question,
are lower than [****] per Wagering Station, then PureDepth will (a) promptly
notify IGT of such license, provided however that PureDepth need not disclose
the identify of the licensee or specific license terms to IGT, and (b) extend to
IGT the lower royalty rates of the noticed license, effective as of the date on
which they became effective in respect to the noticed license.”

      


       

      
        	
                23.  

              	
                Section 6
      (Technology Transfer) is hereby amended by adding a new subsection 6.05
      (Third Party Software Development) as
follows:

              


      

       

      “Section 6.05
Third Party Software
Development.  IGT acknowledges and agrees that PureDepth has
the right to enter into contracts with third party subcontractors under which
PureDepth will perform software development for such third parties solely to
develop software to be delivered to IGT in return for consideration to be paid
to PureDepth by such third parties.”

      


       

      
        	
                24.  

              	
                Section
      5.03 (Intellectual Property Review by IGT and Maintenance Rights) is
      hereby amended by adding the following phrase at the beginning of the
      second sentence: “With respect to PureDepth Patent Applications which have
      been published or which have direct counterparts that has been
      published,”.

              


      

       

       

      
        
           

        

        
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                25.  

              	
                Section
      5.03 (Intellectual Property Review by IGT and Maintenance Rights) is
      hereby amended by replacing the sentence that begins “PureDepth shall also
      provide IGT with copies of any proposed PureDepth Patent Applications” and
      the sentence that follows with the following two
  sentences:

              


      

       

      “PureDepth
and its agents shall not provide IGT or its agents with copies of confidential
unpublished Patent Applications or prosecution documents associated with such
confidential unpublished Patent Applications.  If PureDepth provides
confidential unpublished Patent Applications or prosecution documents associated
therewith to IGT, such applications shall not be deemed Confidential Information
within the meaning of Section 9.01.”

      


       

      
        	
                26.  

              	
                Section
      1.13 is hereby amended by adding the following text after "'Existing
      Patent Applications'" in the first
sentence:

              


      

       

      "relating
to MLD Technology, filed in the US or elsewhere on or before the Effective Date,
and owned by PureDepth or any Affiliate of PureDepth, including all patent
applications".

      


       

      
        	
                27.  

              	
                Section
      1.13 is hereby amended by adding the following text after "during the term
      of this Agreement" in the first
sentence:

              


      

       

      "and
owned by PureDepth or any Affiliate of PureDepth".

      


       

      
        	
                28.  

              	
                Section
      1.14 is hereby amended by adding the following text after "controlled by
      PureDepth":

              


      

       

      "or any
Affiliate of PureDepth".

      


       

      
        	
                29.  

              	
                Section
      8.03 is hereby amended by replacing
[****].

              


      

       

       

      
        	
                30.  

              	
                Section
      1.15 is hereby amended by adding the following text after “the
      sale,”:

              


      

       

      “lease,”

      


       

      Except as
expressly amended herein, all other terms of the Agreement shall remain in full
force and effect.

       

      
        
           

        

        
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      IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed by their
duly authorized officers thereof or authorized representatives.

      


       

      
        	
                IGT:

              	
                PUREDEPTH:

              
	 	 
	
                By:
      /s/ Randy
      Hedrick

              	
                By:
      /s/ Jonathan J.
      McCaman

              
	
                Name:
      Randy Hedrick

              	
                Name:
      Jonathan J. McCaman

              
	
                Title:
      SR VP IGT Labs

              	
                Title:
      CFO

              
	
                Date:
      September 10, 2008

              	
                Date:
      September 10, 2008

              


      

      


       

       

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