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EXHIBIT 10.11
CERTAIN INFORMATION HAS BEEN OMITTED UNDER A
CONFIDENTIAL TREATMENT REQUEST MADE PURSUANT TO RULE 406
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
SECOND AMENDMENT TO
GTIS MASTER OPTION AND LICENSE AGREEMENT
This second amendment agreement (the "Second Amendment") is made and
entered into the 27th day of March, 1996, by and among WMS INDUSTRIES INC.
("WMS"), XXXXXXXX ELECTRONICS GAMES, INC. ("WEG"), MIDWAY MANUFACTURING
COMPANY ("Midway") and XXXXXXXX ENTERTAINMENT INC. ("WEI"), each being Delaware
corporations with offices at 0000 Xxxxx Xxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx
00000, and GT INTERACTIVE SOFTWARE CORP. ("GTIS"), a Delaware corporation with
offices at 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
W I T N E S S E T H:
WHEREAS, on December 28, 0000 XXX, XXX, Xxxxxx, WEI and GTIS entered
into the GTIS Master Option and License Agreement (the "GTIS Master PC
Agreement") pursuant to which the WMS Group granted to GTIS certain rights with
respect to the manufacture, distribution and sale of versions of Games for use
on Designated Multipurpose Computer Platforms; and
WHEREAS, on March 31, 0000, XXX, XXX, Xxxxxx, WEI and GTIS entered
into an Amendment to the GTIS Master PC Agreement (the "First Amendment");
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and
WHEREAS, WMS, WEG, Midway, WEI and GTIS desire to further amend the
GTIS Master PC Agreement as provided for in this Second Amendment.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and other good and valuable consideration, the parties hereto
agree as follows:
1. Capitalized terms used, but not defined or revised herein,
shall have the meaning ascribed to such terms in the GTIS Master PC Agreement
or the form of Home Computer Software Distribution and License Agreement
annexed to the GTIS Master PC Agreement as Exhibit A.
2. This Second Amendment shall become effective on the date WII
closes the acquisition of AGC pursuant to the Stock Purchase Agreement
(the "Effective Date"). WMS will give GTIS prompt written notice of such
closing. If such acquisition does not close by June 30, 1996, this Second
Amendment shall be null and void and of no force and effect. The capitalized
terms used in this paragraph are defined in paragraph 3 of this Second
Amendment. GTIS' rights, if any, under the GTIS Master PC Agreement and form
of Home Computer Software Distribution and License Agreement with respect to
any games acquired pursuant to the Stock Purchase Agreement, and any subsequent
sequels, adaptations or other versions thereof, shall be subject to all third
party rights pursuant to agreements made by the Atari Group existing at the
Effective Date. All such rights, to the extent known by WMS, are set forth on
a schedule to a letter dated the date hereof and signed by WMS and GTIS.
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THE INFORMATION BELOW MARKED BY * HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT.
3. Section 1 of the GTIS Master PC Agreement shall be
amended to add or replace definitions as follows:
1.1(a) "AGC" shall mean Atari Games Corporation, a California
corporation, which is currently a wholly-owned subsidiary of Warner
Communications Inc., and which is to be sold to WII pursuant to the
Stock Purchase Agreement.
1.1(b) "Atari Advance" shall mean the aggregate * Dollars
advance by GTIS to WMS pursuant to the Atari Agreements.
1.1(c) "Atari Agreements" shall mean the Master Option and
License Agreement for Atari PC Games and the Master Option and License
Agreement for Atari Home Video Games entered into by WMS and GTIS
dated March 27, 1996."
1.1(d) "Atari Game" shall mean (i) any game developed or
acquired by or on behalf of AGC or entities which were affiliates of
AGC prior to AGC being acquired by WII pursuant to the Stock Purchase
Agreement, including, without limitation, those games listed on
Schedule 1 to this Second Amendment, and any adaptations
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of such games for other platforms, and (ii) any game currently in
development or developed subsequent to such acquisition by or on
behalf of AGC or a member of the Atari Group, or developed, in whole
or in substantial part, by any person or persons who were employees of
AGC or a member of the Atari Group as of the closing date of such
acquisition and who are employees of any member of the WMS Group at
the time of such development, and any adaptations of such games for
other platforms. For purposes of this Section, employees shall be
deemed to include independent contractors who work a substantial
portion of their time at the facilities of any member of the WMS
Group.
1.1(e) "Atari Group" shall mean AGC, or any entity, a
majority of whose capital stock is owned, directly or indirectly, by
AGC or with respect to which during the term of this Agreement, AGC,
directly or indirectly, has the legal power, without the consent of
any third party, to direct the acquisition of rights to or
exploitation of Games on Designated Multipurpose Computer Platforms.
1.1(f) "Business Day" shall mean any day other than a
Saturday, Sunday or Federal holiday.
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1.2(a) "Early Termination Event" shall mean AGC ceasing to
be at least 50.1% owned by a member of the WMS Group, or the Atari
Group transferring a majority of its intellectual property assets and
licenses to a person or entity who is not a member of the WMS Group.
1.4 "Game" shall mean any coin-operated video game
(including kits), any home video game and any on-line game, released
or intended to be released, by any member of the WMS Group for sale in
commercial quantities in the normal course of business; provided,
however, that Game shall not include any Atari Game. Home video games
shall include games designed for play on dedicated home systems, such
as those marketed by Nintendo, Sega, Atari, Sony, etc. as well as on
multipurpose home computers, such as those marketed by IBM and Apple.
1.7(a) "Milestones" shall mean the defined tasks in the
process of the development of a Technically Acceptable Master Disk as
are deemed sufficiently important such that the achievement of such
tasks will entitle the developer to receive a payment, the amount of
such payment, the standards for approval which will entitle that
developer to
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receive such payment and the circumstances under which the development
arrangement may be terminated prior to completion.
1.9(a) "PC Option Expiration Date" shall have the meaning
ascribed in Section 2.1 hereof.
1.9(b) "PC Extended Expiration Date" shall have the meaning
ascribed in Section 2.1 hereof.
1.9(c) "Pirate" shall mean an individual or entity which
counterfeits a game or sells counterfeit games.
1.10(a) "Stock Purchase Agreement" shall mean the Stock
Purchase Agreement dated February 23, 1996, between Warner
Communications Inc. and WII pursuant to which Warner Communications
Inc. has agreed to sell and WII has agreed to purchase all of the
outstanding stock of AGC.
1.11(a) "WII" shall mean Xxxxxxxx Interactive Inc., a
wholly-owned subsidiary of WMS.
4. The GTIS Master PC Agreement shall be amended to add at the
end of Section 2.1 thereof, the following:
If the Atari Advance has not been fully recouped by the
expiration date (determined after giving effect to all Extension
Events) of GTIS' first option to acquire licenses
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under this Section 2.1 (the "PC Option Expiration Date"), such
expiration date shall be extended to a date which is the earlier to
occur of (i) two years from the PC Option Expiration Date, or (ii) the
date on which the Atari Advance is fully recouped. Such new
expiration date is hereafter referred to as the "PC Extended
Expiration Date." In determining whether the Atari Advance has been
fully recouped for all purposes under this Agreement, amounts owed by
GTIS but not yet reported, paid or credited to the Licensor shall be
deemed recouped by GTIS. The expiration date may be further extended
under the following circumstances. If (a) an Early Termination Event
occurs more than one year prior to the PC Extended Expiration Date,
and (b) GTIS shall not have fully recouped the Atari Advance by the PC
Extended Expiration Date (as such date may be extended from time to
time by future amendments or extensions of GTIS' first option other
than by reason of this sentence), then the expiration date shall be
further extended to a date which is the earlier to occur of (x) the
date on which the Atari Advance is fully recouped or (y) the date, to
the nearest calendar quarter end, determined by adding to the PC
Option Expiration
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Date the number of days between the date of the Early Termination
Event and the PC Option Expiration Date.
5. Section 2.7 of the GTIS Master PC Agreement shall be amended
as follows:
5.1. Section 2.7.1 shall be amended by adding the
following to the first sentence "; provided, that this Section 2.7.1 shall not
apply to Accepted Games as to which GTIS has exercised its rights of review and
approval under Section 2.11 hereof."
5.2. Section 2.7.2 shall be amended by adding the
following to the first sentence "; provided that this Section 2.7.2 shall not
apply to Accepted Games as to which GTIS has exercised its rights of review and
approval under Section 2.11 hereof."
5.3. Former Section 2.7.3 shall be renumbered as "2.7.4"
and any references within that Section and in the GTIS Master PC Agreement to
Section 2.7.3 shall be deemed as amended to read "Section 2.7.4." A new
sentence shall be added after the first sentence of new Section 2.7.4 which
shall read as follows: "If GTIS fails to respond in writing to WMS' notice
within ten (10) Business Days after receipt thereof by GTIS, GTIS shall be
deemed to have consented to WMS' election to terminate development."
5.4. A new Section 2.7.3 shall be added which shall read as
follows:
"2.7.3. Subject to the provisions of 2.11 hereof,
GTIS
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THE INFORMATION BELOW MARKED BY * HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT.
shall bear * of the actual costs of development of any Section 2.4 Game or
Section 2.5 Game as to which GTIS has exercised its rights of review and
approval under Section 2.11."
6. The GTIS Master PC Agreement shall be amended to add a new
Section 2.11 which shall read as follows:
Anything in Sections 2.4 or 2.5 to the contrary
notwithstanding, in the event that after March 31, 1996 the WMS Group
desires to hire a third party developer to develop a Technically
Acceptable Master Disk for an Accepted Game, GTIS shall have the right
to review and approve (such approval not to be unreasonably withheld)
the proposed Milestones prior to the WMS Group entering into a binding
agreement with such developer (such right of review and approval shall
not extend to any terms of the developer agreement other than the
Milestones). The WMS Group shall notify GTIS in writing of its
intention to hire such third party developer and GTIS shall notify WMS
in writing within five (5) Business Days after receipt of the WMS
Group notice that GTIS desires to exercise its right of review and
approval of Milestones. GTIS' failure to timely notify WMS shall be
deemed its election not to
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THE INFORMATION BELOW MARKED BY * HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT.
exercise such right of review and approval. If GTIS shall exercise
such right, GTIS and WMS shall negotiate in good faith to reach
agreement with respect to the proposed Milestones as promptly as
practicable. If such agreement is not reached within ten (10)
Business Days after receipt by WMS of GTIS' aforesaid notice, then WMS
may notify GTIS of Milestones which are acceptable to WMS and GTIS
shall have three (3) Business Days after receipt of such notice to
accept such Milestones. If GTIS does not accept such Milestones
within such three (3) Business Day period, WMS may proceed to enter
into an agreement with such developer as if GTIS had elected not to
exercise its right of review and approval. If a developer agreement
is signed following acceptance by GTIS of the Milestones as aforesaid,
upon approval by GTIS and WMS of the material delivered or other
requirements of each of such Milestones, GTIS shall pay to WMS * of
the Milestone payment within five (5) Business Days after GTIS
receives WMS' invoice therefor. Such payment shall be credited
against the obligations of GTIS to pay WMS * of the actual costs of
code development simultaneously with the receipt
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THE INFORMATION BELOW MARKED BY * HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT.
of a Technically Acceptable Master Disk set forth in Sections 2.4 and
2.5. With respect to any Technically Acceptable Master Disk for
which GTIS is obligated to fund * of the Milestone payments, if WMS
exercises its rights in Section 2.7.4 to terminate development, the
following shall apply: (i) if GTIS consents to such termination,
neither WMS nor GTIS shall be entitled to any reimbursement of the
Milestone payments previously made by the other, or (ii) if GTIS
withholds its consent to such termination, if permitted by the
developer agreement, GTIS may take over the responsibility for
development of a Technically Acceptable Master Disk with the developer
and fund the balance of the development costs. Upon receipt by WMS of
a notice from GTIS that GTIS has received a Technically Acceptable
Master Disk with respect to the Game, WMS shall pay to GTIS, the
amount, if any, by which * of the original development budget approved
by WMS exceeds the Milestone payments previously made by WMS. If GTIS
has fully funded its obligations to make Milestone payments
theretofore due, GTIS may elect to terminate its obligations to make
Milestone payments with
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THE INFORMATION BELOW MARKED BY * HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT.
respect to future Milestones on which the developer has not yet
commenced work; provided that GTIS may not so elect unless the
agreement with the developer permits WMS to terminate its obligations
to the developer by making payments only for Milestones previously
achieved or in work or GTIS agrees to pay * of any actual costs of
terminating the developer agreement. If GTIS properly elects to
terminate its obligation to make Milestone payments, (i) if WMS agrees
to such termination and also terminates the developer agreement,
neither WMS nor GTIS shall be entitled to any reimbursement of the
Milestone payments previously made by the other, or (ii) if WMS elects
to continue development of the Technically Acceptable Master Disk,
GTIS shall be entitled to reimbursement of the Milestone payments
previously made by it upon completion by WMS of the Technically
Acceptable Master Disk, but GTIS shall be deemed to have waived any
future rights to distribute or license the version of the Game
embodied in the Technically Acceptable Master Disk. GTIS shall hold
WMS harmless for any claims by developers against the WMS Group by
reason of
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THE INFORMATION BELOW MARKED BY * HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT.
GTIS' failures to make timely Milestone payments as required
under this Section. WMS shall use all reasonable efforts to cause
agreements with developers entered into after March 31, 1996 which
relate to Technically Acceptable Master Disks for which GTIS is making
* of the Milestone payments to provide for GTIS to have the right to
assume the rights and obligations under that agreement should WMS
elect to terminate the agreement and GTIS elect to continue it. If
both WMS and GTIS elect to terminate a developer agreement and any
proceeds are subsequently generated from the abandoned project, the
proceeds shall be shared by WMS and GTIS in proportion to their
Milestone payments made with respect to such abandoned project. All
ownership and rights in software, artwork, literary text, designs and
other works, and all intellectual property relating thereto, which
would have vested in a member of the WMS Group but for such
termination shall vest in such member of the WMS Group, not GTIS, even
if GTIS assumes the developer agreement, and the WMS Group shall
remain entitled to all of the benefits of the representations and
warranties,
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indemnifications, confidentiality provisions, restrictions,
covenants and other obligations of the developer which would survive
termination of such agreement. The provisions of this Section 2.11 are
in all cases subject to the provisions of Section 2.12. For developer
agreements in respect of which GTIS has agreed to make Milestone
payments, the WMS Group shall provide GTIS a copy of the final version
of the developer agreement within ten (10) Business Days after the
same is signed; provided, however, that the WMS Group shall have the
right to redact any information in that agreement relating to third
parties which does not affect GTIS' rights or obligations.
7. The GTIS Master PC Agreement shall be amended to add a new
Section 2.12 which shall read as follows:
2.12 If permitted under existing agreements with third
parties, WMS agrees to submit its choice of third party developers to
be selected under Sections 2.4 and 2.5 of this Agreement to GTIS for
GTIS' approval, such approval not to be unreasonably withheld, and,
GTIS shall notify WMS of its decision with respect to such developer
within five (5) Business Days after receipt by GTIS of WMS' notice.
If the Technically Acceptable Master Disk
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being developed is based upon a coin-operated Game which has been
released within the 24 month period preceding WMS' request for GTIS'
approval of the developer, or is released after such request for
approval but prior to the release of the home version of such Game,
WMS shall have the final decision in selecting the developer if a
representative of WMS' coin-operated game development group advises
GTIS in writing that the selection of a particular developer is
important to such group. In all other circumstances, if GTIS
reasonably disapproves of the developer suggested by WMS, that
developer shall not be used and a new developer shall be selected by
WMS subject to GTIS' right of approval as provided above in this
Section 2.12.
8. The GTIS Master PC Agreement shall be amended to add a new
Section 2.13 which shall read as follows:
Royalties payable to WMS pursuant to Schedule B of the Home
Computer Software Distribution and License Agreement are measured by
the wholesale prices of Licensed Product. Accordingly, reasonably in
advance of WMS' decision to enter into a developer contract and
reasonably in advance of GTIS' initial release of the
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Licensed Product, GTIS shall advise WMS, at WMS' request, of GTIS'
expected pricing strategy and the reasons therefor. Nothing herein
shall be deemed to restrict GTIS' freedom in selecting wholesale sales
prices it considers appropriate, which shall be in GTIS' sole
discretion.
9. The GTIS Master PC Agreement shall be amended to add a new
Section 2.14 which shall read as follows:
If, under Section 2.1 of any Home Computer Software
Distribution and License Agreement entered into under this Agreement,
Licensor has granted written approval (which shall not be unreasonably
withheld) to Licensee of a specific sublicensee for the Licensed
Property, such approval shall apply to the sublicensing by that
sublicensee of all Licensed Properties licensed to Licensee under Home
Computer Software Distribution and License Agreements entered into
under this Agreement, subject to the following: (i) the sublicense
agreements shall contain provisions with respect to quality of
Licensed Product, trademarks, copyrights, materials, other
intellectual property rights, rights of additional sublicensing or
assignment, termination rights, confidentiality, accounting, auditing,
reporting and payment procedures in
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THE INFORMATION BELOW MARKED BY * HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT.
form agreed to by GTIS and WMS, and the form as so agreed to may be
used by all approved sublicensees described in clause (iii) below;
provided that if such form is not so used, any other form to be used
shall be subject to prior approval as provided in this subsection (i);
(ii) no such blanket approval shall be deemed given with respect to
Licensed Properties as to which approval requirements imposed by third
parties, such as the NFL and NBA, apply, (iii) if the sublicense is
for a Marketing Area other than those designated as Key Marketing
Areas in such Home Computer Software Distribution and License
Agreement and if the expected sales volume in such Marketing Area, in
GTIS' good faith judgment, is an average of * units or less per SKU
per year, Licensee will not be required to obtain Licensor's prior
written approval of the terms of such license but Licensee will be
required to provide a copy of each sublicense to Licensor within ten
(10) Business Days after GTIS enters into such sublicense; and (iv) if
the Marketing Area is designated as a Key Marketing Area or if, in
GTIS' good faith judgment, the expected sales volume for such
Marketing Area is more
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THE INFORMATION BELOW MARKED BY * HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT.
than an average of * units per SKU per year, Licensee will be
required to obtain Licensor's prior written approval, which Licensor
will not unreasonably withhold, of the terms of a sublicense for such
Marketing Area even if the identity of the sublicensee has been
previously approved; provided, however, if a sublicense is for
multiple platforms and multiple games, the approval of the sublicense
will be deemed to be approval for all Games distributed under that
sublicense (subject to clause (ii)). Anything to the contrary
notwithstanding, (x) if a previously approved sublicensee becomes an
Exporter (as such term is defined in Exhibit A to the GTIS Master
Option and License Agreement (Home Video) dated March 31, 1995) or a
Pirate, Licensee will immediately upon becoming aware thereof notify
Licensor of the identity of such Exporter or Pirate and as soon as
practicable terminate the sublicense upon request by Licensor, and (y)
Licensor and Licensee will review every two years the identity of
sublicensees, and those sublicensees who previously received blanket
approval as provided in the first sentence of this Section and who are
no longer considered acceptable by Licensor, in the
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exercise of Licensor's reasonable judgment, will no longer have
such blanket approval and will be subject to Licensor's prior approval
with respect to all future sublicenses in accordance with the approval
procedures set forth above. Licensee shall use all reasonable efforts
to cause each agreement with its sublicensees to permit Licensee to
terminate such agreement immediately if such sublicensee shall be or
become an Exporter or a Pirate.
10. Section 7 of the GTIS Master PC Agreement shall be amended
to add at the end thereof, the following:
With respect to this Agreement and all Home Computer Software
Distribution and License Agreements entered into in connection
herewith, each of WMS Group and GTIS agree to use reasonable efforts
to ensure that either of them may disclose the proprietary information
of the other (including, without limitation, the software source code
and tools relating to any Game), only to those persons within their
organizations who have a need to know such information in order to
perform its obligations under this Agreement and the Home Computer
Software Distribution and License Agreements and any such disclosure
shall be limited to the information which needs to be known.
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Further, neither the WMS Group nor GTIS shall use any such proprietary
information for purposes other than the performance of its obligations
under this Agreement and the Home Computer Software Distribution and
License Agreements.
11. Paragraph 5 of the First Amendment shall be amended
to provide that Section 10.1 of the GTIS Master PC Agreement shall be amended
to delete the parenthetical language "(including its sublicenses and affiliates
as one party)" in the last sentence of such Section and by replacing the words
"as long as that party remains fully liable for its obligations hereunder" at
the end of the second sentence of such Section 10.1 with the words "as long as
both the assignee and the assignor remain fully liable for assignor's
obligations hereunder."
12. For purposes of the last paragraph of Paragraph 13 of
the First Amendment (i) distribution of a coin-operated video or pinball game
by any member of the Atari Group or a former affiliate of any member of the
Atari Group shall be deemed distribution by Licensor or its affiliates; and
(ii) all references to "Licensor or any of its affiliates" shall be amended to
read, "Licensor or any entity which at any time was or is an affiliate of any
member of the WMS Group or the Atari Group." The following shall be added
immediately preceding such last paragraph:
Anything in the foregoing paragraphs to the contrary
notwithstanding, where the Licensed Property has not been embodied in a
coin-operated video or pinball
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THIS INFORMATION BELOW MARKED BY * HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIENTIAL TREATMENT.
game, whether distributed by Licensor or any entity which at any time
was an affiliate of any member of the WMS Group or the Atari Group,
Licensee may elect to pay an alternative royalty therefor. The
alternative royalty shall equal the sum of the royalty percentage
payable in accordance with the table set forth in Schedule B plus the
Licensee's share of Third Party Fees and Royalties, but in no event
shall the alternative royalty exceed * of the actual Net Wholesale
Sales Price of the Licensed Product; provided, however, that anything
in the foregoing paragraphs or this paragraph to the contrary
notwithstanding, under no circumstances shall royalties, whether
regular royalties, Substitute Royalties or alternative royalties, be
less than * of the Third Party Fees and Royalties payable with respect
to the sale of Licensed Products.
12.1. Section 1 of the Home Computer Software Distribution
and License Agreement shall be amended by adding at the end thereof, the
following:
Capitalized terms used, but not defined herein, shall have the
meaning ascribed to such terms in the GTIS Master Agreement.
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THE INFORMATION BELOW MARKED BY * HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT.
12.2. Section 3.2 of the Home Computer Software
Distribution and License Agreement shall be amended to add as the first clause
thereof, the following:
After the end of the Japan Territory Period, as defined in
the letter between WMS and GTIS dated Xxxxx 00, 0000, xxxxxxxxx
"Xxxxx Xxxxxxxxx,"
13. Schedule B to the Home Computer Software Distribution and
License Agreement shall be amended as follows:
13.1. Paragraph 2 under the heading "Adjustment to
Royalties" shall be amended by adding at the end thereof, the following which
shall be deemed a clarification of the practice currently being followed by
Licensee and Licensor:
In cases where Licensed Products are bundled, net proceeds
from bundling shall be treated in the same manner as net proceeds from
sublicensees; provided, however, that if Licensee is also the
manufacturer of products for bundling, the fee to Licensee shall equal
* rather than * of net proceeds.
13.2. A new Paragraph 4 shall be added after paragraph 3
under the heading "Adjustment to Royalties" which shall read as follows:
4. For purposes of Paragraphs 1 and 2 above, the fees,
royalties or other participations referred to in clause 3 of Section
1.9 shall not be excluded in determining
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THE INFORMATION BELOW MARKED BY * HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT.
"Third Parties Fees and Royalties." For avoidance of doubt,
advances payable to developers shall continue to be excluded.
13.3. The paragraph under the heading "Recoupment"
shall be amended to replace the word "paid" on the first line of such paragraph
by the words "applied or accrued" and to insert the words "applied or accrued
by Licensee" between the words "Recoupable Amounts" and "under" on line 6 of
such paragraph.
13.4. A new paragraph shall be added at the end of
the paragraph under the heading "Recoupment" which shall read as follows:
"If the Atari Advance has not been fully recouped by GTIS on
the date on which the total of recoupable amounts under this Agreement
and other Home Computer Software Distribution and License Agreements
entered into pursuant to the GTIS Master Agreement equals the * Dollars
Option and Advance Fee and Guaranty paid by the Licensee under the GTIS
Master Agreement, then royalties otherwise payable under this Agreement
shall be recoupable against the Atari Advance in the manner set forth
in this Schedule B until the Atari Advance shall be fully recouped. In
determining whether the Atari Advance has been fully recouped, amounts
owed by GTIS but not yet reported,
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paid or credited to the Licensor shall be deemed recouped by GTIS. If
in respect of any royalty payment period royalties are available for
recoupment of the Atari Advance under any one or more of the
distribution and license agreements entered into under the Atari
Agreements, the GTIS Master Agreement and the GTIS Master Option and
License Agreement (Home Video Games) dated March 31, 1995, (the "GTIS
Master Home Video Agreement"), the Atari Advance shall be recouped
from royalties in the following order: (i) royalties payable under
distribution and license agreements entered into under the Atari
Agreements; (ii) royalties payable under distribution and license
agreements entered into under the GTIS Master Agreement; and (iii)
royalties payable under distribution and license agreements entered
into under the GTIS Master Home Video Agreement.
14. WMS hereby confirms to GTIS that it is WMS' present
intention that it will maintain a separate Atari Group games design
organization and that any member of the design teams working for that
organization will work solely on the creation of Atari Games. WMS further
confirms that it will use all reasonable effort to maintain such separate
organization.
15. In the event of conflicts between the provisions of the GTIS
Master
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Agreement and the Home Computer Software Distribution and License Agreement,
the provisions of the GTIS Master Agreement shall prevail.
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IN WITNESS WHEREOF, the parties have executed this Second
Amendment as of the day and year first above written.
WMS INDUSTRIES INC
By: /s/ Xxxx X. Xxxxxxxx
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XXXXXXXX ELECTRONICS GAMES, INC.
By: /s/ Xxxx X. Xxxxxxxx
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MIDWAY MANUFACTURING COMPANY
By: /s/ Xxxx X. Xxxxxxxx
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XXXXXXXX ENTERTAINMENT INC.
By: /s/ Xxxxx Xxxx
--------------------------------------
GT INTERACTIVE SOFTWARE CORP.
By: /s/ Xxxxxx Xxxxxxxxxx
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