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EXHIBIT 10.13
CERTAIN INFORMATION HAS BEEN OMITTED UNDER A
CONFIDENTIAL TREATMENT REQUEST MADE PURSUANT TO RULE 406
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
AMENDMENT TO
GTIS MASTER OPTION AND LICENSE AGREEMENT
(HOME VIDEO GAMES)
This amendment agreement (the "First 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 March 31, 0000 XXX, XXX, Xxxxxx, WEI and GTIS entered into
the GTIS Master Option and License Agreement (Home Video Games) (the "GTIS
Master Home Video 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 Consumer Game Platforms; and
WHEREAS, WMS, WEG, Midway, WEI and GTIS desire to amend the GTIS
Master Home Video Agreement as provided for in this First Amendment.
NOW, THEREFORE, in consideration of the premises and mutual covenants
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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 Home Video
Agreement or the form of Home Video Game Distribution and License Agreement
annexed as Exhibit A to the GTIS Master Home Video Agreement.
2. This First Amendment shall become effective on the date WII
closes the acquisition of AGC pursuant to the Stock Purchase Agreement. WMS
will give GTIS prompt written notice of such closing. If such acquisition does
not close by June 30, 1996, this First 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 First Amendment. GTIS' rights, if any, under the GTIS
Master Home Video Agreement and form of Home Video Game 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.
3. Section 1 of the GTIS Master Home Video Game 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.
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THE INFORMATION BELOW MARKED BY * HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT.
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 listed on
Schedule 1 to this First Amendment, and any adaptations 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
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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 Consumer Game Platforms.
1.1(f) "Business Day" shall mean any day other than a
Saturday, Sunday or Federal holiday.
1.4(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.
1.7 "Game" shall mean any home video game designed for
play on a specific Designated Consumer Game Platform which has been
released for commercial shipment in the normal course of business by
any member of the WMS Group or by any licensee of the WMS Group on
such Designated Consumer Game Platform for sale in commercial
quantities in the United States in the normal course of business, but
excluding (i) any such home video game with respect to which the WMS
Group shall, prior to the date
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hereof, have granted rights (or any option, right of first refusal or
negotiation or other ability to obtain rights which may be
subsequently exercised) to any third party, including without
limitation any sublicensee of the WMS Group, to manufacture,
distribute or sell such home video game on such specific Designated
Consumer Game Platform within the Licensed Territory, including any
renewals or extensions thereof resulting from the exercise of
previously granted rights; and (ii) any Atari Game. Set forth on
Schedule 1 annexed hereto is a list of all material agreements
pursuant to which the WMS Group, other than the Atari Group, has,
prior to March 31, 1995, granted rights to manufacture, distribute and
sell such home video games on Designated Consumer Game Platforms
within the Licensed Territory, but excluding any agreements pursuant
to which the WMS Group has granted rights to home video games based on
games which have been released for commercial shipment prior to March
31, 1995 in the normal course of business by the WMS Group or by any
sublicensee of the WMS Group as coin-operated video or pinball games
or on any dedicated home video game platform or agreements pursuant to
which the WMS Group has granted rights to any derivative or sequel to
any such released coin-operated video, pinball or home video game. A
home video
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game shall be deemed a separate Game with reference to the specific
Designated Consumer Game Platform on which it has been designed for
play.
1.11 "Initial Option Period" shall mean the period
commencing on the date hereof and ending on June 30, 2001; provided,
however, if the Atari Advance has not been fully recouped by June 30,
2001, the Initial Option Period shall be extended to a date which is
the earlier to occur of (i) June 30, 2003, or (ii) the date on which
the Atari Advance is fully recouped. 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 Initial Option Period
may be further extended under the following circumstances. If (a) an
Early Termination Event occurs prior to June 30, 2000, and (b) GTIS
shall not have fully recouped the Atari Advance by the end of the
Initial Option Period as extended pursuant to the first sentence of
this Section 1.11 (as such date may be further extended from time to
time by future amendments or extensions other than the extensions next
referred to in this sentence), then the Initial Option Period shall be
further extended to a date which is the earlier to occur of (x) the
date on which the Atari Advance is
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fully recouped or (y) the date, to the nearest calendar quarter end,
determined by adding to the date the Initial Option Period as extended
would have expired, the number of days between the occurrence of the
Early Termination Event and June 30, 2001.
1.23(a) "Pirate" shall mean an individual or entity which
counterfeits a game or sells counterfeit games.
1.27(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.
1.27(b) "WII" shall mean Xxxxxxxx Interactive Inc., a
wholly -owned subsidiary of WMS.
4. The GTIS Master Home Video Agreement shall be amended to add
a new Section 2.8 which shall read as follows:
Royalties payable to WMS pursuant to Schedule B of the Home
Video Game Distribution and License Agreement are measured by the
wholesale price 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 Licensed
Product, GTIS shall advise WMS, at WMS' request, of GTIS' expected
pricing strategy and the
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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.
5. The GTIS Master Home Video Agreement shall be amended
to add a new Section 2.9 which shall read as follows:
If, under Section 2.1 of any Home Video Game 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
Video Game 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 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
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THE INFORMATION BELOW MARKED BY * HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT.
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 Video Game
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 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
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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 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 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.
6. Section 7 of the GTIS Master Home Video Agreement and
Section 16 of the form of Home Video Game Distribution Agreement annexed as
Exhibit A thereto shall be amended to add at the end thereof, the following:
With respect to this Agreement and the Home Video Game
Distribution and License Agreements entered into in connection
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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 Video Game
Distribution and License Agreements and any such disclosure shall be
limited to the information which needs to be known. 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 Video Game Distribution and License Agreements.
7. Paragraph 12.1 of the GTIS Master Home Video 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 12.1 with the
words "as long as both the assignee and the assignor remain fully liable for
assignor's obligations hereunder."
8. Section 1 of the form of Home Video Game Distribution and
License Agreement, annexed as Exhibit A to the GTIS Master Home Video
Agreement, shall be amended by adding at the end thereof the following:
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THE INFORMATION BELOW MARKED BY * HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT.
Capitalized terms used, but not defined herein, shall have the
meaning ascribed to such terms in the GTIS Master Agreement.
9. Schedule B to the Home Video Game Distribution and License
Agreement shall be amended as follows:
9.1. The paragraph under the heading "Recoupment"
shall be amended to replace the words "earned and otherwise payable" on the
first and second lines of such paragraph by the words "applied or accrued" and
to replace the words "actually paid" in line seven of such paragraph by the
words "applied or accrued."
9.2. A new paragraph shall be added at the end of
the last paragraph under the heading "Recoupment" on Schedule B to the Home
Video Game Distribution and License Agreement 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 Video Game Distribution and License
Agreements equals the * Dollars Minimum Guaranteed Royalty and
Guaranteed Advance Royalty 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
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has been fully recouped, amounts owed by GTIS but not yet reported,
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 dated December 28, 1994, as amended (the "GTIS Master
PC Agreement"), the Atari Advance shall be recouped from royalties in
the following order of priority: (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 PC Agreement; and (iii)
royalties payable under distribution and license agreements entered
into under the GTIS Master Agreement.
10. 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 efforts to maintain such separate
organization.
11. In the event of conflicts between the provisions of the GTIS
Master Home Video Agreement and the Home Video Game Distribution and License
Agreement, the
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provisions of the GTIS Master Home Video Agreement shall prevail.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
day and year first above written.
WMS INDUSTRIES INC
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------
XXXXXXXX ELECTRONICS GAMES, INC.
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------
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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