EXHIBIT 10.6

GAMING DEVICE LICENSE AGREEMENT

Contract No. 124788

 

 

This Gaming Device License Agreement (“Agreement”) is made as of the 1st day of
April, 2009 (the “Effective Date”) by and between:

 

Licensor:      HASBRO, INC. and HASBRO INTERNATIONAL, INC.      1027 Newport
Avenue      Pawtucket, Rhode Island 02862-1059      USA      (401) 727-5617
(Telephone)      (401) 727-5595 (Fax) and      Licensee:      WMS GAMING INC.
     800 South Northpoint Boulevard      Waukegan, Illinois 60085      (847)
785-3085 (Telephone)      (847) 785-3177 (Fax)

This Agreement consists of the attached License Agreement Summary (the
“Summary”), the License Agreement Basic Terms (the “Basic Terms”) and all
schedules and exhibits thereto. To the extent of a conflict or inconsistency
between the terms and conditions in the Summary and the Basic Terms, the Summary
shall control. Capitalized terms not defined in context have the meanings set
forth in the Summary. The terms and conditions of the Agreement shall only be
binding if Licensee signs and returns this Agreement below and Licensor
countersigns same.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

Hasbro Contract Number 124788. ©2006-2009 Hasbro, Inc. and WMS Gaming Inc. All
rights reserved. This document shall not be deemed an offer and shall not be
binding unless signed by all named parties.

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The parties hereby declare, and by these presents confirm, their express desire
that this contract be written in English. Les parties déclarent qu’elles ont
demandé et par les présentes confirment leur désir exprès que cette convention
soit rédigée en anglais.

 

AGREED TO AND ACCEPTED BY:   HASBRO, INC.     WMS GAMING INC. By:  

 

    By:  

 

Date:  

 

    Date:  

 

HASBRO INTERNATIONAL, INC.      

By:

 

 

     

Date:

 

 

     

The “Date of Execution” of this Agreement is June 12, 2009.

 

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LICENSE AGREEMENT SUMMARY

Contract No: 124788

 

 

 

1. Certain Basic Terms and Definitions

“Licensed Properties” means the intellectual property and proprietary rights
owned or controlled by Licensor in all versions (other than versions that are
co-branded with third parties (“Co-Branded Versions”)), subsequently developed
versions and international versions and translations of the MONOPOLY,
BATTLESHIP, CLUE (CLUEDO), YAHTZEE, and [*] board games sold by Licensor,
including without limitation their respective attributes, associated logo(s),
names, characters, symbols, designs, likenesses, visual representations, style
elements, artwork, trademarks, trade dress, copyrighted elements, rules,
features, game play and game mechanics, and patents owned or controlled by
Licensor and used in any of the foregoing board games (provided, however, that
if there is a third-party license fee or royalty for use of any such patent,
then Licensor shall inform Licensee of such patent and Licensee shall be solely
responsible for payment of the license fee or royalty and Licensee covenants and
agrees to pay the same). Licensor represents and warrants that there is no such
patent owned or licensed by Licensor and used in the current versions of the
MONOPOLY, BATTLESHIP, CLUE (CLUEDO), YAHTZEE, and [*] board games for which
Licensee would be responsible for payment of a license fee or royalty as
provided in the immediately preceding sentence. In no event shall Licensee have
the right to utilize the Licensed Properties as depicted in or adapted for any
live action presentation, audio program or recording, theatrical motion picture,
direct-to-video program, or television program, series or game show.

“Licensed Articles” means (i) any “Gaming Device” that utilizes the Licensed
Properties; and (ii) gaming services and software applications using the
Licensed Properties which relate to Gaming Devices, including services through
which Gaming Devices are linked for progressive jackpots, whether through local
area networks, wide area networks or otherwise as well as network-enabled,
server-based, server-enabled or downloadable gaming applications used in
connection with such Gaming Devices or Licensed Articles (collectively
“Network-Enabled Gaming”).

“Gaming Device” means: any mechanical, electromechanical or electronic device or
machine dedicated for use only for chance-based gaming (but which may have a
skill factor in the base game or bonus rounds as provided in the last sentence
of this paragraph) in legal gaming establishments and peripheral systems,
including all Class II and Class III gaming devices as these terms are
understood pursuant to the Indian Gaming Regulatory Act and its subsequent legal
or regulatory interpretations falling within the foregoing definition, unless
falling within the exclusions or restrictions contained in this Agreement, and
associated equipment (e.g., chairs, signage and Network-Enabled Gaming systems)
used in connection with such a device or machine, through which a player places
a wager, the outcome of the wager is determined (whether in the device, the
peripheral systems or associated equipment) and on which the outcome of the
wager (win or loss) is displayed (but the wager may be placed and the outcome
displayed on separate Gaming Devices that are within the same gaming
establishment) (e.g., slot machines, whether video, reel spinning or otherwise,
and video lottery terminals, electronic table games, video poker machines,
dedicated handheld / mobile gaming devices provided by casinos or other legal
gaming establishments for use only in casinos and other legal gaming
establishments, all of the foregoing which may be provided through
Network-Enabled Gaming, but subject to the exclusions set forth below). Such
chance-based gaming devices may have game play or bonus rounds that include a
limited skill factor, and may include video poker and blackjack or other games
notwithstanding that there is a skill factor in poker, blackjack or other game.

 

 

* 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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Gaming Devices and Licensed Articles do not include the following items,
including machines or devices, peripheral systems or equipment, or gaming
services or products related to the following items: [*].

 

 

* 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 the avoidance of doubt, it is acknowledged and agreed that exclusion
(A) above includes [*], and accordingly such [*] are not included in the
definitions of Licensed Articles or Gaming Devices, but the parties expressly
agree that [*] are not excluded by exclusion (A) above. Licensee may offer free
interactive on-line advertising games utilizing the Licensed Properties that
simulate, illustrate, or explain the play of the Licensed Articles to market,
advertise, and promote the Licensed Articles; provided that such free
interactive games shall be subject to all of the terms and provisions of this
Agreement with respect to the Licensed Articles, including, without limitation,
Licensor’s approval rights, Licensee shall accrue no revenue from the use and
distribution of the same, and there shall be limitations on the amount and
quality of play of such interactive games so that the player cannot or will not
play such interactive games for a sustained period of time, either in one
playing session or in multiple sessions over time, and further that Licensor
shall have the right not to approve such interactive games if it determines that
the interactive games would be competitive with or infringe on the rights
granted by Licensor to other licensees for interactive on-line amusement games
using the Licensed Properties. In the event that Licensor determines, in its
sole and absolute discretion, and regardless of whether Licensor shall have
previously approved the interactive game, that any such interactive game is
competitive with or arguably infringes the rights granted by Licensor to any
such other licensee for amusement games or is not in compliance with the
provisions herein, then Licensee shall modify or cease the distribution and
offering of such interactive game as directed by Licensor.

[*]

“Pre-Existing Agreement” means the license to the MONOPOLY Licensed Property
between Licensor and Licensee, dated the 1st day of September, 1997, as amended.

“Territory”: Worldwide, subject to possible withdrawal of certain Regions from
the scope of the Territory as provided in this Agreement. It is understood that
Hasbro, Inc. shall be deemed “Licensor” hereunder with respect to all rights and
obligations of Licensor in the United States, its territories, and possessions,
and Hasbro International, Inc. shall be deemed “Licensor” hereunder as to all
rights and obligations of Licensor elsewhere in the Territory.

“Regions”: For purposes of this Agreement, the Territory is divided into five
(5) “Regions” as follows: (1) North America (including the territories and
possessions of the United States and Canada, Mexico, the Caribbean and cruise
ships, but excluding Central America); (2) Central America and South

 

 

* 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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America (not including Mexico); (3) Europe (including the United Kingdom and
Russia) and Africa; (4) Australia/New Zealand; and (5) Asia (including Japan).

“Channels of Distribution”: Legal gaming establishments.

“Term”: The Term of this Agreement shall consist of an Initial Term and, if
exercised as provided below, an Extension Term.

“Initial Term”: The Effective Date (April 1, 2009) through December 31, 2016,
unless earlier terminated in accordance with the terms of this Agreement.
Provided, however, that the Initial Term for the [*] Licensed Property shall
commence on [*] (except that commencing on the Effective Date Licensee is
expressly authorized to design, develop, manufacture and seek regulatory
approval for Licensed Articles using the [*] Licensed Property and during the
[*], Licensee may display Licensed Articles utilizing the [*] Licensed Property
at trade shows, consult with casinos or other legal gaming establishments,
distributors and other third parties with regard to the placement of such
Licensed Articles, and make announcements that Licensor has granted such rights
to Licensee as well as advertise, promote and market such Licensed Articles;
provided, however, Licensee may also make such disclosures prior to such time
period solely to the extent that such disclosures are required by applicable
laws, rules and regulations).

“Extension Term”: January 1, 2017 through December 31, 2019, unless earlier
terminated in accordance with the terms of this Agreement. In the event that
Licensee is not in default of any material terms of this Agreement both at the
time of exercise and on the last day of the Initial Term, Licensee may exercise
its option to extend the Term of this Agreement for the Extension Term by
sending written notice to Licensor of Licensee’s exercise of such option no
later than [*]; provided, however, that such exercise of the Extension Term
shall not be effective unless the following condition (the “Extension Royalty
Requirement”) has been satisfied: Licensee has earned royalties totaling at
least [*] in the Territory in the period beginning [*] through [*], provided,
however, that Licensee may cure a shortfall of earned royalties in the stated
timeframe in the amount of [*] or less by a cash payment in the amount of the
shortfall (the “De Minimis Payment”) made on or before [*]. For avoidance of
doubt, for the purpose of determining whether the Extension Royalty Requirement
has been satisfied, earned royalties for the period [*] through [*] shall not
include royalties earned in the month of [*] notwithstanding that payment of
such royalties is due not later than [*] and so may be paid during the Initial
Term, and royalties that are earned in [*] but are not due and payable until [*]
shall be included for purposes of determining whether the Extension Royalty
Requirement has been satisfied. Advance Payments paid but not earned as
royalties do not count against the Extension Royalty Requirement.

“Required Notices” means the following notices:

- For MONOPOLY: “The MONOPOLY name and logo, the distinctive design of the game
board, the four corner squares, the MR. MONOPOLY name and character, as well as
each of the distinctive elements of the board and playing pieces are trademarks
of Hasbro for its property trading game and game equipment. © [year of
publication] Hasbro. All Rights Reserved.” (provided, however, that if space
prevents use of this notice, a shorter notice is as follows: “MONOPOLY is a
trademark of Hasbro used with permission. © [year of publication] Hasbro. All
Rights Reserved.”)

- For the other Licensed Properties: “[LICENSED PROPERTY] is a trademark of
Hasbro and is used with permission. © [year of publication] Hasbro. All Rights
Reserved. Licensed by Hasbro.”

 

 

* 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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“Affiliate” means, as to a particular party, an entity or person that is
controlled by, controls, or is under common control with, such party. The term
“control” (or the like) shall mean the power to elect a majority of the board of
directors or other governing group of an entity or the power to direct
management of such party, whether, in each case, through the ownership of voting
securities, by contract, or otherwise.

 

2. Payment Terms

2.1 Royalties.

(a) Royalties

(i) Lease Placements. For Licensed Articles, including Licensed Property
Associated Gaming Devices (as defined below), which are not sold outright by
Licensee or a sublicensee that has been pre-approved in writing by Licensor, but
rather are leased or otherwise placed with third parties under arrangements
where Licensee will receive ongoing payments from their operation and for any
other Licensed Articles not covered by Sections 2.1(a)(ii) and 2.1(a)(iii) of
this Summary below, Licensee will pay Licensor a royalty equal to [*] of the
gross revenue received by Licensee or sublicensee, whichever is greater, for the
use of such Licensed Articles, less any fees payable to third parties such as
government levies, third party commissions, prizes for players (or funds to
support such prizes), royalties to other licensors and amounts payable to
casinos.

(ii) Flat Fee. For Licensed Articles including Licensed Property Associated
Gaming Devices which are not sold outright by Licensee or a sublicensee that has
been pre-approved in writing by Licensor, but rather are leased or otherwise
placed with third parties under arrangements where Licensee will receive ongoing
payments from their operation, which are placed in such jurisdictions where
Licensor is precluded by statute, regulation, rule, ordinance or order from
receiving royalty payments based upon such percentage of revenue as provided
above without Licensor first being licensed, approved or found suitable,
Licensee will pay Licensor for each day each Licensed Article is operating the
royalties in the applicable jurisdictions as set forth on the schedule attached
hereto as Exhibit 7 (the “Flat Fee Schedule”). See Section 2.1(b) of this
Summary regarding adjustments to the Flat Fee Schedule.

(iii) Sale. For Licensed Articles including Licensed Property Associated Gaming
Devices which are sold by Licensee or by a sublicensee of Licensee that has been
pre-approved in writing by Licensor, Licensee shall pay Licensor a royalty of
[*] of Licensee’s Net Sales of such Licensed Articles (including but not limited
to slot machines and slot machine conversions) or, if applicable, such
sublicensee’s Net Sales whichever is higher. The term “Net Sales” shall mean
gross sales less only fees payable to third parties that are not recognized as
revenue by Licensee under generally accepted accounting principles consistently
applied in accordance with Licensee’s normal practices such as government taxes,
TITO license fees, freights costs, prizes for players (or funds to support such
prizes) and the following discounts and credits: corporate discounts, tradeshow
discounts, volume discounts, no-trial discounts, no-trade-in discounts and
trade-in credits, provided that they are payable to third parties and not
recognized as revenue by Licensee under generally accepted accounting principles
consistently applied in accordance with Licensee’s normal practices. No
deductions shall be made for cash discounts, marketing allowances, bad debt or
uncollectible accounts. All costs and expenses incurred in the manufacture,
sale, distribution or exploitation of the Licensed Articles, or otherwise
incurred by Licensee or an approved sublicensee, shall be paid by Licensee or
such sublicensee, and no such costs or expenses shall be deducted from any
royalty payable to Licensor.

 

 

* 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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Any Gaming Device that Licensee sells that does not include Licensed Property,
but which Licensee converts within [*] of such initial sale to a Gaming Device
that includes Licensed Property shall be considered a Licensed Article and
Royalties shall be paid to Licensor for the sale of the Gaming Device, as set
forth in this Section 2.1(a) (iii).

(iv) Certain Royalty Clarifications

(A) For the avoidance of doubt, the parties acknowledge and agree that where a
Gaming Device is a Licensed Property Associated Gaming Device Licensee shall pay
royalties as set forth in Sections 2.1(a)(i)-(iii), based upon the revenues from
the use, placement, operation or sales of the Licensed Property Associated
Gaming Device (and for the avoidance of doubt, and without expanding the scope
or definition of Licensed Property Associated Gaming Devices as set forth in
Section 2.1(a)(iv)(B), (i) expressly including, without limitation, all such
revenues with respect to any games, features, wagers or applications (including
Network-Enabled Gaming Applications) accessed or played by the player from or
through such Licensed Property Associated Gaming Device, regardless of whether
or not such games, features, wagers or applications include Licensed Property
(including, without implied limitation, primary wagering games that do not
utilize Licensed Property in the game theme, game play, iconography or
characters, such as the primary wagering games on the Player Terminals in the
current MONOPOLY BIG EVENT game), but subject to Section 2.1(a)(iv)(C) and
expressly agreeing that Licensed Property Side Games are not within the scope or
definition of Licensed Property Associated Gaming Devices, and (ii) expressly
excluding revenues associated with the use, placement, operation or sales of
unbranded infrastructure associated with Network-Enabled Gaming Devices, such as
servers), as applicable based on the type of placement, calculated as set forth
in the applicable Section (and for royalty payments which are to be made under
Section 2.1(a)(ii), the parties shall establish a Flat Fee set in good faith
that is estimated to be [*] of the applicable projected revenues, less the
permitted deductions).

(B) A “Licensed Property Associated Gaming Device” shall mean a Gaming Device
that has any one or more of the following criteria: (i) Licensed Property
appears on the hardware (including a top-box) or cabinetry of the Player
Terminal and/or on the physical signage connected to the Player Terminal, or
(ii) Licensed Property is displayed on the video display of the Player Terminal
(which, for the avoidance of doubt, includes, without limitation, the top-box)
and/or displayed on signage connected to the Player Terminal before, during or
after game play, other than where such display is either only infrequent and
incidental or where such use is as a “Licensed Property Side Game” (defined
below), or (iii) the primary wagering game played on the Player Terminal
utilizes Licensed Property in the game theme, game play, iconography or
characters, or (iv) the Player Terminal is linked (other than through a
“Licensed Property Side Game”) to a display, game, bonus round or the like,
which is linked to one or more other Player Terminals (“Multiple Machine
Display”), and on or in which Licensed Property is displayed or used at least
[*]. For the avoidance of doubt it is understood and agreed that, without
implied limitation, a Player Terminal shall be a Licensed Property Associated
Gaming Device if it meets criteria (iv), notwithstanding that it does not meet
any of the other criteria, including, without limitation, that its primary
wagering game does not utilize Licensed Property in the game theme, game play,
iconography or characters (for example, the Player Terminals in the current
MONOPOLY BIG EVENT game). A handheld mobile Gaming Device shall be a Licensed
Property Gaming Device if it meets any one or more of the foregoing criteria
(i) through (iv).

(C) The parties recognize that there may be Non-LP Network-Enabled Gaming
Applications (defined below) for which a royalty is payable based on its use in
connection with Licensed Property Associated Gaming Devices, but where the
revenues of Licensee or its sublicensees derived from such Non-LP
Network-Enabled Gaming Application cannot be tied to the specific Licensed
Property Associated Gaming Devices (i.e., where the Non-LP Network-Enabled
Gaming Application is

 

 

* 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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distributed by means of a Multiple Machine Display, casino-wide seat licenses or
where a flat fee is paid for the Non-LP Network-Enabled Gaming Applications and
[*]. In such a situation, royalties of [*] shall be applied to the [*] from the
Non-LP Network-Enabled Gaming Application calculated as the [*].

(D) For the avoidance of doubt, that parties acknowledge and agree that where a
Licensed Property Side Game is displayed on a non-Licensed Property Associated
Gaming Device, Licensee shall pay royalties attributable to such Licensed
Property Side Game as set forth in Sections 2.1(a)(i)-(iii), as applicable based
on the type of placement, as set forth above, and not on the revenues from such
non-Licensed Property Associated Gaming Device.

(E) Notwithstanding anything to the contrary contained herein, the parties
acknowledge and agree that Licensee may design or develop certain
Network-Enabled Gaming Applications that may not fall within any of the
foregoing situations. In such an event, Licensee will present the situation to
Licensor in order to determine whether there is a mutually agreeable royalty
structure to apply, but neither party shall be obligated to agree to any such
royalty structure, except in its sole and absolute discretion; if the parties
cannot agree on a royalty structure, Licensee shall not utilize or incorporate
Licensed Property in such proposed Gaming Devices.

(G) Certain Definitions

(1) “Network-Enabled Gaming Application” means an application that is provided
by or controlled by a server and not provided by or controlled by a Gaming
Device that is a Player Terminal.

(2) “Licensed Property Network-Enabled Gaming Application” means a
Network-Enabled Gaming Application that utilizes a Licensed Property.

(3) “Non-LP Network-Enabled Gaming Application” means a Network-Enabled Gaming
Application that is not a Licensed Property Network-Enabled Gaming Application.

(4) “Licensed Property Side Game” means a Licensed Property Network-Enabled
Gaming Application that is separately selected by the player apart from the
primary wagering game on the Player Terminal, not integrated into the game play
of the primary wagering game, is not funded through the pay tables of the
primary wagering game and is not displayed on the Player Terminal or its
associated signage until the player makes a selection to see the side games
(i.e., the player presses a button or takes some other action to call up a menu
of side games)

(5) “Player Terminal” means a device where a player places a wager or on which
the outcome of the wager is displayed.

(v) For Category B2, B3 and B4 machines in the United Kingdom which are
distributed through a sublicense, Licensee shall pay Licensor a royalty equal to
[*] of the [*].

 

 

* 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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[*]

(b) Flat Fee Schedule Adjustments. [*] the parties shall confer and negotiate in
good faith to make adjustments, if necessary or appropriate, to the Flat Fee
Schedule for the upcoming subsequent [*] in an effort to have the royalties to
be paid using the Flat Fee Schedule in such subsequent [*] approximate an
effective Royalty rate of [*] of the projected revenues for such subsequent [*]
for the applicable Licensed Articles to which the Flat Fee Schedule and its
rates would apply, subject to applicable gaming regulatory requirements. The
projected revenues shall be based upon forecasted placements of Gaming Devices
and their associated projected revenues, consistent with Licensee’s internal
planning, which projections shall be included in the Business and Marketing Plan
provided pursuant to Section 4 of this Summary giving consideration to a number
of factors, including but not limited to, the then-current footprint and
financial performance of Licensed Articles, the trend in growth or shrinkage of
the then-current footprint of Licensed Articles, the number and timing of new
Licensed Articles scheduled for introduction during the subsequent [*], the
types of games scheduled for introduction (e.g., WAP or stand alone, video or
mechanical, etc.), customer acceptance of participation products generally,
anticipated consumer acceptance of the Licensed Articles and player trends
(e.g., volatility, denomination, free spin games, picking games, etc.),
projected introductions of new platforms and technologies (e.g., Network-Enabled
Gaming, account-based wagering, handheld, transmissive and community gaming,
etc.), macro changes to the relevant gaming markets, the competitive landscape,
the macro economy, changes in regulations (i.e., smoking bans), changes in
taxation, jurisdictional approvals, new gaming markets opening, expansions and
contractions to existing casinos/slot floors, new casino openings, the accuracy
of prior [*]’s projections, and any projected increase or decrease in the
consumer demand for Gaming Devices themed for the applicable Licensed Properties
(including, without limitation, the impact based upon new product or promotional
releases or activities and changes to consumer awareness and popularity of the
Licensed Properties). For the avoidance of doubt, the listing of certain factors
in the preceding sentence does not preclude other relevant factors from being
taken into account and does not mean that all of the listed factors will
necessarily be relevant in any given [*]. In connection with the parties
conferring on and setting of the new Flat Fee Schedule, Licensee shall provide
Licensor, as part of the annual Business and Marketing Plan, supplemented as
necessary, with an understanding of the underlying assumptions relied upon in
its forecasting consistent with the information provided by Licensee to Licensor
in setting the Flat Fee Schedule for [*]. In setting the subsequent [*] Flat Fee
Schedule, or otherwise, the parties shall not seek to true up or otherwise
reconcile any prior [*] effective royalty rates. If Licensor and Licensee have
not agreed on the revised Flat Fee Schedule for the upcoming [*] by December 31,
then the issue shall be settled by the Dispute Resolution Procedure set forth in
Section 10 of this Summary.

2.2 Total Royalty Guarantee. Licensee shall pay to Licensor minimum guaranteed
royalties of not less than [*] (the “Total Royalty Guarantee”), payable as
follows:

(a) In each [*], Licensee shall pay to Licensor [*] minimum guaranteed royalties
(each an “[*] Guarantee”), fully-recoupable against royalties earned in such
[*], payable by advance payments (each an “Advance Payment”) for each such [*]
as set forth below.

[*]

 

 

* 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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With respect to each [*], Licensee guarantees to pay to Licensor the [*]
Guarantee amount set forth above for royalties with respect to Licensed Articles
earned during the period [*] (other than for [*], where the applicable period is
from [*]), payable in [*] Advance Payments [*], each equal to [*] of the [*]
Guarantee amount as set forth above, due on [*] (other than [*] where there
shall be only [*] Advance Payment due on [*]), such Advance Payments to be
applied and off-set against royalties earned in such [*]. Notwithstanding the
foregoing, if the actual earned royalties in any [*] are greater than [*] of the
total Advance Payment as of [*], then the [*] Advance Payment due on [*] shall
be off-set and reduced by the amount that actual earned royalties exceed the
first Advance Payment that was payable on [*]. [*].

(b) All [*] Guarantee payments, including Advance Payments, are non-refundable.
Each [*] Guarantee shall be applicable only to the royalties earned in the
applicable [*]. As an example, but without limitation, the [*] Guarantee for the
period from [*] shall not include, and the Advance Payments for such period
shall not be recouped against, royalties earned in [*] notwithstanding that such
royalties are payable on [*], and instead such royalties earned in [*] and paid
in [*] shall apply against the [*] Guarantee and (if applicable) be offset
against the [*] Advance Payments.

(c) Advance Payment for [*]. For the [*] Guarantee of [*], Licensee shall be
credited with the previously paid balance of the [*] guarantee payment (pursuant
to the Pre-Existing Agreement) of [*]. Accordingly, the remaining Advance
Payment owed to Licensor for [*] is [*], which shall be due and payable on [*]
unless previously out-earned and paid by actual royalties. Furthermore, the
License Extension Fee set forth in Section 2.3 of this Summary shall be credited
against and shall be off-set against the Advance Payment and [*] Guarantee for
[*].

2.3 License Extension Fee. In consideration of the license extension, on [*]
Licensee shall pay Licensor a license extension fee in the amount of [*]

 

 

* 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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(“License Extension Fee”). The License Extension Fee is separate from and not to
be off-set against royalties, but shall be off-set and applied against the
Advance Payment and [*] Guarantee for [*].

2.4 Currency; Electronic Payments. All amounts payable hereunder shall be paid
in and are stated in United States Dollars calculated using the average exchange
rate for the relevant currency quoted by the Wall Street Journal for the
relevant month when the payments are made, costs of transfer being for the
account of Licensee. Further, all payments to Licensor shall be made in United
States Dollars by wire transfer, with directions for such transfers to be
provided from Licensor to Licensee in a side letter (“Side Letter”) separate
from this Agreement (for the avoidance of doubt, the contents of the Side Letter
shall be treated as Confidential Information under Section 27 of the Basic
Terms).

 

3. Additional Provisions

3.1 Failure of a Licensed Property to Receive Regulatory Approval.

(a) In the event that Licensee, despite using good-faith, commercially
reasonable efforts, is unable to obtain regulatory approval in the States of
Nevada or Mississippi for Gaming Devices or Licensed Articles using one of the
Licensed Properties solely because of the nature of the Licensed Property
involved (for example, because such Licensed Property is deemed to be contrary
to the public policy or associated with products marketed to children and
therefore unsuitable for use in connection with Gaming Devices under Nevada
Gaming Commission Regulation 14.025 or similar regulations), then Licensee shall
have the option, exercised by written notice to Licensor given within thirty
(30) days of such regulatory decision, to initiate the procedure in
Section 3.1(b) below for replacing such Licensed Property with a substitute
Licensed Property.

(b) If Licensee timely gives such notice, then Licensor and Licensee shall
discuss in good-faith possible other properties owned or controlled by Licensor
that are available for use for Gaming Devices and Licensed Articles at that time
and are not then the subject of any negotiations between Licensor and a
third-party for use for rights included within the scope of the definition of
Licensed Articles or Gaming Devices which could be substituted for such Licensed
Property, but the substitution of any such other property for such Licensed
Property shall be subject to the approval of Licensor, to be granted or withheld
in Licensor’s sole and absolute discretion. In the event that Licensee and
Licensor mutually agree on a substitute Licensed Property, then effective on the
date agreed upon by Licensor and Licensee the Licensed Property that was the
subject of the regulatory decision shall be replaced by such substitute Licensed
Property. For the avoidance of doubt, and without implied limitation, there
shall be no changes in the Total Royalty Guarantee, [*] Guarantees or royalties
based on any such Licensed Property not receiving regulatory approval as
aforesaid. If Licensor and Licensee have not agreed on a substituted Licensed
Property within thirty (30) days after Licensee’s notices as set forth in
Section 3.1(a), then the issue shall be settled by the Dispute Resolution
Procedure.

(c) If Licensee fails to timely give such notice as set forth in section 3.1(a),
then such Licensed Property shall remain part of this Agreement and no longer be
subject to this Section 3.1, and this Agreement shall continue in full force and
effect with no change in the terms and provisions of this Agreement.

3.2 Region Clawbacks.

(a) Within [*] after the U.S. Launch of the first Licensed Article using a
Licensed Property, Licensee shall in the normal course of business Introduce in
each Region of the Territory Licensed Articles using such Licensed Property;
provided, however, that with respect to the

 

 

* 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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MONOPOLY Licensed Property Licensee shall in the normal course of business
Introduce in each Region of the Territory Licensed Articles using such Licensed
Property within [*] of the Effective Date of this Agreement.

(i) For purposes of this provision, “U.S. Launch” shall mean obtaining
regulatory approval of a Licensed Article using a Licensed Property in each of
Nevada, New Jersey, Mississippi, and Native American gaming jurisdictions. After
Licensee has obtained regulatory approval of a Licensed Article using a Licensed
Property in one of these jurisdictions, it will thereafter seek to obtain
regulatory approval in such other jurisdictions using its good faith business
judgment in the normal course of its business. Licensee shall, upon request of
Licensor from time to time, inform Licensor of the status of its efforts to
obtain the U.S. Launch for each Licensed Property (other than MONOPOLY for which
the U.S. Launch has already occurred). Promptly after the U.S. Launch for a
Licensed Property, Licensee shall send Licensor a notice stating the date of the
U.S. Launch for such Licensed Property. Licensee shall have the right to
determine when to develop and have the U.S. Launch for Licensed Articles of each
Licensed Property in its sole and absolute discretion.

(ii) For purposes of this provision, “Introduce” shall mean the following:

 

  (A) For the Central America and South America Region, placement in the normal
course of business of [*] Licensed Properties.

 

  (B) For the Europe and Africa Region, placement in the normal course of
business of [*] Licensed Properties.

 

  (C) For the Australia/New Zealand Region, placement in the normal course of
business of [*] Licensed Properties.

 

  (D) For the Asia Region, placement in the normal course of business of [*]
Licensed Property.

(b) In the event that Licensee fails to Introduce Licensed Articles using a
Licensed Property in a given Region within such [*] period after the first U.S.
Launch of Licensed Articles for a Licensed Property (or within [*] after the
Effective Date for the MONOPOLY Licensed Property), then Licensor may by written
notice to Licensee withdraw Licensee’s rights to such Licensed Property in such
Region, such withdrawal of the Region with respect to the given Licensed
Property to be effective upon the giving of such notice, but subject to the
provisions of Section 14 (Disposal of Stock After Expiration; Continuation of
Leases) of the Basic Terms.

(c) For avoidance of doubt, to meet the specified number of placements within a
Region that count towards the minimum number of units constituting an
Introduction as specified in Section 3.2(a)(ii) of this Summary, the required
minimum number of Licensed Articles must simultaneously be in place at any one
time within the [*]. As an example, if the requirement of twenty (20) CLUE
(CLUEDO) placements in Australia/New Zealand applied in the [*] period from [*],
the requirement of [*] placements would not be met by there being only [*] in
[*] which are then removed in [*] and a subsequent [*] in [*], but the
requirement would be met if on [*]

 

 

* 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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[*]

there were [*] of such Licensed Articles in the Region even if some units are
subsequently removed and not replaced with additional units. MONOPOLY Gaming
Devices originally placed pursuant to the Pre-Existing Agreement as of the
Effective Date and still in place at the applicable time shall count towards the
quantity of MONOPOLY Gaming Devices set forth in Section 3.2(a)(ii) of this
Summary.

3.3 United Kingdom. For each Licensed Property being treated separately, within
[*] of the first Licensed Article using a Licensed Property (or, with respect to
the MONOPOLY Licensed Property, within [*]), Licensee shall simultaneously have
available Licensed Articles using such Licensed Property on a minimum of an
aggregated total of [*] Category B2, B3 and/or B4 Gaming Devices (as defined
under the UK Gambling Act of 2005) (“UK Introduction”). If Licensee has not made
a UK Introduction of a Licensed Property within the period set forth herein,
then Licensor may by written notice to Licensee withdraw Licensee’s rights to
that Licensed Property under this Agreement in the United Kingdom with respect
to Category B2, B3 and/or B4 games under the UK Gambling Act of 2005 and its
regulations, such withdrawal to be effective upon the giving of such notice, but
subject to the provisions of Section 14 (Disposal of Stock After Expiration;
Continuation of Leases) of the Basic Terms.

 

4. Business and Marketing Plan

4.1 Marketing Plan. Commencing no later than November 1, 2009, and annually
thereafter by November 1 of each calendar year during the Term, Licensee shall
submit to Licensor a written business and marketing plan (“Business and
Marketing Plan”) for the Licensed Articles.

(a) Annual Marketing Plan. The marketing plan portion of the Business and
Marketing Plan (“Marketing Plan”) shall include with respect to each release or
planned release of Licensed Articles a summary of marketing, promotion and
advertising strategies, an overview of planned campaigns by Region (or by
country if and where applicable), inclusive of milestone timelines and
concepts/renderings of marketing materials (print, web, microsites, promotional
materials, etc.). The parties expressly agree, that the decision whether and to
what extent to advertise, promote or market the Licensed Articles is in
Licensee’s sole and absolute discretion and that there is no actual or implied
minimum quantity of advertising, promotional or marketing obligations or
expenditures hereunder.

(b) Marketing Plan Update. In May of each year during the Term, Licensee shall
deliver to the Licensor an update to the Marketing Plan setting forth: (i) with
respect to each release or planned release of the Licensed Articles, a summary
of marketing, promotion and advertising strategies, an overview of planned
campaigns by Region (or by country if and where applicable), inclusive of
milestone timelines, and concepts/renderings of marketing materials (print, web,
microsites, promotional materials, etc.), and (ii) such additional marketing
information as may be reasonably requested in advance by Licensor.

4.2 Business Plan.

(a) The business portion of the Business and Marketing Plan (“Business Plan”)
shall set forth:

 

  (i) the current footprints and projected annual footprints, revenues and
royalties by Licensed Property and Region (and for the United States and Canada
by general geographic region), for the subsequent [*],

 

  (ii) the projected product release schedule by Licensed Property for the
subsequent [*], and

 

 

* 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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  (iii) a general summary of the major and projected trends and developments in
the domestic and international slot machine industry for the preceding and
subsequent [*], including those factors to be considered for the Flat Fee
Schedule Adjustments pursuant to Section 2.1(b) of the Summary.

(b) Quarterly Business Updates. In February, May and August of each calendar
year during the Term, Licensee shall deliver to the Licensor an update of the
Business Plan: (i) summarizing the existing footprint and product release
schedule by Licensed Property, including any updates on product development,
regulatory approval submissions and projected release dates for the current
calendar year, (ii) the projected number of units, revenues and royalties for
the current calendar year by quarter and an update on the outlook for the
subsequent calendar year by Licensed Property and Region, and (iii) such
additional information as may be reasonably requested in advance by Licensor
from time to time.

4.3 For the avoidance of doubt, the Business and Marketing Plan are to be
treated as Confidential Information under Section 27 of the Basic Terms.

 

5. Warrants

5.1 Existing Warrant. As additional consideration to induce Licensor to enter
into this Agreement, Licensee has arranged for WMS Industries, Inc. to amend
simultaneously with the execution of this Agreement the existing Common Stock
Purchase Warrant (“Existing Warrant”) for 250,000 shares (now 375,000 shares due
to a stock split) of the common stock of WMS Industries, Inc. dated
September 15, 2003, by and between Hasbro, Inc. and WMS Industries, Inc., to
change the “Expiration Date” (as defined therein) to be December 31, 2018,
subject to further extension to December 31, 2021 if the Term of this Agreement
is extended for the Extension Term. The agreed upon form of amendment to the
Existing Warrant is attached to this Agreement as Exhibit 9. Licensor hereby
waives its right to accelerate the vesting of the Existing Warrant to purchase
the shares of the Common Stock of WMS Industries, Inc. as provided for in that
certain Existing Warrant agreement, which shall be amended accordingly. Licensee
acknowledges that such amendment is material consideration provided in order to
induce Licensor to enter into this Agreement. In the event of a conflict between
this Agreement and the Existing Warrant document (as amended), the Existing
Warrant document as amended shall control.

5.2 New Warrant. As additional consideration to induce Licensor to enter into
this Agreement, Licensee has arranged for WMS Industries Inc. to provide to
Hasbro, Inc. a warrant for shares of the common stock of WMS Industries, Inc.,
solely as set forth below in Section 20 of the Basic Terms, as will be provided
in a common stock purchase warrant, to be entered into, by and among Hasbro,
Inc. and WMS Industries, Inc. (herein after “New Warrant”) The agreed upon form
of common stock purchase warrant for the New Warrant under this Section 5.2 is
attached to this Agreement as Exhibit 10. Licensor expressly acknowledges that
the vesting of the New Warrant is contingent upon the occurrence of the
conditions set forth in Section 20.4 of the Basic Terms, and that in the event
that the contingencies are never fulfilled such that the New Warrant never vests
shall not be deemed a failure of consideration. Licensee acknowledges that the
grant of such contingently vesting New Warrant is material consideration
provided in order to induce Licensor to enter into this Agreement. In the event
of a conflict between this Agreement and the New Warrant document, the New
Warrant document shall control.

 

6. Pre-Existing Agreement and Prior Audit

6.1 Pre-Existing Agreement. The Pre-Existing Agreement has a license term that
prior to the entering into of this Agreement ran through December 31, 2011.
Licensor and Licensee agree: (i) for the

 

 

* 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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Pre-Existing Agreement, the “Term” (as defined in such agreement) shall be
revised to run through March 31, 2009 with no sell-off/lease-off period;
(ii) that the Pre-Existing Agreement shall apply only to revenues and royalties
with respect to use of the MONOPOLY Licensed Property and Licensed Articles
using the MONOPOLY Licensed Property earned in periods on or before March 31,
2009 and the royalties earned on such Licensed Articles on or before March 31,
2009 shall apply to the guarantee and any applicable advance under the
Pre-Existing Agreement for such Licensed Property and not with respect to any
[*] Guarantee or the Total Royalty Guarantee under this Agreement (for the
avoidance of doubt, there shall be no minimum guaranteed royalties for the
period January 1, 2009 through March 31, 2009); and (iii) that this Agreement
(and not the Pre-Existing Agreement) shall apply to all Licensed Articles using
the MONOPOLY Licensed Property beginning on or after April 1, 2009, even if
manufactured or distributed under the Pre-Existing Agreement.

6.2 Settlement of Prior Audit and QME Obligations.

(a) Licensee represents and warrants to Licensor that Licensee is not aware of
any breach by Licensee under the Pre-Existing Agreement (other than the possible
breaches identified in items (i) through (viii) of this Section 6.2(a) below),
and Licensor represents and warrants to Licensee that Licensor is not aware of
any breach by Licensor under the Pre-Existing Agreement. Neither the foregoing
sentence nor anything else set forth in this Agreement shall constitute an
admission by either party of any breaches under the Pre-Existing Agreement. Each
party, in reliance on the other party’s foregoing representation and warranty,
hereby, except as expressly set forth in this Section 6, expressly waives,
releases and extinguishes any and all actual, possible or alleged claims,
findings, breaches or failures to perform under the Pre-Existing Agreement,
including any possible breaches of the Pre-Existing Agreement raised by any
audit, or that could have been raised by any audit, save only: (1) Licensor’s
right to audit with respect to the proper and accurate guarantee and royalty
payments for the period from January 1, 2008 through March 31, 2009, (2) any
claims that Licensee has underreported or underpaid revenues and royalties for
any period under the Pre-Existing Agreement, including interest with respect to
such underpaid or overpaid royalties, other than the claims specifically
identified in items (i) through (viii) of this Section 6.2(a) below which are
expressly waived, released and extinguished hereunder; (3) any claims of misuse
of the Licensed Property by Licensee, including, without limitation, the
distribution or use of unapproved Licensed Articles or that Licensee distributed
Licensed Articles outside the scope of the license grant (for example, without
limitation, outside the channels of trade or outside the licensed rights);
(4) any product liability claims arising prior to the Effective Date with
respect to the Licensed Articles; provided, however, that the foregoing waiver,
release, and extinguishment shall not be deemed to apply to the provisions of
Section 6 of the Pre-Existing Agreement (Indemnification and Product Liability
Insurance) as they relate to third-party claims and suits, and damages, losses,
costs and expenses with respect thereto, nor shall the foregoing be deemed to
waive, release or extinguish any claims under this Agreement, including, without
limitation, where such breach is continuing under this Agreement (for example,
but without implied limitation, the distribution or use after March 31, 2009 of
unapproved Licensed Articles or the distribution of Licensed Articles outside
the license grant. Licensor expressly acknowledges that it is waiving its rights
to audit or continue to audit the period prior to January 1, 2008. Specifically,
and without limitation, Licensor releases, waives and extinguishes the following
specific possible breaches by Licensee of the Pre-Existing Agreement occurring
during the period April 2002 through December 31, 2007 raised by Licensor’s
audits of such period: [*].

 

 

* 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.

 

xiv

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[*]

Nothing contained in this Section 6, nor anything else set forth in this
Agreement, shall constitute an admission or otherwise imply that either party is
in breach of any provisions of the Pre-Existing Agreement, including for the
period from January 1, 2008 through April 1, 2009.

(b) In addition to the foregoing waiver, Licensor further agrees to waive,
release and extinguish all possible claims related to or breaches by Licensee
under the Pre-Existing Agreement with respect to compliance with Paragraph 9(d)
(Marketing Commitment) of the License Agreement Summary part of the Pre-Existing
Agreement as added to said agreement by Amendment 4, including, without
limitation, the obligations to submit marketing plans, to spend Qualified
Marketing Expenditures in specified amounts, and to pay to Licensor any
shortfalls in required Qualified Marketing Expenditure requirements, for all
periods prior to April 1, 2009, including, without limitation, calendar year
2008 through March 31, 2009. The parties further agree to waive, release and
extinguish all possible claims related to or breaches by the parties for failure
to meet and adjust the Flat Fee Schedule under Paragraph 2(a)(ii) of the License
Agreement Summary part of the Pre-Existing Agreement for all periods prior to
April 1, 2009.

(c) Notwithstanding the foregoing, and subject to Section 6.2(b) of this
Agreement, Licensor shall retain the right to audit Licensee with respect to the
period from January 1, 2008 through March 31, 2009 with respect only to the
proper and accurate reporting and payment of royalties and guarantees to
Licensor and proper use of the Licensed Property and use and distribution of the
Licensed Articles. Any claimed or alleged findings or breaches with respect to
such audit for the period through March 31, 2009 or any other claim or breach
under the Pre-Existing Agreement shall not give rise to any claims for breach or
default of this Agreement or otherwise form the basis for Licensor to declare a
breach or default or seek to terminate this Agreement; provided, however, that
the foregoing shall not be deemed to limit Licensor’s rights and remedies,
including termination, under this Agreement where such breach is continuing
under this Agreement (for example, but without implied limitation, the
distribution or use after March 31, 2009 of unapproved Licensed Articles or the
distribution of Licensed Articles outside the Channels of Distribution or
outside the licensed rights), subject to the notice obligations and cure period
as set forth in Section 12(f) of the Basic Terms.

 

7. [*]

 

 

* 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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8. [*]

 

9. [*]

9.1 In the event that during the Term Licensor desires to enter into or renew
(other than under an automatic renewal or a unilateral option for a licensee to
elect to renew) a license agreement for use of the Licensed Properties or any
other properties owned by Licensor for [*] exclusion in the definitions of
Gaming Devices and Licensed Articles), Licensor agrees to discuss in good-faith
the possibility of entering into a license agreement with Licensee for such
rights separate from this Agreement, but neither party shall be obligated to
enter into a license agreement for such rights except if each party shall
determine to do so in its sole and absolute discretion and only on such terms
and conditions as such party may determine in its sole and absolute discretion,
and nothing herein shall be deemed to prevent, limit or restrict Licensor from
entering into such an agreement with any third-party or from discussing the
licensing of such rights with any third-party before, during or after
discussions with Licensee. Without implied limitation, Licensee acknowledges and
understands that Licensor has existing relationships with companies engaged in
[*] and that Licensor is regularly approached by third parties interested in
licensing Licensor’s properties for [*], and that Licensor discussing possible
licensing of [*] with such third parties is not in violation of this provision.

 

10. Dispute Resolution Procedure

10.1 Dispute Resolution Procedure. Any matter that under the terms of this
Agreement is to be resolved by the “Dispute Resolution Procedure” shall be
resolved by conference of officers of Licensor and Licensee as provided below,
and if that fails to resolve the matter, by binding arbitration as provided
below. In the event that parties are unable to agree on a resolution to such a
matter, the parties shall refer the issue to John DeSimone, Vice President
Finance & Business Planning, Digital Media & Gaming, for Licensor and Jeff
Michel, Executive Director, Licensing and Trademarks, for Licensee or their
successors as designated by Licensor and Licensee, respectively. Such procedure
shall be invoked by either party by presenting to the other a “Notice of Request
for Resolution of Dispute” (a “Notice”) identifying the issues in dispute to be
addressed. A telephone conference of the designated officers (or another officer

 

 

* 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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designated by a party, provided such officer is of similar stature in his/her
respective company) will be held within five (5) business days after the
delivery of the Notice, or such other period as mutually agreed by the parties.
In the event that the telephone conference between these persons does not
resolve the dispute, then upon delivery of a further Notice, either party may
require that the matter be referred for resolution between Mark Blecher, Senior
Vice President Digital Media & Gaming, for Licensor and Orrin Edidin, President,
for Licensee, or their successors as designated by Licensor and Licensee,
respectively. A telephone conference of these persons (or another officer
designated by a party, provided such officer is of similar stature in his/her
respective company) shall be held within five (5) business days after delivery
of the further Notice (and such additional number of days as the parties may
then agree). If the second set of officers is not able to resolve the dispute
within five (5) business days after their conference (or within the additional
number of days agreed to by the parties), then the matter shall be resolved by
binding arbitration in New York, New York, in accordance with the rules of the
American Arbitration Association by a panel of three arbitrators. Either party
may commence the arbitration by notice to the other. Each of the parties shall
name one arbitrator and a third arbitrator shall be mutually agreed upon by the
parties. Once one party has named an arbitrator, the other party shall have ten
(10) days from notice of such selection, to select an arbitrator. If the parties
are unable to agree on the third arbitrator within ten (10) days of naming of
the second arbitrator, then the third arbitrator shall be chosen as follows:
each party shall provide to the other a list of not more than three arbitrators
acceptable to such party; each party may “veto” one of the arbitrators on the
other party’s list; a list of the non-vetoed potential third arbitrators shall
be submitted to the first two arbitrators for selection; and if the first two
arbitrators are unable to agree on the third arbitrator, then each party shall
provide the name of one of the non-vetoed potential third arbitrators and the
third arbitrator shall be chosen by lot from among those two. Each of the
arbitrators shall have experience in gaming matters and in licensing matters and
shall be independent of either party and their respective affiliates. Each party
shall bear the cost of the arbitrator appointed by such party, and the parties
shall share the cost of the third arbitrator. The decision of the three
arbitrators shall be binding upon the parties.

 

11. Sublicensing

Licensor hereby consents to Licensee’s sublicense of rights under this Agreement
for use of (i) [*], as a distributor, manufacturer, and agent for configuration
of Licensed Articles developed by Licensee for use in [*] (as that term is
defined under U.S. gaming regulations) jurisdictions, as well as in certain [*];
and (ii) [*] as the distributor, manufacturer, and agent for configuration of
Licensed Articles developed by Licensee for use in the [*] (as that term is
defined under U.S. gaming regulations) jurisdictions (e.g., [*]) where gaming
platforms are configured differently from those in [*] jurisdictions, as well as
in certain [*] jurisdictions (e.g., [*]). Additionally, Licensor expressly
consents to placement by Licensee of Licensed Articles that are [*] through a
sublicense relationship.

 

12. [*]

In the event that [*]1 [*].

 

 

* 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

Based upon the most current Morgan Stanley and Goldman Sachs’ reports there are
approximately 933,000 slot machines, excluding Class II and central
determination games in the United States and Canada. [*]

 

xvii

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[*]

 

13. Memorandum of Exclusive License

The parties agree to execute contemporaneously with this Agreement, (i) the
Memorandum of Exclusive License attached hereto as Exhibit 4-1, which Licensee
may record with the United States Copyright Office, and (ii) the Notice of
Termination of Exclusive License attached hereto as Exhibit 4-2, which

 

 

* 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.

 

xviii

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Licensor may record with the United States Copyright Office in the event of
proper termination or expiration of this Agreement.

*    *    *

 

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LICENSE AGREEMENT BASIC TERMS

Contract No. 124788

 

 

WHEREAS, Licensor has rights to the Licensed Properties;

WHEREAS, Licensee desires to utilize the Licensed Properties in connection with
the development, manufacture, sale, lease, placement, and distribution of
articles hereinafter described.

NOW, THEREFORE, in consideration of the mutual covenants herein contained, and
for other good and valuable consideration, the parties do hereby agree as
follows:

l. GRANT OF LICENSE

(a) Licensed Articles. Upon the terms and conditions hereinafter set forth,
Licensor hereby grants to Licensee and Licensee hereby accepts the exclusive (as
provided in Section 3 of the Basic Terms) right, license and privilege, and any
other grant of licensed rights as granted elsewhere in this Agreement (i.e.,
sublicensing rights in Section 11 of the Summary), of utilizing the Licensed
Properties solely upon and in connection with the design, development,
manufacture, sale, lease, placement, marketing, advertising, promoting and
distribution of the specific articles and services listed in the Licensed
Articles definition in the Summary, and no other articles or services of any
kind, and only as may be approved by Licensor, in the manner approved, when the
Licensed Articles are submitted for approval (collectively, the licensed rights
granted pursuant to this Agreement may be referred to as the “License Grant”).
The definition of the Licensed Articles shall be strictly construed.
Notwithstanding anything herein to the contrary, and without expanding
Licensee’s rights hereunder in any way, Licensee shall not have the right to use
the “Hasbro” logo, the “MB” logo, the “Parker Brothers” logo, the “OddzOn” logo,
or the “Kenner” logo without Licensor’s express prior written approval.

(b) Territory. The license hereby granted extends only to the Territory and only
to distribution in the Channels of Distribution. To the extent such restriction
is permissible by law, Licensee agrees that it will not make or authorize any
use, direct or indirect, of the Licensed Properties in any other area, or
outside the Channels of Distribution, and that it will not sell or distribute
Licensed Articles to persons who Licensee knows or should know intend or are
likely to resell or redistribute them in an area outside the Territory or
outside the Channels of Distribution.

(c) Term. The Term of this Agreement is as shown in the Summary, unless sooner
terminated in accordance with the provisions hereof.

2. TERMS OF PAYMENT

(a) Rate. Licensee agrees to pay to Licensor as royalties amounts determined as
provided in the Summary with respect to the lease, sale, placement, use or
distribution of the

Licensed Articles by Licensee or any of its affiliates or by permitted
sublicensees. Except as set forth in the Summary as permitted deductions in
computing royalties, all costs and expenses incurred in the manufacture, sale,
lease, placement, distribution or exploitation of the Licensed Articles, or
otherwise incurred by Licensee, shall be paid by Licensee, and no such costs or
expenses shall be deducted from any royalty payable to Licensor. All payments to
be made by the Licensee to Licensor under this Agreement, unless expressly noted
to the contrary, are exclusive of value added tax (if applicable), consumption
tax or other sales tax or customs duty which shall, where appropriate, be
payable by the Licensee. All taxes, duties, import charges or assessments
levied, assessed or imposed by any government authority with respect to the
Agreement on the income of the Licensee (or upon Licensor in respect of
Licensee’s income) shall be borne by the Licensee (provided that this shall not
be deemed to prevent the deduction of any amounts permitted under Section 2(a)
of the Summary as deductions from gross revenues in computing royalties), and
the Licensee shall indemnify and save harmless Licensor in respect thereof,
provided that if in accordance with any applicable law any withholding tax is
imposed on any royalty, advances or guarantee payment payable by the Licensee to
Licensor under the Agreement, the Licensee or the paying bank shall deduct the
sum of tax from the royalty payment and pay it to the competent tax authorities.
Within sixty (60) days from such deduction and payment, the Licensee or paying
bank shall provide Licensor with a receipt voucher or other document acceptable
to the relevant local tax authority, as well as an English language translation
thereof, which evidences the receipt by the relevant tax authorities of payment
of any tax due so that Licensor can secure the necessary credits.

(b) Terms of Payment. Licensee shall pay the Total Royalty Guarantee, [*]
Guarantees, and Advance Payments as set forth in the amounts as set forth in the
Summary and elsewhere in this Agreement. No part of such amounts paid toward the
Total Royalty Guarantee and [*] Guarantees shall in any event be repayable to
Licensee, other than in accordance with Section 12 of the Summary.

(c) Periodic Statements. On or before the twenty-fifth (25th) day after the end
of each calendar month, Licensee shall furnish to Licensor complete and accurate
royalty statements for such calendar month just ended, using the royalty
reporting form attached hereto as Exhibit 1. Such royalty statements shall
provide: (i) for sold Licensed Articles, the number sold, country in which sold
or to which

* 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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shipped, description (Licensed Property and specific Gaming Device), gross sales
price, and itemized permitted deductions for calculating royalties, (ii) for
leased Licensed Articles or other recurring payments on account of Licensed
Articles on which Licensee pays a percentage royalty, Licensed Property and
specific Gaming Device gross revenue received itemized by country and itemized
permitted deductions for calculating royalties, (iii) for Licensed Articles for
which Licensee pays royalties based on a Flat Fee Schedule, Licensed Property
and specific Gaming Device, and number of days of operation itemized by country
(and if within the United States sufficient information to ascertain the
appropriate royalty category), (iv) an itemized calculation of the royalties
earned and payable with respect to such calendar month, (collectively, the
“Required Reporting Information”), certified to be accurate by Licensee, or if a
corporation, by an officer of Licensee. Such statements shall be furnished to
Licensor whether or not any of the Licensed Articles have been sold, leased or
otherwise provided during the month to which such statements refer; provided,
however, that Licensee does not have to start providing statements for any
Licensed Property until the first calendar month in which royalties are earned
with respect to Licensed Articles using that Licensed Property.

(d) Royalty Payments. Royalties in excess of the applicable Advance Payment
required and paid hereunder shall be due on the twenty-fifth (25th) day
following the last day of the calendar month in which earned. The receipt or
acceptance by Licensor of any of the statements furnished pursuant to this
Agreement, or of any royalties paid hereunder (or the cashing of any royalty
checks paid hereunder) shall not preclude Licensor from questioning the
correctness thereof at any time within three (3) years after the expiration
and/or termination of this Agreement (but such period shall not be deemed to
extend the record retention requirement and audit timing limitations set forth
in Section 11 of the Basic Terms), and in the event that any inconsistencies or
mistakes are discovered in such statements or payments, they shall immediately
be rectified and the appropriate payment made by or credit taken by Licensee.
Licensee shall pay Licensor interest on a late royalty payments (including [*]
Guarantee and Advance Payment payments and any underpaid royalty payment) at an
interest rate of [*] per month, or the highest rate permitted by law, whichever
rate is lower, from the date the royalty payment (or underpaid portion thereof)
should have been received by Licensor until paid. Royalty payments must be
remitted to Licensor by electronic payment as provided in the Summary. The
parties agree that if Licensee makes a lease arrangement with its customer as a
means of financing the purchase of a Licensed Article which is a Gaming Device,
such Gaming Device shall be considered to be sold (not leased) for purpose of
this Agreement and Licensee shall pay royalties on such sale as set forth in
Section 2.1(a)(iii) of the Summary at the full purchase price minus applicable
discounts and deductions upon the inception of the lease, in accordance with
Generally Accepted Accounting Principals. The parties acknowledge that

the Licensed Articles include accessories which (A) Licensee may provide to its
customers in connection with Licensed Articles which are Gaming Devices or
services, and (B) utilize the Licensed Property. An example of such an accessory
includes electric signage which calls players’ attention to the presence of
Gaming Devices within a casino. Notwithstanding anything to the contrary in this
Agreement, Licensee shall not pay Licensor royalties on such accessories. The
parties acknowledge that it is customary in the gaming industry for Gaming
Devices to be placed on a trial basis in order for: (i) a customer to have, for
a limited period of time, the right to return the Gaming Device and unwind the
transaction, (ii) Licensee to conduct, for a limited period, a regulatory field
trial at the request of a regulatory agency; or (iii) Licensee to conduct, for a
limited period, consumer focus group testing and/or field trials (any one of
such actions constituting the “Trial Period”). For any Licensed Articles placed
on such trial basis, the royalty thereon shall be deemed to accrue only after
the Trial Period (including any extensions thereof) has terminated, unless the
Trial Period exceeds six (6) months, in which case such royalty shall accrue at
the end of such six months.

3. RESERVATION OF RIGHTS; EXCLUSIVITY

(a) Subject to the restrictions set forth in this Section 3, including with
respect to Co-Branded Versions, all rights whatsoever in the Licensed Properties
not specifically granted herein to Licensee are reserved to Licensor and may be
freely exercised at any time by Licensor or its designees without accounting to
Licensee and without any claim, charge or encumbrance in favor of Licensee.

(b) Licensor agrees that it shall not grant any other license to the Licensed
Properties (or any Co-Branded Versions) within the scope of the License Grant
hereunder, and not withdrawn as set forth herein, for use of the Licensed
Properties (or any Co-Branded Versions) in connection with the design,
development, sale, lease, use placement, or distribution of Licensed Articles
during the Term in the Territory through the Channels of Distribution, other
than as permitted in this Section 3 below. Nothing in this Agreement shall be
construed to prevent Licensor from granting any other licenses for the use of
the Licensed Properties or from utilizing the Licensed Properties in any manner
whatsoever provided that such licenses and uses do not conflict with the
preceding sentence. For the avoidance of doubt, in any case where Licensor
withdraws rights granted to Licensee as provided herein, such rights shall no
longer be subject to the foregoing exclusive License Grant, and for the
avoidance of doubt the parties

* 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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acknowledge and agree that the foregoing exclusive License Grant shall not apply
to the Sell Off Period with respect to such withdrawn rights or after the
expiration or termination of this Agreement.

(c) It is further understood that, without limiting the foregoing rights
reserved to Licensor, Licensor, without being deemed to have violated the
exclusive license rights granted to Licensee, may during the last [*] of the
Term grant third parties rights for exploitation after the Term of articles like
the Licensed Articles using the Licensed Properties and in connection with such
a grant allow the third party to design, develop, manufacture and seek
regulatory approvals with respect to such articles during the last [*] of the
Term and during the last [*] of the Term to display proposed product at trade
shows, consult with casinos or other legal gaming establishments, distributors,
and other third parties with regard to the placement of such articles, and make
announcements that Licensor has granted such rights to a third party (provided,
such third party may also make such disclosures prior to such time period solely
to the extent that such disclosures are required by applicable laws, rules and
regulations). Notwithstanding the foregoing, such third party may not place
articles utilizing the Licensed Property in the Territory in the Channels of
Distribution for play by consumers during the Term.

(d) It is further understood that, notwithstanding the foregoing, in accordance
with previously terminated or expired license agreements and the existing
license agreement(s) for the [*] Licensed Property relating to the use of the
Licensed Properties in connection with the Licensed Articles in the Territory,
Licensor reserves the right to permit the licensee(s) thereunder, and solely in
strict accordance with the terms of the applicable licenses, to sell-off such
articles on hand or in process as of the Effective Date within the Territory
during the Term (including with respect to such Articles using the [*] Licensed
Property for a period through [*] after the effective date for such Licensed
Property, which effective date is [*]) or continue the lease terms of such
articles previously ordered or in place and that owners of sold machines may
have the right to continue using them, provided however, that no such lease or
placement on a recurring revenue model of any sort of a third party
manufacturer’s or distributor’s Licensed Article may extend more than [*] to
Licensee for such Licensed Property in this Agreement (such Effective Date for
the [*] Licensed Property being [*]), and such use shall not be deemed to
violate the exclusive rights granted to Licensee in Section 3 of this Agreement.

4. GOOD WILL

(a) Licensee recognizes the great value of the good will associated with the
Licensed Properties, and acknowledges that the Licensed Properties and all
rights therein, including good will pertaining thereto, belong exclusively to
Licensor. Licensee further recognizes and acknowledges that an uncured material
breach by Licensee of any of its covenants,

agreements or undertakings hereunder with respect to use of the Licensed
Properties, legal marking requirements, quality standards, or ethical standards
may cause Licensor irreparable damage, which cannot be readily remedied in
damages in an action at law, and may, in addition thereto, constitute an
infringement of Licensor’s copyrights in or trademarks that are part of the
Licensed Properties, thereby entitling Licensor to seek equitable remedies,
costs and reasonable attorney’s fees. Nothing in this Agreement shall be
construed as requiring Licensor to promote, advertise, or otherwise use or
exploit the Licensed Properties during or after the Term (such matters being
entirely within Licensor’s discretion), and Licensor shall be under no
obligation to sell any products utilizing the Licensed Properties at any time.

(b) Licensor recognizes the great value of the good will associated with the
Licensee’s Marks (as defined below), and acknowledges that the Licensee’s Marks
and all rights therein, including good will pertaining thereto, belong
exclusively to Licensee. Licensor further recognizes and acknowledges that an
uncured material breach by Licensor of any of its covenants, agreements or
undertakings hereunder with respect to use of the Licensee’s Marks may cause
Licensee irreparable damage, which cannot be readily remedied in damages in an
action at law, thereby entitling Licensee to seek equitable remedies, costs and
reasonable attorney’s fees. Nothing in this Agreement shall be construed as
requiring Licensee to promote, advertise, or otherwise use or exploit the
Licensee’s Marks during or after the Term (such matters being entirely within
Licensee’s discretion), and Licensee shall be under no obligation to sell any
products utilizing the Licensee’s Marks at any time.

5. INTELLECTUAL PROPERTY RIGHTS.

(a) Subject to the provisions of Section 5(b) of these Basic Terms, all right,
title and interest in and to the Licensed Properties, including, without
limitation, all intellectual property with respect thereto, and all intellectual
property derived from the Licensed Properties contained, used in, reproduced, or
displayed in the Licensed Articles and their marketing and promotional
materials, and all intellectual property rights and registrations with respect
to the same, are and shall be owned exclusively by Licensor and are hereby
assigned to Licensor, together with the associated good will (all of the
foregoing, including, without limitation, the Licensed Properties and the
intellectual property derived from the Licensed Properties being hereinafter
collectively referred to as “Licensor’s IP”). Intellectual property used in the
Licensed Articles shall not be considered to be derived from a Licensed Property
or constitute Licensor’s IP simply on the basis that it is thematically linked
to the general theme of the Licensed Property

* 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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(e.g., a murder mystery and the CLUE (CLUEDO) board game or the use of a word
that is used in the Licensed Property, such as [*] in combination with the
MONOPOLY board game). As examples, without implied limitation, the parties
expressly agree that trademark rights in marks such as [*] based on such marks
being created and used by Licensee for Licensed Articles under this Agreement
(provided and to the extent that the same do not include Licensor’s copyrighted
works or derivative works thereof) would not be considered derived from the
Licensed Properties, would not constitute Licensor’s IP and would be owned by
Licensee, but would be subject to the license from Licensee to Licensor of the
Licensee’s Marks as set forth below. Licensee covenants and agrees that this
Agreement shall be deemed a license, not a transfer, of Licensor’s rights in the
Licensed Properties, and that Licensee shall have no interest in or claim to the
Licensor’s IP or any other intellectual property owned by Licensor or assigned
pursuant to this Agreement to Licensor, including, without limitation, the
Licensor’s IP, except to the limited extent of the License to use the same
pursuant and subject to the terms and conditions of this Agreement. Licensee
shall not utilize the Licensed Properties or any other intellectual property of
Licensor except as expressly permitted by this Agreement or pursuant to a
separate license agreement with Licensor.

(b) Subject to the provisions of Section 5(a) of these Basic Terms, all right,
title and interest in and to the Licensed Articles and the elements thereof, to
the extent not consisting of Licensor’s IP shall be the exclusive property of
Licensee, including, without limitation, all proprietary inventions, creations
and functional elements of the Licensed Articles such as code, routines, tools,
algorithms, activities, play mechanics, and any other functional features, and
any marks created, designed or developed by Licensee for use in connection with
the Licensed Articles and all intellectual property (including trademarks,
copyrights and patents), and proprietary inventions whether or not patentable
utilized by or contained within the Licensed Articles, to the extent not
consisting of the Licensor’s IP. Licensor covenants and agrees that this
Agreement shall not transfer any of Licensee’s rights in the Licensed Articles
or Licensee’s intellectual property (including Licensee’s Marks), other than as
expressly set forth in Section 5(a) of the Basic Terms, and that Licensor shall
have no interest in or claim to the Licensed Articles or Licensee’s intellectual
property associated therewith other than as expressly set forth in Section 5(a)
of the Basic Terms. Licensor shall not utilize the Licensed Articles except
pursuant to a separate license agreement with Licensor. All uses hereunder of
Licensee’s intellectual property (including Licensee’s Marks) shall inure to
Licensee’s benefit.

 

Licensee hereby grants Licensor a limited, non-exclusive (except as to toys and
games and digital games that do not include or involve a wagering theme or
simulate Gaming Devices or the play of Gaming Devices or in any manner replicate
a casino-style game, where such license shall be exclusive as provided below),
worldwide, royalty-free, perpetual, including, for the avoidance of doubt, after
the expiration or termination of this Agreement (but terminable in the event of
an uncured breach of this license grant to Licensee’s Marks after notice from
Licensee as set forth below), and sub-licensable (as set forth immediately
below) license to the trademarks owned by Licensee under the provisions of
Section 5(a) of this Agreement that: (x) Licensee develops or creates in
connection with the design and development of Licensed Articles under this
Agreement, (y) are used on Licensed Articles produced under this Agreement, and
(iii) which are thematically linked to a Licensed Property (“Licensee’s Marks”),
solely as set forth herein. Licensor may use Licensee’s Marks in connection with
its own goods and services and may sublicense Licensee’s Marks for a
sublicensee’s goods and services, provided that no such use of Licensee’s Marks
by Licensor or any of its sublicensees shall be for or in connection with: [*]
Notwithstanding anything to the contrary contained herein, Licensor may not
during or subsequent to the Term sublicense Licensee’s Marks to any entity that
at the time the sublicense is entered into is a manufacturer, distributor or
operator of articles like the Licensed Articles. For the avoidance of doubt the
license to use the Licensee’s Marks in connection with goods and services,
includes, without implied limitation, the right to use such marks in connection
with the design, development, manufacture, sale, lease, marketing, advertising,
promoting and distribution of such goods and services. Licensor expressly
acknowledges and agrees that the Licensee’s Marks are and shall remain
Licensee’s sole and exclusive property. Licensor shall ensure that all uses of
the Licensee’s Marks by Licensor and its sublicensees shall be only on and in
connection with goods and services of quality at least equal to that of the
Licensed Articles. The grant to Licensor of rights to use the Licensee’s Marks
in connection with toys and games and digital games that do not include or
involve a wagering theme or simulate Gaming Devices or the play of Gaming
Devices or in any manner replicate a casino-style game, shall be exclusive, and
Licensee agrees that it shall not license to others or use for itself

* 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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(except as provided below) the Licensee’s Marks in connection with toys, games
and digital games that do not include or involve a wagering theme or simulate
Gaming Devices or the play of Gaming Devices or in any manner replicate a
casino-style game, subject to the following conditions set forth below which are
required for Licensor to maintain such exclusivity. Notwithstanding the
foregoing limited exclusivity, Licensee shall not be precluded from use of the
Licensee Marks in connection with Gaming Devices or any advertising, marketing
or promotion of its Gaming Devices even if such advertising, marketing or
promotion includes or involves a wagering theme, simulates Gaming Devices,
involves a non-wagering digital game, the play of Gaming Devices or in any
manner replicates a casino-style game. In the event that Licensor or its
permitted sublicense(s) has not made use of any given Licensee Mark in
interstate commerce in the United States within eighteen (18) months for toys or
games or within twenty four (24) months for digital games that do not include or
involve a wagering theme or simulate Gaming Devices or the play of Gaming
Devices or in any manner replicate a casino-style game, from the date such mark
is first introduced to the public in Licensed Articles, (and Licensor has
provided Licensee with samples or other sufficient documentation to evidence the
same), the licensee to such Licensee Mark shall revert to being non-exclusive.
The parties expressly acknowledge and agree that Licensor shall have no
obligation to use or exploit any Licensee’s Mark.

Upon written request by Licensee, Licensor shall provide Licensee with the date
of the first use of the Licensee’s Marks by Licensor and its sublicensees in
interstate commerce in the United States and the date of first use in each
country. At Licensee’s request (and with reimbursement of Licensor’s reasonable
out-of-pocket costs and expenses as and to the extent provided below), Licensor
shall execute (but not create) and provide Licensee with all necessary
documents, assignments and signatures which Licensee may reasonably request for
the purpose of perfecting Licensee’s title to all intellectual property rights
and registrations thereof with respect to the Licensee’s Marks which are the
property of Licensee, including, without limitation, those rights which are
owned by or assigned to Licensee pursuant to this Agreement. Licensee will
reimburse Licensor for any reasonable out-of-pocket expenses Licensor incurs in
providing such documents, assignments and signatures, provided that Licensee has
approved such costs in advance in writing; provided, however, that this
reimbursement shall not apply with respect to any sublicensees or to any
assignments necessary from any third party developers, designers or programmers,
or any other employees, agents, or subcontractors involved in the design,
manufacture or development of goods upon which Licensee’s Marks are used.
Licensor agrees to secure assignments of all rights which any sublicensee and
any third party developers,

designers or programmers or any other employees, agents or subcontractors
involved in the design, manufacture or development of goods upon which
Licensee’s Marks are used may otherwise claim in such intellectual property of
Licensee. All uses by Licensor and its sublicensees hereunder of Licensee’s
Marks shall inure to Licensee’s benefit. If, by operation of law, Licensor is
deemed to have acquired any ownership interest in any of Licensee’s Marks,
Licensor hereby assigns such interest to Licensee. Upon Licensee’s request, and
at no cost to Licensee, Licensor shall provide Licensee with samples for
trademark registration and quality assurance purposes of all of its products and
all of its sublicensee’s products that use Licensee’s Marks. Licensor shall
follow Licensee’s instructions for proper use of Licensee’s Marks in order that
protection and/or registrations for the intellectual property with respect
thereto may be obtained or maintained. Licensor agrees that it will cause the
trademark notices provided by Licensee, and any other notice desired by
Licensee, to appear on or within all goods using Licensee’s Marks and on or
within all advertising, promotional or display material bearing such goods or
marks. Licensor shall ensure that all sublicenses of Licensee Marks shall be in
writing and shall contain at a minimum the requirements set forth herein.
Licensor’s obligations under this license to Licensee’s Marks shall survive the
termination or expiration of this Agreement.

If Licensor shall violate any of its material obligations with respect to the
terms and conditions of this license to the Licensee’s Marks, Licensee shall
have the right to terminate the license to the Licensee’s Marks hereunder upon
thirty (30) days written notice to Licensor stating with particularity the
violation(s) of its obligations, and such notice of termination shall become
effective unless Licensor shall completely remedy the stated violation(s) within
the thirty (30) day period and provide reasonable evidence to Licensee that such
violation(s) has been remedied. Licensor acknowledges and agrees that Licensee
is licensing the Licensee’s Marks on an as is basis and that Licensee makes no
representation or warranty as to the availability of the marks for use on or in
connection with any particular goods or services and all warranties, express or
implied, including any warranties of non-infringement are expressly disclaimed.

(c) Upon written request by Licensor, Licensee shall provide Licensor with the
date of the first use of the Licensed Articles in interstate commerce in the
United States and the date of first use in each country of the Territory. At
Licensor’s request (and with reimbursement of Licensee’s reasonable
out-of-pocket costs and expenses as and to the extent provided below), Licensee
shall execute (but not create) and provide Licensor with all necessary
documents, assignments and signatures which Licensor may reasonably request for
the

 

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purpose of perfecting Licensor’s title to all intellectual property rights and
registrations thereof which are the property of Licensor, including, without
limitation, those rights which are owned by or assigned to Licensor pursuant to
this Agreement, and further shall provide any necessary written confirmation of
Licensor’s license to the Licensee’s Marks hereunder. Licensor will reimburse
Licensee for any reasonable out-of-pocket expenses Licensee incurs in providing
such documents, assignments and signatures, provided that Licensor has approved
such costs in advance in writing; provided, however, that this reimbursement
shall not apply to any assignments necessary from any sublicenses or third party
developers, designers or programmers of the Licensed Articles or related
materials or any other employees, agents or subcontractors involved in the
design, manufacture or development of the Licensed Articles. Licensee agrees to
secure assignments of all rights which any sublicensee and any third party
developers, designers or programmers of the Licensed Articles or related
materials or any other employees, agents or subcontractors involved in the
design, manufacture or development of the Licensed Articles may otherwise claim
in such intellectual property of Licensor. All uses by Licensee hereunder of the
trademarks included in the Licensed Properties and Licensor’s IP shall inure to
Licensor’s benefit. If, by operation of law, Licensee is deemed to have acquired
any ownership interest in any of Licensor’s IP, Licensee hereby assigns such
interest to Licensor. Upon Licensor’s request, and at no cost to Licensor,
Licensee shall provide Licensor with access to the Licensed Articles that use
the trademarks included in Licensor’s IP and provide adequate specimens of use
to support a trademark registration (i.e., photographs of the mark used on a
Licensed Article) for trademark registration purposes. Upon Licensor’s request,
and subject to regulatory constraints, Licensee shall provide Licensor with
copies, in such format as Licensor may reasonably request (including, without
limitation, digital or electronic) files of all artwork utilizing the Licensed
Properties or owned by or assigned to Licensor pursuant to this Agreement.
Licensee shall follow Licensor’s instructions for proper use of the Licensed
Properties in order that protection and/or registrations for the intellectual
property with respect thereto may be obtained or maintained. Licensor shall in
good faith consider any request by Licensee to attempt to procure or maintain
statutory copyright and trademark protection for elements of the Licensed
Property in the Territory, but the decision of whether to attempt to procure or
maintain such statutory copyright and trademark protection and the conduct of
any such attempts shall be in the sole and absolute discretion of Licensor and
at Licensor’s sole cost and expense.

(d) As a condition to the grant of the rights hereunder, Licensee agrees that it
will cause the Required Notices, and any other notice desired by Licensor, to
appear on or within each Licensed Article sold, leased, placed or distributed by
it

and on or within all advertising, promotional or display material bearing the
Licensed Properties.

(e) Licensee shall assist Licensor, and will be reimbursed by Licensor for
Licensee’s reasonable out-of-pocket costs and expenses as and to the extent set
forth below, to the extent necessary or desirable in the procurement of any
protection or to protect any of Licensor’s rights to the Licensed Properties and
Licensor’s IP, and Licensor, if it so desires, may commence or prosecute any
claims or suits in its own name or with the prior consent of Licensee in the
name of Licensee, or with the prior consent of Licensee or to the extent
permitted by applicable law join Licensee as a party thereto. Licensor will
reimburse Licensee for any reasonable out-of-pocket costs and expenses Licensee
incurs in rendering such assistance, provided that Licensor has approved such
costs in advance in writing. Licensee shall notify Licensor in writing of any
infringements or imitations by others of the Licensed Properties on articles
similar to the Licensed Articles which may come to Licensee’s attention, and
Licensor shall have the sole right to determine whether or not any action shall
be taken on account of any such infringements or imitations. Licensee shall not
institute any suit or take any action on account of any such infringements or
imitations, or otherwise institute any suit or take any action relating to the
Licensed Properties, without first obtaining the written consent of Licensor to
do so. Except with Licensor’s written consent, neither Licensee, its parent or
any of its subsidiaries or affiliates, will register or attempt to register
copyrights in any country or to register as a trademark, service mark, copyright
or other intellectual property right or registration including domain name
registration any of the Licensed Properties or any other intellectual property
owned by Licensor, or any trademark, word, symbol or design which is so similar
thereto as to suggest association with or sponsorship by Licensor or any of its
subsidiaries. In the event of breach of the foregoing, Licensee agrees, at its
expense and at Licensor’s request, immediately to terminate the unauthorized
registration activity and promptly to execute and deliver, or cause to be
delivered to Licensor, such assignments and other documents as Licensor may
require to transfer to Licensor all rights to the registrations, rights or
applications involved.

(f) Moral Rights. Where applicable and to the extent permissible by law, with
respect to the Licensor’s IP, Licensee hereby unconditionally and irrevocably
waives all moral rights in the Licensed Articles, and shall obtain all waivers
of moral rights and consents from any employee, agent, subcontractor or other
third party in relation thereto to the extent that such waivers or consents are
enforceable under applicable law.

(g) With respect to any patentable subject matter developed or owned by
Licensee, its Affiliates, and their respective successors and assigns prior to
the Date of Execution of this Agreement, or to which they have acquired rights
prior to the Date of Execution of this Agreement, derived from the

 

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MONOPOLY Licensed Property or from any other properties licensed by Licensee or
an Affiliate of Licensee from Licensor under a license agreement entered into
prior to the Date of Execution, whether patented or not, and all rights and
interests with respect thereto (such patentable subject matter, inventions,
material, rights and interests being referred to herein as the “Patent
Property”), Licensee hereby covenants and agrees on behalf of itself and its
Affiliates, and their respective successors and assigns, not to sue, in law,
equity or otherwise, or institute or maintain any lawsuit or other claim, action
or proceeding alleging any infringement or misappropriation of the Patent
Property against Licensor or an Affiliate of Licensor by virtue of Licensor or
its Affiliate licensing any trademark or copyright to a third party for use in
the making, selling, offering to sell, advertising, importing, reproduction or
use of any gambling product, service or device produced under a brand, trademark
or copyright license from Licensor or its Affiliate, and notwithstanding the
expiration of this Agreement. For clarification, such covenant not to sue
Licensor and its Affiliates applies only to a suit based on Licensor or its
Affiliate as a brand, trademark or copyright licensor and does not extend to or
preclude Licensee from asserting a lawsuit, claim, action or other proceeding
against Licensor or an Affiliate for such infringement where Licensor or an
Affiliate is involved other than as a brand, trademark or copyright (for
example, without implied limitation, where Licensor or an Affiliate is a
manufacturer, developer or distributor of an infringing gaming device).
Notwithstanding the foregoing, Licensee may join Licensor in any such lawsuit or
proceeding where it is necessary to do so, such as where Licensor is an
indispensible party or pursuant to a compulsory claim or counterclaim, but in
such a lawsuit or proceeding where Licensor must be joined as aforesaid,
Licensee shall not seek damages from Licensor related to the third party’s use
of the Patent Property. Nothing contained herein shall limit or restrict
Licensee from instituting or maintaining any lawsuit or other claim, action or
proceeding against any third party, including against a licensee of Licensor or
its Affiliates, including for any alleged infringement or misappropriation of
the Patent Property or any other intellectual property right.

6. WARRANTIES, INDEMNIFICATION AND PRODUCT LIABILITY INSURANCE

(a) Licensee’s Representations and Warranties. Licensee represents and warrants
that: (i) this Agreement has been duly authorized, executed, and delivered by
Licensee; (ii) it has the full power and authority to enter into and perform its
obligations hereunder; (iii) this Agreement constitutes the valid and binding
obligation of Licensee, enforceable in accordance with its terms; and (iv) the
making of this Agreement does not violate any agreement, grant of rights or
obligation existing between Licensee and any other person,

firm, or corporation. Licensee has not made and does not hereby make any
representation or warranty with respect to the quantity of placements (if any)
of Licensed Articles that Licensee may place. Licensor agrees that it will not
make any claim, nor shall any liability be imposed upon Licensee based upon any
contention that more placements could have been made or that better business
could have been done than what was actually made or done by Licensee or that
better prices, revenues or terms could have been obtained, but the foregoing
shall not be deemed to waive any claims or rights or remedies that Licensor may
have based on Licensee’s failure to perform or observe its expressed obligations
set forth in this Agreement.

(b) Licensor’s Representations and Warranties. Licensor represents and warrants
that: (i) this Agreement has been duly authorized, executed, and delivered by
Licensor; (ii) it has the full power and authority to enter into and perform its
obligations hereunder; (iii) this Agreement constitutes the valid and binding
obligation of Licensor, enforceable in accordance with its terms; (iv) the
making of this Agreement does not violate any agreement, grant of rights, or
obligation existing between Licensor and any other person, firm, or corporation;
(v) Licensor has not previously granted and will not grant any rights in the
Licensed Properties to any third party which conflict with the License Grant
granted to Licensee herein; (vi) Licensor is the registered owner of the
trademark registrations listed on Exhibit 5 attached hereto; (vii) Licensor is
the registered owner of the United States copyright registrations listed on
Exhibit 6 attached hereto; and (viii) [*] asserting that Licensor’s use of the
intellectual property in the Licensed Properties infringes the intellectual
property rights (including but not limited to any patents, copyrights,
trademarks and trade dress) of another person, firm or corporation and [*].

(c) Licensor hereby covenants and agrees to indemnify, defend, and hold
Licensee, and its Affiliates and subsidiaries, and their respective directors,
officers, shareholders, agents and employees, free, clear and harmless of and
from any and all third party claims, liabilities, judgments, damages, cost and
expenses including, without limitation, reasonable attorneys’ fees and expert
witness fees arising out of (i) actual or alleged copyright infringement based
on the Licensed Properties as supplied to Licensee by Licensor and used by
Licensee pursuant to the terms of this Agreement; (ii) actual or alleged
trademark

* 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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infringement by use of the trademarks contained in the Licensed Properties and
used by Licensee pursuant to this Agreement by a claimant [*]; (iii) actual or
alleged trademark infringement by use of the trademarks contained in the
Licensed Properties and used by Licensee pursuant to this Agreement by a
claimant which is a current or former licensee of a Licensed Property from
Licensor alleging superior rights to use of such trademarks in connection with
articles like the Licensed Articles based on such current or former licensee’s
use of such trademarks under its license agreement with Licensor; (iv) a claim
by a current or former third-party licensor to Licensor of the Licensed
Properties that such third-party is entitled to receive compensation in
connection with the use of the Licensed Properties in the Licensed Articles,
(v) [*]; and (vi) any and all uses of Licensee’s Marks by Licensor, its
Affiliates and their sublicensees, all of the above on the express condition
that the Licensee shall promptly notify Licensor in writing of any such claims
or suits.

(d) Licensee hereby covenants and agrees to indemnify, defend and hold Licensor,
and its Affiliates and subsidiaries, and their respective directors, officers,
shareholders, agents and employees, free, clear and harmless of and from any and
all third party claims, liabilities, judgments, damages, cost and expenses
including, without limitation, reasonable attorneys’ fees and expert witness
fees arising out of the manufacture, distribution, sale, lease, placement, use,
operation, marketing or advertising of the Licensed Articles (except to the
extent covered by Section 6(c) above), including, without limitation: (i) any
claim of actual or alleged trademark infringement by Licensee’s or a
sublicensee’s use of Licensee’s Marks or other trademarks contained in the
Licensed Articles, other than trademarks contained in the Licensor’s IP, and
excluding those listed in Exhibit 5, by a claimant alleging superior rights to
use such trademarks in connection with slot machines or other Gaming Devices or
Licensed Articles, (ii) any patent, process, idea, method or device used by
Licensee or a sublicensee in connection with the Licensed Articles (other than
with respect to patents utilized in the Licensed Properties), and (iii) any
claims, suits, losses and damages (including reasonable attorneys fees and
expenses) arising out of actual or alleged defects in the Licensed Articles,
whether defects in design, manufacture, or otherwise, all of the above on the
express condition that the Licensor shall promptly notify Licensee in writing of
any such claims or suits. Licensee agrees that it will obtain, at its own
expense, product liability insurance from a recognized insurance company,
providing adequate product liability insurance protection (at least in the
amount of Two Million United States Dollars (U.S. $2,000,000.00) for Bodily
Injury Liability and Property Damage Liability for each occurrence and Five
Million United States Dollars (U.S.

$5,000,000.00) in annual aggregate), effective throughout the Term and any
renewal, and for at least three (3) years after any expiration or termination of
the Agreement, naming the Licensee as named insured and Licensor as additional
insured against any claims, suits, losses or damages arising out of any such
actual or alleged defects in the Licensed Articles. As proof of such insurance,
a certificate of insurance naming Licensor as an additional insured will be
submitted to Licensor by Licensee for Licensor to verify Licensee’s compliance
with this paragraph before any Licensed Article is distributed or sold, and at
the latest, within thirty (30) days after the Effective Date of this Agreement.
Licensor shall be entitled to a copy of the then prevailing certificate of
insurance, which shall be furnished to Licensor by Licensee. As used in the
first and third sentences of this Section 6(d), “Licensor” shall also include
the officers, directors, agents and employees of Licensor, and its Affiliates.
The certificate of insurance shall include a provision to notify Licensor in
writing, prior to the effective date, of any non-standard amendment or early
cancellation of such insurance before the effective date thereof, other than in
connection with the annual renewals of such policies in the ordinary course of
Licensee’s business.

(e) In connection with any claim or suit described in Section 6(c) or 6(d), the
party indemnifying under this Section 6 (the “Indemnitor”) shall defend, contest
or otherwise protect the indemnified party (the “Indemnitee”) against such claim
or suit at the Indemnitor’s own cost and expense. The Indemnitee shall
reasonably cooperate with the Indemnitor, at the Indemnitor’s request and
expense, in the defense of the claim or suit and shall give the Indemnitor full
control over the defense and settlement thereof, provided that no such
settlement requiring other than payment of money damages may be made without the
Indemnitee’s consent, which will not be unreasonably withheld. In the event that
the Indemnitor fails timely to defend, contest or otherwise protect against a
claim or suit, the Indemnitee shall have the right to defend, contest or
otherwise protect against the same, and upon ten (10) days’ written notice to
the Indemnitor, make any compromise or settlement thereof and recover the entire
cost thereof from the Indemnitor, including without limitation, reasonable
attorneys’ fees, disbursement and all reasonable amounts applied as a result of
such suit or claim or compromise or settlement thereof. The obligations of the
parties under Sections 6(c), (d) and (e) shall survive the termination or
expiration of this Agreement.

* 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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7. MERCHANDISE AND MANUFACTURING STANDARDS

(a) Specifications. Licensee represents, warrants and covenants that the
Licensed Articles will meet the Specifications. “Specifications” means that the
Licensed Articles: (1) are of an acceptable quality, making them merchantable
and fit for their intended and foreseeable uses; (2) are of such style, quality,
and appearance as to be appropriate for and suited to their exploitation, to the
protection and enhancement of the Licensed Properties and the good will
pertaining thereto; (3) are designed, produced, sold and distributed in
accordance with all laws, rules and regulations applicable to the design,
manufacture, distribution, use and sale of the Licensed Articles, including,
without limitation, all gaming regulatory laws, rules and regulations, and those
set forth in Exhibit 3-1 attached hereto and incorporated herein by reference,
to the extent applicable to the Licensed Articles; and (4) do not display any
content utilizing the Licensed Property that has not been specifically disclosed
to and approved in writing by Licensor. Licensee shall conduct safety testing of
the Licensed Articles in accordance with Exhibit 3-2 attached hereto. In the
event that Licensee changes such safety testing, Licensee shall submit a
proposed revised Exhibit 3-2 to Licensor for its approval, which shall not be
unreasonably withheld. Upon request by Licensor, Licensee shall provide Licensor
with specific test data. Licensee shall maintain any test reports and other
safety testing records, as well as all engineering design records, for a period
of not less than two (2) years from the date that such document was created.

(b) Approvals.

(i) Licensee shall, before selling, leasing, placing or distributing any
Licensed Article, furnish to Licensor free of cost, for Licensor’s written
approval, concept documents, preliminary artwork (including, without limitation,
artwork for video screens, device cabinets and peripherals), designs,
specifications, and final artwork of such Licensed Article, provided however
that with respect to the hardware or external physical components of such
Licensed Articles, Licensee must furnish to Licensor for approval only those
components that display Licensed Properties or other Licensor’s IP. The quality,
content, style and appearance of such Licensed Articles shall be subject to the
written approval of Licensor. When seeking Licensor’s approval of the Licensed
Articles, rather than submitting the Licensed Articles, Licensee may elect to
submit artwork therefrom and videotape or other depictions thereof, but if
Licensor wishes to examine the Licensed Article itself, Licensee shall make the
same available for inspection and review by Licensor at Licensee’s Illinois
facilities.

(ii) Any item submitted to Licensor shall not be deemed approved unless and
until approved by Licensor in writing or electronically through the Hasbro
Property Group

Licensee Approval System or a successor system (collectively, “LAS”), provided
that any waiver or modification of a Licensor comment previously made in LAS may
be made electronically by email from Licensee. Licensor is not under any
obligation to review Licensee’s submission unless Licensee uses Licensor’s
approval form or through LAS. With respect to any item submitted by Licensee to
Licensor for approval under this Section 7(b), Licensor shall endeavor to
provide approval or disapproval of the submitted item within ten (10) business
days after receipt of the same, but in no event shall any item be deemed
approved unless and until approved by Licensor in writing or electronically as
set forth in the first sentence of this Section 7(b)(ii). Approval by Licensor
of Licensed Articles or any other item shall not constitute a waiver of
Licensor’s rights or Licensee’s duties and obligations under any other provision
of this Agreement, including, without limitation, Licensee’s obligations to
develop, sell and distribute the Licensed Articles in compliance with the
Specifications or Licensee’s obligations to defend, hold harmless, and indemnify
Licensor.

(iii) Sale, lease, placement or distribution by Licensee of any Licensed Article
which has not been specifically approved by Licensor as hereinabove provided
shall be deemed to constitute a material breach of this Agreement. If any
Licensed Articles or related materials distributed by Licensee fail materially
to conform with the samples or materials previously approved by Licensor, then
Licensor may elect, at is sole discretion, without limitation on any other
rights and remedies of Licensor, to do one or more of the following: (i) require
Licensee to terminate distribution of the Licensed Article or materials at
issue; (ii) terminate this Agreement in accordance with the provision of
Section 12(e) if Licensor provides the required notice and Licensee fails to
cure such default within the allotted time; and/or (iii) subject to the
provisions of this sentence and the following sentence, require that Licensee
bring any such non-complying Licensed Articles or materials into compliance
within thirty (30) days after receipt of written notice from Licensor, and the
failure of Licensee to demonstrate that any affected units of such Licensed
Articles or materials have been brought into compliance within such prescribed
period shall entitle Licensor to terminate this Agreement pursuant to the
provisions of Section 12(e) below. After Licensed Articles and related materials
have been approved pursuant to this paragraph, Licensee will not then change the
same in any material respect without Licensor’s prior written consent, and
Licensor shall not withdraw its approval of the same, unless the same shall be
defective or harmful, not in compliance with the Specifications, or subject to a
claim of infringement (other than a claim of infringement relating only to the
Licensee’s intellectual property). In no event shall Licensor be liable for
damages caused directly or indirectly by any such withdrawal of approval,
including but not limited to claims for lost profits, consequential damages, or
costs.

 

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(iv) As to the exercise by Licensor of its rights to approve the Licensed
Articles and any material relating thereto pursuant to this Paragraph 7(b) and
Sections 8 and 9 below, Licensor shall not unreasonably withhold or delay such
approval, and will take into account gaming industry regulations, standards and
practices and the technical limitations of the applications involved.

(c) Manufacturing Ethics and Approval of Manufacturers. Licensee acknowledges
that Licensor has a significant interest in ensuring that the Licensed Articles
are manufactured, distributed, and sold in accordance with the highest ethical
and business standards. Licensee’s, its Affiliates, or third-party
manufacturers’, printers’ or packagers’ (collectively “Manufacturers”)
facilities that produce components of the Licensed Articles that are branded
with Licensor’s IP shall be referred to herein as Facilities and such definition
shall supersede the definition of Facilities in Licensor’s Global Business
Ethics Principles. Licensee covenants and agrees that any Manufacturers’
Facilities comply and will remain in compliance throughout the Term with
Licensor’s Global Business Ethics Principles as modified in Section 7(e) of the
Basic Terms (hereinafter, as modified by Section 7(e) of the Basic Terms, the
“Principles”), attached hereto as Schedule C and incorporated herein by
reference. Licensee covenants and agrees that Licensor or its representative
shall have the right from time to time, with prior notice, to inspect and audit
any such Facilities, and such inspection and audit process may include, but
might not necessarily be limited to, a review of the Facility’s policies,
records and payroll documents, walkthrough of the entire Facility, and
confidential interviews with management and workers; provided, however, that
Licensor shall have no right to audit and inspect any such Facilities located in
the United States of America, unless Licensor has received an allegation that
such Facility is not in compliance with the Principles or Licensor otherwise has
reason to believe that such Facility is not in compliance with the Principles.
Licensor’s approval of any such Facility may be conditioned upon such Facility
being determined to be in compliance with the Principles. Licensee shall, prior
to production of any new Licensed Articles not already being produced under the
Pre-Existing Agreement and thereafter on an annual basis on or before each
anniversary of the date of this Agreement, provide to Licensor a written
disclosure of the name and location of the Facilities (including any such
Facilities currently approved under the Pre-Existing Agreement), and if
following Licensee providing such a written disclosure there is any change or
planned change of the name or location of such Facilities, then Licensee shall
give Licensor prompt written notice stating the changes or planned changes, and
any such new Facility shall be subject to approval as provided in this Agreement
prior to production. Licensee shall not engage any Facility that refuses to
consent to Licensor’s inspection and audit of such Facilities, and upon notice
from Licensor shall immediately terminate the services

of any such Facility that attempts to prevent any such inspection. Prior to
using any Facility Licensee must obtain Licensor’s written approval of such
Facility. Facilities approved under the Pre-Existing Agreement as of the
Effective Date shall be deemed approved under this Agreement as of the Effective
Date with respect to the continued manufacturing of previously approved Licensed
Articles; provided, however, that no such prior approval of Licensor shall be
required for Facilities located in the United States of America provided that
Licensee has provided a written disclosure of the use or intended use of such
Facility as provided above, unless Licensor has informed Licensee either that
Licensor has received an allegation that such Facility in the United States is
not in compliance with the Principles or Licensor has reason to believe such
Facility is not in compliance with the Principles. As part of the approval
process Licensee must submit to Licensor for Licensor’s review with respect to
each such Facility an audit or audits as specified below conducted by a
third-party auditor acceptable to Licensor reporting the level of compliance of
such Facility with the Principles; provided, however, that no such audit report
must be submitted with respect to any such Facilities located in the United
States of America (except that if at such time or thereafter Licensor has
received an allegation that such Facility is not in compliance with the
Principles or Licensor otherwise has reason to believe that such Facility is not
in compliance with the Principles, then Licensee must submit to Licensor such an
audit for Licensor’s review and approval). Where applicable, Licensee shall
submit either one such audit conducted within the last six-month period or two
such audits conducted within the last two (2) years. Licensee shall cooperate
with Licensor and endeavor to cause the Manufacturer to cooperate with Licensor
in addressing any issues or concerns raised by any audit. Licensor may condition
its approval of a Manufacturer or Facility on the submission of a corrective
action plan and submission of a third-party verification audit within three
(3) months from Licensor’s request. If a Manufacturer continues to use any
Facility approved by Licensor for production of components of the Licensed
Articles that are branded with Licensor’s IP, then Licensee shall submit to
Licensor for Licensor’s review annually no later than twelve (12) months from
the date of the prior audit submission an audit conducted within the prior year
by a third-party auditor acceptable to Licensor reporting the level of
compliance of the facility with the Principles; provided, however, that this
requirement shall not apply to any such Facilities located in the United States
of America, unless Licensor notifies Licensee that Licensor has received an
allegation that such Facility is not in compliance with the Principles or
Licensor otherwise has reason to believe that such Facility is not in compliance
with the Principles. The submission of such audits and Licensor’s approval of
any Manufacturer or Facility shall not be deemed to waive or release the other
provisions of Section 7(c) above, including, without

 

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limitation, the right of Licensor or its representatives to inspect and audit
Facilities.

(d) In the event that Licensee is contacted by any governmental body or agency
(including but not limited to the United States Food And Drug Administration,
Federal Trade Commission, Consumer Product Safety Commission, Federal
Communications Commission, the U.S. Department of Justice, Health Canada, or any
federal, state, or provincial attorney general’s office) concerning any issue of
product safety with respect to the Licensed Articles involving a serious injury
(that is, an injury requiring hospitalization or emergency room treatment) or
death, then Licensee shall so notify Licensor within forty-eight (48) hours of
Licensee’s executive management becoming aware of such contact, and thereafter
upon request of Licensor, except as may be otherwise required by law,
confidentiality requirements and as subject to all applicable privileges,
Licensee shall keep Licensor generally informed of its response to any such
governmental body or agency with respect to such matter subject to Licensee’s
judgment giving due consideration to issues of potential liability, evidence and
discovery.

(e) For Facilities located in the United States of America, Licensor agrees
that:

(i) The second sentence of Paragraph 1 of the Principles shall be deemed
complied with if all employment, including overtime, is in compliance with
applicable law.

(ii) Paragraph 6 of the Principles, “Communication of Principles” shall be
deemed complied with if information with respect to employee rights, working
hours and working conditions is provided to employees in compliance with
applicable law.

(iii) in the second paragraph of Paragraph 3 of the Principles shall be deemed
complied with if working hours and overtime are provided and compensated in
compliance with applicable law.

(iv) Paragraphs 10 of the Principles shall be deemed complied with if Licensor
complies with the provisions of Section 7(c) above with respect to allowing
inspection and audit of Facilities, providing audit reports, and the taking of
corrective actions as and to the extent required by Section 7(c) above.

(v) Paragraph 11 of the Principles shall be complied with if such certification
is provided with respect to Facilities owned and operated by Licensee, and for
Facilities not owned and operated by Licensor audit reports are provided to the
extent required by Section 7(c) above.

8. LABELING; ADVERTISING MATERIAL APPROVALS

(a) Labeling. As a condition to the grant of rights hereunder, Licensee agrees
that it will cause to appear on or

within each Licensed Article sold, leased, placed or distributed by it and on or
within all advertising, promotional or display material bearing any Licensed
Property, the applicable Required Notice (or a shorter or alternative notice as
approved by Licensor) and any other notice desired by Licensor, and where such
article or advertising, promotional or display material bears a trademark or
service mark of Licensor, appropriate statutory notice of registration thereof.
It is understood that, in the event that any change or changes in the foregoing
notices shall be required, such change or changes shall be instituted within
ninety (90) days on a running change, go forward basis only after Licensor gives
written notice to Licensee of the requested change, and shall not affect
Licensee’s inventory, purchase commitments, or parts or product in process
existing at the end of such ninety day period and bearing the notice referenced
above; provided, however, that no such change shall be instituted in the
software of the Licensed Articles until Licensee elects to submit a new revision
of the software for the necessary regulatory approval, and then such change
shall be instituted when and where such approval is received and such revision
is incorporated into the Licensed Articles. Licensee shall have the right to
affix in or on the Licensed Articles and related materials its own notices,
legends and markings, as well as those of its third party licensors and
developers, those required by law or those required to indicate compliance with
regulatory, safety or quality standards (e.g. Underwriters’ Laboratory markings)
or as a public service, subject to Licensor’s approval, not to be unreasonably
withheld or delayed.

(b) Approvals. A sample of each and every tag, label, imprint, storyboard, copy
and layout or other device containing any such notice and all advertising,
promotional or display material (including, without limitation, Internet or
website materials) bearing a Licensed Property shall be submitted by Licensee to
Licensor for its written approval prior to use by Licensee. Licensee must use
Licensor’s approval form or process with each submission for Licensor’s
approval.

9. PROMOTIONAL MATERIAL

(a) In all cases where Licensee desires artwork involving Licensed Articles to
be executed, the cost of such artwork and the time for the production thereof
shall be borne by Licensee. All artwork and designs involving the Licensed
Properties, or any reproduction thereof, shall be subject to prior written
approval of Licensor.

(b) Licensor shall have the right, but shall not be under any obligation, to use
the Licensed Properties so as to give the Licensed Properties, Licensor and/or
Licensor’s programs full and favorable prominence and publicity; provided,
however, that uses of the Licensee’s name and the Licensed Articles shall be
subject to Licensee’s consent, such consent not to be unreasonably withheld or
delayed.

 

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(c) Licensee agrees not to offer for sale or lease or advertise or publicize any
of the Licensed Articles on radio, broadcast (which term “broadcast” shall not
include internet advertising), print or television without the prior written
approval of Licensor. For the avoidance of doubt, notwithstanding the foregoing
parenthetical stating that the term “broadcast” does not include internet
advertising, the content of internet advertising with respect to the Licensed
Articles or using the Licensed Properties is subject to Licensor’s prior written
approval as provided in this Agreement. Licensee also agrees to submit to
Licensor for advance approval designed sketches of all advertising and other
publicity material which Licensee proposes to use in connection with the
promotion, sale, distribution, and leasing of the Licensed Articles. Licensee
shall not use, or authorize the use of, any Licensed Property in connection with
the promotion, provision or endorsement of any products, services, forums
(including on a website) or activities that: are illegal; are defamatory or
demean, ridicule or attack individuals on the basis of age, color, national
origin, race, religion, sex, sexual orientation or disability; are pornographic,
lewd or obscene; or promote or endorse illegal drug use, or advertise the
Licensed Articles on any such website.

(d) Upon request of Licensee, not more than two (2) times in any calendar year
for each Licensed Property, Licensor agrees to provide Licensee with information
and materials regarding the brand awareness, affinity, and demographic
information regarding consumers, users and purchasers of the Licensed Property
board games, to the extent that Licensor has such information and materials.
Such information shall be treated as Confidential Information of Licensor.
Licensor shall not be required to provide Licensee with sales data related to
the Licensed Property board games.

10. DISTRIBUTION

(a) Licensee agrees that during the Term of this Agreement it will manufacture,
distribute, lease and sell the Licensed Articles and that it will make and
maintain arrangements for the distribution of the Licensed Articles, consistent
with its customary practices for goods or services of like kind and in
accordance with its reasonable business judgment, exercised in good faith.

(b) Licensee agrees that it will sell and distribute the Licensed Articles
outright or distribute them otherwise as contemplated by Section 2.1(a) of the
Summary consistent with its customary business practices and only within the
Channels of Distribution. Licensee shall not sell or distribute Licensed
Articles to any entity whose sales or distribution of the Licensed Articles are
or will be made for publicity or promotional tie-in purposes, combination sales,
premiums, give-aways, or similar methods of merchandising, or who engages in
deceptive, illegal, or immoral business practices as to the use of the Licensed
Articles. For purposes of this paragraph, the term “premium” shall include, but
not be

limited to, free or self-liquidating items offered to the public in conjunction
with the sale or promotion of a product or service, or any similar scheme or
device, the prime intent of which is to use the Licensed Articles in such a way
as to promote, publicize and/or sell services (other than use of the Licensed
Articles) and/or product(s) other than the Licensed Articles. In the event any
sale or lease is made at a special price to any of Licensee’s Affiliates or to
any other person, firm or corporation related in any manner to Licensee or its
officers, directors or major stockholders as the end user, and not as part of
interim steps of Licensee’s distribution prior to the sale or lease to legal
gaming establishments for use by end users, there shall be a royalty paid on
such sale or lease based upon the price or lease terms generally charged the
trade by Licensee if price or lease terms is part of the calculation of the
royalty.

11. RECORDS

Licensee agrees to keep accurate books of account and records covering all
transactions relating to its compliance with Sections 2 (including the
referenced definitions and provisions contained in the Summary), 6(b) (as it
relates to insurance), and 14 of these Basic Terms and Section 3 of the Summary,
and Licensor and its duly authorized certified public accountants or other
representatives shall have the right, but not more than once per calendar year,
on at least thirty (30) days written notice and during Licensee’s normal
business hours to an inspection of said books of account and records and of all
other documents, materials, and premises in the possession or under the control
of Licensee reasonably necessary to determine compliance with the
above-referenced terms and provisions of this Agreement and shall have free and
full access thereto for said purposes and for the purpose of making extracts
therefrom and ensuring Licensor of Licensee’s compliance with the
above-referenced terms and provisions of this Agreement. All such books and
records related to the proper reporting and paying of royalties shall be
maintained for at least [*] following the month to which they pertain. Any such
audits shall be limited to no further back than the [*] prior to the calendar
quarter in which the Licensor gives notice of its intent to conduct the audit
(for example, if Licensor gives notice in [*], the audit shall be limited to no
further back than the [*] prior to then (that is, [*]. Licensor shall report
audit findings to Licensee within six (6) months after the date that audit
starts. In the event that Licensor or its duly authorized certified public
accountants shall discover a royalty payment discrepancy of [*] or more pursuant
to any such examination, Licensee shall pay to Licensor the fee for such
examination, plus reasonable out of pocket costs. The fee for said examination
shall be [*]

* 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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[*] per day, but in no event shall Licensee be charged in excess of [*] for any
individual examination. Royalties found to be due as a result of Licensor’s
examination of the Licensee’s books of accounts should be paid immediately with
interest at an interest rate of [*], or the highest rate permitted by law,
whichever rate is lower, from the date the royalty amount should have been paid
to Licensor until paid.

12. TERMINATION

(a) Licensor may withdraw certain rights granted to Licensee as provided in
Sections 3.1, 3.2, and 3.3 of the Summary above.

(b) If in any calendar year of the Term Licensee fails to lease, sell, or
otherwise provide any Licensed Articles and derives no revenue from the use or
operation thereof, Licensor may terminate this license by giving notice of
termination to Licensee. Such notice shall be effective when mailed by Licensor.

(c) If Licensee becomes insolvent, or if a petition in bankruptcy or for
reorganization is filed by or against it (and in the case of a filing against
it, such filing is not dismissed within ninety (90) days), or if any insolvency
proceedings are instituted by or against it under any state or federal law (and
in the case of a filing against it, such filing is not dismissed within ninety
(90) days), or if it makes an assignment for the benefit of its creditors, or if
a receiver is appointed for its property and business and remains undischarged
for a period of ninety (90) days, or if it liquidates its business in any manner
whatsoever, or if any distress, execution or attachment is levied on
substantially all of its assets and remains undischarged for a period of ninety
(90) days, Licensor shall have the right, if it so elects, to terminate this
Agreement and the license hereby granted, upon thirty (30) days’ notice in
writing to Licensee. Upon the expiration of such thirty (30) days, this
Agreement and the license hereby granted shall cease and terminate.

(d) If Licensor becomes insolvent, or if a petition in bankruptcy or for
reorganization is filed by or against it (and in the case of a filing against
it, such filing is not dismissed within ninety (90) days), or if any insolvency
proceedings are instituted by or against it under any state or federal law (and
in the case of a filing against it, such filing is not dismissed within ninety
(90) days), or if it makes an assignment for the benefit of its creditors, or if
a receiver is appointed for its property and business and remains undischarged
for a period of ninety (90) days, or if it liquidates its business in any manner
whatsoever, or if any distress, execution or attachment is levied on
substantially all of its assets and remains undischarged for a period of ninety
(90) days, Licensee shall have the right, if it so elects, to terminate this
Agreement and the license hereby granted, upon thirty (30) days’ notice in
writing to Licensor. Upon the expiration of such thirty (30) days, this
Agreement and the license hereby granted shall cease and terminate. In the event
that Licensee elects not to

terminate the Agreement pursuant to this Section, and Licensor or a
debtor-in-possession or trustee managing Licensor’s bankruptcy estate elects to
reject this Agreement pursuant to Section 365 of the U.S. Bankruptcy Code, and
Licensee elects to continue licensing the intellectual property under this
Agreement pursuant to Section 365(n) of the U.S. bankruptcy Code, the
intellectual property which Licensee may continue licensing pursuant to and, as
if fully subject to Section 365(n) shall include the rights to use the
trademarks and trade dress that are included within the Licensed Properties
hereunder, notwithstanding any provisions of the bankruptcy code to the
contrary.

(e) If Licensee shall violate any of its material obligations under the terms of
this Agreement, including, without limitation, if this Agreement or any rights
and duties hereunder shall be assigned, mortgaged, sublicensed or otherwise
encumbered by Licensee or by operation of law, including, without limitation, a
Constructive Assignment, without the prior written consent of Licensor as
provided in Section 20 below or otherwise in violation of this Agreement (except
as provided in Section 20.2 below where Licensee exercises its right to
terminate this Agreement and proceed with or continue in existence a
Constructive Assignment), Licensor shall have the right to terminate the license
granted in this Agreement upon thirty (30) days’ written notice to Licensee
stating with particularity the violation(s) of its obligations, and such notice
of termination shall become effective unless Licensee shall completely remedy
the stated violation(s) within the thirty (30) day period and provide reasonable
evidence to Licensor that such violation(s) has been remedied.

(f) If Licensor shall violate any of its material obligations under the terms of
this Agreement, Licensee shall have the right to terminate this Agreement upon
thirty (30) days’ written notice to Licensor stating with particularity the
violation(s) of its obligations, and such notice of termination shall become
effective unless Licensor shall completely remedy the stated violation(s) within
the thirty (30) day period and provide reasonable evidence to Licensee that such
violation(s) has been remedied.

(g) Termination of the license under the provisions of Section 12 shall be
without prejudice to any rights which either party may otherwise have against
the other, including the right to recover royalties due hereunder or damages
caused it by the other’s breach, but subject to Section 30 below. In the event
of a material breach by Licensor (including wrongful termination or withdrawal
or rights) not cured within the cure period set forth in Section 12(f), in
addition to any other rights and remedies available to it under law, equity or
otherwise, Licensee may seek a remedy of specific performance of the License
Grant, whether to grant such remedy to be

* 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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determined by the court. Upon the termination of this license, notwithstanding
anything to the contrary herein, all royalties on sales theretofore made or
revenues theretofore earned in excess of the applicable previously paid Advance
Payments, shall become immediately due and payable, and shall not be repayable.
In the event of termination on account of Licensee’s material breach not cured
in accordance with the requirements set forth in Section 12(e), and such
material breach involved (i) Licensee’s failure to make and report any payments
when due (including, without limitation, royalties, Advance Payments, and [*]
Guarantee payments), (ii) failure to maintain the required records and allow
Licensor audit rights as provided in Section 11 above, (iii) the distribution or
use of unapproved products or the distribution of Licensed Articles outside the
License Grant (for example, without limitation, outside the Territory or
Channels of Distribution or outside of the license rights), (iv) failure to
comply with the provisions of Section 7(c) with respect to the Global Business
Ethics Principles and Manufacturers, (v) failure to maintain the required
insurance and provide a insurance certificates with respect to the same, or
(vi) if this Agreement or any rights and duties hereunder shall be assigned,
mortgaged, sublicensed or otherwise encumbered by Licensee or by operation of
law, including, without limitation, a Constructive Assignment, without the prior
written consent of Licensor as provided in Section 20 below or otherwise in
violation of this Agreement (except as expressly provided for in Section 20.2
where Licensee exercises its right to terminate this Agreement and proceed with
or continue in existence a Constructive Assignment), then the balance of the
Total Royalty Guarantee, including, without limitation, any [*] Guarantee or
Advance Payment amounts with a due date subsequent to the date of termination,
shall become immediately due and payable on the date of termination. In the
event of termination on account of Licensor’s material breach not cured in
accordance with the requirements set forth in Section 12(f), then Licensee shall
be relieved of any and all Advance Payments and [*] Guarantee payments that are
not due and owing as of the date of the termination.

13. STATEMENTS PRIOR TO AND UPON TERMINATION OR EXPIRATION; LIMITS ON SALES IN
LAST [*]

(a) Between [*] of [*] of the Term (for example, assuming the Term is not
extended for the Extension Term, between [*]), and again within [*] after such
expiration (or, in the event of termination of this license, [*] after receipt
of notice of termination or the happening of the event which terminates this
Agreement where no notice is required), Licensee shall furnish to Licensor a
statement showing the number and description of Licensed Articles on hand or in
process of manufacture. Licensor shall have the right to take a physical
inventory to ascertain or verify such inventory and statement, and refusal by
Licensee to submit to such physical inventory by Licensor shall forfeit
Licensee’s right to dispose of such inventory

as provided in Section 14 hereof, Licensor retaining all other legal and
equitable rights Licensor may have in the circumstances.

(b) In each of the last [*] of the Term, sales of Licensed Articles shall be
subject to the following limitations: (i) such sales in a Region of a Licensed
Article using a Licensed Property during each such [*] may not be in a quantity
more than [*] than the average quantity of Licensed Articles using the same
Licensed Property [*] in that Region per [*] over the [*] prior to such year,
and (ii) such sales in a Region of Licensed Articles using a Licensed Property
during each such [*] may not be at a price [*] the average selling price of sold
Licensed Articles using the same Licensed Property [*] sold in that Region over
the [*] prior to such [*]. If Licensee has made no sales of Licensed Articles
using any particular Licensed Property (other then the MONOPOLY Licensed
Property) or [*], then Licensee may sell such Licensed Articles using the
particular Licensed Property or [*] only with the express written waiver of
Licensor and in such case subject to such terms and restrictions as Licensor
sets forth in the written waiver.

14. DISPOSAL OF STOCK AFTER EXPIRATION; CONTINUATION OF LEASES

(a) After expiration of the Term of this Agreement, Licensee, except as
otherwise provided in this Agreement, may dispose of Licensed Articles which are
completed and on hand (or are in the process of manufacture under order from a
third-party customer of Licensee) at the time of expiration for a period of [*]
(hereinafter, the “Sell-Off Period”), provided that (i) royalties with respect
to sales during the Sell-Off Period are paid and statements are furnished for
that period in accordance with Section 2 of the Summary and Sections 2(c) and
(d) of the Basic Terms and are not credited against or offset by any Total
Royalty Guarantee or [*] Guarantee, (ii) Licensed Articles using the same
Licensed Property [*] had been offered for sale and shipped prior to the

 

 

 

 

 

 

 

 

 

 

 

 

 

* 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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expiration of the Term, (iii) such sales are restricted to the Territory and
within the Channels of Distribution, (iv) such sales in a Region of Licensed
Articles using the same Licensed Property [*] during the Sell-Off Period may not
be in a quantity more than [*] than the average quantity for a [*] period of
sold Licensed Articles using the same Licensed Property [*] in that Region
calculated using such sales over the [*] period prior to expiration, and
(v) such sales in a Region of Licensed Articles using the same Licensed Property
[*] during the Sell-Off Period may not be at a price more than [*] the average
price of sold Licensed Articles using the same Licensed Property [*] in that
Region over the [*] period prior to expiration. If Licensee has made no sales of
Licensed Articles using any particular Licensed Property (other then the
MONOPOLY Licensed Property) or [*], then Licensee may sell such Licensed
Articles using the particular Licensed Property [*] in the Sell-Off Period only
with the express written waiver of Licensor and in such case subject to such
terms and restrictions as Licensor sets forth in the written waiver. With
respect to any Licensed Articles that as of the date of expiration of the Term
are leased to a third party or have been sold to a third party but are subject
to a recurring payment obligation (for example, without limitation, payment for
continuing software support), such lease agreement or other agreement with
recurring payment obligation may continue for its previously agreed upon
contract term, provided that in no event shall it continue for longer than [*]
after the date of expiration of the Term of this Agreement and no such agreement
may be extended or renewed after the date of expiration of the Term, and at the
end of such [*] or shorter period, Licensee shall convert or remove the Licensed
Articles such that the machines have been stripped of and do not contain,
display, use or reproduce the Licensed Properties or any intellectual property
owned by or assigned to Licensor pursuant to this Agreement. Such Licensed
Articles that were leased or subject to a recurring payment obligation may not
be sold at or during the foregoing period of up to [*] (unless such Licensed
Articles were subject to a customer purchase option entered into in the normal
course of business prior to the expiration date of the Term of this Agreement,
in which event such Licensed Articles may be sold only in accordance with the
purchase option terms during the Sell-Off Period and subject to the restrictions
contained herein with respect to quantities, price, Licensed Property and, [*]
and such sales shall count toward the quantity restrictions set forth above).
The foregoing provisions with respect to allowing sell-off of Licensed Articles
and continuation of lease, participation and other recurring revenue agreements
shall apply in the event of the withdrawal of rights under the License Agreement
Summary, Sections 3.1, 3.2, and 3.3, with respect to the Licensed Articles that
are the subject of the rights being withdrawn. Licensee shall have a continuing
obligation to pay royalties with respect to any revenue for Licensed Articles
that is earned after the expiration or termination of this Agreement

or after the withdrawal of such rights, such royalties to be paid and statements
with respect thereto provided in accordance with Section 2 of the Summary and
Sections 2(c) and (d) of the Basic Terms, provided such royalties may not be
credited against or offset by any Total Royalty Guarantee or [*] Guarantee. No
such inventory sell off during the Sell-Off Period or continuation of leases as
provided hereinabove shall be permitted in the event of termination of this
Agreement by Licensor in accordance with Paragraph 12 of the Basic Terms above,
including but not limited to termination based on failure of Licensee to pay
when due royalties or any portion of the Total Royalty Guarantee, including any
[*] Guarantee payment, failure of Licensee to affix notices of copyright,
trademark, or service mark as specified in this Agreement, or the sale, lease or
distribution of Licensed Articles that have not been approved by Licensor
pursuant to this Agreement or that do not conform to the quality and style of
the articles approved by Licensor pursuant to Section 7 of the Basic Terms, or
by reason of termination for any other causes or events set forth in Section 12
above. In the event of such termination by Licensor by reason of any cause or
event contained in Section 12, Licensee, its receivers, representatives,
trustees, agents, administrators and successors shall have no further right to
sell, lease, exploit or in any way deal in or with any of the Licensed Articles,
or any advertising or promotional matter or materials relating thereto, and all
licenses of Licensed Articles shall terminate. Any inventory of Licensed
Articles remaining after expiration or termination of this Agreement and any
permitted Sell-Off Period shall be destroyed, and a certificate of such
destruction shall be promptly provided to Licensor by Licensee; provided,
however, that the foregoing shall not require Licensee to destroy any machine or
components thereof which have been stripped of and do not contain, display, use
or reproduce the Licensed Properties or any intellectual property owned by or
assigned to Licensor pursuant to this Agreement or otherwise.

(b) Throughout the Term and any Sell-Off Period, Licensee agrees to refrain from
“dumping” the Licensed Articles in the market place. “Dumping” shall mean the
distribution of Licensed Articles at volume levels significantly above
Licensee’s immediately preceding levels with respect to the Licensed Articles
and at price levels or license fees or charges so far below prior levels and/or
industry

 

 

 

 

* 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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norms (including but not limited to lease or placement at prices that would not
allow for recapture of the cost of the Licensed Articles) with respect to the
Licensed Articles as to disparage and/or devalue the Licensed Property. Licensee
shall not build-up inventory of Licensed Articles in anticipation of selling
such Licensed Articles during the Sell-Off Period. Nothing herein shall be
construed as granting Licensor the right to set or approve Licensee’s pricing,
and nothing shall be deemed to restrict Licensee’s ability to set prices in its
own unfettered discretion.

15. EFFECT OF TERMINATION OR EXPIRATION

Upon and after the expiration or termination of this license, and any applicable
Sell-Off Period, all rights granted to Licensee hereunder shall forthwith revert
to Licensor, and Licensee will refrain from further use of the Licensed
Properties or Licensor’s IP or any further reference to it, direct or indirect,
in connection with the manufacture, sale, lease or distribution of Licensee’s
products, except as provided in Paragraph l4.

16. LICENSOR’S REMEDIES

(a) Licensee acknowledges that its failure (except as otherwise provided herein)
to cease the manufacture, sale, lease or distribution of the Licensed Articles
at the termination or expiration of this Agreement (or any applicable Sell-Off
Period) will result in immediate and irremediable damage to Licensor. Licensee
acknowledges and admits that there is no adequate remedy at law for such failure
to cease manufacture, sale, lease or distribution, and Licensee agrees that in
the event of such failure, Licensor shall be entitled to equitable relief by way
of temporary and permanent injunctions and such other further relief as any
court with jurisdiction may deem just and proper.

(b) Resort to any remedies referred to in this Agreement shall not be construed
as a waiver of any other rights and remedies to which either party is entitled
under this Agreement or otherwise.

17. EXCUSE FOR NONPERFORMANCE

Neither party shall have any liability for its delay or failure to perform under
this Agreement (provided, however, that this shall not apply to obligations to
pay money) where caused by national emergency, war, fire, flood, strike, riot,
materials shortages, transportation failure or other force majeure beyond its
control; provided that if such failure or delay shall continue for a period of
one hundred twenty (120) days or more, the other party may terminate this
Agreement by giving written notice, in which case the provisions of Section 14
(disposal of stock after expiration; continuation of leases) would apply. In
such events, all royalties on sale, lease, placement, and distribution
theretofore made shall become immediately due and payable (subject to being off
set and applied against previously paid Advance Payments), and no advance,
minimum royalties, or royalty guarantee payments shall be repayable, and

no Advance Payment or [*] Guarantee with a due date after the date of
termination shall become due or owing. For the avoidance of doubt, the foregoing
does not apply to Licensee’s failure to obtain or maintain any licenses or
regulatory approvals with respect to the sale, lease, placement or distribution
of the Licensed Articles in any jurisdiction.

18. NOTICES

All notices required or permitted hereunder by either party to the other shall
be in writing and shall be delivered personally, sent by certified or registered
mail, return receipt requested, or by reputable overnight courier, postage or
other delivery charges prepaid, to the addresses shown on the Summary or to such
other address as either party may from time to time designate by notice as
required hereby. Notices shall be deemed to have been duly given on the first to
occur of either: (i) the date delivered personally; (ii) the date shown on the
return receipt or on other evidence of delivery; or (iii) three (3) business
days after being deposited in the mail if sent by certified or registered mail
or the first (1st) business day after being delivered to a reputable overnight
courier if sent by reputable overnight courier.

19. NO JOINT VENTURE

This Agreement does not and will not be deemed as establishing a relationship
between the parties as partners or joint venturers, nor shall any similar
relationship be deemed or construed to exist between them. Nothing herein shall
be construed as constituting either party as the other’s agent or as authorizing
either party to bind or incur financial or other obligations in the other’s
name. The parties acknowledge and agree that the rights and powers retained by
Licensor to approve the Licensed Articles and advertising, display and
promotional material using the Licensed Properties or otherwise to approve of or
inspect Licensee’s activities, all as herein provided, are retained because of
the necessity of protecting Licensor’s copyrights, trademarks, properties and
property rights generally, and specifically to conserve the good will and good
name of Licensor’s company and of the Licensed Properties.

20. RESTRICTIONS ON ASSIGNMENT AND SUBLICENSING BY LICENSEE

20.1 This Agreement and all rights and duties hereunder are personal to Licensee
and shall not be assigned, mortgaged, sublicensed or otherwise encumbered by
Licensee or by operation of law, without the prior written consent of Licensor,
to be granted or withheld in Licensor’s sole and absolute discretion, except as
otherwise provided below in

* 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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Section 20.5 with respect to certain sublicenses and as provided in Section 20.2
with respect to certain proposed Constructive Assignments. For purposes of this
Agreement, the terms “assigned” or “assignment” shall, in addition to the
transfer of this Agreement or the rights or obligations hereunder (other than
permitted sublicenses), whether voluntarily, involuntarily, by operation of law
or otherwise, be deemed to include:

(i) a sale or other transfer by Licensee of all or substantially all of its
assets;

(ii) the merger, amalgamation, consolidation or reorganization of Licensee into
or with another corporation or other entity (other than an Affiliate of Licensee
that is not a Competitor, as defined below), as a result of which Licensee is
not the surviving corporation, provided that in the event of such a transaction
with an Affiliate that is not a Competitor, then as of the effective date of the
transaction, such Affiliate shall be deemed to be Licensee and shall be subject
to the restrictions on assignment and provisions with respect to assignment of
this Section 20 including without limitation, termination of this Agreement in
the event that Licensor properly withholds its consent to such an assignment;

(iii) any transaction (including any of the foregoing transactions as well as
any in which Licensee is the surviving corporation) which, whether by way of
sale, gift or other transfer, results in an individual, entity or group (within
the meaning of Section 13(d)(3) or 13(d)(5) of the Securities Exchange Act of
1934, as amended (the “1934 Act”), acquiring, in the aggregate, more than a [*]
ownership of the combined voting power of all outstanding voting stock of
Licensee, provided however that if the individual, entity or group acquiring
such ownership does not disclose under item 4 of Schedule 13D or any amended
Schedule 13D filed pursuant to Section 13d of the 1934 Act (or comparable
provision of any successor form), any plan or proposal relating to or that would
result in (A) any extraordinary corporate transaction such as a merger,
reorganization or liquidation involving the Licensee, (B) a sale or transfer of
a material amount of assets of the Licensee, (C) a change in the then present
board of directors or senior management of Licensee, (D) any material change in
the Licensee’s business or corporate structure or (E) any action similar to
those described in the foregoing clauses (A) – (D), then the acquisition of such
percentage ownership of the combined voting power of all outstanding voting
stock of Licensee shall not be deemed an assignment until such individual,
entity or group acquires more than [*] of the combined voting power of all
outstanding voting stock of Licensee, and provided further that the acquisition
of voting stock of Licensee in the specified percentages by an Affiliate of
Licensee (provided such Affiliate is not a Competitor) shall not be deemed an
assignment, but in such event, then such Affiliate shall thereafter also be
deemed to be included in the term “Licensee” for purposes of this Section 20 and
shall be subject to the restrictions on assignment and provisions with

respect to assignment of this Section 20, including without limitation,
termination of this Agreement in the event that Licensor properly withholds
consent to such an assignment, or

(iv) the liquidation or dissolution of Licensee.

Any assignment under clauses (i), (ii) or (iii) of this Section 20.1 shall be
considered a constructive assignment (“Constructive Assignment”). Licensee shall
give written notice to Licensor within ten (10) business days after Licensee’s
executive management becomes aware of: (a) the filing of any Schedule 13D with
respect to Licensee, including any amended Schedule 13D, or (b) the acquisition
in the aggregate by any individual, entity or group of more than [*] ownership
of the combined voting power of all outstanding voting stock of Licensee
(whether or not a Constructive Assignment) or more than [*] ownership of the
combined voting power of all outstanding voting stock of Licensee. For purposes
of this Section 20.1, “Licensee” shall be deemed to include WMS Industries Inc.,
and accordingly, without implied limitation, a Constructive Assignment with
respect to WMS Industries Inc. shall be subject to the provisions of this
Section 20, including, without limitation, Section 20.2 below.

20.2 In the event of any such proposed assignment covered by this Section 20,
Licensee shall give written notice to Licensor requesting Licensor’s consent to
such assignment. In connection with any such proposed assignment, Licensee shall
provide to Licensor a statement as to whether the proposed assignment is a
Constructive Assignment as well as information (to the extent such information
is available to Licensee) reasonably necessary for Licensor to evaluate the
proposed assignment, including, without limitation, with respect to the proposed
assignee, its management, and its ownership, including its financial condition
and business operations. Licensor shall provide notice of its consent to the
proposed assignment or notice of its withholding of consent to such assignment
within thirty (30) days of Licensee’s written notice requesting Licensor’s
consent to such assignment, but in no event shall consent to be deemed to have
been given by Licensor’s failure to give notice of its consent or withholding of
consent within the required thirty (30) day time period.

In connection with a proposed Constructive Assignment, Licensor shall not
unreasonably withhold its consent and, in the event that it withholds consent,
shall provide Licensee with a written statement explaining the basis for
withholding consent. In connection with any proposed assignment other than a
Constructive Assignment, Licensor may withhold its consent to such proposed
assignment in its sole and absolute discretion. In no event shall Licensor’s
consent to a proposed Constructive Assignment be

* 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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conditioned upon a renegotiation of or change in the. material terms of this
Agreement or additional consideration other than the warrant as set forth below.

In the event that Licensor withholds its consent to a Constructive Assignment,
Licensee may, by written notice to Licensor given no later than thirty (30) days
after receipt of Licensor’s notice withholding consent, terminate this
Agreement. In the event that Licensee timely gives notice of such termination,
then Licensee may proceed with the Constructive Assignment without being deemed
to be in breach of this Agreement and this Agreement shall terminate effective
as of the date of Licensee’s notice of termination, in which case: (a) any
unpaid Advance Payments with due dates following the date of termination shall
become immediately due and payable by Licensee to Licensor on the date of
termination, and (b) the provisions of Section 14 of the Basic Terms (Disposal
of Stock After Expiration; Continuation of Leases) shall apply, provided,
however, the royalties earned on such placements pursuant to Section 14 shall be
applied and off-set against the [*] Guarantee and Advance Payments, for the [*]
in which such royalties are earned, including those paid as set forth
immediately above (any such off-set royalties being referred to herein as
“Post-Termination Offset Royalties”). For example, if the Agreement is
terminated under this Section 20.2 in [*] and Licensee earns royalties during
the sell-off period in [*], such royalties shall be offset against the [*]
Guarantee for [*] and royalties earned in [*] shall be offset against the
accelerated [*] Guarantee and Advance Payments for [*], that were previously
paid or paid at the time of termination.

If such Constructive Assignment is to any entity other than a Competitor,
Licensor shall be obligated to use its commercially reasonable efforts to
relicense the Licensed Properties for rights contained within the scope of the
License Grant for what would have been the remainder of the Term, subject to
Licensor’s good faith business judgment, and Licensor shall pay to Licensee (as
set forth below) amounts based on any and all guaranteed and/or earned royalties
or license fees that Licensor or an Affiliate of Licensor recognizes (or the
amortized portion thereof under generally accepted accounting principles as
applied by Licensor) from such relicensing of the Licensed Properties for
articles falling within the definition of the Licensed Articles for the period
time that would have covered the remainder of the Term (“New Royalties”),
subject to the limitations, deductions and recoupment set forth below,
calculated [*] on a [*] basis with [*], for the period of time from the date of
termination through what would have been the remainder of the Term. With respect
to each such [*], including any partial [*] in which this Agreement is
terminated, Licensor shall pay to Licensee (subject to deduction and recoupment
of certain Licensor costs and expenses as set forth below) an amount equal to
(a) the amount of such New Royalties recognized by Licensor for such [*] less
(b) an amount equal to the average of the

amount of royalties paid by Licensee to Licensor in excess of the applicable [*]
Guarantee in each of the [*] prior to the [*] in which the Agreement is
terminated (including, if applicable, the calendar years prior to the Effective
Date) (that is, take the difference of the amount of royalties paid versus the
amount of the [*] Guarantee for the [*] before the [*] of termination, the
difference of the amount of royalties versus the amount of the [*] Guarantee for
the [*] before the [*] of termination, and the difference of the amount of
royalties versus the amount of the [*] Guarantee for the [*] before the year of
termination, add those [*] numbers together, and divide by [*], provided, that
for the avoidance of doubt, it is agreed that if such three year average is a
negative number, this shall not increase the amount payable to Licensee),
provided that in no event shall such amount payable by Licensor in any [*] be
greater than the amount paid by Licensee to Licensor under Section 20.2 above in
[*] Guarantee Payments that would have been due for such [*] (less any
Post-Termination Offset Royalties earned in such [*]), and subject to the
deductions and recoupment as set forth below. Before making any such payments to
Licensee under this Section 20.2, Licensor may first deduct and recoup from the
payments otherwise payable to Licensee the documented costs and expenses
Licensor or any of its Affiliates incurs in connection with relicensing and
attempting to relicense such rights to the Licensed Properties, including costs
and expenses in connection with identifying potential licensees, negotiating
with potential licensees, entering into agreements with licensees, and to the
extent greater than under this Agreement the costs and expenses of administering
or carrying out its duties or enforcing its rights under such licenses
(including reasonable allocation of the costs and expense of Licensor’s or its
Affiliates’ own personnel), whether such costs and expenses were incurred in
such [*] or in prior [*] and regardless of whether such costs and expenses
relate to potential agreements for relicensing the Licensed Properties that do
not materialize. For the avoidance of doubt, such deducted and recouped costs
and expenses do not have to relate to the specific Licensed Property for which
the New Royalties were received. All such payments to Licensee hereunder shall
be made within thirty (30) days of the end of the calendar quarter which
Licensor recognizes such New Royalties payments. Examples of the application of
this provision are set forth in Exhibit 8.

In the event that Licensor withholds its consent to an assignment other than a
Constructive Assignment, and Licensee makes such assignment, Licensor may
terminate this Agreement in accordance with Section 12(e) of the Basic Terms. In
the event that Licensor properly withholds its consent to a

* 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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Constructive Assignment, and Licensee makes such assignment or the Constructive
Assignment continues in existence, and Licensee does not timely exercise its
termination right as provided above in this Section 20.2, then Licensor may
terminate this Agreement in accordance with Section 12(e) of the Basic Terms,
provided that the applicable cure period set forth in Section 12(e) shall be ten
(10) days.

20.3 Licensee expressly agrees Licensor’s withholding of its consent to a
proposed assignment, including a Constructive Assignment, will not be deemed to
be unreasonable if the proposed assignee (which for purposes of clause (iii) of
Section 20.1 includes the individual, entity or group acquiring the specified
ownership percentage) is a Competitor. For the avoidance of doubt, and
notwithstanding the preceding sentence, the parties acknowledge and agree that
Licensor may withhold its consent to any proposed assignment, other than a
Constructive Assignment, in its sole and absolute discretion and therefore, any
such withholding of consent to a proposed assignment, other than a Constructive
Assignment, cannot be deemed to be unreasonable. For purposes of this provision
“Competitor” shall mean, as of the date Licensee requests consent to the
assignment (based upon the proposed assignee’s last financial statement for the
most recently completed fiscal year:

(a) one of the [*] Toy or Game Companies (defined below) measured by revenues,
or an Affiliate of a Toy or Game Company for which a disclosed line of business
is the manufacturing, marketing, distribution, or wholesale sales of children’s
toys or games that accounts for a minimum of [*] of the consolidated entity’s
consolidated revenue or consolidated operating profits or meets the segment
criteria set forth in Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 131 (“Disclosures about Segments of an
Enterprise and Related Information”) (hereinafter FASB 131). “Toy or Game
Company” shall mean an entity which has a disclosed line of business principally
engaged in the manufacturing, marketing, distribution, or wholesale sales of
children’s toys or games that accounts for a minimum of [*] of the entities’
consolidated revenue or consolidated operating profits or meets the segment
criteria set forth in Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 131 (“Disclosures about Segments of an
Enterprise and Related Information”).

(b) one of the [*] developers, [*] distributors or [*] producers of child or
family oriented movies measured by revenues, or an Affiliate of a such entity
for which a disclosed line of business is the development, distribution or
production of child or family oriented movies that accounts for a minimum of [*]
of the consolidated entity’s consolidated revenue or consolidated operating
profits or meets the segment criteria set forth in FASB 131; provided, however,
that Licensor has a disclosed line of business for the development, distribution
or production of child or family oriented movies

that accounts for a minimum of [*] of the Licensor’s consolidated revenue or
consolidated operating profits or meets the segment criteria set forth in FASB
131.

(c) one of the [*] developers, [*] distributors or [*] producers of child or
family oriented television shows measured by revenues, or an Affiliate of a such
entity for which a disclosed line of business is the development, distribution
or production of child or family oriented television shows that accounts for a
minimum of [*] of the consolidated entity’s consolidated revenue or consolidated
operating profits or meets the segment criteria set forth in FASB 131; provided,
however, that Licensor has a disclosed line of business for the development,
distribution or production of child or family oriented television shows that
accounts for a minimum of [*] of the Licensor’s consolidated revenue or
consolidated operating profits or meets the segment criteria set forth in FASB
131.

The parties expressly agree that there may be other reasonable bases for
Licensor to withhold consent to a proposed Constructive Assignment.

20.4 As additional consideration to induce Licensor to consent to any assignment
of this Agreement that requires Licensor’s consent, Licensee shall provide to
Licensor the New Warrant to purchase the common stock of WMS Industries, Inc.
simultaneously with the execution of this Agreement. The New Warrant will vest,
for the quantity of shares as set forth below, solely in the event that both
Licensor timely delivers an unqualified written consent to such an assignment of
this Agreement and the transaction described in such consent is consummated. In
the event that the conditions precedent to the vesting of the New Warrant never
occurs, such that the New Warrant never vests, the failure of the New Warrant to
vest shall not be deemed a failure of consideration. The exercise price of such
New Warrant shall be valued at the price of the common stock of WMS Industries,
Inc. at the close of the market on the grant date of such New Warrant. In the
event of a conflict between this Agreement and the New Warrant document, the New
Warrant document shall control.

 

Number

    Of

Warrants

   Year
Consent
Given

500,000

   2009

500,000

   2010

500,000

   2011

475,000

   2012

450,000

   2013

425,000

   2014

400,000

   2015

* 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.

 

19

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

375,000

   2016

375,000

   2017

375,000

   2018

375,000

   2019

20.5 Licensee shall not be entitled to sublicense any of its rights under this
Agreement, without the written consent of Licensor as provided above, except
that Licensee may enter into the following sublicense without the written
consent of Licensor: (a) as set forth in Section 11 of the Summary, (b) for
distribution of licensed content in the United Kingdom in Category B2-B4
machines under the UK Gambling Act of 2005, in which case Licensee shall give
notice to Licensor of the sublicense and identifying the entity granted the
sublicense and the sublicensed rights and obligations, or (c) in the event
Licensee is not a manufacturer of the Licensed Articles, or wishes to use a
third party to manufacture the Licensed Articles, Licensee may, subject to the
provisions of Paragraph 7(c) , utilize a third-party manufacturer in connection
with the manufacture and production of the Licensed Articles, provided that such
engagement is in accordance with the conditions and requirements of Paragraph
7(c) above.

20.6 This Agreement will be binding upon Licensee’s permitted successors and
assigns. In no event shall any sublicense agreement include the right to grant
any further sublicenses.

21. Regulatory Compliance.

(a) Licensee and Licensor will cooperate in good faith and use their best
efforts to comply with the requirements of all applicable gaming laws and gaming
authorities having jurisdiction over Licensee and the exploitation of the
Licensed Articles (each a “Gaming Authority”); provided, however, that nothing
in this Section 21 shall require Licensor to seek to become licensed, approved
or found suitable by any Gaming Authority. If a Gaming Authority prohibits or
restricts the taking of any action, including the payment of monies, which
prohibition or restriction frustrates the purpose of this Agreement, the parties
will in good faith attempt to modify or amend this Agreement, or take other
appropriate action, to obtain the approval of such Gaming Authority to permit
payment by Licensee of the amounts due Licensor hereunder. If Licensee is
prevented from paying Licensor royalty payments by a Gaming Authority, Licensee
shall not be considered to be in breach of this Agreement so long as Licensee
deposits such royalty payments into an escrow account established with a
mutually agreeable escrow agent for the benefit of Licensor until payment is
authorized by such Gaming Authority of otherwise distributed pursuant to an
order of a court of competent jurisdiction. The funds deposited into the escrow
account shall be invested as directed by Licensor, and be at Licensor’s risk.

(b) Upon request by Licensee, Licensor shall promptly provide all information
reasonably requested by the Gaming

Compliance Committee of WMS Industries Inc. (the “Compliance Committee”), with
respect to Licensor (including Licensor’s officers, directors, and controlling
shareholders), its financial condition, litigation, indictments, criminal
proceedings, and the like in which Licensor or its officers, directors, and
controlling shareholders are or may have been involved, if any, in order for the
Compliance Committee to determine that no such information would disclose any
fact which would jeopardize, in any material manner, any gaming licenses or
permits held by Licensee and/or its Affiliates with any Gaming Authority.

22. INTEGRATION

No waiver or modification of any of the terms of this Agreement shall be valid
unless in writing and signed by the party to be charged. No waiver by either
party of a breach or default hereunder, or a continuing breach or default, shall
be deemed a waiver by such party of a subsequent breach or default of like or
similar nature. Any approval or consent given by a party shall not constitute a
waiver of any of such party’s rights or the other’s duties under any provision
of this Agreement. Other than certain terms of the Pre-Existing Agreement as
expressly provided herein, the amended warrant referenced in Section 5.1 of the
Summary, the new warrant referenced in Section 5.2 of the Summary and the Side
Letter agreement between the parties to be signed simultaneously herewith, there
are no representations, promises, warranties, covenants or undertakings other
than those contained in this Agreement, which represents the entire
understanding of the parties. No person, firm, group or corporation, other than
Licensee and Licensor, shall be deemed to have acquired any rights by reason of
anything contained in this Agreement.

23. GOVERNING LAW

This Agreement shall be construed in accordance with the internal laws of the
State of Rhode Island and applicable United States Federal Law. The parties
agree that any dispute arising hereunder shall be subject to the exclusive
jurisdiction of the courts of such State, including the United States District
Court for the District of Rhode Island, and consent to the jurisdiction thereof.

24. HEADINGS

The paragraph and other headings in this Agreement are for reference purposes
only and will not affect the meaning or interpretation of this Agreement.

25. SEVERABILITY

In the event that any provision(s) of this Agreement is adjudicated by a court
of competent jurisdiction to be unlawful, unenforceable, invalid, and/or
unconscionable, that provision(s) shall be deemed severed from this Agreement
and shall not affect the validity or enforceability of the remaining

 

20

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

provisions hereof or this Agreement as a whole, unless the Agreement fails in
its essential purpose.

26. SURVIVAL

The expiration or termination of this Agreement shall not affect those
provisions that by the nature thereof are intended to survive any such
expiration or termination, including, without limitation, provisions of
Paragraphs 2, 4, 5, 6, 7(d) and (e), 11, 12(g), 13-16, 21-27, and 30 of the
Basic Terms, as well as those in the Summary where appropriate or
cross-referenced by the foregoing, including Sections 2, 5, 6, 7 (with respect
to the obligation to make payments) and 13.

27. CONFIDENTIAL INFORMATION

Confidential or proprietary information contained in this Agreement (including,
without limitation, the royalty rates and guarantee amounts) and the
confidential or proprietary information of one party which may be disclosed to
the other party hereunder or in the performance of this Agreement, shall be
considered “Confidential Information” subject to the Mutual Confidential
Information Agreement, by and between Licensor and Licensee, dated as of
August 2, 2006 (as amended herein), and shall not be disclosed or used except as
provided in said agreement, provided that such Confidential Information may be
disclosed by a party or its representatives in connection with any action
concerning compliance with or enforcement of this Agreement and the terms,
provisions and obligations hereunder. The Mutual Confidential Information
Agreement is amended by adding the following words “or by regulation or a gaming
authority” immediately following “such disclosure is required by law or legal
process” in paragraph 2.

28. PRESS RELEASE

Upon execution of this Agreement, Licensee may make a press release concerning
this Agreement, and Licensor may make a press release concerning this Agreement.
Each such press release shall be subject to the approval of the other party,
which approval will not be unreasonably withheld or delayed. The parties agree
to work together on scheduling the timing of the press releases, and the parties
recognize the need for Licensee to issue its press release prior to or
simultaneously with Licensor’s press release. In the event that Licensee needs
to file and disclose this Agreement with the Securities and Exchange Commission,
Licensee shall provide Licensor with an opportunity to comment on the proposed
redaction of this Agreement and will consider Licensor’s input in good faith
prior to filing this Agreement.

29. LICENSOR’S APPROVAL RIGHTS

As to the exercise by Licensor of its rights to approve the Licensed Articles
and any material relating thereto pursuant to Paragraphs 7, 8 and 9 hereof,
Licensor shall not unreasonably

withhold or delay such approval, and will take into account gaming industry
regulations, standards and practices and the technical limitations of the
applications involved.

30. LIABILITY

Neither party shall be liable for incidental, consequential, special or other
indirect damages (including, without limitation, lost profits) arising out of or
in connection with this Agreement, even if informed of the possibility thereof;
provided, however, that the foregoing shall not be deemed to apply to a
third-party claim for incidental, consequential, special or other indirect
damages (including, without limitation, lost profits) covered by a party’s
indemnification, defense and hold harmless obligations under Section 6 above.

-END-

 

21

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

EXHIBIT 1

HASBRO ROYALTY REPORTING FORM

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

EXHIBIT 2

LOGO [g22820ex10_6pg51.jpg]

Hasbro Global Business Ethics Principles

Hasbro, Inc., together with its subsidiaries and affiliates (“Hasbro”), strives
to conduct its business in accordance with high ethical and business standards,
and seeks to have its vendors, suppliers and licensees conduct themselves in the
same manner. Hasbro has long recognized concerns about the quality and character
of working conditions around the world, including the United States. We are
continually striving to improve the working environment for those involved in
the production of our toys and games. Hasbro wants its consumers to have
confidence that products manufactured by Hasbro, or its vendors, suppliers and
licensees, are produced in accordance with the principles set forth herein and
are not made under inhumane or exploitative conditions. Implementation of the
Global Business Ethics Principles enables Hasbro to ensure that manufacturing
facilities involved in the production of Hasbro products (“Facilities”)
understand and adhere to Hasbro’s requirements in this area. Participation in
this program and adherence to these principles is mandatory for all Facilities.

 

  1. Forced Labor - There will not be any use of forced, prison or indentured
labor in the production of Hasbro products*. All employment, including overtime,
shall be on a voluntary basis.

 

  2. Child Labor - The use of child labor is prohibited. No person shall be
employed in a factory that produces or manufactures any Hasbro product at an age
younger than sixteen**, or younger than the age for completing compulsory
education in the country of manufacture where such age is higher.

 

  3. Working Hours and Compensation - Facilities must comply with all applicable
national and local wage and hour laws, including minimum wage laws, or shall be
consistent with the prevailing industry wage standards, if higher. Employee
benefits shall be provided in accordance with national and local requirements.
Normal working hours should not exceed forty-eight (48) hours/week with one day
off in every seven-day period. Overtime work in necessary business circumstances
shall be conducted in such a way as to adequately compensate workers for all
work performed beyond the normal working hour standard.

 

  4. Health and Safety - Facilities shall ensure that all employees have a
healthy and safe environment, including in dormitories, where provided. Hasbro
expects all Facilities to promote an awareness of health and safety issues to
their employees including issues surrounding fire prevention, emergency
evacuation, proper use of safety equipment, basic first-aid and the proper use
and disposal of hazardous waste materials.

 

  5. Abuse; Discrimination - Facility employees shall be treated with dignity
and respect. No employee shall be subject to abuse, cruel or unusual
disciplinary practices or discrimination in employment or hiring on the grounds
of race, religion, origin, political affiliation, sexual preference, age or
gender.

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

  6. Communication of Principles - Facilities will communicate these principles
to employees in an appropriate oral and written fashion and will undertake
efforts to educate employees about these principles on a periodic basis.

 

  7. Acceptance of Advantages - Hasbro will not tolerate Facilities who do not
conduct business in an ethical and proper manner or who use bribes, kickbacks or
provide gifts, favors, or services to gain a competitive advantage with Hasbro.

 

  8. Environmental Impact - Hasbro maintains a commitment to sound environmental
programs and practices and encourages the reduction and recycling of waste.
Facilities must comply with all applicable laws relating to the environment and
dispose of toxic materials in a controlled and safe manner. To that end, Hasbro
seeks to conduct business with Facilities who are equally dedicated to pursuing
continuous efforts to improve the compatibility of its operations with the
environment.

 

  9. Freedom of Association - Hasbro recognizes all employees’ right to choose
[or not] to affiliate with legally sanctioned organizations or associations
without unlawful interference.

 

  10. Monitoring - Hasbro shall have the right to conduct periodic on-site
visits of working and living conditions, including audits of production records
and practices and of wage, hour and payroll information maintained by
Facilities, to review and ensure compliance with these principles. Although
Hasbro retains its rights to terminate its relationship with a vendor, supplier
or licensee facility in violation of these principles, Hasbro will endeavor to
work with Facilities to promptly address any problems discovered in the course
of its review or audit. Hasbro will require the implementation of an acceptable
written corrective action plan for any problems found during an audit. Failure
to address items in the corrective action plan may also result in termination of
the business relationship.

 

  11. Certification - Hasbro will require a written statement from Facilities of
compliance with these principles.

 

  12. Compliance with Applicable Laws - Facilities will comply with the national
laws of the country in which they are conducting business, any local laws,
regulations or standards applicable to their business and the industry standards
which have been established in their location; provided, however, in the event
of any conflict between the provisions of any of the preceding laws,
regulations, or standards and the provisions of this document, then the
provision containing the higher standards shall prevail.

Hasbro, as a member of the Toy Industries of America, strongly supports and
endorses the industry efforts to improve factory working conditions. While
Hasbro will retain the right to conduct its own audits, participation in the
ICTI CARE program, including regular audits by an approved audit company will
generally be sufficient. The ICTI CARE audit documentation and guidance
materials can be found on the ICTI CARE website.

 

Brian Goldner    Al Verrecchia Chief Executive Officer    Chairman of the Board

June 2008

 

* Rehabilitation programs may be assessed by Hasbro on a case-by-case basis.

** Workers under sixteen may be considered on a case-by-case basis when hired in
accord with International Labor Organization (ILO) Convention 138.

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

EXHIBIT 3-1

United States:

All applicable laws, rules, and regulations of the United States including (but
not limited to), to the extent applicable to the Licensed Articles: The Federal
Hazardous Substances Act; The Federal Food, Drug, and Cosmetic Act; the
Flammable Fabrics Act; ASTM F963-07, Standard Consumer Safety Specification on
Toy Safety; and all other applicable state and local laws and regulations.

Canada:

All applicable laws, rules, and regulations of Canada including (but not limited
to):

 

•  

Canadian Federal Hazardous Product Act

 

•  

Canadian Federal Food, Drug, and Cosmetics Act

 

•  

Canadian Federal Packaging and Labeling Act

 

•  

Canadian Provincial Stuffed Article Act

And all associated Canadian Federal/Provincial statutes and regulations.

Rest of the Territory:

All applicable laws, rules, and regulations of the applicable jurisdictions of
such Territory.

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

EXHIBIT 3-2

Licensee’s safety testing with respect to the Licensed Articles is in accordance
with IEC (International Electronic Commission) standard 60335. Licensee is self
certified through CSA (Canadian Safety Association) to conduct our safety
testing. Safety test reports are submitted to CSA for final approval and issuing
of certificate of compliance.

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

EXHIBITS 4-1 and 4-2

[THIS PAGE IS INTENTIONALLY LEFT BLANK]

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

MEMORANDUM OF EXCLUSIVE LICENSE

THIS MEMORANDUM OF EXCLUSIVE LICENSE is made as of this 12th day of June, 2009,
by and between HASBRO, INC. and HASBRO INTERNATIONAL, INC., (collectively
“HASBRO”) with offices at 1027 Newport Avenue, Pawtucket, Rhode Island
02862-1059 and WMS GAMING INC., (“WMS”) with offices at 800 South Northpoint
Blvd., Waukegan, IL 60085.

WHEREAS, Hasbro and WMS have entered into that certain Gaming Device License
Agreement of even date herewith (the “License Agreement”), with respect to the
development, manufacture, sale, lease, placement, marketing, distribution and
other exploitation of MONOPOLY, BATTLESHIP, CLUE (CLUEDO), YAHTZEE, and [*]
board game themed Gaming Devices (such terms and all other capitalized terms
used as defined terms and not otherwise defined herein shall have the meanings
ascribed thereto in the License Agreement);

NOW THEREFORE, pursuant to the terms of the License Agreement, and incorporating
and subject to all of the terms, definitions and provisions thereof, for good
and valuable consideration, Hasbro and WMS have agreed to execute this
Memorandum of Exclusive License, and hereby agree as follows:

LICENSE

Pursuant to the terms of the License Agreement, Hasbro grants to Licensee the
worldwide (other than as expressly set forth in the License Agreement),
exclusive (as provided in the License Agreement) license to utilize the Licensed
Properties solely upon and in connection with the design, development,
manufacture, sale, lease, placement, marketing, advertising, promoting and
distribution of the Licensed Articles in legal gaming establishments, including
Gaming Devices and associated equipment, including, without limitation, the
exclusive (as provided in the License Agreement) right to use the copyrights
owned by Hasbro and enumerated on Schedule A attached hereto and made a part
hereof, to make derivative works, in connection with the promotion, sale and
other exploitation of Licensed Articles, including Gaming Devices and associated
equipment, all subject to the terms and conditions of the License Agreement and
provided that the term with respect to the [*] property shall begin on [*].

TERM

The initial term of the License Agreement shall run through December 31, 2016
unless earlier terminated as provided in the License Agreement. The term may be
renewed for an additional three-year period, provided that certain conditions
set forth in the License Agreement are satisfied, or unless earlier terminated
as provided in the License Agreement.

This Memorandum of Exclusive License is not intended to and shall not modify,
amend, supplement, waive or release any of the covenants, agreements, terms and
provisions of the License Agreement.

 

* 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.

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

This Memorandum of Exclusive License has been duly authorized and executed as of
this 12th day of June 2009.

 

AGREED TO AND ACCEPTED BY:       HASBRO, INC.     WMS GAMING INC. By:  

 

    By:  

 

Date:  

 

    Date:  

 

HASBRO INTERNATIONAL, INC.       By:  

 

      Date:  

 

     

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

SCHEDULE A

TO MEMORANDUM OF EXCLUSIVE LICENSE

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

MEMORANDUM OF TERMINATION OF EXCLUSIVE LICENSE

THIS MEMORANDUM OF TERMINATION OF EXCLUSIVE LICENSE is by and between HASBRO,
INC. and HASBRO INTERNATIONAL, INC., (collectively “HASBRO”) with offices at
1027 Newport Avenue, Pawtucket, Rhode Island 02862-1059 and WMS GAMING INC.,
(“WMS”) with offices at 800 South Northpoint Blvd., Waukegan, IL 60085.

WHEREAS, Hasbro and WMS had entered into that certain Gaming Device License
Agreement dated June 12, 2009 (the “License Agreement”), with respect to the
development, manufacture, sale, lease, placement, marketing, distribution and
other exploitation of MONOPOLY, BATTLESHIP, CLUE (CLUEDO), YAHTZEE, and [*]
board game themed Gaming Devices (such terms and all other capitalized terms
used as defined terms and not otherwise defined herein shall have the meanings
ascribed thereto in the License Agreement);

NOW THEREFORE, pursuant to the terms of the License Agreement, and incorporating
and subject to all of the terms, definitions and provisions thereof, Hasbro and
WMS have agreed that upon the proper termination or expiration of the exclusive
License Agreement they shall date and execute this Memorandum of Termination of
Exclusive License, which may then be filed by Hasbro in the United States
Copyright Office.

IT IS HEREBY AGREED, that pursuant to the terms of the License Agreement, the
license granted to WMS as provided therein to utilize the Licensed Properties
upon and in connection with the design, development, manufacture, sale, lease,
placement, marketing, advertising, promoting and distribution of the Licensed
Articles in legal gaming establishments, has been properly terminated or has
otherwise expired effective of as              [insert date].

AGREED TO AND ACCEPTED BY:

 

HASBRO, INC.     WMS GAMING INC. By:  

 

    By:  

 

Date:  

 

    Date:  

 

HASBRO INTERNATIONAL, INC.       By:  

 

      Date:  

 

     

 

 

* 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.

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

EXHIBIT 5

Worldwide Trademark Registrations

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

EXHIBIT 6

United States Copyright Registrations

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

[*]

 

 

* 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.

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

EXHIBIT 7

Flat Fee Schedule

[*]

 

 

* 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.

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

EXHIBIT 8

[*]

 

 

* 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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EXHIBIT 9

FORM OF AMENDMENT TO EXISTING WARRANT

THE WARRANT AMENDED BY THIS WARRANT MODIFICATION AGREEMENT AND ANY SECURITIES
ACQUIRED UPON THE EXERCISE OF SUCH WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR ANY STATE SECURITIES
LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
ASSIGNED, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS.

 

 

WMS INDUSTRIES INC.

COMMON STOCK PURCHASE WARRANT MODIFICATION AGREEMENT

 

 

This Common Stock Purchase Warrant Modification Agreement (this “Agreement”)
modifies the terms of that certain Common Stock Purchase Warrant issued by WMS
Industries Inc., a Delaware corporation (the “Company”), to HASBRO, INC.
(“Hasbro” or the “Warrantholder”) effective September 15, 2003 (the “Warrant”).
Capitalized terms used in this Agreement and not defined herein have the
meanings set forth in the Warrant. In consideration of the mutual covenants and
representations contained herein and other good and valuable consideration, each
of the Company and Hasbro agrees to the following modifications to the Warrant:

1. Expiration Date. The first paragraph of the Warrant is amended to delete the
phrase “on September 14, 2013 (the “Expiration Date”)” and substitute in place
thereof “on the Expiration Date (as defined below)” and to add the following
sentence at the end of such paragraph:

“Expiration Date” means December 31, 2018 or, solely in the event that the term
of that certain Gaming Device License Agreement dated as of April 1, 2009
between Hasbro and Hasbro International, Inc., as licensor, and WMS Gaming Inc.,
as licensee, is extended for the Extension Term (as defined in such Gaming
Device License Agreement), December 31, 2021.

2. Vesting of the Warrant. Section 1.1 of the Warrant is deleted in its entirety
and replaced with the following:

Vesting. The Warrant shall vest with respect to 20% of the Warrant Shares per
year commencing January 1, 2007 and continuing on each anniversary of January 1,
2007 until fully vested.

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3. Representations and Warranties. Each of Hasbro and the Company, severally and
not jointly, hereby represents and warrants solely with respect to itself as
follows:

3.1. This Agreement has been duly authorized and executed by it and is a valid
and binding obligation, respectively, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting the enforcement of creditors’
rights.

3.2. The execution, delivery and/or performance by it of this Agreement shall
not, by the lapse of time, the giving of notice or otherwise, constitute a
violation of any applicable law or a breach of any provision contained in such
party’s Certificate of Incorporation or Bylaws (each as amended, restated or
otherwise modified through the date hereof) or contained in any agreement,
instrument or document to which it is a party or by which it is bound.

3.3. No consent, approval, authorization or other order of any court, regulatory
body, administrative agency or other governmental body is required for the valid
execution or performance of any of its obligations hereunder.

4. Miscellaneous.

4.1. Entire Agreement. This Agreement and the Warrant constitute the entire
agreement between the Company and the Warrantholder with respect to the subject
matter hereof and thereof.

4.2. Binding Effects; Benefits. This Agreement shall inure to the benefit of and
shall be binding upon the Company and the Warrantholder and their respective
heirs, legal representatives, successors and assigns. Nothing in this Agreement,
expressed or implied, is intended to or shall confer on any person other than
the Company and the Warrantholder, or their respective heirs, legal
representatives, successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.

4.3. Section and Other Headings. The section and other headings contained in
this Agreement are for reference purposes only and shall not be deemed to be a
part of this Agreement or to affect the meaning of interpretation of this
Agreement.

4.4. No Further Modifications. Except as expressly set forth in this Agreement,
the terms of the Warrant remain in full force and effect in accordance with
their terms.

4.5. Further Assurances. Each of the Company and the Warrantholder shall do and
perform all such further acts and things and execute and deliver all such other
certificates, instruments and documents as the Company or the Warrantholder may,
at any time and from time to time, reasonably request in connection with the
performance of any of the provisions of this Agreement.

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IN WITNESS WHEREOF, each of the Company and Hasbro has caused this Agreement to
be signed by its duly authorized officer.

 

WMS INDUSTRIES INC. By:  

 

Name:   Orrin J. Edidin Title:   President

 

HASBRO, INC. By:  

 

Name:   Title:  

Dated: June     , 2009

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EXHIBIT 10

FORM OF NEW WARRANT

THIS WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933
ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST
THEREIN MAY BE OFFERED, SOLD, ASSIGNED, PLEDGED, TRANSFERRED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS.

 

 

WMS INDUSTRIES INC.

COMMON STOCK PURCHASE WARRANT

 

 

This certifies that, for good and valuable consideration, WMS Industries Inc., a
Delaware corporation (the “Company”), grants to HASBRO, INC. (“Hasbro” or the
“Warrantholder”), the right to subscribe for and purchase from the Company the
number of validly issued, fully paid and nonassessable shares (the “Warrant
Shares”) of the Company’s Common Stock, par value $0.50 per share (the “Common
Stock”) determined pursuant to the schedule set forth in Section 1 below, at the
purchase price per share of $[TBD] (the “Exercise Price”), from time to time
after vesting of the Warrant pursuant to Section 1 below and before 5:00 PM
Eastern Standard Time on the Expiration Date (as defined below), all subject to
the terms, conditions and adjustments herein set forth. “Expiration Date” means
December 31, 2018 or, solely in the event that the term of that certain Gaming
Device License Agreement dated as of April 1, 2009 between Hasbro and WMS Gaming
Inc. (the “License Agreement”) is extended for the Extension Term (as defined in
the License Agreement), December 31, 2021.

1. Duration and Exercise of Warrant; Limitation on Exercise; Payment of Taxes.

1.1. Warrant Shares. The number of Warrant Shares, if any, purchasable under
this Warrant shall be determined based on the date by which Hasbro executes and
delivers to the Company an unqualified written consent to an assignment of the
License Agreement (including, without limitation, “assignment” or “Constructive
Assignment” (as such terms are defined in section 20.11 of the Basic Terms of
such Agreement)) (an “Assignment”), if such consent is requested by the Company
and timely delivered by Hasbro as follows:

 

Date of Delivery of Hasbro Consent to Assignment

   Number of Warrant Shares

 

1 To be confirmed based on execution copy of License Agreement.

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

On or before December 31, 2011

   500,000

After December 31, 2011 but on or before December 31, 2012

   475,000

After December 31, 2012 but on or before December 31, 2013

   450,000

After December 31, 2013 but on or before December 31, 2014

   425,000

After December 31, 2014 but on or before December 31, 2015

   400,000

After December 31, 2015 but prior to the Expiration Date

   375,000

1.1. Vesting. The Warrant shall vest with respect to the number of Warrant
Shares determined pursuant to Section 1.1 solely upon the consummation of an
Assignment for which Hasbro has executed and delivered an unqualified written
consent.

1.2. Duration and Exercise of Warrant. Subject to the terms and conditions set
forth herein, the Warrant may be exercised, in whole or in part, by the
Warrantholder by:

1.2.1. the delivery of this Warrant to the Company, with a duly executed
Exercise Form attached as Exhibit A hereto specifying the number of vested
Warrant Shares to be purchased, prior to the Expiration Date; and

1.2.2. the delivery of payment to the Company, for the account of the Company,
by cash, by wire transfer of immediately available funds or by certified or bank
cashier’s check, of the Exercise Price for the number of vested Warrant Shares
specified in the Exercise Form in lawful money of the United States of America.
The Company agrees that such Warrant Shares shall be deemed to be issued to the
Warrantholder as the record holder of such Warrant Shares as of the close of
business on the date on which this Warrant shall have been surrendered and
payment made for the Warrant Shares as aforesaid.

1.3. Conversion of Warrant.

1.3.1. Right to Convert. In addition to, and without limiting, the other rights
of the Warrantholder hereunder, the Warrantholder shall have the right (the
“Conversion Right”) to convert this Warrant or any part hereof into Warrant
Shares at any time and from time to time to the extent that this Warrant has
vested and prior to the Expiration Date. Upon exercise of the Conversion Right,
the Company shall deliver to the Warrantholder, without payment by

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

the Warrantholder of any Exercise Price or any cash or other consideration, that
number of Warrant Shares computed using the following formula:

 

 

X=

  Y (A-B)        A   

 

Where:    X=   The number of Warrant Shares to be issued to the Warrantholder   
Y=   The number of Warrant Shares purchasable pursuant to this Warrant or such
lesser number of Warrant Shares as may be selected by the Warrantholder    A=  
The Fair Market Value (as defined in Section 6.1.6) of one Warrant Share as of
the Conversion Date    B=   The Exercise Price

1.3.2. Method of Conversion. The Conversion Right may be exercised by the
Warrantholder by the surrender of this Warrant to the Company, together with a
written statement (the “Conversion Statement”) in the form of Exhibit A hereto
specifying that the Warrantholder intends to exercise the Conversion Right and
indicating the number of Warrant Shares that are the subject of such exercise of
the Conversion Right. Such conversion shall be effective upon the Company’s
receipt of this Warrant, together with the Conversion Statement, or on such
later date as is specified in the Conversion Statement (the “Conversion Date”)
and, at the Warrantholder’s election, may be made contingent upon the closing of
the consummation of the sale of Common Stock pursuant to a Registration
Statement (as defined in Section 8.1 below). Certificates for the Warrant Shares
so acquired shall be delivered to the Warrantholder within a reasonable time,
not exceeding three (3) Business Days after the Conversion Date. A “Business
Day” is a day other than Saturday, Sunday or a day on which national banks are
authorized by law to close in the State of Illinois.

1.4. Warrant Shares Certificate. A stock certificate or certificates for the
Warrant Shares specified in the Exercise Form shall be delivered to the
Warrantholder within three (3) Business Days after receipt of the Exercise Form
and receipt of payment of the exercise price. If this Warrant shall have been
exercised only in part, the Company shall, at the time of delivery of the stock
certificate or certificates, deliver to the Warrantholder a new Warrant
evidencing the rights to purchase the remaining Warrant Shares, which new
Warrant shall in all other respects be identical to this Warrant.

1.5. Payment of Taxes. The issuance of certificates for Warrant Shares shall be
made without charge to the Warrantholder for any stock transfer or other
issuance tax or other incidental expense of issuance; provided, however, that
the Warrantholder shall be required to pay any and all taxes which may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the Warrantholder as reflected upon the
books of the Company.

2. Warrantholder Representations and Warranties; Restrictions on Transfer;
Restrictive Legends.

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

2.1. The Warrantholder represents and warrants that:

2.1.1. The Warrantholder (i) is acquiring this Warrant, and (ii) upon exercise
of this Warrant will acquire the Warrant Shares (this Warrant and the Warrant
Shares collectively are referred to herein as the “Securities”) for its own
account for investment only and not with a view towards, or for resale in
connection with, the public sale or distribution thereof, except pursuant to
sales registered or exempted under the 1933 Act.

2.1.2. The Warrantholder is an “accredited investor” as that term is defined in
Rule 501(a)(3) of Regulation D under the 1933 Act.

2.1.3. The Warrantholder understands that the Securities are being offered and
sold to it in reliance on specific exemptions from the registration requirements
of the United States federal and state securities laws and that the Company is
relying upon the truth and accuracy of, and the Warrantholder’s compliance with,
the representations, warranties, agreements, acknowledgments and understandings
of the Warrantholder set forth herein in order to determine the availability of
such exemptions and the eligibility of the Warrantholder to acquire the
Securities.

2.1.4. The Warrantholder has been furnished with all materials relating to the
business, finances and operations of the Company and materials relating to the
offer and sale of the Securities that have been requested by the Warrantholder.

2.1.5. The Warrantholder understands that no United States federal or state
agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities or the fairness or suitability
of the investment in the Securities nor have such authorities passed upon or
endorsed the merits of the offering of the Securities.

2.1.6. The Warrantholder understands that (i) the Securities have not been and
are, except as provided in Section 8 hereof, not being registered under the 1933
Act or any state securities laws, and may not be offered for sale, sold,
assigned, pledged or transferred or otherwise disposed of unless
(A) subsequently registered thereunder, (B) the Warrantholder shall have
delivered to the Company an opinion of counsel, in form and substance reasonably
acceptable to the Company, to the effect that such Securities to be sold,
assigned or transferred may be sold, assigned or transferred pursuant to an
exemption from such registration, or (C) the Warrantholder provides the Company
with reasonable assurance that such Securities can be sold, assigned or
transferred pursuant to Rule 144 promulgated under the 1933 Act (or a successor
rule thereto) (“Rule 144”); and (ii) any sale of the Securities made in reliance
on Rule 144 may be made only in accordance with the terms of Rule 144 and
further, if Rule 144 is not applicable, any resale of the Securities under
circumstances in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the 1933 Act) may
require compliance with some other exemption under the 1933 Act or the rules and
regulations of the Securities and Exchange Commission (the “Commission”)
thereunder.

2.1.7. The Warrantholder shall not sell, assign or otherwise transfer, pledge or
hypothecate all or part of this Warrant without the prior written consent of the
Company; provided that (x) any such sale, assignment or other transfer by the
Warrantholder of

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

the Warrant in its entirety to an entity owned or controlled by the
Warrantholder (but only for so long as it remains so owned or controlled and
such entity agrees (i) to be bound by the terms and conditions of this Warrant
pursuant to an agreement reasonably acceptable to the Company (an “Assumption
Agreement”) and (ii) to transfer this Warrant back to the Warrantholder if it
ceases to be owned or controlled by the Warrantholder), and (y) any such sale,
assignment or other transfer by the Warrantholder of the Warrant in its entirety
to the successor to the Warrantholder or substantially all of Warrantholder’s
assets or business in connection with (i) the merger, consolidation or
reorganization of the Warrantholder or (ii) the sale, assignment, transfer or
other disposition of all or substantially all of the Warrantholder’s assets or
business in one or more related transactions, provided that any transferee
described in this clause (y) executes an Assumption Agreement, may be effected
without any such consent.

2.1.8. Except as otherwise agreed to by the Company, each Warrant shall be
stamped or otherwise imprinted with a legend in substantially the following
form:

THIS WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE
OFFERED, SOLD, ASSIGNED, PLEDGED, TRANSFERRED, OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR
AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS.

Except as otherwise agreed to by the Company, each stock certificate for Warrant
Shares issued upon the exercise of any Warrant and each stock certificate issued
upon the direct or indirect transfer of any such Warrant Shares shall be stamped
or otherwise imprinted with a legend in substantially the following form:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER
THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, ASSIGNED, PLEDGED,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT AND SUCH LAWS.

2.1.9. Except with respect to the restrictions set forth in Section 2.1.7 above,
the restrictions imposed under this Section 2 upon the transferability of the
Warrant and the shares of Common Stock acquired upon the exercise of this
Warrant shall cease when (i) the Warrant Shares have been sold pursuant to a
registration statement that is effective under the 1933 Act, (ii) the Company is
presented with an opinion of counsel reasonably satisfactory to the Company that
such restrictions are no longer required in order to insure compliance with the

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

1933 Act or with a Commission “no-action” letter stating that future transfers
of such securities by the transferor or the contemplated transferee would be
exempt from registration under the 1933 Act, or (iii) such securities may be
transferred by the holder in accordance with Rule 144 without the holder being
deemed an underwriter of such securities within the meaning of Section 2(a)(11)
of the 1933 Act. When such restrictions terminate, the Company shall, or shall
instruct its transfer agent to, promptly, and without expense to the holder
issue new securities in the name of the holder not bearing the legends required
under this Section 2.

2.1.10. At the Warrantholder’s option, this Warrant may be exchanged for one or
more other Warrants representing the right to purchase a like aggregate number
of shares of Common Stock upon surrender of such Warrant(s) to the Company as is
represented by this Warrant; provided, however, that this Warrant shall not be
exchanged for other Warrants unless each such new Warrant represents the right
to purchase at least 50,000 shares of Common Stock. Whenever this Warrant is so
surrendered to the Company for exchange, the Company shall execute and deliver
the Warrants which the Warrantholder is entitled to receive. All Warrants issued
upon any registration of transfer or exchange of Warrants shall be the valid
obligations of the Company, evidencing the same rights, and entitled to the same
benefits, as the Warrants surrendered upon such registration of transfer or
exchange. No service charge shall be made for any exchange of this Warrant.

3. Company Representations and Warranties.

The Company hereby represents and warrants as follows:

3.1. All Warrant Shares that are issued upon the exercise of this Warrant will,
upon issuance, be validly issued, fully paid, and nonassessable, not subject to
any preemptive rights, and free from all taxes, liens, security interests,
charges, and other encumbrances with respect to the issue thereof, other than
taxes with respect to any transfer occurring contemporaneously with such issue.

3.2. During the period within which this Warrant may be exercised, the Company
will at all times have authorized and reserved, and keep available free from
preemptive rights, a sufficient number of shares of Common Stock to provide for
the exercise of the rights represented by this Warrant.

3.3. This Warrant has been duly authorized and executed by the Company and is a
valid and binding obligation of the Company enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other laws of general application affecting the enforcement of creditors’
rights.

3.4. The execution, delivery and/or performance by the Company of this Warrant
shall not, by the lapse of time, the giving of notice or otherwise, constitute a
violation of any applicable law or a breach of any provision contained in the
Company’s Certificate of Incorporation (as amended, restated or otherwise
modified) or Bylaws (as amended, restated or otherwise modified) or contained in
any agreement, instrument or document to which the Company is a party or by
which it is bound.

3.5. No consent, approval, authorization or other order of any court, regulatory
body, administrative agency or other governmental body is required for the valid
issuance of the

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

Warrant or for the performance of any of the Company’s obligations hereunder,
except in connection with listing of the Warrant Shares on the New York Stock
Exchange, which listing will be effected in accordance with the rules and
regulations of the New York Stock Exchange and in connection with the
registration of the Warrant Shares under the 1933 Act as provided in Section 8.

3.6. The Company, at its expense, will take all such action as may be necessary
to assure that the Common Stock issuable upon the exercise of this Warrant may
be so issued without violation of any applicable law or regulation, or of any
requirements of any domestic securities exchange or automated quotation system
upon which any capital stock of the Company may be listed or quoted, as the case
may be. Such action by the Company may include, but not be limited to, causing
such shares to be duly registered or approved, listed or quoted on relevant
domestic securities exchanges or automated quotation systems.

4. Loss or Destruction of Warrant.

Upon receipt by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant and, in the case of loss,
theft or destruction, of such indemnification as the Company may require, and,
in the case of such mutilation, upon surrender and cancellation of this Warrant,
the Company will execute and deliver a new Warrant of like tenor.

5. Ownership of Warrant.

The Company may deem and treat the person in whose name this Warrant is
registered as the holder and owner hereof (notwithstanding any notations of
ownership or writing thereon made by anyone other than the Company) for all
purposes and shall not be affected by any notice to the contrary.

6. Certain Adjustments.

6.1. The number of Warrant Shares purchasable upon the exercise of this Warrant
and the Exercise Price shall be subject to adjustment as follows:

6.1.1. Stock Dividends, etc. If at any time after the date of the issuance of
this Warrant (i) the Company shall fix a record date for the issuance of any
stock dividend payable in shares of Common Stock or (ii) the number of shares of
Common Stock shall have been increased by a subdivision or split-up of shares of
Common Stock, then, on the record date fixed for the determination of holders of
Common Stock entitled to receive such dividend or immediately after the
effective date of such subdivision or split up, as the case may be, the number
of shares to be delivered upon exercise of this Warrant will be increased so
that the Warrantholder will be entitled to receive the number of shares of
Common Stock that such Warrantholder would have owned immediately following such
action had this Warrant been exercised in full immediately prior thereto, and
the Exercise Price will be adjusted as provided below in Section 6.1.5.

6.1.2. Combination of Stock. If the number of shares of Common Stock outstanding
at any time after the date of the issuance of this Warrant shall have been
decreased by a combination of the outstanding shares of Common Stock, then,
immediately after the

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

effective date of such combination, the number of shares of Common Stock to be
delivered upon exercise of this Warrant will be decreased so that the
Warrantholder thereafter will be entitled to receive the number of shares of
Common Stock that such Warrantholder would have owned immediately following such
action had this Warrant been exercised in full immediately prior thereto, and
the Exercise Price will be adjusted as provided below in Section 6.1.5.

6.1.3. Reorganization, Merger, etc. If any capital reorganization of the
Company, any recapitalization or reclassification of the Common Stock, any
consolidation of the Company with or merger of the Company with or into any
other person, or any sale or lease or other transfer of all or substantially all
of the assets of the Company to any other person (each, a “Transaction”), shall
be effected in such a way that the holders of Common Stock shall be entitled to
receive stock, other securities or assets (whether such stock, other securities
or assets are issued or distributed by the Company or another person) with
respect to or in exchange for Common Stock, then, upon exercise of this Warrant,
the Warrantholder shall have the right to receive the kind and amount of stock,
other securities or assets receivable upon such Transaction by a holder of the
number of shares of Common Stock that such Warrantholder would have been
entitled to receive upon exercise of this Warrant had this Warrant been
exercised in full immediately before such Transaction. This section shall apply
to successive reorganizations, reclassifications, recapitalizations,
consolidations, mergers, sales and transfers and to the stock or securities of
any other corporation that are at the time receivable upon the exercise of this
Warrant.

6.1.4. Carryover. Notwithstanding any other provision of this Section 6.1, no
adjustment shall be made to the number of shares of Common Stock to be delivered
to the Warrantholder (or to the Exercise Price) if such adjustment represents
less than 1% of the number of shares to be so delivered, but any lesser
adjustment shall be carried forward and shall be made at the time and together
with the next subsequent adjustment which together with any adjustments so
carried forward shall amount to 1% or more of the number of shares to be so
delivered.

6.1.5. Exercise Price Adjustment. Whenever the number of Warrant Shares
purchasable upon the exercise of this Warrant is adjusted as provided in this
Section 6, the Exercise Price payable upon the exercise of this Warrant shall be
adjusted by multiplying such Exercise Price immediately prior to such adjustment
by a fraction, of which the numerator shall be the number of Warrant Shares
purchasable upon the exercise of the Warrant immediately prior to such
adjustment, and of which the denominator shall be the number of Warrant Shares
purchasable immediately thereafter.

6.1.6. Antidilution Provisions.

(a) Definitions. For purposes of this Section 6.1.6 the following definitions
shall apply:

“Common Stock Equivalents” shall mean Convertible Securities and rights
entitling the holder thereof to receive directly, or indirectly, additional
shares of Common Stock without the payment of any consideration by such holder
for such additional shares of Common Stock or Common Stock Equivalents.

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

“Common Stock Outstanding” shall mean the aggregate of all Common Stock
outstanding and all Common Stock issuable upon conversion of all outstanding
Convertible Securities and exercise of all options.

“Convertible Securities” means evidences of indebtedness, shares of stock or
other securities which are convertible into or exchangeable for, with or without
payment of additional consideration, shares of Common Stock, either immediately
or upon the arrival of a specified date or the happening of a specified event or
both.

“Current Exercise Price” shall mean the Exercise Price immediately before the
occurrence of any event, which, pursuant to Section 6.1.6, causes an adjustment
to the Exercise Price.

“Fair Market Value” means with respect to a share of Common Stock at any date:

(i) If shares of Common Stock are being sold pursuant to a public offering under
an effective registration statement under the 1933 Act which has been declared
effective by the Commission and Fair Market Value is being determined as of the
closing of the public offering, the “per share price to public” specified for
such shares in the final prospectus for such public offering;

(ii) If shares of Common Stock are then listed or admitted to trading on any
national securities exchange or traded on any national market system and Fair
Market Value is not being determined as of the date described in clause (i) of
this definition, the closing price for the trading day immediately preceding
such date;

(iii) If no shares of Common Stock are then listed or admitted to trading on any
national securities exchange or traded on any national market system or being
offered to the public pursuant to a registration described in clause (i) of this
definition, the average of the reported closing bid and asked prices thereof on
such date in the over-the-counter market as published by Pink OTC Markets Inc.
or any similar successor organization, and as reported by any member firm of the
New York Stock Exchange selected by the Company and reasonably acceptable to the
Warrantholder;

(iv) If no shares of Common Stock are then listed or admitted to trading on any
national exchange or traded on any national market system, if no closing bid and
asked prices thereof are then so quoted or published in the over-the-counter
market and if no such shares are being offered to the public pursuant to a
registration described in clause (i) of this definition, the fair value of a
share of Common Stock shall be as determined by an investment bank selected by
Company with the approval of the Warrantholder (which approval shall not be
unreasonably withheld or delayed), the costs of such investment bank to be paid
by the Company.

(b) Adjustments to Exercise Price. The Exercise Price in effect from time to
time shall be subject to adjustment in certain cases as follows:

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(i) In case the Company shall at any time after the issue date of this Warrant
issue or sell any Common Stock or Common Stock Equivalent without consideration,
or for a consideration per share less than the then Fair Market Value, then, and
thereafter successively upon each such issuance or sale, the Current Exercise
Price shall simultaneously with such issuance or sale be adjusted to an Exercise
Price (calculated to the nearest cent) determined by multiplying the Current
Exercise Price in effect immediately prior to such issuance or sale by a
fraction, the numerator of which shall be the number of shares of Common Stock
Outstanding on such date of sale or issuance plus the number of shares of Common
Stock which the aggregate consideration received for the issuance or sale of
such additional shares would purchase at the Fair Market Value and the
denominator of which shall be the number of shares of Common Stock Outstanding
immediately after the issuance or sale.

For the purposes of this subsection, the following provisions shall also be
applicable:

(A) Cash Consideration. In case of the issuance or sale of additional Common
Stock or Common Stock Equivalents for cash, the consideration received by the
Company therefor shall be deemed to be the amount of cash received by the
Company for such shares (or, if such shares are offered by the Company for
subscription, the subscription price, or, if such shares are sold to
underwriters or dealers for public offering without a subscription offering, the
initial public offering price), without deducting therefrom any compensation or
discount paid or allowed to underwriters or dealers or others performing similar
services or for any expenses incurred in connection therewith.

(B) Non-Cash Consideration. In case of the issuance (otherwise than upon
conversion or exchange of Convertible Securities) or sale of additional Common
Stock, options or Convertible Securities for a consideration other than cash or
a consideration, a part of which shall be other than cash, the fair value of
such consideration as determined by the board of directors of the Company in the
good faith exercise of its business judgment, irrespective of the accounting
treatment thereof, shall be deemed to be the value, for purposes of this
section, of the consideration other than cash received by the Company for such
securities.

(C) Options and Convertible Securities. In case the Company shall in any manner
issue or grant any options or any Convertible Securities, the total maximum
number of shares of Common Stock issuable upon the exercise of such options or
upon conversion or exchange of the total maximum amount of such Convertible
Securities at the time such Convertible Securities first become convertible or
exchangeable shall (as of the date of issue or grant of such options or, in the
case of the issue or sale of Convertible Securities other than where the same
are issuable upon the exercise of options, as of the date of such issue or sale)
be deemed to be issued and to be outstanding for the purpose of this section and
to have been issued for the sum of the amount (if any) paid for such options or
Convertible Securities and the minimum amount (if any) payable upon the exercise
of such options or upon conversion or exchange of such Convertible Securities at
the time such Convertible Securities first become convertible or exchangeable;
provided that, subject to the provisions of subsection (D) below, no adjustment
or further adjustment of the Exercise Price shall be made upon the actual
issuance of (a) any such Common Stock or Convertible Securities or upon the
conversion or exchange of any such Convertible Securities or the exercise of
such options or (b) any Common Stock issued or sold pursuant to conversion of
any Convertible Securities or exercise of any Options to the extent outstanding
on the date of issue of this Warrant.

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(D) Change in Option Price or Conversion Rate. If the exercise price provided
for in any option referred to in subsection (C) above, or the rate at which any
Convertible Securities referred to in subsection (C) are convertible into or
exchangeable for shares of Common Stock shall change at any time (other than
under or by reason of provisions designed to protect against dilution), the
Current Exercise Price in effect at the time of such event shall forthwith be
readjusted to the Exercise Price that would have been in effect at such time had
such options or Convertible Securities still outstanding provided for such
changed exercise price, additional consideration or conversion rate, as the case
may be, at the time initially granted, issued or sold. If the exercise price
provided for in any such option referred to in subsection (C), or the additional
consideration (if any) payable upon the conversion or exchange of any
Convertible Securities referred to in subsection (C), or the rate at which any
Convertible Securities referred to in subsection (C) are convertible into or
exchangeable for shares of Common Stock, shall be reduced at any time under or
by reason of provisions with respect thereto designed to protect against
dilution and such reduction would trigger an adjustment under this section, then
in case of the delivery of shares of Common Stock upon the exercise of any such
option or upon conversion or exchange of any such Convertible Security, the
Current Exercise Price then in effect hereunder shall, upon issuance of such
shares of Common Stock, be adjusted to such amount as would have obtained had
such option or Convertible Security never been issued and had adjustments been
made only upon the issuance of the shares of Common Stock actually delivered and
for the consideration actually received for such option or Convertible Security
and the Common Stock.

(E) Termination of Option or Conversion Rights. In the event of the termination
or expiration of any right to purchase Common Stock under any option or of any
right to convert or exchange Convertible Securities, the Current Exercise Price
shall, upon such termination, be changed to the Exercise Price that would have
been in effect at the time of such expiration or termination had such Option or
Convertible Security, to the extent outstanding immediately prior to such
expiration or termination, never been issued, and the shares of Common Stock
issuable thereunder shall no longer be deemed to be Common Stock Outstanding.

(F) Notwithstanding anything to the contrary set forth above, no adjustment
pursuant to this Section 6.1.6 shall be made for the issuance of Common Stock or
Common Stock Equivalents to employees, directors or consultants of the Company
with the approval of, or pursuant to a plan approved by, the Board of Directors
of the Company; provided, however, that for purposes of this Warrant,
“consultant” shall mean individuals who are natural persons and provide bona
fide services to the Company or its subsidiaries that are not in connection with
the offer or sale of the Company’s securities in a capital raising transaction
and do not relate to the promotion or maintenance of a market for the Company’s
securities.

6.2. Notice of Adjustments. Whenever the number of Warrant Shares or the
Exercise Price of such Warrant Shares is adjusted, as herein provided, the
Company shall promptly mail by first class, postage prepaid, to the
Warrantholder, notice of such adjustment or adjustments setting forth in
reasonable detail the number of Warrant Shares and the Exercise Price of such
Warrant Shares after such adjustment, a brief statement of the facts requiring
such adjustment, and the computation by which such adjustment was made.

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6.3. Extraordinary Corporate Events. If the Company, after the date hereof,
proposes to effect (i) any transaction described in Sections 6.1.1, 6.1.2 or
6.1.3 hereof, or (ii) a liquidation, dissolution or winding up of the Company or
(iii) any payment of a dividend or distribution with respect to the Common Stock
(other than a cash dividend or distribution), then, in each such case, the
Company shall mail to the Warrantholder a notice describing such proposed action
and specifying the date on which the Company’s books shall close, or a record
shall be taken, for determining the holders of Common Stock entitled to
participate in such action, or the date on which such reorganization,
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up shall take place or commence, as the case may be, and
the date as of which it is expected that holders of Common Stock of record shall
be entitled to receive securities and/or other property deliverable upon such
action, if any such date is to be fixed. Such notice shall be mailed to the
Warrantholder at least ten days prior to the record date for any such action.
The failure to give notice required by this Section 6.3 or any defect therein
shall be a breach of this Warrant but shall not affect the legality or validity
of the action taken by the Company or the vote upon any such action. Unless
specifically required by this Section 6, the Exercise Price, the number of
shares covered by each Warrant and the number of Warrants outstanding shall not
be subject to adjustment as a result of the Company being required to give
notice pursuant to this Section 6.3.

6.4. No Impairment. The Company shall not, by amendment of the Charter or
through any reorganization, recapitalization, transfer of assets, consolidation,
merger, dissolution, issuance or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
to be observed or performed hereunder by the Company, but shall at all times in
good faith assist in the carrying out of all the provisions of this Section 6
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the Warrantholder against impairment.

7. Fractional Shares. No fractional shares of Common Stock or scrip shall be
issued to the Warrantholder in connection with the exercise or conversion of
this Warrant. Instead of any fractional shares of Common Stock that would
otherwise be issuable to the Warrantholder, the Company will pay to the
Warrantholder a cash adjustment in respect of such fractional interest in an
amount equal to the product of such fractional interest and the Exercise Price
paid by the Warrantholder for its Warrant Shares upon such exercise.

8. Piggyback Registration Rights.

8.1. Registration Statements. If at any time the Company proposes to register
for its own account any of its Common Stock under the 1933 Act by registration
on any form other than Form S-4 or S-8 (even if other stockholders will
participate in such registration), it shall each such time give written notice
to the Warrantholder of its intention to do so at least 10 Business Days prior
to the initial filing of a registration statement or statements or similar
documents (the “Registration Statement”) for such registration. Upon the written
request of the Warrantholder, made within 5 Business Days after the receipt of
any such notice (which request shall specify the Warrant Shares intended to be
disposed of by the Warrantholder and the intended method of disposition), the
Company shall use its reasonable best efforts to effect the registration under
the 1933 Act of all the Warrant Shares that the Company has been so requested to
register by the Warrantholder to the extent required to permit the disposition
of such Warrant Shares in accordance with the intended methods of disposition
thereof described as

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aforesaid; provided, however, that, in the case of an underwritten offering,
prior to the effective date of the registration statement filed in connection
with such registration, immediately upon notification to the Company from the
managing underwriter of the price at which such securities are to be sold, if
such price is below the price which the Warrantholder shall have indicated to be
acceptable to the Warrantholder, the Company shall so advise the Warrantholder
of such price, and the Warrantholder shall then have the right to withdraw its
request to have its Warrant Shares included in such registration statement;
provided further, that if, at any time after giving written notice of its
intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to the Warrantholder and the Company shall be relieved of its
obligation to register any Warrant Shares in connection with such registration
(but not from any obligation of the Company to pay the registration expenses in
connection therewith). The obligations of the Company to effect a registration
pursuant to this Section 8.1 shall continue until all of the Warrant Shares have
been sold by the holder or could immediately be sold pursuant to Rule 144
without the holder being deemed an underwriter of such securities within the
meaning of Section 2(a)(11) of the 1933 Act.

8.2. Underwriter Holdback. If the managing underwriter of any underwritten
offering under this Section 8 shall inform the Company by letter that, in its
opinion, the number of Warrant Shares requested to be included in such
registration would adversely affect such offering, and the Company has so
advised the Warrantholder in writing, then the Company will include in such
registration, to the extent of the number that the Company is so advised can be
sold in (or during the time of) such offering, first, all securities proposed by
the Company to be sold for its own account, second, any holders with contractual
rights senior to the Warrantholder, third, the Warrant Shares requested to be
included in such registration pursuant to this Warrant and, fourth, all other
securities proposed to be registered.

8.3. Obligations of the Company. In connection with the registration of the
Warrant Shares as contemplated by this Section 8 the Company shall:

8.3.1. Following receipt of a written request from the Warrantholder under
Section 8.1 to register Warrant Shares with the Commission, prepare and file a
Registration Statement with respect to the securities to be sold by the Company
together with the Warrant Shares to be sold by the Warrantholder, and thereafter
use its reasonable commercial efforts to cause the Registration Statement to
become effective as soon as practicable, which Registration Statement (including
any amendments or supplements thereto and prospectuses contained therein), in
each case, shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein, or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading:

8.3.2. Prepare and file with the Commission such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective and to comply with the
provisions of the 1933 Act with respect to the disposition of all Warrant Shares
covered by the Registration Statement until the earlier to occur of (i) such
time as all of such Warrant Shares have been disposed of in accordance with the
intended methods of disposition by the Warrantholder as set forth in the
Registration Statement

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and (ii) the expiration of one year from the date the registration statement is
declared effective by the Commission;

8.3.3. Furnish to the Warrantholder (without charge to the Warrantholder) such
number of copies of a prospectus, including a preliminary prospectus and all
amendments and supplements thereto and such other documents, as the
Warrantholder may reasonably request in order to facilitate the disposition of
the Warrant Shares; the Company consents to the use of the prospectus and any
amendment or supplement thereto by the Warrantholder in connection with the
offering and the sale of the Warrant Shares covered by the prospectus or any
amendment or supplement thereto;

8.3.4. Use its reasonable commercial efforts to (a) register and qualify the
Warrant Shares covered by the Registration Statement under such securities or
Blue Sky laws of such jurisdictions as the Warrantholder reasonably requests,
(b) prepare and file in those jurisdictions all required amendments (including
post-effective amendments) and supplements, (c) take such other reasonable
actions as may be necessary to maintain such registrations and qualifications in
effect at all times the Registration Statement is in effect and (d) take all
other reasonable actions necessary or advisable to enable the disposition of
such securities in all such jurisdictions; provided, however, that the Company
shall not be required in connection therewith or as a condition thereto to
qualify to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 8.3.4.

8.3.5. In the event of an underwritten offering, enter into and perform its
obligations under an underwriting agreement with the managing underwriter of
such offering, in usual and customary form, including, without limitation,
customary indemnification and contribution obligations, and in the case of any
non-underwritten offering, provide to broker-dealers participating in any
distribution of Warrant Shares reasonable indemnification.

8.3.6. Promptly (and in any event within two Business Days) notify the
Warrantholder of the happening of any event of which the Company has knowledge,
as a result of which the prospectus included in the Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances then existing, not misleading,
and use its reasonable commercial efforts to prepare promptly a supplement or
amendment to the Registration Statement to correct such untrue statement or
omission, and deliver a number of copies of such supplement or amendment to the
Warrantholder as such Warrantholder may reasonably request;

8.3.7. Promptly (and in any event within two Business Days) notify the
Warrantholder (and, in the event of an underwritten offering, the managing
underwriters) of the issuance by the Commission of any stop order or other
suspension of effectiveness of the Registration Statement, and use its
reasonable commercial efforts to obtain the withdrawal of any order suspending
the effectiveness of the Registration Statement;

8.3.8. Make available for inspection by the Warrantholder, any underwriter
participating in any disposition pursuant to the Registration Statement, and any
attorney, accountant, or other agent retained by the Warrantholder or
underwriter (collectively, the “Inspectors”), all pertinent financial and other
records, pertinent corporate documents and

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properties of the Company, as shall be reasonably necessary to enable each
Inspector to exercise its due diligence responsibility, and cause the Company’s
officers, directors and employees to supply all information reasonably requested
by any such Inspector in connection with the Registration Statement;

8.3.9. Use its reasonable commercial efforts either to (a) cause all the Warrant
Shares covered by the Registration Statement to be listed on a national
securities exchange and on each additional national securities exchange on which
similar securities issued by the Company are then listed, if any, if the listing
of such Warrant Shares is then permitted under the rules of such exchange or,
(b) if similar securities issued by the Company are not then listed on a
national securities exchange, cause all the Warrant Shares covered by the
Registration Statement to be listed or included for trading on the exchange or
quotation system on which similar securities issued by the Company are then
listed or traded;

8.3.10. Promptly (and in any event within two Business Days) notify the
Warrantholder when the prospectus or any prospectus supplement or post-effective
amendment has been filed, and with respect to the Registration Statement or any
post-effective amendment thereto, when the same has become effective; and

8.3.11. Use its best efforts to comply with all applicable rules and regulations
of the Commission, and make available to its securityholders, to the extent
required, as soon as reasonably practicable, an earnings statement covering the
period of at least twelve months, but not more than eighteen months, beginning
with the first month after the effective date of the Registration Statement,
which earnings statement shall satisfy the provisions of Section 11(a) of the
1933 Act.

8.4. Obligations of the Warrantholder. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Warrant that the
Warrantholder shall comply with its obligations under this Warrant, including
this Section 8.4.

8.4.1. The Warrantholder shall furnish to the Company such information regarding
itself, the Warrant Shares and the intended method of disposition of the Warrant
Shares as shall be reasonably required to effect the registration of the Warrant
Shares and shall execute such documents and agreements in connection with such
registration as the Company may reasonably request, all in a timely manner so as
to enable the Company to comply with its obligations hereunder. Concurrent with
the notice delivered pursuant to Section 8.1 above, the Company shall notify the
Warrantholder of the information the Company requires from the Warrantholder
(the “Requested Information”) if the Warrantholder elects to have any of its
Warrant Shares included in the Registration Statement. If within 5 Business Days
of the notice delivered by the Company pursuant to Section 8.1 above, the
Company has not received the Requested Information from the Warrantholder and
the Company has properly notified the Warrantholder in accordance with the
preceding sentence, then the Company may file the Registration Statement without
including Warrant Shares.

8.4.2. The Warrantholder, by its acceptance of the Warrant Shares, agrees to
cooperate with any reasonable request made by the Company in connection with the
preparation and filing of any registration statement hereunder which includes
the Warrant Shares.

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8.4.3. In the event of an underwritten offering, the Warrantholder agrees to
enter into and perform its obligations under any underwriting agreement, in
usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the managing underwriter of
such offering and take such other actions as are reasonable required in order to
expedite or facilitate the disposition of the Warrant Shares.

8.4.4. The Warrantholder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 8.3.6,
the Warrantholder will immediately discontinue disposition of Warrant Shares
pursuant to the Registration Statement covering such Warrant Shares until the
Warrantholder’s receipt of the copies of the supplemented or amended prospectus
contemplated by Section 8.3.6 and, if so directed by the Company, the
Warrantholder shall deliver to the Company (at the expense of the Company) or
destroy (and deliver to the Company a certificate of such destruction ) all
copies, other than permanent file copies then in the Warrantholder’s possession,
of the prospectus covering Warrant Shares at the time of receipt of such notice;
and

8.4.5. The Warrantholder may not participate in any underwritten registration
hereunder unless the Warrantholder (a) agrees to sell such Warrant Shares on the
basis provided in any underwriting arrangements, (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements and (c) agrees to pay the Warrantholder’s pro rata portion of all
underwriting discounts and commissions.

8.5. Expenses of Registration. All expenses (other than underwriting discounts
and commissions and fees and disbursements of any counsel retained by the
Warrantholder) incurred in connection with registration, filings or
qualifications pursuant to Section 8 including, without limitation, all
registration, listing, filing and qualification fees, printers and accounting
fees, and the fees and disbursements of counsel for the Company shall be borne
by the Company.

8.6. Indemnification. In the event any Warrant Shares are included in a
Registration Statement under this Agreement:

8.6.1. To the extent permitted by law, the Company shall indemnify and hold
harmless the Warrantholder, each person, if any, who controls the Warrantholder,
any underwriter (as defined in the 1933 Act) for the Warrantholder, and each
person, if any, who controls any such underwriter within the meaning of the 1933
Act or the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
(each, an “Indemnified Holder”), against any losses, claims, damages, expenses,
liabilities (joint or several) (collectively, “Claims”) to which any of them may
become subject under the 1933 Act, the Exchange Act or otherwise, insofar as
such Claims (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any of the following statements,
omissions of violations (collectively a “Violation”): (a) any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement or any post-effective amendment thereof, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, (b) untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus if used prior to the effective date of such Registration Statement,
or contained in the pricing prospectus, the final prospectus or any “issuer free
writing prospectus” or any “issuer information” within the meaning of Rule

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433 promulgated under the 1933 Act (as amended or supplemented if the Company
files any amendment thereof or supplement thereto with the Commission), or the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading, or (c) any
violation or alleged violation by the Company of the 1933 Act, the Exchange Act,
any state securities law, or any rule or regulation promulgated under the 1933
Act, the Exchange Act, or any state securities law. Subject to the restrictions
set forth in Section 8.6.3, with respect to the number of legal counsel, the
Company shall reimburse Warrantholder and each such underwriter or controlling
person, promptly as such expenses are incurred and are due and payable, for any
legal fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim, whether or not such claim,
investigation or proceeding is brought or initiated by the Company or a third
party. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 8.6(x) shall not apply to a
Claim arising out of or based upon a Violation which occurs solely in reliance
upon and in conformity with information furnished in writing to the Company by
any Indemnified Holder expressly for use in connection with the preparation of
the Registration Statement or any such amendment thereof or supplement thereto;
and (y) shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the Company, which
consent shall not be unreasonably withheld.

8.6.2. In connection with any Registration Statement in which the Warrantholder
is participating, the Warrantholder agrees to indemnify and hold harmless, to
the same extent and in the same manner set forth in Section 8.6.1, the Company,
each of its directors, each of its officers who sign the Registration Statement,
each person, if any, who controls the Company within the meaning of the 1933 Act
or the Exchange Act, any underwriter and any other stockholder selling
securities pursuant to the Registration Statement or any of its directors or
officers or any person who controls such stockholder or underwriter
(collectively and together with an Indemnified Holder, an “Indemnified Party”),
against any Claim to which any of them may become subject, under the 1933 Act,
the Exchange Act or otherwise, insofar as such Claim arises out of or is based
upon any Violation, in each case to the extent (and only to the extent) that
such Violation occurs solely in reliance upon and in conformity with written
information furnished to the Company by the Warrantholder expressly for use in
connection with such Registration Statement; and the Warrantholder will
reimburse any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such Claim; provided, however, that the
indemnity agreement contained in this Section 8.6.2. shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the prior
written consent of such Warrantholder, which consent shall not be unreasonably
withheld.

8.6.3. Promptly after receipt by an Indemnified Party under Section 8.6 of
notice of the commencement of any action (including any governmental action),
such Indemnified Party shall, if a Claim in respect thereof is to be made
against any indemnifying party under Section 8.6, deliver to the indemnifying
party a written notice of the commencement thereof, and the indemnifying party
shall have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly noticed,
to assume control of the defense thereof with counsel satisfactory to the
Indemnified Parties; provided, however, that an Indemnified Party shall have the
right to retain its own counsel, with the fees and expenses to be paid by the
indemnifying party, if, in the reasonable opinion of

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counsel for the Indemnified Party, representation of such Indemnified Party by
the counsel retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such Indemnified Party and any
other party represented by such counsel in such proceeding. The Company shall
pay for only one legal counsel for the Warrantholder. The failure by an
Indemnified Party to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Party under Section 8.6,
except to the extent that such failure to notify results in the forfeiture by
the indemnifying party or substantive rights or defenses. The indemnification
required by Section 8.6 shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as such expense, loss, damage
or liability is incurred and is due and payable.

8.7. Contribution. To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 8.6 to the fullest extent permitted by law.

8.8. Transfer Of Registration Rights. The right to sell Warrant Shares pursuant
to the Registration Statement described herein will automatically be assigned to
each transferee of the Warrant or Warrant Shares permitted under the terms of
this Warrant. In the event that it is necessary, in order to permit a
Warrantholder to sell Warrant Shares pursuant to the Registration Statement, to
supplement or amend the Registration Statement to name such Warrantholder, such
Warrantholder shall upon written notice to the Company, be entitled to have the
Company make such amendment or supplement as soon as reasonably practicable.

9. Miscellaneous.

9.1. Entire Agreement. This Warrant constitutes the entire agreement between the
Company and the Warrantholder with respect to the subject matter hereof.

9.2. Binding Effects; Benefits. This Warrant shall inure to the benefit of and
shall be binding upon the Company and the Warrantholder and their respective
heirs, legal representatives, successors and assigns. Nothing in this Warrant,
expressed or implied, is intended to or shall confer on any person other than
the Company and the Warrantholder, or their respective heirs, legal
representatives, successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Warrant. Except as otherwise set forth
herein, this Warrant may not be assigned, sold, pledged, transferred or
otherwise disposed of by the Warrantholder without the prior written consent of
the Company.

9.3. Section and Other Headings. The section and other headings contained in
this Warrant are for reference purposes only and shall not be deemed to be a
part of this Warrant or to affect the meaning of interpretation of this Warrant.

9.4. Pronouns. All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.

9.5. Further Assurances. Each of the Company and the Warrantholder shall do and
perform all such further acts and things and execute and deliver all such other
certificates,

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instruments and documents as the Company or the Warrantholder may, at any time
and from time to time, reasonably request in connection with the performance of
any of the provisions of this Warrant.

9.6. Notices. All notices and other communications required or permitted to be
given under this Warrant shall be in writing and shall be deemed to have been
duly given if delivered personally or sent by United States mail or overnight
courier, postage prepaid, to the parties hereto at the following addresses or to
such other address as any party hereto shall hereafter specify by notice to the
other party hereto:

 

  (a) if to the Company, addressed to:

WMS Industries Inc.

800 S. Northpoint Blvd.

Waukegan, IL 60085

Attention: Executive Vice President and Chief Financial Officer

With a copy to:

WMS Industries Inc.

800 S. Northpoint Blvd.

Waukegan, IL 60085

Attention: Vice President, General Counsel and Secretary

 

  (b) if to the Warrantholder, addressed to:

Hasbro, Inc.

1011 Newport Avenue

Pawtucket, RI 02862

Attn: General Counsel

With a copy to:

Hasbro, Inc.

1011 Newport Avenue

Pawtucket, RI 02862

Attn: President, Hasbro Properties Group

Except as otherwise provided herein, all such notices and communications shall
be deemed to have been received on the date of delivery thereof, if delivered
personally, on the next Business Day if sent by overnight courier, or on the
third Business Day after the mailing thereof if sent by U.S. mail.

9.7. Separability. Any term or provision of this Warrant which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the terms and provisions of this Warrant or affecting the
validity or enforceability of any of the terms or provisions of this Warrant in
any other jurisdiction.

9.8. Governing Law. This Warrant shall be deemed to be a contract made under the
laws of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to such agreements made and to
be performed entirely within such State.

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9.9. No Rights or Liabilities as Stockholder. Nothing contained in this Warrant
shall be determined as conferring upon the Warrantholder any rights as a
stockholder of the Company or as imposing any liabilities on the Warrantholder
to purchase any securities whether such liabilities are asserted by the Company
or by creditors or stockholders of the Company or otherwise.

IN WITNESS WHEREOF, each of the Company and Hasbro has caused this Warrant to be
signed by its duly authorized officer.

 

WMS INDUSTRIES INC. By:  

 

Name:   Orrin J. Edidin Title:   President HASBRO, INC. By:  

 

Name:   Title:  

Dated: June    , 2009

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Exhibit A

EXERCISE AND CONVERSION FORM

(To be executed upon exercise or conversion of this Warrant)

Exercise. The undersigned hereby irrevocably elects to exercise its right to
purchase                     of the Warrant Shares pursuant to Section 1.2 of
the Warrant and herewith tenders payment for such Warrant Shares to the order of
WMS Industries Inc. in the amount of $                    .

Conversion. The undersigned hereby irrevocably elects to exercise its Conversion
Right with respect to                     Warrant Shares pursuant to Section 1.3
of the Warrant.

The undersigned requests that a certificate for the Warrant Shares deliverable
to the undersigned upon exercise or conversion, as applicable, be registered in
the name of                     and that such certificates be delivered to
                    whose address is                     .

Dated:                             

 

Signature  

 

 

 

  (Print Name)  

 

  (Street Address)  

 

  (City)            (State)                    (Zip Code)

Signed in the Presence of: