Document:

exv10w1

 

Exhibit 10.1

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

AMENDMENT No. 3 TO

LICENSE AGREEMENT

     This Amendment No. 3 to License Agreement (“Amendment”) is an amendment to
the License Agreement and License Agreement Summary, each dated September 1,
1997, as subsequently amended by Amendment No. 1, dated 1998, and Amendment No.
2, dated June 23, 1999, (hereinafter collectively referred to as “Agreement”)
between, on the one hand, HASBRO, INC. and HASBRO INTERNATIONAL, INC., both
with a principal place of business at 1027 Newport Avenue, Pawtucket, Rhode
Island 02862-1059 (hereinafter collectively referred to as “Licensor”) and, on
the other hand, WMS GAMING INC., with its principal place of business at 800 S.
Northpoint Boulevard, Waukegan, Illinois 60085 (“Licensee”).

RECITALS:

	 	A.	 	Pursuant to the Agreement, among other things, Licensor
granted a license to Licensee to manufacture, distribute, promote
and sell certain gaming products, sold in association with the
trademark “MONOPOLY.” Capitalized terms used in this Amendment and
not otherwise defined shall have the meanings given to such terms in
the Agreement.
	 
	 	B.	 	Licensor and Licensee desire to modify and amend the
Agreement.

AGREEMENT:

     THEREFORE, in consideration of the mutual covenants and agreements in the
Agreement and this Amendment, the parties hereby agree as follows:

1.     Licensed Articles. Paragraph 1(a) of the License Agreement Summary is
hereby amended by adding the following at the end of that paragraph: “Without
in any way expanding on the foregoing grant of rights, that class of games
currently known as “Pachinko” and “Pachislot” which is not designed for
casinos, but rather for non-traditional gaming venues such as Pachinko
parlours, and for which the payout to the player is tokens, rather than cash or
cash substitutes (e.g., vouchers, tickets, script, coupons, etc.), is
specifically excluded from the list of Licensed Articles and from Licensee’s
right of first refusal, provided, however, that such class of games shall not
be distributed to, used by or placed in casinos or traditional gaming venues,
or used in association with gaming goods or products (for example use of a
Pachinko game on a top box of a gaming device).”

2.     Channels of Distribution. Paragraph 1(b)(ii) of the License Agreement
Summary is hereby amended by deleting that paragraph in its entirety and
replacing it with the following:

     "(ii) Channels of Distribution: Legal gaming establishments.”

3.     Star Games: Licensor hereby approves Star Games Corporation Pty. Ltd. (“Star
Games”) as Licensee’s sublicensee of video slot machines in Australia, New
Zealand, and Papua New Guinea, provided that Licensee shall remain primarily
liable under all

 

 

provisions of the Agreement. Paragraph 12(a) of the Agreement is amended by
adding of the following at the end of such paragraph: “In the event of a breach
by Star Games of any of the terms of this Agreement, Licensor shall have the
right, exercisable by providing written notice to Licensee, to require that
Licensee terminate Star Games as a sublicensee. In such case, Licensee shall
have thirty (30) days from Licensor’s mailing of such notice either (a) to
terminate Star Games as a sublicensee and provide Licensor with written
confirmation of such termination or (b) to have Star Games completely remedy
its breach and to satisfy Licensor that the breach has been completely
remedied. Unless within such thirty (30) days, Star Games completely remedies
its breach and Licensee satisfies Licensor that the breach has been completely
remedied or Licensee terminates Star Games and provides Licensor with written
notice of Star Games’ termination, Licensor shall thereafter have the right to
terminate this Agreement by giving written notice of termination to Licensee.
Such notice shall be effective when mailed by Licensor.”

4.     Royalties. Paragraph 2(a)(ii) of the License Agreement Summary is hereby
deleted in its entirety and replaced with the following:

     "(ii) For Licensed Articles which are gaming devices sold by Licensee or
by a sublicensee of Licensee that has been preapproved in writing by Licensor,
Licensee shall pay Licensor a royalty of [*] No deductions shall be made for
cash or other discounts 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.”

5.     Periodic Statements. Paragraph 2(c) of the Agreement is hereby amended such
that, in addition to providing Licensor with the statements described therein,
Licensee shall also provide Licensor’s regional offices identified below with
statements pertaining to the sale and/or lease (or other authorized placement
with third parties as set forth in the Agreement) of the Licensed Articles in
the respective regions of the world identified below that are managed by such
offices. For the avoidance of doubt, the statements provided to such regional
offices shall contain the same information (limited, however, to the specific
regions listed below) as Licensee is required to provide to Licensor under
Paragraph 2(c). Further, this Amendment in no way relieves Licensee of its
obligation to provide complete statements to Licensor for all parts of the
Territory.

	 	 	 
	Region:	 	Statement to be provided to:
	 
	Asia, Australia, New Zealand,	 	
Gail Mitchell
	Japan, Papua New Guinea	 	
Vice President, Australasia & Japan
	 	 	
Hasbro Consumer Products
	 	 	
570 Blaxland Road
	 	 	
Eastwood
	 	 	
NSW 2122, Australia

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

2

 

	 	 	 
	Europe, Africa, Mexico	 	
Isabelle Gilmour
	Central America, South America,	 	
Vice President, Europe
	Middle East, and Israel	 	
4th Floor, Medici Court
	 	 	
67/69 New Bond Street
	 	 	
London W1S 1DF
	 	 	
United Kingdom.

6.     Payment From Star Games. Licensor acknowledges that timely royalty payments
to Licensor for Australia, New Zealand and Papua New Guinea are subject to
Licensee receiving timely, accurate information from Star Games. Licensee shall
make timely, good faith payments to Licensor based on information it receives
from Star Games. If after verification of sales information, a good faith
payment must be adjusted, the adjustment shall be made to the royalties paid in
the quarter following verification of the accurate royalty payments. In the
event that such adjustment requires additional payment to Licensor, Licensee
shall pay Licensor interest on such late payment at an interest rate of one and
three fourths percent (1.75%) per month, or the highest rate permitted by law,
which ever rate is lower, from the date the royalty payment should have been
received by Licensor until paid. In no event shall Licensee be required to
refund any overpayment; however, in the event of an overpayment, Licensee may
credit such overpayment toward royalties due to Licensor in the calendar
quarter following that in which the overpayment was detected. Without limiting
the scope of Licensor’s rights hereunder, it is specifically agreed that
Licensee shall include in its agreement with Star Games a provision requiring
Star Games to maintain the same records as Licensee is required to maintain
under Paragraph 11 of the Agreement; Licensee’s agreement with Star Games shall
also grant Licensor the same audit rights with respect to Star Games books of
account and records as Licensee granted to Licensor with respect to Licensee’s
books of account and records under Paragraph 11 of the Agreement.

7.     Approvals. Paragraphs 7(a)(ii), 8(b), 9(a) and 9(c) of the Agreement are
hereby amended such that all materials and samples described therein which are
related to Licensed Articles that are intended to be sold and/or leased (or
otherwise placed with third parties as set forth in the Agreement) in the
regions of the world listed below shall be submitted for approval directly to
Licensor’s regional offices as identified below, rather than to Licensor. For
the avoidance of doubt, whenever Licensee intends on using materials and
samples in a country in which such materials and samples have not been used
before, Licensee shall submit such materials and samples to Licensor or
Licensor’s regional offices identified below for approval regardless of whether
such materials and samples have been previously approved for use by Licensee in
a different country. For all parts of the world not identified below, Licensee
shall continue to submit materials and samples requiring approval to Licensor.
Notwithstanding the foregoing, in the sole event that game play and associated
technology of particular Licensed Articles remain identical for a particular
region of the world listed below to game play and associated technology that
were previously approved for use in the United States, those particular
elements of the Licensed Articles would not be subject to the regional approval
described in this paragraph.

3

 

	 	 	 
	Region:	 	Approvals must be submitted to:
	 
	Asia, Australia, New Zealand	 	
Gail Mitchell
	Japan	 	
Vice President, Australasia & Japan
	 	 	
Hasbro Consumer Products
	 	 	
570 Blaxland Road
	 	 	
Eastwood
	 	 	
NSW 2122, Australia
	 	 	 
	Europe, Africa, Mexico	 	
Isabelle Gilmour
	Central America, South America,	 	
Vice President, Europe
	Middle East, and Israel	 	
4th Floor, Medici Court
	 	 	
67/69 New Bond Street
	 	 	
London W1S 1DF
	 	 	
United Kingdom.

8.     Licensor’s Right to Eliminate Country from Territory. Paragraph 1(b)(ii) of
the Agreement is hereby deleted in its entirety and replaced with the
following:

     ” In the event that Licensee and its affiliates have not submitted a
Licensed Article for required regulatory approvals in at least one country of a
Region within [*] of the Initial Term, or in the event that Licensee and its
affiliates have not placed Licensed Articles on test or begun commercial
shipment of Licensed Articles in at least one country of a Region within [*],
then Licensor shall have the right to terminate Licensee’s rights hereunder for
all Licensed Articles in such Region by giving Licensee written notice of such
termination. [*]”

     [*] Upon acceptance that the Licensee obligations have been satisfied in
the Region for which Licensee has sent notice, Licensor shall provide written
acknowledgement that Licensee’s obligations in the identified Region have been
met and such writings shall be incorporated herein by reference and made a part
of this Amendment.

9.     Notices. Paragraph 18 of the Agreement is hereby amended by deleting:

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

4

 

     “Notices sent to Licensee must be sent to the attention of the President
with copies to the Vice President and General Counsel, WMS Industries, Inc.,
3401 N. California Avenue, Chicago, Illinois, 60618.”

and replacing that sentence with:

     “Notices sent to Licensee must be sent to the attention of the President
with copies to the Executive Vice President, Chief Operating Officer and
General Counsel, WMS Industries, Inc., 800 S. Northpoint Boulevard, Waukegan,
Illinois 60085.”

10.     All other terms and conditions of the Agreement shall remain unchanged and
in full force and effect.

     IN WITNESS WHEREOF, the parties have hereunto set their hand this 16th day
of December, 2002.

	 	 	 
	HASBRO, INC	 	
WMS GAMING INC.
	 
	By: /s/ Jane Ritson-Parsons

             Jane Ritson-Parsons

             President

             Hasbro Properties Group

             HASBRO, INC	 	
By: /s/ Orrin J. Edidin

HASBRO INTERNATIONAL, INC.

By: /s/ Jane Ritson-Parsons

5exv10w2

 

Exhibit 10.2

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

AMENDMENT No. 4 TO

LICENSE AGREEMENT

     This Amendment No. 4 to License Agreement (“Amendment4”), dated as of
September 15, 2003, is an amendment to the License Agreement and License
Agreement Summary, each dated September 1, 1997, as subsequently amended by
Amendment No. 1, dated 1998, Amendment No. 2, dated June 23, 1999, and
Amendment No.3, dated December 16, 2002 (hereinafter collectively referred to
as “Agreement”) between, on the one hand, HASBRO, INC. and HASBRO
INTERNATIONAL, INC., both with a principal place of business at 1027 Newport
Avenue, Pawtucket, Rhode Island 02862-1059 (hereinafter collectively referred
to as “Licensor”) and, on the other hand, WMS GAMING INC., with its principal
place of business at 800 S. Northpoint Boulevard, Waukegan, Illinois 60085
(“Licensee”).

RECITALS:

	 	A.	 	Pursuant to the Agreement, among other things, Licensor granted
a license to Licensee to manufacture, distribute, promote and sell
certain gaming products, sold in association with the trademark
“MONOPOLY.” Capitalized terms used in this Amendment4 and not
otherwise defined shall have the meanings given to such terms in the
Agreement.
	 
	 	B.	 	Licensor and Licensee desire to modify and amend the Agreement.

AGREEMENT:

     THEREFORE, in consideration of the mutual covenants and agreements in the
Agreement and this Amendment4, the parties hereby agree as follows:

1.     EFFECTIVE DATE: This Amendment4 shall be effective upon full execution by
both parties, except as otherwise provided herein.

2.     The License Agreement Summary is hereby deleted in its entirety and replaced
with the following:

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

 

 

LICENSE AGREEMENT SUMMARY

NAME: MONOPOLY

     This Summary is hereby incorporated into and made a part of the attached
License Agreement. The specifics detailed below, where numbered as paragraphs
or subparagraphs, relate to similarly number paragraphs or subparagraphs in the
attached License Agreement.

     The License Agreement is between:

	 	 	 	 	 
	Licensor	 	and	 	Licensee
	 
	HASBRO, INC. and	 	 	 	WMS GAMING INC.
	HASBRO INTERNATIONAL, INC	 	 	 	800 S. Northpoint Boulevard
	1027 Newport Avenue	 	 	 	Waukegan, Illinois
	Pawtucket, Rhode Island 02862	 	 	 	 

1.     GRANT OF LICENSE.

(a)  (i) Licensed Articles shall mean (i) any “Gaming Device” that utilizes
the Name; and (ii) gaming services using the Name which relate to Gaming
Devices such as services through which Gaming Devices are linked for
progressive jackpots, whether through local area networks, wide area networks
or otherwise.

“Gaming Device” shall mean: [*]

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

2

 

(b)  (i) Territory: Worldwide, subject to exclusion of certain Regions as
provided below:

		
	 	        (A) For purposes of this Agreement, the Territory is divided into
eight (8) “Regions” as follows: (1) North America (including Caribbean
and Cruises, but excluding Mexico and Central America); (2) Central
America and South America (including Mexico); (3) Europe (including
Russia, but excluding the United Kingdom); (4) United Kingdom; (5)
Africa; (6) Australia/New Zealand; (7) Japan; and (8) Asia (excluding
Japan). Set forth in Exhibit 3 and Exhibit 5 of Amendment4 to this
Agreement (attached hereto and made a part hereof) for each Region
(other than North America, United Kingdom and Japan) are (1) the
Advance Payments (as defined in Section 2(b)(i) below) for such Region
on Exhibit 3, and (2) the Region Threshold Amounts (as defined in
Section 1(b)(i)(B) below) for such Region on Exhibit 5. The Advance
Payments and Region Threshold Amounts for the Japan Region and the
United Kingdom Region shall be determined as provided in Sections
2(b)(iii)(C) and (D) of this License Agreement Summary, and the Advance
Payments and Region Threshold Amounts for Central America and South
America are subject to increase as provided in Section 2(b)(iii)(B) of
this License Agreement Summary following the time when legislation
allows the introduction of Gaming Devices in Mexico.
	 
	 	        (B) Licensor may eliminate any Region (other than North America)
from the Territory as provided below in the event that Licensee fails
to earn royalties for any such Region equal to the region threshold
amount set forth on Exhibit 5 or, when applicable with respect to the
United Kingdom Region, Exhibit 6 for such Region for any of the [*]
(the “Region Threshold Amounts”). Notwithstanding the foregoing,
Licensor shall not have a right to remove a Region on account of such a
shortfall of earned royalties if the amount of the shortfall is [*] or
less of the applicable Region Threshold Amount and

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

3

 

		
	 	Licensee makes a cash payment in the amount of the shortfall to
Licensor by the 25th day of the month following the conclusion of such
[*] measurement period. In the event Licensee fails to make such
shortfall payment (or is not permitted to do so, because the shortfall
was greater than [*]) for any applicable Region, then Licensor may
terminate Licensee’s rights in that Region upon thirty (30) days’ prior
written notice to Licensee, provided that such notice shall be given to
Licensee within 90 days after conclusion of the applicable measurement
period. For avoidance of doubt, the Region Threshold Amounts refer to
royalties earned in such period, and so, for example, fourth quarter
[*] royalties which are payable on [*] would not count toward the
Region Threshold Amount for the [*]; and fourth quarter [*] royalties
which are payable on [*] would count toward the Region Threshold Amount
for [*]. It is the intention of the parties that in determining if a
Region Threshold Amount has been met, royalties earned in the
applicable period are used, notwithstanding that Advance Payments are
applied with respect to royalties paid in a calendar year. Advance
Payments made but not earned as royalties do not count against the
Region Threshold Amounts.
	 
	 	        (C) In the event that Licensee’s rights in a Region are
terminated, Licensee shall have a [*] sell-off period for such Region
in accordance with Paragraph 14 of the License Agreement, and lease
terms for Licensed Articles which are leased shall not exceed the
termination of the Region by more than [*].

     (ii)  Channels of Distribution: Legal gaming establishments.

(c)  Term:

     Development and Test Period: [*]

     Initial Term: [*] to [*].

     Optional Renewal Term: [*] to [*]. [*]

     First Extension Term: [*] to [*]. [*]

     Second Extension Term: [*] to [*].

		
	 	        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 First Extension Term, Licensee may exercise its option to extend
the Term of this Agreement for the Second Extension Term by sending
written notice to Licensor of Licensee’s exercise of such option no
later than one year prior to the end of the First Extension Term (that
is, no later than [*]); provided, however, that such extension for the
Second Extension Term shall not be effective unless the

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

4

 

		
	 	following condition (the “Extension Royalty Requirement”) has been
satisfied: Licensee has earned royalties totaling at least U.S.[*] in
the Territory for 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 fourth quarter of [*] which are payable by [*] notwithstanding that
payment of such royalties is made in calendar year [*]. Advance
Payments made but not earned as royalties do not count against the
Extension Royalty Requirement. In the event that Licensee has not
earned royalties in the amount of [*] at the time of Licensee’s written
notice of exercise of the option for the Second Extension Term, then
the extension for the Second Extension Term shall not be effective
unless Licensee earns such royalties through [*] or (if permitted)
makes the De Minimis Payment.
	 
	 	        Notwithstanding the foregoing provisions to the contrary, Licensor
may waive the Extension Royalty Requirement at any time upon notice to
Licensee in consideration of accelerated vesting of the warrant to
purchase shares of the common stock of WMS Industries Inc., as provided
in that certain Warrant, dated as of September 15, 2003, by and among
Hasbro, Inc. and WMS Industries, Inc.

2.     TERMS OF PAYMENT.

     (a)  Royalty Rate. The Royalty Rate set forth in the original License
Agreement Summary shall remain in full force and effect through [*] (that is,
for gross revenue received through [*]). Commencing on [*], the effective
Royalty Rate shall be:

        (i) For Licensed Articles 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(a)(ii) and 2(a)(iii) of this License
Agreement Summary below, Licensee will pay Licensor a royalty equal to [*];
provided, however, that for any Licensed Article that remains in operation on a
casino floor (or other legal gaming establishment) with the same “top box” (as
identified by serial number) and game (for example, the MONOPOLY Money Grab
game) for a period longer than [*] from the initial placement of such Licensed
Article, Licensee shall pay to Licensor a royalty equal to [*], commencing
with the [*] month.

        (ii) For Licensed Articles 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 Licensee’s revenue as provided above without Licensor first being licensed,
approved or found suitable, Licensee will pay Licensor for each

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

5

 

day each Licensed Article is operating the following royalties in the
jurisdictions set forth below according to the schedule set forth below (the
“Flat Fee Schedule”):

	 	 	 
	Nevada:	 	
U.S.[*] per unit per day;
	Non-Nevada:	 	
U.S.[*] per unit per day.

The parties shall review the Flat Fee Schedule not less frequently than
annually and shall negotiate in good faith to make any adjustments which may be
necessary or appropriate to reflect any changes to market conditions or
consumer acceptance of the Licensed Articles, subject to applicable gaming
regulatory requirements. Under no circumstances may the Flat Fee Schedule be
adjusted more than once every twelve months.

        (iii) For Licensed Articles 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 [*]. [*]. No deductions shall be
made for cash or other discounts 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.

     (b)  Terms of Payment. The parties recognize and agree that the Total
Royalty Guarantee for the Initial Term has been paid.

		
	 	(i) North America. For the period [*] through [*], Licensee shall pay to
Licensor minimum guaranteed royalties totaling U.S. [*] for the North
America Region. Such payments will be made in annual minimum advanced
guaranteed royalties (“Advance Payments”) for each calendar year as set
forth in the table below. Licensee may offset the Advance Payment for the
North America Region for any calendar year against the royalties for the
North America Region paid in such calendar year, but in no event shall
royalties or Advance Payments for the North America Region be applied,
offset or credited with respect to Advance Payments or royalties for any
other part of the Territory. For avoidance of doubt, the Advance Payment
for a year is applied to royalties paid in such year, and so, the
royalties for revenues earned in the fourth quarter of a year, but payable
by January 25 of the following year, shall be offset against the Advance
Payment for such following year. The royalties for revenues earned in the
fourth quarter of 2003, but payable by 2004, shall be offset against the
Advance Payment for 2004. Each calendar year is calculated separately for
purposes of Advance Payments (for example, if Licensee pays royalties for
the North America Region in 2005 in excess of the Advance Payment for such
Region for 2005, such excess shall not reduce the Advance Payment for such
Region due for 2006 or for any subsequent year). For avoidance of doubt,
the parties confirm that no part of any Advance Payment for the North
America Region shall be repayable to Licensee notwithstanding that
royalties payable on revenues for such Region in the applicable year are
less than the amount of such Advance Payment.

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

6

 

	 	 	 	 	 
	

	 	 	Balance Due
Dates	 	Advance Payment
	

	[*]	 	 	 	 
	

	[*]	 	
[*]
	 	[*]
	

	[*]	 	
[*]
	 	[*]
	

		 	 	 	 
	

	[*]	 	
[*]
	 	[*]
	

		
	 	(ii) International. For the period [*] through [*], Licensee shall also
pay to Licensor minimum guaranteed royalties totaling [*] for the
remainder of the Territory other than the North America Region (subject to
adjustment as provided below). In the event Licensor eliminates a Region
pursuant to Section 1(b)(i) (B), such amount shall be decreased for such
elimination. Such payments will be made in annual Advance Payments as set
forth on Exhibit 3 for each Region no later than January 31 of each
applicable year. Licensee may offset the Advance Payment for any calendar
year for a Region against the royalties paid in such calendar year for
such Region, but in no event shall royalties or Advance Payments for one
Region be applied, offset or credited with respect to Advance Payments or
royalties for any other Region. For avoidance of doubt, the Advance
Payment for a year is applied to royalties paid in such year, and so, the
royalties for revenues received in the fourth quarter of a year, but
payable by January 25 of the following year, shall be offset against the
Advance Payment for such following year. The royalties for revenues
received in the fourth quarter of 2003, but payable by January 25, 2004,
shall be offset against the Advance Payment for 2004. Each calendar year
is calculated separately for purposes of Advance Payments (for example, if
Licensee pays royalties for the Australia/New Zealand Region in 2005 in
excess of the Advance Payment for such Region for 2005, such excess shall
not reduce the Advance Payment for such Region due for 2006 or for any
subsequent year). For avoidance of doubt, the parties confirm that no
part of any Advance Payment for the any Region shall be repayable to
Licensee notwithstanding that royalties payable on revenues for such
Region in the applicable year are less than the amount of such Advance
Payment.

		
	 	(iii) Establishment of Advance Payments and Region Threshold Amounts for
the United Kingdom and Japan and Adjustment to Advance Payments and Region
Threshold Amounts for Central and South America on Account of Mexico.

		
	 	        (A) The Advance Payments and Region Threshold Amounts for those
Regions set forth on Exhibit 3 and Exhibit 5 were agreed to based on
royalty forecasts for licensed activities by

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

7

 

		
	 	Licensee or approved sublicensees. Those royalty forecasts did not
include any amounts for the Japan Region or for the country of Mexico as
part of the Central America and South America Region and the royalty
forecasts for the United Kingdom were dependent on when legislation is
expected to be enacted. Accordingly, the following provisions shall
apply.
	 
	 	        (B) In the event that legislation is enacted in Mexico allowing for
the distribution of Gaming Devices in Mexico, Licensee shall provide
Licensor with good-faith royalty forecasts for such country for the
remainder of the Term, including the Second Extension Term. Such
forecasts will be derived following reasonable consultation and sharing of
information by Licensee with Licensor, consistent with the sharing of
information and consultation provided to Licensor in connection with the
negotiation of Amendment 4 to this Agreement and agreement upon the
Advance Payments and Royalty Threshold Amounts for certain Regions in
connection therewith. Annual Advance Payments for the Central America and
South America Region shall be increased by an amount equal to [*], and the
Region Threshold Amounts for each applicable [*] measurement period for
such Region shall be increased by an amount equal to [*]. The agreed-upon
royalty forecasts, increase in Advance Payments, and increase in Region
Threshold Amounts shall be included in the Plan (as defined in Paragraph
10 (b) of this License Agreement Summary). Exhibit 3 and Exhibit 5 hereto
shall be amended to incorporate the increases in Advance Payments and
Region Threshold Amounts for the Central America and South America Region.
In the event the parties are unable to agree to the royalty forecasts for
Mexico (and hence the increases in Advance Payments and Region Threshold
Amounts), the matter shall be resolved by the “Dispute Resolution
Procedure” set forth in Section 10(c) of this License Agreement Summary.
	 
	 	        (C) In the event that legislation is enacted in Japan allowing for
the distribution of Gaming Devices in Japan, Licensee shall provide
Licensor with good-faith royalty forecasts for such country (that is, the
Japan Region) for the remainder of the Term, including the Second
Extension Term. Such forecasts will be derived following reasonable
consultation and sharing of information by Licensee with Licensor,
consistent with the sharing of information and consultation provided to
Licensor in connection with the negotiation of Amendment 4 to this
Agreement and agreement upon the Advance Payments and Region Threshold
Amounts for certain Regions in connection therewith. Annual Advance
Payments for the Japan Region shall be an amount equal to [*], and the
Region Threshold Amounts for each applicable [*] measurement period for
the Japan Region shall be an amount equal to [*]. The agreed-upon royalty
forecasts, increase in Advance Payments, and increase in Region Threshold
Amounts shall be included in the Plan (as defined in Paragraph 10 (b) of
this License Agreement Summary). Exhibit 3 and Exhibit 5 hereto shall be
amended to include the Advance Payments and Region Threshold Amounts for
the Japan Region. In the event the parties are unable to agree to the
royalty forecasts for Japan (and hence the increases in Advance Payments
and Region Threshold Amounts), the matter shall be resolved by the
“Dispute Resolution Procedure” set forth in Section 10(c) of this License
Agreement Summary.
	 
	 	        (D) The parties have agreed that in the event that legislation is
enacted in the United Kingdom deregulating the UK casino market and
allowing distribution of Gaming Devices in the United Kingdom, then the
Advance Payments and the amount for each year that will be counted

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

8

 

		
	 	toward the Region Threshold Amounts for the United Kingdom Region shall be
as set forth on
Exhibit 4 and Exhibit 6 (attached hereto and incorporated herein),
commencing with the year in which such amounts take effect dependent on
the year in which such legislation is enacted. Exhibit 4 and Exhibit 6
list years on column headings based on the assumption that [*] is the year
in which such legislation is enacted. If, in fact, the legislation is
enacted in a year later than [*], then the dates on Exhibit 4 and Exhibit
6 shall be moved forward a corresponding number of years. As examples:
(1) if such legislation is enacted in [*], then the column on Exhibit 4
under the heading [*] with an Advance Payment in the amount of [*] will,
in fact, apply to the year [*]; and (2) if such legislation is enacted in
[*], then the column on Exhibit 6 under the heading [*] with a Region
Threshold Amount of [*] will, in fact, apply to the year [*], and
accordingly the dollar amount for that year and the following year of [*]
(listed on Exhibit 6 under the heading “[*]”) would be combined to be the
Region Threshold Amount for the United Kingdom Region for the period
ending [*].

     (c)  Periodic Statements. Not later than the twenty-fifth (25th) day of
the month following each calendar quarter, Licensee shall furnish to Licensor
complete and accurate royalty statements. Any sales in Puerto Rico and all
international sales shall be itemized separately on all royalty reporting
forms.

     (d)  Royalty Payments. Royalties in excess of any Advance Payments shall
be due on the twenty-fifth (25th) day of the month following the calendar
quarter in which earned and payment shall accompany statements. Licensee shall
pay Licensor interest on any late royalty payment at the lower of an interest
rate of one and three fourths percent (1.75%) per month or the highest rate
permitted by law from the date the royalty should have been received by
Licensor until paid.

     (e)  Additional consideration.

     (i)  Additional [*] License Fee: In consideration of the extension of the
Term, Licensee shall pay to Licensor as an additional license fee an amount
equal to the difference between [*] and the amount of royalties to be paid by
Licensee under this License Agreement during calendar year [*]. Within [*]
business day of full execution of this Amendment4, Licensee shall pay to
Licensor [*] as an estimate of the amount owed under this paragraph. The
actual amount owed under this paragraph shall be calculated as of [*] and the
[*] royalty payment shall be adjusted to reflect the difference between the
amount owed under this paragraph and [*], if any.

     (ii)  [*]

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

9

 

     (iii)  Warrants: As additional consideration to induce Licensor to enter
into Amendment4 and to extend the Term, Licensee has arranged for WMS
Industries Inc. to provide to Hasbro, Inc. warrants for 250,000 shares of the
common stock of WMS Industries, Inc., as provided in that certain Warrant,
dated as of September 15, 2003, by and among Hasbro, Inc. and WMS Industries,
Inc. Licensee acknowledges that such warrants were material consideration
provided in order to induce Licensor to enter into Amendment4.

7.     (a) Approvals: 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 by Licensor at Licensee’s facilities.

8.     (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 by
it and on or within all packaging, cartons, wrapping material, advertising,
promotional or display material bearing the Name, the notice: “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 prevent use of
this notice, a shorter notice is follows: “MONOPOLY is a trademark of Hasbro
used with permission. ©[year of publication] Hasbro. All Rights Reserved.”)
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 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.

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

10

 

     (b)  Approvals: Each and every tag, label, imprint, storyboard, copy and
layout or other device containing any such notice and all advertising,
promotional or display material bearing the Name, shall
be submitted by Licensee to Licensor for its written approval prior to use by
Licensee. Licensee must use Licensor’s approval form with each submission for
Licensor’s approval. 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 indicated 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.

9.     PROMOTIONAL MATERIAL.

     (d)  Marketing Commitment. Commencing no later than January 31, 2004, and
annually thereafter by January 31 of each calendar year during the Term,
Licensee shall submit to Licensor an annual written marketing plan for the
Licensed Articles for the current year for Licensor’s good faith approval,
taking into consideration Licensee’s expertise in marketing and promotions in
the gaming industry. Such marketing plan shall include a country-by-country
breakdown (or where appropriate breakdown by Region) of planned marketing
efforts and budgeted expenditures for the elements of the same, and an estimate
of how Licensee will meet the requirement for Qualified Marketing Expenditures
set forth below. In the event that Licensor does not approve the marketing
plan, the parties agree to work together in good-faith to revise the marketing
plan so that it meets with Licensor’s approval. [*].

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

11

 

10.     DISTRIBUTION.

     (a)  Licensee represents that it has the capacity to deploy a new version
of the Licensed Articles every [*] during the Term of this Agreement; provided
however that the deployment of such Licensed Articles shall be in Licensee’s
sole discretion as determined in good faith. Commencing in calendar year [*]
and for each calendar year in the Term, Licensee shall have fully developed and
regulator approved (by GLI or any one of the gaming regulators for any of,
Nevada, Mississippi, or New Jersey) [*] new games using the Name ready for
deployment.

     (b)  Commencing in [*], Licensee shall provide to Licensor by September
30th of each year, a [*] product distribution plan (the “Plan”) for the
following [*]. The parties agree that any adjustment in the Plan as it relates
to product placements by Region shall not adjust the Advance Payments or Region
Threshold Amounts set forth on Exhibits 3 through 6 and as the same may have
been amended for any new countries in the Region. [*].

     (c)  Dispute Resolution Procedure. Any matter that under the terms of
this License Agreement Summary 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 Patricia
Schmidt, Vice President, Licensing Promotions of North America, of Licensor and
Kathleen McJohn, Vice President, General Counsel and Secretary, for Licensee.
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 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. 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 Jane Ritson-Parson, President Hasbro Properties
Group, of Licensor and Orrin Edidin, Executive Vice President, for Licensee. 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 are not able to resolve the dispute within five (5) business days
after their conference, then the matter shall be resolved by binding
arbitration in New York, New York, in accordance with the rules of the American

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

12

 

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. 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.

     (d)  [*]

14.     Sell-off Period: [*] for Licensed Articles which are sold. Lease terms
for Licensed Articles which are leased shall not exceed the termination of this
Agreement by more than [*].

(END OF PAGE)

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

13

 

3.     Section 1(a)(ii) (Right of Refusal) is hereby deleted from the Agreement.

4.     This document shall not be deemed an offer and shall not be binding unless
signed by Licensor and Licensee.

5.     This Amendment 4 may be executed in one or more counterparts, and by
facsimile transmission, each copy of which shall be deemed an original and all
of which, when taken together, shall constitute one and the same instrument,
but this Amendment shall not be binding upon the parties until it has been
signed by each party. The parties hereto agree that facsimile signatures on a
copy of this Amendment shall be effective and enforceable as if they were
original signatures.

All other terms and conditions of the Agreement shall remain unchanged and in
full force and effect. In the event of any conflict between the terms of this
Amendment 4 and the terms of the Agreement as it existed before this
Amendment 4,
the terms of this Amendment 4 shall control.

     IN WITNESS WHEREOF, the parties hereunto have set their hand as of the
date first set forth above.

	 	 	 	 
	Licensor	 	
Licensee
	 
	HASBRO INC	 	
WMS GAMING INC.
	 
	 	/s/ Jane
Ritson-Parsons	 	/s/ Orrin J. Edidin
		
		

	 
	By:	Jane
Ritson-Parsons	 	Orrin J. Edidin
		
		

	 
	Title:	President	 	Executive Vice President and Chief Operating Officer
		
		

	 
	Date:	9/15/03
		

	 	 	 	 
		 	

	 
	HASBRO
INTERNATIONAL, INC.	 	

	 
	 	/s/ Jane
Ritson-Parsons	 	
		

	 
	By:	Jane
Ritson-Parsons	 	
		
		
	 
	Title:	President	 	
		
	 	
	 
	Date:	9/15/03	 	
		
	 	

14

 

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

Exhibit 3

Annual Minimum Advanced Guaranteed Royalties By Established International Region

(All amounts are in U.S. dollars)

	 	 	 
	

	REGION	 	
[*]
	

	

	Australia & New Zealand	 	
[*]
	

	

	Russia & Europe (no UK)	 	
[*]
	

	

	Africa	 	
[*]
	

	

	Central & South America	 	
[*]
	

	

	Asia (no Japan)	 	
[*]
	

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

 

 

Exhibit 4

Annual Minimum Advanced Guaranteed Royalties For United Kingdom Region

(All amounts are in U.S. dollars)

	 	 	 
	

	REGION	 	
[*]
	

	

	United Kingdom	 	
[*]
	

	

	

	

	

	

	

	

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

 

 

Exhibit 5

Biennial Threshold Amounts By Established International Region

(All amounts are in U.S. dollars)

	 	 	 
	

	REGION	 	
[*]
	

	

	Australia & New Zealand	 	
[*]
	

	

	Russia & Europe (no UK)	 	
[*]
	

	

	Africa	 	
[*]
	

	

	Central & South America	 	
[*]
	

	

	Asia (no Japan)	 	
[*]
	

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

Exhibit 6

Threshold Amounts for United Kingdom Region

(All amounts are in U.S. dollars)

	 	 	 
	

	REGION	 	
[*]
	

	

	United Kingdom	 	
[*]
	

	

	

	

	

	

	

	

	

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

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