Stock Purchase Proposal ======================= If Amiga completes all three chips by 9/1/84, Atari will purchase 1 million series B preferred shares for $3 million, using either cash or cancellation of debt. Capital structure of Amiga: 3.5 million shares common stock, owned by employees .5 million shares common stock reserved for future issuance to employees 2 million shares common stock reserved for issuance to InterMedics Corporation Total face amount of all shares = $5.8 million In addition to current stock and stock to be issued to Atari, Amiga plans to issue up to 2 million shares of series A preferred stock for not less than $2 per share. If the average sales price of this stock *is* less than $2, Atari gets a credit against future royalties. This presumably is to prevent Amiga from diluting Atari's ownership stake by dumping a bunch of cheap shares on the market. License Proposal ================ Atari has exclusive license to use the chips in videogames. Nonexclusive rights to computers. Atari receives a worldwide, perpetual license to make and use the Amiga chipset. They must may $2 royalty for each chipset sold as part of a videogame console or computer. Atari must pay $15.00 royalty for each chipset sold as part of a standup videogame. If Atari's royalty payments for a given year ever total less than $100,000, they lose their exclusivity here. Amiga may not license chips to others who directly compete against Atari, with one exception: Amiga may license the audio chip (only) to General Instruments, but they cannot use it in standup videogames prior to 6/85 or in videogame consoles or computers prior to 6/86. Atari may begin making videogames using the chipset immediately. Atari may make a computer add-on kit for a console that uses the chipset earliest 6/85. Atari may make a standalone computer using the chipset earliest 3/86. Atari may not make a second disk drive or RAM expansion beyond 128 K prior to 1/86. Amiga can make their own line of computers with the chipset beginning immediately, but can only sell it through dealers until 4/86. Atari can only sell their products through mass merchandisers until 4/86. Amiga must place in escrow with a neutral third party the complete design specs for the chipset. Short-term Advance ================== If Amiga accepts this proposal, Atari will immediately advance them $.5 million. Amiga must pay this money back to Atari, with interest, by 6/30/84 if a license agreement is not in place by 3/31/84. If Atari and Amiga do not sign a license agreement and Amiga does not pay back the $.5 million to Atari by 6/30/84, Atari may take the chipset documentation from escrow and the license proposal immediately goes into effect. The $500,0000 loan is considered repaid in exchange for Atari not needing to pay any royalties at all to Amiga for use of the chipset. Scheduled loan schedule from Atari to Amiga: Signing of letter of intent = $.5 million Signing of license agreement = $1 million Each chip of chipset completed = $.5 million Total = $3 million These loans will be converted into a stock purchase (see stock purchase proposal) once all chips are completed. If Amiga doesn't provide the chipset by 9/1/84, Atari may either convert the loans into stock anyway or declare them immediately due. If the latter, Atari may take chipset documentation from escrow and license proposal goes into effect, but royalty rate for videogame consoles and computers goes to $4 per chipset. These royalties can first be used to pay off Amiga's loan for them. If Atari must complete the chipset for Amiga, they may charge Amiga their cost to do so plus 10 percent, once again payable against royalties.