BUYOUT AGREEMENT
Exhibit
10.10
This Buyout Agreement (the "Agreement") is dated February
24.2009 (the "Effective
Date') and is
between Atari Interactive, Inc.("Atari") and Red Mile Entertainment, Inc. ("Red Mile").
Recitals
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A.
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Atari
and Red Mile are party to a Publishing Agreement dated June 20, 2008 (the
"Publishing
Agreement") under which Red Mile licensed to Atari certain rights in and
to the interactive software game with the working title "Heroes over
Europe* (the "Title").
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B.
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On
February 12, 2009. Atari delivered to Red Mile a notice stating that Atari
had terminated
the Publishing Agreement and had exercised its rights to retain the rights
licensed to Atari
thereunder.
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C.
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Atari
is willing to release to Red Mile the rights to the Title licensed to
Atari under the Publishing
Agreement in exchange for certain payments from Red Mile pursuant to the
terms of this Agreement, in accordance with the terms and conditions
hereinbelow. Red Mile anticipates funding the payments called for by this
Agreement with the proceeds from a new financing and/or production
agreement to be entered into between Red Mile and a third party (the "Third Party") regarding
completion and distribution of the Title for the Sony Playstation 3,
Microsoft Xbox 360, and personal computer
platforms.
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Agreement
The parties agree as follows:
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1.
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Buyout Fee. In
exchange for the release of Atari's rights in the Title, Red Mile shall
pay Atari
(collectively, the "Buyout
Fee"):
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1.1.
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A
fee in the amount of $4,750,000 (the "Initial Payment") on
March 5, 2009 or as
soon as reasonably practicable thereafter if Red Mile provides evidence by
March 5, 2009 reasonably satisfactory to Atari of an agreement in
principle for financing of the Title by a Third Party (including, at
minimum, proof of funds and definitive proof of intent (e.g., executed
L01); but in any event not later than March 19, 2009;
and
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1.2.
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33%
of any and all royalties or other payments received by Red Mile or its
affiliates,
without deductions of any kind, from the Third Party in connection with
the licensing of the Title net of the Initial Payment ("Net Royalties") until
Atari has received aggregate fees and royalties under this Agreement
(inclusive of the Initial Payment) of $5,500,000, to be paid to Atari
within five (5) business days following receipt by Red Mile or its
affiliates of the corresponding Net Royalty amount(s)(the "Atari First-Tier Royalties");
and
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1.3.
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thereafter,
15% of any and all Adjusted Net Royalties (as defined below) received
by Red Mile or its affiliates, to be paid to Atari within five (5)
business days following receipt by Red Mile or its affiliates of the
corresponding Adjusted Net Royalties (or portion thereof), provided that
in no event shall any amount payable to Atari in accordance with this
subsection 1.3 be a negative amount (the "Atari Second-Tier
Royalties"). As used herein, the "Adjusted Net Royalties"
means Net Royalties minus all
verifiable out-of-pocket direct costs actually paid by Red Mile in order
to complete the development of the Title with respect to the period from
inception of the Tile through completion of the Title. This includes all
amounts paid to IR Gurus Pty. Ltd. at any time in respect of the
Title.
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1
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1.4.
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Quarterly Accounting.
Reporting with respect to the Buyout Fee shall be on a calendar
quarterly basis. Within sixty (60) days after the close of each calendar
quarter, beginning with the first calendar quarter in which any royalties
or other payments (other than the;Initial Payment) are due hereunder, Red
Mile shall provide Atari with a written statement showing the Net
Royalties and Adjusted Net Royalties for such calendar quarter, a
calculation of the royalties and other amounts payable to Atari in respect
of such period (including without limitation the Atari First-Tier
Royalties and the Atari Second-Tier Royalties). Each such statement shall
be accompanied by paymentof the amount of the Buyout Fee then due. Atari
shall be deemed to have consented to all accountings rendered by Red Mile
and each such statement of accounting shall be conclusive, final and
binding, unless specific objection in writing, stating the basis thereof,
is given by Atari to Red Mile within one (1) year after the date it was
rendered. No claim concerning a statement or other account rendered by Red
Mile may be made unless asserted within one (1) year after the date of Red
Mile's notice rejecting such objection or, if Red Mile fails to give such
notice of rejection, within one (1) year after the sixtieth (60th) day
following Atari's written
objection,
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1.5
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Examination Rights.
Atari shall have the right, to be exercised not more than
once
per calendar year and upon not less than ten (10) business days prior
written notice to Red Mile, through an independent public accounting firm
reasonably acceptable to Red Mile, to examine the books, records and
accounts of Red Mile relating to the Buyout Fee, for the purposes of
verifying Red Mile's compliance with the terms and conditions of this
Agreement. All information made available to Atari's representative in any
such examination shall be and be treated as Confidential 'Information, and
prior to any such examination, Atari's representative shall enter into an
appropriate confidentiality agreement with Red Mile. Each such examination
shall not weed three (3) days in duration and shall be conducted during
regular business hours, in such manner as not to interfere unduly with the
business of Red Mile. Atari's representative shall report to Atari solely
whether Atari has been overpaid, underpaid or properly paid for the period
subject to examination. The expenses of examination pursuant to this
Section 1.5 shall be borne by Atari; provided, however, that Red Mile
shall be charged for the expense of any such examination that establishes
an underpayment to Atari in excess of ten percent (10%) of the amount due
for the period subject to examination. In the event that such examination
reveals any overpayment by Red Mile, Atari shall reAund such overpayment
within thirty (30) days following Atari's receipt of such examination
results.
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1.6.
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Payment of Discovered
Ilederpayment, With respect to any claim by Atari that additional
monies are payable by Red Mile to Atari pursuant to this Agreement based
upon such an examination, Red Mile shall not be deemed in breach of this
Agreement if within thirty (30) calendar days after Red Mile's receipt of
any written claim that additional monies are due and payable, together
with a copy of the audit report prepared in connection with such audit,
Red Mile shall either: (i) pay such additional monies so claimed by Atari;
or (ii) contest such claim, in whole or in part, by written notice sent to
Atari.
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2
2.
Release of Rights in the
Title.
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2.1.
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On
receipt by Atari of the initial Payment, all of the rights licensed by Red
Mile to Atari
pursuant to the Publishing Agreement (the "Licensed Rights"), including
all intellectual Property Rights and other rights in or to the
Deliverables, Title, Exclusive Derivative Products, Future Products and/or
Sequels (as such terms are defined in the Publishing Agreement) shall
immediately revert to Red
Mile.
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2.2.
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As
soon as is practicable after the Effective Date, Atari shall deliver at
Red Mile's cost
all code, art, documentation, music, sound effects and other assets
relating to the Title within Atari's possession or
control.
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| 2.3. | Atari makes no representations or warranties with respect to the Licensed Rights, which shall revert to Red Mile on an as-is, where-is basis. |
3.
Publishing
Agreement
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3.1.
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As
of the Effective Date, the Publishing Agreement will be terminated and of
no further force and effect. Neither party to this Agreement will have any
further obligation or liability to the other party under the Publishing
Agreement other than subject to Sections 9, 10, and 11 , which shall
survive such termination.
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4.
Mutual Release of
Claims.
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4.1.
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Except
for obligations arising under this Agreement and/or the Mutual Nondisclosure
Agreement between Red Mile and Atari dated on or about February 13, 2009
(the "Confidentiality
Agreement") and except as expressly provided otherwise in Section
3.1 above, the parties to this Agreement, on their own behalf, and on
behalf of their respective officers, directors, employees, investors,
shareholders, divisions, successors and assigns, hereby fully and forever
release each other and their respective officers, directors, employees,
investors, shareholders, affiliates, divisions, successors and assigns,
from, and agree not to xxx each other concerning, any claim, duty,
obligation or cause of action relating to any matters of any kind, that
either party may possess arising from any omissions, acts or facts that
have occurred on or before the Effective Date and relating to, or arising
from, or otherwise in connection with the Publishing Agreement or the
licensing of rights in the Title by Red Mile to Atari, and all claims for
attorneys' fees and costs;
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4.2.
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Each
party to this Agreement is familiar with and expressly waives all rights
under
California Civil Code Section 1542 (and every statute of similar effect),
which provides as follows: "A general release does not extend to claims
which the creditor does not know or suspect to exist in his or her favor
at the time of executing the release, which if known by him or her must
have materially affected his or her settlement with the
debtor."
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4.3.
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The
foregoing release and waiver are not being provided based upon any representations
not expressly contained in this Agreement. The parties understand the risk
that the facts known to them or believed to be true, may be otherwise, and
each of the parties voluntarily assumes such
risk.
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5.
Miscellaneous.
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5.1.
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Authority. Each
party represents and warrants that it has the right and authority to
enter into this Agreement, and that there exist no obligations which
prevent such party from granting, accepting, or performing all of the
undertakings provided for in this
Agreement.
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5.2.
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Governing Law.
This Agreement shall be governed by and construed in accordance
with the laws ofthe State of New York, excluding its conflict of laws
rules.
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5.3.
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Entire Agreement.
This Agreement and the Confidentiality Agreement are the entire
agreement between the parties with respect to the subject matter hereof
and supersede all prior and contemporaneous agreements. This Agreement
shall not be modified except by a writing signed by an authorized
representative of each
party.
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5.4.
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Attorneys' Fees.
in any proceeding to enforce this Agreement, the prevailing party
shalt recover, in addition to all other relief, reasonable attorneys' fees
and costs.
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5.5.
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Counterparts.
The parties may execute this Agreement in two or more counterparts,
each of which shall be deemed an original.
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| 5.6. | All dollar amounts provided herein are denominated in U.S. Dollars. |
The
parties have signed this agreement on the Effective Date.
| Red Mile Entertainment, Inc. | Atari Interactive, Inc. | |||
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By:
/s/ Xxxxxxx X. Xxxxxxxx
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By:
/s/ X. Xxxxxxxx
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Name:
Xxxxxxx X. Xxxxxxxx
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Name:
X. Xxxxxxxx
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Title:
CEO
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Title:
President
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