PEAK ENTERTAINMENT HOLDINGS, INC.
Xxxxxxx Xxxx, Bagshall Hill
Bakewell, Xxxxxxxxxx XX 00 0XX
Xxxxxx Xxxxxxx
March 6, 2006
Xx. Xxxxx Xxxxxxxxxx
The Silly Goose Company, LLC
00 Xxxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Re: Agreement dated April 28, 2003; Entertainment
Production Agreement dated December 16, 2003;
and Financing Agreement dated August 6, 2004
(collectively, the "Peak Wumblers Agreements")
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Dear Xxxxx:
Peak Entertainment Holdings, Inc.("Peak") and you and the undersigned have
agreed as follows:
1. Effective immediately, but subject to the provisions of Paragraph 5
below, the February 13, 2006 letter from The Silly Goose Company, LLC to
Peak Entertainment Ltd. (the "Purported Termination Letter") is hereby
withdrawn and revoked, and the Purported Termination Letter is confirmed to
have been sent in error and acknowledged by The Silly Goose Releasors, as
defined in Section 2 (b) below, to be unfounded, to the extent it alleges
any tortious or intentional breaching act, failure to properly account or
commingling of funds, on the part of Peak Entertainment Ltd. or any
affiliate, agent, officer, attorney or employee of Peak. Subject to the
provisions of Paragraph 5 below, each of the Peak Wumblers Agreements is
terminated to the extent provided for herein and of no further force and
effect to the extent provided for herein, and Peak shall surrender to the
Silly Goose Company, LLC ("Silly Goose") all rights in the Wumblers Project
previously granted by Silly Goose to Peak (the "Rights") and Peak hereby
returns all Rights to Silly Goose, subject to the terms hereof, and except
as stated in this letter agreement of modification of the Peak Wumblers
Agreements.
2. (a) Subject to the above, Peak for itself and its officers,
directors, affiliates, attorneys, successors and assigns, (the "Peak
Releasors") hereby releases
Silly Goose, Xxxxx Xxxxxxxxxx, and the parties listed on Schedule A, and
their heirs, administrators, executors, personal representatives, officers,
directors, affiliates, successors and assigns (the "Peak Releasees") from
any obligations the Peak Releasees have or may have had to the Peak
Releasors under the Peak Wumblers Agreements and any claims the Peak
Releasors have or may have had against the Peak Releasees from the
beginning of time to the date hereof.
(b) Subject to the above, Silly Goose, Xxxxx Xxxxxxxxxx, and the
parties listed on Schedule A, for themselves and their heirs,
administrators, executors, personal representatives, officers, directors,
affiliates, successors and assigns, (the "Silly Goose Releasors") hereby
release Peak, its officers, directors, affiliates, attorneys, successors
and assigns (the "Silly Goose Releasees") from any obligations the Silly
Goose Releasees have or may have had to the Silly Goose Releasors under the
Peak Wumblers Agreements and from any claims the Silly Goose Releasors have
or may have against the Silly Goose Releasees from the beginning of time to
the date hereof.
3. In addition to the return of Rights to Silly Goose pursuant to the
terms herein stated, and pursuant thereto Peak shall promptly use
reasonable efforts to deliver to Silly Goose all materials, samples,
models, contracts, scripts, etc., developed in connection with the Wumblers
Project (the "Materials"), with Silly Goose first providing delivery
instructions and full insurance as per its own determined value of the
materials, and Silly Goose shall hold Peak harmless for any damage or loss
that may occur in the course of transfer. Peak shall have no liability for
the condition of the Materials in the hands of contractors. To the extent
any Materials are situated at the location of contractors working on the
Wumblers Project, Peak shall then promptly advise such contractors that the
Materials belong to Silly Goose and are subject to your direction, and
Silly Goose releases Peak from any liability as to such materials in the
hands of contractors. We have directed Xxxx Xxxxx to coordinate the
delivery to you of those Materials we have on hand at our premises pursuant
to the terms hereof.
4. In further consideration of Peak's surrender of all Rights and
Materials, Silly Goose agrees that Peak retains the right to receive 15% of
100% of the proceeds calculated in the same manner as for any investor in
the Wumblers Project from the entity exploiting the Wumblers Project (the
"Percentage"), which assumes 4Kids is the majority investor funding The
Wumblers Project, or the Percentage shall be such other percentage as is
otherwise set forth below, provided, however, that payment to Peak of such
Percentage shall attend on and be paid after (a) the investors in such
entity have recouped their direct investment, (b) those persons listed on
Schedule A have received from such entity the aggregate sum of $1,170,000
on account of their anticipated credit for prior development of the
Wumblers Project and (c) the distribution by such entity to Xxxxx
Xxxxxxxxxx of $45,000 for consulting fees Peak hereby acknowledges Xxxxx
Xxxxxxxxxx is entitled to receive out of the Wumblers Project. After
payments from the Wumblers Project or satisfaction thereof in any other
manner has been made of the amounts provided for in 4 (a), (b) and (c)
above, Peak shall receive such Percentage of 100% of net profits, as set
forth below, calculated from the first dollar of net profits received by
the entity exploiting the Wumblers Project.
(i) If 4Kids, or a wholly-owned or controlled affiliate of 4Kids is
the majority investor funding the Wumblers Project, the Percentage retained
by Peak above shall be 15%;
(ii) If 4Kids is not the majority investor funding the Wumblers
Project, the Percentage retained by Peak above shall be 15% and Peak shall
retain representation rights for The Wumblers on a 35% of gross receipts
for the UK;
(iii) If 4Kids is not the majority investor, and if the parties hereto
agree that Peak shall retain a Percentage of 7.5%, then Peak shall not
retain representation rights for The Wumblers for the United States and
Canada, and Peak shall retain all other worldwide rights on a 35% of gross
receipts for the UK and 40% for the rest of the world.
(iv) If 4Kids is not the majority investor, and if the parties hereto
agree that Peak shall retain a Percentage of 8%, then Peak shall retain
representation rights for The Wumblers on a 35% of gross receipts basis for
the UK and 40% for Europe, Australia, South America and South Africa, and
Silly Goose shall retain representation rights for the rest of the world..
(v) If 4Kids is not the majority investor, and if the parties hereto
agree that Peak shall retain a Percentage of 9%, then Peak shall retain
representation rights for The Wumblers on a 35% of gross receipts basis for
the UK and 40% for France, Spain, Italy, Australia and Mexico, and Silly
Goose shall retain representation rights for the rest of the world.
(vi) ) If 4Kids is not the majority investor, and if the parties
hereto agree that Peak shall retain a Percentage of 10%, then Peak shall
retain representation rights for The Wumblers on a 35% of gross receipts
basis for the UK and 40% for Australia, and Silly Goose shall retain
representation rights for the rest of the world.
5. If full execution of this agreement by all parties listed on
Schedule A hereto is not delivered to Peak on or before March 13, 2006,
Silly Goose shall use its best efforts to ascertain from the party(ies)
failing to sign the reason for such failure
and to report such reason promptly to Peak. In addition, from and after
March 13, 2006, Xxxxx Xxxxxxxxxx and Silly Goose, jointly and severally,
shall indemnify and hold Peak harmless against and from all losses,
damages, costs and expenses, including reasonable attorneys fees, arising
from claims against Peak by persons listed on Schedule A who have not
signed this Agreement, provided that (a) this indemnification shall not
apply to that portion of actions or proceedings that are solely criminal
proceedings (b) the amount for which Xxxxx Xxxxxxxxxx shall be responsible
for any single claim shall not exceed the amount invested in Peak by the
party making the claim, and (c) in the event the aggregate amount invested
by parties listed on Schedule A who fail to sign this Agreement exceeds
$35,000, Peak shall have the right to terminate this Agreement, to be
exercised in writing delivered to Silly Goose (the "Rescission Notice"),
setting forth a date (the "Rescission Date"), which Rescission Date shall
be not less than seven (7) days after the date of the Rescission Notice,
provided that in no event may a Rescission Notice be sent after March 20,
2006. Unless by the Rescission Date the aggregate amount invested by
parties listed on Schedule A who fail to sign this Agreement no longer
exceeds $35,000, this Agreement shall terminate, all of its provisions
shall be deemed rescinded as if never executed, and Silly Goose shall
promptly deliver the Materials to Peak and send a notice to all contractors
working on the Wumblers Project similar to that described in paragraph 3.
6. The parties each acknowledge that: no representations not contained
herein have been made to the other to induce this agreement; that this
agreement is the entire agreement between the parties revoking and
replacing all prior agreements between the parties; that no party hereto
shall make negative statements about the other parties in regard to their
respective business activities; that no amendment or change hereto shall be
of any force or effect unless specifically consented to in a writing signed
by the parties; that this agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
principles of conflicts of law; that each party has consulted with separate
independent counsel in this regard; and, that this agreement was drafted by
each of the parties hereto.
7. This agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument, and faxed signatures shall be valid
as original.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Kindly acknowledge your agreement to the foregoing on all five (5)
copies of this letter and return two (2) fully executed copies to the
undersigned.
Very truly yours,
PEAK ENTERTAINMENT HOLDINGS
By: /s/ Wilf Shorrocks
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Wilf Shorrocks, President
READ AND AGREED:
The Silly Goose Company, LLC
By: /s/ Xxxxx Xxxxxxxxxx
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Xxxxx Xxxxxxxxxx, Manager
/s/ Xxxxx Xxxxxxxxxx
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Xxxxx Xxxxxxxxxx, Individually