BUYOUT AGREEMENT
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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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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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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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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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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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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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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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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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 rejecti
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