Agreement Regarding Issuance of Shares - Atari Inc. and Infogrames Entertainment SA
EXECUTION COPY
AGREEMENT REGARDING ISSUANCE OF SHARES
September 15, 2005
Atari, Inc.
417 Fifth Avenue
New York, NY 10016
U.S.A.
Ladies and Gentlemen:
This is to set forth the agreement between Atari, Inc. ("Atari"), a
Delaware corporation, and Infogrames Entertainment S.A. ("IESA"), a French
societe anonyme, regarding the issuance by Atari of shares of common stock, par
value $0.01 per share, of Atari ("Common Stock") in satisfaction of obligations
of Atari to IESA and/or its subsidiaries, which agreement is as follows:
1. At the closing described below, Atari will issue to IESA 4,881,533 shares
(the "Shares") of Common Stock, to be applied at the rate of $1.30 per
Share as follows:
(a) 3,626,154 Shares will be applied in full satisfaction of a total of
$4,714,000 due from Atari to subsidiaries of IESA for work performed
and to be performed relating to the development of the Test Drive
Unlimited and Stuntman 2 games, as reflected on the attached schedule.
(b) 1,255,379 Shares will be applied to reduce month end net balances due
from Atari and its subsidiaries (the "Atari Companies") to IESA and
its direct or indirect wholly-owned subsidiaries (the "IESA
Companies"), as provided in Section 2.
2. (a) If at the end of September 2005 or any subsequent calendar month
through and including March 2006, the amount due from the Atari
Companies to the IESA Companies exceeds the amount due from the IESA
Companies to the Atari Companies, the $1.30 per share issue price of
the Shares described in Section 1(b) will be applied in satisfaction
of the net amount due from the Atari Companies to the IESA Companies
until the entire issue price has been applied.
(b) If at March 31, 2006, after applying the issue price of the Shares
described in Section 1(b) as provided in Section 2(a) in satisfaction
of net amounts, if any, due from the Atari Companies to the IESA
Companies at the end of each month from September 2005 to and
including March 31, 2006, any portion of that issue price has not been
applied in satisfaction of net amounts due from the Atari Companies to
the IESA companies, not later than April 10, 2006, IESA will pay the
unapplied balance of that issue price to Atari in cash.
3. The closing of the issuance of the Shares to IESA (the "Closing") will take
place on September 15, 2005, at Atari's offices, 417 Fifth Avenue, New
York, NY 10016, at 10:00 a.m., New York City time. At the Closing:
(a) Atari will deliver to IESA the certificates representing the Shares,
registered in IESA's name. Each certificate shall bear a legend
stating that the shares it represents were issued in a transaction
that was not registered under the Securities Act of 1933, as amended,
and those shares may be sold or otherwise transferred only in a
transaction that is registered
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under that Act or is exempt from the registration requirements of that
Act and any applicable state securities laws.
(b) IESA will deliver to Atari a document stating that (i) all obligations
of Atari set forth on the schedule to this Agreement relating to the
development of the Test Drive Unlimited and Stuntman 2 games have been
paid in full and (ii) acknowledging that the issue price of the Shares
described in Section 1(b) will be applied in satisfaction of net month
end balances due from the Atari Companies to the IESA Companies, or
paid, as provided in Section 2.
4. IESA hereby acknowledges and agrees that all of the services rendered and
expenses incurred by the subsidiaries of IESA in connection with Test Drive
Unlimited and Stuntman 2 and all of the results and proceeds thereof
(sometimes severally and collectively called "Elements" herein), were and
shall continue to be performed in accordance with, and are subject to the
terms of, Atari's standard developer agreement, including (a) with respect
to Atari's ownership from inception and in perpetuity of all intellectual
property rights or interests resulting from or arising in connection with
such services such that, among other things, Atari is and shall be the sole
and exclusive owner of all right, title and interest, including without
limitation all copyrights, trademarks, and patent rights (and all
extensions and renewals thereof throughout the world), in and to all such
Elements, including all so-called engines, designs, game play, narrative,
characters, textures, and processes created, adapted, commissioned or used
by such subsidiaries in performing the Test Drive Unlimited and Stuntman 2
development work at any time, it being expressly acknowledged by IESA that
all such work has been commissioned by Atari and rendered by the IESA
subsidiaries on a "work-for-hire" basis from inception (and, to the extent
that it is ever legally determined that such work or any Elements were not
rendered or created on a work-for-hire basis, IESA hereby irrevocably
grants to Atari a gratis, perpetual, exclusive, world-wide license with
respect to any such Elements), and (b) standard warranties and
representations from the IESA subsidiaries in favor or Atari that all
Elements are delivered to Atari on an unencumbered, liability-free, fully
paid-up basis such that Atari's exploitation thereof and of the games shall
never (i) violate the laws or requirements of any jurisdiction, union or
other entity, (ii) infringe the rights of any person or entity or (iii)
require Atari to pay any sums or other consideration to any person or
entity in respect of the Elements (other than those licensors identified on
Exhibit 4 attached hereto and such other ordinary course license payments
which Atari may hereafter agree in writing to accept).
5. Atari represents and warrants to IESA as follows:
(a) Atari is a corporation duly incorporated and in good standing under
the laws of the State of Delaware.
(b) Atari has all corporate power that is necessary to enable it to enter
into this Agreement and to carry out the transactions contemplated by
it. All corporate actions necessary to authorize Atari to enter into
this Agreement and carry out the transactions contemplated by it have
been taken. This Agreement has been duly executed by Atari and is a
valid and binding agreement of Atari, enforceable against Atari in
accordance with its terms.
(c) When the Shares are issued at the Closing as contemplated by this
Agreement, the Shares will be duly authorized and issued, fully paid
and non-assessable shares of Common Stock, and IESA will own the
Shares free and clear of any liens, encumbrances or claims of other
persons, other than liens or encumbrances imposed by reason of acts of
IESA and restrictions imposed by U.S. Federal and state securities
laws.
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6. IESA represents and warrants to Atari as follows:
(a) IESA is a societe anonyme duly formed and currently existing under the
laws of the Republic of France.
(b) IESA has all corporate power that is necessary to enable it to enter
into this Agreement and to carry out the transactions contemplated by
it. All actions necessary to authorize IESA to enter into this
Agreement and carry out the transactions contemplated by it have been
taken. This Agreement has been duly executed by IESA and is a valid
and binding agreement of IESA, enforceable against IESA in accordance
with its terms.
(c) IESA is aware that the Shares will be issued to it in a transaction
that will not be registered under the U.S. Securities Act of 1933, as
amended, and that IESA may sell or transfer the Shares only in a
transaction that is registered under that Act or is exempt from the
registration requirements of that Act and any applicable U.S. state
securities laws.
(d) IESA will be acquiring the Shares at the Closing for investment, and
not with a current view to the sale or distribution of the Shares.
7. This Agreement will be governed by the laws of the State of New York in the
United States of America, without regard to principles of conflicts of laws
that would apply the laws of any other jurisdiction. IESA and Atari each
(i) agrees that any action or proceeding relating to this Agreement may be
brought in, but only in, a state or Federal court sitting in the Borough of
Manhattan in the State of New York, (ii) consents to the personal
jurisdiction of any such court in any such action or proceeding, (iii)
agrees not to seek to change the venue of any such action or proceeding
brought in any such court, whether on the basis of convenience of the
parties or for any other reason, and (iv) agrees that process in any such
action or proceeding may be served by registered mail or in any other
manner permitted by the rules of the court in which the action or
proceeding is brought.
8. Any notice or other communication under this Agreement must be in writing,
and will be deemed given when it is delivered in person or sent by email or
facsimile communication, or on the tenth day after the day on which it is
sent by mail, to the other of them at its principal office.
9. This Agreement and the documents to be delivered in accordance with this
Agreement contain the entire agreement between Atari and IESA relating to
the transactions that are the subject of this Agreement and those other
documents, all prior negotiations, understandings and agreements between
Atari and IESA with regard to those transactions are superseded by this
Agreement and those other documents, and there are no representations,
warranties, understandings or agreements concerning the transactions that
are the subject of this Agreement or those other documents other than those
expressly set forth in this Agreement or those other documents.
10. This Agreement may be amended by, but only by, a document in writing signed
by both Atari and IESA.
11. This Agreement may be executed in two or more counterparts, some of which
may contain the signatures of fewer than all the parties or may contain
facsimile copies of pages signed by some of the parties. Each of those
counterparts will be deemed to be an original copy of this Agreement, but
all of them together will constitute one and the same agreement.
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Please execute a copy of this document which, when it is executed by Atari,
will constitute a legally binding agreement between IESA and Atari.
Very truly yours,
INFOGRAMES ENTERTAINMENT S.A.
(for itself and each of its wholly-owned subsidiaries)
By: /s/ Thomas Schmider
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Title: DGD
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Agreed to:
ATARI, INC.
(for itself and each of its wholly-owned subsidiaries)
By: /s/ Diane P. Baker
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Title: EVP & CFO
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