EX-10.1



 




EXHIBIT 10.1


EXECUTION COPY




GLOBAL MEMORANDUM OF UNDERSTANDING 

REGARDING RESTRUCTURING OF ATARI, INC.




     This GLOBAL MEMORANDUM OF UNDERSTANDING REGARDING RESTRUCTURING OF ATARI, INC. (this “Global
MOU”) is made this ___day of December, 2007, between Infogrames Entertainment S.A., a company
organized under the laws of France (“IESA”) and Atari, Inc., a Delaware corporation (“Atari”).



     WHEREAS, IESA holds a majority interest in Atari and IESA and Atari are parties to several
agreements as further identified below concerning, among other things, the publishing and
distribution of certain interactive entertainment software (the “Products”) and the provision of
corporate and management services;



     WHEREAS, IESA and Atari are parties to that certain Distribution Agreement dated as of October
2, 2000, as amended and supplemented from time to time (the “2000 Distribution Agreement”),
pursuant to which IESA granted to Atari the right to distribute, publish and market in North
America (i.e., the United States, Canada and their territories and possessions) Products owned or
controlled by IESA in exchange for the consideration set forth therein;



     WHEREAS, IESA and Atari are parties to that certain Distribution Agreement dated as of
December 16, 1999, as amended and supplemented from time to time (the “1999 Distribution Agreement”
and together with the 2000 Distribution Agreement, the “Distribution Agreements”), pursuant to
which Atari granted to IESA the right to distribute, publish and market in all countries comprising
Europe, Products owned or controlled by Atari in exchange for the consideration set forth therein;



     WHEREAS, IESA and Atari are parties to that certain Management Services Agreement dated as of
March 31, 2006, pursuant to which IESA agreed to provide certain services to Atari in exchange for
the consideration set forth therein (the “Management Services Agreement”);



     WHEREAS, IESA and Atari are parties to that certain Services Agreement dated as of March 31,
2006, pursuant to which Atari agreed to provide certain services to IESA for the consideration set
forth therein (the “Services Agreement” and together with the Management Services Agreement, the
“Existing Intercompany Services Agreements”);



     WHEREAS, IESA and Atari are parties to that certain Production Services Agreement dated as of
March 31, 2006 (“PSA”) pursuant to which Atari agreed to furnish certain production services to
IESA as identified therein for the consideration set forth therein;



     WHEREAS, as of the date hereof, the Distribution Agreements, the Services Agreements and the
PSA remain in full force and effect;



     WHEREAS, IESA, Atari and Atari Interactive, Inc., a Delaware corporation and a wholly owned
subsidiary of IESA (“Interactive”), are parties to that certain Trademark License Agreement dated
as of September 4, 2003, as amended by Amendment No. 1 Trademark License



 









 




Agreement dated as of August 22, 2005 (the “Trademark License”), pursuant to which Interactive
licenses certain trademarks to Atari;




     WHEREAS, Atari and FUNimation Productions, Ltd., a Texas limited partnership (“FUNimation”),
are parties to that certain Sublicense Agreement dated October 27, 1999 (the “1999 FUNimation
Agreement”), and that certain Sublicense Agreement, dated December 31, 2004 (the “2004 FUNimation
Agreement”), pursuant to which FUNimation granted to Atari the right to distribute in certain
territories certain Products owned or controlled by FUNimation;



     WHEREAS, Atari derives a significant portion of its revenues from the distribution of products
under the 1999 FUNimation Agreement and 2004 FUNimation Agreement;



     WHEREAS, pursuant to a letter dated October 19, 2007 from FUNimation to Atari, FUNimation
purported to terminate each of the 1999 FUNimation Agreement and the 2004 FUNimation Agreement for
the reasons stated therein (the “Termination Letter”);



     WHEREAS, Atari and FUNimation are parties to that certain agreement dated as of April 25,
2003, as amended, pursuant to which FUNimation licenses to Atari certain rights with respect to Yu
Yu Hakusho (the “YYH Agreement”);



     WHEREAS, pursuant to an invoice dated June 18, 2007, and a corrected invoice dated July 6,
2007 (collectively, the “Invoices”), FUNimation has asserted that Atari owes FUNimation and/or Fuji
Creative Corporation certain outstanding royalty payments under the YYH Agreement with respect to
Yu Yu Hakusho (the “YYH Claims”);



     WHEREAS, following its receipt of the Termination Letter and Invoices, Atari and FUNimation
engaged in good faith negotiation in an effort to resolve the matters raised in the Termination
Letter and Invoices, which negotiations resulted in the execution by Atari and FUNimation of the
DBZ Settlement Agreement and Release dated as of the date hereof (the “DBZ Settlement Agreement”)
and the YYH Settlement Agreement and Release dated as of the date hereof (the “YYH Settlement
Agreement” and together with the DBZ Settlement Agreement, the “Settlement Agreements”) true and
correct copies of which are annexed hereto as Exhibits E and F, respectively (the “Settlement
Agreements”);



     WHEREAS, pursuant to the DBZ Settlement Agreement, among other things, Atari has agreed to pay
to FUNimation $2,706,546.52 million representing accrued and unpaid royalties and reasonable
auditor’s and attorneys’ fees incurred by FUNimation (the “DBZ Settlement Payment”), in exchange
for which, among other things, FUNimation has agreed to withdraw the Termination Letter and give
Atari the releases and other consideration set forth therein;



     WHEREAS, pursuant to the YYH Settlement Agreement, among other things, Atari has agreed to pay
to FUNimation $338,084.66 in settlement of the YYH Claims (the “YYH Settlement Payment” and
together with the DBZ Settlement Payment, the “Settlement Payments”) in exchange for which, among
other things, FUNimation has agreed to give Atari the releases and other consideration set forth
therein;



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     WHEREAS, it is a condition to the effectiveness of the Settlement Agreements that IESA agree
to issue in favor of FUNimation a limited reimbursement in the event Atari becomes the subject of a
proceeding under Title 11 of the United States Code (the “Bankruptcy Code”) in which Atari, any
trustee or third party with standing seeks to avoid and recover the Settlement Payments;



     WHEREAS, Atari is engaged in a restructuring of its finances and business operations in an
effort to stabilize its business and return it to profitability (the “Restructuring”);



     WHEREAS, in connection with its Restructuring, Atari has developed a business plan under which
Atari will function primarily as a distributor of products developed by third-parties or with
respect to which, third-parties hold the exploitation rights, and will no longer be involved in the
development and production of its own Products (the “Business Plan”);



     WHEREAS, a copy of Atari’s short term budget and projections for fiscal year 2009, underlying
the Business Plan are annexed hereto as Schedule 1;



     WHEREAS, the budget and projections have been prepared by management in good faith based on
assumptions and projections believed by management to be reasonable in all material respects as of
the date hereof;



     WHEREAS, the implementation of the Business Plan requires substantial modifications and
reworking of the existing agreements between IESA and Atari, including the Distribution Agreements,
the Existing Intercompany Services Agreements and the termination of the PSA;



     WHEREAS, the consummation of the Settlement Agreement is an integral component of the Business
Plan;



     WHEREAS, to execute the Business Plan and satisfy its obligations under the Settlement
Agreement, Atari will require a waiver and amendment to the Credit Agreement (as defined below),
substantially in the form annexed hereto as Exhibit H;



     WHEREAS, Atari has requested IESA’s assistance and support with respect to the modification
and reworking of the intercompany agreements and that IESA furnish the limited reimbursement
required under the Settlement Agreement;



     WHEREAS, subject to the terms and conditions set forth herein, IESA has agreed to provide such
assistance and support and to enter into the limited reimbursement required under the Settlement
Agreement; and



     WHEREAS, IESA and Atari desire to enter into this Global MOU to set forth the parties
respective obligations in furtherance of Atari’s Restructuring and Business Plan.



     NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained and for
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, IESA and Atari hereby agree as follows:



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     1. Distribution Agreements: On or before December ___, 2007 (the “Execution
Date”), IESA and Atari shall execute and deliver the Short Form Distribution Agreement, in
substantially the form annexed hereto as Exhibit A. Among other things, the Short
Form Distribution Agreement shall, in accordance with the terms thereof, terminate, supercede
and replace the Distribution Agreements and shall provide the terms and conditions under which
Atari will act as IESA’s exclusive distributor in the United States and Canada for certain
Products developed by or on behalf of IESA, the rights to which are owned or licensed to IESA.



     2. Intercompany Services Agreement: On or before the Execution Date, IESA,
Interactive, Humongous, Inc. and Atari shall execute and deliver the Intercompany Services
Agreement, in substantially the form annexed hereto as Exhibit B. Among other things,
the Intercompany Services Agreement, shall in accordance with the terms thereof, terminate,
supersede and replace the Existing Intercompany Services Agreements.



     3. Termination and Transfer of Assets Agreement. On or before the Execution
Date, IESA, Interactive and Atari shall execute and deliver the Termination and Transfer of
Assets Agreement, in substantially the form annexed hereto as Exhibit C. Among other
things, the Termination and Transfer and Assets Agreement provides for the termination of the
PSA in accordance with the terms thereof.



     4. QA Services Agreement. On or before the Execution Date, IESA, Interactive,
Humongous, Inc. and Atari shall execute and deliver the QA Services Agreement, in
substantially the form annexed hereto as Exhibit D. Among other things, the QA
Services Agreement shall provide for the furnishing by Atari of certain quality assurance
services.



     5. Settlement Agreements. Atari represents and warrants that fully executed and
true and correct copies of the DBZ Settlement Agreement and YYH Settlement Agreement are
annexed hereto as Exhibit E and Exhibit F, respectively. Atari expressly
acknowledges, that in exchange for the Settlement Payments, it will receive equivalent and
contemporaneous value under the Settlement Agreements, including but not limited to, the
withdrawal of the Termination Letter, the resolution of the claims asserted in the Termination
Letter and Invoices, certain amendments to the 2004 FUNimation Agreement, and the releases set
forth in the Settlement Agreements. Atari further represents and warrants that upon the full
execution and delivery of the FUNimation Reimbursement (as defined below) by IESA and
FUNimation, the Settlement Agreements will be in full force and effect.



     6. FUNimation Reimbursement Agreement. On the Effective Date (as defined below),
IESA will execute the reimbursement contemplated by the Settlement Agreement in favor of
FUNimation in the form annexed hereto as Exhibit G (the “FUNimation Reimbursement”).
The FUNimation Reimbursement shall be of no force and effect, unless and until, it is executed
by FUNimation and delivered to IESA by FUNimation.



     7. Conditions to Effectiveness. IESA and Atari acknowledge and agree that none
of the transactions contemplated by this Global MOU, including the Short Form



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Distribution Agreement, the Intercompany Services Agreement, the Termination and Transfer
of Assets Agreement and the QA Services Agreements, shall be effective unless and until (i)
each such agreement shall have been executed and delivered by the parties hereto and any other
parties thereto and delivered to the other party or parties, as applicable; (ii) Atari, Blue
Bay High Yield Investments (Luxembourg) S.A.R.L., as successor administrative agent under the
Credit Agreement, dated as of November 3, 2006, as amended and supplemented as of the date
hereof (as so amended and supplemented, the “Credit Agreement”), and the Lenders under the
Credit Agreement, shall have entered into a Waiver and Amendment to the Credit Agreement in
substantially the form annexed hereto as Exhibit H; and (iii) the Settlement
Agreements shall be in full force and effect. The date on which such conditions are satisfied
shall be deemed the “Effective Date” hereunder.




     8. Atari Representations and Warrantees. Atari represents and warrants to IESA
that (i) Atari is a corporation duly organized, validly existing and in good standing under
the law of Delaware and has all requisite power and authority to execute, deliver and perform
its obligations under this Global MOU and the agreements contemplated hereunder; (ii) the
execution, delivery and performance by Atari of this Global MOU have been duly authorized by
all necessary corporate action of Atari; and (iii) this Global MOU constitutes the legal,
valid and binding obligation of Atari, enforceable against Atari in accordance with its terms.
Atari further represents and warrants that it has been represented by independent and
experienced counsel and financial advisors in connection with this Global MOU and the
transactions contemplated hereunder and under the Restructuring.



     9. IESA Representations and Warrantees. IESA represents and warrants to Atari
that (i) IESA is a company duly organized, and validly existing and in good standing under the
laws of France and has all requisite power and authority to execute, deliver and perform its
obligations under this Global MOU and the agreements contemplated hereunder; (ii) the
execution, delivery and performance by IESA of this Global MOU has been duly authorized by all
necessary corporate action of IESA; and (iii) this Global MOU constitutes the legal, valid and
binding obligation of IESA, enforceable against IESA in accordance with its terms. IESA
further represents and warrants that it has been represented by independent and experienced
counsel in connection with this Global MOU and the transactions contemplated hereunder and
under the Restructuring.



     10. Trademark License. During the third fiscal quarter of 2008, IESA will meet
with Atari for the purpose of discussing an extension of the termination date of the Trademark
License. At such time, and provided Atari has stabilized its business and is meeting its
financial projections, IESA will in good faith consider a reasonable extension of the
Trademark License, but will be under no obligation to do so.



     11. Choice of Law. The validity, construction and enforceability of this Global
MOU shall be governed by and construed in accordance with the laws of New York, without
reference to the conflicts of laws provisions thereof. The transactions and agreements
contemplated by this Global MOU and the Exhibits annexed hereto shall be governed by the law
set forth therein.



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     12. Other Terms. The terms contained in this Global MOU and the Exhibits hereto
constitute the entire agreement between the parties and supersede all previous agreements and
understandings, whether oral or written, between the parties with respect to the subject
matter of this Global MOU. The recitals set forth in this Global MOU constitute an integral
part of this Global MOU. No agreement or understanding purporting to amend any provision of
this Global MOU shall be effective or binding upon either party unless set forth in a written
document which expressly refers to this Global MOU and which is signed on behalf of each
party. The parties are independent contractors, and nothing contained in this Global MOU or
done in furtherance hereof shall constitute either party as the agent of the other party for
any purpose.



     13. Parent Subsidiary Relationship. Except as otherwise set forth in this Global
MOU, or the Exhibits and other documents executed pursuant hereto or thereto, nothing set
forth herein shall, or be deemed to, affect each of IESA’s and Atari’s obligations to the
other party under their contractual obligations and under applicable law.



     14. COUNTERPARTS. This Global MOU may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all such separate counterparts shall
together constitute but one and the same instrument. Any signatures delivered by a party by
facsimile transmission or by e-mail transmission shall be deemed an original signature hereto.



 [SIGNATURE PAGE FOLLOWS]




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     IN WITNESS WHEREOF, IESA and Atari have caused this Global MOU to be executed and delivered by
its duly authorized officer as of the date first set forth above.



	 	 	 	 	 
	 	 	ATARI, INC.,
	 	 	a Delaware corporation,
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Curtis Solsvig
	 

	 	 	 	 
	 

	 	Name:
	 	Curtis Solsvig
	 

	 	 	 	 
	 

	 	Title:
	 	Chief Restructuring Officer
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	INFOGRAMES ENTERTAINMENT S.A.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Patrick Leleu
	 

	 	 	 	 
	 

	 	Name:
	 	Patrick Leleu
	 

	 	 	 	 
	 

	 	Title:
	 	President and Chief Executive Officer
	 

	 	 	 	 






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