Document:

f10k2009ex10x_redmile.htm

     

    Exhibit
10.10

    
      

      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

       

      
        	
                A.  

              	
                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").

              

      

       

      
        	
                B.  

              	
                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.

              

      

       

      
        	
                C.

              	
                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.

              

      

       

      Agreement

       

         
The parties agree as follows:

       

      
        	
                 
      

              	
                1.

              	
                Buyout Fee. In
      exchange for the release of Atari's rights in the Title, Red Mile shall
      pay Atari
      (collectively, the "Buyout
      Fee"):

              

      

       

      
        	
                 
      

              	
                1.1.

              	
                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

              

      

       

      
        	
                 
      

              	
                1.2.

              	
                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

              

      

       

      
        	
                 
      

              	
                1.3.

              	
                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.

              

      

       

       

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

       

       

      
        	
                 
      

              	
                1.4.

              	
                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,

              

      

       

      
        	
                 
      

              	
                1.5

              	
                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.

              

      

      
        	
                 
      

              	
                 

              

      

      
        	
                 
      

              	
                1.6.

              	
                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.

              

      

      
        
        

      

      
      

      

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

       

      2.            
Release of Rights in the
Title.

       

      
        	
                 
      

              	
                2.1.

              	
                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.

              

      

       

      
        
          	
                   
      

                	
                  2.2.

                	
                  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.

                
	 	 	 
	 	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

       

      
        
          	
                   
      

                	
                  3.1.

                	
                  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.

                

        

         

        4.            
Mutual Release of
Claims.

      

       

      
        	
                 
      

              	
                4.1.

              	
                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 sue 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;

              

      

       

      
        	
                 
      

              	
                4.2.

              	
                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."

              

      

       

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

       

       

      
        	
                 
      

              	
                4.3.

              	
                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.

              

      

       

      5.            
Miscellaneous.

       

      
        	
                 
      

              	
                5.1.

              	
                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.

              

      

       

      
        	
                 
      

              	
                5.2.

              	
                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.

              

      

       

      
        	
                 
      

              	
                5.3.

              	
                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.

              

      

       

      
        	
                 
      

              	
                5.4.

              	
                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.

              

      

       

      
        
          	
                   
      

                	
                  5.5.

                	
                  Counterparts.
      The parties may execute this Agreement in two or more counterparts,
      each of which shall be deemed an original.

                
	 	 	 
	 	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.	 
	 	 	 	 	 
	
                      By:     
      /s/ Chester P. Aldridge

                    	 	 	
                      By:  
      /s/ P. Harrison

                    	 
	
                      Name:
      Chester P. Aldridge

                    	 	 	
                      Name:
      P. Harrison

                    	 
	
                      Title:  
      CEO

                    	 	 	
                      Title:
      President

                    	 

            

          

        

      

       

       

       

      4f10k2009ex10xii_redmile.htm

    
      
        Exhibit
10. 12

        

        April 24,
2009 DRAFT

        STRICTLY
CONFIDENTIAL

        NOT AN
OFFER - SUBJECT TO CONTRACT

      

       

      
        
          	 
      	
                  Atari
      Interactive, Inc.

                          
      417 Fifth Avenue

                           
      New York, NY 10016

                            Direct:
      212-726-6500

                            Fax:
      212-726-4239

                

        

      

       

       

      April
_, 2009 

       

      VIA
FACSIMILE

       

      Red
Mile Entertainment, Inc. 

      223
San Anselmo Ave., Ste. 3 

      San
Anselmo, CA-94960

      Facsimile:
+1 415 339 4251 

      Attn:
Mr. Simon Price

       

      IR
Gurus Interactive Pty Ltd. 

      Level
3, 355 Spencer Street 

      West
Melbourne, Victoria 3003 

      Australia

      Facsimile:
+613 9328 8332 

      Attn:
Mr. Craig Laughton

       

      Re:
Heroes over Europe

       

      Dear
Messrs.
Price and Laughton:

       

          As you are
aware, certain issues have
arisen with respect to the development and publishing of the Title (as defined
below). Red Mite Entertainment, Inc., a Delaware corporation,
with offices at 223 San Anselmo Ave., Ste. 3,.
San
Anselmo, CA 94960 (“RME”) IR
Gurus Interactive Pty Ltd., a company organized under the laws of
Australia with a principal place
of business at Level 3, 355 Spencer Street, West Melbourne, Victoria 3003
Australia; facsimile: +613 9328 8332
(the "TG"); and Atari Interactive, Inc., a
Delaware corporation,
with offices
at 417 Fifth Ave., New York, NY 10016 (the “Atari” and, collectively with RME
and TG,
the "Parties")
wish
to resolve such issues and to clear any encumbrances on chain-of-title
for
the Title in order to facilitate the transfer of the publishing rights for the
Title to a third-party publisher.
Accordingly, the Parties are entering into this letter agreement (the
"Agreement")
in
accordance
with the terms and conditions set forth herein. Capitalized terms used and not
otherwise
defined in this Agreement shall have the meanings ascribed
to them in the Publishing Agreement (as defined below).

       

      
        
          
          

        

        
          -1-

          
            

          

        

        
          
          

        

      

      
         

        Exhibit
10. 12

        

        April 24,
2009 DRAFT

        STRICTLY
CONFIDENTIAL

        NOT AN
OFFER - SUBJECT TO CONTRACT

      

      PREAMBLE

       

      WHEREAS, TG and RME are parties to a
Software Development and Licensing Agreement dated as of March 3, 2006, a copy
of which
is attached hereto as Exhibit
A, entered
into in connection with the development, of and licensing of
certain rights in and to Heroes Over Europe for the Sony Playstation 3,
Microsoft Xbox 360 and personal computer (PC) platforms (the
"Title"),
as
amended and as varied by the Variation and Settlement Agreement of March
28, 2008 and a Deed dated April 30, 2008 (collectively, the "Development
Agreement”);

       

      WHEREAS, Atari and RME entered into a
Publishing Agreement dated June 20, 2008, a copy of which is attached hereto as
Exhibit
B, under which Red Mile licensed to Atari certain rights in and to the
Title (the “Publishing
Agreement”);

       

      WHEREAS, Atari, TG and RME are party to
a Letter Agreement dated June 20, 2008, a copy of which is attached hereto as
Exhibit
C addressing
certain matters relating to the Publishing Agreement (the "Inducement
Letter");

       

      WHEREAS, Atari and
RME entered
into a Buyout Agreement dated February 24, 2009, a
copy of which is attached
hereto as Exhibit
D, (the
"Buyout
Agreement”);

       

      WHEREAS, Atari and RME are party to a Mutual
Nondisclosure Agreement
dated effective February 13, 2009, a copy of which is attached hereto
as Exhibit
E,
(the "NDA"
and, collectively with the Development Agreement, the Publishing
Agreement, the Inducement Letter and the Buyout Agreement, the "HoE
Documents");

       

      WHEREAS, on or about February 12, 2009, Atari
delivered to RME a notice stating that Atari had terminated the Publishing
Agreement and had exercised its rights to retain the rights
licensed to Atari thereunder (the "Termination
and Retention");

       

      WHEREAS, on or about March 30, 2009, RME
sent to Atari a letter asserting, among other things, that the Termination and
Retention was wrongful and purporting to make certain legal claims against Atari
(the "March
RME Letter");

       

      WHEREAS, TG delivered to RME a notice
stating that TG had terminated the Development Agreement pursuant to a notice
sent to RME on or about March 30,
2009;

       

      WHEREAS, Atari delivered to RME a notice
stating that Atari had cancelled and rescinded the Buyout Agreement pursuant to
a notice sent to RME on or about April 2, 2009;

       

      WHEREAS, Atari and TG are entering into a side
letter agreement of even date herewith with respect to certain
matters pertaining
to the allocation
of the Settlement Fee (as defined
below),
in or substantially in the form attached hereto as Exhibit
F (the
"Side Letter
Agreement”) which
shall take precedence over terms of this Agreement that relate to issues
between TG and Atari only;

       

      
        
          
          

        

        
          -2-

          
            

          

        

        
          
          

        

      

      
         

        Exhibit
10. 12

        

        April 24,
2009 DRAFT

        STRICTLY
CONFIDENTIAL

        NOT AN
OFFER - SUBJECT TO CONTRACT

      

       

      WHEREAS, TG, RME and Ubisoft have
entered into a side letter agreement pertaining to certain sequel rights
concerning the Heroes over Europe franchise, a fully executed copy of which is
attached hereto as Exhibit
G (the "Sequel
Side
Lever");

       

      WHEREAS, in order to settle a11 of the Released
Claims (as defined below) and to facilitate a transfer by Atari of all of
the Transferred Rights (as defined below) to a third-party publisher of the
Title (the
"New Publisher"), the
Parties have negotiated the terms
and conditions of this Agreement;
and

       

      WHEREAS, Atari, RME and TG are willing to enter
into such settlement on such terms, effective as of the date first
written above (the "Effective
Date");

       

      NOW THEREFORE, for good and valuable
consideration, the receipt and
sufficiency of
which Atari, RME and TG do hereby acknowledge, Atari, RME and TG do
hereby agree as
follows:

       

      AGREEMENT

       

      I.Rights
Buyout Agreement.

       

      Each
of RME and TG hereby agrees and confirms that, notwithstanding anything (if
anything) in any of the HoE Documents to
the
contrary, Atari has and shall have the irrevocable right to enter into a rights
buyout agreement with the New Publisher
pursuant to
which among other things Atari shall transfer to the New Publisher, free and
clear of any liens or other encumbrances,
any and all of the Transferred Rights (as defined below) (the "Rights
Buyout Agreement').
As
used herein, "Transferred
Rights"
shall
mean all Intellectual Property Rights and other rights, powers and
entitlements in or to (i) the Title, (ii) the Exclusive Derivative Products;
(iii) any Sequels; (iv) any Ancillary Products and (v) any
Title spin-offs, in each case throughout the Term (including the
Sell-Off. Period, if applicable), to the full extent that such rights were
granted or were purported to have been granted to Atari pursuant to the
Publishing Agreement and including any and all Moral Rights.

       

      To
the extent (if any) that the Termination and Retention did not operate to vest
in Atari the full right, power and authority to transfer and assign all
of the Transferred Rights to the New Publisher free and clear of any
encumbrances as contemplated hereby, each of TG and RME hereby authorizes, and
confirms to Atari all right and authority necessary in order for Atari to make a
full assignment, transfer and conveyance of any or all of the Transferred Rights
to the New Publisher,
with the result that upon such assignment, transfer and conveyance of the
Transferred Rights, the Transferred Rights shall be fully vested in the New
Publisher and the New Publisher shall have the Ml enjoyment thereof. Without
limitation to the generality of the foregoing TG hereby grants a fully paid,
irrevocable, worldwide right and license in and to the Transferred Rights to
Atari; and RME hereby acknowledges and affirms such grant by TO of the
Transferred Rights to Atari.

       

      RME
hereby expressly waives and releases any and all right, title, license or other
interest that it may hold in or to any of the Transferred Rights, the Title, the
Exclusive Derivative

       

      
        
          
          

        

        
          -3-

          
            

          

        

        
          
          

        

      

      
Exhibit
10. 12

      

      April 24,
2009 DRAFT

      STRICTLY
CONFIDENTIAL

      NOT AN
OFFER - SUBJECT TO CONTRACT

    

     

    
      Products,
Sequels and/or the "Heroes over Europe" franchise. RME
acknowledges and agrees that no approvals of any kind by RME shall be
required in connection with exploitation of any of the Transferred Rights by the
New Publisher. "TG and RME hereby consent to the transfer," conveyance and/or
assignment of the Transferred Rights by Atari to the New Publisher. As provided
in Paragraph XV below, TG and RME agree to provide, as reasonably requested,
such further
assurances as may be required with regard to Atari's ability to assign its
Transferred Rights
effectively and completely to the New Publisher.

       

          Prior to
execution of the Rights Buyout Agreement, neither RME nor TG shall have any
discussions with
Ubisoft Entertainment SA (“Ubisoft”)
or any other New Publisher regarding the Transferred Rights or any other
rights in or to the Title„ and during such period all such discussions
shall be conducted exclusively by Atari, provided that TG shall have the right
to discuss and enter into
a new development agreement, consistent with the
terms hereof arid the terms of the Side Letter, for the Title with
Ubisoft during, such period. In addition, during
such period each Party shall reasonably and in good-faith cooperate
and coordinate with Atari in order to facilitate execution of the Rights
Buyout
Agreement.

       

          In order to
support representations, warranties, indemnities,
covenants and agreements that Atari will or may need to make for purposes
of the Rights Buyout Agreement, TG hereby reaffirms and makes to Atari each of
the, representations, warranties, indemnifications, covenants and agreements
made by RME to Atari in the following sections of the Publishing Agreement, in
each case solely to the extent applicable to the Rights Buyout Agreement 4.1,
4.3, 4.4, 4.6, 4.7, 5.3, 5.5, 5.6, 9, 11.1, 15.1, 16.2 (excluding the final
sentence thereof), 16.4, 18, 23 and 28.

       

      II. Payment

       

      Atari
shall, in settlement
of the above-referenced issues, including without limitation the release
of all Released Claims (defined below) and the irrevocable consent to transfer
of all Transferred Rights, pay RME solely a settlement fee in the amount of Four
Hundred Thousand United States Dollars ($400,000.00), payable, by wire transfer
to the Client Trust Account of counsel for RME, Bullivant Houser Bailey, PC, in
accordance with wire instructions to be provided to Atari by RME or counsel for
RME, within fourteen (14) days following mutual execution in full of the Rights
Buyout Agreement (the "Settlement
Fee"). Except for the Settlement Fee, no Party shall have any payment
obligation to any other Party hereunder.

       

              
  III. Conditions
Mutual execution of the Rights Buyout Agreement by a duly authorized
officer of each of Atari and the New Publisher shall be a condition precedent to
all of the Parties' respective releases, covenants, agreements, obligations,
liabilities, grants, representations and warranties made under this Agreement.
In the event that the Rights Buyout Agreement is not thus consummated by June
30, 2009, this
Agreement shall be null and void from the date of its execution.

       

      IV. Termination of HoE
Agreements.

       

      For
the avoidance of doubt, and solely to the extent it becomes effective under
Paragraph III, this Agreement expressly supersedes the Publishing
Agreement and the other HoE

       

      
        
          
          

        

        
          -4-

          
            

          

        

        
          
          

        

      

      
         

        Exhibit
10. 12

        

        April 24,
2009 DRAFT

        STRICTLY
CONFIDENTIAL

        NOT AN
OFFER - SUBJECT TO CONTRACT

      

       

      Documents.
The Publishing Agreement and all of the other HoE Documents are hereby deemed to
be terminated, in their entirety,; are of no further form or effect
(notwithstanding anything therein, including survival clauses, to the contrary);
and are referred to in and attached to this Agreement for reference purposes
only, in order to give meaning to the grants of rights, representations and
warranties made in this Agreement.

       

      V. Representations
and Warranties:
Indemnity.

       

      The
Development Agreement contained certain representations and warranties of TG
to
RME concerning ownership of intellectual property and noninfringement,
and TG agreed to indemnify RME with respect to any breach of such warranties.
Likewise, the Publishing Agreement contained certain representations and
warranties of RME to Atari
concerning ownership of intellectual property and noninfringements
and RME agreed to indemnify Atari with respect to any breach of such warranties.
Except for the Sequel Rights, RME has, pursuant to Section I above, waived and
released any and all right, title and interest in the Title, and RME will take
no further part in the development or publication of the Title. Accordingly, the
Parties make the following representations and warranties:

       

      TG
represents and warrants that:

       

      
        	
                (a)  

              	
                it
      has the full power and authority to grant to Atari and RME the rights
      granted under this Agreement;

              

      

       

      
        	
                (b)  

              	
                nothing
      contained in the Title or the rights granted to Atari under this Agreement
      does or will infringe, violate or misappropriate any intellectual property
      of any third party

              

      

       

      
        	
                (c)  

              	
                it
      has received no notice of any claim, pending or threatened, based on
      infringement of the rights granted to Atari under this Agreement;
      and

              

      

       

      
        	
                (d)  

              	
                it
      has not sold, assigned, leased, licensed or in any other way disposed of
      or encumbered the rights granted to Atari hereunder
      and will not sell, assign, lease, license or in any other way dispose of
      or encumber any of such rights.

              

      

       

      RME
represents and warrants that:

       

      
        	
                (a)  

              	
                it
      has the full power and authority to grant to Atari the rights granted
      under this Agreement;

              

      

       

      
        	
                (b)  

              	
                it
      has received no notice of any claim, pending or threatened, based on
      infringement of the rights granted to Atari, under this
      Agreement;

              

      

       

      
        	
                (c)  

              	
                it
      has not sold, assigned, leased, licensed or in any other way disposed of
      or encumbered the rights granted to Atari hereunder and will not sell,
      assign, lease, license or in any other way
      dispose of or encumber any of such rights;
  and

              

      

       

      
        	
                (d)  

              	
                TG's
      grant of the Transferred Rights to Atari does not and shall not conflict
      with any Intellectual
      Property Right or other right held by RME, and, to the best of
      RME's

              

      

       

      
        
          
          

        

        
          -5-

          
            

          

        

        
          
          

        

      

      
         

        Exhibit
10. 12

        

        April 24,
2009 DRAFT

        STRICTLY
CONFIDENTIAL

        NOT AN
OFFER - SUBJECT TO CONTRACT

         

      

      knowledge,
TG has the full power and authority to grant the Transferred Rights to
Atari.

       

      Atari
represents and warrants that:

       

      
        	
                 
      (a)  

              	
                 it
      has the full power and authority to enter into this Agreement and perform
      its obligations hereunder.

              

      

       

      Each
Party will indemnify, defend and hold harmless each other Party and its
affiliates, officers, directors, employees and agents from and against all
losses, liabilities, claims, obligations and expenses (including reasonable
attorneys' fees) arising from any third-party claim in connectioe with any
breach or alleged breach by such indemnifying party of any of the foregoing
representations and warranties.

       

      VI.  Mutual
Releases.

       

      The
Parties, their respective subsidiaries, parents, shareholders, officers,
directors, employees, agents, successors, transferees, licensors, licensees,
publishers, distributes, and assigns hereby forever release, acquit, and
discharge one another, their affiliates, and their respective subsidiaries,
parents, shareholders, officers, directors, employees, agents, successors,
tandems, licensors, licensees, publishers, distributors, and assigns, from any
and all Released Claims (as defined below). This paragraph does not apply to any
breach of this Agreement or to any claim or cause of action arising under this
Agreement, including without limitation any violation of the provisions of this
Agreement concerning confidentiality and confidential information. For the
avoidance of doubt, each of TG and RME acknowledges and agrees that Atari has
the sole and absolute discretion and authority to negotiate, finalize the terms
of and enter into the Rights Buyout Agreement with the New Publisher, and to
make all decisions and determinations with respect thereto, in each case within*
any obligation to TG or RME other than as expressly set forth herein. Each Party
represents and warrants to the other Parties that there are and have been no
agreements between or among the Parties other than this Agreement, the Side
Letter Agreement (as pertains to TG and Atari oily), the Sequel Side Letter (as
pertains to TG and RME only) and the HoE Documents.

       

      As
used herein, "Released Claims" means any and all claims, lawsuits, counts,
causes of action, damages, expenses, judgments, executions, attachments, debts,
demands, liabilities and obligations of every kind and nature, that any Party
ever bad, now has or hereafter can have from the beginning of time until now,
known and unknown, in law or equity, whether formal or informal, and whether or
not in writing, arising from, related to or in conjunction with any of the
following items, any expenses or costs incurred by any Party in connection
therewith or with the enforcement thereof and any services, materials or
work-product rendered, provided, delivered or produced thereunder, in each case
subject to the Parties' obligations as expressly provided by this Agreement
(collectively, "Claims"): (i) identified In the March RME Letter; (ii) arising
under or in connection with the Publishing Agreement (except to the extent
surviving pursuant to Paragraph IV), (HQ arising tinder or in connection with
the Development Agreement; (iv) arising under or in connection with the Buyout.
Agreement; (v) arising under or in connection with the NDA; (vi) arising under
or in connection with the Side Letter (for purposes of the Claims
against

       

      
        
          
          

        

        
          -6-

          
            

          

        

        
          
          

        

      

      
         

        Exhibit
10. 12

        

        April 24,
2009 DRAFT

        STRICTLY
CONFIDENTIAL

        NOT AN
OFFER - SUBJECT TO CONTRACT

      

       

      RME
only); (vii) arising under the Sequel Side Letter (for purposes of Claims
against Atari only); or (viii) otherwise known to a Party as of the Effective
Date.

       

      Each
Party represents and warrants that is not aware of any existing Claim that it
would or could or might bring, as of the Effective Date, and that is not
included in the Released Claims.

       

      VII.  No
Admission.

       

      This
Agreement is a good-faith compromise of disputed claims and does not in any way
constitute an admission by any Party hereto to any liability, fault, wrongdoing
or responsibility, past, present or future. Neither this. Agreement nor the
terms or contents hereof shall be admissible
at any legal, quasi-legal, arbitration, or other dispute resolution proceeding
except to the extent necessary to enforce the rights and/or obligations
arising under this Agreement and, in the case of TG and Atari, under the Side
Letter Agreement.

       

      VII.
Finality
of Agreement.

       

      Each
Party has conducted its own due diligence inquiry into all of the facts that
give rise to this Agreement and waives any right to bring any cause of action
based upon fraud or fraud in the inducement because no Party is relying upon any
statement, representation, inducement or promise of any other Party, except as
expessly stated in this Agreement.

       

      Subject
to the previous paragraph, in entering into this Agreement and the releases
contained
herein, each Party assumes of the risk of errors, changes in fact or later
discovered facts;
accordingly, this Agreement and the releases contained herein are intended to be
final and binding
and are further intended to be effective as a full and final accord and
satisfaction among the
Parties; and each Party relies upon the finality of this Agreement and the
releases herein as a material
factor inducing that Party's execution of this
Agreement.

       

      IX.
No Assignment of Legal Claim. Each
of the Parties hereby represents and warrants that it has not assigned or
transferred to any other person any debt, claim, right, demand, obligation,
cost, expense, or cause of action, in law or in equity, that it may have against
any other Party, that is, or may or would be, the subject of
this Agreement. No Party shall assign This Agreement without the prior
written consent of the other
Parties.

       

      X.
Confidentiality.

       

      This
Agreement and its terms are and shall remain confidential. The Parties may
disclose this
Agreement and its terms to related or affiliated corporate entities, and to
their respective auditors, accountants, attorneys and other professional
advisors. The Parties may also make disclosure of this Agreement or its terms in
connection with the due diligence relating to any merger,
acquisition, reorganization, investment, loan or financing by, in or
to the respective Parties,
provided that a binding confidentiality agreement is signed by the person or
entity to whom
disclosure is made and that the, present Agreement is treated as confidential
under such confidentiality
agreement. Atari may also make disclosure of this Agreement or its terms,
the Side Letter Agreement and/or the HoE Documents to the New Publisher. Unless
otherwise

       

      
        
          
          

        

        
          -7-

          
            

          

        

        
          
          

        

      

      
         

        Exhibit
10. 12

        

        April 24,
2009 DRAFT

        STRICTLY
CONFIDENTIAL

        NOT AN
OFFER - SUBJECT TO CONTRACT

         

      

      expressly
provided in this paragraph, this Agreement and the terms hereof shall not be
disclosed by the Parties to any non-Party unless so ordered by a court of law or
otherwise compelled by law or with the consent of the non-disclosing Party which
shall not be withheld unreasonably. In the event of any disclosure of this
Agreement by either Party, the disclosing Party agrees to enter into a
confidentiality agreement with the person or entity to which
such disclosure is to be made that binds such person or entity to the terms set
forth in this section. The Patties agree that if either Party receives notice of
any court. or government order for disclosure of the terms of this Agreement,
that Party will (i) immediately notify the other Parties in order that the
latter may review the order and determine whether it shall challenge the
disclosure of the terms of this Agreement and (ii) comply with the tams of any
applicable protective order.

       

      XI. Notices.

       

      All
notices hereunder shall be in writing and shall be effective upon receipt.
Notices may be sent by any reasonable means, including facsimile, to the Parties
at their addresses and facsimile numbers first written above. Each notice shall
be sent to each of the other Parties hereto. The Parties shall notify one
another of their respective facsimile numbers or any changes thereof or of their
addresses for notice. A required copy of every notice to Atari shall also be
sent to the LIME, LLC – Lawyers for Interactive Media & Entertainment, 132
Fayerweather Street, Cambridge, MA 02138; attn: Steven A. Bercu, Esq., facsimile
(617) 812-2554.

       

                     
XII.  Binding
Nature of Terms.

       

      Each
of the terms of this Agreement is binding upon the Parties, and their respective
successors, transferees, assigns, heirs and personal representatives. If any
provision of this Agreement is declared null and void or unenforceable by any
court or tribunal having jurisdiction, then such provision shall be considered
separate and apart from the remainder of this Agreement which shall remain in
full force and effect, but such provision shall be modified (as nearly as
possible to reflect its original intent) to eliminate such aspects of the
provision that made it null, void or unenforceable and such modified prevision
shall then be deemed an original part of this Agreement.

       

      XIII. Construction
and Headings. This
Agreement shall not be construed more strictly against one Party than against
ray other Party by virtue of the fact that this Agreement may have been drafted
or prepared by counsel for one of the Parties, the parties recognizing and
acknowledging that all Parties to this Agreement have contributed substantially
and materially to the drafting and preparation hereof. The headings, titles and
captions contained in this Agreement are inserted only as a matter of
convenience and for reference, and in no way define, extend or describe the
scope of this Agreement or the intent or meaning of any provision
herein.

       

      XIV. Authorization
of Signatories.

       

      The persons signing
this Agreement represent and warrant that they are duly authorized to execute
this Agreement on behalf of Atari, RME end TG, respectively, and to bind said
entities
to the terms, conditions, provisions, duties and obligations set forth in this
Agreement.

       

      
        
          
          

        

        
          -8-

          
            

          

        

        
          
          

        

      

      
         

        Exhibit
10. 12

        

        April 24,
2009 DRAFT

        STRICTLY
CONFIDENTIAL

        NOT AN
OFFER - SUBJECT TO CONTRACT

      

       

      XV. Execution
in Counterparts and
Facsimiles.

       

      This
Agreement may be executed in any number of
counterparts and signatures may be passed by way of the exchange of
digitally scanned copies, in PDF format, each and all of which shall be deemed
for all.
purposes to be one agreement with original signatures.

       

      XVI.
Further
Assurances. The Parties mutually agree to execute, acknowledge, and
deliver any and all such agreements, documents and instruments, and
to perform any and all such acts and things as may be reasonably
necessary and proper to consummate the transactions contemplated by this
Agreement.

       

      XVII. Governing
Law: Jurisdiction:
Miscellaneous

       

      This
Agreement constitutes the entire agreement of the Parties relating to the
subject matter hereof, and supersedes any and all prior and contemporaneous oral
and/or written agreements, correspondence, claims, positions and assertions
concerning the subject matter hereof or thereof. No oral or written promise or
representation has been made by any Party (or by any of their respective
attorneys, officers or employees) as an inducement to the other Party/les to
enter Into this Agreement This Agreement can only be modified by a writing
signed by a duly authorized
officer of each Party.

       

      The
Parties agree that the prevailing party shall be entitles to attorneys' fees and
costs if either Party initiates an action for enforcement of the terms of this
Agreement. The Parties irrevocably consent and submit to the exclusive
jurisdiction of the courts of the state and federal courts located within New
York, New York for purposes of any dispute arising hereunder or in connection
with this Agreement.

       

      Please
indicate your consent by signing three copies of this Agreement and returning
two fully executed originals to each of the other Parties. This Agreement, once
signed by an authorized representative of both Parties, shall constitute a valid
and binding agreement, under seal, as of the date first set forth above,
enforceable in accordance with its terms and governed under the laws of the
State of New York without regard to its principals of conflict of
laws.

       

      Sincerely yours,

      Atari Interactive,
Inc.

       

       

      By: /s/ Jim
Wilson        

      Name: Jim Wilson

      Title: President & CEO

       

      
        
          
          

        

        
          -9-

          
            

          

        

        
          
          

        

      

       

      
        Exhibit
10. 12

         

        April
24, 2009 DRAFT

        STRICTLY
CONFIDENTIAL

        NOT
AN OFFER - SUBJECT TO CONTRACT

         

         

         

         

        ACCEPTED
AND AGREED TO:

         

        RED
MILE ENTERTAINMENT, INC.

         

         

         

         

        By: /s/
Simon Price         

        Name:
Simon Price

        Title:
CEO

        Dated
: 29/4/09

         

         

         

         

        ACCEPTED
AND AGREED TO:

         

        IR
GURUS PTY LTD

        D/B/A
TRANSMISSION GAMES

         

         

         

         

        By: /s/
Michael T. Fegan

        Name:
Michael T. Fegan

        Title:
CEO

        Dated
: 27/4/09

         

         

        
          
            
            

          

          
            -10-

            
              

            

          

          
            
            

          

        

         

        Exhibit
10. 12

         

        April
24, 2009 DRAFT

        STRICTLY
CONFIDENTIAL

        NOT
AN OFFER - SUBJECT TO CONTRACT

         

         

        Exhibit
A

         

        Copy
of Development Agreement

         

         

         

         

        Attached.

         

         

         

         

         

        
          
            
            

          

          
            -11-

            
              

            

          

          
            
            

          

        

         

         

        Exhibit
10. 12

        
 

         

        DATE
March3, 2006

         

         

         

         

        
          (1)   
RED
MILE ENTERTAINMENT, INC

        

         

         

        
          (2)   
IR
GURUS INTERACTIVE PTY LTD

        

         

         

         

         

         

         

        SOFTWARE
DEVELOPMENT AND LICENSING

        AGREEMENT

         

        For

         

        HEROES
OVER EUROPE on PS3, XBOX 360, and PC

         

         

         

        
          
            
            

          

          
            -12-

            
              

            

          

          
            
            

          

        

        

           

           

          THIS
AGREEMENT is made on March 3, 2006 

           

          BETWEEN:

           

          
            	
                    (1)  

                  	
                    Red
      Mile Entertainment, Inc., a Florida Corporation ("the Publisher") whose
      principal address is 4000 Bridgeway, Suite 101, Sausalito., CA 94965;
      and

                  

          

          
            	
                    (2)  

                  	
                    IG
      Gurus Interactive Pty Lid, an Australian corporation whose principal
      address is Level 3, 355 Spencer Street, West Melbourne, Victoria 3003,
      Australia (the "Developer" or
"Licensor")

                  

          

           

          
            	
                    (A)  

                  	
                    The
      Developer has a software development engine capable of creating the
      Product.

                  

          

          
            	
                    (B)  

                  	
                    Publisher
      seeks to engage the Developer's services to develop the
      Product.

                  

          

          
            	
                    (C)

                  	
                    The
      Developer has agreed to exclusively license certain rights to the Product
      on the
      terms and conditions of this
Agreement.

                  

          

          
            
            

          

           

          AGREEMENT

           

          1.                   
DEFINITIONS

           

          1.1                  
In this Agreement:

           

          "Acceptance
Date" in relation to any Gold Master means the date on
which it is accepted unconditionally under paragraph
4.5;

           

          "Affiliate" means any corporate entity
that controls, is controlled by or is under the common control of a party to
this Agreement;

           

          "Alpha Version" means the Version of the
Product that is written by or for the Developer that is a playable version of
the Product containing substantially all features of the Product, as specified
in the Specification with all software modules integrated and working together
in a usable and testable fashion. The Alpha Version is expected to undergo
further test and revision for levels, design tuning and elimination of possible
Product Errors. Some assets may be placeholders for purposes of this Version and
this Version may not include software theft protection, and title and legal
screens. It also includes a draft of the User Manual and any Supporting
Documentation reasonably requested by the Publisher to allow complete feature
and functionality
testing.

           

          "Beta Version" means the Version of the
Product that is written by or for the Developer that is a complete running
software Product containing ALL FEATURES of the Product and final-quality game
assets, as specified in the Specification plus the incorporation of
improvements, corrections and any other errors identified through testing of the
Alpha Version of the Product. The Beta Version is a Version which is ready for
Publisher to do its quality assurance testing and Developer is ready to fix
Errors which may be found by Publisher during its "QA" testing and will include
all Original Language assets and be Multi Byte Language compatible. It also
includes such information and user instructions that the Publisher reasonably
and requires to finish producing a User Manual in the Original
Language;

           

          
            
              
              

            

            
              -13-

              
                

              

            

            
              
              

            

             

            Exhibit
1 0. 12

          

           

          "Conversion" means the preparation of a
Product which involves the adaptation or conversion of a Version into a new
Version for use on a Machine other than the Initial
Machine;

           

          "Co-Publisher" means a licensee with
whom Publisher shares to a substantial degree the costs of publishing the
Product in a part of the Territory, as opposed to a licensee who bears all of
those costs alone and "co-publishing" shall be interpreted
accordingly;

           

          "Delivery Date" means the relevant
Milestone Date specified for delivery of the Gold Master of each
Version;

           

          "Developer Trademark(s)" means
Developer's trademark or trade name or art work used in conjunction therewith to
identify Developer's software development business and/or the trademarks and/or
trade names and/or artwork used in conjunction
therewith;

           

          "End User" means anyone who is the
ultimate user of any
Product;

           

          "Error" means any known material defect
relevant to an End User in a Product
including:

           

          
            	
                    (a)  

                  	
                    any
      failure to run the test procedure set out in the
      Specification;

                  

          

           

          
            	
                    (b)  

                  	
                    any
      inability to perform repeatedly without interruption, loss of data or
      erroneously
      or improperly formatted
output;

                  

          

           

          
            
            

          

          
            	
                    (c)  

                  	
                    any
      misspelled incorrect text;

                  

          

           

          
            	
                    (d)
       

                  	
                     any
      non-compliance of any Product with any part of the
      Specification;

                  

          

           

          "Gold Master" means:

           

          
            	
                    (a)  

                  	
                    a
      non-copy protected and non-encrypted final gold master of a Product for
      use on an Initial Machine in such physical medium which (i) is
      sufficiently complete and correct to be released into the final
      manufacturing process in preparation for commercial release and shipment,
      in its Original Language and Translations in executable form; and (ii) is
      accepted for manufacturing and distribution by any applicable third-party
      licensor whose approval is contractually required prior to manufacturing
      and distribution of the Version for that Initial Machine. The Gold Master
      shall be the Beta Version with incorporation of any final improvements and
      correction of any Product Errors found in the testing of any and all
      elements of the Beta Version;

                  

          

           

          
            	
                    (b)  

                  	
                    a
      copy protected final Gold Master of the Version referred to in (a) in its
      Original Language and related Translations recorded in executable form;
      and

                  

          

           

          
            	
                    (c)
       

                  	
                    in
      the case of (a) and (b), any necessary supporting software and data including
      all graphics and sound files

                  

          

           

          
            
            

          

          "Hardware Manufacturers" means Sony
Computer Entertainment and Microsoft
Corporation.

           

          
            
              
              

            

            
              -14-

              
                

              

            

            
              
              

            

          

           

          Exhibit 10. 12

           

          "Initial Machine" means the PlayStation
3, Xbox 360 and PC for which the Product will be developed by the Developer
under this Agreement;

           

          "Intellectual Property Rights" means,
without limitation, all present and future rights of copyright, patent,
registered designs, design rights, trademarks and trade names, neighbouring
rights or rights analogous to any of the above under any jurisdiction, in each
case registered or unregistered and existing now or in the future, including
reversions and renewals of such rights and rights to make applications for
registration of any such rights and Intellectual Property Rights shall include
in particular all rights in any jurisdiction to copy, adapt, translate,
broadcast, transmit, publish, perform, reproduce in any medium and otherwise
exploit the work or materials
concerned;

           

          "Machine" means an object or system of
any description, now known or coming into existence in the future, with which a
Product may be viewed, played or otherwise
used;

           

          "Milestone" means each stage of
development of the Product set out alongside a Milestone Date in Schedule 1;

           

          "Milestone Date" means each of the dates
for achieving a Milestone in Schedule
1;

           

          "Milestone Payment Schedule" means the
schedule detailing the relevant fee charged by the Developer for the completion
of each Milestone as detailed in Schedule
1.

           

          "Multi Byte Character" means a character
or single text letter whose character code consists of two or more bytes under a
certain character-encoding
scheme.

           

          "Multi Byte Languages" means software
code that supports Multi Byte Character represented text and characters for one
dialect of an Asian language to be determined by the parties in connection with
the preparation of Translations (as defined
below).

           

          "Original Language" means American
English.

           

          "Product" means a PlayStation 3, Xbox
360 and PC game "Heroes over Europe" as more particularly defined in the
attached Design Document (Exhibit A) to be produced by the Developer under this
Agreement in respect of the Initial Machines and comprising each stage as
existing from time to
time:

           

          
            	
                    (a)  

                  	
                    the
      Product plots, themes, story lines, characters and
    sequences;

                  

          

           

          
            	
                    (b)  

                  	
                    all
      revised, amended and rejected prototypes and materials prepared in
      connection with the development of the
Product;

                  

          

           

          
            	
                    (c)
       

                  	
                    all
      Object Code, graphics, sound effects and music and implementing
      copy protection
      routines in each of the
Versions;

                  

          

           

          
            
            

          

          "Product Names" means all names of
characters, scenes, themes, products, sets, processes or other aspects of the
Product and all designs of characters, backgrounds and other visual features
appearing in the Product;

           

          
            
              
              

            

            
              -15-

              
                

              

            

            
              
              

            

          

          
             

            Exhibit 10.12

          

           

          "Project Manager(s)" means the person at
Developer responsible for the project management of Product and identified in
Schedule 2;

           

          "Publisher's Producer" means the person
at Publisher responsible for the project management of Product and identified in
Schedule 2;

           

          "Quarter End" means 31 March, 30 June,
30 September and 31 December each year during the
Term;

           

          "Source Code" means all software code
and listings (excluding the Developer's Tools and Technology) generated by the
Developer in human readable form in order to create any Version of the Product,
together with accompanying sound code, Product notes, flow charts, diagrams,
written script of text, audio track and other documentation relating to such
code;

           

          "Specification" means the specification
for each Version of the Product current from time to time comprising a detailed
specification of all game features, mechanics, game structure and technical
specifications of the
Product;

           

          "Supporting Documentation" means
documentation in English containing full and clear information enabling the
Publisher and its licensees to support and maintain all aspects of the
Product;

           

          "Term" will mean beginning on the date
shown on page one of this Agreement and ending ten years hence unless extended
under the terms of "Renewal". At the end of the Term, Publisher shall cease
manufacturing any additional units of the Product. Publisher may continue to
sell units in inventory for an additional three months ("Sell-off Period")
beyond the term. Profits for sales of Products during the Sell-off Period shall
be paid and remitted in accordance with paragraph
10

           

          "Territory" means
the universe;

           

          "Translation" means a copy of a Version
in which text and/or text related graphics and/or dialogue have been translated
into French, German, Italian, Spanish, Dutch and one dialect of an Asian
language in accordance with paragraph 9
hereof;

           

          "Unit" means
a copy of a Version embodied in a medium or format (whether tangible, electronic
or otherwise) which is customarily made commercially available to the
public;

           

          "User Manual" means a manual containing
instructions for End Users clearly expressed and enabling them to operate the
Product fully, in a style suitable for the intended age range of IEnd
Users;

           

          "Version" means
a form of the Product produced by the Developer under this Agreement designed to
be compatible with a particular Initial Machine and (where relevant) a
particular screen format PAL/NTSC including all prototypes and all Master Copies
of that Version, and when used in connection with the name of a Machine shall
mean a form of the Product readable and executable on that
Machine;

           

          
            
              
              

            

            
              -16-

              
                

              

            

            
              
              

            

          

           

             

            Exhibit 10.12

             

          

          "Virus Free" means that at the time of
delivery, the Product shall not contain any known computer Product (detectable
by the McAfee anti-virus software current at that time) which copies itself to
other storage machines including magnetic tape cassette, memory chip, electronic
cartridge, optical disk and magnetic disk and which destroys data, causes damage
or creates a nuisance or annoyance to the End
User.

           

          "Working Day" means Monday to Friday
except for all public holidays observed in the United States or
Australia;

           

          
            	
                    1.2 

                  	
                    As
      the context permits, references to people include any legal entity, and
      partnerships or unincorporated associations, references to the singular
      include the plural and vice versa, and references to any gender include
      each other gender.

                  

          

           

          
            	
                    1.3 

                  	
                    "Include"
      or "including" are used without
limitation.

                  

          

           

          
            	
                    1.4

                  	
                    Headings
      and titles are used for references only and do not affect
      the        interpretation of the
      Agreement.

                  

          

           

          
            	
                    1.5 

                  	
                    Any
      reference to any paragraph or schedule is a reference to a paragraph or
      schedule in this Agreement.

                  

          

           

           

          
            	
                    2.

                  	
                    INTELLECTUAL
      PROPERTY RIGHTS

                  

          

           

          
            
              
                
                  	
                          2.1
      

                        	
                          License. Publisher acknowledges
      that Developer owns the intellectual property rights to the name "Heroes
      over Europe" and to an existing game by that name ("Existing Heroes over
      Europe"). Publisher agrees to use such name for the Product in North
      America, Europe and Asia. In versions where Publisher uses the name
      "Heroes over Europe" as the title of the Product, the Product and the Gold
      Master shall be the sole and exclusive property of Developer. Publisher's
      sole rights shall be those granted elsewhere in this
      Agreement.

                        

                

              

            

          

           

          
            
              	 	
                      2.1.1

                    	
                       Other
      versions of the Product. Developer, as controller of the underlying
      software code for "Heroes over Europe", shall decide whether or not to
      create other video game versions of the Product. Publisher shall have the
      right of first refusal on reasonable commercial terms to publish any other
      version of the Product. Under this Agreement other versions include all
      video game formats know known, including PS2, Xbox, PSP
      and DS, and their successors (i.e., PS3 is a successor to PS2) and
      the P.C. The parties agree to negotiate in good faith the terms under
      which Publisher would publish such products. If the parties are unable to
      negotiate an agreement within 30 days of Developer noticing Publisher of
      its desire to create other versions, Developer shall be free to negotiate
      with other publishers. Prior to completing an agreement with another
      Publisher, Developer shall offer the Product to Publisher on the same
      terms and conditions as agreed to with the other publisher. Publisher
      shall have ten (10) days to elect to match the offer or lose its
      rights to the other
version(s).

                    

            

          

           

          
            	
                     
      

                  	
                    2.1.2

                  	
                    Sequels
      of the Product. Publisher shall have the first right of negotiation
      for the next sequel to the Product If the parties are
      unable

                  

          

           

          
          

        

      

    

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

      

       

      Exhibit 10.12

       

    

    
      
        	
                 

              	
                to
      negotiate an agreement within 30 days of Developer noticing Publisher of
      its desire to create a sequel, Developer shall be free to negotiate with
      other publishers. Prior to completing an agreement with another Publisher,
      Developer shall offer the Product to Publisher on the same terms and
      conditions as agreed to with the other publisher. Publisher shall have ten
      (10) days to elect to match the offer or lose its rights to the sequel and
      all future sequels. (For sake of clarity, Publisher has this right for the
      first sequel. If Publisher and Developer agree to terms fbr the first
      sequel, Publisher will have such rights for the second sequel, and so on.
      Once Publisher has lost the right to a particular sequel, it has lost the
      right to all future sequels.)

              

      

       

      
        
          	 	
                  2.1.3

                	
                  Agreement
      not  to Compete. So long as the Product is being actively
      sold by Publisher, Developer shall not create, for its own benefit or for
      another Publisher any product based on Heroes over
  Europe.

                

        

      

       

      
        	
                2.2

              	
                Developer's
      Intellectual Property Rights.

              

      

       

      
        	
                (a)  

              	
                Notwithstanding
      anything else contained herein, Developer will retain exclusive ownership
      and control of all of the Intellectual Property Rights in or relating to
      the Product. Developer hereby grants to Publisher a royalty-bearing,
      worldwide, exclusive license to: (i) sell copies of the Product in the
      format delivered to Publisher by Developer only (excluding without
      limitation the right to modify the Product or exploit it in source code
      format or in connection with any other product); and (ii) sublicense such
      rights to sub-licensees.

              

      

       

      
        	
                (b)  

              	
                For
      the avoidance of doubt Publisher shall not (and shall not authorize any
      third party to) (i) decompile, disassemble or otherwise reverse engineer
      the source code or underlying algorithms of the Product, regardless of
      name. This paragraph 2.2(b) shall not apply to software code delivered by
      Developer to Publisher in accordance with paragraph 9 provided that
      Publisher shall not use any such code for any purpose other than in order
      to create Translations.

              

      

       

      
        	
                3. 

              	
                DEVELOPMENT

              

      

       

      
        
          	 	
                  3.1

                	
                   The
      Developer shall develop the Product for the Initial Machines and in the
      Original Language(s) in accordance with the Specification. Developer will
      provide or obtain at its sole cost and expense all necessary programming
      (including, without limitation, the application of technical knowledge,
      expertise and the services of personnel) and other production materials
      required to develop the Product, including licenses such as GameSpy. In
      addition, Publisher will loan Developer necessary development systems and
      PC workstations. Such equipment will be returned upon completion of the
      Product.

                

        

      

       

      
        
          	 	
                  3.2

                	
                  The
      Developer shall achieve each of the Milestones by the relevant Milestone
      Date (Publisher to provide reasonable assistance to Developer in respect
      of meeting the relevant Milestone). On achieving each Milestone, the
      Developer shall, if requested to do so by the Publisher, deliver to the
      Publisher all materials

                

        

      

    

     

     

    
       

      
        
          
          

        

        
          -18-

          
            

          

        

        
          
          

        

         

        Exhibit
10.12

      

       

      relevant
to the particular Milestone including in particular copies of the User Manual
and Support Documentation with each Alpha and Beta Version. In addition,
Publisher may request Developer deposit Source Code with a mutually agreed upon
Escrow Agent in Australia. Publisher shall pay all fees of Escrow Agent. Under
the terms of such escrow arrangement, Publisher may request release of the
source code from escrow, only if Developer fails to perform such translations or
refuses to create them and fails to cure such default as required by paragraph
9.2, below.

       

      
        	
                3.3

              	
                The Developer shall
      keep the Publisher promptly and regularly informed of all developments,
      problems, new concepts and ideas in relation to the
      Product.

              

      

       

      
        	
                3.4

              	
                The
      Developer shall appoint a Project Manager who shall liaise with the
      Publisher during development of the Product. In addition, Developer must
      identify the key team members on Schedule 2. The original key team members
      and any subsequent changes to the key team members are subject to approval
      by Publisher.

              

      

       

      
        	
                3.5

              	
                The
      Developer shall be responsible for initial testing on each Version prior
      to delivery in accordance with customary testing procedures. The Developer
      shall prior to delivery correct Errors discovered as a result of that
      testing, and also (in accordance with the procedure set out in this
      paragraph) any Errors notified to the Developer by the Publisher following
      the Publisher's testing of any Alpha or Beta Versions, or other Product
      materials supplied before delivery of the Alpha Version, Beta Version and
      the Gold Master.

              

      

       

      
        	
                3.6

              	
                Publisher
      shall be responsible for submitting the Gold Master candidate to the
      Hardware Manufacturers for approval within five (5) days of receiving the
      Gold Master approval from the Developer. Developer and Publisher shall
      work together in good faith to obtain approval of the Gold Master
      candidate from the Hardware Manufacturers. Should the Gold Master
      candidate be rejected by either Hardware Manufacturer and such rejection
      is not due to the acts or omissions of Publisher, and the Developer and
      Publisher together are unable to correct such deficiencies and obtain
      approval of the Gold Master by Hardware Manufacturer, Publisher or
      Developer may terminate this Agreement in accordance with paragraph
      16.2.

              

      

       

      
        	
                3.7

              	
                Developer
      shall deliver, at its own cost, the Marketing Deliverables included on
      Schedule 5. Such Marketing Deliverables are material deliverables for
      meeting the Milestone commitments.

              

      

       

      4.                   
DELIVERY AND ACCEPTANCE

       

      
        	
                4.1 

              	
                Developer
      shall submit to Publisher a Version of the Product at each Milestone for
      approval. Publisher shall (acting reasonably) review the submission for
      compliance with the relevant parts of the Specification at that Milestone
      and for Publisher's continued awareness as to the Product
      status.

              

      

       

      
        	
                4.2

              	
                As
      soon as reasonably practicable, but in any event within 10 (ten) business
      days following receipt of a Version of the Product at each Milestone,
      Publisher's Producer shall notify the Developer in writing
      that:

              

      

       

       

      
        
          
          

        

        
          -19-

          
            

          

        

        
          
          

          Exhibit
10.12

        

      

       

                   

       

      
        
          	 	4.2.1  	it
      accepts and approves that Version unconditionally; or
	 	 	 
	
                   
      

                	
                  4.2.2

                	
                  it accepts and
      approves that Version conditionally on correction of the Errors
      specified; or

                
	 	 	 
	 	4.2.3
      	it
      does not accept or approve that
Version

        

      

       

      and shall
at the same time notify the Developer of the Errors that it is aware of which
are contained in that Version which it has not accepted and approved
unconditionally. Publisher shall accept and approve unconditionally each Version
unless there is an Error in that Version.

       

      
        	
                4.3

              	
                If the Publisher has
      not have given the Developer such notice under paragraph 4.2 within
      the said 10 (ten) business days, that Version shall be deemed
      accepted.

              

      

       

      
        	
                4.4

              	
                As
      soon as reasonably practicable, but in any event no later than 10 Calendar
      Days (or such other period as the parties may agree) after receiving
      notice of non­acceptance pursuant to paragraph 4.2, the Developer
      shall correct the specified Errors at its sole expense and deliver to the
      Publisher the corrected Version of the Product. Paragraphs 4.2, 4.3 and
      this paragraph 4.4 shall then apply again in respect of that corrected
      Version.

              

      

       

      
        	
                4.5

              	
                The
      Developer shall deliver to the Publisher the Gold Master of each Version
      by the relevant Delivery Date. For the avoidance of doubt, Developer shall
      deliver a Gold Master for the Original Language Version of the Product and
      a multi-language Version for all agreed Translations as required by the
      Hardware Manufacturers and Publisher, i.e., a US Gold Master for SCEA and
      one (1) multi-language Gold Master each for SCEE and for SCEI,
      respectively. The parties acknowledge that in the case of PS3 and Xbox
      360, the Hardware Manufacturer shall have the final right to accept or
      reject such Master. In the case of rejection, Developer shall respond as
      if such rejection was made by Publisher and shall respond to such
      rejection in accordance with this paragraph
4.

              

      

       

      5.                   
CHANGE CONTROL

       

      
        	
                5.1

              	
                A
      party may at any time by notice in writing to the other party suggest or
      request a change to the attached Design Document, where the proposed
      changes will have the effect of varying the Product. Such notice must
      clearly detail the nature of the proposed change (`Change
      Request').

              

      

       

      
        	
                5.2

              	
                 Within
      5 business days (or any longer period as the parties may reasonably agree)
      of receiving a Change Request from, Developer must prepare and submit to
      Publisher a proposal (`Change Request Quote') containing at
      least:

              

      

       

      
        
          	 	5.2.1   	the
      time within which the Change Request can be implemented.
	 	 	 
	
                   
      

                	
                  5.2.2

                	
                  an analysis of the
      impact or likely impact of the Change Request and its
      implementation
on:

                

        

      

       

      (a) the
Design Document (including the project plan); and

       

      (b) the
performance or other technical aspect of this Agreement.

       

       

      
        
          
          

        

        
          -20-

          
            

          

        

        
          
          

          Exhibit
10.12

        

      

       

       

      
        
          	
                   
      

                	
                  5.2.3

                	
                  the skill type and
      the days effort the Developer proposes to use to implement
      the Change Request.

                
	 	 	 
	 	5.2.4
      	the
      cost of implementing the Change
Request.

        

      

       

      
        	
                5.3

              	
                If
      the proposed Change Request can be reasonably accommodated within the
      specified existing level of resources, not including overtime work, then
      being used by the Developer in performing its obligations under this
      Agreement and without degradation of Developer's compliance with all
      applicable performance requirements, the cost of implementing the Change
      Request is covered by the charges already payable under this Agreement If
      implementation of the proposed Change Request will reduce Developer's cost
      to fully perform its obligations under this Agreement, the Developer must
      review the charges payable so as to reflect any projected cost
      savings.

              

      

       

      
        	
                5.4

              	
                The cost quoted by
      the Developer to implement the Change Request must reflect no
      more than the same level of profit as the charges payable for this
      Agreement.

              

      

       

      
        	
                5.5

              	
                If
      Publisher cannot agree with the Developer about any Change Request and
      that dispute cannot be resolved within 14 business days, either party may
      refer the dispute for resolution by an independent expert who is required
      to determine an equitable adjustment to the price to reflect the proposed
      change in the scope of work. In making a determination under this clause,
      the independent expert is acting as an expert, and is not acting as an
      arbitrator. The parties must share equally the costs of the independent
      expert.

              

      

       

      
        
          	
                  5.6

                	
                  A Change Request
      Quote is not accepted unless Publisher accepts it in writing and signed
      by its representative.

                
	 	 
	5.7  	If
      Publisher accepts a Change Request
Quote:

        

      

       

      
        
          	 	
                  5.7.1
      

                	this
      Agreement is amended to the extent necessary to incorporate the terms
      (including costs), specifications and timing in the Change Request
      Quote.
	 	 	 
	
                   
      

                	
                  5.7.2

                	
                  the Developer must
      carry out, implement and complete the Change Request
      on the terms of the Change Request
    Quote.

                

        

      

       

      6.                   
MEDIA
FORMAT, COPY PROTECTION

       

      The final
media format of the Product must by determined by the Publisher prior to
completion of "pre production" (as detailed in the attached design Document).
Publisher will notify Developer on or before the completion of the Product's
beta milestone of the copy protection scheme to be used on the
Product.

       

      7.                   
QUALITY
ASSURANCE ("QA")

       

      Publisher
acknowledges that it will be responsible of the Product's QA. In particular,
Publisher will be primarily responsible for general QA activities,
pre-submission, submission, compatibility and localization QA activities.
Developer

      will be
responsible for basic Product QA only (for example, the main function of
Developer's QA will be to act as an interface between the Publisher's QA
activities and the Product development team).

       

       

      
        
          
          

        

        
          -21-

          
            

          

        

        
          
          

          Exhibit
10.12

        

      

       

       

      8.                    LICENSE

       

      Developer
hereby grants to Publisher, and Publisher hereby accepts, the exclusive right to
manufacture, distribute, sell and market the Product in the Territory through
any and all channels of distribution known now or created in the future during
the Term of this Agreement. Subject as provided in this Agreement, the
publishing of the Product including manufacturing, pricing, distribution,
marketing, packaging and artwork shall be the responsibility and the obligation
of the Publisher. Publisher shall have the right, subject to approval of
Developer, such approval not to be unreasonably withheld, to sublicense the
rights licensed hereunder to third parties.

       

      9.                   
TRANSLATION

       

      
        	
                9.1

              	
                At
      its own cost, Publisher shall be responsible for translating and
      integrating localized text and voice over material and generating a
      multi-language Gold Master(s) embodying the Translations. Unless otherwise
      agreed in writing between the parties and subject to the payment of
      Developer's reasonable costs as detailed in Schedule 1, the Developer will
      provide the services to translate and integrate localized text and voice
      over materials and generate a multi-language Gold Master(s) embodying the
      Translation.

              

      

       

      
        	
                9.2

              	
                If
      the Developer fails to perform such translations or refuses to create them
      and fails to cure such default within thirty (30) days of receipt of
      notice from Publisher, Publisher may use a third party for the
      Translation, the Developer shall supply the Publisher with all Original
      Language text and/or text related graphics and/or dialogue featured in the
      relevant Version, to the extent not previously delivered. Publisher shall
      recover the reasonable cost of any such translations out of Profits
      earned.

              

      

       

      
        	
                9.3

              	
                If
      pursuant to this Section 9 the Publisher uses a third party to carry out
      the Translation, the Publisher will sign, and will ensure that its chosen
      third party signs, a confidentiality undertaking reasonably specified by
      the Developer which will include, without limitation, undertakings that
      the Source Code, and any other material, information, data or other things
      of the Developer will not be used by the persons signing for any purpose
      other than the development of the Translation and that all such things
      will be held securely at all times and returned to the Developer when work
      on the Translation is complete. Developer shall deliver to Publisher any
      additional work (including part of the Developer's Tools and Technology)
      which is necessary to the Publisher in order to complete a
      Translation.

              

      

       

      10.                
 PROFIT SHARING

       

      10.1               
 The Publisher shall pay the Developer the following share of profits as
follows:

       

      
        	
                                       
      10.1.1 

              	
                The
      Publisher shall retain one hundred percent (100%) of all cash received
      from any sources until the Publisher has recovered all of Publisher's
      reasonable out of pocket costs, including payments made to Developer
      related to the Product, plus $300,000. Publisher will provide Developer
      with a detailed accounting of all out of pocket expenses charged to the
      project.

              

      

       

      
        	
                                       
      10.1.2 

              	
                Once
      the Publisher has recovered the costs in 10.1.1, the Publisher shall
      retain sixty-five percent (65%) of any remaining monies and pay to
      Developer thirty five percent
(35%).

              

      

       

      
        	
                10.2

              	
                Within
      forty-five (45) days of the Quarter End following the date on which the
      Publisher first commercially releases a Version of the Product and of
      every subsequent Quarter End the Publisher shall provide the Developer
      with a written Profit Statement specifying in sufficient detail (i)
      amounts spent in satisfaction of the Marketing Guarantee (as defined
      below) in respect of that quarter; and (ii) the calculations of Cash
      Receipts and Expenses, and the Profit (if any) due to the Developer in
      respect of that quarter. Each Profit Statement shall be accompanied by a
      wire transfer for any monies due, save that if the Publisher is prevented
      by the law of any country from making payments outside that country it
      shall be entities to pay the relevant sums to the Developer in that
      country. All sums payable to Developer pursuant to this Agreement
      (including the Development Advances and Profits) shall be made in U.S.
      Dollars. At each Quarter End the Publisher may retain from Profits payable
      a reserve against returns or other credits in respect of Units sold by the
      Publisher hereunder in the manner set out in paragraph
    10.2.1.

              

      

       

      
        	
                                       
      10.2.1

              	
                The
      Publisher will withhold a general reserve against rebates, deductions,
      price protection, discounts, allowances or refunds for returned, defective
      or discounted units, exchanges, credits and the like (the
      "General Reserve") either:

              

      

       

      
        	
                                                         
      10.2.1.1 

              	
                where
      Publisher is responsible for the above described items, a reserve not to
      exceed Twenty percent (20%) of Gross Wholesale Sales ("Gross Wholesale
      Sales" is defined as gross amounts received by Publisher from the sale,
      distribution or ancillary exploitation attributable to the Product),
      or

              

      

       

      
        	
                                                         
      10.2.1.2

              	
                 where
      publisher is not responsible for the above described items, in a pro rata
      amount of any such reserve withheld by Publisher's Co-Publishers or
      sub-licensees of the product. Such pro-rata amount shall be based on the
      applicable Royalty Rate in paragraph 10.1. (For example, should a
      Co-Publisher withhold from Publisher $1,000 in payments which would fall
      under paragraph 10.1.1 above, Publisher would withhold $350 from Developer
      in a reserve. When Co-Publisher releases Publisher's reserve, Publisher
      will promptly release Developer's
reserve.)

              

      

       

       

      
        
          
          

        

        
          -22-

          
            

          

        

        
          
          

          Exhibit
10.12

        

      

       

       

      
        	
                 
      

              	
                10.2.2

              	
                In either case under
      paragraph 10.2.1, such reserve shall be liquidated on
      a twelve month rolling
  basis.

              

      

       

      
        	
                10.3

              	
                Publisher
      will maintain accurate accounts, books and records that report the
      marketing, distribution and sales and other commercial exploitation of
      each Version of the Product which has been commercially released by the
      Publisher and any sub-licensing by the Publisher. Developer shall have the
      right to designate a certified public accountant ("the Auditor") on
      Developer's behalf to examine those accounts, books and records solely for
      the purpose of verifying the expenditures of the Marketing Guarantee and
      verifying the accuracy of the Royalty Statements under paragraph 10.2 and
      the Royalty payable under this Agreement. Developer's Auditor may only
      make such examination during regular business hours and upon reasonable
      notice and in manner that is at the Publisher's reasonable convenience and
      not disruptive to the Publisher's business. Each examination will take
      place at the place the Publisher normally keeps the accounts, books and
      records to be examined, which is presently in Sausalito, California.
      Developer shall be limited to one such examination each 12 months while
      the Product is being commercially exploited and for 3 years thereafter.
      Publisher's accounts, books and records relating to the Marketing
      Guarantee and to a particular Profitability Statement may be examined only
      within 36 months after the date the Statement was rendered. Developer
      shall not have the right to examine Publisher's accounts, books or records
      relating to a particular Profitability Statement more than once. Prior to
      the commencement of any examination of the Publisher's accounts, books and
      records under this Agreement, Developer shall cause the Auditor to sign a
      letter and/or agreement which acknowledges the confidentiality of the
      Publisher's accounts, books and records in the form set out in Schedule 3.
      The fees of the Auditor shall be at the sole expense of Developer unless
      such audit discovers previously undiscovered errors in favor of Publisher
      exceeding both 5% and $2,500 for the entire time period covered by that
      audit, in which case the Publisher shall reimburse actual and reasonable
      Auditor's fees for that audit to Developer in addition to make good the
      amounts of such errors and pay interest on such unpaid sums at the
      statutory rate of interest under California
law.

              

      

       

      
        	
                10.4

              	
                Each
      Profitability Statement shall be final and binding on Developer unless
      Developer has given Publisher written notice of objection stating the
      matters to which it disagrees within 3 years of the issue of the
      Profitability Statements, and (if the Publisher does not accept any of
      those objections), unless the Developer has issued and served legal
      proceedings within 2 years of the date of the Developer's relevant notice
      of objection.

              

      

       

      
        11.                  DEVELOPMENT
COST

         

        
          	
                  11.1

                	
                  Development
      Cost of the Product in accordance with this Agreement shall be the
      relevant amount set out in Schedule 1 payable to the Developer by the
      Publisher in accordance with the Milestone Payment Schedule detailed in
      Schedule 1.

                

        

         

      

      
        	
                11.2

              	
                Without
      prejudice to the provisions of paragraph 4 above, Publisher shall use
      reasonable endeavours to expedite its acceptance of deliverables in
      relation to a Milestone.

              

      

       

       

      
        
          
          

        

        
          -23-

          
            

          

        

        
          
          

          Exhibit
10.12

        

      

       

       

      
        	
                11.3

              	
                Developer
      may raise an invoice on the Publisher upon notice by the Publisher of its
      acceptance of each Milestone pursuant to Paragraph 4 and such invoice is
      due within ten (10) calendar days of this
  acceptance.

              

      

       

      
        	
                11.4

              	
                The
      Publisher shall have no obligation to make any payments to the Developer
      under this Agreement for anything save for the payment of the Development
      Cost referred to in this paragraph 11, Profits under paragraph 10 and
      payments (if relevant) under paragraph 9. Nevertheless, any other
      additional payments that the Publisher, in its discretion, makes to the
      Developer in relation to the Developer's work under this Agreement for any
      reason shall be treated as a further Development Cost payment and fully
      recoupable from Profits payable under this Agreement, unless otherwise
      agreed in writing.

              

      

       

      
        	
                11.5

              	
                All
      Development Costs paid by Publisher to the Developer together with
      payments (if relevant) under paragraph 9 (except payment of Profits) shall
      be recoupable at the rate of 100% out of the cash received by Publisher
      for sale and license of the
Product.

              

      

       

      
        	
                11.6

              	
                The parties agree
      that no finder's fees are payable to any party under this transaction.

              

      

       

      12.                 
INDEMNIFICATION.

       

      
        	
                12.1

              	
                Developer
      Indemnification. Subject to the provisions of paragraph 12.3
      (Indemnification Procedures), Developer will indemnify, defend and hold
      harmless Publisher and its affiliates, officers, directors, employees and
      agents from and against any and all losses, liabilities, claims,
      obligations, costs and expenses (including, without limitation, reasonable
      attorneys' fees) which arise in connection with any breach or alleged
      breach by Developer of any of its representations and warranties set forth
      in paragraph 14 (Warranties of Developer). Notwithstanding anything in
      this paragraph 12 to the contrary, in the event that, by reason of a claim
      by a third party of infringement based on the Product, Publisher is
      temporarily or permanently enjoined from distributing the Product
      developed under this Agreement, then, if Developer is unable, within sixty
      (60) days from the signing of the order of injunction, to provide
      Publisher with a non-infringing Product, Publisher shall have the right to
      obtain a license from the third party to continue with the marketing,
      distribution and sale of the Product(s) and Developer shall reimburse
      Publisher for any reasonable license/settlement fee and related reasonable
      legal expenses paid by Publisher to the third party, unless Developer
      ultimately prevails in the litigation; if Publisher elects this remedy and
      obtains such a license, such remedy shall be Publisher's sole and
      exclusive remedy in connection with such
    claim.

              

      

       

      
        	
                12.2

              	
                Publisher
      Indemnification. Subject to the provisions of paragraph 12.3
      (Indemnification Procedures), Publisher agrees to defend, indemnify and
      hold harmless Developer and its affiliates, officers, directors, employees
      and agents from and against any and all losses, liabilities, claims,
      obligations, costs and expenses (including, without limitation, reasonable
      attorneys' fees) which arise in connection with the breach or an alleged
      breach by Publisher of any of its warranties set forth in paragraph 15
      (Warranties of
Publisher).

              

      

       

       

      
        
          
          

        

        
          -24-

          
            

          

        

        
          
          

          Exhibit
10.12

        

      

       

       

      
        	
                12.3

              	
                Indemnification
      Procedures. If a third party asserts any claim or allegation which,
      if proven, would trigger the indemnification obligations set forth in
      paragraphs 12.1 and 12.2, the indemnifying party shall be notified
      promptly of such claim by the indemnified party and given control of the
      defence and/or settlement thereof. After notice from the indemnifying
      party to the indemnified party of its election to assume the defence of
      such claim or action, the indemnifying party shall not be liable to the
      indemnified party under this paragraph 12 for any legal or other expenses
      subsequently incurred by the indemnified party in connection with the
      defence thereof. No indemnifying party shall, without the prior written
      consent of the indemnified party, effect any settlement of any pending or
      threatened proceeding in respect of which any indemnified party is a party
      and indemnity could have been sought hereunder by such indemnified party,
      unless such settlement includes an unconditional release of such
      indemnified party from all such liability on claims that are the subject
      matter of such proceeding. Moreover Developer shall not, in the absence of
      the consent of Publisher (which shall not be unreasonably withheld or
      delayed), effect any settlement of any pending, threatened or actual
      proceeding or claim which has the effect of compromising in any way the
      rights, interests and licenses in the Product or the license granted to
      Publisher hereunder. The foregoing provisions of this paragraph 12 state
      the entirety of the parties' obligations with respect to any claim by any
      third party.

              

      

       

      
        	
                12.4

              	
                Developer
      shall procure and maintain for itself and its employees and contractors
      all insurance coverage required by Australian law. Developer also agrees
      to maintain general liability and errors and omissions insurance, in the
      amount of at least AU$1,000,000. Upon request, Developer shall furnish
      Publisher with an up-to-date certificate of insurance evidencing such
      coverage.

              

      

       

      13.                 
MARKETING

       

      
        	
                13.1

              	
                The
      parties will work together to determine the optimal time and manner of
      announcing the Product and having the website "go live". Developer will
      own, operate and maintain the "official" website for the "Heroes over
      Europe" Product and Publisher and Developer shall cooperate with each
      other on providing content for such
website.

              

      

       

      
        	
                13.2

              	
                Publisher
      shall, subject to the terms of this Agreement and consistent with its own
      policies, practices and procedures, use commercially reasonable efforts to
      promote and exploit the Product throughout the Territory within a
      reasonable period following the hardware manufacture's
      approval.

              

      

       

      
        	
                13.3

              	
                Publisher
      shall furnish Developer without charge thirty (30) samples of each English
      language Version of the Product distributed hereunder, such samples not to
      be resold by Developer. Developer shall have the right to purchase
      additional units of the Product at Publisher's cost therefore, such copies
      not to be resold or used for any advertising or promotional activities
      (except with Publisher's prior written
consent).

              

      

       

      
        	
                13.4

              	
                Publisher shall
      present all marketing materials to Developer for review and approval,
      not to be unreasonably withheld. Developer shall have ten (10) days to
      approve or reject such materials. In the case where Developer does not
      respond within ten (10) days, the marketing materials are deemed
      approved.

              

      

       

       

      
        
          
          

        

        
          -25-

          
            

          

        

        
          
          

          Exhibit
10.12

        

      

       

      
        	
                13.5

              	
                Publisher
      shall be responsible for setting the initial suggested retail price (SRP)
      and any subsequent changes to said SRP. Such pricing shall represent
      Publishers best efforts to properly price the Product taking into account,
      the perceived quality or the Product, the market and pricing of any
      competitive products. In the event that Publisher deems it necessary to
      change the SRP, Publisher shall inform Developer of such change and the
      reasons for such change.

              

      

       

      14.            
    WARRANTIES OF DEVELOPER

       

      14.1               The
Developer represents and warrants that:

       

      (a) 
 it will at all material times own or control all Intellectual Property
Rights to the Product, free from any third party right or interest which would
impair the rights of the Publisher under this Agreement;

       

      (b) 
 it has and will at all material times have full power and authority to
enter into and perform this Agreement and to grant the rights expressed to be
granted by it;

       

      (c) 
 nothing contained in the Product will infringe a third party's
Intellectual Property Rights, of a right of privacy or name or image or
likeness, or become liable under unfair competition law;

       

      (d)
 nothing contained in the Product will be obscene or libellous or otherwise
in breach of any relevant laws or regulations of any territory which relates to
health and safety;

       

      (e) 
 each Gold Master will be Virus Free on its Acceptance Date and each Gold
Master shall not contain any software routine designed to disable a computer
Product automatically with the passage of time or by the intervention of a third
party other than a licensee of the Gold Master or Publisher;

       

      (f)   
the Product will be an original work created by the Developer;

       

      (g) 
 the execution of this Agreement will not put the Developer in breach of
any other agreement including an exclusive term agreement;

       

      (h) 
the Developer has received no notice of any claim pending or threatened against
Developer based on infringement of the rights set forth in this
Agreement;

       

      (i)   
the Developer has not sold, assigned, leased, licensed or in any other way
disposed of or encumbered the rights granted to Publisher hereunder in such a
way as to materially affect the rights granted to Publisher hereunder, and
Developer will not sell, assign, lease, license or in any other way dispose of
or encumber any of such rights in such a manner as to encumber the rights
granted to Publisher hereunder;

       

      (j)   
Developer will not use Publisher's name or logos or the names of any of
Publisher's products for any purpose, including, but not limited to, advertising
or promotional purposes, except as provided in this Agreement or with the prior
written consent of Publisher.

       

      15.              
  WARRANTIES OF PUBLISHER

       

      15.1              
 The Publisher warrants and represents:

       

      
        	
                (a)  

              	
                it
      has and will at all material times have full power and authority to enter
      into and perform this Agreement and to grant the rights
      granted;

              

      

       

      
        	
                (b)  

              	
                nothing
      contained in this Agreement or in the performance of this Agreement will
      place Publisher in breach of any other contract or
    obligation.

              

      

       

      
        	
                (c)  

              	
                Publisher
      does not know or have reason to know that anything Publisher provides that
      is or will be contained in the Product does or will violate or infringe
      any Intellectual Property Rights, whether statutory or common law of any
      third party in any jurisdiction, or contain any libelous or otherwise
      unlawful material;

              

      

       

      
        	
                (d)  

              	
                Publisher
      has received no notice of any claim pending or threatened against
      Publisher based on infringement of the rights set forth in this Agreement;
      and

              

      

       

      
        	
                 
      

              	
                 (e)

              	
                Publisher warrants
      that it has the financial ability to enter into and perform all
      its obligations under this
  Agreement.

              

      

       

      
        	
                 
      

              	
                Disclaimer.
      EXCEPT FOR THE WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT,
      THE PARTIES HEREBY DISCLAIM ALL OTHER WARRANTIES, WHETHER EXPRESS OR
      IMPLIED, INCLUDING WITHOUT LIMITATION, ANY AND ALL WARRANTIES OF
      MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NON-INFRINGEMENT OF
      THIRD PARTY RIGHTS.

              

      

       

      16.                 
TERMINATION

       

      
        	
                16.1

              	
                Either
      party shall be entitled, without prejudice to its other rights, to
      terminate the Agreement with immediate effect by giving written notice to
      the other party if the other party is in breach of any of its material
      obligations under this Agreement and, if the breach is capable of remedy,
      it has continued unremedied for a period of thirty (30) calendar days
      after the other party has been given written notice specifying the breach
      and the steps required to remedy it. Failure to pay any monies due under
      this Agreement is a material breach and subject to cure under this
      paragraph 16.1.

              

      

       

      
        	
                16.2

              	
                If
      Sony Computer Entertainment of America rejects the concept submittal or
      the Gold Master candidates for any reason, except due to Publisher's act
      or omission, Publisher may cancel this agreement for the non-approved
      product.

              

      

       

       

      
        
          
          

        

        
          -26-

          
            

          

        

        
          
          

          Exhibit
10.12

        

      

       

       

      
        	
                16.3

              	
                Either
      party shall be entitled, without prejudice to its other rights, to
      terminate the Agreement with immediate effect by giving written notice to
      the other party if the other party shall have a receiver or an
      administrative receiver or an administrator or liquidator appointed over
      it (except a liquidator appointed for the purpose of amalgamation or
      reconstruction) or shall pass a resolution for winding up or shall enter
      into any voluntary agreement with its creditors or shall become bankrupt
      or file for voluntary bankruptcy or anything analogous to any of the above
      under the law of any jurisdiction occurs in relation to such
      party.

              

      

       

      
        	
                16.4

              	
                If
      at any time, Developer is more than thirty days late delivering a
      Milestone, and such event is not due to the acts or omissions of
      Publisher, Publisher may Terminate this Agreement. In such case, as
      Publisher's sole remedy, unless Developer is willfully not delivering a
      Milestone, shall be termination.

              

      

       

      
        	
                16.5

              	
                Subject
      to clauses 16.1 and 16.3 and notwithstanding any other provision contained
      in this Agreement, Developer cannot terminate this Agreement prior to US
      third party hardware manufacturer final approval (ready for release to
      manufacturing).

              

      

       

      17.                 
CONSEQUENCES
OF TERMINATION

       

      
        	
                17.1

              	
                Any
      termination of the Agreement shall not affect any accrued rights or
      liabilities of either party, nor any other rights of the terminating party
      in relation to the matter giving rise to the termination, nor shall it
      affect the coming into force or the continuance in force of any provisions
      of this Agreement which are expressly intended to come into or to continue
      in force on or after such termination. Termination of this Agreement by
      the Publisher under paragraph 16 shall not affect any Version whose
      Acceptance Date has already occurred, and this Agreement shall continue to
      apply in all respects to any such
Version.

              

      

       

      
        	
                17.2

              	
                In
      the event that this Agreement is terminated in accordance with Paragraph
      16.2 or 16.4, Publisher will pay Developer any expenses incurred (but not
      damages for loss of profit) which are substantiated and are properly
      incurred by the Developer up to the date of termination to the extent that
      those liabilities or expenses cannot be mitigated, provided that such
      expenses do not exceed the total fees payable to the Developer under this
      Agreement.

              

      

       

      18.                 
CREDITS
AND ARTWORK

       

      
        	
                18.1

              	
                Publisher
      acknowledges that Developer's Name and logo shall appear on a splash
      screen during the "boot-up" sequence of the Product, subject to approval
      of the Hardware Manufacturers. Subject to such approvals, whenever
      Publisher's name and/or logo appears, Developer's name and/or logo shall
      appear on the Product packaging, User Manuals, demo discs and self-playing
      demos, screenshots, and full-page print advertising, in approximately the
      same size of Publishers logo on the Product and in the credits of all
      Versions of the Product. In addition Developer may designate a reasonable
      number of persons to receive individual text credits in the Product whose
      names and capacities Developer shall submit to Publisher prior to final
      delivery of the Product. On Publisher's request, Developer shall promptly
      supply Publisher with any transparencies that might be required by it for
      the purposes of this paragraph. Publisher's obligations under this
      paragraph are subject to the final approval of the applicable Hardware
      Manufacturer. An inadvertent failure by Publisher to include Developer's
      name or logo shall not be a material breach of this Agreement, provided
      that Publisher shall cure any such failure on a prospective basis once
      Publisher has been notified of
same.

              

      

       

       

      
        
          
          

        

        
          -27-

          
            

          

        

        
          
          

          Exhibit
10.12

        

      

       

       

      
        	
                18.2

              	
                Developer
      shall supply Publisher on reasonable request (so as not to interfere with
      Developer's efforts to complete and deliver the Product as contemplated
      hereunder) with any relevant materials it may have that may be useful to
      Publisher for artwork, packaging, merchandising, marketing and advertising
      including play through videos, demo discs, screenshots and graphics of
      characters.

              

      

       

      
        	
                18.3

              	
                Publisher
      shall cause copyright, patent and trademark notices to appear on each unit
      of the Product (other than on screen notices, the production and placement
      of which shall be Developer's responsibility) and on the back of the
      Product packaging and User Manual and advertising materials as may be
      designated and approved by
Developer.

              

      

       

      19.                 
SUPPORT

       

      
        	
                19.1

              	
                The
      Developer shall at its sole expense correct any Errors in any Gold Master
      which become apparent after that Gold Master has been accepted by the
      Publisher and which the Publisher notifies to the Developer, and shall
      carry out any other alterations to the Gold Master which the Publisher
      notifies the Developer are needed for any of the following reasons: to
      obtain the rating from the applicable rating board (such as ESRB in the
      U.S.)
      as specified in the Specification; to obtain the approval of Hardware
      Manufacturers; or to ensure that the Product conforms with the
      Specification. The Developer shall start correction of Errors and making
      of alterations within 5 days of receiving the Publisher's notice and shall
      rectify all Errors and make all alterations set out in the notice as soon
      as reasonably practicable thereafter. Developer's obligations under this
      paragraph 19.1 in respect of each Version shall terminate twelve (12)
      months after the initial commercial release of the Product pursuant to
      this Agreement.

              

      

       

      
        	
                                       
      19.1.1 

              	
                The
      parties shall work together so that the Product does not violate the
      guidelines for ratings issued by ESRB in the United States and ELSPA in
      the UK or censorship ratings in other countries in the Territory. In any
      case where the Product does not meet the guidelines, Developer shall be
      responsible at its own cost to promptly correct the
    Product.

              

      

       

      
        	
                19.2

              	
                From
      the date that the Publisher accepts any Gold Master, the Developer will
      provide technical support to the Publisher only (not to End Users under
      any circumstances) in respect of that Gold Master without further charge.
      This support will continue for a period of 7 calendar months from the date
      of first commercial release by Publisher and will be by means of e-mail
      and telephone on Working Days and during regular business hours, Melbourne
      Time. Developer will use reasonable endeavors to provide a service out of
      hours and on non-Working Days in the event of exigent circumstances. The
      support will be provided by a person with reasonable technical knowledge
      of the Product. Any questions that cannot be dealt with immediately will
      be responded to with reasonable promptness. Failure by Developer to
      provide such support shall not be a material breach of this
      Agreement.

              

      

       

      20.                 
NOTICES

       

      Any
notice required or permitted by this Agreement shall be in writing and shall be
given by fax (if confirmed by delivery of the hard copy as provided herein),
courier or other personal delivery or by registered or certified mail at the
appropriate address below or at a substitute address designated by notice by the
party concerned:

       

      
        	
                IR
      Gurus Interactive

                Level
      3, 355 Spencer Street, 

                West
      Melbourne Victoria 3003, Australia 

                Attn:
      Mike Fegan

                Phone:
      011 613 9328 8225 

                Fax:
      011 613 9328 8332

              	
                Red
      Mile Entertainment. 4000 Bridgeway

                Suite
      101

                Sausalito,
      CA 94965 

                Attention:
      CFO

                Phone:
      1 (415) 339-4245

                 Fax:
      1 (415) 339-4249

              

      

       

      Notices
shall be deemed given when faxed (if confirmed by delivery of the hard copy as
provided herein), delivered by a courier or, in the case of mail, upon receipt,
with written notification of said receipt.

       

      21.                 
CONFIDENTIALITY

       

      
        	
                21.1
      

              	
                Each
      party to this Agreement acknowledges that it will have access to
      proprietary or confidential information of the other party including, but
      not limited to, the terms of this Agreement, the documentation and
      materials produced in accordance with this Agreement, marketing
      information, manufacturing information, customer or client information and
      development techniques and know-how ("the Confidential Information").
      During the Term of this Agreement, each party will regard and preserve as
      strictly confidential the Confidential Information and will not use the
      Confidential Information or disclose the Confidential Information to a
      third party other than is strictly necessary in order to fulfill an
      obligation under this Agreement.

              

      

       

      
        	
                21.2

              	
                The obligations of
      confidentiality and non-use specified in paragraph 21.1 will not apply
      to any Confidential Information of one party
      which:

              

      

       

      
        	
                                       
      21.2.1 

              	
                was
      known by the other party prior to the date of this Agreement and not
      obtained or derived, directly or indirectly, from such party or its
      Affiliates or if so obtained or derived, was lawfully obtained or derived
      and is not held subject to any confidentiality or non-use
      obligations;

              

      

       

      
        	
                                       
      21.2.2 

              	
                is
      or becomes public or available to the general public otherwise than
      through any act or default of the other party or any breach of a
      confidentiality obligation to the disclosing party by a third
      party;

              

      

       

       

      
        
          
          

        

        
          -28-

          
            

          

        

        
          
          

          Exhibit
10.12

        

      

       

       

      
        	
                                       
      21.2.3 

              	
                is
      obtained or derived prior or subsequent to the date of this Agreement from
      a third party which, to the best knowledge of the party acquiring such
      information, is lawfully in possession of such information and does not
      hold such information subject to any confidentiality or non­use
      obligations;

              

      

       

      
        	
                 
      

              	
                21.2.4

              	
                is independently
      developed by such party without use of the other party's
      confidential information;
  or

              

      

       

      
        	
                 
      

              	
                21.2.5

              	
                is required to be
      disclosed by one of the parties pursuant to an applicable
      law or under a government or court order provided
      that:

              

      

       

      
        	
                (a)  

              	
                the obligations of
      confidentiality and non-use will continue to the
      fullest extend not in conflict with such law or order;
      and

              

      

       

      
        	
                (b)  

              	
                if
      and when a party is required to disclose such Confidential Information
      pursuant to any such law or order, such party will give notice to the
      other party to allow such party to make efforts to obtain a protective
      order or take such other actions as will prevent or limit, to the fullest
      extent possible, public access to, or disclosure of, such Confidential
      Information.

              

      

       

      
        	
                21.3

              	
                It
      is further understood and agreed that money damages would not be a
      sufficient remedy for any breach of either party's obligations under this
      paragraph 21 by the other party, or any employees, consultants or other
      persons under the other party's supervision and that the disclosing party
      shall be entitled to specific performance, including, without limitation,
      injunctive relief, as a remedy for any such breach. The parties agree that
      the damaging party shall reimburse the costs and expenses (including,
      without limitation, reasonable attorneys' fees) incurred by the damaged
      party in connection with the enforcement of this
  Agreement.

              

      

       

      
        	
                21.4

              	
                In
      the event of any termination or expiration of this Agreement, each party
      shall promptly return to the other party all Confidential Information of
      such other party in tangible form, the receiving party shall certify in a
      writing signed by an authorized officer or representative that the
      foregoing have been shredded and disposed of in a secure
      manner.

              

      

       

      22.                 
GENERAL

       

      
        	
                22.1

              	
                No
      addition to or modification of any provision of this Agreement shall be
      binding upon the parties unless made by written instrument signed by a
      duly authorized representative of each of the parties. Each party confirms
      it is not relying on any representation or commitment by the other in
      entering into this Agreement except as set out in this Agreement. This
      paragraph 22.1 shall not apply to any deliberate misrepresentations made
      before this Agreement was made.

              

      

       

      
        	
                22.2

              	
                Developer
      may not assign this Agreement, nor delegate or subcontract any of its
      obligations hereunder, to any third party without the prior written
      consent of Publisher, which consent will not be unreasonably withheld;
      provided, however that Developer may assign its right to receive payments
      of the Development Advance and/or Profits hereunder without the consent of
      Publisher. Publisher may assign this Agreement to a purchaser of the
      business of Publisher or substantially all the assets of the business
      without the consent of Developer, but save as aforesaid Publisher may not
      assign this Agreement, nor delegate or subcontract any of its obligations
      hereunder, to any third party without the prior written consent of
      Developer, which consent will not be unreasonably withheld. Subject to the
      foregoing, this Agreement shall bind and inure to the benefit of the
      parties, and their respective successors and permitted
      assigns.

              

      

       

       

      
        
          
          

        

        
          -29-

          
            

          

        

        
          
          

          Exhibit
10.12

        

      

       

       

      
        	
                22.3

              	
                Neither
      party is the legal representative, agent, joint venturer, partner, or
      employee of the other party for any purpose whatsoever. Neither party has
      any right or authority to assume or create any obligations of any kind or
      to make any representation or warranty on behalf of the other party,
      whether express or implied, or to bind the other party in any respect
      whatsoever.

              

      

       

      
        	
                22.4

              	
                No
      failure or delay by either party in exercising any right, power, or remedy
      under this Agreement shall operate as a waiver of any such right, power or
      remedy. No waiver or modification of any provision of this Agreement shall
      be effective unless in writing and signed by both parties. Any waiver by
      either party of any provision of this Agreement shall not be construed as
      a waiver of any other provision of this Agreement, nor shall such waiver
      operate as or be construed as a waiver of such provision respecting any
      future event or circumstance.

              

      

       

      
        	
                22.5

              	
                If
      any provision or wording of this Agreement is held by a judicial authority
      having jurisdiction over the matter to be unlawful or unenforceable for
      any purpose, it shall be deemed excluded for that purpose and the rest of
      this Agreement shall remain in full force and effect. The parties will
      negotiate in good faith a valid and enforceable provision to replace the
      excluded provision as closely as reasonably
  possible.

              

      

       

      
        	
                22.6

              	
                FORCE
      MAJUERE. In the event that either party is prevented from fulfilling its
      material obligations hereunder or said obligations are materially
      interfered with by reason of events of war, fire, flood, earthquake,
      explosion or other natural disaster, industrial action or any other reason
      beyond the reasonable control of that party, such obligation shall be
      delayed until it can be performed. The party claiming excusable delay must
      promptly notify the other party of such delay. If the delay continues for
      more than 45 days the other party may terminate this Agreement by giving
      45 days prior written notice to the delaying party provided that the
      Agreement will not terminate if the party claiming excusable delay
      substantially performs the material obligation which has been delayed
      within such 45 day notice period from the other
  party.

              

      

       

      
        	
                22.7

              	
                EXCEPT
      FOR THE OBLIGATIONS IN PARAGRAPH 12, NEITHER PARTY SHALL BE LIABLE FOR ANY
      INCIDENTAL, INDIRECT, CONSEQUENTIAL, OR SPECIAL DAMAGES ARISING OUT OF
      THIS AGREEMENT OR ANY OBLIGATION ARISING THEREFROM OR OTHERWISE, WHETHER
      LIABILITY IS ASSERTED IN CONTRACT OR TORT (INCLUDING NEGLIGENCE AND STRICT
      PRODUCT LIABILITY), AND IRRESPECTIVE OF WHETHER IT HAS ADVISED OR HAS BEEN
      ADVISED OF THE POSSIBILITY OF ANY SUCH LOSS OR
  DAMAGE.

              

      

       

       

      
        
          
          

        

        
          -30-

          
            

          

        

        
          
          

          Exhibit
10.12

        

      

       

       

      
        	
                22.8

              	
                Each
      party's services and rights herein granted are special, unique,
      extraordinary and intellectual in character and value such that the loss
      thereof could not be reasonably compensable in damages in an action at
      law. Accordingly, the other party shall be entitled to seek equitable
      relief by way of injunction or otherwise to prevent the breach or
      continued breach thereof. Should Publisher's Co-Publisher in a particular
      country or region breach the Agreement, Developer may only seek injunction
      in the country or region where such breach
  occurred.

              

      

       

      
        	
                22.9

              	
                If
      any dispute arises in connection with this Agreement, either party may
      convene an extraordinary meeting on their respective Developer's Project
      Manager and Publisher's Producer by serving not less than 3 Working Days
      notice on the other. At such meeting the representatives shall negotiate
      in good faith, and in a timely manner, in an effort to resolve the
      dispute. If the Developer's Project Manager and Publisher's Producer
      cannot resolve the dispute, then either party may refer the dispute to the
      respective chief executive officers of the parties by serving notice on
      the other party. The chief executive officers shall negotiate in good
      faith, and in a timely manner, in an effort to resolve the dispute.
      Nothing in this paragraph shall limit the ability of either party to seek
      legal redress in respect of the dispute in a court of
  law.

              

      

       

      
        	
                22.10

              	
                Developer
      may change their Project Manager and Publisher may change the Publisher's
      Producer at any time by giving the other party 5 Working Days' notice of
      the change and such notice shall stipulate the new Developer's Project
      Manager or Publisher's Producer's name, address, telephone number and any
      other relevant contact details. Publisher shall have right to approve the
      Developer's project manager, shall approval not to be unreasonably
      withheld.

              

      

       

      
        	
                22.11

              	
                Until
      one year has passed from the initial release of the United States version
      of the Product, this Agreement and all questions arising hereunder shall
      be governed by and construed in accordance with the laws and decisions of
      the State of California without giving effect to the principles thereof
      relating to conflicts of law. After such period, the Agreement will be
      governed by and interpreted in accordance with the substantive laws of
      Australia. Subject to the above, ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST
      EITHER PARTY ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY BE BROUGHT
      IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF
      CALIFORNIA UNTIL THE TURNOVER DATE AND THEREAFTER IN ANY COURT OF
      COMPETENT JURISDICTION IN AUSTRALIA, AND BY EXECUTION AND DELIVERY OF
      AGREEMENT EACH PARTY ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
      LICENSED PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
      JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
      CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED
      THEREBY IN CONNECTION WITH THIS AGREEMENT. Nothing herein shall affect the
      right to serve process in any other manner permitted by law or shall limit
      the right of either party to bring proceedings against the other party in
      the courts of any other jurisdiction. The parties stipulate and agree that
      any judgment relating to this Agreement, which is entered in a court
      located within California, shall be binding throughout the world and may
      be 

              

      

       

       

       

      
        
          
          

        

        
          -31-

          
            

          

        

        
          
          

          Exhibit
10.12

        

      

       

       

       

       

      
        
          	 	
                  Sued
      upon docketed, entered and/or enforced, without challenge or opposition on
      their part and without a trial of any of the issues which give rise to
      such judgment in any state, county, province, commonwealth or territory
      having jurisdiction over their respective persons or properties. The
      parties recognized that the above agreement to submit all controversies to
      forever-binding adjudication by a court located within San Francisco,
      California does not constitute a confession of judgment on anybody part
      but is simply an agreement similar to an arbitration agreement to have
      particular controversies  resolved once and for all, by a
      specified tribunal. Notwithstanding  the foregoing, all parties
      agree that equitable relief, including injunctive and specific
      performance, may be necessary and proper to enforce their obligation and
      commitments under this paragraph, including without limitations under
      paragraph 2, 12, 14, 15, 16, 17, 18 and 21 of this Agreement and this
      choice of jurisdiction or venue does not prevent either party from seeking
      such relief in any court competent jurisdiction throughout the
      world

                
	 	 
	
                  22.12
      

                	
                  
                    In
      the event any of this Agreement shall be held invalid or unenforceable, it
      shall be deemed modified only to the extent necessary to make it lawful.
      To effect such modification, the said provision shall be deemed deleted,
      added to and/or rewritten whichever shall most fully preserve the
      intention of the parties as originally expressed
    herein.

                  

                

        

      

       

      
        	
                23.13

              	
                
                  In
      the event any of this Agreement shall be held invalid or unenforceable, it
      shall be deemed modified only to the extent necessary to make it lawful.
      To effect such modification, the said provision shall be deemed deleted,
      added to and/or rewritten whichever shall most fully preserve the
      intention of the parties as originally expressed
    herein.

                

              

      

       

      
        The
prevailing party in any litigation between the parties shall recover from the
other party its reasonable legal party fees and expenses

         

        This
Agreement may be executed in two (2) or more counterparts, each of which shall
be deemed an original and all  of which together shall constitute one
and the same instruments.

         

        ACCORDINLY,
this Agreement has been entered into by the parties on the date set out on page
1.

         

        
          
            	
                    Red
      Mile Entertainment, Inc.

                  	 
      	
                    IR
      Gurus Interactive Pty. Ltd.

                  
	 
      	 
      	 
      
	
                    /s/
      Chester P.
      Aldridge                 
      

                  	 
      	
                    /s/
      Mike
      Fegan            
      

                  
	
                    Chester
      P. Aldridge

                  	 
      	
                    Mike
      Fegan

                  

          

        

         

         

      

       

       

       

      
        
          
          

        

        
          -32-

          
            

          

        

        
          
          

          Exhibit
10.12

        

      

       

      
 

      SCHEDULE
1

       

                                                            

      
        
          
            
              	Milestone  	
                      Date

                    	
                        
      Name 

                    	
                      Payment 

                    
	 	 	 	 
	
                      0

                    	 
      	
                      Sign
      on

                    	
                      $              158,409

                    
	
                      1

                    	
                      14-Mar-06

                    	
                      Pre-production
      design deliverables

                    	
                      $              158,409

                    
	
                      2

                    	
                      25-Jul-06

                    	
                      Pre-production
      ends

                    	
                      $              211,211

                    
	
                      3

                    	
                      5-Sep-06

                    	 
      	
                      $              264,014

                    
	
                      4

                    	
                      17-Oct-06

                    	 
      	
                      $              264,014

                    
	
                      5

                    	
                      28-Nov-06

                    	 
      	
                      $              316,817

                    
	
                      6

                    	
                      9-Jan-07

                    	 
      	
                      $              316,817

                    
	
                      7

                    	
                      20-Feb-07

                    	 
      	
                      $              369,620

                    
	
                      8

                    	
                      3-Apr-07

                    	 
      	
                      $              369,620

                    
	
                      9

                    	
                      15-May-07

                    	 
      	
                      $              422,423

                    
	
                      10

                    	
                      26-Jun-07

                    	 
      	
                      $              422,423

                    
	
                      11

                    	
                      7-Aug-07

                    	 
      	
                      $              422,423

                    
	
                      12

                    	
                      18-Sep-07

                    	
                      Alpha
      / E3

                    	
                      $              316,817

                    
	
                      13

                    	
                      30-Oct-07

                    	
                      Beta

                    	
                      $              211,211

                    
	
                      14

                    	
                      10-Dec-07

                    	
                      1st
      Submission

                    	
                      $              105,606

                    
	
                      15

                    	
                      25-Jan-08

                    	
                      RTM

                    	
                      $              105,606

                    
	 
      	 
      	
                      Total

                    	
                      $
      4,435,438.00

                    

            

          

        

      

       

       

       

      All
Figures are in US$ Dollars.

       

      Deliverable
details to be determined as part of milestone 2 (Pre-production)

       

      Given the
partnership nature of this Agreement, the parties will meet quarterly to review
actual costs vs. budget and estimated costs to complete the project and make
budget and monthly payment revisions as necessary. Upon completion, Developer
shall produce a final detailed analysis of actual costs. Any underage of these
costs shall be deducted from Developer Profits and retained by Publisher.).
(That is: if actual costs are less than total of monthly payments, the underage
would be treated as a "prepaid profit distribution" to Developer). If there is
an overage, and such overage was pre-approved by Publisher, such overage shall
be paid out 100% to Developer from Publisher before Publisher retains any
profits.

       

       

      
        
          
          

        

        
          -33-

          
            

          

        

        
          
          

          Exhibit
10.12

        

      

       

       

      SCHEDULE
2

       

       

      DEVELOPER
KEY TEAM MEMBERS

       

      TBD

       

      PUBLISHER'S
PRODUCER

       

      Executive
Producer- Yasuhiro Noguchi

       

      LICENSED
TOOLS AND TECHNOLOGY

       

      TBD

       

      LICENSED
PRODUCTION SOFTWARE

       

      TBD

       

      LICENSED
ART SOFTWARE

       

      TBD

       

      LICENSED
AUDIO SOFTWARE

       

      TBD

       

      LICENSED
MANAGEMENT AND OTHER TOOLS

       

      Microsoft
Project

      Excel

      Open
Office

       

       

      
        
          
          

        

        
          -34-

          
            

          

        

        
          
          

          Exhibit
10.12

        

      

       

      
 

       

      SCHEDULE
3

       

      AUDITOR
LETTER

      Dear
Sirs:

       

      Confidentiality
undertaking

       

      We
acknowledge that we shall audit the accounts of Red Mile Entertainment, Inc.
(the "Company")
for and on behalf of our client                     
  pursuant to the

      Development
Agreement between the Company and                    
dated [insert date]
on the
following date(s):                    
(the "Audit"). During the course of the Audit we shall
have access to and be entrusted with Confidential
Information.

       

      In
consideration of the Company making Confidential Information available to us, we
undertake to the Company in the terms set out below:

       

      1.                   
CONFIDENTIAL INFORMATION

       

      
        
          	
                  1.1

                	
                  In
      this letter, the phrase "Confidential Information" shall mean information
      (whether of a commercial, technical, scientific, operational,
      administrative, financial, marketing, business, intellectual property
      nature or otherwise), whether oral or written, relating to the Company and
      its business that is provided by the Company to ourselves pursuant to the
      Audit.

                
	 	 
	1.2	Information
      shall not be regarded as Confidential Information if such
      information:

        

      

       

      
        	
                (a)  

              	
                was
      already known to us prior to the Audit;
or

              

      

       

      
        	
                (b)  

              	
                is
      or becomes publicly available other than as a consequence of a breach of
      the terms of this letter; or

              

      

       

      
        	
                (c)  

              	
                is
      received by us from a third party who is not in breach of any obligation
      of confidentiality in respect of that information;
  or

              

      

       

      
        	
                (d)  

              	
                is
      independently developed by us.

              

      

       

      2.                  
 CONFIDENTIALITY
OBLIGATIONS

       

      2.1               
  We shall:

       

      (a) keep all
Confidential Information confidential;

       

      (b) use the
Confidential Information solely for the preparation of the Audit report
forand not for any other purpose; and

       

      (c)
not
disclose any Confidential Information to any other person or firm, other
than as permitted by paragraph 2.2 below.

       

       

      
        
          
          

        

        
          -35-

          
            

          

        

        
          
          

          Exhibit
10.12

        

      

       

       

      
        	
                2.2

              	
                We
      may disclose Confidential Information solely as it directly relates to the
      sales, licensing and deductible costs and expenses of products covered
      under the aforementioned Development
Agreement:

              

      

       

      
        	
                (a)  

              	
                tofor
      the purposes of the Audit;

              

      

       

      
        	
                (b)  

              	
                to
      our members and employees who need to know such Confidential Information
      to assist with the Audit;

              

      

       

      
        	
                (c)  

              	
                to
      the extent that such disclosure is required by
  law;

              

      

       

      
        	
                (d)  

              	
                to
      the extent that such disclosure is required by any rule or requirement of
      any regulatory authority with which we are bound to comply;
    or

              
	 	 
	(e)
       	to
      our professional advisers for the purposes of our seeking
  advice.

      

       

      
        	
                2.3

              	
                We
      shall ensure that each member or
      employee who receives Confidential Information in accordance with
      paragraph 2.2(b) above is made aware of this
  letter.

              

      

       

      3.                   
GENERAL

       

      
        	
                3.1

              	
                The
      terms of this letter shall only continue in full force and effect for two
      years from the date of this letter, unless and to the extent that they may
      be released earlier by the Company in
      writing.

              

      

       

      
        	
                3.2

              	
                This
      letter shall be governed by and construed in accordance with California
      law and any dispute arising from it shall be subject to the exclusive
      jurisdiction of the California
courts.

              

      

       

       

      Yours
faithfully

       

       

       

      Accepted
and agreed for and on behalf of Red Mile Entertainment, Inc.:

       

       

      Signature:                                                                   
      

       

      Print
Name:                                                                    
      

       

      Date:                                                                                     

       

       

      
        
          
          

        

        
          -36-

          
            

          

        

        
          
          

          Exhibit
10.12

        

      

       

       

       

      SCHEDULE
4

       

      Marketing
Deliverables

       

      
        
          
            
              
                
                  
                    
                      
                        	   
      Deliverable	    Delivery
      Date 
	   
      Logo Art	   
      ASAP
	
                                10
      – 20 Screenshots

                              	
                                Per
      Milestone

                              
	
                                10
      hi-res key art assets to be used for marketing collateral materials
      delivered throughout development (Begins with package concept
      art)

                              	
                                TBD

                              
	
                                Playable
      E3-2006 Teaser/Trailer Video

                              	
                                TBD

                              
	
                                50
      Screenshots for E3 distribution

                              	
                                TBD

                              
	
                                Playable
      Consumer Demo

                              	
                                TBD

                              
	
                                Manual
      Text (Word Doc), Art Assets and Screens for Manual

                              	
                                TBD

                              
	
                                (3)
      Gameplay videos for press/downloadable use

                              	
                                TBD

                              
	 
      	 
      

                      

                    

                  

                

              

            

          

        

      

       

       

      
        
          
          

        

        
          -37-

          
            

          

        

        
          
          

          Exhibit
10.12

        

      

       

       

       

      SCHEDULE
S

      Key
Features List

       

      Heroes
Over Europe

       

      Set in
the Europe, the game follows the fortunes of a rookie RAF pilot through World
War II.

       

      Core
Features

       

        
n  Detailed
aircraft models with sophisticated damage effects.

        
n  Destructible
ground targets dynamically affect gameplay objectives.

      
        	
                n  

              	
                Bigger,
      more detailed levels with more variations in landscapes such as canyons,
      mountains, and urban settings.

              

      

      
        	
                n  

              	
                Extensive
      selection of British, German, Italian, Russian, and American aircraft-
      over 40 aircraft types.

              

      

      
        	
                n  

              	
                More
      ground target types to destroy.

              

      

      
        	
                n  

              	
                26
      single player missions.

              

      

      
        	
                n  

              	
                Improved
      enemy AI system.

              

      

      
        	
                n  

              	
                Improved
      physics system affect flight dynamics, damage
  effects.

              

      

      
        	
                n  

              	
                Extensive
      reward cycle- players will receive frequent upgrades, new aircraft, bonus
      missions, etc. during gameplay.

              

      

      
        	
                n  

              	
                Variety
      of gameplay scenarios, including, dog fighting, torpedo bombing, dive
      bombing.

              

      

       

      Multiplayer/Online
Features

       

       
 n  Improved
game lobby system, with support for buddy lists and clans.

       
 n  Better
variety of multiplayer missions- 20 multiplayer missions.

       
 n  Multiplayer
cooperative gameplay missions.

       
 n  Ranking
system/ladder board encourages competitive play.

      
        	
                n  

              	
                Team
      play feature enables players to create their own squadrons with other
      players as their wingmen.

              

      

      
        	
                n  

              	
                Downloadable
      game content.

              

      

       

       

      
        
          
          

        

        
          -38-

          
            

          

        

        
          
          

          Exhibit
10.12

        

      

       

      
        

         

        VARIATION
AND SETTLEMENT AGREEMENT

        SETWEEN.RED
MILE & TRANSMISSION GAMES

         

        This
Agreement, dated as of the date of the last signature contained hereon, shall
serve to amend the Software Development and Licensing Agreement dated as of
March 3, 2006 (the "Development Agreement"), entered Into by and between Red
Mile Entettairunent, Inc ("Publisher") and IP
Gurus Interactive Pty Ltd ("Developer") in
connection with the development of Heroes Over. Europe (the "product"): This
agreement shall also serve to settle all outstanding issues related to
Developer, Publisher, and any related parties of the Developer or Publisher in
connection with the development cost obligations for the Product and for any
other projects,. Including without limitation, Sin City, Heroes of The Pacific
for the PSP, and Equestrian Challenge, other than
royalties for Heroes Of The Pacific, and includes any agreement or other written
or verbal correspondences (including but not limited to emails, verbal
communications, notices, the Letter Of Intent dated August 20, 2005, and the
Stock Purchase and Sale Agreement dated August 24, 2007) between the parties,
including but not limited to those referencing that
Developer has developed Product and Sin City and any other projects at cost and
any
obligation for Publisher to remunerate Developer for any amounts above cos or
any other financial matters of any kind between the parties, other than
royalties for Heroes Of The Pacific. This Agreement shall also serve to settle all outstanding
issues related to the Stock Purchase and Sale Agreement dated August 24, 2007.
Capitalized terms used without definition herein shall have the respective
definitions del forth
in the Development:Agreement.

         

        
          	
                  1.
       

                	The
      preamble to the Development Agreement is hereby changed to reflect Red
      Mile Entertainment as a Delaware Corporation.
	 	 
	
                  2.  

                	
                  With
      the exception of monies payable to the Developer in accordance with clause
      12 of this Agreement, all monies paid to Developer in relation to the
      Product and Sin City, by Red Mile, Evolved Games Inc. or any other party
      with whom Publisher has contracted for co-publishing or distribution
      rights that has paid say development cost or milestones to Developer for
      the product, must be recouped before any monies shall be paid to Developer
      in any manner (e.g., royalties).

                
	 	 
	
                  3.
       

                	The
      following are hereby added to Section
1.1:

        

         

        "Distributor
or Distribution Patter shall mean a licensee or other entity to whom
Publisher grants the tight to bring the Product from Publisher to the cnd user
in the territory.

         

        "Documentation".
The "Documentation" included in the Product shall mean any documentation
generated during the course of development of the Product.

         

         

        
          
            
            

          

          
            -39-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

         

        "Final
Project Archive and Documentation." "Final Project Archive and Documentation"
shall Mean: all files necessary to recreate the- NTSC Final Version and PAL Final Version,
including without limitation: (1) a text file describing the step by step
instructions to build the image ROM on a CD, DVD, or other common storage media;
(ii) documentation describing the sequence of events necessary to generate
aversion-of the work identical to the NTSC Final Version and PAL Final Version;
(iii) an inventory of all project directories and subdirectories with detailed
description of each, and (iv) a list of all tools, Including the manufacturer
and versioning information of the tool, necessary to reconstruct the NTSC Final
Version and PAL Final Version. The archive must be delivered in a state that is
capable of being rebuilt on a computer system that is different from the
computer system it was originally built on. Developer will provide Publisher
with two (2) copies of this material on the selected storage media. These
archives will exclude all, extraneous files, but will include uncompressed,
modifiable versions of all scripts, source code, data, Graphics, Game Sounds,
Music, Documentation, Game Data, Tools, and any other material which Developer
includes in the Product Developer Will also provide Publisher with a file list, including the
names of each spume file in the order the instructions are executed, as required
by current United States Copyright submission requirements.

         

        "Game
Data." The "Game Data" included In the Product shall mean all data contained in
the Product that is utilized by the Product to generate any element within the
Product or any data that is modified into data that is contained in the product
that is utilized by the Product to generate any element within the
Product.

         

        "Graphics,
Game Sounds And Music". The "Graphics" included in the Product shall mean and
include all graphics, bitmaps, sprite and/or moving object definitions,
backgrounds, layouts, characters sets, 3D models, textures, animation data,
other forms of visual artwork or data used to generate visual artwork contained
within the 'Product. "Game Saimds" and "Music' shall mean and include all
sounds, music and any other audio cues or aural representations contained
within. the product.

         

        "Tools."
The "Toole' as used in this Agreement means any program, object, or process that
is used to create, generate, permute, or modify any Graphics, Game Sounds and Music,
Documentation, Game Data, and any other materials required to recreate the
Product Developer does not need to provide any commercially available of
the shelf tool. Any Tools created to build the Product must be provided in
both executable and source code formats. If Tools is Developer Technology, then
Developer must provide an executable version of the Tools including detailed
documentation on how to use
the Tool.

         

         

        
          
            
            

          

          
            -40-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

         

         

        "Sequel
or Prequel" shall mean the interactive entertainment software product for any
platform and any successor platform or new platforms which (i) reproduces
all or a
substantial part of the source code and or the source materials and (ii) which
employs the same or similar characters and elements of design as those appeasing
in the Product but in a different plot, sequence, or situation. For greater
clarity, this includes any historical flight combat games or use of the "Heros"
name, trademark, or logos on any flight combat game.

         

        
          	
                  4.  

                	
                  The
      definition of "Other Versions Of The Product" in Section 2.1.1 is hereby
      amended to include all other platforms including web based and mobile
      platforms.

                

        

         

        
          	
                  5.  

                	
                  The
      following is hereby added to the end of Section
  33:

                

        

         

        "Developer
must provide Publisher t mitten report every two weeks detailing SWIM of current
milestone progression and identifying any potential delays, cost overruns, or
other risk factors identified in the project. In addition, Developer must inform
Publisher of any material chenges to its ability to carry out its obligations
under the Agreement."

         

        6.        
The following is hereby added to the end of Section 3.6:

         

        "Both
Publisher and Developer agree to use best commercial efforts to obtain
approval."

        

         

        
          
            
            

          

          
            -41-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

         

        7.        
The
following is hereby added as Section 3.8:

         

        "Publisher
may terminate this Agreement immediately If any Milestone (a) continues to
demonstrate Errors after a third submission of the Milestone to Publisher or (b)
is not delivered to Publisher in a form complete and fit for testing within
thirty (30) days of the scheduled Milestone Date applicable to that Milestone,
provided that any such delay is clearly not caused by publisher
In the terminates this Agreement and uncured breach by Developer, all source
Code, object code, art assets, documentation, final project archive and
documentation, game data, graphics game sound and music, tools and the right to
use the brand "Heroes Over Europe" for the Product shall immediately devolve to
Publisher on payment of all monies for work done towards the milestones listed
on Schedule 1A. For example, in the event the Agreement is terminated on June 2,
2008, which is before the submission date of Milestone 18, monies for work done
would be calculated as 20 (the number of days between Milestone 17 date of May
13, 2008 and termination date of June 2, 2008) divided by 35 (total number
of clays between Milestone 17 date and Milestone 18 date) multiplied by $593,000
(the amount of Milestone l8)."

         

        8.       
The
following is hereby added as Section 4.6:

         

        "Developer
acknowledges that Publisher is the owner of the assets which. include but are
not limited to the assets listed below that it has loaned to Developer.
Developer Warrants it will return all such assets in good working condition,
regular wear and tear accepted, at completion of the last Milestone due
hereunder in Schedule 1A."

         

        
           

          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                	
                                        Count
      of IRG Asset ID

                                      	
                                         Quantity

                                      
	
                                        Asset
      Description

                                      	
                                         Total

                                      
	
                                        Infinity
      Gamer Spec PC

                                      	
                                         5

                                      
	
                                        Nitro
      Ae3 PC

                                      	
                                         5

                                      
	
                                        ProDG
      PSP

                                      	
                                         6

                                      
	
                                        PS3
      Devkit

                                      	
                                         7

                                      
	PSP
      Devkit	5
	
                                        Xbox360
      Devkti

                                      	
                                         6

                                      
	
                                        PSP
      Complier

                                      	
                                         6

                                      
	
                                        Xenon 
      Equipment

                                      	
                                         1

                                      
	
                                        Microsoft
      Visual Studio 2005

                                      	
                                         6

                                      
	
                                        OPTPIX
      imagestudio

                                      	
                                        1

                                      

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

         

        9.        
The following is hereby added as Section 11.7:

         

        "In the
event Developer fails to submit the Second Submission by 20 January 2009, other
than as a result of delays caused by Publisher (including Sony and/or Microsoft)
Developer shall pay Publisher $10,000 USD for each 7 calendar days (prorated
accordingly) that the Second Submission is late beyond 20 January 2009, but such
amount shall not exceed a maximum value of $50,000 USD. Such amount shall
only be payable from any monies actually paid under clause 12(b) of this
Agreement. For avoidance of doubt if no monies are paid under clause 12(b), then
no monies whatsoever will be payable under this clause 9.

        

        
          
            
            

          

          
            -42-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

         

        10.     
The
following is hereby added to Section 14.1:

         

        "(k)
Developer warrants that it has no disputes regarding Publisher's license to the
Property..as provided by the Development Agreement, including no disputes,
actual or threatened, involving Codemsaters Corporation or Ben Palmer, that may
impact perfomtance of this contract."

         

        11.  The
following is hereby added as. Section 16.6:

         

        "In the
event Developer's lieense for the Product Is terminated with Ben Palmer or
ThatGarne in signing the below, Ben Palmer agrees on behalf of himself and
ThatGame that Publisher shall have the Snit option and last rip of refusal to
purchase the license from ThatGame in an amount not to exceed $400,000 AUD.
Notwithstanding the foregoing; in the event that Developer has paid to Ben
Palmer and/or ThatGame the sum of at least $400,000 AUD in respect of the
licence, Publisher will not be required to pay any monies to Ben.Paimer
and/or ThatQame under this clause 16.6. "

        12.     
Financial Adjustments and Shares. Publisher hereby disclaims any entitlement to
any
shares in ER Gurus Pty Ltd, and agrees to pay Developer the following
amounts:

         

        (a) on 1
April 2006, US$36,389 in respect of final amounts owing for Sin City
and,

         

        (b) on
the initial release of the United States version of the Product, USD $400,000.
However that amount will be reduced as follows:

         

        (i) to USD
$300,000 in the event Publisher is entitled to Minimum Guarantees of $7.0
million USD or less for the Produet, whether from a co-publishing or
distribution deal or otherwise; and

         

        (ii) to USD
$200,000 in the event Publisher is entitled to Minimum Guarantees of $6.0
million USD or less for the Product, whether from a co-publishing or
distribution deal or otherwise; and

         

        (iii) to USD
$100,000 in the event Publisher is entitled to Minimum Guarantees of $5.0 minion
USD or less for the Product, whether from a co-publishing or distribution deal
or otherwise; and.

         

        (iv) to nil in
the event the is entitled to Minimum Guarantees of $4.0 million USD or less
teethe Product, whether from a co-publishing or distribution deal or
otherwise.

         

         

        
          
            
            

          

          
            -43-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

         

        provided
that Publisher has used its best endeavours to maximize the Minimum Guarantee
for such co-publishing or distribution deal.

         

        Where
Minimum Guarantees between the figures referred to above are achieved, the
arnount to be paid to Developer will be prorated. For example, if minimum
Guarantees of $6.5 million were achieved, the amount to be paid to Developer
would be $250,000 USD.

         

        The term
Minimum Guarantee shall include the aggregate of any guamatees committed
to the Publisher, plus any assumption of development milestone obligations which
are paid directly to the Developer or a third party designated by the
Developer at any time. By way of example if a co-publishing or distributor
partner commits a Minimum Guarantee to Publisher of 6 million US) and assume all
remaining mile:noes obligations are 3 million USD, then the Minimum Guarantee
will be 9 million USD which would entitle the Developer to a 400,000 USD
payment

         

        13.    
 Sin
City Materials.
On receipt of the US$36,389 in respect of Sin City referred to in clause
12(a) hereof, all source code, object code, art assets, documentation, final
project archive and documentation, game data, graphics game sounds and music,
tools and right to the name "Sin City" shall, as between the parties,
immediately devolve toPublisher.

         

        14.      
Representation. Each party
represents to the other that it has full power and authority to execute this
agreement and has no knowledge of any existing or threatened claim, demand,
obligation, liability, deal, action or cause of action arising from or in any
manner connected.
with this or any agreements between the parties of which it has not Informed the
other party.

         

        
          15.       Whole Agreement. The
obligations of the parties as provided herein are the sole consideration for
this Agreement, and no representations, promises or inducements have been made by the parties
other than as appear in this Agreement This Agreement may not be extended except
in writing signed by the parties.

        

         

        
          16.      
Miscellaneous. Warranties,
representations, agreements, and obligations contained in this Agreement shall survive
the execution and delivery of this Agreement and shall survive any and all
performances in accordance with this Agreement. In the event of any litigation
to enforce the provisions of this Agreement, the prevailing party in such
litigation shall be entitled to reasonable attorneys' fees as fixed by the
court. This Agreement and the terms and provisions hereof shall inure to the
benefit of and be binding upon the heirs, successors and assigns of the parties. This
Agreement and the Development Agreement shall be construed and enforced in
accordance with the laws of the State of California.

        

         

         

        
          
            
            

          

          
            -44-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

         

        17.      
Hams Developer and Publisher hereby release and forever discharge each other,
and their respective related corporations (within the meaning of the
California Corporations Code and/or the Corporation Act 2001 (Cth)), current and former partners,
current and former officers, current and former directors, current and former
agents, current and former shareholders or members, current and former trustees,
current and former beneficiaries;
and employees, of and from any and all claims, acts; damages, demands'
rights of action and
causes of action which
either ever had, now has, or in the future may have, against the other,
including without limitation in rotation to any and all fees, expenses, or
remuneration owed, except for those obligations and liabilities contained herein
or reinstated pursuant to the
provisiond hereof including any liabilides or obligations
arising under the Development Agreement as modified by this Agreement. This
release is intended as a full release of each, every, and all other claims of
every kind and nature relating thereto. Both parties expressly waive any and all
rights which they may have under Section 1542 of the Civil Code of the State of
California pertaining to this agreement (or such similar statutes), which
provides as follows:

         

        A GENERAL
RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO
EXIST IN HIS FAVOR AT 'THE TIME OF EXECUTING THE RELEASE, WHICH IP KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED) HIS SETTLEMENT wax THE DEBTOR..

         

        For the
avoidance of doubt, this mutual release also extends to any and all outstanding
issues related to the Stock Purchase and Sale Agreement dated August 24,
2007.

         

        18.     
 SCHEDULE IA is hereby deleted and replaced in its entirety by the Schedule
IA in this document

         

        
          19.      
SCHEDULE
1B  is hereby deleted and replaced In its entirety by the Schedule 1B
in this document.

        

         

        
          20.      
No
Further Variations. The parties agree that there will be no further variations
to the Schedules.

        

         

        21.      Additional
Publisher Product Rights. As well as the rights of
refusal which Publisher has under clause 2 of the Development Agreement,
Publisher will have the right until March 3, 2016, to require the Developer to
develop Sequels or Prequels as directed by the Publisher at the Developer's cost
plus 30%, with audit rights to verify costs of such project For greater clarity,
cost herein is defined as the agreed to total cost of development at
commencement of the Sequel er Prequel projects and speCifically excludes any
cost overruns. In the went Fel:dist* exercises this right to develop two
additional games under the terms of this agreement, the term of this clause
shall extend • through March 3, 2026.

         

        
          

          
            
              
              

            

            
              -45-

              
                

              

            

            
              
              

              Exhibit
10.12

            

          

        

         

         

        22.     
 Date of Effect.
This Agreement will come into effect on the last date that.

        

        (a)      this
Agreement is executed by both parties and

         

        (b)      the attached Deed is executed by
all the parties to the Stock Purchase and Sale Agreement dated 24, 2007.

         

        21.     
Change of
Contral. In the event of a change of control of either party due to
purchase of all or substantially all or the assets or stock or any merger
or acquisition, said party understands and agrees that the acquirer of said
party shall be bound by the terms of this contract, and that it must make
acceptance of the terms contained herein a material term of any such change of
control, merger, acquisition or the like.

         

        23.      
The
following hereby replaces the first sentence of 21 (a)

         

        "Notwithstanding
anything else contained herein other than Section 7 of the Variation and
Settlement Agreement Between Red Mile and Transmission Games, Developer will
retain exclusive ownership and control of all of the Intellectual Property
Rights in or relating to the Product"

         

        24.      
3.6 is
hereby replaced in its entirety by the following

         

        "Publisher
shall be responsible for submitting the Gold Master candidate.to the Hardware
..Manufacturers for approval within five (5) days of receiving the
Gold Master approval from the Developer. Developer and Publisher shall work
together in good faith to obtain approval of the Gold Master candidate from the
Hardware Manufacturers.

         

        
          25.      
13.5 is hereby amended to include any co-publishing partners or distributors
selected by the publisher.

        

         

        26.      
17.2 is hereby amended to delete reference to 16,4.

         

        
          27.      
 Section
19 shall be amended to include any co-publishing partners or distributors of the
Publisher.

        

         

        
          28.       
Schedule
2 shall be amended for the fbllowing: DEVELOPER KEY TEAM MEMBERS Including but
not limited to:

        

         

        
          
            
              	
                      Producer:

                    	
                      Ben
      Board

                    	 
      
	
                      Techincal
      Director:

                    	
                      Cameron
      Dann

                    	 
      
	
                      Lead
      Programmer:

                    	
                      Matt
      Delbose

                    	 
      
	
                      Lead
      Artist:

                    	
                      Nathan
      Thomas

                    	 
      

            

          

        

         

         

        
          
            
            

          

          
            -46-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

         

        
          
            
              	 
      	 
      	 
      
	
                      Lead
      Designer:

                      Lead
      Audit:

                      Senior
      Programmer

                      Senior
      Programme:

                      Senior
      Programmer:

                      Senior
      Area:

                      Senior
      Artist:

                      Programmer:

                      Programmer:

                      Programmet:

                    	
                      Andrew Symons

                      Kim
      Dellavedova

                      David
      May

                      Shaun
      Stamper

                      Anthony
      Marshall

                      Patrick
      Roussety

                      Kamil
      Hamra

                      Steve
      Hearmonth

                      Matt
      McKinnon

                       

                    	 
      

            

          

        

         

         

        
          
            
              
                
                   

                

              

            

          

        

        

         

         

        RED NILE
ENTERTAINMENT, 

        a
Delaware oorporation

         

        By: /s/
Chester P.
Aldridge                

        Name:
Chester P. Aldridge  

        Title:
CEO

        Date:
March 27, 2008

         

        RED MILE
ENTERTAINMENT PTY LTD 

        an
Australian corporation

         

        By: /s/
Chester P.
Aldridge                

        Name:
Chester P. Aldridge  

        Title:
CEO

        Date:
March 27, 2008

         

         

         

        
          
            
            

          

          
            -47-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

         

         

         

        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                	
                                        IR
      GURUS PTY LTD

                                      
	 
      	 
      
	
                                        By:

                                      	
                                        /s/
      Michael T. Fegan

                                      
	
                                        Name:

                                      	
                                        Michael
      T. Fegan

                                      
	
                                        Title:

                                      	
                                        CEO

                                      
	
                                        Date:

                                      	
                                        20
      th March 2008

                                      
	 
      	 
      
	
                                        ACCEPTED
      AND AGREED TO BY:

                                      
	 
      	 
      
	 
      	
                                        /s/
      CRAIG PHILIP LAUGHTON

                                      
	 
      	
                                        CRAIG
      PHILIP LAUGHTON

                                      
	 
      	
                                        Date:
      26/03/2008

                                      
	 
      	 
      
	 
      	
                                        /s/
      NATHAN ERIC MURPHY

                                      
	 
      	
                                        NATHAN
      ERIC MURPHY

                                      
	 
      	
                                        Date:
      26/03/2008

                                      
	 
      	 
      
	 
      	
                                        /s/
      MICHA EL THOMAS FEGAN

                                      
	 
      	
                                        MICHAEL
      THOMAS FEGAN

                                      
	 
      	
                                        Date:
      26/03/2008

                                      
	 
      	 
      
	 
      	
                                        /S/
      ANDREW GEOFFREY

                                      
	 
      	
                                        ANDREW
      GEOFFERY

                                      
	 
      	
                                        Date:
      26/03/2008

                                      
	 
      	 
      
	 
      	
                                        /S/
      BEN BYRON PALMER

                                      
	 
      	
                                        BEN
      BYRON PALMER

                                      
	 
      	
                                        Date:
      26/03/2008

                                      
	 
      	 
      
	 
      	
                                        /S/
      IAN GEORGE CUNLIFFEE

                                      
	 
      	
                                        IAN
      GEORGE CUNLIFFEE

                                      
	 
      	
                                        Date:
      26/03/2008

                                      
	 
      	 
      
	 
      	
                                        /S/

                                      
	 
      	
                                        VOTRAINT
      No. 651 PTY LTD

                                      
	 
      	
                                        Date:
      26/03/2008

                                        DIRECTOR

                                      

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

         

         

         

         

         

        
          
            
            

          

          
            -48-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

         

         

         

        DEED
OF RELEASE

         

         

        This Deed
settles all outstanding issues between the Parties related to the Stock Purchase
and Sale Agreement dated August 24, 2007, in conjunction with an agreement (the
"Variation and Settlement Agreement") entered at much the same time as this
agreement between Red Mile Entertainment, Inc. and IR Gurus Interactive Pty
Ltd (the "Parties" and each a "Party") that, among other things varies the
Software Development and Licensing Agreement dated as of March 3, 2006 on the
terms set out in that Variation Agreement

         

        The
parties to this Deed hereby agree to be bound by and to give effect to the
Variation Agreement

         

        The
signatories hereto, other than Red IVide Entertainment, Inc. and Red Mile
Entertainment Pty Ltd, warrant that they have no disputes with any Party to this
Deed, actual or threatened, that may impact performance of the Software
Development:and Licensing Agreement
dated as of March 3, 2006, as varied by the Variation Agreement

         

        
          	
                  This
      Deed takes effect at the same
      time as the Variation and Settlement Agreement.

                   

                   

                

        

        
          	
                  SIGNED
      SEALED AND DELIVERED BY:

                

        

         

         

        RED MILE
ENTERTAINMENT, INC, 

        a
Delaware corporation

         

        By: /s/
Chester P.
Aldridge                

        Name:
Chester P. Aldridge  

        Title:
CEO

        Date:
March 27, 2008

         

        
          

          
            
              
              

            

            
              -49-

              
                

              

            

            
              
              

              Exhibit
10.12

            

          

        

      

       

       

      
        

         

        April 24,
2009 DRAFT

        STRICTLY
CONFIDENTIAL

        NOT AN
OFFER - SUBJECT TO CONTRACT

         

         

         

        Exhibit
B

         

        Copy of Publishing
Agreement

      

       

       

       

      
        
          
          

        

        
          -50-

          
            

          

        

        
          
          

          Exhibit
10.12

        

      

       

       

      
        

         

        HEROES
OVER EUROPE

         

        PUBLISHING
AGREEMENT

         

        This
Publishing Agreement, dated as of June 20, 2008, is by and between Atari
Interactive, Inc. ("Atari"),
a Delaware corporation with its headquarters at 417 Fifth Ave., New York,
NY 10016, and Red Mile Entertainment, Inc. ("Licensor"),
whose address and other identifying information are provided in Exhibit A to this
Agreement. The parties agree as follows.

         

        PURPOSE

         

        Licensor
controls certain Intellectual Property Rights with respect to the Heroes over
Europe interactive game franchise, and Licensor or its third-party contractors
have developed or are in the process of developing an interactive software game
for the Sony Playstation 3, Microsoft Xbox 360 and personal computer (PC)
platforms, working title "Heroes over Europe", derived from such property
(collectively, the "Title"),
which, subject to the terms and conditions of this Agreement, the parties
desire to be published by Atari. This Agreement, including the attached Exhibits
and Addenda, states the terms and conditions agreed to by the parties with
respect to such development and publishing. Unless otherwise specified, all
capitalized terms used in this Agreement and attached Exhibits and Addenda shall
be understood as defined in the attached Glossary Addendum.

         

        AGREEMENT

         

        1.                 Development
and Delivery

         

        
          
            	
                    1.1

                  	
                    Deliverables and
      Milestones. Licensor agrees to perform and complete each Milestone
      and to develop and deliver the Deliverables, in accordance with the
      Milestone, Deliverable and Payment Schedule (Exhibit B);
      the Specifications (Exhibit C);
      and the Compensation Schedule (Exhibit
      D).

                  
	 	 
	1.2	
                    Change
      Requests. Any changes to the Specifications proposed by
      Licensor or Atari shall be subject to mutual approval by the
      parties

                  

          

        

         

        
          	
                  1.3

                	
                  Progress Reports.
      On or before the tenth (10th) day of each calendar month during
      which any development hereunder remains uncompleted, Licensor shall
      deliver to Atari a progress report in a form reasonably acceptable to
      Atari describing all tasks completed during the preceding month and all
      problems encountered in the course of development hereunder. If Atari so
      requests, Licensor shall contact and meet with Atari's Representative in
      connection with the progress report. In addition, Licensor shall contact
      Atari's Representative promptly by telephone upon discovery of any problem
      that will materially delay development work or Licensor's ability to
      conform to the Specifications, and thereafter promptly confirm such report
      in writing. Upon reasonable notice, Atari's Representative may call on
      Licensor at Licensor's place of business, review the status of development
      with the persons rendering performance for Licensor, inspect work in
      process, and review the application of development funds which have been
      provided by Atari.

                

        

         

        
          
            	
                    1.4

                  	
                    Deliverable Materials.
      All development work hereunder shall be fully documented in
      accordance with applicable professional standards. Any Deliverable
      comprising computer programs or structured data of any type shall be
      accompanied by complete Source Materials (excluding Source Code except
      that in the event of termination by Atari for breach in accordance with
      Section 15.1 or a default in development in accordance with Section
      2.2(b). If applicable, the Deliverables shall also contain the complete
      text for any Instructional Materials.

                  
	 	 
	1.5	
                    Assistance. In the event
      that Atari shall need to make use of any Source Materials, Licensor shall
      provide reasonable consultation to Atari so that Atari's responsible
      personnel may understand the contents, meaning and/or operation of any
      materials included in such Source
Materials.

                  

          

        

         

      

       

       

      
        
          
          

        

        
          -51-

          
            

          

        

        
          
          

          Exhibit
10.12

        

      

       

      
         

        
          	
                  1.6

                	
                  Development Aids.
      In the event of Licensor's material breach of this Agreement and
      only for the purposes of completing any necessary development work
      hereunder, maintaining the Title and/or Deliverables, or for creating any
      localizations of the Title, Licensor hereby grants to Atari a
      non-exclusive license to use, copy, adapt, modify, publicly perform,
      publicly display, transmit and create Derivative Works of all Development
      Aids that are not generally commercially available and Derivative Works
      thereof, or have third parties perform such activities, for so long as
      Atari has distribution rights to the Title and/or Deliverables pursuant to
      this Agreement. In the event of such breach, (i) Licensor shall deliver
      such Development Aids as applicable to any Deliverables delivered to date
      and (ii) Licensor shall deliver a list of commercially available
      Development Aids that it used in creating such Deliverable along with a
      description of how such Development Aids were
  used.

                

        

         

        
          	
                  1.7

                	
                  Persons Rendering
      Performance. Unless otherwise agreed as set forth below, Licensor
      shall render the services to be performed hereunder through its employees.
      If Licensor wishes to perform its obligations through the services of any
      other Person, Licensor shall first obtain the written consent of Atari,
      which consent shall not be unreasonably withheld or delayed; Atari hereby
      acknowledges Transmission Games as the developer of the Title Platform
      versions to be delivered by Licensor hereunder. This consent, however, may
      be conditioned on a screening interview, on the execution of an affidavit
      of non-exposure to third-party trade secrets, or on other precautions
      deemed reasonable by Atari, and Atari may limit such consent to the
      performance of certain specified
tasks.

                

        

         

        
          	
                  1.8

                	
                  Editorial Review.
      Atari shall have ongoing and final editorial authority as to the
      content, look and feel and all other aspects of the Deliverables, in
      consultation with Licensor and subject to the criteria in the
      Specifications.

                

        

         

        
          	
                  1.9

                	
                  Pre-submission
      Testing. Each Deliverable shall be thoroughly tested by Licensor,
      prior to delivery to Atari. Delivery thereof to Atari shall constitute a
      certification of Licensor's good faith belief that the delivered item
      meets the applicable acceptance criteria under this Agreement. Atari shall
      perform quality assurance testing on the delivered and accepted Beta
      Deliverable and all Deliverables thereafter, including testing for all
      localized SKUs, and Licensor shall promptly rectify all Program Errors
      identified via such testing.

                

        

         

        
          	
                  1.10

                	
                  Time.
      Licensor and Atari agree that time is of the essence for this Agreement
      and for all the terms and conditions
      contained herein.

                

        

         

        
          	
                  1.11

                	
                  Localizations.
      Atari shall (at its cost) translate all text and audio dialogue
      appearing in the Title (including, without limitation, user instructions
      related to the Title, screen text and fonts, and audio tracks if
      applicable) into the Localization languages specified inüxhibit C.
      Licensor shall supply to Atari all reference, instruction and other
      associated materials, in document and computer readable formats, necessary
      to allow Atari perform such translations (the "Localization
      Kit"). Such Localizations shall be integrated into the Title by
      Licensor for potential Royalties only and without any additional advances
      or other fees. The creation of any translation into Localization languages
      not specified in Exhibit C shall
      be performed by Atari (at its cost), provided that Licensor shall
      integrate any such additional Localizations into the Title, and Atari
      shall not contract with third parties for any such integration services,
      provided that, with respect to Eastern European language Localizations
      only, Atari shall have the right at its sole option to contract with third
      parties to perform such translation and/or integration services in lieu of
      Licensor (the "Independent
      Localizations"). In connection with the Independent Localizations,
      Licensor shall provide Atari with all Source Materials necessary for such
      third party/ies to integrate and/or recompile the applicable translations
      in order to create such Eastern European-language Localizations (the "Integration
      Kir).

                

        

         

        
          	
                  1.12

                	
                  Communications with
      Licensor. Consistent with Licensor's rights under its development
      agreement with Transmission Games, Licensor shall use its best efforts to
      facilitate direct communications between Atari and Transmission Games,
      including both on-site and remote communications and/or site visits.
      Licensor represents and warrants that nothing in such development
      agreement prevents or will prevent direct communications between Atari and
      Transmission Games.

                

        

         

         

        
          
            
            

          

          
            -52-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

         

        2.                 Acceptance

         

        
          	
                  2.1

                	
                  Acceptance Procedure.
      Licensor will notify Atari, in writing, when it believes it has
      completed a Milestone and
      will, together with such notification, provide Atari with materials in
      support of its proposed Milestone completion. Atari will evaluate the
      materials submitted by Licensor as evidence of completion of the
      Milestone. Atari agrees that when it has made a finding as to
      whether Licensor has completed a Milestone in accordance with the
      applicable Specifications, it will promptly provide a written acceptance
      or rejection (an
      "Evaluation")
      of the Milestone to Licensor, using the Milestone Evaluation Form
      as set forth in Exhibit E.
      Atari shall be deemed to have rejected any Milestone for which
      Atari fails to provide Licensor an Evaluation within fifteen (15) business
      days following Atari's receipt thereof. If Atari fails to provide such
      written evaluation to Licensor within such period, Licensor may provide
      notice of a follow-up request to Atari for approval of the applicable
      Milestone (a "Follow-Up
      Approval Request").
      Failure by Atari to give written approval or disapproval within
      five (5) business days from the date of a Follow-Up Approval Request will
      be deemed approval with respect to the subject Milestone. Any notice of
      rejection shall set forth in reasonable detail the basis for Atari's
      rejection. Upon receipt of a written notice of rejection, Licensor shall
      promptly correct the identified deviations from the Specifications, and
      each such item shall again be subject to the acceptance procedure
      described herein.

                

        

         

        
          	
                  2.2

                	
                  Default in
      Development. In the event Licensor shall fail to deliver as
      required under Section 1 within five (5) business days after the time
      provided in the Milestone Schedule, or shall have failed to correct a
      deviation from the Specifications within thirty (30) days after Atari's
      initial notice thereof under Section 2.1, or within such extended period
      for performance as may have become applicable pursuant to clause [a]
      below, or if Licensor breaches its obligations with regard to product
      support under Section 3, then Atari, at its sole option, and without
      prejudice to such other legal rights as it may have hereunder or
      otherwise, may:

                

        

         

        
          	
                  [a]  

                	
                  extend
      the time for Licensor's performance, in which case the Royalty Reduction
      (as defined below) shall apply;

                

        

         

        
          	
                  [b]  

                	
                  undertake
      completion of the deficient item itself or with the services of any third
      party, with the right to use in connection therewith any Source Materials
      previously delivered or due to Atari pursuant to this Agreement, and
      deduct its fully burdened
      costs thereof (including without limitation royalties, if any, paid
      to others) from any amounts due to Licensor hereunder;
  or

                

        

         

        
          	
                                       [c]
      

                	
                  in
      the further event of a failure to deliver as required under Section 1
      within fifteen (15) days after the time provided in the Milestone
      Schedule, upon notice to Licensor (a "Production
      Take-Over Notice"),
      immediately take over production of the Title, making all unpaid
      payments to Transmission Games directly, on Licenser's behalf (unless a
      Licensor Insolvency Event has occurred), in accordance with E4hibit
      B,
      Schedule 1 for the Title and reducing the corresponding fees due to
      Licensor upon approval of the applicable Milestones by the amount of such
      payments made directly to Transmission Games (a "Production
      Take-Over"). In the event of a Production Take-Over, and in the
      further event of a failure to deliver Milestone Eight (Gold Master) within
      fifteen (15) days of the time provided in the Milestone Schedule, then (i)
      the fee due to Red Mile upon approval of Milestone Eight shall
      automatically be deemed to be reduced by Two Hundred Fifty Thousand
      Dollars ($250,000.00) and (ii) royalty rate applicable at such time
      (inclusive of any Royalty Reduction) shall be further reduced by
      one-half.

                

        

         

        As used
herein, a "Royalty
Reduction' means an automatic penalty in the form of a reduction of the
royalties otherwise payable to Licensor hereunder in the following amounts: for
a failure to deliver the applicable Milestone within fifteen (15) days of the
time provided in the Milestone Schedule, a reduction of such royalties by five
percent (5%) of Net Receipts (i.e., if the royalties otherwise payable to
Licensor were 30% of Net Receipts, they would be reduced to 25% of Net
Receipts); for a failure to deliver the applicable Milestone within thirty (30)
days of the time provided in the Milestone Schedule, a reduction of such
royalties by ten percent (10%) of Net Receipts; and for a failure to deliver the
applicable Milestone within forty-five (45) days of the time provided in the
Milestone Schedule, a reduction of such royalties by fifteen percent (15%) of
Net Receipts. Notwithstanding anything herein to the contrary, no Royalty
Reduction shall apply in the event that the Gold Master, including Title
versions for all Platforms and all Localizations (other than the Non-EFIGS
Localizations), are delivered to Atari by February 20, 2009.

         

         

        
          
            
            

          

          
            -53-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

         

        3.                 Product
Support

         

        
          	
                  3.1

                	
                  Support
      Services and Assistance; Technical Consultation. Licensor agrees to provide the
      support services and
      assistance set forth in the Support Schedule. In addition, Licensor
      agrees to make its development personnel or those of its third-party
      contractors reasonably available for telephone consultation and in-person
      assistance (at Atari's expense for reasonable and documented travel and
      lodging expenses) for purposes of assisting Atari and its contractors in
      connection with the Deliverables and in connection with product
      demonstrations.

                

        

         

        
          	
                  3.2

                	
                  Limited Warranty.
      Licensor warrants that during the Term each Deliverable and the
      Title shall be free from any condition affecting it that renders the
      marketing or use of such Deliverable or the Title into which it is
      incorporated for its intended purpose difficult or impracticable (a "Material
      Defect"), and that each such Deliverable and the Title shall appear
      and perform in all respects substantially in accordance with the
      Specifications. Licensor shall use its best efforts to submit to Atari as
      quickly as possible and at no charge to Atari all changes necessary to
      correct Material Defects as to which Atari notifies Licensor in writing.
      In the event that Licensor is unable to deliver to Atari any such change
      within ten (10) days, Licensor shall notify Atari in writing as to the
      status of such change and its estimated date of completion. For one (1)
      year following the expiration of the Term or earlier termination of this
      Agreement, Licensor shall provide to Atari this same limited warranty,
      provided that Licensor shall not be obligated to supply with any changes
      that are required because of changes to operating systems, system hardware
      or system software that are released following such expiratiion or
      termination.

                

        

         

        
          	
                  3.3

                	
                  Exclusions. The
      limited warranty set forth in Section 3.2 shall not apply to defects in or
      resulting from programs or materials or portions thereof supplied to
      Licensor by Atari or any of Atari's agents or
  contractors.

                

        

         

        4.                 
License Grants

         

        
          	
                  4.1

                	
                  Distribution License
      to Atari. Licensor hereby grants to Atari during the Term (and the
      sell-off period as described below) an irrevocable, exclusive (other than
      during the sell-off period) license to make, use, publish, sell, offer for
      sale, distribute, reproduce, transmit, publicly perform, and publicly
      display (and/or have third-parties perform the foregoing) the Deliverables
      and the Title and the Intellectual Property and Intellectual Property
      Rights with respect thereto as reasonably necessary or useful for Atari to
      manufacture, market, sell, license, distribute and promote the Title
      (either as delivered by Licensor or as modified by Atari), the Exclusive
      Derivative Products and the Ancillary Products, in each case without
      further approval by Licensor. Licensor hereby agrees that, pursuant to
      this license, Atari shall have the exclusive right during the Term to
      publish market, distribute, sell, license and otherwise exploit the Title
      for the Platforms, the Exclusive Derivative Products and the Ancillary
      Products.

                

        

         

        
          	
                  4.2

                	
                  Support License to
      Atari. Licensor hereby grants to Atari during the Term and the
      sell-off period and for one (1) year thereafter an irrevocable license to
      make, use, sell, offer for sale, distribute, reproduce, transmit, publicly
      perform, and publicly display (and/or have third-parties perform the
      foregoing) the Deliverables and the Title and the Intellectual Property
      and Intellectual Property Rights with respect thereto as necessary in
      Atari's discretion for Atari to maintain, support, upgrade, repair, or
      replace the Title and units of the Title (either as delivered by Licensor
      or as modified by Atari).

                

        

         

        
          	
                  4.3

                	
                  Exclusivity.
      During the Term, Licensor shall not offer or license to any other
      Person any interactive game product or the right to distribute or produce
      any such product based on the HEROES OVER EUROPE property for the
      Platforms (or any successors thereto), including, without limitation, any
      such product distributed by means of an electronic download, any such
      product made available for play from an online or Internet site
      (including, without limitation, an Internet service provider or online
      system), or any such product sold with computer or multimedia hardware,
      modems or other peripherals. In addition, during the Holdback Period,
      Licensor shall not, directly or indirectly (i) engage in the development,
      publishing, licensing or production of any product of the Game Type or
      (ii) enter into any agreement with any third party with respect
      thereto.

                

        

         

        
          	
                  4.4

                	
                  Term and Territory.
      The term of this Agreement shall commence on the effective date and
      expire on the seventh (7th) anniversary of the Initial Release (the "Initial
      Term"), provided that the Initial Term (and each Renewal Term, if
      any) shall automatically be extended for an additional one (1) year period
      as from expiration of the Initial Term or Renewal Term, as applicable
      (each, a "Renewal
      Term" and, together with the Initial Term, the "Term")
      unless either party terminates this Agreement via notice no later
      than ninety (90) days prior to the expiration of the Initial Term or the
      current Renewal Term, as applicable. The rights granted to Atari hereunder
      shall be effective throughout the United States, its territories and
      possessions ("Domestic
      Territory") and the remainder of the world other than the Domestic
      Territory ("International
      Territory").
      (The Domestic Territory and the International Territory are jointly
      referenced herein as the "Territory.")

                

        

        

         

        
          
            
            

          

          
            -54-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

         

        
          	
                  4.5

                	
                  Moral Rights.
      Subject to Licensor's approval rights, as set forth in Section 5.5
      below, and so long as
      Atari is in compliance with such approval rights, Licensor
      expressly assigns to Atari any and all rights of paternity or integrity,
      rights to claim authorship, to object to any distortion, mutilation or
      other modification of, or other derogatory actions in relation to any
      Deliverables and/or Title, whether or not the foregoing would be
      prejudicial to Licensor's honor or reputation, and any similar right,
      existing under judicial or statutory law of any country in the world, or
      under any treaty ("Moral
      Rights"), regardless of whether such right is denominated or
      generally referred to as a moral right. Licensor hereby irrevocably
      transfers and assigns to Atari any and all Moral Rights that Licensor may
      have in any Deliverables or Title. Licensor hereby forever waives and
      agrees never to assert any and all Moral Rights it may have in the
      Deliverables or Title.

                

        

         

        
          	
                  4.6

                	
                  Atari's Retained
      Rights. Atari retains complete ownership of all Intellectual
      Property, Intellectual Property Rights, and know-how supplied to Licensor
      by Atari or any of Atari's contractors or agents. Licensor shall not have
      any right, title, license, or other form of ownership interest in any of
      Atari's Intellectual Property or Intellectual Property Rights existing as
      of the date of this Agreement, Intellectual Property or Intellectual
      Property Rights later developed by Atari, or any Intellectual Property or
      Intellectual Property Rights supplied to Licensor by Atari or by Atari's
      contractors or agents. Licensor's use of any such Atari's Intellectual
      Property or Intellectual Property Rights shall be only for the purpose of
      performing Licensor's obligations under this Agreement, in accordance with
      the Specifications, for developing the Deliverables, and Licensor shall
      not under any circumstances have any other or further right or license
      whatsoever with respect thereto.

                

        

         

        
          	
                  4.7

                	
                  Future Products.
      Atari shall have the exclusive right throughout the Term, subject
      where applicable to the Developer First Refusal, to develop, publish and
      otherwise exploit any expansion packs, add-on packs, premium modules, DLC,
      Ports, or conversions of the Title (collectively, the "Exclusive
      Derivative Products").
      Atari shall have the Right of First Negotiation and the Last Right
      to Match with respect to publishing, licensing, distribution, and/or other
      exploitation of the initial Sequel (the "First
      Sequel') and any spin-offs of the Title. With respect; to any
      Sequels other than the First Sequel (each an "Additional
      Sequel"),
      Atari shall unless Licensor elects to publish the applicable
      Additional Sequel In-House, have the Right of First Negotiation and the
      Last Right to Match. With respect to any Additional Sequel published
      In-House by Licensor, Atari shall have the Atari Distribution Option. The
      foregoing spin-offs, First Sequel, Additional Sequels and the Exclusive
      Derivative Products shall be referred to herein as the "Future
      Products").

                

        

         

        5.                 
Intellectual Property Rights

         

        
          	
                  5.1

                	
                  Licensor's Trademarks.
      Use of the "HEROES OVER EUROPE" trademark (or other trademarks of
      Licen­sor) in connection with the Title, and the goodwill associated
      therewith, shall inure to the benefit of Licen­sor. Atari shall have
      no right, title and interest in or to such trademarks or Licensor's
      copyrights or patents, except to the limited extent of the license to use
      the same pursuant to this Agreement. Upon request, Atari agrees to deliver
      to Licensor free of cost six (6) samples of the Title together with its
      packaging material for trademark registration purposes in compliance with
      applicable laws. Atari further agrees to provide Li­censor with the
      date of the first use of the Title in interstate and intrastate commerce.
      If Atari requests that Licensor obtain trademark or copyright protection
      with respect to the "HEROES OVER EUROPE" trade­mark (or other
      trademarks or copyrights with respect to the Deliverables and the Title)
      in any country in the Territory where Licensor had not previously obtained
      such protection, then Licensor agrees to take rea­sonable actions to
      obtain such protection.

                

        

         

        
          	
                  5.2

                	
                  Trademark and
      Copyright Notices. Each Deliverable, where applicable, shall bear a
      copyright notice and a trademark notice in the name of Licensor and any
      other parties with an interest therein. Atari shall not re­move such
      notice(s) from the Title and shall cause to be affixed on each unit of the
      Title manufactured, dis­tributed, or sold under this Agreement, and on
      advertising, promotional, and packaging material with respect thereto, an
      appropriate credit notice as reasonably necessary to protect any
      trademark, copyright or other rights of Licensor in the Title. The
      appropriate Licensor notice is as follows: "(c)[year] [Licensor].
      "[Trademark] is a trademark of [Licensor]". The year referred to in the
      copyright notice is the year in which the particular rendition of the
      Title was first published. If reasonably necessary because of space
      constraints, Atari may use the following short-form notice "[Property
      Name] ®&(c) [Licensor]."

                

        

         

        

        
          
            
            

          

          
            -55-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

         

         

        
          	
                  5.3

                	
                  Atari's Rights.
      Notwithstanding anything else herein to the contrary, it is hereby
      further agreed that Atari shall own the copyright in any instructions or
      rules for the Title (except to the extent that the same were in­cluded
      in the Deliverables) and Exclusive Derivative Products, and/or unrelated
      insert or in-pack which may be published, included, and/or offered for
      sale in conjunction with the Title; provided, however, that this shall not
      be deemed to grant to Atari any right in the underlying "HEROES OVER
      EUROPE" prop­erty (including, without limitation, all Intellectual
      Property and Intellectual Property Rights with respect thereto) itself.
      Atari shall also hold the copyright in any packaging, wrapping,
      advertising, and/or promo­tional material relating to the Title, or in
      any other written or printed material created by Atari (or its
      con­tractors), which pictures, depicts, or describes the Title;
      provided, however, that this shall not be deemed to grant to Atari any
      right in the underlying "HEROES OVER EUROPE" property. It is understood
      that Atari may place appropriate copyright and other notices on the Title
      and such material, including, without limitation, if applicable, credits
      for any third-party contractor of
Atari.

                

        

         

        
          	
                  5.4

                	
                  Offensive Litigation.
      Atari shall assist Licensor, to the extent reasonably necessary, in
      the procurement of any protection or to protect any of Licensor's rights
      to the Title, and Licensor, if it so desires, may com­mence or
      prosecute any claims or suits in its own name and at its sole cost and
      expense. Upon the prior written consent of Atari, which shall not be
      unreasonably withheld or delayed, such claim or suit may be commenced or
      prosecuted in the name of Atari or with both Atari and Licensor joined as
      parties thereto. Any and all sums collected or recovered in any such suit
      or suits, whether by decree, judgment, settlement or otherwise, will
      belong exclusively to Licensor. Upon request of Licensor, Atari will
      execute all papers, testify on all matters and otherwise cooperate in
      every way necessary and desirable for the prosecution of any such action
      or proceeding, and Licensor will reimburse Atari for the expenses incurred
      as a result of such cooperation. Atari shall notify Licensor in writing of
      any infringements or imitations by others of the Licensor's property on
      articles similar to the Title if and when such become known to Atari.
      Licensor shall have the sole right to determine whether or not any action
      shall be taken on account of such infringements; provided, however, that
      if Licensor fails to do so promptly upon request of Atari, then Atari may
      institute any such suit or take any action on account of any such
      infringements, provided that Atari has obtained the prior written consent
      of Licensor to do so, which shall not be unreasonably withheld or delayed.
      Should Atari receive Licensor's consent as aforesaid and institute or
      prosecute any action or proceeding against third parties for or by reason
      of any unlawful infringement of the rights granted to Atari under this
      Agree­ment, such action or proceeding will be instituted, maintained,
      and/or prosecuted solely at the cost and ex­pense of Atari, and any
      and all sums collected or recovered in any such suit or suits, whether by
      decree, judgment, settlement or otherwise, will belong exclusively to
      Atari. Upon request of Atari, Licensor will execute all papers, testify on
      all matters and otherwise cooperate in every way necessary and desirable
      for the prosecution of any such action or proceeding, and Atari will
      reimburse Licensor for the expenses in­curred as a result of such
      cooperation.

                

        

         

        
          	
                  5.5

                	
                  Licensor
      hereby, on behalf of itself, its employees and its contractors,
      irrevocably waives and agrees never to assert against Atari, any and all
      moral or "droit moral" rights that Licensor, its employees or its
      contrac­tors may have in or with respect to the Specifications,
      Deliverables, Title, the Software and Licensor Trademarks, even after
      expiration or termination of this Agreement. Licensor acknowledges that
      the Title is created for a commercial purpose. Except as expressly
      provided otherwise herein, the rights licensed to Atari hereunder shall
      give Atari or any third party designated by Atari, the unlimited right to
      manufacture, sell, sublicense or otherwise vend the Title, the Exclusive
      Derivative Products and Ancillary Products, by any method in which Atari
      desires, and to use any trademarks, trade names or labels in connection
      therewith, subject to the trademark notice provisions set forth in Exhibit A
      hereto and the restrictions and reserved rights of Licensor
      contained herein.

                

        

         

         

        
          
            
            

          

          
            -56-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

        
 

         

        
          	
                  5.6

                	
                  License to Use
      Licensor Trademarkq. Licensor hereby grants Atari, its licensee or
      sublicensee a non­exclusive license to use such Licensor Trademarks
      for use in the Title, the Exclusive Derivative Products and/or Ancillary
      Products to fulfill its obligations under Section 5.2 hereinabove as
      publisher for the Term and subject to the terms of this
      Agreement.

                

        

         

        6.                 Marketing
and Production

         

        
          	
                  6.1

                	
                  Marketing Commitment.
      Atari shall use commercially reasonable efforts to market the Title
      within the Territory and shall commit to a Marketing Budget of at least $1
      million. Atari has no other marketing obligations hereunder and, subject
      to the foregoing commitment, Atari may devote to the Title such marketing
      efforts as Atari shall determine in its sole
  discretion.

                

        

         

        
          	
                  6.2

                	
                  Marketing Particulars.
      Except as otherwise provided in Section 6.1, Atari shall have the
      exclusive right to determine, at its sole discretion, all matters
      regarding the marketing of the Title, Exclusive Derivative Products and
      Ancillary Products, including without limitation, all aspects of
      advertising; promotion; packaging; channels and methods of distribution,
      including, without limitation, any bundling or OEM arrangements; pricing;
      terms of sale or license; introduction dates; the territories to be
      exploited; and (subject to Licensor's approval rights pursuant to Section
      5.5) the trademarks, service marks and logos under which the Title,
      Exclusive Products and/or Ancillary Products are marketed. Licensor shall
      have the right of consultation with respect to Atari's U.S. marketing plan
      for the Title.

                

        

         

        
          	
                  6.3

                	
                  Samples. Atari
      shall provide without charge to Licensor fifty (50) samples of each Title
      Platform version published for sale in the United States and at least five
      (5) samples of every Localization published by Atari pursuant to this
      Agreement.

                

        

         

        7.               
Compensation to
Licensor

         

          
Atari shall pay Licensor the compensation (the "Compensation")
as defined in and as and when set forth in the Compensation Schedule
(Exhibit D).
For amounts associated with Licensor's completion of a Milestone, Atari may
withhold the entire amount if Atari has not accepted the associated Milestone as
completed under the terms of Section 2.1. Any amounts withheld shall be released
to Licensor if and when all Milestone development is current or with the payment
due on Final Acceptance, whichever occurs sooner, provided that this Agreement
has not as of such time been canceled or terminated.

         

        8.               
Attribution,
Publicity and Promotional Appearances

         

        
          	
                  8.1

                	
                  Attribution.
      Licensor shall be entitled to such credits as are specified in the
      Credit Schedule as set forth in Exhibit
      A attached
hereto.

                

        

         

        
          	
                  8.2

                	
                  Publicity Involving
      Atari. Licensor shall not use Atari's name or any of Atari's
      Intellectual Property in any press release, advertisement or promotional
      materials without Atari's prior written consent, such consent not to be
      unreasonably withheld.

                

        

         

        9.               
Representations
and Warranties

         

        As an
inducement to Atari entering into and consummating this Agreement, Licensor
represents, warrants and covenants as follows:

         

        
          	
                  9.1

                	
                  Organization
      Representations; EnforceAbility. Licensor is duly organized,
      validly existing and in good standing in the jurisdiction as stated in
      Exhibit A
      to this Agreement. The execution and delivery of this Agreement by
      Licensor and the transactions contemplated hereby have been duly and
      validly authorized by all necessary action on the part of Licensor. This
      Agreement constitutes a valid and binding obligation of Licensor
      enforceable in accordance with its
terms.

                

        

         

        
          	
                  9.2

                	
                  No Conflict.
      The entering into and performance of this Agreement by Licensor
      does not and will not violate, conflict with or result in a material
      default under any other contract, agreement, indenture, decree, judgment,
      undertaking, conveyance, lien or encumbrance to which Licensor or any of
      its affiliates is a party or by which it or any of its property is or may
      become subject or bound. Licensor will not grant any rights under any
      future agreement, nor will it permit or suffer any lien, obligation or
      encumbrances that will conflict with the full enjoyment by Atari of its
      rights under this Agreement.

                

        

         

         

        
          
            
            

          

          
            -57-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

         

        
          	
                  9.3

                	
                  Right to Make Full
      Grant. Except as set forth in Schedule 9.3 (the "Security
      Interests"), Licensor has and shall have all requisite ownership,
      rights and licenses to perform its obligations under this Agreement fully
      as contemplated hereby and to grant to Atari all rights with respect to
      the Deliverables, the Title and any Source Materials purported to be
      granted hereunder, including, without limitation, the exclusivity grants
      contained herein, free and clear of any and all agreements, liens, adverse
      claims, encumbrances and interests of any Person, including, without
      limitation, Licensor's employees, agents, artists and contractors and such
      contractors' employees, agents and artists, who have provided, are
      providing or shall provide services with respect to the development of the
      Deliverables and the Title.

                

        

         

        
          	
                                       9.3.1
      

                	
                  Security Interests.
      Licensor is permitted to grant all the licenses and rights granted
      to Atari hereunder pursuant to the terms of the Security Interests and
      such grant does and shall not violate any representation, warranty or
      covenant thereunder.

                

        

         

        
          	
                  9.4

                	
                  Noninfringement.
      Nothing contained in the Deliverables or the Title, required in the
      process of incorporating the Deliverables into the Title, or required in
      order for Licensor to create and deliver the Deliverables and the Title
      under this Agreement does or will infringe, violate or misappropriate any
      Intellectual Property or Intellectual Property Right of any third party.
      Further, no characteristic of the Deliverables or the Title does or will
      cause manufacturing, using, maintaining or selling units of the Title
      containing the Deliverables to infringe, violate or misappropriate any
      Intellectual Property or Intellectual Property Right of any
      Person.

                

        

         

        
          	
                  9.5

                	
                  No Pending or Current
      Litigation. Licensor is not involved in current litigation,
      arbitration or any other claim and knows of no pending litigation,
      arbitration, other claim, or fact which may be the basis of any claim
      regarding any of the materials Licensor has used or will use to develop or
      has incorporated or will incorporate into the Deliverables or the Title to
      be delivered under this Agreement.

                

        

         

        
          	
                  9.6

                	
                  No Harmful Content.
      The Deliverables and the Title as delivered by Licensor to Atari
      contain and will contain no matter which is injurious to end-users or
      their property, or which is scandalous, libelous, obscene, an invasion of
      privacy or otherwise unlawful or
tortious.

                

        

         

        
          	
                  9.7

                	
                  No Viruses.
      Each Deliverable developed under this Agreement and the media upon
      which it is delivered to Atari contain and will contain no computer
      viruses, booby traps, worms, time bombs or other programming designed to
      interfere with the normal functioning of the Deliverables, the Title into
      which the Deliverables are and/or will be incorporated, or Atari's or the
      end-user's equipment, programs or
data.

                

        

         

        
          	
                  9.8

                	
                  No Easter
      Eggs/Unauthorized Content. Each Deliverable and the Title contain
      and will contain no functionality, graphics, or audio or visual material,
      including without limitation references to Licensor, Licensor's employees
      or consultants, Licensor's competitors, Atari, or any other entity or
      person, unless such material has been disclosed to, prescribed by, or
      supplied by Atari.

                

        

         

        
          	
                  9.9

                	
                  First-Party Approvals.
      Licensor has received concept approval for the Title from Microsoft
      Corporation and
      Sony Computer Entertainment of America,
  Inc.

                

        

         

        
          	
                  9.10

                	
                  Credits. The
      credit requirements and other materials delivered by Licensor to Atari,
      including, but not lim­ited to, any and all third party credits under
      this Agreement shall be complete and accurate and Atari shall incur no
      liabilities to any third parties arising out of the use of such materials
      and compliance with such credit requirements pursuant to Atari's rights in
      the Title.

                

        

         

        
          	
                  9.11

                	
                  Third-Party Payments.
      Licensor shall be solely responsible for any and shall pay any
      third party payments or residuals for use of the Title, Content, Title
      engine, third party tools, and Software as contemplated and to be allowed
      hereunder (including without limitation music publisher royalties, if
      applicable).

                

        

         

        
          	
                  9.12

                	
                  Inducement Letter.
      Licensor shall cause Transmission Games to sign the inducement
      letter in the form attached
      hereto as Exhibit
      F.

                

        

         

        10.             
Atari's Representations and Warranties

         

          
As an inducement to Licensor entering into and consummating this Agreement,
Atari represents, warrants and covenants as follows:

         

         

        
          
            
            

          

          
            -58-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

         

         

        
          	
                  10.1

                	
                  Organization
      Representations: Enforceability. Atari is a duly organized, validly
      existing corporation in good standing in Delaware. The execution and
      delivery of this Agreement by Atari and the transactions contemplated
      hereby have been duly and validly authorized by all necessary action on
      the part of Atari. This Agreement constitutes a valid and binding
      obligation of Atari enforceable in accordance with its
    terms.

                

        

         

        
          	
                  10.2

                	
                  No Conflict.
      The entering into and performance of this Agreement by Atari does
      not and will not violate, conflict with or result in a material default
      under any other contract, agreement, indenture, decree, judg­ment,
      undertaking, conveyance, lien or encumbrance to which Atari is a party.
      Atari will not grant any rights under any future agreement, nor will it
      permit or suffer any lien, obligation or encumbrances that will conflict
      with the full enjoyment by Licensor of its rights under this
      Agreement.

                

        

         

        
          	
                  10.3

                	
                  Noninfringement.
      Nothing contained in any materials supplied to Licensor by Atari or
      any of Atari's agents or contractors does or will infringe, violate or
      misappropriate any Intellectual Property or Intellec­tual Property
      Right of any third party. Further, no characteristic of such materials
      does or will cause manu­facturing, using, maintaining or selling units
      of the Title to infringe, violate or misappropriate any Intellec­tual
      Property or Intellectual Property Right of any third
  party.

                

        

         

        11.              
Indemnification

         

        
          	
                  11.1

                	
                  Licensor's
      Indemnification of Atari. Licensor hereby indemnifies Atari, its
      officers, directors and employees, and agrees to defend and hold them
      harmless from and against any and all liability, damage, loss or expense
      (including reasonable attorneys' fees) (A) arising from any third party
      claim, demand, action or proceeding (a "Claim")
      based upon (i) the alleged breach of any of Licensor's
      representations, warranties or covenants set forth in Section 9; (ii) the
      failure of Licensor's Deliverables to perform in accordance with the
      Specifications; (iii) Licensor's tortious conduct; or (iv) Licensor's
      breach of Section 13, or (B) incurred in the settlement or avoidance of
      any such Claim, provided, however, that Atari shall give prompt notice to
      Licensor of the assertion of any such Claim and provided further that
      Licensor shall have the right to select counsel and control the defense
      thereof, subject to Atari's right to participate through counsel (at its
      own expense) therein. Atari shall have the right to withhold amounts
      otherwise payable to Licensor under this Agreement not in excess of the
      amount reasonably believed to be subject to any such Claim and to apply
      such amounts as required in satisfaction of the foregoing
      indemnities.

                

        

         

        
          	
                  11.2

                	
                  Atari's
      Indemnification of Licensor. Atari hereby indemnifies Licensor, its
      officers, directors, and employees, and agrees to defend and hold them
      harmless from and against any and all liability, damage, loss or expense
      (including reasonable attorneys' fees) (A) arising from any third-party
      claim, demand, action or proceeding (a "Claim")
      based upon (i) the alleged breach of any of Atari's
      representations, warranties or covenants set forth in Section 10; (ii)
      Atari's tortious conduct; or (iii) Atari's breach of Section 13, or (B)
      incurred in the settlement or avoidance of any such Claim, provided,
      however, that Licensor shall give prompt notice to Atari of the assertion
      of any such Claim and provided further that Atari shall have the right to
      select counsel and control the defense thereof, subject to Licensor's
      right to participate through counsel (at its own expense)
      therein.

                

        

         

        
          	
                  12

                	
                  Distribution
      Option. For Additional Sequels published In-House by Licensor,
      Atari shall have an exclusive distribution option, as further described
      below, in accordance with Section 4.7. Should Licensor decide to
      distribute any such Additional Sequel within the world-wide territory,
      Atari shall have the right of first refusal for the distribution of such
      Additional Sequel within such territory. Such Additional Sequels will, on
      a case-by-case basis, be announced by Licensor to Atari, together with
      reasonably detailed information about such Additional Sequel (including
      prototype and/or playable level), no earlier than upon completion of a
      prototype or playable level thereof and no later than 180 days prior to
      the Gold Master delivery thereof, to be distributed by Atari. Atari may,
      within fifteen (15) business days following such announcement, submit a
      written offer to Licensor with respect to distribution of such Additional
      Sequel (the "Atari
      Offer").
      If the parties do not reach a definitive agreement with respect to
      such distribution within sixty (60) days following submission by Atari of
      its written offer, then Licensor shall have the right to offer to license
      the applicable Additional Sequel for distribution to a third party,
      provided that if the terms offered by Licensor to such third party (the
      "Third
      Party Terms") are no less favorable to such
  third

                

        

         

         

         

        
          
            
            

          

          
            -59-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

         

         

        party
than the terms for Atari in the Atari Offer or in the best terms offered by
Licensor in response to the Atari Offer, then Licensor shall offer 1.0 Atari the
right to distribute the applicable Additional Sequel on the Third Party Terms
and Atari shall have ten (10) business days to accept the Third Party Terms. In
the event that Atari accepts the Third Parity terms within the foregoing ten
(10) business day period, then the parties shall use best efforts, negotiating
in good faith, promptly to conclude a definitive agreement in accordance with
the Third Party Terms. If Atari does not accept the Third Party Terms within the
foregoing ten (10) business day period, then Licensor shall have the right to
license the applicable Additional Sequel on substantially the same terms as the
Third Party Terms. The distribution option of Atari as described in this Section
12 shall be referred to herein as the "Atari
Distribution Option".

         

        13.             
Confidentiality

         

        
          	
                  13.1

                	
                  Preservation of
      Confidentiality. Each party ("Receiving
      Party") agrees that it will hold all Confidential Information of
      the other party ("Disclosing
      Party") in trust for the sole benefit of the Disclosing Party and
      for the exercise of the limited rights expressly granted to the Receiving
      Party under this Agreement. The Receiving Party shall take all reasonable
      steps necessary to preserve the confidentiality of the Confidential
      Information of the Disclosing Party, including, but not limited to, those
      steps that the Receiving Party takes to protect the confidentiality of its
      own most highly confidential information. Except as may be expressly
      authorized by the Disclosing Party in writing, the Receiving Party shall
      not at any time either before or after any termination of this Agreement,
      directly or indirectly: (i) disclose any Confidential Information to any
      person other than an employee or subcontractor of the Receiving Party who
      needs to know or have access to such Confidential Information for the
      purposes of this Agreement, and only to the extent necessary for such
      purposes; (ii) except as otherwise provided in this Agreement, duplicate
      the Confidential Information for any purpose whatsoever; or (iii) use the
      Confidential Information for any reason or purpose other than as expressly
      permitted in this Agreement.

                

        

         

        
          	
                  1.

                	
                  The
      Receiving Party shall notify each of its employees and subcontractors to
      whom it discloses or provides access to Confidential Information, that
      such disclosure or access is made in confidence and, prior to such
      disclosure or provision of access, the Receiving Party shall obtain such
      employee's or subcontractor's writ­ten agreement to protect the
      confidentiality of the Confidential
Information.

                

        

         

        
          	
                  13.2

                	
                  Obligations Upon
      Unauthorized Disclosure. If at any time, the Receiving Party
      becomes aware of any unauthorized duplication, access, use, possession or
      knowledge of any Confidential Information, the Receiving Party shall
      immediately notify the Disclosing Party. The Receiving Party shall provide
      any and all reasonable assistance to the Disclosing Party to protect the
      Disclosing Party's proprietary rights in any Confidential Information that
      the Receiving Party or its employees or subcontractors may have directly
      or indirectly disclosed or made available and that may be duplicated,
      accessed, used, possessed or known in a manner or for a purpose not
      expressly authorized by this Agreement, including, but not limited to
      enforcement of confidentiality agreements, commencement and prosecution in
      good faith of legal action (alone or with the Disclosing Party), and
      reimbursement for all reasonable attorneys' fees (and all related costs),
      costs and expenses incurred by the Disclosing Party to protect its
      proprietary rights in the Confidential Information. The Receiving Party
      shall take all reasonable steps requested by the Disclosing Party to
      prevent the recurrence of any unauthorized duplication, access, use,
      possession or knowledge of the Confidential
  Information.

                

        

         

        
          	
                  13.3

                	
                  Exceptions. The
      foregoing restrictions will not apply to information to the extent that
      the Receiving Party can demonstrate such information (i) was known to the
      Receiving Party at the time of disclosure to the Receiving Party by the
      Disclosing Party as shown by the files of the Receiving Party in existence
      at the time of disclosure; (ii) has become publicly known through no
      wrongful act of the Receiving Party; (iii) has been rightfully received
      from a third party authorized by the Disclosing Party to make such
      disclosure without restriction; (iv) has been approved for release by
      written authorization of the Disclosing Party; or (v) has been disclosed
      by court order or as otherwise required by law, provided that the
      Receiving Party has notified the Disclosing Party immediately upon
      learning of the possibility of any such court order or legal requirement
      and has given the Disclosing Party a reasonable opportunity (and
      cooperated with the Disclosing Party) to contest or limit the scope of
      such required disclosure (including without limitation application for a
      protective order).

                

        

         

         

        
          
            
            

          

          
            -60-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

        
          	
                  13.4

                	
                  Confidentiality of
      Agreement. Notwithstanding Section 13.1, each party may disclose
      the terms and conditions of this Agreement (i) as required by any court or
      other governmental body or as otherwise required by law, provided that
      such party has notified the other party immediately upon learning of the
      possibility of any such requirement and has given the other party a
      reasonable opportunity (and cooperated with the other party) to contest or
      limit the scope of such required disclosure (including without limitation
      application for a protective order); (ii) to legal counsel; (iii) in
      confidence, to accountants, banks, and financing sources and their
      advisors; and (iv) in confidence, in connection with the enforcement of
      this Agreement or rights under this Agreement. Notwithstanding anything to
      the contrary in this Agreement, the parties shall publicly disclose the
      existence and general nature of this Agreement through a joint press
      release, the text of which shall be jointly approved by the parties and
      the timing of which shall be at Atari's sole discretion (the "Announcement").
      Except as provided in subsections (i) through (iv) above, any
      public disclosure of the existence and/or general nature of this Agreement
      prior to the Announcement by Licensor shall require prior written consent
      of Atari.

                

        

         

        
          	
                  13.5

                	
                  Return of Confidential
      Materials. Upon any expiration, termination or cancellation of this
      Agreement or the completion of Licensor's services hereunder, or at any
      time that Atari may request, each party shall promptly return to the other
      all Confidential Information in tangible form which is then in the
      possession or control of such
party.

                

        

         

        
          	
                  13.6

                	
                  Notwithstanding
      anything to the contrary contained herein, the confidentiality
      restrictions set forth herein shall not apply to Atari with respect to
      disclosure to third parties necessary in connection with Atari's or its
      licensees' or sublicensees' exploitation of the Content, the Software,
      Ancillary Products and the Title in accordance with the terms and
      conditions of this Agreement.

                

        

         

        14.              
Termination

         

        
          	
                  14.1

                	
                  Subject
      to Section 15.2, and in the event of a material breach of this Agreement
      by Atari prior to completion of the Title, Licensor may terminate this
      Agreement by giving thirty (30) days prior written notice. Notwithstanding
      the foregoing, this Agreement will not terminate at the end of the notice
      period if Atari has cured the breach about which it has been notified.
      After completion of the Title, Licensor agrees that its sole remedy for
      failure by Atari or its licensees to cure, or attempt to cure, any breach
      hereof, including failure to use reasonable efforts to insure that such
      trademark notices are placed in the manner on the Title as directed by
      Licensor, shall be a legal claim for damages, and Licensor hereby waives
      all rights to seek injunctive
relief.

                

        

         

        
          	
                  14.2

                	
                  Subject
      to Sections 15.1 and 15.2, and in addition to Atari's other termination
      rights hereunder and without limiting Atari's rights or remedies at law or
      in equity, Atari may upon written notice to Licensor terminate this
      Agreement as a result of a material breach of this Agreement by Licensor,
      provided that Licensor may cure such breach in fifteen (15) days from the
      date said notice is deemed delivered as set forth in Section 20 except for
      termination by Atari for material breach pursuant to Section 2.2, in which
      case termination shall be deemed effective immediately. A material breach
      may include, but is not limited to, Licensor's failure to finish the
      Title, Licensor's ceasing to do business, Licensor's filing for bankruptcy
      or otherwise being insolvent, Licensor's failure to have the Deliverables
      approved by Atari, and/or Licensor's failure to finish the Title on time
      or on budget as per the Milestone schedule. In the event of such
      termination, Atari shall have no obligation to pay Licensor any additional
      installments of the Compensation, and Atari shall be entitled to be paid
      back or to recover any and all payments for non-approved
      Milestones.

                

        

         

        
          	
                  14.3

                	
                  Subject
      to Section 15.2, and in addition to Atari's other termination rights
      hereunder, and without limiting Atari's rights or remedies at law or in
      equity, Atari may terminate this Agreement at any time prior to the Final
      Delivery Date, without cause, by providing Licensor with written notice of
      such termination. In the event of such termination, Atari shall have no
      obligation to pay Licensor any additional installments of the Milestone
      payments except as set forth herein. If Atari has given written approval
      of a Milestone as set forth herein, then Atari shall honor its payment
      obligations for such approved Milestone and in addition shall pay Licensor
      the pro-rated amount for the then current
  Milestone.

                

        

         

        
          	
                  14.4

                	
                  Subject
      to Sections 15.1 and 15.2, and in addition to Atari's other termination
      rights hereunder, and without limiting Atari's rights or remedies at law
      or in equity, after approval of the final Deliverables by Atari, any
      applicable licensor(s), and any applicable Manufacturers, Atari may
      terminate this Agreement at any
time

                

        

         

         

        
          
            
            

          

          
            -61-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

        
 

         

        for a
breach of any of the representations, warranties, obligations, or
indemnifications made, or agreed to, by Licensor herein, or any material breach
of this Agreement. In the event of such termination, Atari shall (i) have no
obligation to pay Licensor any additional Royalties hereunder, including, but
not limited to, any Royalties earned, but for which Atari has not yet rendered
an accounting.

         

        
          	
                  14.5

                	
                  Subject
      to Section 15.2 and in addition to Atari's other termination rights
      hereunder, if a receiver, administrator, administrative receiver or
      manager shall be appointed or any distress or execution or other process
      shall be levied on or enforced (and not being discharged within 30 days)
      over the whole or any part of Licensor's assets, or if Licensor offers to
      make or makes any arrangement with or for the benefit of its creditors, or
      commits an act of or files for bankruptcy, or if any petition to consider
      a resolution for the making of an administration order or to wind up or
      dissolve Licensor shall be passed or presented, or if Licensor ceases to
      carry on business, or suffers any analogous proceedings under foreign law
      (any of the foregoing, a "Licensor
      Insolvency Event"), then Atari shall have the right to immediately
      terminate this Agreement upon written notice to Licensor. If this
      Agreement is terminated pursuant to this Section 14.5, neither this
      Agreement nor any right or interest herein shall be deemed an asset in any
      insolvency, receivership, bankruptcy arrangement proceedings, and neither
      Licensor, its receivers, representatives, trustees, agents,
      administrators, successors and/or assigns shall have any right to sell,
      exploit or in any way deal in any of the Title or Deliverables. In the
      event this Agreement is terminated by Atari hereunder, any and all
      Deliverables created by or on behalf of Licensor hereunder shall be
      immediately delivered to Atari.

                

        

         

        
          	
                  14.6

                	
                  Notwithstanding
      anything to the contrary contained herein, Atari's right to terminate this
      Agreement as set forth
      herein shall include the right to terminate the Agreement in whole or in
      part.

                

        

         

        
          	
                  14.7

                	
                  Survival. The
      respective rights, obligations, representations and warranties of the
      parties under Sections 1.6, 2.2, 9 through 14, 15, 16, 18, 20, and 22
      through 32 shall survive any cancellation, termination or expiration of
      this Agreement.

                

        

         

        15.              
Rights in Title and Software upon Termination

         

        
          	
                  15.1

                	
                  In
      the event Atari terminates this Agreement for a material breach by
      Licensor prior to the delivery of the final Deliverables as set forth in
      Section 14 above or in accordance with Section 14.5, Atari may, in its
      sole discretion, within sixty (60) days of the notice of termination elect
      to retain all rights licensed to it hereunder with respect to the Title,
      Software and Content. Licensor shall deliver to Atari all Source Materials
      for the Title and provide Atari with reasonable assistance in completing
      development of the Title. Atari may provide the Software and Content to a
      third party developer for completion of the Title. In the event Atari
      elects to have a third party developer complete the Title, Atari's only
      payment obligation to Licensor shall be a pro-rated royalty, and Atari
      shall only have an obligation to pay Licensor any such pro­rated
      royalty, if any, after Atari has recouped any and all of the Milestone
      payments paid to Licensor hereunder and all other development costs paid
      by Atari in order to complete the Title. The pro-rated royalty rate shall
      be computed by multiplying the royalty rate set forth on Exhibit D by a
      fraction the numerator of which is the dollar amount associated with all
      completed and approved Milestones and the denominator of which is the
      total dollar amount paid by Atari for delivery of the completed Title
      (i.e., any and all Milestone payments paid hereunder plus any monies paid
      to a third party developer).

                

        

         

        
          	
                                      
      15.1.1 

                	
                  In
      the event Atari terminates this Agreement for a material breach by
      Licensor after approval of the final Deliverables as set forth in Section
      14.4 above or in accordance with Section 14.5, Atari may, in its sole
      discretion, within sixty (60) days of the notice of termination elect to
      retain all rights licensed to it hereunder with respect to the Title(s),
      Software, Ancillary Products, Future Products and Content. Licensor shall
      deliver to Atari all source materials for the Title. In accordance with
      Section 14.4, Atari may retain a reasonable estimated amount from
      royalties hereunder, including, but not limited to, any royalties earned,
      but for which Atari has not yet rendered an accounting, in anticipation of
      damages hereunder.

                

        

         

         

        
          
            
            

          

          
            -62-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

         

         

        
          	
                  15.2

                	
                  In
      the event (i) Atari terminates this Agreement as set forth in Section
      14.2, 14.4 or 14.5 and Atari elects not to exercise its rights under
      Section 15.1, if any; (ii) Atari terminates this Agreement pursuant to
      Section 14.3; or (iii) Licensor terminates this Agreement pursuant to
      Section 14.1, all rights granted to Atari by Licensor hereunder shall
      immediately revert to Licensor subject to the sell-off period ("Sell-Off
      Period")
      set forth in Section 16. If Licensor completes the Title, licenses
      the Title and/or Software and/or Content, or in any other manner, now
      known or hereinafter discovered, invented, or developed, exploits the
      Title and/or Software and/or Content, Licensor shall, from first dollar
      received from any source, including development dollars, pay Atari the
      total amount of the Milestone payments and any other amounts paid by Atari
      to Licensor prior to the date of
termination.

                

        

         

        
          	
                  15.3

                	
                  Notwithstanding
      anything to the contrary contained herein, following the expiration or
      termination of this Agreement both Atari and Licensor shall continue to
      have the right to receive revenues and/or royalties from any and all
      licenses, sublicenses, engagements, contracts and agreements entered into
      during, or substantially negotiated prior to the end of, the Term for the
      Title and Ancillary Products and any extensions hereof and upon any and
      all extensions, modifications, renewals and substitutions thereof; and
      upon any such resumptions of all such licenses, sublicenses, engagements,
      and contracts. Atari shall have the obligation to continue to pay Licensor
      per the royalty and accounting provisions of Exhibit B
      and the Royalty Addendum hereof. Any license, assignment or similar
      agreement entered into by Atari with a third party, or third parties, for
      the Ancillary Products shall survive the expiration or termination of this
      Agreement for so long as such license agreement remains in full force and
      effect.

                

        

         

        
          	
                  15.4

                	
                  Upon
      expiration of the Term and reversion of the rights hereunder to Licensor,
      Licensor agrees that in consideration of Atari's promotion of the Title,
      Content and any Future Products or other derivative products created
      hereunder, Licensor shall pay Atari an amount equal to fifty percent (50%)
      of any Net Receipts and other revenues received by Licensor in connection
      with the Title or other product developed hereunder and distributed by
      Licensor after the Term. Licensor shall have the same accounting and
      payment obligations in connection therewith as Atari has hereunder, and
      Atari shall have the same audit rights as Licensor hereunder. For the sake
      of clarity, Atari shall only be entitled to share in the revenue in
      connection with the Title and derivative products created during the Term,
      and shall not be entitled to share in any revenue relating to the Content
      or games developed after the Term.

                

        

         

        16.             
Sell-Off Period

         

        
          	
                  16.1

                	
                  Following
      the expiration or termination of the Agreement in whole or in part, Atari
      shall deliver within ninety (90) business days to Licensor a statement
      including the number and description of the Title units and Ancillary
      Products in Atari's inventory, or licenses or sublicenses presently
      existing, on hand, on order or in process before the expiration or
      termination date.

                

        

         

        
          	
                  16.2

                	
                  Upon
      the expiration or termination hereof, Atari shall immediately cease
      further exploitation of the license granted herein with respect to the
      manufacture and sale of Titles and/or Ancillary Products; provided,
      how­ever, Atari shall have a period (the "Sell-off
      Period")
      of one hundred eighty (180) days after such expira­tion or
      termination to sell off the Titles and/or Ancillary Products remaining in
      its inventory, on hand, on order, or in process, before the expiration or
      termination date. Licensor shall be entitled to receive royal­ties in
      connection with all sales made by Atari during the Sell-off
      Period.

                

        

         

        
          	
                  16.3

                	
                  Upon
      the expiration of the Sell-off Period, Atari shall cease to sell the
      Titles and Ancillary Products and in a reasonable amount of time shall
      supply to Licensor with a
      list of the inventory of the Titles and Ancillary Products at such
      date.

                

        

         

        
          	
                  16.4

                	
                  In
      the event that Atari does not sell all of its inventory of the Title and
      Ancillary Products during the Sell­off Period, Licensor shall have the
      option, to be exercised by giving Atari written notice, within five (5)
      business days after the expiration of the Sell-off Period to (i) extend
      the Sell-off Period for an additional thirty (30) days, (ii) purchase, at
      Atari's cost, any and all of the Title and Ancillary Products remaining in
      Atari's inventory at the expiration of the Sell-off Period or (iii) order
      the destruction of all of the Title and Ancillary Products remaining in
      inventory. Licensor may extend the Sell-off Period for any number of
      ad­ditional thirty (30) day periods, and in the event that Licensor
      elects not to further extend the Sell-off
Pe-

                

        

         

         

        
          
            
            

          

          
            -63-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

         

        17.             
Force
Majeure

         

          
Neither party shall be deemed in default of this Agreement to the extent that
performance of their obliga­tions or attempts to cure any breach are delayed
or prevented by reason of any act of God, fire, natural disaster, ac­cident,
act of government, sabotage of material or supplies or any other cause beyond
the control of such party ("Force
Majeure"), provided that such party gives the other party written notice
thereof promptly and, in any event, within fifteen (15) calendar days of
discovery thereof. In the event of such a Force Majeure, the time for
perform­ance or cure shall be extended for a period equal to the duration of
the Force Majeure, but not in excess of six (6) months.

         

        18.             
Limitation
of Liability

         

          
EXCEPT FOR BREACHES OF SECTION 13, AND EXCEPT AS PROVIDED IN SECTION 11 WITH
REGARD TO THIRD-PARTY CLAIMS, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR
SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OF ANY NATURE, FOR ANY
REASON, INCLUDING, WITHOUT LIMITATION, THE BREACH OF THIS AGREEMENT OR ANY
TERMINATION OF THIS AGREEMENT, WHETHER SUCH LIABILITY IS ASSERTED ON THE BASIS
OF CONTRACT, TORT (INCLUDING NEGLIGENCE OR STRICT LIABILITY) OR OTHERWISE, EVEN
IF THE OTHER PARTY HAS BEEN WARNED OF TIRE POSSIBILITY OF SUCH DAMAGES. All
remedies provided for in this Agreement are intended to be cumulative, and not
exclusive or in limitation of any other remedies, whether provided in other
provisions of this Agreement or otherwise available under applicable law, except
to the extent remedies are specifically limited by the foregoing
sentence.

         

        19.            
Assignment

         

          
Atari shall have the right to extend the license granted hereunder to any
subsidiary, affiliated or controlled company and to sublicense any of the rights
granted herein. Atari shall have the right to assign this Agreement so long as
such assignee agrees to be bound by its covenants and burdens. Licensor may
assign Licensor's right to receive royalties under this Agreement at any time.
Licensor may, upon written approval by Atari, not to be unreasonably withheld,
assign all Licensor's rights and obligations under this Agreement to its
successor-in-interest upon a Change of Control of Licensor, provided in each
instance that such assignee agrees to be bound by its covenants and burdens.
Except as otherwise provided above, Licensor may not assign, sublicense or
delegate this Agreement or its obligations hereunder, in whole or in part,
expressly or by operation of law without the prior written consent of Atari,
which Atari may grant or withhold in its sole discretion; provided, however,
that after ninety (90) days after Final Acceptance, Atari shall not unreasonably
withhold or delay such consent. In the event of any permitted or consented to
assignment, sublicense or delegation by Licensor, Licensor shall remain
primarily obligated and liable under all the provisions of this Agreement. Any
assignment, sublicense or delegation in violation of the preceding sentence
shall be null and void. Subject to the foregoing provisions of this paragraph,
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their successors and assigns. It is further understood and agreed
that all obligations of exclusivity granted to Atari which are binding on
Licensor hereunder shall also be binding upon any Person controlling, controlled
by or under common control with Licensor, and Licensor agrees to employ no such
legal form or instrumentality, or assist any third party in any activity, so as
to avoid any such obligations, option or right.

         

        20.             
Notices

         

          
All notices hereunder shall be in writing and shall be effective upon receipt.
Notices may be sent by any reasonable means, including facsimile. The parties
shall notify each other of their respective facsimile numbers or any changes
thereof or of their addresses for notice; provided that a copy of every notice
sent to Atari shall also be sent to the LIME, LLC – Lawyers for Interactive
Media & Entertainment, 132 Fayerweather Street, Cambridge, MA 02138; attn;
Steven A. Bercu, Esq., facsimile (617) 812-2554. Unless notice is given to the
contrary, Licensor's address and facsimile number for notice shall be deemed to
be as shown in Exhibit
A of this Agreement.

         

         

        
          
            
            

          

          
            -64-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

         

        21.             
Request for Assurances

         

           
If at any time during the term of this Agreement Atari determines that it is
questionable whether Licensor will perform any of its material obligations
hereunder, Atari shall be entitled to request from Licensor such written
assurances of due performance as Atari, in its reasonable discretion, shall deem
adequate. Failure by Licensor to provide assurances in the form requested within
fifteen (15) calendar days after receipt of a written request therefor shall
constitute a material breach of this Agreement.

         

        22.             
Independent
Contractors

         

           
Licensor shall be deemed to have the status of an independent contractor, and
nothing in this Agreement shall be deemed to place the parties in the
relationship of employer-employee, principal-agent, or partners or joint
venturers.

         

        23.             
Taxes

         

          
Licensor shall be responsible for and pay any withholding taxes, payroll taxes,
disability insurance payments, unemployment taxes and all other taxes or charges
on the payments received by Licensor hereunder. Atari may deduct from any and
all payments hereunder all taxes that Atari is legally required to withhold.
Atari shall notify Licensor of any such deductions along with the corresponding
payments hereunder,

         

        24.             
No
Agents

         

          
Licensor represents that it knows of no finder, agent or broker (exclusive of
Licensor's officers, directors and employees) who (i) participated in any way in
bringing about the within transaction, or (ii) that Licensor reasonably believes
would claim compensation therefor.

         

        25.            
Governing
Law and Consent to Jurisdiction Venue and Service of Process

         

          
This Agreement shall be governed by he substantive laws of the State of New York
(without giving effect to its conflict of law rules), all rights and obligations
of the parties of this Agreement and the interpretation, construction and
enforceability hereof shall also be governed by the laws of the State of New
York (without giving effect to its conflict of law rules). Atari and Licensor
agree (i) to submit to the jurisdiction of any State and/or Federal Court
situated within New York County, New York for any action properly brought
pursuant to this Agreement; (ii) to waive any objection they may have now or
hereafter to the venue of any suit brought pursuant to clause (i) above; and
(iii) that service of process may be made by mailing a copy of such process by
registered or certified mail, postage prepaid, return receipt requested to the
served party's representative as identified in this Agreement, or such other
representative as has been identified as of such time as service is to be
made.

         

        26.            
Waiver

         

         
Any term or condition of this Agreement may be waived or qualified by a party
entitled to the benefit thereof only by a written instrument executed by such
party. No omission, delay or failure on the part of either party in exercising
any rights hereunder, and no partial or single exercise thereof, will constitute
a waiver of such rights or of any other rights hereunder.

         

        27.             
Number
and Gender

         

          
Except as otherwise specified, singular and plural forms, and gender forms, of
pronouns and other words and terms herein shall be deemed interchangeable as
required by the context and the identity of the parties.

         

        28.             
Other Programs Published by Atari

         

          
Licensor acknowledges that Atari is in the interactive game business. Nothing
contained in this Agreement shall be construed to prevent Atari from using,
developing, having others develop, and marketing and distributing and having
others market and distribute, any software or other products similar in function
to the Deliverables but not derived from the Source Code thereof or to obligate
Atari to compensate Licensor in any way therefor.

         

         

        
          
            
            

          

          
            -65-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

         

        29.             
Illegal Acts

         

               
In no event shall this Agremnent be construed as requiring Atari or Licensor to
commit any unlawful act or acts whatsoever.

         

        30.             
Severability

         

        In the
event that any court of compelent jurisdiction declares soy portion of this
Agreement to be invalid or otherwise unenforceable, the remainder of this
Agreement shall remain in force and shall be tillaffeatti by suds invalidity or
unenfotteability.

         

        31.             
Entire Agreement

         

        This
Agreement, along with the exhibits, schedules and addenda referenced herein,
which are hereby incorporated by reference, constitutes the entire agreement
between the panics pertaining to the subject matter hereof and supersedes all
prior and contemporaneous agreements, negotiations and understandings, oral or
written, This Agreement may be modified only by an instrument in
writing duly executed by both parties.

         

        32.             
Submission Not An Offer

         

        This
document shall not be deemed an offer and shall not
be binding unless signed by a duly authorized officer of all named
parties.

         

        AGREED
AND ACCEPTED:

         

        
           

          
            
              
                
                  
                    
                      	
                              ATARI
      INTERACTIVE, INC

                            	 
      	
                              RED
      MILE ENTERTAINMENT, INC.

                            
	 
      	 
      	 
      
	
                              By:
      /s/ Phill Harrison                 
      

                            	 
      	
                              By:
      /s/ Simon
      Price           
      

                            
	
                              Print
      Name: Phill Harrison

                            	 
      	
                              Print
      Name: Simon Price

                            
	Title:
      President	 	Title:
      President
	Date:
      6/23/2008	 	Date:
      6/20/2008
	 	 	 
	 	 	 

                    

                  

                

              

            

          

           

           

          
            
              
              

            

            
              -66-

              
                

              

            

            
              
              

              Exhibit
10.12

            

          

        

        
          

        

         

        
           

        

         

        EXHIBIT
A

        CONTRACT
INFORMATION 

        
          

        

         

        Name
of Title: HEROES OVER EUROPE

         

        I.
Information Regarding Licensor:

         

        Licensor's
Name                             Red
Mile Entertainment, Inc.

         

        Address                                         
 223 San Anselmo Ave., Ste. 3

         

                                                                  San
Anselmo, CA 94960

         

        Fax
Number                                     (415)
339-4251

         

        Phone
Number                                (415)
339-4240

         

        Type of
legal
entity                        Corporation

         

        State/Country
of Incorporation or Organization: Delaware

         

        TIN:                                                 
20-4441647

         

        Contact:

         

        Name:                      
Chester Aldridge

         

        Title:                         Chairman/CEO

         

        Direct
dial:              
(415) 339-4241

         

        Email: 
                    
chester@redmileentertainment.com

         

        II.   
Support
Schedule:

         

        Licensor
shall provide consultation to Atari's employees, from time to time, as necessary
to solve consumer problems with installation and/or use of the Title; provided,
however, that Atari shall in all cases (i) be the first point of contact with
end users of the Title, (ii) shall make reasonable efforts to identify and solve
routine issues concerning installation and basic operation of the Title by such
end users, and (iii) provide other primary-level support to end
users.

         

        III. Credits:

         

        
          	
                  A.          

                	
                  Screen
      Credit. The Title shall display, each time execution begins, an
      opening Atari Interactive logo followed by a "splash" screen identifying
      Licensor as the owner of the underlying property and, if requested by
      Licensor, a further "splash" screen identifying Licensor or its
      third-party contractor as the developer of the Title. In the event that
      Atari chooses, in its sole discretion, to display any credits when the
      user terminates execution of the Title, then Atari shall include
      appropriate credits for Licensor (and, if requested by Licensor, its
      third-party development
contractor).

                

        

         

        
          	
                  B.           

                	
                  In-Game
      Credit. Atari shall include, in the menu-accessible credits
      included in the Title, credits identifying Licensor as the owner of the
      underlying property and, if requested by Licensor, Licensor or its
      third-party contractor as developer of the
  Title.

                

        

         

        
          	
                  C.

                	
                  Advertising.
      Atari may at its sole discretion include a name, trademark or
      symbol relating to Licensor in any advertising
      for the Title.

                

        

         

         

        
          
            
            

          

          
            -67-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

        

         

        EXHIBIT
B

        MILESTONE,
DELIVERABLE AND PAYMENT

        SCHEDULE

        
          

        

         

        HEROES
OVER EUROPE

         

        PS3,
X360, PC

        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                	
                                        No.

                                      	
                                        Milestone
      Date

                                      	
                                        Deliverable
      Description

                                      	
                                        Publishing Fee (US$) Due

                                        Upon
      Approval of Deliver-

                                        able

                                      	 
      
	
                                        1

                                      	
                                        June
      20, 2008

                                      	
                                        Signing

                                      	
                                        2,250,000.00

                                      	 
      
	 	 	 	 	 
	
                                        2

                                      	
                                        June
      20, 2008

                                      	
                                        GDD
      & TDD delivered

                                        Interim
      Build

                                        -
      Four missions to functional, unpolished standard:

                                        *
      Recon Patrol

                                        *
      Berlin at Night * The Bulge

                                        *
      Party Crashers

                                        -
      Four terrains to functional, unpolished standard:

                                        *
      Alps for Mission: Recon Patrol (Unique single usage terrain)

                                        *
      Berlin for Mission: Party Crashers

                                        *
      Berlin modified to suit Berlin at Night * Jericho modified to suit The
      Bulge

                                        -
      Five cockpit models

                                        -
      Main menu London scene UI transition

                                        -
      Progress with UI based on deliverables to be determined in
MI6

                                        -
      Weather

                                        -
      evidence in a form reasonably acceptable to Atari of payment to
      Transmission Games of all amounts payable to Transmission Games in
      connection with Deliverables in­cluded in this Milestone and
      acknowledg­ment executed by a duly authorized officer of Transmission
      Games of receipt of such amounts.

                                      	
                                        1,000,000.00

                                      	 
      
	
                                        3

                                      	
                                        August
      15, 2008

                                      	
                                        Alpha

                                        ±
      Leipzig trade show public demo build complete on one console platform
      (probably PS3)

                                        -
      evidence in a form reasonably acceptable

                                      	
                                        1,000,000.00

                                      	 
      

                              

                            

                          

                        

                      

                    

                     

                     

                    
                      
                        
                        

                      

                      
                        -68-

                        
                          

                        

                      

                      
                        
                        

                        Exhibit
10.12

                      

                    

                     

                     

                     

                  

                

              

            

          

        

        
          
            
              
                
                  
                    	 
      	 
      	
                            to
      Atari of payment to Transmission Games of all amounts payable to
      Transmission Games in connection with Deliverables in­cluded in this
      Milestone and acknowledg­ment executed by a duly authorized officer of
      Transmission Games of receipt of such amounts.

                          	 
      	 
      
	 
      	
                            October
      1, 2008

                          	
                            Pre-Beta

                            -
      Localization Kit ready for full usage and implementation (but allowable
      for minor adjustments based on game finalization and delivery of the Beta
      MS)

                            -
      Integration Kit

                            -
      evidence in a form reasonably acceptable to Atari of payment to
      Transmission Games of all amounts payable to Transmission Games in
      connection with Deliverables in­cluded in this Milestone and
      acknowledg­ment executed by a duly authorized officer of Transmission
      Games of receipt of such amounts.

                          	
                            500,000.00

                          	 
      
	
                            4

                          	
                            November
      4, 2008

                          	
                            Consumer
      demo for PSN/XBL/PC cover- mount submitted for approval.

                            -
      evidence in a form reasonably acceptable to Atari of payment to
      Transmission Games of all amounts payable to Transmission Games in
      connection with Deliverables in­cluded in this Milestone and
      acknowledg­ment executed by a duly authorized officer of Transmission
      Games of receipt of such amounts.

                          	
                            N/A

                          	 
      
	
                            5

                          	
                            November
      20, 2008

                          	
                            Beta

                            -
      evidence in a form reasonably acceptable to Atari of payment to
      Transmission Games of all amounts payable to Transmission Games in
      connection with Deliverables in­cluded in this Milestone and
      acknowledg­ment executed by a duly authorized officer of Transmission
      Games of receipt of such amounts.

                          	
                            1,000,000.00

                          	 
      
	
                            6

                          	
                            December
      12, 2008

                          	
                            PSN/XBL/PC
      covermount demo approved. - evidence in a form reasonably acceptable to
      Atari of payment to Transmission Games of all amounts payable to
      Transmission Games in connection with Deliverables in-

                          	
                            N/A

                          	 
      

                  

                

              

            

          

           

           

          
            
              
              

            

            
              -69-

              
                

              

            

            
              
              

              Exhibit
10.12

            

          

           

           

           

           

           

        

        
          
            
              
                
                  
                    
                      	 
      	 
      	
                              cluded
      in this Milestone and acknowledg­ment executed by a duly authorized
      officer of Transmission Games of receipt of such amounts.

                            	 
      	 
      
	
                              7

                            	
                              January
      20, 2009

                            	
                              Gold
      Master Submission

                              -
      evidence in a form reasonably acceptable to Atari of payment to
      Transmission Games of all amounts payable to Transmission Games in
      connection with Deliverables in­cluded in this Milestone and
      acknowledg­ment executed by a duly authorized officer of Transmission
      Games of receipt of such amounts.

                            	
                              500,000.00

                            	 
      
	
                              8

                            	
                              February
      20, 2009

                            	
                              Gold
      Master Approval (excluding the Non- EFIGS Localizations)(as defined in
      Exhibit C); full source and archival
      delivery includ­ing highest-resolution a/v
    assets

                            	
                              950,000.00

                            	 
      
	
                              -
      evidence in a form reasonably acceptable to Atari of payment to
      Transmission Games of all amounts payable to Transmission Games in
      connection with Deliverables in­cluded in this Milestone and
      acknowledg­ment executed by a duly authorized officer of Transmission
      Games of receipt of such amounts.

                            
	
                              9.

                            	
                              March
      13, 2009

                            	
                              Gold
      Master Approval - Non-EFIGS Local- izations and full source and archival
      deliv­ery in connection therewith

                              -
      evidence in a form reasonably acceptable to Atari of payment to
      Transmission Games of all amounts payable to Transmission Games in
      connection with Deliverables in­cluded in this Milestone and
      acknowledg­ment executed by a duly authorized officer of Transmission
      Games of receipt of such amounts.

                            	
                              50,000

                            	 
      
	 
      	 
      	
                              TOTAL

                            	
                              $7,250,000.00

                            	 
      

                    

                  

                

              

            

          

        

         

         

        Completion
Bonus, if applicable (in accordance with Exhibit
D):                                                                                                                                                
$250,000.00

         

        Schedule
1

         

        Heroes
Over Europe – MILESTONE SCHEDULE PAYABLE TO TRANSMISSION GAMES PURSUANT TO
Section 2.2(c).

         

         

        
          
            
              	
                      Milestone
      16

                    	
                      $US
      604,500 

                    	
                      8th
      April 2008

                    

            

          

        

         

         

        
          
            
            

          

          
            -70-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

        
 

        
          
            
              	
                      Milestone
      17

                      Milestone
      18

                      PS3
      Alpha

                      360
      Alpha

                      PC
      Alpha

                      Pre-Beta

                      PS3
      Full Beta

                      360
      Full Beta

                      PC
      Full Beta

                      PS3
      First Submission

                      360
      First Submission

                      PC
      First Submission

                      Second
      Submission

                      Approval

                      Street

                      Total
      Cost to Complete:

                    	
                      $US
      387,000

                      $US
      593,000

                      $US
      224,500

                      $US
      112,250

                      $US
      112,250

                      $US
      420,000

                      $US
      140,500

                      $US
      70,250

                      $US
      70,250

                      $US
      72,000

                      $US
      36,000

                      $US
      36,000

                      $US
      0

                      $US
      22,000

                      $US
      0

                      $US
      2,900,500

                    	
                      13th
      May 2008

                      17th
      June 2008

                      1st
      August 2008

                      8th
      August 2008

                      15th
      August 2008

                      16th
      September 2008

                      4th
      November 2008

                      11th
      November 2008

                      18th
      November 2008

                      12th
      December 2008

                      19th
      December 2008

                      23rd
      December 2008

                      20th
      January 2009

                      3rd
      February 2009

                      10th
      March 2009

                    

            

          

        

         

         

         

        
          
            
            

          

          
            -71-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

         

         

        EXHIBIT
C

        SPECIFICATIONS 

        
          

        

         

        HEROES
OVER EUROPE

         

        Localizations (Licensor to perform
integration services, in each case in accordance with and subject to Section
1.11): U.K. English,
French, Italian, German, Spanish, Korean, Traditional Chinese, Japanese, and, in
accordance with Section
1.11 and for PC Platform only, Russian and Polish. The Korean, Traditional
Chinese and Japanese Localizations shall be referred to herein as the
"Non-EFIGS
Localizations".

         

        Heroes
over Europe is the sequel to the successful WWII arcade flight sim/shooter,
Heroes of the Pacific. Heroes over Europe follows the real-life fortunes of a
select number of fighter squadrons from Great Britain, America and New Zealand
and their involvement in some of the key historical air battles of WWII. From
the Blitz of London in July 1940 to Berlin, 1945.

         

        On PS3,
Xbox360 & PC, featuring multiple, non-intersecting rich and detailed single
player storylines, coupled with full multiplayer support across LAN, Xbox Live
and PS Network.

         

        USPs
include:

         

        
          	
                  ·  

                	
                  Ace
      kill – the ability to fill your "Ace kill" meter through skillful flying
      and then focus to blast your enemy from the sky with one or two carefully
      placed shots.

                

        

         

        
          	
                  ·  

                	
                  Aerial
      scenery – use clouds, the sun and your enemy's contrails to hide, evade
      enemies on your tail, dive bomb attack and predict the enemy's next
      move.

                

        

         

        
          	
                  ·  

                	
                  Dynamic
      Camera – the player's plane sweeps across the screen responding to every
      command. Exquisitely realized scenery stretches away to the horizon, all
      the action visible, no longer impeded by an awkwardly placed plane model.
      The player can now execute the most complex aerial maneuvers without
      disorientation and keep the enemy firmly in their
  sights.

                

        

         

        
          	
                  ·  

                	
                  Fully
      customizable aircraft – Players can fully customize their aircraft in
      multiplayer with colour, transfers and insignia giving them the true
      individuality of the WWII flying
Aces.

                

        

         

        Playing
through 16 challenging and diverse missions with currently the best dog-fighting
experience on any console; players no longer have a repetitive fire and forget
at a tiny blip on the map experience. Make strategic use of the aerial and
ground terrain, and ace kill feature to hunt and take down the enemy.
Beautifully rendered environments spanning the iconic White Cliffs of Dover, the
Italian Alps, the English Channel and the faithfully recreated cities of 1940's
Berlin and London.

         

            Definitive
GDD and TDD to be delivered with Milestone 2.

         

            Content
recoupable as a "Recoupable License Content" cost: all costs incurred by Atari
for creating or licensing content, technology or elements incorporated in,
integrated into or embodied in the Title, including but not limited to the costs
of the costs of preparing translations of audio-visual assets to be integrated
in creating Localizations.

         

         

        
          
            
            

          

          
            -72-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

         

        EXHIBIT
D

        COMPENSATION SCHEDULE 

        
          

        

         

        HEROES
OVER EUROPE

         

        I.     
Budget:

         

        Subject
to the terms and conditions of this Agreement, the Budget for creating the Title
shall be Seven Million Two Hundred Fifty Thousand United States Dollars (U.S.
$7,250,000.00), which Atari has or shall pay to Licensor as Milestone payments
pursuant to the Milestone, Deliverable and Payment schedule contained in Exhibit B, all of
which (together with the Completion Bonus) shall be fully recoupable advances
against royalties, if any. Atari shall pay Licensor each Milestone payment
within thirty (30) days after the date on which Atari accepts (pursuant to
Section 2.1) the associated Milestone. In addition, Atari shall pay Licensor the
Completion Bonus in the event that (i) the Gold Master approval date for all
Title Platform versions occurs by February 20, 2009 and (ii) the average Game
Ranking Score for the PlayStation 3 and Microsoft Xbox 360 Title Platform
versions is at least 80%.

         

        Notwithstanding
anything to the contrary herein, Atari agrees to satisfy a portion of the
foregoing Milestone payment obligation to Licensor with respect to the first
Milestone ("Signing") by paying a Three Hundred Eighty-Seven Thousand U.S.
Dollar ($387,000.00) portion of the Two Million Two Hundred-Fifty Thousand U.S.
Dollar payment associated with such first Milestone, earned by Licensor and
payable by Atari upon execution of this Agreement and in any case with
confirmation of wire transmission of funds to be provided no later than June 24,
2008 directly to Developer on behalf of Licensor and on Licensor's account in
accordance with the Developer wire instruction set forth below. The balance of
the first Milestone payment shall be payable directly to Licensor upon execution
of this Agreement, in accordance with the Licensor wire instruction set forth
below, and in any case with confirmation of wire transmission of funds to be
provided no later than June 24, 2008.

         

        Developer wire
instruction:

         

        Name: IR Gurus PTY LTD

        SWIFT Code:
WPACAU2S

        Account
#: 351687

        Bank: Westpac Bank 

        Beneficiary
Address:

        355
Spencer Street West 

        Melbourne
VIC Australia 3003

         

        Licensor wire
instruction:

         

        Name:
Red Mile Entertainment, Inc.

        Bank of America City: Greenbrae State:
California

        ABA
routing number: 026009593

        Account
Number: 0016917-11089

        SWIFT
Code: BOFAUS3N

        Phone:
415-925-2944

        Beneficiary
Address:

        223
San Anselmo Ave #3

        San
Anselmo, CA 94960

         

        II.   
Royalties:

         

        Subject
to the terms and conditions of this Agreement, including any Royalty Reduction,
Atari shall pay Licensor a royalty, subject to the Late Adjustment (if
applicable) of thirty percent (30%) of Net Receipts of the Title and, in the
case of Net Receipts of the Exclusive Derivative Products, a five percent (5%)
royalty, provided in each instance that: (a) Atari shall first recoup all
payments made to Licensor as set forth under Section I (Budget) of this Exhibit
and all Recoupable Content Costs, such recoupment to be at the rate of thirty
percent (30 %) of Net Receipts;
and (b) the foregoing thirty percent (30%) rates for the payment and recoupment
of royalties by Atari shall be increased to thirty-five percent (35%) in the
event that (i) the Game Ranking Scores for each of the PC, PS3 and Xbox 360
Platform Title versions average eighty-five percent (85%) or better and (ii)
the
Gold Master approval date for all Title Platform versions occurs by
February 20, 2009. All Platform Title versions, and all SKUs of each such Title
version, shall be cross-collateralized for purposes of recoupment by Atari of
payments made to Licensor under Section (Budget) above.

         

         

         

        
          
            
            

          

          
            -73-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

        
 

         

        EXHIBIT
E

         

        FORM OF DELIVERABLE
APPROVAL/DISAPPROVAL FORM

         

        This
document represents official notice to licensors/Contractors

         

        of
approval or disapproval of submitted Deliverables.

         

        oDeliverable Approved

         

        oDeliverable
Rejected

         

        Licensor
Name:

        Game:

        Platform:

        Date
Submitted by Licen-

        sor/Contractor:

        Contract
Payment Date:

        Payment
Amount:

        Deliverable/Milestone
Number:

         

        Comments:

         

         

         

        Signature
required:

         

        1.
Producer:                                                                                                      
                           
           Date:                                                                                           

         

            Print
Name:                                                                                                               
                        

         

        2. Exec.
Producer:                                                                                                                     
                 Date:                     
                                                              

         

        3. Legal:                                                                                                                                 
                      
Date:                                                                         
          

         

        

        COPY TO
FINANCE

         

         

        
          
            
            

          

          
            -74-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

         

        EXHIBIT
F

        FORM OF
INDUCEMENT LETTER

        
          
            

          

        

         

        Letter
Agreement

         

        Reference
is made to the agreement dated concurrently herewith (the "Publishing
Agreement") between Red Mile Entertainment, Inc., a Delaware corporation,
with offices at 223 San Anselmo Ave., Ste. 3, San Anselmo, CA 94960, as the
producer and rights holder ("Red
Mile") responsible for delivery of the services of IR Gurus Interactive
Pty Ltd., a company organized under the laws of Australia with a principal place
of business at Level 3, 355 Spencer Street, West Melbourne, Victoria 3003
Australia; facsimile: +613 9328 8332 (the "Ser­vice
Provider") on the one hand, and Atari Interactive, Inc., a Delaware
corporation, with offices at 417 Fifth Ave., New York, NY 10016 (the "Company"),
with respect to the software game currently known as "Heroes over Europe"
(the "Game")
being developed by the Service Provider.

         

        This
Letter Agreement is made between and among Red Mile, the Service Provider and
the Company.

         

        I. As an
Inducement to the Company and Red Mile to enter into the Publishing Agreement
and this Letter Agreement, Service Provider hereby represents, warrants, and
agrees as follows:

         

        1. That
Service Provider has entered into a valid and subsisting agreement, as amended
and in full force as of the date hereof (the "Red
Mile Agreement") with Red Mile covering the rendition of Service
Provider's services to Red Mile that are needed to develop the Game (the "Development")
and grant the intellectual prop­erty rights and other rights with
respect to the Game, such that Red Mile has and shall have the rights provided
by the Red Mile Agreement (the "Licensing")
and the full right and authority to enter into the Publishing Agreement,
to furnish to Company the product of the services of Service Provider and to
grant the rights granted to Company upon the terms and conditions specified
therein, in each case as pertains to the Develop­ment and
Licensing.

         

        2. That
Service Provider is familiar with each and all of the terms, covenants,
conditions, representations, acknowledgements and warranties in the Publishing
Agreement with which it has been provided pertaining to the Development and/or
Licensing and hereby consents to the execution thereof and acknowledges that
per­formance by Red Mile of the terms thereof will not conflict with or
violate the terms of the Red Mile Agree­ment; that, in the event that
Service Provider is entitled to terminate the Red Mile Agreement with immediate
effect, Service Provider will nevertheless be bound by and will duly observe,
perform and comply with each and all of the terms, covenants and conditions of
the Red Mile Agreement on the part of Service Provider to be performed and
complied with but in that event will do so for the benefit of the Company; and
in that event Service Provider shall render to the Company all of the services
and grant to the Company all of the rights which are to be rendered or granted,
as the case may be, by Service Provider pursuant to the Red Mile Agree­ment,
even if Red Mile shall be dissolved or shall otherwise cease to exist; and in
that event Service Provider represents, acknowledges, and warrants to the
Company in
the same manner all matters and things that Service Provider represented,
acknowledged, or warranted to Red Mile in the Red Mile Agreement

         

        3. That
Service Provider is under no obligation or disability by law or otherwise which
would prevent or restrict Service Provider from performing and complying with
all of the terms, covenants and conditions of the Publishing Agreement on the
part of Service Provider to be performed or complied with.

         

        4. That,
while Service Provider is not entitled to terminate the Red Mile Agreement with
immediate ef­fect, has not in fact terminated such agreement due to an
uncured breach relating to the subject matter of the Publishing Agreement (the
"Red
Mile Termination"), Service Provider will look solely to Red Mile or its
as­sociated or subsidiary companies and not to the Company for all
compensation and other remuneration for any and all services which Service
Provider may render and grant to the Company under the Publishing
Agree-

        

         

        
          
            
            

          

          
            -75-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

         

        ment,
provided that notwithstanding anything herein to the contrary Company shall not
be liable to pay any compensation or other remuneration to Service Provider to
the extent that it is also liable to pay such amount to Red Mile or its
successors pursuant to the Publishing Agreement. As a condition to Company's
obligations in this paragraph (I)(4) and paragraph (11)(1) hereinbelow, Service
Provider shall (i) use all commercially rea­sonable efforts to recover any
compensation or other remuneration from Red Mile in accordance with the Red Mile
Agreement prior to the Red Mile Termination and (ii) upon the Red Mile
Termination, assign Service Providers rights and causes of action against Red
Mile under the Red Mile Agreement to Company.

         

        5. That the
Company shall be entitled to seek equitable relief against Service Provider, by
injunction or otherwise, to restrain, enjoin, and/or prevent the violation or
breach by Service Provider of any obligation of Service Provider to be
performed, as provided in the Publishing Agreement and not cured during the
applica­ble cure period thereunder, and/or the violation or breach by
Service Provider of any obligations or agreements under this present instrument
and not cured after notice and a reasonable opportunity to cure.

         

        6. That
Service Provider will indemnify and hold Company harmless from and against any
and all taxes which Company is obligated to pay and any and all liabilities
(including judgments, penalties, interest, dam­ages, costs, expenses and
reasonably attorneys' fees) obtained against, opposed or suffered by the Company
or which the Company incurs, in each case by reason of the Company's failure to
deduct and withhold from the compensation payable under the Publishing Agreement
any amounts required or permitted to be deducted and withheld from the
compensation of an employee of Service Provider.

         

        7. That
Service Provider will not amend or modify the Red Mile Agreement in any
particular way that would
prevent or interfere with the performance of Service Provider's services for the
Company, pursuant to the Publishing Agreement, including the Development and
Licensing.

         

        II. As an
Inducement to the Service Provider and Red Mile to enter into this Letter
Agreement, Company hereby represents, warrants, and agrees as
follows:

         

        1. That
Company is familiar with each and all of the terms, covenants, conditions,
representations, acknowledgements
and warranties of the Red Mile Agreement with which it has been provided
concerning pay­ment of payment of monies including royalties relating to the
Heroes over Europe property; that in the event that Service Provider is entitled
to terminate the Red Mile Agreement with immediate effect due to an uncured
breach by Red Mile relating to the Heroes over Europe property, Company, subject
to the provisions of Para­graph (1)(4) above, will be bound by and will duly
observe, perform and comply with each and all of the terms, covenants and
conditions in the Red Mile Agreement concerning payment of monies including
royalties relating to the Heroes over Europe property and this Letter Agreement
on the part of Red Mile to be performed and complied with, even if Red Mile
shall be dissolved or shall otherwise cease to exist. In addition, the event of
the Red Mile Termination, Company shall automatically be deemed to have granted
to Service Provider the same rights in and to the Developer First Refusal (as
defined in the Publishing Agreement) as granted by Company to Red Mile in the
Publishing Agreement.

         

        2. That
Company is under no obligation or disability by law or otherwise which would
prevent or restrict Company
from performing and complying with all of the terms, covenants and conditions in
the preceding paragraph II(1).

         

        3. That
Company will not amend or modify the Publishing Agreement in any particular way
that would prevent
or interfere with Company's compliance with the provisions of this Letter
Agreement.

         

        As an
Inducement to the Service Provider to enter into this Letter Agreement, Red Mile
hereby represents, warrants, and agrees that to the extent that this Letter
Agreement is inconsistent with any rights which Red Mile has against the Service
Provider under or in relation to the Game and the Red Mile Agreement, this
Let­ter Agreement shall prevail; and agrees that, notwithstanding anything
to the contrary, in the event that Red Mile goes into Chapter 11 or if the
Service Provider becomes entitled to terminate the Red Mile Agreement pursuant
to clause 16.3 of the Agreement of 3 March 2006 between Red Mile and the Service
Provider, Red

        

         

        
          
            
            

          

          
            -76-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

        Mile's
rights to royalties which would otherwise be payable to the Service Provider
shall immediately termi­nate, so that the Company can pay those royalties
directly to the Service Provider.

         

        Executed
as an Agreement:

         

        
          
            
              
                
                  	
                          For
      and on behalf of Atari In­teractive, Inc

                           

                          [DO
      NOT SIGN – TEMPLATE ONLY]

                        	 
      	
                          For
      and on behalf of Red Mile Entertainment, Inc

                           

                          [DO
      NOT SIGN – TEMPLATE ONLY]

                        	 
      	
                          For
      and on behalf of IR Gurus Interactive Pty Ltd

                           

                          [DO
      NOT SIGN – TEMPLATE
ONLY]

                        

                

              

            

          

        

         

        Dated: June
2008

         

         

        
          
            
            

          

          
            -77-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

         

         

         

        GLOSSARY ADDENDUM

        
          	
                   

                  "Alpha" means a code- and
      feature-complete version of the Title, ready for full testing. Without
      limiting the generality of the foregoing, for the Alpha version of the
      Title: all features are functional and the Title can be played from
      beginning to end in all modes using all options; a small percentage of
      placeholder assets (art, music, sound, full-motion video/cinematics, etc.)
      is acceptable; can have bugs and crashes, but cannot have missing assets
      that prevent access to testing game features, modes, or options; for most
      games, this will be the first version submitted to QA for full testing;
      and (in the case of console-platform versions) Title is potentially ready
      for pre-tech submission to the applicable third-party platform
      manufacturer.

                

        

         

        "Ancillary
Products" shall mean any and all ancillary products, including but not
limited to, hint books, strategy guides, photographs, posters and toys derived
from, based on, or in any way related to, the Title, and, only if in production,
in negotiation or commercially released prior to one (1) year following
expiration or earlier termination of the Term, any motion pictures and
television shows derived from, based on, or in any way related to, the
Title.

         

        "Atari
Distribution Option" shall have the meaning provided in Section 12 of
this Agreement.

         

        "Atari's
Representative" shall mean Robert Stevenson, or such other individual or
individuals who may be appointed from time to time by Atari to coordinate with
Licensor on behalf of Atari with respect to this Agreement.

         

        "Background
Intellectual Property" shall mean the Intellectual Property of Licensor
identified under the heading "Background Intellectual Property" in Exhibit
A.

         

        "Beta"
means a version of the Title in which all art, design, and code are
complete. Without limiting the generality of the foregoing, for the Beta version
of the Title: all art is final, design tuning is completed, and all gameplay is
fully functional and more robust than Alpha; in, the event that Milestones
require simultaneous delivery of foreign-language localized versions of the
Title, or in the event that the Title contains multiple languages, all languages
must be implemented; some minor play balancing and game tuning remain; and (in
the case of console-Platform versions) Title is ready for pre-tech submission to
the applicable third-party Platform manufacturer.

         

        "Budget"
shall mean the development budget set forth under the "Budget" heading of
the Compensation Schedule (Exhibit
D).

         

        "Change of Control" shall mean
a change of ownership or control of Licensor or of its business performing the
work that is the subject matter of this Agreement, such that: (i) a single
Person having direct or indirect majority ownership or control of Licensor
ceases to have such ownership or control, (ii) there is a change of more than
fifty percent (50%) in the composition of any group of Persons having direct or
indirect majority ownership or control of Licensor, but not including changes
which merely substitute a Person with another Person under common ownership or
control with the Person removed, or (iii) Licensor sells substantially all of
its business or that portion of its business, or substantially all of the assets
of such business or portion, associated with the subject matter of this
Agreement to a Person unaffiliated with Licensor.

         

        "Confidential
Information" shall mean all information relating to the Deliverables and
Title or to the business of either party to this Agreement and their respective
affiliates, including without limitation the existence of the Deliverables or
Title, either party's involvement with the Deliverables or Title, the terms of
this Agreement or of any contract, subcontract, or other agreement, relationship
or arrangement relating to services or materials of any nature to be provided
with respect to the Deliverables or Title, the identities of the Persons
providing such services and materials and the terms under which such services or
materials are provided or to be provided, the identity of customers and
prospects of either party or its affiliates, development or marketing plans for
the Deliverables or Title or for any other product of either party or its
affiliates, cost information, specifications, computer programs and related
Source Code and Design Documentation, engineering notebooks, drawings, patent
disclosures and applications and their status, presentations regarding the
Deliverables or Title, market studies, sales information, nonpublic financial
information, and any other information designated in writing or identified in
this Agreement as confidential, provided, that no Intellectual Property that
Atari owns pursuant to Section 4 shall be deemed Confidential Information of
Licensor.

         

        "Content"
shall mean any and all Intellectual Property Rights in and to that
certain property currently known as "Heroes over Europe", including, but not
limited to, the name and trademark of the Title, storylines, characters, names,
symbols, titles, logos, artwork, music, game concept, designs, visual
representations and likenesses, worlds, and universe of the Title, i.e., the
content of the Title.

         

        "Credit
Schedule" shall mean the list of credits and/or notices set forth under
the "Credits" heading of Exhibit
A.

         

        
          
            
            

          

          
            -78-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

         

        "Deliverable"
shall mean an item identified as a deliverable in the Milestone,
Deliverable and Payment Schedule in Exhibit B.

         

        "Derivative
Work" shall mean a work which is based upon one or more preexisting
works, such as, but not
limited to, a revision, enhancement, modification, translation, abridgment,
condensation, expansion, transfer to another medium, or any other form in which
such preexisting works may be recast, transformed or adapted, and which, if
prepared without authorization of the owner of the copyright in such preexisting
works, would constitute a copyright infringement. For purposes hereof,
Derivative Work shall include any compilation that incorporates such a
preexisting work.

         

        "Design
Documentation" shall mean all technical documentation in connection with
the Deliverables or Title, including without limitation specifications, designs,
descriptions, flow charts, Source Code, data dictionaries, data structure
descriptions, file layouts, schematic diagrams, timing diagrams, circuit
layouts, chip plots, chip masks, drawings and blueprints.

         

        "Developer"
shall mean Transmission Games.

         

        "Developer
First Refusal" shall mean the Right of First Negotiation and the First
Refusal Option of Transmission Games to develop any Exclusive Derivative
Products of the Title for any of the PC, PlayStation 3, Microsoft Xbox 360
Platforms or Nintendo Wii Platforms. In the event of a material uncured (within
the applicable cure period) breach by Transmission Games under the applicable
development agreement for any of the foregoing developments, the Developer First
Refusal right shall automatically be deemed to be rescinded and shall be null
and void.

         

        "Development
Aids" shall mean any device, programming, documentation, media or other
materials, including compilers, "workbenches," programming tools, and
higher-level or "proprietary" languages used by Licensor or required by Atari
for the development, maintenance and implementation of any Deliverables or
Title.

         

        "DLC"
shall mean any downloadable content that Developer may create for the Title,
intended to enhance or promote the Title, which Atari may offer to end users
either for sale or as free bonus or promotional content. For the avoidance of
doubt, DLC shall be deemed to be part of the Title for purposes of this
Agreement.

         

        "Exclusive
Derivative Products" shall have the meaning provided in Section
4.7.

         

        "Final
Acceptance" shall mean Atari's acceptance pursuant to Section 2.1 of this
Agreement of the final Milestone to be accepted under the Milestone
Schedule.

         

        "Final
Delivery Date" shall mean the date on which the final Deliverables must
be delivered to Atari as set forth on the Milestone Schedule.

         

        "First
Refusal Option" shall mean the right of a Person (the "First
Person") in certain situations to match the terms and conditions of any
offer for the right to develop a software game (the "Opportunity")
that (i) another Person (the "Second Person")
receives during the Term of this Agreement, (ii) the Second Person wishes
to accept and (iii) is less favorable to the Second Person than the best offer
made by the First Person with respect to the applicable Opportunity during the
applicable Right of First Negotiation (a "Third-Party
Offer"). The First Refusal Option shall be exercised as follows. When the
Second Person receives a Third-Party Offer that it would otherwise accept, the
Second Person shall deliver to the First Person a copy of the applicable
solicitation for bids (if any) and a bona fide and complete written description
of such Third-Party Offer (the "Description").
The First Person shall then have five (5) business days after receipt (or
deemed receipt, whichever is earlier) of such information to determine whether
or not to match the terms and conditions of such Third-Party Offer. If the First
Person elects to match the terms and conditions of the Third-Party Offer, the
First Person shall prior to the expiration of said 5­business-day period
accept the terms and conditions of such Third-Party Offer in writing and the
parties shall thereafter use commercially reasonable efforts and negotiate
exclusively to consummate the transaction promptly, provided that if the
transaction is not consummated within thirty (30) days neither party shall have
any further obligation to continue such negotiations. If the First Person fails
to match the terms and conditions of the Third-Party Offer in writing within
said 5-business-day period, the Second Person shall be free to accept the
Third-Party Offer it would otherwise have accepted, provided that if any of the
terms contained in the Description are materially changed during the
negotiations with the successful bidder, the First Refusal Option shall apply
again to the modified bid, but with said 5-business-day period shortened to
three (3) business days.

         

         

        
          
            
            

          

          
            -79-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

        "Game
Ranking Score" means, for the applicable Title Platform version, the
score (expressed as a percentage) determined by averaging all rankings for the
applicable Title Platform version appearing on the Metacritic (http:,','www.metacrilic.com)
website on the date that is ninety (90) days following the Initial
Release of the applicable Platform Title version in the earlier to occur of the
Domestic Territory or the International Territory.

         

        "Game
Type" means a World War II air-combat flight simulation.

         

        "Gold
Master" means the version of the Title unconditionally approved by the
applicable platform manufacturer (or, in the case of personal computer titles,
by Atari as being completely bug-free and ready for commercial manufacture), as
complete and suitable for release into the final manufacturing process for
commercial release as an Atari product. Without limiting the foregoing, the Gold
Master shall be readily manufacturable on the media appropriate for all
applicable platforms and readily playable on such platform(s) without material
defects from such media

         

        "Holdback
Period" means the period from the Effective Date until one (1) year
following Initial Release.

         

        "In-House"
means Licensor's self-publishing of a product and sale of product inventory
directly to a retailer or distributor without the involvement of any third-party
publisher; provided, for the avoidance of doubt, that In-House publishing may
include the provision of Distribution Services (as defined below) only by
third-party publisher(s). As used herein, "Distribution Services" shall mean the
distribution of physical and/or electronic Title units within the applicable
territory, consistent with standard industry practices and excluding
responsibility for marketing or manufacturing such Title units.

         

        "Initial
Release" in connection with a specified subject matter, shall mean the
first commercial shipment of manufactured units of such subject matter sold to
the trade for ultimate resale to consumers.

         

        "Integration
Kit" shall have the meaning provided in Section 1.11.

         

        "Instructional
Materials" shall mean the printed materials intended for customer or
end-user use, including without limitation user's manuals and instructions for
using the Deliverables or Title.

         

        "Intellectual
Property Right" shall mean the rights in and to, including, without
limitation, the right to use and to exclude others from access to or use of,
Intellectual Property.

         

        "Intellectual
Property" in connection with a specified subject matter shall mean all
U.S. and foreign patents, trade secrets, Technology, trademarks, trade names,
copyrights, moral rights, designs, rights of publicity, mask work rights,
utility models, and other industrial or intangible property rights of a similar
nature; all grants and registrations worldwide in connection with the foregoing
and all other rights with respect thereto existing other than pursuant to grant
or registration; all applications for any such grant or registration, all rights
of priority under international conventions to make such applications and the
right to control their prosecution, and all amendments, continuations, divisions
and continuations-in-part of such applications; and all corrections, reissues,
patents of addition, extensions and renewals of any such grant, registration or
right.

         

        "Last
Right to Match" means the right of a Person (the "First
Person") to match the terms and conditions of an offer for the sale or
provision of rights, goods or services or the grant of a license (the "Opportunity")
that another Person (the "Second
Person") receives during the Term of this Agreement. The Last Right to
Match shall be exercised as follows. When the Second Person desires to contract
with respect to the Opportunity, the Second Person shall solicit bids from
Persons it determines to be qualified and able to perform. Once the Second
Person selects from among the bids it receives the bid it would otherwise
accept, the Second Person shall deliver to the First Person a copy of the
solicitation for bids and a copy of the bid it would otherwise accept. The First
Person shall then have seven (7) business days after receipt of such information
to determine whether or not to match the terms and conditions of such bid. If
the First Person elects to match the terms and conditions of the bid, the Second
Person shall promptly contract with the First Person for the provision of the
goods and/or services in question on the terms and conditions of the bid, but
subject to Persons' (Bidders') prior consent. If the First Person elects not to
match the terms and conditions of the bid or does not give a written acceptance
to match the terms and conditions of the bid to the Second Person within seven
(7) business days, the Second Person shall be free to accept the bid it would
otherwise have accepted, provided that if the terms and conditions of the
accepted bid are changed in any material manner during the negotiations with the
successful bidder, the Last Right to Match shall apply again to the modified
bid.

         

         

        
          
            
            

          

          
            -80-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

         

        "Late
Adjustment" means a reduction in the otherwise applicable royalty rate
equal to 0.5% of Net Receipts for each month or portion thereof beyond the
scheduled delivery date that an approved Title Platform version Gold Master is
delivered.

         

        "Licensor
Insolvency Event" has the meaning provided in Section 14.5. 

         

        "Licensor
Trademarks" means the RED MILE trademark, trade name and
logo.

         

        "Localization"
means any translation of the Title to another broadcast standard (i.e.,
NTSC to PAL) and/or to a language other than United States English.

         

        "Localization
Kit" has the meaning provided in Section 1.11.

         

        "Marketing
Budget" means the overall budgeted marketing plan for the Title,
including but not limited to items such as MDF (as defined in the Royalty
Addendum); coop advertising; creation and production of creative, marketing,
advertising and promotional assets and elements; web advertising; print
advertising; television and radio advertising; cross-promotional initiatives,
public relations; email marketing; media buys; and press tours.

         

        "Milestone
Delivery" shall mean delivery by Licensor to Atari of all materials
specified for a particular Milestone, as set forth in the Milestone
Schedule.

         

        "Milestone
Schedule" shall mean the
schedule of development increments with respect to this Agreement (each a
"Milestone"),
as
set forth under the
Milestone, Deliverable and Payment Schedule in Exhibit
B.

         

        "Object
Code" shall mean computer instructions, expressed substantially or
entirely in binary form, which are directly executable by a computer after
suitable processing but without intervening steps of compilation or
assembly.

         

        "Person"
shall mean a natural person, a corporation, a partnership (general or limited),
a joint venture, an association, a trust or any other organization or entity
including a government or political subdivision or an agency or instrumentality
thereof.

         

        "Platforms"
shall mean the Sony Playstation 3, Microsoft Xbox 360 and Windows
personal computer (PC) platforms, and their respective successor
platforms.

         

        "Port"
means any conversion, transfer or re-work of the Title to operate on any
platform other than the Platforms, and includes all SKUs of the
converted/transferred/reworked Title appearing on each such new
platform

         

        "Program
Error" means any material deviation from the Specifications that has not
been agreed upon by Atari and Licensor, in writing, or any material deviation
from commonly accepted standards for normal and correct operation of game
software programs, including, but not limited to, events or occurrences where
the Title abnormally ceases functioning, produces incorrect or misleading
information, erroneously interprets information given to it, or is subject to
repeatable phenomena which render the Title commercially
unsuitable.

         

        "Recoupable
Content Costs" means the
cost of licensed and/or created content negotiated and/or secured by Atari for
or in connection with the Title, the cost of which is to be recouped from
royalties payable to Licensor hereunder, as specified in Exhibit
C.

         

        "Right
of First Negotiation" means the right of a Person (the "First
Person") to submit the first bid to another Person (the "Second
Person") for the sale or provision of rights, goods or services or the
grant of a license (the "Opportunity")
with respect to which the First Person has the Right of First
Negotiation. The Right of First Negotiation shall be exercised as follows.
Whenever the Second Person desires to exploit an Opportunity for which the First
Person has the Right of First Negotiation, the Second Person shall request that
the First Person submit a bid regarding the Opportunity. If the First Person
intends to exercise its Right of First Negotiation, it must submit a bid in
response to the Second Person's request within twelve (12) business days. If the
First Person does submit a bid, both parties shall negotiate in good faith over
the bid for a reasonable period of time, not to exceed thirty (30) additional
days. If the parties have not reached agreement in writing regarding the terms
and conditions for the exploitation of the Opportunity within said time period,
or if the First Person fails to submit a bid in a timely manner, the Second
Person shall be free to accept any bid from any other party with respect to the
Opportunity, or the Second Person shall be free not to exploit the Opportunity
at all.

         

        "Royalty
Reduction" shall have the meaning provided in Section 2.2.

         

         

        
          
            
            

          

          
            -81-

            
              

            

          

          
            
            

            Exhibit
10.12

          

        

         

         

        "Sell-off
Period" shall have the meaning provided in Section 16.2

         

        "Sequel"
means a subsequent product in any medium continuing the course of the story (or
representing an earlier phase of the story, commonly referred to as a "prequel")
begun in the Title or derived from the Title and based upon similar
themes.

         

        "Software"
shall mean any and/or all of the following: computer Source Code, generic
code, Object Code, engine, developer's tools and technology, graphic materials,
art work, story lines, music, sound effects, documentation, user manuals and all
other materials, created or developed by or on behalf Licensor as part of its
services to create a Title.

         

        "Source
Code" shall mean computer programming code, other than Object Code, and
related documentation and comments which may be printed out or displayed in a
form readable and understandable by a programmer of ordinary skill.

         

        "Source
Materials" shall mean all Source Code and/or Development Aids and/or
other Software, together with applicable documentation, in each case as and to
the extent necessary to support and maintain all aspects of any Deliverables or
Title or, if applicable, complete development of the Title.

         

        "Specifications"
shall mean the specifications set forth in Exhibit
C hereto.

         

        "Support
Schedule" shall mean the
list of support obligations set forth under the "Support Schedule" heading of
Exhibit
A.

         

        "Technology"
shall mean all discoveries, inventions, writings, know-how, designs,
techniques, methods, formulae, algorithms, procedures and all knowledge or other
information, whether or not the subject matter thereof is patentable,
copyrightable or eligible for mask 'work protection, which are incorporated in
or used in designing, developing or modifying the Deliverables or Title or any
hardware or software component thereof, or are known or become known to Licensor
and are useful in connection therewith, excluding subject matter in the public
domain as of the date hereof or which hereafter enters the public domain through
no fault of Licensor.

         

        "Transmission
Games" means IR Gurus Interactive Pty Ltd, d/b/a Transmission Games, a
company organized under the laws of Australia with a principal place of business
at Level 3, 355 Spencer Street, West Melbourne, Victoria 3003 Australia;
facsimile: +613 9328 8332.

      

       

       

      
        
          
          

        

        
          -82-

          
            

          

        

        
          
          

          Exhibit
10.12

        

      

       

       

    

    
      ROYAL ADDENDUM 

      
        

      

       

      

      1.           
Royalty Provisions

            
Subject to the provisions of this Addendum, Atari shall pay as royalties on the
Title the amounts identified as royalties in the Compensation Schedule (Exhipit D) of this
Agreement.

       

      
        	
                 1.1

              	
                Advances. Any
      payments designated in the Compensation Schedule as advances shall be
      fully recoupable against earned royalties, and shall be non-refundable,
      except as otherwise expressly provided in this Agreement, including
      without limitation in Section 2.2 and 14 of the
  Agreement.

              

      

       

      
        	
                 
      1.2

              	
                 Backup, Promotional
      and Complimentary Copies; Close Outs. No amount shall be credited
      or paid hereunder (i) with respect to any receipts from copies of Title
      distributed by Atari to existing customers as replacement or corrected
      copies, whether provided to such customers under a recall, warranty or
      maintenance policy or otherwise; (ii) with respect to any receipts from
      copies supplied for promotional or demonstration purposes to the press,
      trade, sales representatives, Licensor or potential major accounts; (iii)
      with respect to complimentary copies provided to Licensor; (iv) with
      respect to Close Out Sales made by Atari or (v) on the sale of any Units
      of the Title where the price Atari (or its Affiliate or other third party
      distributor) charges its retail customers for such Units is less than ten
      dollars ($10.00) for console or ($5.00) for personal computer
      (PC).

              

      

       

      
        	
                 
      1.3

              	
                Samples and Locked
      Copies. Without limiting the foregoing, it is further understood
      and agreed (i) that no royalties shall be paid hereunder with regard to
      any "sampler" product that Atari may distribute containing demonstration
      subsets of a Title, and (ii) that in the event Atari shall distribute "key
      locked" or similar demonstration products containing a full implementation
      of a Title which is originally provided in a state inaccessible to the
      user, (x) no royalty shall be payable with respect to such Title unless
      and until the user agrees to pay to unlock such Title or otherwise render
      it accessible, and (y) the Net Receipts with respect to such Title when so
      unlocked or otherwise rendered accessible shall be subject to deduction of
      any amount which thereby accrues to Atari's dealers or distributors as a
      result thereof.

              

      

       

      
        	
                 
      1.4

              	
                Royalties After
      Cancellation by Atari. Should Atari elect to use any of Licensor's
      work product created pursuant to this Agreement in a product released
      subsequent to cancellation of this Agreement under Section 14.1 of this
      Agreement, Licensor shall be entitled to such reduced royalties, as
      determined by Atari in good faith, based upon the proportion of Licensor's
      work product used in Atari's final release of such
  product.

              

      

       

      
        	
                 
      1.5 

              	
                Special Accounting
      Rules.

              

      

       

      
        	
                1.5.1   
       

              	
                International
      Sales.

              

      

       

      
        	
                [1] 
             

              	
                For
      sales outside the United States (the "International
      Territory") for which Licensor is entitled to a royalty based on a
      percentage of the sale price, Atari will make payment to Licensor in U.S.
      Dollars based upon the exchange rate in effect on the day Atari receives
      the receipts of the sale.

              

      

       

      
        	
                [2]    
         

              	
                If
      the payment of royalties to Licensor for sales in any country of the
      International Territory is blocked or subject to restrictions by
      governmental authorities, such royalties may either be held in the
      blocking or restricting country (if permitted by local regulations) or may
      be removed from such country and paid to Licensor, subject to whatever
      restrictions, limitations and/or taxes may be imposed by the government of
      such country. In no event shall Atari be responsible to protect the value
      of sums against currency fluctuation, effects of inflation, or other
      economic or monetary adjustment.

              

      

       

      
        	
                [3]     
         

              	
                If
      the government of a country in the International Territory requires a
      reduction in the royalty rate set forth in this Agreement as a condition
      of approving the payment of royalties to Licensor, Licensor agrees to
      reduce such rate for that
      country so as to provide for the maximum royalty payment allowed by such
      government.

              

      

       

      
        	
                [4]       
       

              	
                When
      deemed reasonably necessary by Atari, Licensor shall enter into separate
      agreements with subsidiary, affiliated or controlled companies of Atari
      for the purpose of facilitating the payment of
  royalties.

              

      

       

      
        
          
          

        

        
          -83-

          
            

          

        

        
          
          

        

         

          Exhibit 10.12

           

        

      

      
        	
                                       
      1.5.2.

              	
                Atari Bundled
      Transactions If Atari sells or licenses a Title containing the
      Deliverables developed under this Agreement with other works or products,
      supplied by Atari, in a package or on a single medium for a single price
      ("Bundled"),
      any royalties due to Licensor based upon Net Receipts of the Title,
      for each Title so sold or licensed shall be computed based on Atari's Net
      Receipts for the entire package or medium, adjusted as follows. The
      royalties computed based upon Net Receipts for such package or medium
      shall be multiplied by the then current suggested retail price of the
      Title, and the result shall then be divided by the sum of the then current
      suggested retail prices of all the works and products, including the
      Title, that Atari includes in such package or medium. Atari shall
      establish a reasonable estimate of the suggested retail price for any
      Bundled work for which there is no prevailing suggested retail price and
      use that value as the suggested retail price of the work for the purposes
      of the royalty calculation defined in this Section. In establishing a
      reasonable estimate of the suggested retail price for works that have no
      prevailing suggested retail price, Atari shall assure that such estimate
      is reasonably related to the value or the sales potential of the work and
      is consistent with suggested retail prices customarily charged in the
      industry.

              

      

       

      
        	
                 
      1.6

              	
                 Distribution by Other
      Means. In the event any Title shall be distributed in any medium or
      by any means for which the calculation of royalties is not provided for
      hereunder, but for which royalties are not excluded hereunder, the parties
      hereto shall be obligated to negotiate with each other in good faith as to
      a fair and reasonable royalty which shall be applicable with respect
      thereto, which royalty shall be commensurate with the royalty rates
      otherwise provided hereunder with respect to such Title, taking into
      account any differences in costs and revenues attributable to the change
      in media or distribution means.

              

      

       

      
        	
                 
      2. 

              	
                Accounting
      and Audit

              

      

       

      
        	
                 
      2.1

              	
                Quarterly Accounting.
      Reporting and payment with respect to royalties shall be on a
      calendar quarterly basis. Prior to payment, Atari shall (i) deduct from
      royalties any taxes, duties or other amounts required by law to be
      withheld by Atari; (ii) deduct or credit such amount, if any, as shall be
      necessary to maintain a reserve for returns equal to thirty percent (30%)
      of the Average Quarterly Royalty (such reserve to be adjusted as soon as
      practicable and at least on a twelve (12) month rolling basis and finally
      liquidated when the last royalty payment hereunder is made); (iii) recoup
      from the royalty any amounts designated as advances against royalties
      which are then recoupable under the terms of such designation; and (iv)
      deduct any additional or other amounts expressly deductible or
      withholdable from royalties hereunder. Within sixty (60) days after the
      close of each calendar quarter, beginning with the first calendar quarter
      in which any royalties are due hereunder, Atari shall provide Licensor
      with a written statement showing the Gross Sales and Net Receipts for such
      calendar quarter, a calculation of the royalties payable to Licensor in
      respect of such period. Each such statement shall be accompanied by
      payment of the amount of royalties due. Licensor shall be deemed to have
      consented to all accountings rendered by Atari and each such statement of
      accounting shall be conclusive, final and binding, unless specific
      objection in writing, stating the basis thereof, is given by Licensor to
      Atari within one (1) year after the date it was rendered. No claim
      concerning a statement or other account rendered by Atari may be made
      unless asserted within one (1) year after the date of Atari's notice
      rejecting such objection or, if Atari fails to give such notice of
      rejection, within one (1) year after the sixtieth (60th) day following
      Licensor's written objection.

              

      

       

      
        	
                 
      2.2

              	
                Examination Rights.
      Licensor 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 Atari, through an independent public accounting firm
      reasonably acceptable to Atari, to examine the books, records and accounts
      of Atari relating to Atari's sales of the Title, for the purposes of
      verifying Atari's compliance with the terms and conditions of this
      Agreement. All information made available to Licensor's representative in
      any such examination shall be and be treated as Confidential Information,
      and prior to any such examination, Licensor's representative shall enter
      into an appropriate confidentiality agreement with Atari. Each such
      examination shall not exceed 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 Atari. Licensor's representative
      shall report to Licensor solely whether Licensor has been overpaid,
      underpaid or properly paid for the period subject to examination. The
      expenses of examination pursuant to this Addendum Section 2.2 shall be
      borne by Licensor; provided, however, that Atari shall be charged for the
      expense of any such examination that establishes an underpayment of
      Licensor in excess of ten percent (10%) of the amount due for
      the

              

      

       

      
        
          
          

        

        
          -84-

          
            

          

        

        
          
          

        

      

       

        Exhibit 10.12

         

      

      
        	
                 

              	
                period
      subject to examination. In the event that such examination reveals any
      overpayment by Atari, Licensor shall refund such overpayment within thirty
      (30) days following Licensor's receipt of such examination
      results.

              

      

       

      
        	
                 
      2.3

              	
                Payment
      of Discovered Underpayment. With respect to any claim by Licensor
      that additional monies are payable by Atari to Licensor pursuant to this
      Agreement based upon such an examination, Atari shall not be deemed in
      breach of this Agreement if, within thirty (30) calendar days after
      Atari'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, Atari shall either: (i) pay such additional monies so
      claimed by Licensor; or (ii) contest such claim, in whole or in part, by
      written notice sent to Licensor.

              

      

       

      
        	
                 
      2.4

              	
                Audit
      Prior to Dispute Resolution. Licensor further agrees that as a
      condition to proceeding with any action or adjudication concerning Atari's
      failure to pay Compensation under this Agreement, Licensor shall first be
      obligated to conduct an examination in accordance with Section 2.2 of this
      Addendum.

              

      

       

      
        	
                3. 

              	
                Certain
      Definitions

              

      

       

            
For purposes of this Addendum, the following terms shall be understood as
defined below:

       

      "Average
Quarterly Royalty" shall mean the mean quarterly royalty amount for those
of the four (4) most recent calendar quarters for which royalties have been
reported under this Agreement.

       

      "Chargebacks"
means, with respect to the Title or the Exclusive Derivative Products, as
applicable, after the Initial Release, deductions taken by a retailer from or
off such retailer's wholesale invoice for units of such Title or the Exclusive
Derivative Products, as applicable for price protection and markdowns, plus an
additional four percent (4%) of Gross Receipts deducted in order to reflect
retailer-level deductions taken for shortages, shipping errors, fines, bad debt,
defective items, early payment, volume discounts, and similar items

       

      "Close
Out Sale"
shall mean any sale of a product at a price thirty three and one third
percent (33 1/3%) or more below Atari's standard wholesale "A" price made with
the intention of discontinuing the product in question and liquidating
inventory.

       

      "Gross
Receipts" means the actual amounts received by Atari or (without
duplication) its affiliates for sale or sublicensing of the Title or the
Exclusive Derivative Products, as applicable, to any third-party.

       

      "Manufacturing Costs" means
the costs of manufacturing and packaging, including license fees, royalties and
other consideration payable to any (if any) Platlbrm manufacturers (e.g., Sony,
Nintendo, and Microsoft), shipping and handling, insurance, and customs and
brokerage fees.

       

      "MDF"
means, with respect to the Title or the Exclusive Derivative Products, as
applicable after the Initial Release, the deduction taken by a retailer from or
off such retailer's wholesale invoice for units of the Title or the Exclusive
Derivative Products, as applicable for amounts spent by such retailer for the
provision of marketing materials and tools to promote the Title or the Exclusive
Derivative Products, as applicable or amounts paid by distributors of the Title
or the Exclusive Derivative Products, as applicable to such retailer for the
same, it being understood and agreed that MDF is to be calculated over the
commercial life of the Title or the Exclusive Derivative Products, as
applicable.

       

      "Net Receipts" means Gross
Receipts, less only the Manufacturing Costs, Chargebacks, MDF, Returns, Licensed
Content costs, content creation costs, and license fees, provided that any costs
for Licensed Content and/or other Atari-provided content that are deemed
Recoupable Content Costs shall not be deducted when calculating Net
Receipts.

       

      "Returns" means defective, overstock and other
returns and markdowns, price protection and the like given in lieu of
returns.

      

      
        
          
          

        

        
          -85-

          
            

          

        

        
          
          

        

      

       

       

        Exhibit 10.12

         

      

      Schedule
9.3

       

      Security
Interests

       

      
        	
                1.  

              	
                Licensor
      has entered into a Credit Agreement with Silverbirch, Inc. which is
      secured by all personal property of
Licensor.

              

      

       

      
        	
                2.  

              	
                Licensor
      has entered into a Revolving Line of Credit Agreement with Tiger Paw
      Capital Corp. which is secured by all personal property of
      Licensor.

              

      

       

       

       

       

       

       

       

       

      
        
          
          

        

        
          -86-

          
            

          

        

        
          
          

        

      

       

      
         

        Exhibit 10.12

      

       

      April 24,
2009 DRAFT –

      STRICTLY
CONFIDENTIAL

      NOT AN
OFFER - SUBJECT TO CONTRACT

       

      Exhibit
C

       

      Copy of Inducement
Letter

       

      Attached.

       

       

       

      

       

       

       

       

       

      
        
          
          

        

        
          -87-

          
            

          

        

        
          
          

        

      

      

       

      Exhibit
10.12

       

      Letter
Agreement

       

       

      Reference
is made to the agreement dated concurrently herewith (the "Publishing
Agreement')
between Red Mile Entertainment, Inc., a Delaware corporation, with
offices at 223 San Anselmo Ave., Ste. 3, San Anselmo, CA 94960, as
the producer and rights holder ("Red
Mile") responsible for delivery of the services of IR Gurus Interactive
Pty Ltd., a company organized under the laws of Australia with a principal place
of business at Level 3, 355 Spencer Street, West Melbourne, Victoria 3003
Australia; facsimile: +613 9328 8332 (the "Service
Provider") on the one hand, and Atari Interactive, Inc., a Delaware
corporation, with offices at 417 Fifth Ave., New York, NY 10016 (the "CoMpany"),
with respect to the software game currently known as "Heroes over Europe"
(the "Game")
being developed by the Service Provider.

       

      This
Letter Agreement is made between and among Red Mile, the.Service Provider and
the Company.

       

      I. 
As an Inducement to the Company and Red Mile to enter into the Publishing
Agreement and this Letter Agreement; Service Provider hereby represents,
warrants, and agrees as follows:

       

      1.    
 That
Service Provider has entered into a valid and subsisting agreement, as amended
and in full force as of the date hereof (the "Red
Mile Agreement') with Red Mile covering the rendition of Service
Provider's services to Red Mile that are needed to develop,the Game (the "Development')
and grant the intellectual property rights and other rights with respect
to the Game, such that. Red Mile has and shall have the rights provided by the
Red Mile Agreement (the "Licensing")
and the full right and authority to enter into the Publishing Agreement,
to furnish to Company the product of and theof Service
Provider d to grant the rights granted to Company upon the terms and conditions
specified therein, in each case as pertains to the
Development and Licensing.

       

      2.  That
Service Provider is familiar with each and all of the terms, covenants,
conditions,
representations, acknowledgements and warranties in the Publishing Agreement
with, which it has been provided pertaining to the Development and/or Licensing
and hereby consents to the execution thereof and acknowledges that performance
by Red Mile of the terms thereof will not conflict with or violate the terms of
the Red Mile Agreement; that, in the event that Service Provider is entitled to
terminate the Red Mile Agreement with immediate effect, Service Provider will
nevertheless be bound by and will duly observe, perform and comply with each and
all of the terms, covenants and conditions of the Red Mile Agreement on the part
of Service Provider to be performed and complied with but in that event will do
so for the benefit of the Company; and in that event Service Provider shall
render to the Company all of the services and grant to the Company all of the
rights which are to be rendered or granted, as the case may be, by Service
Provider pursuant to the Red Mile Agreement, even if Red Mile shall be dissolved
or shall otherwise cease to exist; and in that event Service Provider
represents, acknowledges, and warrants to the Company in the same manner all
matters and things that Service Provider represented, acknowledged, or warran to
Red Mile in the Red Mile Agreement

      

      
        
          
          

        

        
          -88-

          
            

          

        

        
          
          

        

      

       

      Exhibit 10.12

       

      3.  That
Service Provider is under, no obligation or disability by law or otherwise which
would prevent or, restrict Service Provider from performing and complying with
.411. of the
terms, covenants and conditions of the Publishing Agreement on the part of
Service Provider to be performed or complied with.

       

      4.  That,
while Service Provider is not entitled to terminate.the Red Mile Agreement with
immediate effect, has not in fact terminated such agreement due to an uncured
breach relating to the subject matter of the Publishing Agreement (the "Red
Mile Termination"),
Service
Provider will look solely to Red Mile or its associated or subsidiary
companies and not to the Company for all compensation and other remuneration for
any and all services which Service Provider may render and grant to the Company
under the Publishing Agreement, provided that notwithstanding anything herein to
the contrary Company shall not be liable to pay any compensation or other
remuneration to Service Provider to the extent that it is also liable to pay
such amount to Red Mile or its successors pursuant to the Publishing Agreement.
As a condition to Company's obligations in this paragraph (I)(4) and paragraph
(L)W hereinbelow, Service Provider shall (i) use all commercially reasonable
efforts to recover any compensation or other remuneration from Red Mile in
accordance with the Red Mile Agreement prior to the Red Mile Termination and
(ii) upon the Red Mile Termination, assign Service Providers rights and causes
of action against Red Mile under the Red Mile Agreement to Company.

       

      5.      That
the Company shall be entitled to seek equitable relief against Service
Provider,
by injunction or otherwise, to restrain, enjoin, and/or prevent the violation or
breach by Service Provider of any obligation of Service Provider to be
pertained, as providedn the Publishing Agreement and not cured during the
applicable cure period thereunder, and/or the violation or breach by Service
Provider of any obligations or agreements under this present instrument and not
cured after notice and a reasonable opportunity, to cure.

       

      6.      That
Service Provider will indemnify and hold. Company harmless from andagainst
any and all taxes which Company is obligated to pay and any and all liabilities
(including judgments, penalties, interest, damages, costs, expenses and
reasonably attorneys' fees) obtained against, opposed or suffered. by the
Company or which the Company incurs, in each case by reason. of the Company's
failure to deduct and withhold from the compensation payable under the
Publishing Agreement any amounts required. or permitted to be deducted and
withheld from the compensation of an employee of Service Provider.

       

      7.           That
Service. Provider will not amend or modify the Red Mile Agreement in any
particular
way that would prevent or interfere with the performance of Service Provider's •
services for the. Company, pursuant to the Publishing Agreement, including the
Development and Licensing.

       

      II.
 As an Inducement to the Service Provider and Red Mile to enter into this
Lett Agreement, Company hereby represents, warrants, and agrees as
follows:

      
 

      
        
          
          

        

        
          -89-

          
            

          

        

        
          
          

        

      

      
        
        

      

       

      Exhibit 10.12

       

      1.  That
Company is familiar, with each and all of the terms, covenants, conditions,
representadons, acknowledgements and warranties of, the Red Mile Agmement with
which it has been provided concerning payment of payment or monies including
royalties relating to the Heroes over Europe properly; that in the
event that Service Provider is entitled to terminate the Red Mile
Agreement with immediat effect due to an uncured breach by Red Mile relating to
the Heroes over Europe property, Company subject to the privisions of Paragraph (1)(4)
above, will be bound by and will duly observe, perform and comply with
each and all of the terms,
covenants and conditions in the Red Mlle Agreement concerning payment of monies
including royalties relating to the Heroes over Europe property and
this Letter
Agreement on the part of Red Mile to be performed and complied with, even
if Red Mile shall be dissolved or shall otherwise cease to exist. In
addition, the event of the Red Mlle Termination, Company shall
automatically be deemed to have granted to Service Provider the same rights
in and to the Developer First Refusal (as defined in the Publishing Agreement)
as granted by Company to Red Mile In the Publishing Agreentent.

       

      2.  That
Company is under no obligates or disability by law or otherwise which would
prevent or restrict Company from performing and complying with all of
the terms,
covenants and conditions in the posectfragparagraph II(1).

       

      3.       That
Company will not. amend or modify the Publishing Agreement in any particular way that would prevent or
interfere with Company's compliance with the provisions of this Letter
Agreement.

       

      As an
Inducement to the Service Provider to enter into this Letter Agreement, Red Mile
hereby represents, warrents, and agrees that to the extent that this
Letter  Agreement is inconsistent with any rights which Red Mile has
against the Service Provider under or in relation to the Game and
the Red Mile Agreement, this Letter Agreement shall prevail; and agrees
that, notwithstanding anything to the contrary, in the event that Red
Mile goes into Chapter 11 or if the Service  Provider becomes entitled to
terminate the Red Mile Agreement pursuant to clause 16.3 of the Agreement of
3 March 2006 between Red Mile and the Service Provider, Red
Mile's  rights to mottles which would otherwise be payable to the
Service Provider shall immediately terminate, so
that the Company can pay those royalties directly to the Service
Provider.

       

      Executed as an Agreement

       

      
      

       

      
        	
                 For and on
      behalf of Red Mile Entertainment, Inc.

                 

                /s/ Simon Price

              	
                 For and on
      behalf of IR Gurus Interactive Pty Ltd

                 

                /s/ Michael T. Fegan

              	
                 For and on
      behalf of Atari Interactive, Inc

                 

                /s/ P.
      Harrison

              
	
                 Simon Price,
      President

                 

                Dated:   June 2008

              	
                 Michael T.
      Fegan, CEO

                 

                 

              	
                 P.
      Harrison

                 

                 

              

      

       

       

      
        
          
          

        

        
          -90-

          
            

          

        

        
          
          

        

      

       

      
        
           

          Exhibit 10.12

        

         

        April 24,
2009 DRAFT –

        STRICTLY
CONFIDENTIAL

        NOT AN
OFFER - SUBJECT TO CONTRACT

         

        Exhibit
D

         

        Copy of Buyout
Agreement

         

        Attached.

         

      

       

       

      
      

      

      
        
          
          

        

        
          -91-

          
            

          

        

        
          
          

        

      

       

      Exhibit 10.12

       

      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

       

      
        	
                A.  

              	
                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").

              

      

       

      
        
        

      

      
        	
                B.  

              	
                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.

              

      

       

      
        
        

      

      
        	
                C.
      . 

              	
                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.

              

      

       

      
        
        

      

       

      Agreement

       

      The
parties agree as follows:

       

      
        	
                1.

              	
                Buyout Fee. In
      exchange for the release of Atari's rights in the Title, Red Mile shall
      pay Atari
      (collectively, the "Buyout
      Fee"):

              

      

       

      
        
        

      

      
        	
                 
      

              	
                1.1.

              	
                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 Parry (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

              

      

       

      
        
        

      

      
        	
                 
      

              	
                1.2.

              	
                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

              

      

       

      
        	
              	
                1.3.

              	
                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

              

      

       

      
        
        

      

      
        
          
            
            

          

          
            -92-

            
              

            

          

          
            
            

          

        

      

      
      

       

      Exhibit
10.12

      

        	
                 
      

              	
                 

              	
                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 Title through completion of the Title. This
      includes all amounts paid to IR Gurus Pty. Ltd. at any time in respect of
      the Title.

              

      

       

      
        	
                 
      

              	
                1.4.

              	
                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 payment of 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.

              

      

       

      
        
        

      

      
        	
                 
      

              	
                1.5.

              	
                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 exceed 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 refund such overpayment
      within thirty (30) days following Atari's receipt of such examination
      results.

              

      

       

      
        	
              	
                1.6.

              	
                
                  Payment of Discovered
      Uacierpayment, With respect to any claim by Atari that additional
      monies are payable by Red Mile to Atari pursuant to this
      Agreement

                

              

      

      
        
        

      

       

      
        
        

        
          
            
            

          

          
            -93-

            
              

            

          

          
            
            

          

        

      

       

      Exhibit 10.12

       

      
        	
              	
                 

              	
                based
      upon such an examination, Red Mile shall not be deemed in breach of this
      Agreement if, within thirty i30) 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: (1) pay such additional monies so claimed by Atari;
      or (ii) contest such claim, in whole or in part, by writtee notice sent to
      Atari.

              

      

      
      

      

      
        	
                2.

              	
                Release of Rights in the
      Title.

              

      

       

      
        	
                 
      

              	
                2.1.

              	
                
                  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.

                

              

      

      

        	
                 
      

              	
                2.2.

              	
                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.

              

      

       

      
        
        

      

      
        
        

      

      
        	
                 
      

              	
                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..

              

      

            

        
          
          

        

        
          
          

        

        
          	
                   
      

                	
                  3.1.

                	
                  
                    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.

                  

                

        

      

      
         

      

      
        	
                4.

              	
                Mutual Release
      of Claims.

              

      

       

      
        	
                 
      

              	
                4.1.

              	
                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 sue 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;

              

      

       

      
        	
                 
      

              	
                4.2.

              	
                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."

              

      

       

      
        
          
          

        

        
          -94-

          
            

          

        

        
          
          

        

      

       

      Exhibit 10.12

       

      
        	
                 
      

              	
                4.3.

              	
                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.

              

      

       

      
        
          	
                  5.

                	
                  Miscellaneous.

                

        

      

       

      
        	
                 
      

              	
                5.1.

              	
                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.

              

      

       

      
        	
                 
      

              	
                5.2.

              	
                Governing
      Law. This Agreement shall be governed by and construed in accordance
      with the laws of the State of New York. excluding its conflict of laws
      rules.

              

      

       

      
        
        

      

      
        	
                 
      

              	
                5.3.

              	
                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.

              

      

       

      
        	
                 
      

              	
                5.4.

              	
                Attorneys:
      Fees. In any proceeding to enforce this Agreement, the prevailing
      party
      shall recover, in addition to all other relief, reasonable attorneys' fees
      and costs.

              

      

       

      
        	
                 
      

              	
                5.5.

              	
                Counterparts.
      The parties may execute this Agreement in two or more counterparts,
      each of which shall be deemed an
  original.

              

      

       

      
        	
                 
      

              	
                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.

                
	
                   By:

                	     /s/ Chester P.
      Aldridge         
      	
                   By:        

                	    
      /s/ P.
      Harrison                      
      
	
                   Name:

                	 
      Chester P. Aldridge	
                   Name:

                	 
      P. Harrison
	
                   Title:

                	 
      CEO	
                   Title:

                	 
      President

        

         

         

        
          
            
            

          

          
            -95-

            
              

            

          

          
            
            

          

        

      

       

      
        
        

         

      

       

      
      

      
        Exhibit 10.12

         

        April 24,
2009 DRAFT –

        STRICTLY
CONFIDENTIAL

        NOT AN
OFFER - SUBJECT TO CONTRACT

         

        Exhibit
E

         

        Copy of
NDA.

         

        Attached.

       

       

       

       

      
        
          
          

        

        
          -96-

          
            

          

        

        
          
          

        

      

       

      
Exhibit
10.12

       

       

       

      MUTUAL
NONDISCLOSURE AGREEMENT

       

          This Mutual
Nondisclosure Agreement ("Agreement"), effective February 13, 2009, by and between Red Mile
Entertainment, Inc. ("Red Mile") and Atari Interactive, Inc. ("Atari") (each a
"Party" and together
the "Parties") is entered into for the purpose of preventing the
unauthorized disclosure of either Party's Confidential Information, as defined
herein.

       

      Recitals

       

      
        	
                  A. 

              	
                Red
      Milt and Atari entered into a Publishing Agreement dated June 20, 2008
      (the"Publishing
      Agreement") under which Rod Mile granted a license to Atari regarding
      certain intellectual
      property rights with respect to the development and publication
      of the
      Heroes
      Over
      Europe interactive game (the
"Title").

              

      

       

      
        	
                 
      B.

              	
                Under
      the Publishing
      Agreement, each Party agreed to keep confidential certain
      information relating to the Publishing Agreement and the development and
      publication of
      the Title
      thereunder.

              

      

       

      
        	
                C.  

              	
                On
      February 11, 2009, Atari delivered to Red Mile a notice stating
      that Atari has terminated the Publishing Agreement (the 'Termination
      Notice).

              

      

       

      
        	
                D.  

              	
                The
      Parties now wish to discuss certain, matters in connection with the
      Termination Notice and the effect thereof (the "Potential Transaction"),
      and wish to facilitate such discussion by agreeing to keep certain
      information confidential pursuant to this
  Agreement.

              

      

       

      Agreement

       

      In
consideration of the mutual promises and covenants in this Agreement and the
mutual disclosure of Confidential Information hereunder, the Parties agree as
follows:

       

      
        	
                1.        

              	
                Confidential
      Relationship. The Parties mutually agree to enter into a
      confidential relationship regarding the disclosure by either Party
      (the "Disclosing
      Party") to the other (the "Receiving Party") of Confidential
      Information.

              

      

       

      
        	
                2.        

              	
                Confidential
      Infewatiore For purposes of this agreement, the term "Confidential
      Information" means any nonpublic information disclosed directly or
      indirectly by the Disclosing Party to the Receiving Party, whether in
      writing, gdectronically, orally or by inspection of
      tangible objects (including without limitation documents,
      prototypes, samples, and equipment), which is designated
      as confidential or would be reasonably understood
      to be
      confidential
      under the circumstances.
      Confidential
      Information
      includes, without
      limitation,
      all products and services,
      processes, hardware, software, inventions, trade secrets, ideas,
      designs, drawings, notes, prototypes, mock-tips, storyboards, scripts,
      animation, research, now how, business methods, business
      plans,
      marketing
      and branding strategies, financial informatics], business terms for
      proposed
      dealings between the parties, market information, sales information and
      internal communications.

              

      

       

      
        	
                3.        

              	
                Non-Use and Non-Disclosure

              

      

       

      
        	
                  3.1. 

              	
                The
      Receiving Party shall not make use of
      Confidential Information for
      any purpose except to
      evaluate and
      discuss a potential working
      relationship between the
      Parties
      and
      the
      Potential Transaction.

              

      

       

       

      
        	
                 
      3.2.

              	
                 The
      Receiving Party shall not
      disclose any Confidential Information to third parties or to the
      Receiving Party's employees and consultants, except those employees and
      consultants

              

      

       

      
        
          
          

        

        
          -97-

          
            

          

        

        
          
          

        

      

       

      Exhibit 10.12

       

      of
the Receiving Party who are required to have the information, in order to
evaluate or come in the discussions in which the use of Confidential Information
is permitted under this Agreement. The Receiving Party shall treat the
Confidential Information with at least the same degree of care and safeguards
that it takes with its own confidential information, but in no event less than a
reasonable degree of care. The Receiving Party represents that it has, and
agrees to maintain, an appropriate agreement with each of its employees and
independent contractors who may have access to the Confidential Information
sufficient to enable the Receiving Party to comply with all the terms of this
Agreement. The Receiving Party shall not reverse engineer, disassemble or
decompile prototypes, software or other tangible objects which embody the
Confidential Information. Neither Party shall disclose to any other person the
tact that Confidential information has been made available to the other Party,
that discussions are taking place or have taken place between the Parties, the
status of such discussions or any of the terms, conditions or other fads with
respect thereto. Notwithstanding anything in this Agreement to the contrary, it
shall not be a breach of this Agreement for either party to disclose
Confidential Information required to be disclosed in connection with an
administrative, regulatory or judicial process or proceeding provided, however,
that prompt notice to the party owning the Confidential Information is given of
the posaibility of such. disclosure and that the party which may be compelled to
disclose shall use reasonable good faith efforts to resist such disclosure.
Notwithstanding anything in this Agreement to the contrary, it shall oar be a
breach of this Agreement for Red htile to disclose Confidential Information to
(i) actual or potential lending or financing sources other than software games
industry participants (i.e., non-software•games industry venture capitalists,
investors and/or banks) (collectively, "Authorized Disclosees"); and (ii)
subject to express prior written approval by Atari on a case-by-case basis at
Atari's sole discretion, actual or potential lending or financing sources other
than Authorized Disclosees ("Other Disclosees"); subject in each case to any
such Authorized Died owes or Other Disclosees having entered into a
confidentiality agreement with Red Mile at least as protective of the applicable
Confidential Infotmation as this Agreement and provided that Red Mile tamales
primarily liable hereunder for any disclosure of Confidential Information by any
such Authorized Disclosees or Other Disclosers inconsistent herewith and any
consequential damages resulting therefrom.

       

      
        	
                4.        

              	
                 Return of
      Materials. Within ten days alkereceiving a
      written request from the Disclosing Party, the Receiving Party shall
      return all original materials provided by the Disclosing Party and any
      copies, notes and other items in the Receiving Party's possession pertaining to
      the Confidential
Information.

              

      

       

      
        	
                5.        

              	
                Exclusions. This Agreement does not apply to any information
      which:

              

      

       

      
        	
                5.1.

              	
                was in Receiving Party's
      possession or was known to Receiving Party, without an obligation to keep it
      confidential, prior to its disclosure under this
  Agreement;

              

      

       

      
        	
                5.2.

              	
                is
      or becomes public knowledge through a source other than the Receiving
      Party and through no fault of the Receiving
  Party;

              

      

       

      
        	
                5.3. 

              	
                is
      independently developed by or ibr the Receiving
  Party;

              

      

       

      
        	
                5.4.

              	
                is
      or becomes lawfully available to the Receiving Party from a source other
      than the Disclosing Party; or

              

      

       

      

      
        
          
          

        

        
          -98-

          
            

          

        

        
          
          

        

         

        Exhibit 10.12

         

        
          	
                  5.5.

                	
                  is
      disclosed by the Receiving Party upon written consent from the Disclosing
      Party.

                

        

      

    

     

    
      
        	
                6.

              	
                Term
      of Agreement. This
      Agreement shall remain in full force and effect and shall
      survive the termination of any relationship
      between the Parties. The obligations of the Receiving Party hereunder
      shell survive until the earlier of (a)
      such time as
      all Confidential Information disclosed hereunder
      becomes publicly known and is made generally available through no
      action or
      inaction of the
      Receiving Party, or (b) the third anniversary of the disclosure; provided,
      however, that to the
      extent
      Confidential Infomtatica disclosed hereunder constitutes, in whole or in
      part, a
      trade wad under
      applicable law, the Receiving Parry agrees to protect such trade secrets)
      for so long as
      the information qualifies as a trade secret.

              

      

    

     

    
      
        	
                 7.

              	
                No Rights Granted. This Agreement does not
      constitute a grant or an intention or commitment to grant any license or other
      right, title or interest in the Confidential Information to the Receiving
      Party. The Confidential
      information shall at all times remain the property of the Disclosing
      Party. Nothing in this Agreement, including the disclosure of
      Confidential. Information hereunder, obligates either Party to enter into
      any further agreement with the other Party with respect to the subject
      matter hereof or otherwise.

              

      

    

     

    
      	
              8.

            	
               NoWarranty. Except
      as otherwise specifically provided herein, neither Party makes any representation
      or warranty, express or
      implied,
      with respect to any
      Confidential Information, which is provided "as is." The Disclosing
      Party shall not be liable for the accuracy or completeness of the
      Confidential Information. Neither Party shall be liable for any indirect,
      incidental, or consequential damages of
      any
      kind resulting from or
      wising in connection with this
  Agreement.

            

    

     

    
      	
              9.

            	
              Publishing Agreement.
       Nothing in this Agreement shall affect the rights or obligations of
      tithes Party with respect to the Publishing Agreement. The Parties do not
      inlaid for the obligations of confidentiality under this Agreement to
      supplant, termite, limit or modify the confidentiality obligations
      under the Publishing Agreement. By entering into this Agreement, neither Party
      intends to admit or deny any fact concerning the Publishing Agreement;
      make, receive or accept any notice or claim under the Publishing
      Agreement; or assert or waive any
      rights or remedies such Party
      may have under the Publishing Agreement. Each Party expressly
      reserves the right to pursue
      all legal sad equitable remedies available to such Party. Fox the
      avoidance of doubt, all Confidential Information disclosed hereunder
      shall be deemed to be governed solely by this Agreement
      and not by the
      Publishing Agreement.

            

    

     

    
      
        	
                10.

              	
                Injunctive
      Relict The Receiving Party recognizes and acknowledges that in the
      event of a breach or threatened breach of this Agreement, money damages
      would be an inadequate remedy and extremely difficult to measure. The
      Receiving Party agrees,
      therefore, that the Disclosing Party shall be
      entitled to an
      injunction to
      restrain the Receiving
      Party
      from such
      breach or threatened breach. Nothing in this Agreement shall
      be construed as preventing the Disclosing Party from pursuing any remedy
      at law ce in equity for any breath or threatened
      breech.

              

      

    

     

    
      
        	
                11.

              	
                Attorney's Fees.
      If any lead action arises relating to this Agreement, the
      prevailing Parry shall be entitled to recover all court costs, expenses
      and reasonable attorneys'
fees.

              

      

    

     

    
      	
              12.

            	
               Binding
      Effect. This
      Agreement is binding on the Parties and their heirs, successors and
      assigns.

            

    

     

    
      	
              13.

            	
              Entire Agreement:
      Modifications. This Agreement represents the
      entire agreement between the Parties regarding the subject matter hereof
      and supersedes all prior agreements or understandings between them.
      All additions or modifications to this Agreement must be made in writing
      and must be signed
      by both Parties to be effective.

            

    

     

     

    
      
        
        

      

      
        -99-

        
          

        

      

      
        
        

      

       

      Exhibit 10.12

       

    

    
      	
              14.

            	
              No Agency. This Agreement does not create any
      agency, employment, joint venture or partnership relationship between
      Parties.

            

    

    
       

      
        	
                15.

              	
                Applicable Law. This Agreement is made under, and
      shall be construed according to, the laws of the the State of New
      York.

              

    

     

     

    
      
        	
                 

                Red
      Mile Entertainment, Inc.

              	
                 

                Atari
      Interactive, Inc.

              
	
                 By:

              	     /s/ Chester P.
      Aldridge         
      	
                 By:        

              	    
      /s/ Kathryn A.
      Butters                      
      
	
                 Name:

              	 
      Chester P. Aldridge	
                 Name:

              	 Kathryn
      A. Butters
	
                 Title:

              	 
      CEO	
                 Title:

              	 
      VP, Atarti Properties
	 Date:	 February
      13, 2009	 Date:	  February
      15, 2009

      

    

     

     

    
      
        
        

      

      
        -100-

        
          

        

      

      
        
        

      

    

     

     

    
      Exhibit 10.12

       

      April 24,
2009 DRAFT –

      STRICTLY
CONFIDENTIAL

      NOT AN
OFFER - SUBJECT TO CONTRACT

       

      Exhibit
F

       

      From of Side Letter
Agreement.

       

       

       

      Attached.

    

    
 

     

    
      
        
        

      

      
        -101-

        
          

        

      

      
        
        

      

    

    
      
         

        Exhibit
10. 12

         

      

       

      
        
          
            	 
      	
                    Atari
      Interactive, Inc.

                            
      417 Fifth Avenue

                             
      New York, NY 10016

                              Direct:
      212-726-6500

                              Fax:
      212-726-4239

                  

          

        

      

       

      April
27, 2009 

       

      VIA
FACSIMILE

       

      IR
Gurus Interactive Pty Ltd. 

      Level
3, 355 Spencer Street 

      West
Melbourne, Victoria 3003 

      Australia

      Facsimile:
+613 9328 8332 

      Attn:
Mr. Craig Laughton

       

      Re:
Heroes over Europe

       

       Dear
Mr.
Price and Laughton:

    

     

    We make
reference to the settlement letter agreement of even date herewith between and
among Red Mile Entertainment, Inc., a Delaware corporation, with offices at 223
San Anselmo Ave., Ste. 3, San Anselmo, CA 94960 ("RME"); IR Gurus Interactive Pty Ltd., a company
organized under the laws of Australia with a principal place of business at
Level 3, 355 Spencer Street, West Melbourne, Victoria 3003 Australia; facsimile:
+613 9328 8332 ( "TG"); and Atari
Interactive, Inc., a Delaware corporation, with offices at 417 Fifth Ave., New
York, NY 10016 ("Atari" and, collectively with TG, the
"Parties")
of even date herewith (the "Settlement
Agreement").
Capitalized terms used and not otherwise defined in this letter agreement
(the "Side
Letter Agreement") shall have the meanings ascribed to them in the
Settlement Agreement.

     

    PREAMBLE

     

    WHEREAS, Atari and TG wish to
make certain provisions with respect to funding of the Settlement
Fee;

     

    WHEREAS, Atari and Ubisoft
Entertainment SA ("Ubisoft")
are currently negotiating the terms of a Heroes over Europe Intellectual
Property Rights Buyout Agreement pursuant to which Atari would transfer and
assign to Ubisoft its right and interest in and to the Title (the "Ubisoft
Agreement"); and

     

    
      
        
        

      

      
        -102-

        
          

        

      

      
        
        

      

    

     

    Exhibit 10. 12

     

    WHEREAS, on
April 6, 2009, Atari paid One Hundred Seventy-Five Thousand United States
Dollars ($175,000.00) to TG as financing for development of the Title (the "April
6 Advance")
following RME's failure to pay those monies under the Development
Agreement;

     

    NOW THEREFORE,
for good and valuable consideration, the receipt and sufficiency of which
Atari and TG do hereby acknowledge, Atari and TG do hereby agree as
follows:

     

    AGREEMENT

     

    
      	
              1.                  

            	
              Contribution
      to Settlement Fee. It is the intention of Atari and TG that TG
      contributes One Hundred Thousand United States Dollars ($100,000.00) to
      Atari in order to subsidize Atari's payment of the Settlement Fee (the
      "TG
      Contribution") and that Atari pay the Settlement Fee to RME in
      accordance with the Settlement Agreement. The Parties currently envision
      that this can best be accomplished by adding the TG Contribution to the
      Re-Allocated Amounts (as defined in the Ubisoft Agreement) (the "Preferred
      Mechanism"). Atari and TG hereby agree that, in conjunction with
      signing of the Ubisoft Agreement, (i) TG shall contribute the TG
      Contribution to Atari, either via the Preferred Mechanism or via some
      other mechanism as shall be determined by the Parties in good faith; (ii)
      for the avoidance of doubt, the April 6 Advance and the April 29 Advance
      (as defined below), if any, shall also be deemed to be included in such
      Re-Allocated Amounts; and (iii) Atari shall pay the Settlement Fee to RME
      in accordance with the Settlement
Agreement.

            

    

     

    
      	
              2.                  

            	
              Additional
      Payment. Provided that as of April 29, 2009 TG and Ubisoft have
      either entered into a new development agreement for the Title or TG has
      been and is using best efforts to complete such an agreement, and
      conditioned on this Side Letter Agreement and the Settlement Agreement
      having been executed, Atari shall pay TG an additional amount of One
      Hundred Fifty-Six Thousand United States Dollars ($156,000.00) as further
      financing for development of the Title, on or before April 29, 2009 (the
      "April
      29 Advance")
      following RME's failure to pay those monies under the Development
      Agreement.

            

    

     

    
      	
              3.                  

            	
              Option.
      Provided that the April 29 Advance has been paid in accordance with
      the foregoing Paragraph 2 and unless and until the Settlement Agreement is
      executed, TG will permit Atari to step into RME's shoes under the
      Development Agreement so long as Atari provides notification of its intent
      to do so to TG in writing no later than the close of business in
      Melbourne, Australia on June 30, 2009 (the "Option
      Period"). For the avoidance of doubt, upon execution of the
      Settlement Agreement, the foregoing option of Atari to step into RME's
      shoes under the Development Agreement shall be
    extinguished.

            

    

     

    
      	
              4.                  

            	
              Potential
      Interim Payments.
      During the Option Period and until the Ubisoft Agreement has been
      executed, Atari shall consider in good faith providing further financing
      for development of the Title to TG, provided that in no event shall any
      such further financing (i) be paid prior to May 31, 2009 or (ii) exceed
      amounts that would be payable to TG in accordance with the Development
      Agreement. In the event that Atari fails to make any further financing
      available to TG within 5 days of TG making a written request to Atari for
      further financing, during the Option Period and until the Ubisoft
      Agreement has been executed (excluding the payments of $175,000 and
      156,000), the option to June 30, 2009 shall
  terminate.

            

    

     

    
      
        
        

      

      
        -103-

        
          

        

      

      
        
        

      

    

     

    Exhibit
10. 12

     

    
      	
              5.             

            	
              Repayment.
      In the event that Atari for whatever reason does not enter into the
      New Publishing Agreement by June 30, 2009, TG shall be obligated to repay
      to Atari the April 6 Advance and the April 29 Advance (if any) and any
      additional advances under paragraph 4, with such amounts to be paid to
      Atari promptly following TG's entry into a publishing, financing or
      distribution deal for the Title.

            

    

     

    
      	
              6.

            	
              Condition.
      The Parties acknowledge that Ubisoft has raised certain concerns
      with respect to the chain of title of the Heroes over Europe franchise and
      relinquishment by RME of any sequel rights with respect to such franchise.
      Confirmation of a full resolution of such concerns to Ubisoft's
      satisfaction, in a form reasonably satisfactory to Atari, shall be a
      condition precedent to Atari's covenants, agreements, obligations, and
      liabilities under this Side Letter
Agreement.

            

    

     

    
      	
              7.

            	
              Confidentiality.
      This Agreement and its terms are and shall remain confidential. The
      Parties may disclose this Agreement and its terms to related or affiliated
      corporate entities, and to their respective auditors, accountants,
      attorneys and other professional advisors. The Parties may also make
      disclosure of this Agreement or its terms in connection with the due
      diligence relating to any merger, acquisition, reorganization, investment,
      loan or financing of, by, in or to the respective Parties. Atari may also
      make disclosure of this Agreement or its terms to the New Publisher and/or
      RME. Unless otherwise expressly provided in this paragraph, this Agreement
      and the terms hereof shall not be disclosed by the Parties to any
      non-Party unless so ordered by a court of law or with the consent of the
      non-disclosing Party which shall not be withheld unreasonably. In the
      event of any disclosure of this Agreement by either Party, the disclosing
      Party agrees to enter into a confidentiality agreement with the person or
      entity to which such disclosure is to be made that binds such person or
      entity to the terms set forth in this section. The Parties agree that if
      either Party receives notice of any court or government order for
      disclosure of the terms of this Agreement, that Party will (i) immediately
      notify the other Parties in order that the latter may review the order and
      determine whether it shall challenge the disclosure of the terms of this
      Agreement and (ii) comply with the terms of any applicable protective
      order.

            

    

     

    
      	
              8.

            	
              General.
      Upon your signature below, this Side Letter Agreement shall
      constitute a valid and enforceable agreement between Atari and TG, as of
      the date first set forth above, enforceable in accordance with its terms,
      with the same notice, jurisdictional, governing law, construction and
      headings, authorization of signatories, counterparts, and miscellaneous
      provisions as the Settlement Agreement, each of which is hereby
      incorporated herein by reference.

               

              Please
      indicate your consent by signing three copies of this Agreement and
      returning two fully executed originals to
Atari.

            

    

     

     

    
      
        
        

      

      
        -104-

        
          

        

      

      
        
        

      

    

     

    Exhibit
10. 12

     

    
       

      
        	 	 Sincerely
      yours,
	 	 
	 	 ATARI
      INTERACTIVE, INC.
	 	 
	 	 By:                                                
      
	 	 Name:
	 	 Title:

      

       

       

       

       

       

       

      
      

       

      
        	 ACCEPTED AND AGREED
      TO:	 
	 	 
	 IR GURUS PTY
      LTD	 
	 D/B/A
      TRANSMISSION GAMES	 
	 	 
	
                 By:                                                        
      

              	 
	 Name:
    	 
	 Title:	 
	 Dated:	 

      

       

    

                                                          

     

    

    
      
        
        

      

      
        -105-

        
          

        

      

      
        
        

      

    

     

     

    
      Exhibit 10.12

       

      April 24,
2009 DRAFT –

      STRICTLY
CONFIDENTIAL

      NOT AN
OFFER - SUBJECT TO CONTRACT

       

      Exhibit
G

       

      Copy of Executed Sequel Side
Letter.

       

       

       

      Attached.

    

                                                           

     

     

     

     

    
      
        
        

      

      
        -106-

        
          

        

      

      
        
        

        Exhibit
10.12

      

    

     

     

    

     

    April 27,
2009

     

    VIA
FACSMILE (+613 9328 8332)

     

    IR Gtuus
Interactive Pty Ltd. 

    Attn: Mr.
Mike Fegan

    Level 3,
355 Spencer Street 

    West Melbourne, Victoria 3003

    Australia

     

    Re:   Heroes
over Europe — Sequel Rights

     

    Dear Mr.
Fegan:

     

    Red Mile
Entatahunent, Inc., a Delaware corporation, with offices at 223 San Anselmo
Aye., Ste. 3, San Anselmo, CA 94960 ("MR") and IR Gums Interactive Ply Ltd., a
company organized under the laws of Australia with a principal place of business
at Level 3, 355 Spencer Street, West delbourne, Victoria 3003 Australia and
doing business as Transmission Games ("TG") are entering into this letter
agreement (the "Agreement")
to provide for a grant of certain rights in and to Sequels (as defined
below) to the interactive game Heroes Over Europe for the Sony Playstation 3,
Microsoft Xbox 360 and personal computer (PC) platforms (the "Me")
in accordance with the terms and conditions set forth herein. RME and TO
are each referred to
herein as a "Para"
and collectively as the "Parties.",
The terms "Sequel" and "Prequel" will have theirrospective meanings as
defined In the Development Agreement between TG and the New Publisher dated on
or about 29 April 2009 and are incorporated into this Agreement by
reference.

     

    TG, RME
and Atari Interactive, Inc. ("Atari")
are parties to a letter agreement of even date herewith, pursuant to
which Atari will have the right to transfer publishing rights for the . Title to
a third-party publisher (the "New
Publisher, pursuant to a rights buyout agreement (the "Rights
Buyout Agreement").

     

    The Parties agree as follows:

     

    1.           
First
Sequell.

     

    (a)  
TG shall promptly notify RME in writing
(an "Option
Notice") after TO and the New Publisher have finally determined the/ the
New Publisher will not pu lish, license, distribute and/or otherwise exploit
(collectively, "Publish")
the Sequel.

     

     

    
      
        
        

      

      
        -107-

        
          

        

      

      
        
        

        Exhibit
10.12

      

    

     

     

    
      	
              (b)  

            	
              RME
      shall have the right, within ten business days after receipt of the Option
      Notice,
      to submit a bid to TG to Publish the first
  Sequel.

            

    

     

    
      	
              (c)  

            	
              Upon
      RME's submission of a bid, RME and TG shall negotiate in good faith for a
      reasonable
      period of time, not to exceed twenty calendar
      days after submission of the bid, regarding the terms and conditions under
      which RME will Publish the first
Sequel.

            

    

     

    
      	
              (d)  

            	
              Except
      as provided in Section 1 (e) below, if RME and TO have not reached " agreement
      in writing regarding the terms and conditions under which RME will . Publish the first Sequel within the period set
      forth in Section 1(c) above, or if RME does not submit a
      timely bid, TG shall be free to accept a bid
      from any third party or to elect not to grant third-party rights to
      Publish the Sequel.

            
	 	 
	(e)  	RME's
      rights with respect to the first Sequel shall cease On March 3,
      2016.

    

     

    2.            Second
Sequel

     

    
      	
              (a)  

            	
              If
      TG has delivered an Option Notice to RME with respect to the first Sequel
      and RME
      has not submitted a bid, RME shall have no rights with respect to the
      second Sequel or any additional
Sequel.

            

    

     

    
      	
              (b)  

            	
              IfRME
      submitted a bid in response to an Option Notice with respect to the first
      Sequel or matched the terms of a third-party bid to Publish the first
      Sequel, RME shall have the same rights with respect to the second Sequel
      as for the first Sequel, as set forth in Section 1(a)
      through 1(e) above.

            

    

     

    
      3.           
 Conditions.
The following are
conditions precedent to the effectiveness of this Agreement and the
obligations of the parties hereunder, and the failure of either such condition
shall render this Agreement null and void from the date of its
execution:

    

     

    
      	
               
      

            	
              (a)

            	
              Mutual
      execution of the Rights Buyout Agreement by a duly authorized officer of
      each
      of Atari and the. NevaPublisher by June 30, 2009;
      and

            

    

     

    
      	
              4.            

            	
              Representations and
      Warranties: Indemnity.

            

    

     

    (a)          TG represents and warrants to and RME
represents to TG

     

    
      
        	
                 
      

              	
                (i)

              	
                It
      has the full power and authority to grant to RME the rights granted under
      this Agreement;

              
	 	 	 
	 	
                (ii)

              	
                Neither
      this Agreement nor the imcise of the other
      party's rights hereunder will infringe, violate or misappropriate any
      intellectual it property of any third party;
    and

              

      

    

     

    
      	
               
      

            	
              (iii)

            	
              It
      has riot sold, assigned, leased, licensed or in any other way disposed
      of  or
      encumbered the rights granted to the other hereunder and will not sell,
      assign,
      lease, license or in any other way dispose of or encumber any of
      such
      rights.

            

    

     

     

    
      
        
        

      

      
        -108-

        
          

        

      

      
        
        

        Exhibit
10.12

      

    

     

     

    
      	
               
      

            	
              (b)

            	
              Eaciiparty
      will indemnify, defend and hold harmless the other and its
      affiliates, officers,
      directors, employees and agents from and against all losses, liabilities,
      claims, obligations and expenses (including reasonable attorneys'-fees)
      arising from
      any third-party claim in connection with any breach or alleged breach by
      that
      party of this Agreement or any of the fieregohig representations' and
      warranties.

            

    

     

    
      	
              5.           

            	
              Notices.
      All notices hereunder shall be in writing and shall be effective
      upon receipt Notices
      may be sent by any reasonable means, including facsimile, to the Parties
      at their addresses and facsimile numbers written
      above. The Parties shall notify one another of any change of their
      address or facsimile
  number.

            

    

     

    
      	
              6.  

            	
              Binding Nature of Terms 
      Each
      of the terms of this Agreement is binding upon
      the Parties,
      and heir respective successors, transferees, assigns, heirs and personal
      representatives. If any provision of this Agreement is declared null and
      void or unenforceable by any court or tribunal having jurisdiction, then
      such provision shall be considered beparate
      and apart from the remainder of this Agreement which shall remain
      in M1 force and effect, but such provision
      shall be modified (as nearly as possible to reflect its original
      intent)'to eliminate such aspects of the provision that made it null, void
      or unenforceable
      and such modified provision shall then be deemed an original part
      of this
      Agreement.

            

    

     

    
      	
              7.           

            	
              Construction
      and Headings. This Agreement shall not be construed more strictly
      against one
      Party than against any other
      Party by virtue of the fin that this Agreement may have been
      drafted or prepared by counsel
      for one of the Parties, the Parties recognizing and acknowledging
      that all Parties to this Agreement have contributed substantially and
      materially to the drafting and preparation hereof. The headings, titles
      and cations contained in this Agreement are inserted only as a matter of
      convenience and for reference, and in no way define, extend or describe
      the scope of this Agreement or the intent or meaning of any provision
      herein.

            

    

     

    
      	
              8.           

            	
              Authorization
      of Signatories. The persons signingihis Agreement represent and
      warrant that
      they are duly authorized to execute this Agreement on behalf of RME and
      TO, respectively, and to bind said entities to the terms, conditions,
      provisions, duties and obligations set forth in this
      Agreement.

            

    

     

    
      	
              9.  

            	
              Execution in counteparts and
      Facsimiles. ges. This Agreement may be executed in any number
      of counterparts and sigeatures may be passed by way of the exchange
      of digitally scanned copies in .PDF format, each and all of which
      shall be deemed for all purposes to be one agreement
      with original
    signatures.

            

    

     

    
      	
              10.  

            	
              Further Assurance. The Parties;
      mutually agree to execute, acknowledge, and deliver any
      and all such agreements, documents and instruments, and to
      perform any and all such acts and things as may be masonsbly
      necessary and proper to consummate the transactions contemplated by this
      Agreement.

            

    

     

     

     

    
      
        
        

      

      
        -109-

        
          

        

      

      
        
        

        Exhibit
10.12

      

    

     

     

     

    11.         
Governing Law: Jurisdiction
Miscellaneous. This Agrnetnent can only be modified by a
writing
signed bra duly authrainad officer of each Party specifically referring to this
Agreement. If either Party initiates an action for enforcement of the terms of
this Agreement, the prevailing party shall be entitled to attorneys' fees and
costs. The Parties irrevocably consent and submit to the exclusive jurisdiction
of the courts of the state and federal courts located within Victoria, Australia
for,
purposes of any dispute arising hereunder or in connection with this Agreement.
This Areettient, shall be governed under the law's of the State of Victoria
without regard to hs principals of conflict of laws.

     

    
      12.       
   Termination. TG may
terminate
this Agreement immediately with written notice if
RME goes into compulsory or voluntary liquidation or if a receiver
is appointed or if RME makes an assignment for the benefit of or composition
with its creditors generally, or threatens any of the
foregoing.

    

     

    Please
indicate your consent by signing two copies of this Agreement and returning a
fully executed originals to the other Party..

     

    Sincerely
yours,

     

    Red Mile
Entertainment, Inc.

     

     

    By: /s/
Simon
Price                           

          
Simon Price, CEO

     

     

     

     

    ACCEPTED
AND AGREED TO:

     

    IR
GURUS PTY
LTD

    D/B/A
TRANSMISSION GAMES

     

     

    By:/s/
Michael T.
Fegan                            

    Name:
Michael T. Fegan

    Title: 
CEO

    Dated: 
27/4/2009

     

     

     

     

    -110-

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