Atari, Inc. v. Zoo Publishing, Inc.

Filing 1

COMPLAINT against Zoo Publishing, Inc.. (Filing Fee $ 350.00, Receipt Number 930924)Document filed by Atari, Inc..(rdz) (rdz).

Download PDF
t " Kyle C. Bisceglie Herbert C. Ross OLSHAN GRUNDMAN FROME ROSENZWEId l : tLO" "IJP Park Avenue Tower .... \'41, ' 65 East 55 th Street _ ~ " , New York, New York 10022 Telephone: 212-451-2300 , .~ ., '~/ .....: J . ~~ Ii K 14 43 \ ATARI, INC., Plaintiff, -againstZOO PUBLISHING, INC. d/b/a ZOO GAMES, Defendant. COMPLAINT Plaintiff, by its attorneys, Olshan Grundman Frome Rosenzweig & Wolosky LLP, for its Complaint against defendant, alleges as follows: Nature of this Action 1. In this action, plaintiff seeks recovery of the sums to which it is entitled for its Despite such advances of sums to defendant for the manufacture and delivery of video games. advances, defendant never delivered those video games to the customers to which defendant was to deliver the games or, if defendant delivered them, it never remitted to plaintiff the sums to which plaintiff is entitled, all in breach of sales agreements between plaintiff and defendant. Defendant's wrongful retention of the advances and the other sums to which plaintiff is entitled also constitutes claims for relief for money had and received for which plaintiff is entitled to judgment against defendant. 1182133-7 The Parties 2. Plaintiff Atari, Inc. ("Atari") is a corporation organized under the laws of the State of Delaware and authorized to do business in the State of New York. Atari's principal place of business is in New York, New York. Atari is engaged in the business of publishing, distributing, and selling video games in the form of cartridges, DVDs, and compact discs and by digital download. 3. Defendant Zoo Publishing, Inc. ("Zoo") is a corporation organized under the laws of the State of New Jersey. Zoo's principalJ)lace of business is in Cincinnati, Ohio. Zoo is engaged in the business of publishing, distributing, and selling video games in the form of cartridges and DVDs. Zoo does business under the name Zoo Games. Jurisdiction and Venue 4. This Court has personal jurisdiction over Zoo under NY CPLR 301 as Zoo is doing business in the State of New York, and under CPLR 302 as the causes of action alleged in this complaint arise out of Zoo's transaction of business in the State of New York. Additionally, Zoo contractually agreed to the exercise of the personal jurisdiction of this Court over Zoo for any claim arising with respect to the agreements at issue in this action or the enforcement or breach of those agreements. 5. This Court has original jurisdiction over this action under 28 U.S.c. 1332 as it is between citizens of different States and the monetary value of the amount in controversy exceeds $75,000, exclusive of interest and costs. 6. Venue is proper in this District as each of the parties hereto has consented to venue in this District. Additionally, venue is proper in this District under 28 U.S.C. 1391 because both Atari and Zoo reside in this District pursuant to 28 U.S.C. 1391. 2 1182133-7 First Claim for Relief (Breach of Sales Agreement Made on October 24, 2008) 7. Atari repeats and realleges the allegations of paragraphs 1 through 6 in this Complaint as though fully set forth herein 8. On or about October 24, 2008, Atari and Zoo entered into a Sales Agreement whereby Zoo agreed to sell finished, packaged video games to Atari for its resale to wholesalers and retailers in the United States (and its territories, possessions and military bases wherever situated), Mexico, and Canada. Atari and Zoo entered into a first written amendment to said agreement effective as of April 1, 2009, a second written amendment to said agreement effective as of May 1,2009, and a third written amendment to said agreement effective as of June 1,2009. Copies of the aforesaid Settlement Agreement and the three written amendments thereto are annexed hereto as Exhibit A (the aforesaid agreement as amended by the three amendments thereto is hereinafter referred to as the "Sales Agreement"). 9. The term of the Sales Agreement commenced upon execution of said agreement, i.e., on or about October 24,2008, and terminated March 31, 2010. 10. Section 2(d) of the Sales Agreement provides in pertinent part: Zoo sales staff shall solicit orders for the Video Games from wholesalers and retailers in the Territory and direct such wholesalers and retailers to purchase such Video Games from ATARI. Purchase orders shall be made out to ATARI if possible. ATARI acknowledges that some of Zoo's customers will not change their current purchase orders with Zoo. For such customers, Zoo shall assign such purchase orders to ATARI and direct the customer to remit payment to ATARl. ATARI in turn shall submit purchase orders to Zoo for the Video Games ordered by the wholesalers and retailers from ATARI and from Zoo as assigned to ATARI. 11. Section 2( f) of the Sales Agreement provides in pertinent part: Accompanying each purchase order from AT ARI to Zoo shall be a payment of the costs of goods amount for the Video Games being ordered (set forth on Exhibit A for the initial orders) plus 50% of the difference 3 1182133-7 between (i) the "ATARI Price" (defined as 90% of the price on the customer purchase order) less a reserve of 10% of the ATARI Price and (ii) the cost of goods ("Initial Payment"). The remaining amount of the AT ARI Price shall be paid to Zoo no later than fifteen days after shipment of the relevant Video Game(s) to the relevant customer. 12. Under Section 2(f) of the Sales Agreement, Atari funded Zoo's manufacture of finished, packaged video games and was to be repaid and paid a fee by receiving the full amount of the customers' payments for those games. To ensure payment to Atari, as to those customers which sent purchase orders directly to Zoo, Section 2(d) of the Sales Agreement required Zoo to assign their purchase orders to Atari and to direct those customers to pay Atari. 13. During the term of Sales Agreement, Zoo procured purchase orders from wholesalers and retailers, which Section 2(d) of the Sales Agreement required Zoo to assign to Atari and as to which Zoo was to direct the customers to remit payment to Atari, but Zoo did not assign such purchase orders to Atari and did not direct the customers to pay Atari. 14. During the term of the Sales Agreement, Atari advanced the amounts specified by ~-' Section 2(f) of the Sales AgreemeJ:!t to Zoo for (i) purchase orders given to Atari; (ii) purchase orders assigned by Zoo to Atari; and, (iii) at the request of Zoo, those purchase orders made to Zoo, which Zoo was to assign, but did not assign, to Atari under Section 2(d) of the Sales Agreement. 15. Zoo agreed with Atari that in the event of any purchase order that Section 2(d) required Zoo to assign to Atari but was not so assigned, Zoo would pay to Atari the full amount of the customer's payment to Zoo for the video games delivered pursuant to the purchase order. 16. Section 2(g) of the Sales Agreement provides in pertinent part as follows: If Zoo fails to make any Video Game available for shipment in a timely manner or if any wholesaler or retailer cancels an order for or refuses delivery of Video Games for any reason, then ATARI shall be entitled to a prompt refund of amounts paid to Zoo by ATARI for the undelivered (to AT ARI) or unshipped (to the retailer or wholesaler) units of such Video 4 1182133-7 Game and reimbursement of all Handling Charges and customer chargebacks, if any, incurred by Atari in connection with such Video Game in addition to its other rights and remedies. 17. In breach of the Sales Agreement, and in particular Section 2(g) thereof, Zoo did not deliver the units of finished, packaged video games subject to certain purchase orders that were not assigned to Atari but as to which Zoo requested and received from Atari the advances specified by Section 2(t) of the Sales Agreement. 18. Alternatively, as to some purchase orders that were not assigned to Atari but as to which Zoo requested and received from Atari the advances specified by Section 2(t) of the Sales Agreement, Zoo delivered the video games subject to the purchase orders to the customers but never remitted to Atari the payments that the customers made to Zoo for those video games. 19. The total of (a) Atari's advances to Zoo for manufacture and delivery of video games that Zoo never manufactured or delivered, and (b) the aforesaid payments received by Zoo, which it failed to remit to Atari, is $1,535,800. 20. 21. 22. Based upon the foregoing, Zoo has br:a.shed the Sales Agreement. Atari has fully performed its obligations under the Sales Agreement. As a direct, approximate, and foreseeable result of Zoo's aforesaid breaches, Atari has been damaged and is entitled to recover from Zoo the sum of $1,535,800 together with interest. Second Claim for Relief (For Money Had and Received) 23. Atari repeats and realleges the allegations of paragraphs 1 through 6 in this Complaint as though fully set forth herein. 5 1182133-7 24. During the period from on or about October 24, 2008 to March 31, 2010, Atari paid millions of dollars to Zoo in consideration of Zoo's covenants (a) to manufacture and deliver finished, packaged video games to customers, and (b) to pay to Atari all sums Zoo received from the customers for the video games for which Atari had paid advances. 25. As to certain purchase orders that Zoo received during the aforesaid time period, Zoo never delivered any of the finished, packaged video ganles to the customers even though Atari advanced to Zoo the funds for manufacturing the video games subject to those orders. 26. Alternatively, as to some purchase orders that Zoo received during the aforesaid time period, Zoo delivered the finished, packaged video games to the customers and received payment from the customers but never remitted those payments to Atari even though Atari advanced to Zoo the funds for manufacturing the video games and paid additional amounts to Zoo that Atari and Zoo agreed would be due to Zoo for manufacture and delivery of finished, packaged video games to the customers. 27. Based on the foregoing, Zoo is holding a total of$1,535,8])0 in advances by Atari, which Atari is entitled to have, and Zoo is not entitled to have. 28. 29. Zoo owes Atari $1,535,800. Prior the commencement of this action, Atari demanded that Zoo return to Atari the $1,535,800, but Zoo refused and still refuses to pay the $1,535,800 to Atari. 30. Based on the foregoing, Zoo owes Atari $1,535,800 for money had and received from Atari, together with interest thereon. Third Claim for Relief (Breach of Sales Agreement Made on October 24, 2008) 31. Atari repeats and realleges the allegations of paragraphs 1 through 6 and 8 through 16 in this Complaint as though fully set forth herein 6 1182133-7 32. During the period from September 2009 to March 31, 2010, Zoo received certain purchase orders that were not assigned to Atari but as to which Zoo requested and received from Atari the advances specified by Section 2(f) of the Sales Agreement. 33. Zoo delivered to the customers the video games for which Atari had paid advances, which were subject to the aforesaid purchase orders, but never remitted to Atari the payments that the customers made to Zoo for the delivered video games. 34. The total amount owed by Zoo to Atari on the aforesaid payments which Zoo did not remit to Atari is $1,194,087. 35. Under the Sales Agreement, with the consent of Zoo, Atari has offset $431,827 against the total amount owed by Zoo to Atari on the aforesaid payments. Said offset consists of (i) reserves retained by Atari pursuant to the Sales Agreement for customer sales allowances, returns and price protection and the like and (ii) the reserve Atari was entitled to take on the total amount of $1,194,087 owed to Atari had it been paid to Atari. 36. As a result of (a) Atari offsetting the $431,827 against the total amount ow~g by Zoo to Atari on the aforesaid payments made to Zoo, and (b) deducting from the amount Zoo owes to Atari for those payments, i. e., $101,917, the amount Atari owes to Zoo for certain freight charges related to the purchase orders described in paragraphs 32 and 33 herein, Zoo owes to Atari a balance of $660,343. 37. Both Zoo and Atari have agreed to the computation in paragraph 36 herein of the balance that Zoo owes to Atari on the payments Zoo received as described in paragraphs 33 and 34 herein. 38. 39. Based upon the foregoing, Zoo has breached the Sales Agreement. Atari has fully performed its obligations under the Sales Agreement. 7 1182133-7 40. As a direct, approximate and foreseeable result of Zoo's aforesaid breaches, Atari has been damaged and is entitled to recover from Zoo the sum of $660,343 together with interest. Fourth Claim for Relief (For Money Had and Received) 41. Atari repeats and realleges the allegations of paragraphs 1 through 6 III this Complaint as though fully set forth herein. 42. During the period from in or about September 2009 to March 31, 2010, Atari paid millions of dollars to Zoo in consideration of Zoo's promises (a) to manufacture and deliver finished, packaged video games to customers, and (b) to pay to Atari all sums Zoo received from the customers for the video games for which Atari had paid advances. 43. As to some purchase orders that Zoo received during the aforesaid time period, Zoo delivered the finished, packaged video games to the customers and received payment from the customers but never remitted those payments to Atari, even though Atari advanced the funds for manufacturing the video games subject to those orders and paid additional amounts to Zoo that Atari and Zoo agreed would be due to Zoo for manufacture and delivery of finished, packaged video games to the customers. 44. Zoo received from those customers for the video games delivered by Zoo pursuant to those purchase orders a total of $1,194,087, of which Zoo was entitled to retain only $101,917 for certain freight charges related to those purchase orders, and $1,092,170 was for Atari's sole use and benefit. 45. By Atari's offset of $431,827 consisting of reserves and the reserve which Atari was entitled to hold from the $1,092,170 had it been received by Atari, Zoo paid only $431,827 of the $1,092,170 it owed to Atari, leaving a balance of $660,343 still owed by Zoo to Atari. 8 1182133-7 46. Both Zoo and Atari have agreed to the computations in paragraphs 44 and 45 herein of the balance that Zoo owes to Atari on the payments Zoo received in connection with the purchase orders referred to in paragraphs 43 and 44 herein. 47. Prior the commencement of this action, Atari demanded that Zoo return to Atari the aforesaid sum of $660,343, but Zoo refused and still refuses to pay the $660,343 to Atari. 48. Zoo has failed to pay the money to Atari, and the $660,343 is now owing from Zoo to Atari, together with interest. Fifth Claim for Relief (Breach of Agreement Entered into in or About June 15,2010) 49. Atari repeats and realleges the allegations of paragraphs 1 through 6 in this Complaint as though fully set forth herein. 50. In or about June 2010, Atari and Zoo entered into an agreement (the "June 2010 Agreement") whereby Atari agreed to fund Zoo's manufacture of finished, packaged video games, in consideration of Zoo's covenants (a) to manufacture and deliver finished, packaged video games to customers and (b) to pay to Atari all sums Zoo received from the customers for the video games for which Atari had paid advances, or, in the event any customer canceled an order, to refund to Atari all sums paid by Atari to Zoo for the units of video games subject to that order and pay all sums to which Atari would have been entitled had the order not been cancelled. 51. The purchase orders subject to the June 2010 Agreement correspond to the Sales Orders set forth in the attachment to the agreement dated June 15,2010 by and among Working Capital Solutions, Inc., Atari, and Zoo, a copy of which, including said attachment, is annexed hereto as Exhibit B. 52. Atari funded Zoo's manufacture of the aforesaid finished, packaged video games. 9 1182133-7 53. Zoo delivered the video games to the customers but, in breach of the June 2010 Agreement, never remitted to Atari the payments that the customers made to Zoo for those video games. 54. Alternatively, one or more customers canceled some of the purchase orders subject to the June 2010 Agreement, and, in breach of the June 2010 Agreement, Zoo never refunded to Atari all sums it paid to Zoo for the units of video games subject to those orders and never paid all sums to which Atari would have been entitled had the orders not been cancelled. 55. $1,528,044. 56. With the consent of Zoo, Atari offset $200,909 against the total amount owed by The amount owed by Zoo to Atari pursuant to the June 2010 Agreement IS Zoo to Atari under the June 2010 Agreement. That offset consists of (i) reserves retained by Atari pursuant to the June 2010 Agreement for customer sales allowances, returns and price protection and the like, and (ii) the reserve Atari was entitled to take on the total amount of $1,528,044 owed to Atari had it been paid to Atari. 57. As a result of (a) Atari offsetting the $200,909 against the total amount owed by Zoo to Atari under the June 2010 Agreement, and (b) deducting, from the amount Zoo owes to Atari, $233,920, the additional amount Atari would have owed to Zoo for deliveries of video games under the June 2010 Agreement had Zoo not breached said agreement, Zoo owes to Atari a balance of$1,093,215. 58. Both Zoo and Atari have agreed to the computation in paragraph 57 herein of the balance that Zoo owes to Atari under the June 2010 Agreement. 59. 60. Based upon the foregoing, Zoo has breached the June 2010 Agreement. Atari has fully performed its obligations under the June 2010 Agreement. 10 1182133-7 61. As a direct, approximate and foreseeable result of Zoo's aforesaid breaches, Atari has been damaged and is entitled to recover from Zoo the sum of $1,093,215 together with interest. Sixth Claim for Relief (For Money Had and Received) 62. Atari repeats and realleges the allegations of paragraphs 1 through 6 III this Complaint as though fully set forth herein. 63. In or about June 2010, Atari advanced funds to Zoo for the manufacture of finished, packaged video games in compact disc format to be sold and delivered to certain customers, and, in or about June 2010, Zoo covenanted that Atari was entitled to all funds received from those customers in payment for delivery to them of the aforesaid games. 64. Zoo received payments totaling $1,528,044 from the aforesaid customers, which payments were for Atari's sole use and benefit. 65. Alternatively, the total of (a) all payments Zoo received from the aforesaid customers and (b) (i) all sums that Atari paid to Zoo for the units of video games subject to orders canceled by one or more of said customers and (ii) all sums to which Atari would have been entitled had the orders not been cancelled is $1,528,044, and Zoo has retained all of those payments and sums which were for Atari's sole use and benefit. 66. With the consent of Zoo, Atari has offset $200,909 against the total amount owed The offset consists of (i) reserves retained by Atari for customer sales by Zoo to Atari. allowances, returns and price protection and the like, and (ii) the reserve Atari was entitled to take on the total amount of $1 ,528,044 owed to Atari had it been paid to Atari. 67. As a result of (a) Atari offsetting the $200,909 Atari against the total amount owed by Zoo to Atari, and (b) deducting, from the total amount Zoo owes to Atari, $233,920, the 11 1182133-7 additional amount Atari would have owed to Zoo for deliveries of video games had Zoo not breached its aforesaid covenants, Zoo owes to Atari a balance of$1,093,215. 68. Prior the commencement of this action, Atari demanded that Zoo return to Atari the aforesaid sum of $1 ,093,215, but Zoo refused and still refuses to pay the $1,093,215 to Atari. 69. Zoo has failed to pay the money to Atari, and the $1,093,215 is now owing from Zoo to Atari, together with interest. WHEREFORE, Atari demands that judgment be entered as follows: A. On the First Claim for Relief, awarding to Atari and against Zoo an amount not less than $1,535,800, together with pre-judgment and post judgment interest thereon; B. On the Second Claim for Relief, awarding to Atari and against Zoo an amount not less than $1,535,800, together with pre-judgment and post judgment interest thereon; C. On the Third Claim for Relief, awarding to Atari and against Zoo an amount not less than $660,343, together with pre-judgment and post judgment interest thereon; D. On the Fourth Claim for Relief, awarding to Atari and against Zoo an amount not less than $660,343, together with pre-judgment and post judgment interest thereon; E. On the Fifth Claim for Relief, awarding to Atari and against Zoo an amount not less than $1,093,215, together with pre-judgment and post judgment interest thereon; 12 1182133-7 F. On the Sixth Claim for Relief, awarding to Atari and against Zoo an amount not less than $1,093,215, together with pre-judgment and postjudgment interest thereon; G. Awarding Atari its reasonable attorneys' fees, and expenses incurred in or for this action; and H. I. Awarding Atari costs and disbursements; and Granting such other and further relief to Atari as the Court deems just and proper. Dated: New York, New York March 1,2011 13 1182133-7 Exhibit A SALES AGREEMENT Jlflv THIS SALES AGREEMENT ("Agreement") made on the~ day of October 008, by and between: Zoo Publishing, Inc., a corporation of the State of New Jersey, wit a principal business address of 700 Liberty Place, Sicklerville, New Jersey 08081 (hereinafter referred to as "Zoo"), and Atari, Inc. with a principal business addre s of 417 Fifth Avenue, New York, NY 10016 (hereinafter referred to as "ATARI") WHEREAS, Zoo is engaged in the publishing, development, licensing, manufacturing, marketing, sale and distribution of various interactive video garr: s for play on various platforms throughout the world, and WHEREAS, ATARI would like to be a customer of Zoo which purchase products from Zoo and in turn resells the products to wholesalers and retailers in United States, Mexico and Canada for sales to ultimate end users. NOW, THEREFORE, in consideration of the mutual covenants and hereinafter set forth and for other valuable consideration, the sufficiency of hereby acknowledged, the parties hereto agree as follows: e 1. Definitions: As used in this Agreement the following terms shall have the meanings below: a. "Territory," shall mean the United States (and its territories, possessions and military bases wherever situated), Canada an Mexico. b. "Platforms," shall include the Nintendo Game Boy Advance ystem (GBA), the Nintendo Dual Screen System (DS), the NintendC' ii System (Wii), the Sony Playstation Portable (PSP) and Sony Playstation 2 (PS2), and the Personal Computer. .---~ c. "Video Games" or "Games," means individual finished unit..- of video games, including all applicable manuals and packaging, devel ped and marketed for distribution on the Platforms during the Term ~ isted on Exhibit "A". The corresponding initial purchase order unit ar ounts and cost of goods for each Video Game are attached hereto 8.<': Exhibit "A"; as such exhibit may be amended from time to time in Be rdance with the terms of this Agreement. Notwithstanding, purchas(; rders shall be added on a revolving basis. 2. GRANT OF RIGHTS AND SALES PROCEDURE: 1 a. Subject to the tenus and conditions of this Agreement, Zoo hereby 81' ATARI the right to purchase the Video Games directly from Zoo ane Video Games to wholesalers and retailers in the Territory. The right the specific Video Games to the specific wholesalers and distributors identified in Exhibit A shall be exclusive to Atari. Notwithstandingl foregoing, in the event any such retailers or wholesalers refuse to pur Video Games from ATAR! or AT ARI refuses to sell the specified Vi Games to any of the specified wholesales or retailers, Zoo shall have to sell such Video Games to such wholesaler or retailer. ts to ell such sell e hase the eo e right b. ATARI recognizes that Zoo is bound by certain license agreements tl control the use of proprietary property, proprietary information, seJJVi e marks, game content, inclusive of characters, script, speech, images, characterizations, designs, graphics, artwork as well as the use of an)' trademarks or service marks associated with each Video Game. ATA I shall be permitted to utilize, in all cases, unless specifically prohibited by ; 0, all images, text and other content contained on the packaging, manuals ( sell sheets relative to each specific Video Game. Should ATARI desire to tilize specific elements ofthe Games outside of the packaging, manuals or ell sheets for such Game, ATARI shall submit a specific request to Zoo illustrating the proposed use and specifying the proposed purpose of ' kid illustration (advertising, store display, marketing etc.). Zoo will revie all such submissions and use its commercially reasonable efforts to appr ve the same or submit the same to its applicable licensor(s) for review and a. proval in an expeditious manner. c. Notwithstanding theJoregoing, should any license granted to Zoo wi respect to any Video Game by any licensor of such Video Game expire, tenn ate, revert or if such Game otherwise ceases to be available to Zoo, such" ideo Game shall cease to be part of this Agreement upon written notice to T ARI. In such event, ATARI shall be entitled, subject to a return to Zoo oft e unsold units of the relevant Video Game, at Zoo's expense: (i) to a p1 mpt refund of amounts paid to Zoo by ATARI for such Video Game equ to the amount paid to Zoo for the unsold units of such Video Game in stock t AT ARI and returned to Zoo; (ii) to reimbursement of all Handling C ges (as defined in Section 2(h and customer chargebacks, if any, incurred ATARI in connection with such Video Game; or, in lieu if (i) above, iii) to allocate any portion of amounts paid to Zoo by ATARI for such unse units of the relevant Video Game against unshipped product paid hereund, to such other Video Game titles contained in Exhibit A as the parties shall a ee or to such new Video Games as the parties mutually agree to add to Exhib A, so as to provide an appropriate credit for any such payment for the unav ilable Video Game. d. Zoo sales staff shall solicit orders for the Video Games from wholesa ers and retailers in the Territory and direct such wholesalers and retailers to p chase 2 such Video Games from ATARI. Purchase orders for such Video Gs es shall be made out to ATARI ifpossible. ATARI acknowledges that: me of Zoo's customers will not change their current purchase orders with Z o. For such customers, Zoo shall assign such purchase orders to ATARI and irect the customer to remit payment to ATARI. ATARI in tum shall subm t purchase orders to Zoo for the Video Games ordered by the wholesa rs and retailers from ATARI and from Zoo as assigned to ATARI. The pun order from ATARI to Zoo shall contain the quantity ordered and the . due to Zoo and such additional terms as may be mutually agreed fron time to time. Any additional terms and conditions that conflict with this Agr ement shall be null and void. It is the intent of the parties that this Agreemc;' t set forth all of the material terms and conditions of all Video Game sale~ ade by Zoo to ATARI, unless otherwise mutually agreed. e. ATARI shall purchase directly from Zoo the initial quantities of the ' ideo Games as set forth on the attached Exhibit "A". Subsequent purchas, orders shall be sent by ATARI to Zoo at any time during the Term and ATA I shall purchase the Video Games at the prices set forth on Exhibit A in the set forth on the subsequent purchase orders, or at other such price as detennined by Zoo. Any such subsequent Video game purchases sha subject to the availability of the relevant Video Game. The payment subsequent orders shall be made by ATARI to Zoo once per week du Tenn. f. Accompanying each purchase order from ATARI to Zoo shall be a Pi ent ofthe cost of goods amount for the Video Games being ordered (set ,., rth on Exhibit A for the initial orders) plus 50%.!)f1he difference between (. the "ATARI Price" (defined as 90% of the price on the customer purch" e order) less a reserve of 10% of the ATARI Price and (ii) the cost of goods (' itiaI Paymenf'). The remaining amount ofthe ATARI Price shall be pai< to Zoo no later than fifteen days after shipment of the relevant Video Game( to the relevant customer. The reserve shall be analyzed and reviewed sixty following the execution of this Agreement and liquidated monthly th with a final liquidation no later than July 31, 2009, subject to Section The reserve amount will be returned to Zoo on a monthly basis to the xtent that the amount of the reserve exceeds actual and projected customer ales s. allowances, returns and price protection and the like given in lieu Ofl Reserve amounts may be cross-collateralized. For the avoidance of d ubt, ATARI shall wire the Initial Payment for the Video Games listed on xhibit A to Zoo upon its execution of this Agreement. Zoo shall provide A ARI with wire instructions under separate cover. Refunds of any portion Initial Payment shall be governed by Sections 2(c) and 2(g) ofthis Agreement. g. 3 Zoo shall verify all purchase orders by return facsimile or e-mail within' of receipt of the purchase order from ATARl. Verification shall specify e estimated shipping date as well as any products which may be back ordel Unless otherwise agreed to by ATARI, Zoo agrees to use commercially reasonable efforts to make products available for shipment within two (2 business days following receipt ofthe purchase order provided that the Y deo Games requested are in inventory. If Zoo must produce inventory or ol'd Video Games from Sony or Nintendo to fulfill the purchase order, Zoo agrees tc make product available for shipment within two (2) business days following th receipt of the completed manufacture offinished units of the products. Zoo sha' notify ATARI ifa product ordered by ATARI is not in stock and shall advise A ARI of the anticipated delivery date. If Zoo fails to make any Video Game avail ble for shipment in a timely manner or if any wholesaler or retailer cancels an o. er for or refuses delivery of Video Games for any reason, then ATARI shall be ntitled to a prompt refund of amounts paid to Zoo by ATARI for the undeli veret (to ATARI) or unshipped (to the retailer or wholesaler) units of such Video' ame and reimbursement of all Handling Charges and customer chargebacks, l any, incurred by Atari in connection with such Video Game in addition to its, er rights and remedies. In such event, ATARI shall return the unshipped un ts of the Video Game to Zoo at Zoo's expense, and, notwithstanding anything to t e contrary contained in this Agreement, Zoo shall be free to sell such Vide. Games to the wholesaler or retailer which cancelled its order(s). h. Zoo will pay all Handling Charges associated with any returns of Video { ames to Zoo. In addition, in the event of a recall of any Video Games, Zoo will r y all costs associated with the recall, including but not limited to Handling eh ges, customer chargebacks, end user notification costs, and unit replacement t sts. The term "Handling Charges" will mean, for each Video Game retunfed, reasonable labor and administrative costs plus all of Atari's out-of-pockel: shipping and insurance costs related to the return and, if applicable, reple .shment of such Video Games, to and from Zoo to Atari and to and from Atari to customers. 3. Term: The term ofthis Agreement shall commence upon execution of this A eement and shall automatically expire March 31, 2009 (the "Term"). 4. Representations by Zoo: Zoo represents the following: a. Zoo has obtained, or shall obtain prior to the applicable release d: es set forth in Exhibit "A", all necessary rights and licenses to develop, ublish, market, sell and distribute the Video Games as contemplated by t... s . Agreement. Anything contained in this Agreement notwithstandi g, as a precondition to any obligation of ATARI to make any payment \ th respect to any Video Game, Zoo shall have obtained all such righ and licenses with respect to such Video Game. I 4 b. Zoo shall sell the relevant Video Game to third parties and shall Zoo purchase order ATARI. Zoo shall ship the Video Games p ATARI' s instructions and shall direct the customer to pay Atari. assist ATARI with collections, if needed. c. Zoo shall sell and deliver to ATARI, Video Games, duly package. finished units that are in good and saleable condition and in confo 'ty with the docwnentation provided and that will operate in accordan e with industry standards, for sale by ATARI to wholesalers and retailers or the use by the ultimate end user. In addition, Zoo shall have the optio to engage certain third parties that provide manufacturing services tc T ARI for the purpose of assembling and packaging Video Games at Zoe s sole discretion. d. Zoo warrants that it is duly incorporated and is ingood standing it the State ofNew Jersey, with the full power and authority to execute I d deliver this Agreement and to perfonn the its obligations hereundt . e. The entering into of this Agreement by Zoo does not violate any agreement, right or obligation ofZoo and no other person or enti. is required to execute this Agreement or perfonn the obligations her n. f. There is no pending or threatened litigation which may affect the) gality, validity or enforceability of this Agreement or any transactions contemplated hereunder. g. The Video Games delivered to ATARI shall be subject to Zoo's a: its . developers' and manufacturers' standard warranty tenns as such a contained in the packaging for each Video Game, with copies to communicated in writing to ATARI and to end users from time to ime. Zoo will provide technical support for each Video Game. Technic support will include, without limitation, warranty service, internet upport and phone support via a local or toll-free telephone number. Zoo ill have personnel knowledgeable of the technical and application aspects f each Video Game available to answer support questions during regular usiness hours. h. None of the Video Games or related materials infringes on any pa nts, copyrights, trademarks, tradenames, trade secrets or any other iute: ectual property rights of a third party. 1. / The Video Games and related materials will be in compliance wit applicable laws and regulatory requirements in the Territory, inch ing without limitation, ESRB requirements and procedures, packagin8 and labeling requirements, language requirements, and country of orig 5 requirements. For purposes of compliance with applicable ESRB regulations Zoo shall be deemed the ''publisher'' of the Video G ,es. 5. Representations by ATARI: ATARI represents the following: a. ATARI warrants that it is duly incorporated, and is in good standi, Ig in the State of Delaware, with the full power and authority to execut and deliver this Agreement and to perform the its obligations hereund b. The entering into of this Agreement by ATARI does not violate a y agreement, right or obligation of ATARI and no other person or (, tity is required to execute this Agreement on behalf ofATARI or perfo ATARI's obligations herein. c. To ATARI's knowledge, there is no pending or threa.tened, litiga". on which may affect the legality, validity or enforceability of this A eement or any transactions contemplated hereunder. d. ATARI warrants and represents that it will make no claims or ass against Zoo's ownership of, or license rights in and to, any of Vic Games or advertising, packaging or promotional materials for the Games during the Term of this Agreement or thereafter. Zoo's lk es in and to the Video Games shall remain the sole and exclusive prop yof Zoo. ATARI also agrees that neither this Agreement nor any actio , omission or statement by Zoo or ATARI, nor ATARI's use of the - ideo Games or elements thereof in connection with this Agreement shal. any way confer or imply a grant of rights, title or interest thereto, or to' y element or portion thereof or any other rights, including, without Ii, . 'tation, copyrights, trademarks, trade names, service marks or goodwill assc . ted therewith, the ownership of which shall be and at the times remain lely and exclusively with Zoo or its licensors. Zoo reserves all rights now kt hereafter devised in and to the proprietary properties used in the Vi eo G'ames, including all copyrights and trademarks including but not Ii. .ted to the names and logos of Zoo and its licensors throughout the uniVCl e in perpetuity. 6. Tennination: (a) This agreement may be tenninated upon written notice, in w ole or in part (as it relates to anyone Video Ganle), as follows upon the occurrence of yof the following: i. For anyone Video Game, by either party upon the termination, expiration or loss of the licenses necessary for Zoo to publish, m' 'ket, manufacture, sell or distribute the relevant Video Game, subject t the provisions of Section 2( c). 6 ii. By either party in the event the other party ceases to engage in he business contemplated under this Agreement. iii. By either party upon any material breach of the representation, warranties, covenants or agreements of the other party set fo in this Agreement, provided that such breach is not cured within 5 d s following the breaching party's receipt of written notice of su h breach from the non-breaching party. iv. By either party, ifthe other party becomes insolvent, files or :1 against it a petition under any bankruptcy law (which, ifinvo,[ tary, is unresolved after sixty (60) calendar days from the date of suc filing), proposes any dissolution, liquidation, composition, financial reorganization, or recapitalization with creditors, makes an as ignment or trust mortgage for the benefit of the creditors, or a receiver tee, custodian, or similar agent is appointed or takes possession w respect to any property or business ofsuch party. (b) Following expiration or termination ofthis Agreement, ATARI shall ha the right to hold a reasonable reserve for projected returns, to be liquidated no later - an July 31,2009. Following such liquidation, Zoo shall be responsible for handling fiel inventory issues relating to the Video Games.. 7. Confidentiality: Zoo and ATARI acknowledge that each party may find it ne ssary to provide to the other party certain confidential information ("Confidential Inform tion ") that the disclosing party considers proprietary. Each party agrees to keep confid ntial all Confidential Information disclosed to it by the other party, and identified as suc by the disclosing party, and to protect the confidentiality thereof in the same manner it rotects the confidentiality of similar information of its own (at all times exercising at Ie t the same degree of care in the protection of such Confidential Information as such p y would use to protect its own Confidential Information); provided, however, that either party shall have any such obligation with respect to use or disclosure to third 1'81 ies of such Confidential Information as can be established to: have been known public ; have been generally known in the industry before communication by the disclosing pI y to the recipient; have become known publicly, without fault on the part of the recipien, subsequent to disclosure by the disclosing party. Notwithstanding the foregoing nothing herein shall prevent a recipient from disclosing all or part of the Confidential In~: rmation that it is legally compel1ed to disclose (by oral deposition, interrogatories, reque for information or documents, subpoena, civil investigative demands, or any other ocess) provided, however, that before any such disclosure the recipient shall notify the disclosing party in writing of any such order or request to disclose and cooperat with the disclosing party (at the disclosing party's cost) with respect to any procedure SOl! t to be pursued by the disclosing party in protecting against such disclosure. Notwithst ding the foregoing, the parties acknowledge and agree that this Agreement may be til d with the United States Securities and Exchange Commission. 7 8. Indemnification; Limitation of Liability. Zoo does hereby indemnify, defend and hold hannless ATARI and ATA subsidiaries, parent companies, affiliates, officers, employees and approved and pennitted licensees and assigns from any and all loss and damage (including, wi limitation, reasonahle fees and disbursements ofcounsel incurred by such ind party in any action or proceeding between the parties or between any party and' party or otherwise) arising out ofor in connection with any third party claim reI (i) any breach of any of the warranties, representations, duties, obligations of or agreements made by Zoo under this Agreement; (ii) any product recalls involvif! the Video Games, whether initiated by Zoo, the product developer or manufactu governmental or regulatory agency (including, without limitation, the ESRB) or otherwise; and (iii) any violation oflaw by Zoo in connection with its publishin development, licensing, manufacturing, marketing, sale and distribution of the \ Games. ATARI shall have the right to participate at its own expense and by its '. counsel in the defense of any such claim, and in such event, the parties hereto sh cooperate with each other in the defense of any such action, suit or proceeding a. 1's y third ing to , any deo b. ATARI agrees to defend, indemnify and hold harmless Zoo from and ag' and all third party claims, suits, demands, liabilities, losses, damages, reasonable attorneys' fees and other costs and expenses that may result, in whole or in part, and breach or alleged breach of any representation, warranty or agreement made to this Agreement; (ii) any sale by ATARI of any Video Game outside of the T (iii) any unauthorized manufacture or distribution of any Video Game by A TAR (iv) any violation oflaw by ATARI in connection with the sale of the Video Gar, the extent not arising from acts or omissions by Zoo. nst any 'tory; ; and es to c. EXCEPT IN THE CASE OF A PARTY'S INDEMNIFICATION OBLIGATIONS HEREUNDER OR A BREACH OF THE CONFIDENTIALIT PROVISIONS HEREOF, IN NO EVENT SHALL EITHER PARTY BE LIABI TO THE OTHER UNDER OR IN CONNECTION WITH THIS AGREEMENT FO ANY LOSS OF PROFIT OR INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXE LARY, PUNITIVE OR OTHER INDIRECT DAMAGES OF ANY NATURE, FOR A:t-. REASON WHATSOEVER INCLUDING, WITHOUT LIMITATION, A BRE H OF THIS AGREEMENT, THE EXPIRATION OR ANY TERMINATION OF TEfl AGREEMENT, WHETHER SUCH LIABILITY IS ASSERTED ON THE BAS S OF CONTRACT, TORT (INCLUDING NEGLIGENCE OR STRICT LIABILITY) R OTHERWISE, EVEN IF A PARTY HAS BEEN WARNED OF THE POSSmI ITY OF SUCH DAMAGES. d. During the Tenn of this Agreement and 1 year thereafter, Zoo will at all maintain at its own cost comprehensive general liability (which insurance shall i contractual liability endorsement covering Zoo's obligations under this Agreem, product liability insurance and errors and omissions insurance. Each policy shaJ. mes elude a t), have 8 coverage of at least three million dollars ($3,000,000). Each policy shall be iss by an insurance company with a rating of A or better as set forth in the most current B st Insurance Guide. Such insurance shall be at least sufficient to cover Zoo's indemnification obligations hereunder, but the amount and type of insurance co' age specified herein shall in no way be construed to limit the scope of indemnificatil by Zoo. Zoo shall add ATARI as an additional insured to each policy and will funI sh certificates evidencing that insurance within ten (10) days of the effective date (> this Agreement. In the event there are claims against any existing insurance policy th respect to any Video Game, Zoo will procure additional insurance coverage whi his necessary to maintain the minimum level of coverage described in this section. e. Risk of loss and title for Video Games shall pass to ATARI from Zoo u earlier of deli very to ATARI's designated carrier or designated location in a w house. For Video Games returned to ATARI by customers, for which title has passed tt those customers, title will pass from the customer to ATARI upon return to ATARI. 'sk of loss shall pass to ZOO upon re-delivery to Zoo of returned Video Games. 9. RESERVE REPORTS AND AUDIT. (a) ATARI shall keep sufficient records of all sales ofthe Video Ga es in order to verify the amount of the reserve ultimately retained by A ARI and send a report to Zoo for each month ofthe Term no later that 5 days following the end of such month, setting forth the discounts give directly attributable to the Video Games for which ATARI has retained tl reserve. Such reports shall include, at a minimum, full details co ceming each retail account and all Video Games returned, all markdown~ and other discounts and deductions with specifics for each Video Gar e. ATARI shall maintain the records upon which each monthly rese e report is based for at least one (1) year from the date of such report. Zo , at its sole cost, shall have the right to have an independent accountant udit such records upon at least 15 business days advance notice in WI": ng, but in no event more than once per 12 months. Such audits will be CI. ducted during normal business hours and no audit shall be conducted: dl . g the first forty-five (45) days of a quarter. In the event it is determin that ATARI has ultimately retained reserve amounts that it should ha" remitted to Zoo, ATARI shall promptly remit the unremitted anu ts to Zoo arld, if ATARI has underpaid Zoo by more than ten percent t: 0%) of the reserve amount for the Video Game(s) subject to the audit, A ARI shall pay for the reasonable out ofpocket audit costs and expens . incurred by Zoo in reviewing and/or auditing said records. (b) 10. Miscellaneous. (a) Force Majeure. Neither party shall be responsible for delays or ailure of performance resulting from acts beyond the reasonable control of such party, neluding 9 without limitation, acts of God, acts of war, governmental regulations, pow,. floods, earthquakes or other disasters. (b) Survival. Sections 1, 2(f) (solely with respect to the reserve), 5, 7, 8, 9(b), 10 (b) - (i) and 10 (k) ~ (0) shall survive the expiration or tenninati< of this Agreement for any reason. (c) Notices and Payments. All notices required or permitted u Agreement shall be in writing, shall reference this Agreement and shall be deem. (i) upon receipt after having been sent by registered or certified mail, re. ' requested, postage prepaid; or (ii) upon receipt after deposit with a commercial carrier, with written verification of receipt. All communications shall be s( address set forth below, or to such other address as may be designated by a giving written notice to the other party pursuant to this section: If to Zoo: Zoo Publishing, Inc. Attn: Susan J. Kain, President 700 Liberty Place Sicklerville, New Jersey 08081 If to ATARI: Atari, Inc. Attn: Bob Spellerberg 417 Fifth Avenue NeW York, NY der this given: receipt vemight t to the arty by All payments due to Zoo pursuant to this Agreement shall be sent via wire to a account to be specified by Zoo. (d) Independent Contractor. Nothing in this Agreement shall be co constitute either party as the partner, joint venturer, agent, employee or affili. other, it being intended that the parties shall remain independent contractors party shall be liable for the obligations, liabilities or representations of the other shall not describe or hold itself out as an agent of the Zoo, nor describe itself ( as a distributor of Zoo. Neither party shall hold itself out to be the agent of the 0 (e) Governing Law. This Agreement shall be construed underth internal laws of the State ofNew York, without regard to its choice oflaw provisions. E ch party agrees that the state and/or federal courts located in the County of New York~' all have exclusive jurisdiction over any dispute arising hereunder. Zoo waives any ,0 ection it arises may have to such venue. In the event any dispute, claim, question or differeJ with respect to this Agreement or its perfonnance, enforcement, breach, tenn~ ation or validity, the parties hereto shall use their commercially reasonable efforts to .ettle the dispute. To this end, they shall consult and negotiate with each other, in good faith and 10 understanding of their mutual interests, to reach a just and equitable solution sa .sfactory to both parties. Headings. The division of this Agreement into Sections and the 'nsertion of headings are for the convenient reference only and are not to affect its interpr ation. (f) (g) Amendments. No supplement, modification, amendment~ waiver, tennination or discharge of this Agreement shall be binding, unless executed:! writing by a duly authorized representative of each party to this Agreement. (h) Waiver. No waiver of any of the provisions of this Agreemen deemed to constitute a waiver of any other provision (whether or not similar); such waiver be binding unless executed in writing by the party to be bound by tl No failure on the part of Zoo or ATARI to exercise, and no delay in exercising under this Agreement shall operate as a waiver of such right; nor shall any partial exercise of any such right preclude any other or further exercise of sue the exercise of any other right. shall be waiver. y right ingle or right or (i) Entire Agreement. This Agreement, including the Exhibit~ thereto, constitutes the complete and entire agreement of the parties and supersedes all revious communications, oral or written, and all other communications between them l' lating to the subject matter hereof. There are no representations, warranties, condition' or other agreements, express or implied, statutory or otherwise, between the parties in c nnection with the subject matter of this Agreement, except as specifically set forth herein d Zoo and ATARI have not relied and are not relying on any other information, disc: ssion or understanding in entering into and completing the transactions contemplat by this Agreement. ~~ (j) Assignment. This Agreement shall be binding upon and in benefit of Zoo and ATARI and their respective successors, heirs, personal repre and pennitted assigns. No party shall have the right to assign this Agreement its rights or obligations hereunder without the prior written consent of the other any attempted assignment shall be null and void; provided that ATARI shall be to assign this Agreement and its rights and obligations (in whole or in part) w consent of Zoo to a subsidiary or affiliate of ATARI or pursuant to a merg(. substantially all of the stock or assets or business subject to this Agreement similar type transaction involving ATARI and/or its affiliates. Zoo shall be p. assign this Agreement and its rights and obligations (in whole or in part) w consent of ATARI to a subsidiary or affiliate of Zoo pursuant to a merge substantially all of the stock or assets or business subject to this Agreemenl similar type transaction involving Zoo and/or its affiliates. out the , sale of or other itted to out the sale of or other (k) Severability. If any provision of this Agreement shall be deen arbitrator or any count of competent jurisdiction to be invalid or void, the. provisions shall remain in full force and effect. by an aining 11 From: 10/24/2f1J8 17: 10 I . P. DD2/DD2 ... ' ' .. "" .......... " ....-.....:...: (1) Counterparts: Fa&:similc Si~. This Agreement may be e1lccutccl in one or more munterputs. ach of which when Iakcn togetltar. _II be deemed to c:onstitute one and the same Instrument. Facsimile signatures on Ibis Aan:cmC1lt shall be deemed origiJJala for.1I purposes. (m) No Third Party B_ftciaries. Nothina II) this Agreement is intended or shall be construed to give l1li)' penon. other than the pIItiu hereto (and Zoo'. and ATARI's parents and subsidiaries), any legal or equitlble right. remedy or claim under or in respoct ofthis Agreement or any provision cantained herein. . (n) Exhibits. The exhibits II1d schedules rcKrrod. to in this Agreement aR IIltIched to and arc incorporated herein in their cntimy by RfcreJa. (0) Other Products. Subject to ATARI's ex.c:lusivo ripts hereunder, boIh 7AJo and ATARt acknowledge that both are in the business of crating and publishing software products for a vanei;)' of hardware pJltforms and related hardware produc:b. that both maintain and cotttinaally seek reJatioaships with other parties, ad that they maintain and continually seek licensing or similar amngeNDtl with other parties. Subj~ to ATAlU's exclusive riPIs hereunder, the patios I8fCC that nothing olso in this Agn:cment wllJ be construed u radricting or probibiting eICh from COndnuing its businCSl in any lI.wful manner, and without limitation, elida may at.its solo discretion at any time during or after tho Tonn Ca) create, publish, rnanuf8cture. nwbt and dism'bute any other products, aven if such products arc competitive to and simil. to the Video Games; and (b) cnta' into and maintain rell.ticmships with any other party, CVOIl if.uda parties are competitan, or Iiccnsors of the other party. IN WITNESS WHEREOF, the parties have executed this ~t effective on the date first written above. ZOO PUBLISHINO, INC. ATART,INC. BY::1~K~ Name::'lt)::,ao . Kat a Titlel: Qce;5 " 0 e {Ii 12 [SIGNATURE PAGE TO DIRECT SALES AGREEMENT] 13 EXHIBIT "A" AMF.NDMF.NT [\"L\1BE}\ 0/,\[ TO TIlE OCTOBER 24, )(108 ~"l.F.$ .:\GRFFMENT This <lll1cmJuwnt Ilumbt'r 011(' ("Altu'llcinH'llt , .. ), d"lectiw :l~ Ilj Apri! I, 2OCl9 (lhe "Amendment I Errective O;1tt:"'). "flIt"nd, tht' ~ilk~ r\grc"r1l.?nt d<11.::d OctClher 24. 2008 h~lwct'n loo Publishing. Inc. ,"Zoo"') ;illd Atari. lnr. (" ..... tllTi"). in tilll jilTCe :.Ind cllia:t a:; of tl1\: d.1t~ hcn:of (the "Sall~ Agn:('llI('lll"). Thi~ Amendmenl 1. when fully l'\cc;Jlt'd, shall wn~:itult lilt' further ll11derst,lnding bc.lwcen .Iw panje~ wilh n:spcc( to the Salc.> l\gr~'cmcnl, as 1(,110\15: Section TIlt' rem) ~ i~ is nwdificd (IS lblltlW5: herehy e:\lmdcd thmugh April 30, 2009. l\('epl :\~ e'rres~l~ ()J' J:ly necessary implicatioll modilicd tIl' amcnul"u b~ lhi:; AmcllIJnwnt !. lhe tc'm~ of the Sales Agrecll1(,llI :Ire hCTt'h~ ralilkd ;Irld confirmed willwul limitation or excepllon. Capilaliled lerms used in Ihi~ 1\1Il~l1d111Cl1t I and 1101 "lht'r'Wj~~, u.:lincd ~hflll haw the sallie Ilwiltling a~cribed to Ihem a~ sel I{)Tlii ill 1I1i: Sales '\gr~l'mt'nl. The p.1T1ics hereto hm~' executed thi~ Amendment I. which ~hill; be cl'JC::tht: il~ of the Amendment I Efli:ctive Dale. 1(10 l'uhiishil1~lrlC_ .."'7 Al::tri. Inc. B): -,~~~.!:,-~;, / ' ,:':,i:,-/! rille: Page I of 1 AMENDMENT NUMBER TWO TO THE OCTOBER 24, 2008 SALES AGREEMENT This amendment number two ("Amendment 2"), effective as of May 1, 2009 (the "Amendment 2 Effective Date"), amends the Sales Agreement dated October 24, 2008 between Zoo Publishing, Inc. ("Zoo") and Atan, Inc. ("Atari"), as further amended pursuant to Amendment 1, and, in full force and effect as of the date hereof{the "Sales Agreement"), This Amendment 2, when fully executed, shall constitute the further Wlderstanding between the parties with respect to the Sales Agreement, as follows: Section 3 is modified as follows: The Tenn is hereby extended through May 31, 2009. Except as expressly or by necessary implication modified or amended by this Amendment 2, the terms of the Sales Agreement are hereby ratified and confirmed without limitation or exception. Capitalized tenns used in this Amendment 2 and not otherwise defined shall have the same meaning ascribed to them as set forth in the Sales Agreement. The parties hereto have executed this Amendment 2, which shall be effective as of the Amendment 2 Effective Date. By: ~hm~ M~I(l& Atar~ Inc. Name: >-rtJ Nl~J wMt--~abJ Title: By: ~ Title: cw U1J AMENDMENT NUMBER THREE TO THE OCTOBER 24, 2008 SALES AGREEMENT This amendment number three ("Amendment 3"), effective as of June I, 2009 (the "Amendment 3 Effective Date"), amends the Sales Agreement dated October 24, 2008 between Zoo Publishing. Inc. ("Zoo") and Atari, Inc. ("Atari"), in fuJI force and effect as of the date hereof (the "Sales Aereement"). This Amendment 3, when fuJly executed, shall constitute the further understanding between the parties with respect to the Sales Agreement, as follows: I. Section 1(b) is deleted and replaced with the following: "Platforms," shall include Microsoft Xbox 360 (Xbox360). Nintendo Game Boy Advance System (GBA), Nintendo Dual Screen System (DS), Nintendo DSi System CDSi), Nintendo Wii System (Wii), Sony Playstation Portable (PSP), Sony Playstation 2 (PS2), Sony Playstation 3 CPS3) and the Personal Computer, and any and all derivatives and successors thereof." 2. Notwithstanding anything to the contrary which may be contained in the Sales Agreement, including without limitation Sections 2(a) and 6, the following shall apply from August 1,2009 until the end of the Term. : All rights granted to Atarl in the Sales Agreement shall be limited to the following wholesalers and retailers in the Territory: Wal-Mart, Sam's Club, Jack ofAll Games, GameStop and Target (the "Atari Accounts"). The right to sell the Video Games to the Atari Accounts shall be exclusive to Atari. Atari shall not sell the Video Games to any other retailers, wholesalers or customers and Zoo shall have the right to sell to all wholesalers. retailers and other customers except for the Atari Accounts. In the event Atari does not pay Zoo for any purchase order(s) for the Atari Accounts in accordance with the Agreement and does not render such payment within 10 days ofreceipt ofloo's subsequent written request for such payment relating to any purchase order(s) for the Atari Accounts, and such purchase order(s) do not represent a material change from the sales forecast as set forth in Paragraph 5 ofthis Amendment 3, the Atari Account(s) subject to such request will be automaticalJy deleted from the definition of Atari Accounts and Zoo shall be free to sell to such account(s) with no payment obligations to or by Atari For clarity, Atari shall no longer have any right to sell to such account(s). In addition, on or after November 1,2009, the parties shall reassess the business relationship, including the feasibility ofadding wholesalers and retailers to the Atari Accounts. 3. Notwithstanding anything to the contrary which may be contained in the Sales Agreement, including without limitation, Sections 2(d)-(t), 4(b) and 6(b), the following shall apply from August 1,2009 until the end of the Tenn: Atari shall receive purchase orders directly from the Atari Accounts. Atari shall have no obligation with respect to any purchase order that is not made to Atari. Without limiting the generality of the foregoing, Atari may withhold payments related to any purchase order not made out to Atari unless and until Zoo causes the Atari Account to make such purchase order to Atari. Atari shall supply Zoo with copies of all orders made by the Atari Accounts when such orders are placed. Atari shall hold all rights in connection with credit and collections issues relating to purchase orders made by Atari Accounts. Atari hereby assumes all collection risk relating to purchase orders made out to Atari from the Atari Accounts. Zoo shall reasonably assist Atari with collections on any and all purchase orders, if needed. Atari may continue to hold a reserve (and shall have no obligation to liquidate such reserve) unless and until Atari receives full payment in connection with all purchase orders. 4. Notwithstanding anything to the contrary which may be contained in the Sales Agreement, including without limitation, Section 2(f), the following shall apply from August 1,2009 until the end of the Tenn: Page I of2 For Video Games sold in Wal-Mart in end caps and having a retail price of $10 per wlit or less, Zoo shall pay the cost of goods for such Video Games and the ATARl Price for such Video Games shall be 94% of the price on the customer purchase order for such Video Games. For Video Games sold to any of the Atari Accounts with allowances, price protection and other charges, fees and expenses (collectively, "Retail Charges"), Atari may deduct such Retail Charges from the reserve held by Atari. If such reserve is insufficient to cover any Retail Charges granted by Zoo to any of the Atari Accounts, then Atari may deduct such Retail Charges from any amounts payable to Zoo. If Atari incurs any charges, fees or expenses in connection with the perfonnance of any services requested by Zoo, including without limitation, sales support and shipping costs not otherwise covered by this Agreement, then Zoo shall promptly reimburse Atari for such charges, fees or expenses. All such charges, fees or expenses incurred pursuant to this paragraph shall be subject to the prior mutual agreement of Atari and Zoo. For the purpose of clarity, Atari shall have no obligation to render any such services. 5. Notwithstanding anything to the contrary which may be contained in the Sales Agreement, including without limitation, Sections 2(e)-(g), the foHowing shall apply from August I, 2009 until the end of the Tenn: Zoo shall provide Atan with sales forecasts on a roIling 13-week basis. lfthe sales forecast for any week include any material change(s), then Atari shall have no payment or other obligation to Zoo with respect to such change(s), unless Atari agrees to accommodate such change(s). As used in this paragraph, material changes means a deviation in units often percent (10%) or greater from the forecast for the relevant week as reflected in the original sales forecast dated April 3, 2009. Less than 10% shall not be deemed a "material change". In the event Atari chooses to not accommodate the relative material change, Zoo shall not be obligated to order the units above the amounts of units that Atari has agreed to fund. 6. Section 3 is modified as follows: The Tenn is hereby extended through March 31, 2010. 7. Section 6(b) is modified as follows: The period during which Atari shall have the right to hold a reasonable reserve for projected returns is extended through July 31, 20 lO,except as otherwise set forth herein. Except as expressly or by necessary implication modified or amended by this Amendment 3, the terms of the Sales Agreement are hereby ratified and confirmed without limitation or exception. Capitalized tenns used in this Amendment 3 and not otherwise defmed shall have the same meaning ascn'bed to them as set forth in the Sales Agreement. The parties hereto have executed this Amendment 3, which shall be effective as ofthe Amendment 3 Effective Date. Zoo Publish;ng, l ' : By: 34M-;-A - Atari. Inc. By: .L,,,,. . . S oJ Name: N:O-;"'" . .-/. Page 2 of2 Title: Exhibit B Juae l~. 2010 Atai.l'ac. .17 rdthAWIIDC Now York, New York 10016 Attention: Mr. PlliWp V""";'oo Chief Finacial Officei' Rc: Zoo PubIisbiaa. IDe. o.r Mr. Ft'CIDId mel Mr. VClll"'riwo; As you In: both awm=. punuaat to. facroriD,s IIIINP'w:n' hetWlDCll Zoo Puhti.... IDe. C?a1 mel Workioa Capiml Sol. . . . lac. ~ (the ""FW"" A"... -C), ZOO ... ..tel ... nsiped to WCSf "".;'Uy all of 1..oo's pn:IIIIt ad 1iIIb.n .,......, ftICIIiwble, illdllrtin&, withoIa IimitaIioa, CCI1IIin .ccl'd' RICCi..wc owima to Zoo from . . Buy, om.. ScholWic . EaropM: (eollectiwly. the IIAr!'mm'lW!tqg"). As ......, WCSI ftICIiwa Jl&)1l&IIII cIiJa:tly fiom the Accouat DdIkn ill ftIII*t oftbe iKUDdIi ftlCeiWllble owiDa fnJm 1iIDe to time by 111Gb AGCOaDI I>ebtoa to Zoo. ---/ NotwidJlfMfina !be foreaoiDl8lld IIIbject to Atari pI.)'iD8 Zoo S2,234Jj82.49 011. W_ _., June 16. 2()l0. WCSl hereby ap:cs . . it . . DOt paaclwe my af Ibe ~.--. receiftbIc Jilted _ Ssbr4"10 1 .a.cbcId hcrao owing to Zoo 1iom the Account De*a (the ""Nga=F1C1oI!!d Ascourdi'). WCS .fia1beI' . . . . . . . ifad 10 Ihc c:xII:IIl dial WCSI roccMa ~ cIirecdy from ODe or marc of the Accouat o.bIms in n:::IpCCt of the NcD-FackxecI Atx:auID. WCSt .... I1!IIIit adl pqlDCilt in the DIDft1I8l c:oune to Marl. IDe. (,"A1IIl",") at AIId"s .wrc. .,. fbrdt. bD ~ such .-.,meat ID Zoo puiSUIIIt to 1be knIs oftbD P'Orin&.AuaDpncdL -we,..... . If die forqoins com:c:dy Ids lorIb our ~ pIcue indicate your ax:epbD:e of Ihc biDIIiDe _ _ ... cams ban:ofby ntuminJ to-us 81 cue.... oowm,-:t a.eo( whcnupoIllbis . . . shall become [SIONATUllE PAGB FOUOWS] ----------------- ---- vcry truly yoan, WORKING CAPITAL SOumONS.INC. By:~~ =~? I~ _.-. illilliiiiilliii alal IliliililllSliiilal1 ~~~~i;II;I;ili;i 111111111111111112)1 I' aa.: Sf ~A i i III~IIJJIJIJ~~JJ I!j III I I Ii J' J il II 1 ~ ... ; 1 t '~I ill) 1IIIIIIIIIIIIIIjllii ;:~~;I;;I~II;II! !11!111!!!!!~!i5! I~ Ii I ~ I s ~ ... I I I I ~ 1IIIIIIIIII1111i IIIIIIIUIU;III / I j I I I 11111"llllllill 1~!!lillll-lilllll IIIIII !gil~lil 1111111111111~!1 III I~I I ~ 1111111111111111 I u

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.


Why Is My Information Online?