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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): May 17, 2024
Motorsport
Games Inc.
(Exact
name of registrant as specified in its charter)
Delaware |
|
001-39868 |
|
86-1791356 |
(State
or other jurisdiction
of incorporation) |
|
(Commission
File Number) |
|
(I.R.S.
Employer
Identification No.) |
5972
NE 4th Avenue
Miami,
FL |
|
33137 |
(Address
of principal executive offices) |
|
(Zip
Code) |
Registrant’s
telephone number, including area code: (305) 507-8799
N/A
(Former
name or former address, if changed since last report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
☐ |
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
|
☐ |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
|
☐ |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|
|
☐ |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange on which registered |
Class
A common stock, $0.0001 par value per share |
|
MSGM |
|
The
Nasdaq Stock Market LLC
(The
Nasdaq Capital Market) |
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company ☒
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item
1.01 Entry Into a Material Definitive Agreement
On
May 17, 2024, Motorsport Games Inc., a Delaware corporation (the “Company”), entered into a Settlement Agreement and License
(the “Agreement”) with INDYCAR, LLC, an Indiana limited liability company (“INDYCAR”). The Agreement resolved
any and all disputes between the Company and INDYCAR with respect to the termination of (i) the License Agreement, dated July 13, 2021,
by and between INDYCAR and the Company with respect to INDYCAR SERIES racing series related gaming products (the “IndyCar Products
License”) and (ii) the License Agreement, dated July 13, 2021, by and between INDYCAR and the Company with respect to INDYCAR SERIES
racing series related esports events (the “IndyCar Events License,” together with the IndyCar Products License, the “Prior
License Agreements”). As previously disclosed by the Company on its Current Report on Form 8-K filed on November 14, 2023, the
Prior License Agreements were terminated effective as of November 8, 2023. Pursuant to the Agreement, subject to the satisfaction of
the conditions to the effectiveness of the Agreement (as described below), the Company and INDYCAR agreed that the Company’s liabilities
under the Prior License Agreements, including any and all royalties and/or any other sums or liabilities of any kind whatsoever were
forgiven by INDYCAR and discharged in their entirety in consideration of the Company’s payment to INDYCAR of $250,000 on the date
of the Agreement and $150,000 within 30 days following the date of execution of the Agreement. The Agreement becomes effective
upon satisfaction of (i) the Company’s payment to INDYCAR of $250,000 on the date of the Agreement and (ii) the Company’s
payment of $150,000 to INDYCAR within 30 days following the date of execution of the Agreement. Both $250,000 and $150,000 have been
paid to INDYCAR by the Company and the Agreement is in effect as of the date of this Current Report on Form 8-K.
Further,
as of the effective date of the Agreement, the Company granted to INDYCAR a royalty-free, perpetual, irrevocable, exclusive, transferable,
and sublicensable, right and license throughout the world (the “License”) to use the licensed intellectual property described
in the Agreement (the “Licensed Intellectual Property”) for the purpose of developing, marketing, distributing and selling
esports series and esports events related to, themed as, or containing the INDYCAR SERIES racing series and/or motorsports and/or racing
(including without limitation simulation style) video gaming products related to, themed as or containing the INDYCAR SERIES racing series,
on current and future versions of consoles, PCs, smart TVs, mobile applications, gaming subscription services, cloud gaming, cloud streaming,
handheld products and other new generation formats. In addition, the Company agreed to provide INDYCAR from the effective date of the
Agreement to December 31, 2024, upon request by INDYCAR, with up to 50 hours free-of-charge consulting services to facilitate the transition
of the INDYCAR series game development using the Licensed Intellectual Property to the software developer of INDYCAR’s choice.
The
above description of the Agreement is intended as a summary only and is qualified in its entirety by the terms and conditions set forth
therein. Copy of the Agreements is attached hereto as Exhibit 10.1 and is incorporated herein by this reference.
Item
3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.
As
disclosed in the Company’s Current Report on Form 8-K filed by the Company on November 22, 2023, the Nasdaq Stock Market LLC (“Nasdaq”)
notified the Company on November 17, 2023 that the Company was not in compliance with the minimum stockholders’ equity requirement
of at least $2,500,000 for continued inclusion on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(b)(1) (the “NCM
Equity Rule”). In the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, the Company reported
stockholders’ equity of $498,897, which was below the NCM Equity Rule’s stockholders’ equity threshold. Additionally,
the Company did not meet either of the alternative Nasdaq continued listing standards under the Nasdaq Listing Rules, which include (i)
a market value of listed securities of at least $35 million or (ii) net income of $500,000 from continuing operations in the most recently
completed fiscal year or in two of the three most recently completed fiscal years.
As
disclosed in the Company’s Current Report on Form 8-K filed by the Company on February 6, 2024 (the “February 8-K”),
on February 5, 2024, Nasdaq notified the Company that, based on Nasdaq’s review of the Company and the materials submitted by the
Company to Nasdaq, Nasdaq’s staff granted to the Company an extension to regain compliance with the NCM Equity Rule until May 15,
2024, subject to the Company’s regaining and evidencing compliance with the NCM Equity Rule by such date. The February 8-K disclosed
that, in the event the Company did not regain and evidence compliance with the NCM Equity Rule by May 15, 2024, Nasdaq’s staff
would provide written notification to the Company that its securities may be subject to delisting. Further, if the Company fails to evidence
compliance upon filing its periodic report for June 30, 2024, with the SEC and Nasdaq the Company may be subject to delisting. At that
time, the Company may appeal Nasdaq’s staff’s determination to a Listing Qualifications Panel. The February 8-K disclosed,
without any assurances, that, to regain compliance with the NCM Equity Rule, the Company planned to negotiate and implement equity financing
transactions and negotiate reductions of its licensing liabilities.
To
regain compliance with the NCM Equity Rule, the Company entered into the Agreement disclosed and summarized in Item 1.01 of this Current
Report on Form 8-K. Item 1.01 of this Current Report on Form 8-K is incorporated herein by this reference. Pursuant to the Agreement,
the Company’s liability to INDYCAR, LLC in the amount of approximately $2.9 million was settled for $400,000, which resulted in
a gain of approximately $2.5 million, which in turn resulted in a $2.5 million increase to the Company’s stockholders’ equity.
Accordingly, as of the date of this Current Report on Form 8-K, the Company believes that it has regained compliance with the stockholders’
equity requirement based upon the settlement with INDYCAR that resulted in a $2.5 million increase to the Company’s stockholders’
equity, as described and disclosed in Current Report on Form 8-K.
Nasdaq
will continue to monitor the Company’s ongoing compliance with the NCM Equity Rule and, if at the time of its next periodic report
the Company does not evidence compliance, it may be subject to delisting. In addition, if the Company fails to evidence compliance upon
filing its periodic report for the June 30, 2024, the Company may be subject to delisting.
Forward-Looking
Statements
This
Current Report on Form 8-K contains forward-looking statements within the “safe harbor” provisions of the Private Securities
Litigation Reform Act of 1995. All statements other than those that are purely historical are forward-looking statements. Words such
as “expect,” “anticipate,” “believe,” “estimate,” “intend,” “plan,”
“project,” and similar expressions also identify forward looking statements. Forward-looking statements include, but are
not limited to statements concerning the Company’s future financial performance, whether the Company will maintain compliance with
the NCM Equity Rule and/or whether the Company will be able to evidence compliance upon filing of its quarterly periodic report for period
ending June 30, 2024. All forward-looking statements involve significant risks and uncertainties that could cause actual results to differ
materially from those expressed or implied in the forward-looking statements, many of which are generally outside of the Company’s
control and are difficult to predict. Examples of such risks and uncertainties include, but are not limited to: (i) the Company’s
ability to obtain equity financing arrangements or similar transactions; (ii) Nasdaq’s acceptance of evidence of compliance; or
(iii) the Company’s ability to otherwise maintain compliance with any other continued listing requirement of The Nasdaq Capital
Market. Additional information regarding risks and uncertainties associated with the Company’s business and a discussion of some
of the factors that may cause actual results to differ materially from the results expressed or implied by such forward-looking statements
can be found in the Company’s filings with the Securities and Exchange Commission (the “SEC”), including the “Risk
Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections
of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, its Quarterly Reports on Form 10-Q filed
with the SEC during 2024, as well as in its subsequent filings with the SEC. These forward-looking statements are based on information
as of the date hereof, and the Company assumes no obligation to publicly update or revise its forward-looking statements even if experience
or future changes make it clear that any projected results expressed or implied therein will not be realized.
Item
9.01 Financial Statements and Exhibits
(d)
Exhibits
* Portions of the exhibit, marked by brackets, have been omitted because the omitted information (i) is not material and (ii) is the type that the Company treats as private or confidential.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
|
Motorsport
Games Inc. |
|
|
|
Date:
May 23, 2024 |
By:
|
/s/
Stephen Hood |
|
|
Stephen
Hood |
|
|
Chief
Executive Officer and President |
EXHIBIT
INDEX
*
Portions of the exhibit, marked by brackets, have been omitted because the omitted information (i) is not material and (ii) is the type
that the Company treats as private or confidential.
Exhibit
10.1
[***]
Certain information in this document has been excluded pursuant to Regulation S-K, Item (601)(b)(10). Such excluded information is not
material and is the type that the Company treats as private or confidential.
SETTLEMENT
AGREEMENT AND LICENSE
This
Settlement Agreement and License (this “Agreement”) is executed as of May 17, 2024, but shall not be effective until
the date on which both of the conditions in Section 1.b have been fully satisfied (the “Effective Date”) between:
(i)
Motorsport Games Inc., a Delaware corporation located at 5972 NE 4th Avenue, Miami, Florida 33137 (the “Company”),
and
(ii)
INDYCAR, LLC, an Indiana limited liability company located at 4551 W. 16th Street, Indianapolis,
Indiana 46222 (“INDYCAR”).
The
Company and INDYCAR are sometimes collectively referred to herein as the “Parties” and individually as a “Party.”
RECITALS
A.
The Company and INDYCAR entered into a Confidentiality Agreement effective as of July 6, 2021 prior to execution of the INDYCAR License
Agreements (as defined below) and the parties have no existing obligations under such Confidentiality Agreement.
B.
The Company and INDYCAR entered into (i) the License Agreement, dated July 13, 2021, by and between INDYCAR and the Company with respect
to INDYCAR SERIES racing series related gaming products (the “IndyCar Products License”) and (ii) the License Agreement,
dated July 13, 2021, by and between INDYCAR and the Company with respect to INDYCAR SERIES racing series related esports events (the
“IndyCar Events License,” together with the IndyCar Products License, the “INDYCAR License Agreements”).
C.
Pursuant to the INDYCAR License Agreements, the Company was granted a license to use certain licensed intellectual property for esports
events and motorsports and/or racing video gaming products related to, themed as, or containing the INDYCAR SERIES racing series, on
consoles, PCs, smart TVs, mobile applications, gaming subscription services, cloud gaming, cloud streaming, handheld products and other
new generation formats.
D.
On November 8, 2023, INDYCAR delivered notice to the Company terminating the INDYCAR License Agreements effective as of November 8, 2023.
E.
In connection with the termination of the INDYCAR License Agreements, INDYCAR demanded certain payments under the INDYCAR License
Agreements.
F.
The Parties desire to reach a resolution of all issues between the Parties arising out of or in connection with the INDYCAR License Agreements
and any and all other matters on the terms and conditions set forth in this Agreement.
AGREEMENT
NOW,
THEREFORE, in consideration of the foregoing Recitals and of the mutual agreements and covenants set forth in this Agreement, and for
other good and valuable consideration, the sufficiency and adequacy of which is acknowledged, the Parties, without admitting any liabilities,
hereby agree as follows:
1.
Incorporation of Recitals and Conditions to the Agreement.
| a. | The
above and foregoing recitals are incorporated herein and made a part of this Agreement. The
Parties represent that the foregoing recitals are true and correct. |
| b. | Notwithstanding
any other provision of this Agreement, the Agreement shall not be effective until the date
on which: |
| i. | INDYCAR
receives the payment required by Section 2.b.i.; and |
| ii. | Either
(A) INDYCAR receives and approves a letter agreement from iRacing.com Motorsport Simulations,
LLC (“iRacing”) that confirms to INDYCAR’s satisfaction that iRacing is
obligated to pay $150,000 to INDYCAR on or before December 31, 2024 if INDYCAR has not received
the payment due under Section 2.b.ii from Company or (B) the Company directly pays $150,000
to INDYCAR within 30 days following the date of execution of this Agreement. |
| c. | If
both conditions set forth in Section 1.b.i-ii have not been satisfied within thirty (30)
days following the date of execution of this Agreement, INDYCAR shall have the right to rescind
the settlement contemplated by this Agreement, terminate this Agreement, and INDYCAR reserves
all rights to enforce all remedies in contract or otherwise under the INDYCAR License Agreements. |
2.
Settlement Terms. Subject to full execution of this Agreement by all Parties:
| a. | Subject
to the terms of this Agreement, INDYCAR hereby agrees to accept the terms of this Agreement,
including without limitation the Settlement Payment (as described below) and the Company’s
grant to INDYCAR a License (as defined below), in satisfaction of Company’s liabilities
under the INDYCAR License Agreements and that any and all royalties and/or any other sums
or liabilities of any kind whatsoever are hereby forgiven by INDYCAR and are deemed discharged
in their entirety except as provided in this Agreement. |
| i. | Company
shall pay $250,000 immediately upon execution of this Agreement; and |
| ii. | iRacing
shall pay to INDYCAR $150,000 on or before December 31, 2024, if the Company has not paid
such sum prior to that date. |
| c. | License.
Effective as of the Effective Date, the Company hereby grants to INDYCAR a royalty-free,
perpetual, irrevocable, exclusive, transferable, and sublicensable, right and license throughout
the world (the “License”) to use the licensed intellectual property listed
in Schedule A attached hereto and the results of the transition services specified
in Section 2.d (the “Licensed Intellectual Property”), in whole or in
part, for the purpose of developing, marketing, distributing and selling (1) esports series
and esports events related to, themed as, or containing the INDYCAR SERIES racing series
and/or (2) motorsports and/or racing (including without limitation simulation style) video
gaming products related to, themed as or containing the INDYCAR SERIES racing series, on
current and future versions of consoles, PCs, smart TVs, mobile applications, gaming subscription
services, cloud gaming, cloud streaming, handheld products and other new generation formats
(collectively, the “Purpose”). INDYCAR and the Company acknowledge and
agree that the rights and license granted under the License includes rights to modify, edit,
combine with other materials and/or create derivative works of the Licensed Intellectual
Property in whole or in part solely for the Purpose. For the avoidance of doubt, the Parties
acknowledge and agree that: (i) no licenses are currently held with any track owner and such
licenses have to be negotiated by INDYCAR with the track owners prior to release of any product,
(ii) the Licensed Intellectual Property does not include, and no license nor any other right
are granted with respect to KartKraft platform and project acquired by the Company from Black
Delta (including for use of Unreal Engine); INDYCAR acknowledges and agrees that a license
for the use of Unreal Engine has to be obtained prior to release of any product, and (iii)
the Company shall own and retain all right, title, and interest in and to the Licensed Intellectual
Property with respect to any use other than the Purpose. For clarity, the Parties agree that
INDYCAR shall not be obligated to use the License or obtain any third-party licenses for
any purpose including release of any esports events or any video gaming products. The License,
including the transition services and the results therefrom, is and shall be deemed to be,
for purposes of Section 365(n) of the United States Bankruptcy Code, a license to rights
to “intellectual property” as defined therein. INDYCAR and its successors and
assigns, as licensee of such rights, shall have the rights and elections with respect thereto
as specified in the United States Bankruptcy Code. |
| d. | Free-of-Charge
Transition Service. Within the period from the Effective Date and December 31, 2024,
the Company shall provide INDYCAR upon request by INDYCAR with up to 50 hours free-of-charge
consulting services to facilitate the transition of the INDYCAR series game development using
the Licensed Intellectual Property to the software developer of INDYCAR’s choice. |
| e. | Representations
and Warranties of the Company. Company hereby represents and warrants that as of the
Effective Date: |
| i. | The
Company has full right, authority and ability to license the Licensed Intellectual Property
to INDYCAR and perform its obligations under this Agreement. |
| ii. | The
Company owns the Licensed Intellectual Property, free and clear of all encumbrances, claims,
and rights of third parties. The Company has not and shall not in the future pledge its rights
to the Licensed Intellectual Property as security for any of the Company’s debts or
for any other purpose. |
| iii. | Except
with respect to track licenses which are not in place and will need to be attained by INDYCAR
or the publisher prior to release of any game containing any of the tracks represented in
the INDYCAR project from the Company, the Licensed Intellectual Property is licensable to
INDYCAR in accordance with this Agreement and the Company may perform this Agreement without
any third party consent or approval. All required consents and approvals have been obtained
by the Company (including the Company’s board approval). |
| iv. | Performance
of this Agreement does not violate any of the Company’s governing documents, laws or
regulations, contracts, or other obligations. |
| v. | There
are no restrictions that prohibit the License of any Licensed Intellectual Property as set
forth in this Agreement. |
| vi. | Upon
the Effective Date, INDYCAR and its successors, assigns, tranferees and sublicensees will
have the exclusive right, which is non-terminable and not subject to expiration or revocation,
to develop, license, control, regulate the use of and otherwise exploit the Licensed Intellectual
Property solely for the Purpose without any claim by, or payment or other obligation owing
to, or required consent or approval from any person or entity. |
| vii. | This
Agreement including the License of the Licensed Intellectual Property does not cause INDYCAR
to become responsible for any tax or other liability. Without limiting the foregoing, the
License does not require INDYCAR to pay any amount to any person or entity for any reason. |
| viii. | To
the Company’s knowledge, the Licensed Intellectual Property does not and the use of
the Licensed Intellectual Property by INDYCAR and/or its successors and assigns for the Purpose
will not infringe, misappropriate, or otherwise make any unlawful or unauthorized use of
any of the intellectual property or other proprietary rights of any person or entity. Without
limiting the foregoing, to the Company’s knowledge, the Company did not infringe or
misappropriate or otherwise make any unlawful or unauthorized use of the intellectual property
or other proprietary rights of any person or entity in the creation and development of the
Licensed Intellectual Property. |
| ix. | The
Company has not received any communications claiming infringement, misappropriation or other
unlawful or unauthorized use of the Licensed Intellectual Property and, (i) no person or
entity has threatened to make any claims for infringement, misappropriation or other unlawful
or unauthorized use of the Licensed Intellectual Property and (ii) to the Company’s
knowledge, there is no basis for any claims for infringement, misappropriation or other unlawful
or unauthorized use of the Licensed Intellectual Property. |
| x. | To
the Company’s knowledge, no person or entity is infringing upon any of the Company’s
rights in any of the Licensed Intellectual Property. |
| xi. | Except
as set forth in Section 2.c with respect to KartKraft platform and project acquired by the
Company from Black Delta (including the Unreal Engine and its use as the chassis), the Company
has developed the Licensed Intellectual Property as its original work and entirely through
its own efforts. No Licensed Intellectual Property have been created by any independent contractors
or other third parties for the Company who have not by contract or by operation of law assigned
to the Company their respective intellectual property rights (if any) for the Licensed Intellectual
Property. All employees of the Company involved in the development of the Licensed Intellectual
Property have by contract or by operation of law assigned all their rights (if any) to the
Licensed Intellectual Property to the Company. |
| xii. | Except
as disclosed in the Company’s filings with the U.S. Securities and Exchange Commission
(the “SEC”), including relating the Company’s deficiency with respect
to the Nasdaq listing standards, the Company is not in a material violation of or default
with respect to any law, regulation, contracts, or other obligations applicable to its business
or the Licensed Intellectual Property. |
| xiii. | Except
as disclosed in the Company’s filings with the SEC, including relating the Company’s
deficiency with respect to the Nasdaq listing standards, the Company has not been notified
about any investigations, audits, lawsuits, or other proceedings pending or threatened against
or affecting the Company or any of the Licensed Intellectual Property. |
| xiv. | There
are no unsatisfied judgments against the Company or any of the Licensed Intellectual Property. |
| xv. | The
Company is not subject to any judgment or order of any court or government authority with
respect to or affecting the Licensed Intellectual Property. |
| xvi. | Both
before and following License of the Licensed Intellectual Property and fulfillment of this
Agreement, the Company remains capable of fulfilling its obligations under this Agreement. |
f.
Survival of Certain Obligations of Company. The obligations of Company set forth in Sections 9.5 (insurance) and 12.1 and 12.2
and 12.3 (confidentiality) of the IndyCar Products License and Section 9.4 (insurance) and 12.1 and 12.2 and 12.3 (confidentiality) of
the IndyCar Events License shall continue in force and effect following execution of this Agreement.
g.
Indemnification. The Company shall indemnify, defend, and hold harmless each and every of the INDYCAR Released Parties (as defined
below) from any against any and all actions, claims, demands, liabilities, losses, and damages whatsoever (including without limitation
court costs and attorneys’ fees) (collectively, “Claims”) resulting from, arising out of, or in any manner related
to the Company’s material and uncured breach of any of its representations and warranties and/or other obligations set forth in
this Agreement (including without limitation any Claims of wrongdoing or negligence of any of the INDYCAR Released Parties). Defense
shall be by counsel reasonably acceptable to INDYCAR.
3.
Mutual Releases.
a.
INDYCAR’s Releases. Except as to the obligations created by this Agreement, INDYCAR, on behalf of itself and its agents,
heirs, representatives, shareholders, members, affiliates, parents, subsidiaries, partners, officers, directors, principals, predecessors,
successors in interest (in whole or in part), and assigns, does hereby fully and forever release and discharge the Company, and each
of its respective agents, partners, members, directors, officers, employees, affiliates, principals, predecessors, successors in interest
(in whole or in part), heirs, representatives, and assigns (collectively, the “Company Released Parties”), from any
and all claims, actions, causes of action, suits at law or in equity, demands, damages (actual, compensatory, special, presumed, punitive,
or statutory), costs, judgments, expenses, liabilities, attorneys’ fees and legal costs or any compensation whatsoever, whether
based upon alleged tort or alleged contract, vicarious liability, strict liability or any other legal or equitable theory of recovery,
matured or unmatured, current or future, known or unknown of any kind or nature that any of the INDYCAR Released Parties (as defined
below) have, or ever had against the Company Released Parties.
b.
Company’ Releases. Except as to the obligations created by this Agreement, the Company, on behalf of itself and its agents,
heirs, companies, representatives, shareholders, members, affiliates, parents, subsidiaries, partners, officers, directors, principals,
predecessors, successors in interest (in whole or in part), and assigns does hereby fully and forever release and discharge INDYCAR,
Indianapolis Motor Speedway, LLC, Brickyard Trademarks, Inc., and each of their respective affiliates, agents, partners, members, managers,
shareholders, owners, directors, officers, employees, affiliates, principals, predecessors, successors in interest (in whole or in part),
heirs, representatives, and assigns (collectively, the “INDYCAR Released Parties”), from any and all claims, actions,
causes of action, suits at law or in equity, demands, damages (actual, compensatory, special, presumed, punitive, or statutory), costs,
judgments, expenses, liabilities, attorneys’ fees and legal costs or any compensation whatsoever, whether based upon alleged tort
or alleged contract, vicarious liability, strict liability or any other legal or equitable theory of recovery, matured or unmatured,
current or future, known or unknown of any kind or nature that the Company Released Parties have, or ever had against the INDYCAR Released
Parties.
c.
Covenant Not to Sue or Initiate Proceedings. Each of the Parties agrees not to sue or initiate any civil proceeding, criminal
proceeding, or regulatory proceeding against the other Party or in any way assist any other person or entity in doing so with respect
to the claims released herein. This release provisions as set forth in this Section 3 may be pleaded as a full and complete defense to,
and may be used as the basis for an injunction against, any action, suit, or other proceeding which may be instituted, prosecuted, or
attempted in breach of the release contained herein.
4.
Cooperation to Facilitate Agreement. The Parties agree to cooperate, and cause their representatives to cooperate, in taking
any further action(s) reasonably necessary to implement the letter and purpose of this Agreement. Without limiting the foregoing, the
Company agrees to promptly deliver all information and materials (including without limitation source code and copies and/or assignment
of agreements related to track content and the 2023 INDYCAR vehicle model).
5.
Miscellaneous Terms.
a.
Entire Agreement. This Agreement contains the entire agreement and understanding between the Parties with respect to the subject
matter of this Agreement, and supersedes all other agreements between the Parties. The terms of this Agreement can be modified only by
a writing signed by all of the Parties who are affected by such modification at the time of the modification. This Agreement cannot be
orally modified.
b.
Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction
only, be unenforceable without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other jurisdiction. Notwithstanding the foregoing, the Parties agree
that if any provision of this Agreement is determined by a court to be void, invalid, or unenforceable, and, as a result the Party for
whose benefit such void, invalid, or unenforceable provision exists is denied any or all of the material benefits provided to such Party
pursuant to this Agreement (as determined by a court of competent jurisdiction), then this Agreement may be rescinded by such Party.
c.
Construction. Headings are used herein for convenience only and shall have no force or effect in the interpretation or construction
of this Agreement. All references in this Agreement to the singular shall be deemed to include the plural if the context so requires
and vice versa. References in the collective or conjunctive shall also include the disjunctive unless the context otherwise clearly requires
a different interpretation.
d.
Governing Law; Waiver of Jury Trial. This Agreement shall be governed by the laws of the State of Indiana, without giving effect
to its choice of law principles. EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO
A TRIAL BY JURY IN RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH
PARTY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES
HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.d.
e.
Representation. The Parties acknowledge and represent that they have been given adequate opportunity to consult with legal counsel
before entering into this settlement and executing this Agreement. The language of this Agreement shall be construed as representing
the Parties’ mutual understanding and as having been drafted and approved by the Parties and counsel for all Parties. Each individual
signing this Agreement represents and warrants that he or she has the full right, power and authority to execute this Agreement on behalf
of the Party for which or whom he or she signs. Each Party covenants and agrees to execute such further documents and perform such further
acts as may be reasonable and necessary to effectuate the purposes of this Agreement.
f.
Attorneys’ Fees and Costs. The Parties shall each bear their own respective attorneys’ fees and costs incurred in
connection with the matters resolved by this Agreement, as well as the negotiation and documentation of the compromise represented by
this Agreement. However, in the event of any proceedings to enforce this Agreement, the prevailing party shall be entitled to recover
its legal expenses, including attorneys’ fees and costs, incurred in connection therewith. The parties further agree that this
Agreement may be introduced into evidence in any subsequent proceeding to enforce its terms.
g.
Successors and Assigns. This Settlement Agreement is binding upon, and shall inure to the benefit of, the Parties, their current,
past and future officers, directors, supervisors, employees, agents, representatives, subsidiaries, affiliates, associates, and their
heirs, beneficiaries, trustees, administrators, estates, predecessors, successors and assigns.
h.
Counterparts. This Agreement may be executed in any number of counterparts each of which shall be deemed an original and all of
which shall constitute one and the same agreement, with the same effect as if all Parties had signed the same signature page. Any signature
page of this Agreement may be detached from any counterpart of this Agreement and reattached to any other counterpart of this Agreement
identical in form hereto but having attached to it one or more additional signature pages. This Agreement shall only become effective
on its execution by all Parties.
[Signatures
are on next page.]
IN
WITNESS WHEREOF, the Parties execute this Agreement as of the date set forth below.
MOTORSPORT
GAMES INC. |
|
|
|
|
By:
|
/s/
Stephen Hood |
|
Name:
|
Stephen
Hood |
|
Title:
|
Chief
Executive Officer and President |
|
|
|
|
INDYCAR,
LLC |
|
|
|
|
By:
|
/s/
Mark D. Miles |
|
Name:
|
Mark
D. Miles |
|
Title:
|
President
and CEO – Penske Entertainment Corp. |
|
Schedule
A
Licensed
Intellectual Property
1.
The Company’s intellectual property rights related to the Company’s latest (i.e., as of the date of the Company’s IndyCar
project termination) IndyCar development project for PC, PlayStation and Xbox formats, including the software source code, tools and
applications necessary for a professional development team to resume development and production of the IndyCar game project on the aforementioned
formats.
2.
The Company’s intellectual property rights related to 2023 IndyCar vehicle model, including components necessary to feature the
car in-game, in a drivable state complete with associated audio and effects.
3.
[***]
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