EXHIBIT 10.6
SETTLEMENT AGREEMENT AND RELEASE
This Settlement Agreement and Release ("Agreement"), dated this 13th day of
March, 2002, is entered into by and among Xxxxx Xxxxx ("Fargo"), Interplay
Entertainment, Corp. ("Interplay"), Interplay OEM, Inc., Xxxxxxxxxxx.xxx, Inc.,
(collectively "Interplay Parties"), Shiny Entertainment, Inc., ("Shiny"), and
Xxxxx Interactive SA ("Xxxxx").
R E C I T A L S
A. Xxxxx Xxxxx is an individual residing at 000 Xxxxxx Xxxxxx Xxxxx,
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000. Interplay is a Delaware corporation with its
principal offices located at 00000 Xxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000. Shiny
is a California corporation with its principal place of business at 0000 Xxxxx
Xxxxx Xxxxxxx, Xxxxxx Xxxxx, Xxxxxxxxxx 00000. Xxxxx is a French corporation
with its principal place of business in the United States at 00000 Xxxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxx 00000.
B. There are various disputes between the parties to this Agreement,
including, but not limited to, the complaint and cross-complaint in XXXXX
INTERACTIVE SA V. XXXXX Xxxxx, Orange County Superior Court Case No. 01CC16340
and a cross-complaint between Fargo and Interplay in LASALLE BUSINESS CREDIT,
INC. V. INTERPLAY ENTERTAINMENT CORP., ET AL., Orange County Superior Court Case
No. 00XX00000.
C. The parties mutually desire to effect a complete settlement of any and
all obligations, claims, demands, contentions, and disputes which may exist
between them
(except as specifically set forth herein) and, for that reason, are entering
into this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, agreements and
promises set forth herein and other good and valuable consideration, receipt of
which is hereby acknowledged by each of the parties, in order to avoid costly
and lengthy litigation, without admitting liability on the part of any party,
the parties agree as follows:
A G R E E M E N T
1. RECITALS. The foregoing Recitals shall be part of this Agreement.
2. STIPULATION FOR ENTRY OF JUDGMENT AND STIPULATED JUDGMENT. The Interplay
Parties and Fargo will contemporaneously with executing, and as a condition
precedent to, this Agreement, execute a Stipulation for Entry of Judgment and
Stipulated Judgment for $1,270,000 in favor of Fargo, in forms attached hereto
as Exhibits A and B, satisfactory to Fargo and his counsel, in the case of
LASALLE V. INTERPLAY, Orange County Superior Court, Case No. 00XX00000, which
Stipulated Judgment will not be filed and entered with the Superior Court unless
that amount is not paid in full to Fargo by Interplay by the earlier of (a) July
1, 2002 or (b) the closing date of the transaction by which all or substantially
all of the assets or stock of Shiny Entertainment, Inc. ("Shiny") are sold. The
date by which such payment is due shall be referred to in this Agreement as the
"Payment Date." Notwithstanding the foregoing, the Payment Date under this
paragraph shall be extended to the earlier of: (a) August 1, 2002 or (b) until
the closing or termination of the Sale Agreement (defined below) if Interplay
satisfies each of the
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following requirements:
(i) on or before July 1, 2002 Interplay enters into a binding
acquisition agreement for the sale for cash of (a) substantially all of the
assets of Shiny or (b) in excess of fifty percent (50%) of the voting
control represented by the outstanding shares of Shiny (the "Sale
Agreement"), AND
(ii) such agreement requires, without allowance for extension, a
closing date for such sale which is no later than August 1, 2002, AND
(iii) Interplay provides written notice of such proposed sale along
with copies of the applicable fully executed, definitive sale documents and
all related exhibits and schedules to Fargo prior to July 1, 2002.
The Stipulation shall be self-executing and the Stipulated Judgment shall be
held by Fargo and may be submitted by Fargo for entry upon the failure of the
Interplay Parties to satisfy the Stipulated Judgment on or before the Payment
Date. Fargo agrees not to take any action to assert any default or claim or to
enforce any right with respect to the subject matter of the Stipulation except
in accordance with this Agreement, the Stipulation and the Forbearance
Agreement; provided that such agreement by Fargo to refrain from any action with
respect to the subject matter of the Stipulation shall not apply to actions by
Fargo in connection with any bankruptcy proceeding of any of the Interplay
Parties or Shiny, nor will that agreement apply to any action required by Fargo
to preserve or protect his interests in the collateral or to prevent a
dissipation, sale or other diminution of the collateral which is not consistent
with or permitted by the applicable loan agreements or by this Agreement.
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3. SALE OR LICENSE OF ASSETS. Notwithstanding any other agreement between
the parties, Fargo and the Interplay Parties agree to the following regarding
assets of Interplay:
a. Interplay may sell or license, without obtaining approval of Fargo, any
asset that Interplay does not intend to publish.
b. Interplay may sell or license, without obtaining approval of Fargo, up
to three "titles" which Interplay intends to publish. (Those "titles" Interplay
intends to publish are listed on Exhibit C to this Agreement.) A limitation on
this right is that Interplay may only sell or license two of the following three
"titles": "Galleon"; "Run Like Hell"; and "Hunter."
c. Interplay may sell or license, without obtaining approval of Fargo, any
"titles" which Interplay is currently developing or intends to publish for the
Advanced Color Gameboy or Gamecube platforms, other than "Galleon" (the sale or
license of which shall be subject to clause (b) above).
d. Fargo will execute any consents, releases or other documents reasonably
required by Interplay and requested in a timely fashion to permit the sale of
these assets free of liens or other encumbrances in favor of Fargo.
4. ADDITIONAL AGREEMENTS. The Interplay Parties and Fargo agree to execute,
concurrently with execution of, and as a condition precedent to, this Agreement,
the following additional agreements (the "Ancillary Agreements"):
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a. Securities Purchase Agreement. (A true and correct copy is attached
hereto as Exhibit D);
b. Limited Recourse Promissory Note. (A true and correct copy is attached
hereto as Exhibit E);
c. General Release of Claims re Employment Agreement. (A true and correct
copy is attached hereto as Exhibit F); and
d. Forbearance Agreement among LaSalle Business Credit, Inc., ("LaSalle"),
Fargo, Shiny and the Interplay Parties ("Forbearance Agreement"). (A true and
correct copy is attached hereto as Exhibit G.)
5. THREE MILLION DOLLAR SECURED PROMISSORY NOTE. The Three Million and
No/100 Dollars ($3,000,000) Secured Promissory Note from Interplay to Fargo
dated April 11, 2001 ("Note"), plus all accrued interest due to Fargo pursuant
to that Note, shall be paid to Fargo by the Payment Date. Interplay agrees that
no setoffs, claims or other arguments of any sort can be used to offset, delay
or hinder payment of this obligation, or the enforcement of the collateral
therefor. Fargo agrees not to take any action to assert any default or claim or
to enforce any right with respect to this Note until the Payment Date; provided
that such agreement by Fargo to refrain from any action on the Note shall not
apply to actions by Fargo in connection with any bankruptcy proceeding of any of
the Interplay Parties or Shiny, nor will that agreement apply to any action
required by Fargo to preserve or protect his interests in the collateral or to
prevent
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a dissipation, sale, or other diminution of the collateral which is not
consistent with or permitted by the applicable loan agreements or by this
Agreement.
6. CONDITIONAL RELEASES. If Fargo receives payment in full of the amount of
the aforementioned Stipulated Judgment (see paragraph 2 above) and the Secured
Promissory Note from Interplay dated April 11, 2001 (see paragraph 5 above) on
or before the Payment Date, then Fargo, the Interplay Parties and Xxxxx agree
that the following releases and waiver shall be binding and effective between
them:
a. RELEASE BY XXXXX AND INTERPLAY. The Interplay Parties, Shiny and Xxxxx,
and each of them, hereby release and forever discharge Fargo and his respective
agents, representatives, attorneys, heirs and assigns from any and all claims,
rights, liabilities, damages and causes of action of every kind or nature, in
law, equity or otherwise, known and unknown, suspected and unsuspected, fixed
and contingent, disclosed and undisclosed (collectively, "Claims") arising out
of or in any way relating to their respective obligations, activities and/or
dealings with one another at any time prior to the date hereof to the present.
Specifically excluded from the release of these Claims are (1) Fargo's
obligations under this Agreement and the Ancillary Agreements and (2) any Claims
relating to or arising out of Fargo's conduct after the date of this Agreement
and his continuing duties and obligations under applicable law with respect to
Interplay's trade secrets and proprietary information.
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b. RELEASE BY FARGO. Fargo hereby releases and forever discharge each of
Xxxxx, Shiny and Interplay, and each of their respective agents,
representatives, attorneys, heirs, directors, officers, employees and
subsidiaries, from any and all Claims arising out of or in any way relating to
their respective obligations, activities and/or dealings with one another at any
time prior to the date hereof to the present. Specifically, excluded from the
release of these Claims are (1) any claim for indemnification, contractual,
statutory, or equitable, arising from or relating to any claim or cause of
action brought by any third party; (2) any and all option agreements between
Interplay and Fargo; (3) any and all warrants to purchase shares of Interplay
common stock granted to Fargo; (4) any claim against Interplay arising out of or
related to Fargo's guaranty of Interplay's obligations to Microsoft Corporation;
and (5) the Interplay Parties', Shiny's and Xxxxx' obligations under this
Agreement and the Ancillary Agreements.
c. WAIVER OF UNKNOWN CLAIMS. Each party has been fully advised by his or
its respective attorney of the contents of section 1542 of the Civil Code of the
State of California, and that section and the benefits thereof, as well as
benefits accruing under any comparable provisions of the law of any other
jurisdiction, are hereby expressly waived. Section 1542 reads as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
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d. NO PRIOR ASSIGNMENT OR TRANSFER OF CLAIMS. The parties giving the
foregoing releases warrant and represent that they are and will continue to be
the sole owners of the Claims which they have agreed to release.
7. CONFIRMATION OF FARGO'S SECURITY INTEREST. Nothing in this Agreement
shall abrogate, restrict, or otherwise in any fashion cause Fargo to lose any
security interest which he otherwise has pursuant to his position as a successor
in interest subrogee of LaSalle, the aforementioned $3,000,000 Secured
Promissory Note, or any other security interest Fargo may have in the assets or
other interests of Interplay or any of its subsidiaries until (1) all sums owed
to Fargo have been paid in full, (2) LaSalle is paid in full all amounts with
respect to which Fargo may be liable under any guaranty or other obligation, and
(3) Microsoft Corporation is paid in full all amounts with respect to which
Fargo may be liable under any guaranty or other obligation. Furthermore,
Interplay acknowledges and agrees to the validity, enforceability and due
perfection of all Fargo's security interests.
8. COOPERATION AND FURTHER ASSURANCES. Fargo agrees to cooperate fully with
and assist Interplay in connection with the sale (by means of merger or stock or
asset sale) of Shiny. Conditional upon the repayment to Fargo of all amounts due
him, Fargo will, to the extent the prior release herein of Shiny is
insufficient, (i) release Shiny from any causes of action, claims, obligations,
damages, or liabilities, of whatever kind and character, whether now known or
unknown, existing as of the closing of the sale, which Fargo has or may have
against Shiny; (ii) release any buyer of Shiny from any
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causes of action, claims, obligations, damages, or liabilities, of whatever kind
and character, whether now known or unknown, existing as of the closing of the
sale, which Fargo has or may have against such buyer arising solely as a
consequence of its acquisition of Shiny; (iii) release any security interest
held by Fargo in any assets of Shiny; and (iv) take any further action necessary
or desirable to assist in the sale of Shiny (including executing and delivering
such further instruments and documents) as and to the extent reasonably
requested by Interplay, at Interplay's sole cost and expense.
9. MISCELLANEOUS PROVISIONS. Fargo, Interplay and Xxxxx represent, warrant
and further agree as follows:
a. READING, UNDERSTANDING AND ADVISABILITY. This Agreement has been
carefully read, and the contents hereof are known and understood by all, and it
is signed freely by each person or entity executing it. Prior to the execution
of this Agreement by each party, each party hereto has received independent
legal advice by attorneys of its choice with respect to the advisability of
executing this Agreement.
b. REPRESENTATIONS. Except as expressly stated in this Agreement, no party
hereto has made any statement or representation to any other party regarding any
fact relied upon by the other party entering into this Agreement, and each party
specifically does not rely upon any statement, representation or promise of any
other party in executing this Agreement, except as expressly stated in this
Agreement.
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c. INTEGRATION. This Agreement constitutes a single, integrated, written
contract expressing the entire agreement of the parties hereto relative to the
subject matter hereof. No covenants, agreements, representations, or warranties
of any kind whatsoever have been made by any party hereto, except as
specifically set forth in this Agreement. All prior discussions and negotiations
have been and are merged and integrated into, and are superseded by this
Agreement.
d. GOVERNING LAW. This Agreement shall be construed in accordance with, and
be governed by, the laws of the State of California.
e. SURVIVAL OF WARRANTIES AND REPRESENTATIONS. The warranties and
representations of this Agreement are deemed to survive and shall survive the
closing hereof.
f. FURTHER ASSURANCES. Each of the parties hereto agrees to take such
further action and execute all such further documents as may be necessary or
appropriate in order to consummate the settlement and release contemplated
hereby.
g. DRAFTING. This Agreement shall be construed without regard as to who
drafted the Agreement, and this Agreement shall be construed as if all parties
hereto participated equally in the drafting of the Agreement.
h. SURVIVAL. Wherever possible each provision of this Agreement shall be
interpreted in such a manner as to be valid under applicable law, but if any
provision of this Agreement shall be invalid or prohibited thereunder, such
provision shall be
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ineffective to the extent of such prohibition without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
i. ATTORNEYS' FEES AND COSTS. In the event legal action is taken by any of
the parties hereto to enforce the terms of this Agreement, or any of the
exhibits to this Agreement, the prevailing party in such legal action shall
recover from the other party its reasonable attorneys' fees and costs incurred
in such legal action.
j. COUNTERPARTS AND EFFECTIVENESS. This Agreement may be signed in
counterparts. The signed counterparts, taken together, shall constitute one
Agreement binding on all of the parties. This Agreement shall become effective
at such time as counsel for Fargo, Interplay and Xxxxx have delivered to one
another counterparts of this Agreement executed by all of the parties.
k. AUTHORIZATION TO SIGN. Each of the parties hereby specifically
acknowledge that the person signing below on its behalf has the requisite
authority to sign this Agreement and that all appropriate approvals and
authorizations have been properly obtained. Each of the persons signing below on
behalf of a party hereto specifically acknowledge that he or she is duly
authorized to sign this Agreement on behalf of the party for which he or she has
signed.
l. CONFLICTS. In the event of any conflict between the provisions of this
Agreement and the Forbearance Agreement as concerns the respective rights and
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liabilities of Fargo, on the one hand, and the Interplay Parties and Shiny, on
the other hand, the terms of this Agreement shall control.
m. PRELIMINARY INJUNCTION AND LOCKBOX. Notwithstanding the provisions in
the Forbearance Agreement regarding termination of the "Preliminary Injunction"
and "Lockbox" arrangement described therein, in the event Fargo is not paid the
full amount of the Stipulated Judgment by the Payment Date, Fargo shall have the
right, immediately following the Payment Date, to:
(i) request the court, upon a showing of good cause, to reinstate the
Preliminary Injunction previously obtained by LaSalle (or to issue such
other relief as may be appropriate); and
(ii) reinstate the Lockbox and Blocked Account arrangement under
Article 10 of the LaSalle Loan Agreement (as defined in the Forbearance
Agreement), by giving written notice of same to Interplay, and the
reinstatement of said Lockbox and Blocked Account arrangement shall be
pursuant to the terms of the LaSalle loan documents, shall be in favor of
Fargo as subrogee, and shall be of the same force and effect as the Lockbox
and Blocked Account arrangement in effect immediately prior to the
effective date of the Forbearance Agreement.
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IN WITNESS HEREOF, the undersigned parties have executed this Agreement as
of the date indicated.
Dated: MARCH 13, 2002 /S/ XXXXX XXXXX
------------------- ------------------------------------
Xxxxx Xxxxx
Dated: MARCH 13, 2002 INTERPLAY ENTERTAINMENT
------------------- CORP.
By: /S/ HERVE CAEN
--------------------------------
Name: Herve Caen
Its: AUTHORIZED SIGNATORY
-------------------------------
Dated: MARCH 13, 2002 INTERPLAY OEM, INC.
-------------------
By: /S/ HERVE CAEN
--------------------------------
Name: Herve Caen
Its: AUTHORIZED SIGNATORY
-------------------------------
Dated: MARCH 13, 2002 XXXXXXXXXXX.XXX, INC.
-------------------
By: /S/ HERVE CAEN
--------------------------------
Name: Herve Caen
Its: AUTHORIZED SIGNATORY
-------------------------------
Dated: MARCH 13, 2002 SHINY ENTERTAINMENT, INC.
-------------------
By: /S/ HERVE CAEN
--------------------------------
Name: Herve Caen
Its: AUTHORIZED SIGNATORY
-------------------------------
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Dated: MARCH 13, 2002 XXXXX INTERACTIVE, SA
-------------------
By: /S/ XXXX XXXX
--------------------------------
Name: Xxxx Xxxx
Its: MANAGING DIRECTOR
------------------------------
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