EXHIBIT 10.20
SETTLEMENT AGREEMENT
THIS AGREEMENT made and entered into, effective April 19, 2005,
by and between INTERPLAY ENTERTAINMENT CORP. ("Interplay"), a Delaware
corporation, with an address of 1682 Langley Avenue, Irvine, California 92614,
on the one hand and SNOWBLIND STUDIOS, INC. ("Snowblind"), a Washington
corporation, with an address of 19119 North Creek Parkway, Suite 201, Bothell,
Washington 98011, on the other hand.
WITNESSETH
WHEREAS, on or about February 29, 2000, Interplay and Snowblind
entered into a written contract (hereinafter collectively with all amendments to
the aforementioned written contract referred to as the "Product Agreement")
pursuant to which Snowblind developed a video game entitled "BALDUR'S GATE: DARK
ALLIANCE" for operation on the Sony PlayStation 2 and Microsoft Xbox platforms,
respectively (the "Snowblind Developed Products") and code and tools for the
operation of same, (the "Snowblind Technology"); and
WHEREAS, Interplay commercially released the Snowblind Developed
Products as well as a version of the Snowblind Developed Products designed to
operate on the Nintendo GameCube console video game machine (the "GameCube
Version"); and
WHEREAS, on or about January 14, 2004, Interplay commercially
released a video game entitled "FALLOUT: BROTHERHOOD OF STEEL," a non-derivative
of the Snowblind Developed Products which was designed for use on multiple
gaming platforms that also uses the Snowblind Technology (hereinafter, "FALLOUT:
BROTHERHOOD OF STEEL" is referred to as the "Non-Derivative Product"); and
WHEREAS, on or about January 20, 2004, Interplay commercially
released a video game entitled "Baldur `s Gate: Dark Alliance II," a sequel to
the Snowblind Developed Products which was designed for use on multiple gaming
platforms that also uses the Snowblind Technology (hereinafter, "Baldur's Gate:
Dark Alliance II" is referred to as the "Sequel Product"). [The Snowblind
Developed Products, the GameCube Version, the Non-Derivative Product and the
Sequel Product shall hereinafter be collectively referred to as the "Existing
Products".]
WHEREAS, pursuant to the terms of the Product Agreement,
Snowblind is entitled to certain royalties on the exploitation of the Existing
Products by Interplay as well as Royalty Statements, all as more particularly
set forth in the Product Agreement; and
WHEREAS, on November 19, 2003, Snowblind commenced proceedings
against Interplay in the Superior Court of the State of California for the
County of Orange, entitled SNOWBLIND STUDIOS, INC. V. INTERPLAY ENTERTAINMENT
CORP., Case No. 03CC13842 (the "Litigation"); and
WHEREAS, on June 23, 2004, Snowblind and Interplay entered into a
Stipulation and Partial Settlement Agreement (the "Partial Settlement") upon
which an order granting partial summary adjudication was rendered by the Court
in the Litigation; and
WHEREAS, on June 23, 2004 Snowblind filed a Second Amended
Complaint in the Litigation, in which Snowblind asserted additional causes of
action against Interplay for, INTER ALIA, breach of contract, fraud and
rescission alleging that certain additional royalties are due Snowblind, which
claims Interplay denies; and
WHEREAS, the parties to this Agreement have been engaged in
discussions to compromise and settle all claims actually made or which could
have been made by Snowblind in the Litigation;
NOW, THEREFORE, in consideration of the mutual agreements
hereinafter provided for, the parties do hereby agree as follows:
1. DISMISSAL OF LITIGATION: Within five (5) days of the execution of this
Agreement, Snowblind shall cause to be filed by its counsel or
otherwise, a Request for Dismissal with prejudice of all claims with
respect to the Litigation, and provide counsel for Interplay with a
conformed copy of same. Each party will bear their own costs and
expenses associated with the Litigation, including but not limited to,
legal fees. It is agreed that Snowblind shall not enter judgment on the
Partial Settlement Agreement or the Order granting summary adjudication
dated October 27, 2004.
2. TERMINATION OF THE PRODUCT AGREEMENT AND PARTIAL SETTLEMENT AGREEMENT:
Interplay and Snowblind agree that the Product Agreement and Partial
Settlement Agreement are hereby terminated in their entirety and shall
be of no further force and effect and they are hereby superseded by
this oSettlement Agreement. Neither party has any obligations to the
other with respect to the Product Agreement and Partial Settlement
Agreement unless specifically set forth in this Agreement.
3. REVERSION OF WORK FOR HIRE AND TECHNOLOGY:
(a) Interplay hereby irrevocably and unconditionally grants,
conveys and assigns to Snowblind all of its right, title and
interest in and to the Snowblind Technology. Except as
provided below, Interplay shall have no right to use,
reproduce, perform, display, enhance, upgrade, distribute
(directly or indirectly), modify, adapt, perform, display and
execute, and otherwise exploit or commercialize the Snowblind
Technology. Notwithstanding the foregoing, Snowblind agrees
that Interplay shall have the exclusive right to continue to
manufacture, sell, license, reproduce, perform, display,
distribute (directly or indirectly), modify, adapt, perform,
display and execute, and otherwise exploit or commercialize
the Existing Products using the Snowblind Technology as
embodied in the Existing Products. In connection therewith,
this agreement will constitute an irrevocable and perpetual
license to Interplay to use the Snowblind Technology, but only
as embodied in the Existing Products and no rights are granted
in any manner whatsoever to exploit the Snowblind Technology
not otherwise set forth in this Settlement Agreement.
(b) Interplay hereby irrevocably and unconditionally grants,
conveys and assigns to Snowblind all of its right, title and
interest in and to all materials designed, developed and
delivered by Snowblind to Interplay pursuant to the Product
Agreement, including, without limitation, all characters,
visual representations, artwork, computer models, objects,
sounds,
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computer code (including source code, assembly code, object
code and all data files and other files related thereto), or
other writings, or other materials forming a part thereof or
related thereto, that were created, designed and developed by
Snowblind in connection with its work on the Snowblind
Developed Products (the "Snowblind Work Product"). The term
"Snowblind Work Product" excludes only those elements of the
Snowblind Developed Products which were licensed to Interplay
by Atari and its predecessors-in-interest as the "Baldur's
Gate" and "Dungeons and Dragons" properties, consistent with
Section 5 of the Settlement Agreement dated December 22, 2003
between Interplay and Atari Interactive (the "Atari
Agreement"), which is attached hereto as Exhibit "A" to this
Settlement Agreement. The rights to be transferred by
Interplay to Snowblind will include, without limitation, all
intellectual property rights in and to the Snowblind Work
Product, including without limitation, all rights under
copyright (including the exclusive right to create derivative
works). Snowblind acknowledges and agrees that Interplay will
continue to have the exclusive right to manufacture, sell,
license, distribute, reproduce, duplicate, display, advertise,
execute, exploit, and otherwise commercialize the Existing
Products in perpetuity containing the Snowblind Work Product,
and Snowblind Technology.
(c) Interplay shall have no right to produce new works based upon
or derived from the Snowblind Work Product. Notwithstanding
the foregoing, Interplay and Snowblind agree that nothing
contained in this Settlement Agreement is intended to limit or
shall be construed to in anyway restrict or limit the rights
of either party to design, develop, publish, create,
distribute or otherwise exploit video or other games that take
place in the medieval "sword and sorcerer" fantasy genre,
without the DARK ALLIANCE Trademark, even if those games have
intellectual properties and/or assets similar in content to
the games developed by either party or the Snowblind Work
Product, including but not limited to similar characters,
scenes, objects, plots, sounds and generalized scenes.
4. LICENSE OF DARK ALLIANCE TRADEMARK:
(a) Interplay grants to Snowblind the exclusive right and license
to use the trademark DARK ALLIANCE in any and all interactive
media, except for the development of "massively multiplayer
online games" ("MMOGs") , the rights to which are retained
exclusively by Interplay. Except as provided in Section 5(c),
below, the territory of the license granted herein shall be
worldwide. Snowblind shall have the right to sublicense the
rights granted herein to it by Interplay, but only in
connection with the manufacture, sale and distribution of
games developed by Snowblind for sale under the DARK ALLIANCE
title. The term "massively multiplayer online games," or
"MMOGs," means software products on any platform in which five
hundred (500) or more individual participants have the ability
to play or exist simultaneously in a persistent world.
Snowblind shall have the exclusive right to develop games for
sale under the DARK ALLIANCE title ("Dark Alliance Games") for
any and all hardware platforms, such as but not limited to
console machines (such as PS2, PS3, Xbox, Xbox 2, etc.),
portable handheld machines (such as PSP, Nintendo DS, GameBoy
Advance), personal computers and wireless devices. It is
understood that nothing contained herein and specifically the
term "wireless devices" shall not be construed to in any way
limit or restrict Interplay's right to make a MMOG game that
is capable of being played on "wireless devices", including
but not limited to computers that are connected to the
internet via wireless devices or otherwise. Although Snowblind
agrees that it will not make any MMOG game, Interplay
acknowledges and agrees that Snowblind's games may have online
and multiplayer functionality consistent with the capabilities
of the applicable hardware device so long as not more than
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sixty-four (64) individual participants can play or exist
simultaneously in a persistent world. The foregoing is not
intended to restrict or prohibit Snowblind from distributing
Dark Alliance Games and associated content (e.g., expansion
packs and add-ons) electronically. Further, the manner of
payment for such games alone, whether on a pay-for-content,
pay-per-play or subscription-based model shall not render a
game developed by Snowblind under the license herein and sold
under the title DARK ALLIANCE an MMOG.
(b) Snowblind will have a period of twenty-four (24) months from
the effective date of this Settlement Agreement to enter into
an agreement for the development, publication and distribution
of a Dark Alliance Game, including self-financing and
self-publication of the game if Snowblind chooses to do so.
Within five (5) business days of entering into any such
agreement or deciding to self-publish and self-finance the
development of the new Dark Alliance Game, Snowblind shall
notify Interplay in writing of same. If Snowblind fails to
enter into such agreement or decides not to self-publish and
self-finance such game within such period and notify Interplay
of same, the rights licensed to Snowblind by Interplay in this
Agreement will immediately revert to Interplay and the
exclusive rights granted to Snowblind will terminate. In the
event that Snowblind decides to self-publish and self-finance
any game that is governed by the terms of this Agreement,
Snowblind shall promptly notify Interplay of its decision and
provide Interplay with Snowblind's intended release date for
such game. Snowblind shall promptly notify Interplay of any
changes to such intended release date or if Snowblind decides
to terminate development of such game or if any publishing or
distribution agreement for a Dark Alliance Game is terminated.
(c) Provided Snowblind enters into an agreement for the
development, publication and distribution as provided above ,
Snowblind will have a further period of no more than forty
eight (48) months to complete development of the new Dark
Alliance Game and distribute/release same for sale, but in no
event shall the period of time to enter into an agreement for
the development, publication and distribution of a New Dark
Alliance Game and distribute and release same exceed a total
of fifty four (54) months from the effective date of this
Agreement . For the avoidance of doubt, if Snowblind enters
into and agreement for the development, publication and
distribution of a New Dark Alliance Game six (6) months or
less after the effective date of this Agreement, then
Snowblind shall have a maximum of forty eight (48) months to
complete development and commercially release the New Dark
Alliance Game. `Further, in the event that Snowblind enters
into an agreement for the development, publication and
distribution of a New Dark Alliance Game seven (7) months or
more after the effective date of this Agreement, then
Snowblind shall only have forty seven (47) months for a total
of fifty four (54) months or such shorter period of time as
applicable from entering into such agreement to complete
development and release the New Dark Alliance Game, failing
either of which, the rights licensed to Snowblind by Interplay
in this Agreement will immediately revert to Interplay and the
exclusive rights granted to Snowblind will terminate.
(d) Snowblind shall notify Interplay of any principal terms of any
agreements that it enters into with a third party for the
development and publication of a Dark Alliance Game, such
terms being, the identity of such third party, the territory
of such third party's rights and the
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intended publication date for such game(s), provided that
Interplay agrees to be bound by any confidentiality provisions
in such third party agreement. If, at any time, Snowblind
decides not to create, develop, distribute and publish Dark
Alliance Games, it will notify Interplay in which event, the
rights licensed to Snowblind by Interplay in this Agreement
will immediately revert to Interplay and the exclusive rights
granted to Snowblind will terminate; provided, however, if
during the first 24 months following the effective date of
this Settlement Agreement, Snowblind has entered into an
agreement to develop and publish a Dark Alliance Game or has
notified Interplay of its intention to develop and
self-publish a Dark Alliance Game, a decision by Snowblind
after such 24-month period to publish such game under a title
other than DARK ALLIANCE shall not relieve Snowblind of its
obligation to pay Interplay royalties from the sale of such
game, as provided in Section 4(h), below.
(e) In the event that Snowblind publishes and distributes a Dark
Alliance Game within the time periods provided above,
Snowblind will have a period of twelve (12) months from the
date if the initial commercial release of such Dark Alliance
Game or any subsequently released Dark Alliance Game to notify
Interplay of its intention to develop another or the next Dark
Alliance Game. In the event that Snowblind fails to so notify
Interplay as provided herein with respect to each successive
game all rights granted in this Agreement to Snowblind will
terminate and this Agreement shall be terminated. The
foregoing provision shall be applicable to each succeeding new
Dark Alliance Game and the same time periods and notice
provision shall be applicable.
(f) JAPAN TERRITORY:
(i) In the event that Snowblind enters into an agreement
with a third party for the development and
publication of a Dark Alliance Game, which party does
not have "direct" distribution capabilities in Japan,
then Interplay shall have the right to manufacture,
sell and distribute such Dark Alliance Game(s)
developed by Snowblind in Japan, but only through its
affiliated company Interplay Co. Ltd., ("Interplay
Japan"). If Interplay Japan is not in existence at
the time any Dark Alliance Game contemplated by this
Agreement is completed, then Snowblind may enter into
an agreement with anyone it chooses for the
distribution in Japan of such Dark Alliance Game and
any subsequent Dark Alliance Game without further
obligation to Interplay. Provided Interplay Japan is
the publisher and distributor in Japan for the Dark
Alliance game, all costs associated with such
distribution, including localization of each Dark
Alliance Game into Japanese languages shall be
entirely at Interplay's expense and Snowblind shall
be under no obligation to assist Interplay in any
such localization activities. Upon completion of a
Dark Alliance Game, Snowblind shall deliver such
portions of the source code of the English (US)
language NTSC gold master necessary to produce a
localized version (the rest of the code being
delivered in binary, object code format), such source
code portions being fully executable, decompilable
and recompilable, with all specific tools related to
localizing the product and available information for
that source code localization purpose from which
Interplay may produce its localized versions.
Interplay shall not be entitled to any royalties from
Snowblind on the sales by Interplay of such Dark
Alliance Game in Japan. Interplay shall pay to
Snowblind a royalty of One (U.S.) Dollar and Fifty
Cents (US$1.50) for each unit of such Dark Alliance
Game actually sold by Interplay (and not returned) in
Japan. Snowblind agrees that the royalty rate is
based on sales of such game at a full, top-line,
price; in the event that Interplay Japan is required
to reduce the price for markdowns or "price
protection" purposes, to a price which is fifty (50%)
percent or more below the initial wholesale list
price, the applicable royalty otherwise payable shall
be reduced to US$0.75; no royalties shall be payable
on units of such Dark Alliance Game sold as
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"cut-outs" or "scrap", or sold at or below the cost
of goods therefor. In the event Interplay Japan
distributes such Dark Alliance Game on a subscription
basis, Interplay shall pay Snowblind a royalty of
three percent (3%) of the sums actually received by
or credited to Interplay Japan from such
distribution. In the event a Dark Alliance Game
released hereunder in Japan by Interplay Japan is
distributed on a subscription basis by anyone other
than Interplay Japan, Interplay shall pay Snowblind a
royalty of five percent (5%) of the sums actually
received by or credited to Interplay Japan from such
distribution.
(ii) Interplay shall provide to Snowblind a royalty
statement each calendar quarter within thirty (30)
days the end of each calendar quarter. No sums shall
be payable to Snowblind in respect of sales of any
such Dark Alliance Game until payment therefore has
been actually received by or credited to Interplay.
Snowblind shall be solely responsible for and shall
pay any and all sales, use and similar taxes which
may be imposed by any taxing jurisdiction on payments
from Interplay to Snowblind. Interplay will provide
Snowblind with documentation of any amounts withheld
and payments made to tax authorities so that
Snowblind can claim any tax credits to which it is
entitled.
(iii) All accountings rendered by Interplay hereunder shall
be conclusive, final, and binding on Snowblind, shall
constitute an account stated, and shall not be
subject to any question for any reason whatsoever
unless specific written objection, stating the basis
thereof, is given by Snowblind to Interplay within
three (3) years after the date rendered. No action,
suit, or proceeding of any nature in respect of any
royalty statement or other accounting rendered by
Interplay hereunder may be maintained against
Interplay unless such action, suit, or proceeding is
commenced against Interplay in a court of competent
jurisdiction within one (1) year after the date of
Snowblind's notice rejecting such objection.
(iv) Interplay shall maintain at its offices, books of
account concerning the Dark Alliance Game distributed
by Interplay Japan. Snowblind, or a certified public
accountant on its behalf, may, at Snowblind's sole
expense, examine Interplay's said books relating to
the sale of such Dark Alliance Game in Japan, solely
for the purpose of verifying the accuracy thereof,
only during Interplay's normal business hours and
upon reasonable written notice. Such books relating
to any particular royalty statement may be examined
as aforesaid only within three (3) years after the
date the statement was rendered and Interplay shall
have no obligation to permit Snowblind to so examine
its such books relating to any particular royalty
statement more than once for any one statement.
Snowblind shall notify Interplay in writing within
ninety (90) days after such examination if Snowblind
believes that Interplay royalty reports are not
accurate, and supply Interplay with the report of
Snowblind's accountants including their description
of any and all alleged inaccuracies contained
therein. Snowblind and Snowblind's accountants shall
keep all information obtained in such examination
confidential and to use such information solely for
the purpose of this paragraph.
(g) Provided Snowblind satisfies the conditions of Sections 4 (a)
through and including 4 (d), above, the license and exclusive
rights granted to Snowblind to use the DARK ALLIANCE Trademark
as to the particular Dark Alliance game will be perpetual.
Termination of the license to use the DARK ALLIANCE Trademark
by reason of Snowblind's failure to
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satisfy the conditions of Sections 4 (a) through and including
4 (d), above will not affect the reversion of rights from
Interplay to Snowblind pursuant to Section 3, above or
Snowblind's rights under Section 4(1), below, and Snowblind
will be free to exploit the Snowblind Work Product and
Snowblind Technology as provided in this Agreement.
(h) INTERPLAY ROYALTY:
(i) Snowblind will pay or cause to be paid to Interplay
as a royalty for the rights licensed to Snowblind
herein an amount equal to $1.50 per unit sold and not
returned of any Dark Alliance Game released
hereunder. Notwithstanding the foregoing, Snowblind
shall not have to pay any royalties to Interplay with
respect to the first two hundred thousand (200,000)
units sold of the first Dark Alliance Game released
in accordance with this Agreement. Interplay agrees
that the royalty rate is based on sales of such game
at a full, top-line, price; in the event that
Snowblind or its publisher are required to reduce the
price for markdowns or "price protection" purposes,
to a price which is fifty (50%) percent or more below
the initial wholesale list price, the applicable
royalty otherwise payable shall be reduced to
US$0.75; no royalties shall be payable on units of
such Dark Alliance Game sold as "cut-outs" or
"scrap", or sold at or below the cost of goods
therefore. In the event a Dark Alliance Game released
hereunder is distributed on a subscription basis by
anyone other than Snowblind, Snowblind shall pay
Interplay a royalty of five percent (5%) of the sums
actually received by or credited to Snowblind from
such distribution. In the event that a Dark Alliance
Game released hereunder is distributed on a
subscription basis by Snowblind, then Snowblind shall
pay Interplay a royalty of three percent (3%) of the
sums actually received by or credited to Snowblind
from such distribution.
(ii) Snowblind shall provide to Interplay a royalty
statement each calendar quarter and any payment due
thereon within thirty (30) days of the end of each
calendar quarter. No sums shall be payable to
Interplay in respect of sales of any Dark Alliance
Game until payment therefore has been received by or
credited to Snowblind. Interplay shall be solely
responsible for and shall pay any and all sales, use
and similar taxes which may be imposed by any taxing
jurisdiction on payments from Snowblind to Interplay.
Snowblind will provide Interplay with documentation
of any amounts withheld and payments made to tax
authorities so that Interplay can claim any tax
credits to which it is entitled.
(iii) All accountings rendered by Snowblind hereunder shall
be conclusive, final, and binding on Interplay, shall
constitute an account stated, and shall not be
subject to any question for any reason whatsoever
unless specific written objection, stating the basis
thereof, is given by Interplay to Snowblind within
three (3) years after the date rendered. No action,
suit, or proceeding of any nature in respect of any
royalty statement or other accounting rendered by
Snowblind hereunder may be maintained against
Snowblind unless such action, suit, or proceeding is
commenced against Snowblind in a court of competent
jurisdiction within one (1) year after the date of
Snowblind's notice rejecting such objection.
(iv) Snowblind shall maintain at its offices, books of
account concerning the sales of Dark Alliance Games.
Interplay, or a certified public accountant on its
behalf, may, at Interplay's sole expense, examine
Snowblind's said books relating to the sale of the
Dark Alliance Game, solely for the purpose of
verifying the accuracy thereof, only during
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Snowblind's normal business hours and upon reasonable
written notice. Such books relating to any particular
royalty statement may be examined as aforesaid only
within three (3) years after the date the statement
was rendered and Snowblind shall have .no obligation
to permit Interplay to so examine its such books
relating to any particular royalty statement more
than once for any one statement. Interplay shall
notify Snowblind in writing within ninety (90) days
after such examination if Interplay believes that
Snowblind's royalty reports are not accurate, and
supply Snowblind with the report of Interplay's
accountants including their description of any and
all alleged inaccuracies contained therein. Interplay
and Interplay's accountants shall keep all
information obtained in such examination confidential
and to use such information solely for the purpose of
this paragraph.
(i) Snowblind agrees that any games that it develops
which are sold under the DARK ALLIANCE title will be
of the same quality as the Snowblind Developed
Products. Snowblind agrees that it will not include
any material which is obscene or which constitutes a
libel, slander or other defamation of any person or
entity. Interplay acknowledges that a Dark Alliance
Game which may be rated "M" by the ESRB (or a similar
rating elsewhere in the world) shall not constitute a
default under this provision.
(j) Snowblind shall cause a trademark notice (in a form
to be reasonable designated by Interplay) to appear
on a splash screen with other legal and proprietary
notices within each game that it develops which is
sold under the DARK ALLIANCE title and on the
packaging of such game with other legal and
proprietary notices. Snowblind shall submit or cause
its publisher to submit to Interplay samples of the
splash screen and packaging to Interplay to
demonstrate to Interplay the inclusion of such notice
on such materials no less than sixty (60) days prior
to the release of such Dark Alliance Game. Interplay
shall have a period of five (5) business days after
receipt of the item submitted to advise Snowblind of
any corrections which may be required, failing which,
such item shall be deemed to be correct and approved
for all purposes. Any inadvertent failure by
Snowblind or its publisher to include such notice as
aforesaid shall not constitute a breach of this
agreement, provided that Snowblind shall use
reasonable efforts to prospectively cure any such
inadvertent failure once Snowblind has been notified
of same.
(k) Snowblind shall furnish or cause its publisher to
furnish to Interplay without charge or royalty ten
(10) samples of each Dark Alliance Game, such samples
not to be resold by Interplay.
(1) Snowblind shall own all right, title and interest,
including copyright in all Dark Alliance Games it
develops pursuant to this Agreement in Snowblind's
name, as the owner and author thereof, and Snowblind
may secure any and all registrations, renewals and
extensions of such copyrights without restriction or
obligation to Interplay. No termination of this
license shall affect Snowblind's rights to create and
exploit derivative works in any such Dark Alliance
Games, provided that such derivative works are not
published under the DARK ALLIANCE title. It is
acknowledged that all goodwill associated with the
content of the Dark Alliance Games being developed
pursuant to this Agreement shall inure exclusively to
the benefit of Snowblind and the use by Snowblind of
the DARK ALLIANCE Trademark in connection with such
content shall not vest in Interplay any right, title
or interest in such content. It is further agreed and
understood that at no time shall Interplay take any
action or assist anyone else in taking any action to
contest the validity or enforceability of the rights
of Snowblind in and to. said Dark Alliance Games.
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(l) Interplay shall at all times own all right, title and
interest in and to the DARK ALLIANCE Trademark. It is
acknowledged that all goodwill associated with said
mark shall inure exclusively to the benefit of
Interplay. It is further agreed and understood that
at no time shall Snowblind take any action or assist
anyone else in taking any action to contest the
validity or enforceability of the rights of Interplay
in and to said DARK ALLIANCE Trademark. In addition,
while Interplay shall retain ownership of the DARK
ALLIANCE Trademark, Snowblind shall own any words,
phrases or symbols it may add or append to the DARK
ALLIANCE Trademark and can use all such words,
phrases and symbols without obligation to Interplay
separate and apart from the DARK ALLIANCE Trademark.
However, Interplay shall have the right to approve of
the logo style or design treatment of any use of the
Dark Alliance Trademark, such approval not to be
unreasonably withheld and limited to assuring
Interplay that such logo style or design meets the
quality and design standards set forth in Section
4(i), above. It is agreed that Snowblind or its
publisher shall submit to Interplay any logo style or
design that it intends to use containing the DARK
ALLIANCE Trademark prior to using same in any manner.
Thereafter, in the event that Interplay fails to
advise Snowblind or its publisher of any objection to
the design of same with in five (5) business days,
the design submitted shall be deemed approved.
Snowblind shall own any logo treatment that it, or
its publisher designs for use in connection with the
Dark Alliance Games (it being understood that upon
the termination of the license as provided herein,
Snowblind shall remove all reference to the words
DARK ALLIANCE from such designs) and Interplay shall
have no right under this Settlement Agreement to use
any such logo designs in or in connection with its
own Dark Alliance MMOG games.
5. MAINTENANCE OF THE DARK ALLIANCE TRADEMARK/SECURITY INTEREST:
(a) Interplay will within fourteen (14) business days of execution
of the Settlement Agreement, at its sole cost and expense,
file all necessary applications in the United States, Canada,
Europe (through the CTM) and Japan to register DARK ALLIANCE
as a trademark to cover all goods and services to be exploited
by Snowblind pursuant to the license to be granted and if it
fails to do so, Interplay irrevocably appoints Snowblind as
its attorney-in-fact (with a power coupled with an interest)
to execute and deliver all such necessary documents and
instruments and applications, at Interplay's expense. In the
event that Snowblind wants any applications filed in other
territories, Interplay will file same provided that Snowblind
pays the cost of same in advance. Interplay will within
fourteen (14) business days of execution of the Settlement
Agreement, furnish to Snowblind's counsel a copy of the
Trademark Quitclaim Assignment from Hasbro and Wizards of the
Coast of any and all right, title and interest they have with
respect to "DARK ALLIANCE", made pursuant to the Atari
Agreement (the "Hasbro-Wizards Trademark Assignment") which
Interplay represents and warrants will be a true and correct
copy of same.
(b) Interplay hereby grants to Snowblind a security interest in
the DARK ALLIANCE Trademark to secure the investment and
expected return of Snowblind and its licensees in the event of
bankruptcy of Interplay and a disaffirmance of the Settlement
Agreement in such bankruptcy proceeding and Snowblind shall be
entitled to all rights of a
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secured party as set forth in the California Uniform
Commercial Codes ("UCC"), and any other applicable statutory
protection for secured parties. Interplay will execute and
deliver to Snowblind all necessary UCC-1 s and other documents
for recordation with the California Secretary of State, the
U.S. Patent and Trademark Office and other applicable
registries and if it fails to do so, Interplay irrevocably
appoints Snowblind as its attorney-in-fact (with a power
coupled with an interest) to execute and deliver all such
necessary documents.
6. MUTUAL RELEASES:
(a) Interplay, individually and on behalf of any parent,
affiliated and subsidiary corporations, divisions, its present
and former stockholders, directors, officers, employees,
agents, attorneys, successors and assigns and all persons
and/or entities acting by and through, under or in concert
with Interplay, or any of them, hereby release, remise,
relieve and forever discharge Snowblind, and any parent,
affiliated and subsidiary corporations, divisions, its present
and former stockholders, directors, officers, employees,
agents, attorneys, successors and assigns, licensees, and all
persons and/or entities acting by and through, under or in
concert with Snowblind, or any of them, from all claims,
demands, actions, causes of action, liabilities,
arbitration's, assertions, contentions, debts, accounts,
demands and/or law suits, in law or in equity, of every kind
and nature which Interplay now has, has had or at any time may
have against Snowblind whether heretofore in dispute or known
or unknown, suspected or unsuspected, regardless of when
occurring, arising out of, resulting from or relating or
connected in any way to the Litigation and the Product
Agreement.
(b) Snowblind, on behalf of itself and any parent, affiliated and
subsidiary corporations, divisions, its present and former
stockholders, directors, officers, employees, agents,
attorneys, successors and assigns, licensees, and all persons
and/or entities acting by and through, under or in concert
with Snowblind, or any of them, hereby release, remise,
relieve and forever discharge Interplay and any parent,
affiliated and subsidiary corporations, divisions, its present
and former stockholders, directors, officers, employees,
agents, attorneys, successors and assigns, licensees, and all
persons and/or entities acting by and through, under or in
concert with Interplay, or any of them, from all claims,
demands, actions, causes of action, liabilities,
arbitration's, assertions, contentions, debts, accounts,
demands and/or law suits, in law or in equity, of every kind
and nature which Snowblind now has, has had or at any time may
have against Interplay whether heretofore in dispute or known
or unknown, suspected or unsuspected, regardless of when
occurring, arising out of, resulting from or relating or
connected in any way to the Litigation and the Product
Agreement.
(c) The Parties each acknowledge that there is a risk that
subsequent to the execution of this Settlement Agreement it
will discover facts or discover, incur or suffer claims which
were unknown or unsuspected at the time this Settlement
Agreement was executed, and which if known by it as of the
date of this Settlement Agreement may have materially affected
its decision to execute this Settlement Agreement. Without
limiting the generality of the foregoing, Interplay and
Snowblind each acknowledge its awareness of, and do hereby
waive the provisions of ss.1542 of the Civil Code of the State
of California which reads as follows:
10
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.
(d) Except with respect to breaches of this Settlement Agreement,
the Parties each shall refrain and forebear forever from
commencing, instituting or prosecuting any lawsuits, actions
or other proceedings against the other based on, arising out
of or in connection with any claim, debt, loss, covenant,
agreement, contract, liability, demand, obligation, account,
expense, action, cause of action or suit released hereunder.
7. REPRESENTATIONS AND WARRANTIES:
(a) Each party represents that they have read this Agreement, that
they have discussed it thoroughly with their attorney, that
they understand all of its provisions, that they enter into it
voluntarily, and that the individuals executing this Agreement
have the power and authority to do so on behalf of the
respective parties, and to bind such respective parties to the
terms hereof.
(b) Each party mutually acknowledges to each other that none of
them nor any agent or attorney for either of them, has made
any promise, representation or warranty whatever, express,
implied or statutory, not contained herein concerning the
subject matter hereof to induce the other to execute this
Agreement, and they acknowledge that neither of them had
executed this Agreement in reliance on any such promise,
representation or warranty not contained herein.
(c) Interplay represents and warrants to Snowblind that: (i)
Interplay owns all right, title and interest in and to the
DARK ALLIANCE Trademark and can license such rights to
Snowblind; (ii) the DARK ALLIANCE Trademark does not infringe
upon or violate the personal or property rights or any other
rights of any person or entity; (iii) that there are to the
best of Interplay's knowledge after a due diligence
investigation, no claims, liens, demands, encumbrances, causes
of action, asserted or pending against the DARK ALLIANCE
Trademark, except as to claims, liens demands and encumbrances
that exist as of the date of this Settlement Agreement; and
(iv) Interplay has not assigned, licensed nor in any manner
encumbered, diminished or impaired the rights to be granted
herein to Snowblind and further represents and warrants that
no attempt hereafter will be made to encumber, diminish or
impair any of the rights herein granted by Interplay to
Snowblind with respect to the DARK ALLIANCE Trademark.
8. INDEMNIFICATION:
(a) Interplay shall indemnify and hold harmless Snowblind from and
against any claim, debt, loss, covenant, damages, agreement,
contract, liability, demand, obligation, account, expense,
action, cause of action or suit (including the payment of
attorneys' fees and costs reasonably incurred, whether or not
litigation is commenced) by any person or entity which is not
a party to this Settlement Agreement, which is inconsistent
with any of the warranties, representations or covenants made
by Interplay this Settlement Agreement.
(b) Snowblind shall indemnify and hold harmless Interplay from and
against any claim, debt, loss, covenant, damages, agreement,
contract, liability, demand, obligation, account, expense,
action, cause of action or suit (including the payment of
attorneys' fees and costs
11
reasonably incurred, whether or not litigation is commenced)
by any person or entity which is not a party to this
Settlement Agreement, which is inconsistent with any of the
warranties, representations or covenants made by Snowblind in
this Settlement Agreement or a claim which may be asserted
against Interplay that a Dark Alliance Game developed by
Snowblind infringes on rights claimed by Atari.
9. DEFAULT:
(a) Neither party shall be deemed to be in breach of any of its
obligations hereunder unless and until it shall have been
given specific written notice as provided in Section 10 below,
of the nature of such breach and it shall have failed to cure
such breach within sixty (60) days after receipt of such
written notice. Except as otherwise provided below in this
section 9 (a), in the event of any breach of this Agreement by
Snowblind , Interplay shall be limited to an action for
damages, if any, and in no event shall any of the rights
acquired or to be acquired by Snowblind hereunder be affected
or impaired, nor shall Interplay be entitled to terminate this
Settlement Agreement or to seek to enjoin otherwise interfere
with Snowblind's use and enjoyment any rights assigned,
transferred; licensed or reserved to Snowblind hereunder.
Notwithstanding the foregoing, Interplay shall have the right
to seek equitable relief where Snowblind purports to use the
DARK ALLIANCE Trademark in breach of Sections 4(a) through
4(e) and 4 (i) and seek any other remedy, including but not
limited to, termination of this Agreement in the event that
Snowblind shall have failed to cure three (3) breaches of
section 4 (h) for which notice of same has been provided to
Snowblind.
(b) Either party's failure at any time or times hereafter to
require strict performance by the other of any of the
provisions, warranties, terms and conditions: contained in
this Settlement Agreement shall not waive, affect or diminish
any right of the non-defaulting party at any time or times
hereafter to demand strict performance therewith and with
respect to any other provisions, warranties, terms and
conditions contained in this Settlement Agreement, and any
waiver of any default shall not waive or affect any other
default, whether prior or subsequent thereto, and whether of
the same or a different type. No waiver or modification of any
provision of this Settlement Agreement shall be effective
unless in writing and signed by both parties. Except as
provided in Section 9(a), above, all remedies provided for in
this Settlement Agreement shall be cumulative and in addition
to and not in lieu of any other remedies available to either
party at law, in equity or otherwise.
10. NOTICES: All notices to be given to the parties hereunder shall be
addressed to the parties at the addresses set forth on the first page
hereof or at such other address as the parties shall designate in
writing from time to time. All notices shall be in writing, shall be
delivered by personal delivery, mail, or facsimile, all charges
prepaid, and shall be addressed to the following officers or directors
of the parties as follows: (i) to Snowblind, to the attention of Ryan
Geithman, with a copy to David S. Rosenbaum, Esq., 6303 Owensmouth
Avenue, 10th Floor, Woodland Hills, California 91367; (ii) and to
Interplay, to the attention of Herve Caen, with a copy to Zimmerman,
Rosenfeld, Gersh & Leeds, LLP, 9107 Wilshire Blvd., Suite 300, Beverly
Hills, CA 90210, Attention: Jeffrey Gersh, Esq. For purposes of this
Settlement Agreement, notices which are served by personal delivery
shall be deemed given when personally delivered, all charges prepaid;
notices served by mail shall be deemed delivered on the date five (5)
business days following the date of mailing, postage prepaid; notices
which are delivered by facsimile shall be deemed delivered on the date
transmitted, provided such notices are confirmed by delivery of the
hard copy of such notice by mail or personal delivery thereof in the
manner provided hereinabove; and notices of change of address shall be
effective only after the actual receipt thereof.
12
11. NON-DISCLOSURE: Each party hereto shall keep in confidence and not
disclose to any third party (except its accountants, attorneys or
financial advisers), without the written permission of the other party
the terms of this Settlement Agreement. This requirement of
confidentiality shall not apply to (i) disclosure which may be required
to be disclosed by applicable rules and regulations of government
agencies or judicial bodies; (ii) disclosure of the fact of the
existence of this Settlement Agreement and the settlement of the
Litigation; (iii) disclosure which may be necessary for a party to
enforce its rights under this Settlement Agreement; and (iv)
disclosure, of the provisions of sections 1, 3, 4, 5 and 16 and Exhibit
"A" of this Settlement Agreement and the Hasbro-Wizards Trademark
Assignment which may be made by a party hereto to exploit its rights
under this Settlement Agreement, without otherwise disclosing any of
the other terms of this Settlement Agreement. The parties shall
mutually approve a news release regarding the settlement of the
Litigation, which approval shall not be unreasonably withheld. It is
understood and agreed that Interplay will be filing a Form 8K with the
SEC containing the mutually approved news release regarding this
Settlement Agreement; any subsequent filings that Interplay may be
required to make with the SEC regarding this Settlement Agreement shall
not vary from the content of the mutually approved news release.
12. CONSTRUCTION: The language of this Agreement shall be construed as a
whole according to its fair meaning, and none of the parties hereto
shall be deemed the draftsman of this Agreement or any part -hereof,
for purposes of any litigation which may arise hereafter between them,
since all parties were assisted by their counsel in reviewing and
agreeing thereto, and no ambiguity shall be resolved against any party
by virtue of its participation in the drafting of this Agreement. If
any provision or portion of this Agreement shall be held for any reason
to be unenforceable or illegal, that provision shall be severed from
this Agreement and the remainder of this Agreement shall remain valid
and enforceable between the parties hereto just as if the provision
held to be illegal or unenforceable had never been included in this
Agreement.
13. FURTHER INSTRUMENTS: To the extent that any document is required to be
executed by a party to effectuate this Agreement, the party will
execute and deliver the document.
14. GOVERNING LAW: This Agreement and its validity, construction and effect
shall be governed by the laws of the State of California. Any claim,
dispute or disagreement relating to this. Agreement may be brought only
in the courts of the State of California, which courts shall have
exclusive jurisdiction thereof. If any legal action or other proceeding
is brought for the enforcement of this Agreement the successful or
prevailing party or parties shall be entitled to recover reasonable
attorneys fees and other costs incurred in that action or proceeding,
in addition to any other relief to which it may be entitled.
15. ENTIRE AGREEMENT: Each party hereto acknowledges that this Agreement
constitutes and contains the entire agreement and `understanding of the
parties concerning the subject matters hereof, and supersedes and
replaces all prior negotiations, proposed agreements, and agreements,
written or oral. The parties hereto each further acknowledge that any
13
representations or modifications concerning this instrument shall be of
no force or effect, excepting a subsequent modification in writing,
signed by the party sought to be bound. The headings and captions used
herein are inserted for convenience of reference only and shall not
affect the construction or interpretation of this Agreement.
16. SUCCESSORS AND ASSIGNS: This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs,
successors and beneficiaries. Except as may be otherwise provided in
this Agreement to the contrary, Snowblind shall have no right to
sublicense any of its rights granted herein to it by Interplay without
Interplay's prior written consent. Snowblind shall have the exclusive
and irrevocable right of last refusal to match any offer that Interplay
may receive from a third party to acquire all of Interplay's right,
title and interest in and to the DARK ALLIANCE Trademark, exercisable
upon written notice to Interplay delivered not later than five (5)
business days after receipt by Snowblind of written notice from
Interplay which identifies the third party and describes in reasonable
detail the principal terms of such offer (the "Third Party Offer"). If
Snowblind elects to match such Third Party Offer, the parties shall
negotiate and conclude a formal agreement comprising the terms of such
offer within a thirty (30). In connection with Snowblind's matching
rights, if a component of the consideration payable under such Third
Party Offer, is property, Snowblind may still match such Third Party
Offer by paying the verifiable cash value of such offered property.
Further, if Snowblind is required to exercise its right of last refusal
prior to the release of the first Dark Alliance Game hereunder, the
Consideration to be paid to Interplay by Snowblind required by such
Third Party Offer shall be reduced by the sum of $300,000. If Snowblind
dace not elect to match such Third Party Offer, then Interplay may
enter into the proposed agreement with the patty identified in
Interplay's aforesaid notice upon terms no less favorable to Interplay
than those set forth in the Third Party Offer, provided, however, that
if, Interplay does not do so within one hundred twenty (120) days after
the expiration of the aforesaid five (5) day period, then Snowblind's
right of last refusal under this Section 16 shall remain in effect.
17. SEVERABILITY: Should any provision in this Agreement be declared or be
determined to be illegal or invalid, all remaining parts, terms or
provisions shall be valid, and the illegal or invalid part, term or
provision shall be deemed not to be a part of this Agreement.
18. COUNTERPARTS: This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of
which together shall constitute one and the same instrument. Any copy
of this Settlement Agreement, including facsimile transmission., may be
used as if it were an original.
14
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first indicated above.
- --------------------------------------------------------------------------------
SNOWBLIND STUDIOS, INC. INTERPLAY ENTERTAINMENT CO
By: By:
------------------------------ ------------------------------------
Its: Its:
------------------------------ ------------------------------------
Approved as to Form and Content:
By: By:
-------------------------------- -----------------------------------
David S. Rosenbaum, Esq. Jeffrey F. Gersh, Esq.
Law Offices of David S. Rosenbaum Zimmerman, Rosenfeld, Gersh & Leeds, LLP
Attorney for Plaintiff, Attorneys of Defendant
Snowblind Studios, Inc. Interplay Entertainment Corp.
- --------------------------------------------------------------------------------
15
EXHIBIT "A"
TEXT OF SECTION 5 OF SETTLEMENT AGREEMENT DATED DECEMBER 22, 2003
BETWEEN INTERPLAY AND ATARI INTERACTIVE
5. THE "DARK ALLIANCE" MARK
(a) The parties agree that Interplay shall be the owner of the
"DARK ALLIANCE" mark. In order to facilitate a resolution to
the dispute between Interplay and Atari Interactive, Hasbro,
Inc. and Wizards of the Coast (a Hasbro subsidiary), as
successors in interest to TSR, Inc. have agreed to assign to
Interplay any and all right, title and interest each may have
in and to "DARK ALLIANCE". Upon execution of this Agreement,
Atari Interactive will provide to Interplay an assignment from
Hasbro and Wizards of the Coast of any and all right, title
and interest they have with respect to "DARK ALLIANCE", in the
form attached hereto. THIS SETTLEMENT AGREEMENT SHALL NOT TAKE
EFFECT UNTIL SUCH TIME AS INTERPLAY RECEIVES THE EXECUTED
ASSIGNMENTS FROM HASBRO AND WIZARDS OF THE COAST, ALTHOUGH THE
SETTLEMENT AGREEMENT MAY BE SIGNED AT AN EARLIER TIME.
EXECUTED ASSIGNMENTS FROM HASBRO AND WIZARDS OF THE COAST MUST
BE RECEIVED BY INTERPLAY VIA FAX AT (949) 252-0667 (WITH AN
ADDITIONAL COPY TO ATTENTION: CHRIS NELSON AT (440) 349-3017))
NO LATER THAN 5 P.M. (PSTJ WEDNESDAY, DECEMBER 24, 2003, WITH
ORIGINALS TO FOLLOW VIA OVERNIGHT DELIVERY (SENT FOR DELIVERY
ON DECEMBER 26, 2003). Interplay shall be permitted to
register the "DARK ALLIANCE" mark without interference or
opposition from Atari Inc., Atari Interactive, Hasbro, or any
of their parents, subsidiaries, affiliates, successors, or
assigns, including, but not limited to, Wizards of the Coast.
(b) It is expressly agreed that Interplay may continue to use the
DARK ALLIANCE mark in connection with its development or
publication of fantasy role-playing video and computer games.
Interplay shall not use the mark DARK ALLIANCE on or in
connection with any goods or services in such a way as to
suggest an association, connection, sponsorship or endorsement
by Atari Interactive, Atari Inc., Hasbro and Wizards of the
Coast. Interplay shall not use any intellectual property owned
and/or trademarked, copyrighted or patented by any or all of
the aforesaid companies, except under license or as otherwise
permitted by law. In particular Interplay shall not use any
elements in and to the work entitled "DUNGEONS & DRAGONS"
and/or any of the characters, elements, storylines, or realms
therein, except solely in connection with the marketing,
production and sale of such games and other products
containing intellectual property licensed to Interplay
pursuant to the TSR Agreement and identified on Exhibit A
hereto, or as otherwise permitted by law. The mere use of the
DARK ALLIANCE mark in conjunction with a fantasy role playing
game shall not in and of itself be considered to suggest an
association, connection, sponsorship or endorsement by Atari
Interactive, Atari Inc., Hasbro, Wizards of the Coast and/or
any intellectual property owned by any or all of the
aforesaid, in and to the work entitled
16
"DUNGEONS & DRAGONS" and/or any of the characters, elements,
story lines, or-realms therein, but the said use may be
considered in conjunction with other acts or omissions in
determining whether it suggests an association, connection,
sponsorship or endorsement. Subject to the foregoing, Atari
Interactive and/or Hasbro reserve and expressly do not waive
any rights that either may have to take action against
Interplay for trademark infringement, dilution, unfair
competition, false advertising and/or any related claims in
connection with Interplay's exercise of the rights granted
herein, however, such allegation by Atari Interactive and/or
Hasbro shall not itself constitute a breach of this Agreement
by Interplay or grounds for termination of any or the rights
granted hereunder.
(c) Atari Interactive, as well as Atari, Inc, agrees that nothing
in this Settlement Agreement limits or is intended to limit
the rights of Interplay to use, inter alia, any or all
locations, graphic representations, creatures, monsters,
names, likenesses, behaviors, religions, deities,
environments, legends, fairy tales, stories, universes,
character classes, character professions, or otherwise that
are in the public domain, are owned by any entity other than
Atari Interactive, Hasbro, or Wizards of the Coast, or
otherwise are not subject to copyright or trademark protection
(including by way of example, but without limitation, KNIGHTS,
SWORDSMEN, NECROMANCERS, DRAGONS, WIZARDS, WITCHES, SORCERERS,
GIANTS, DWARVES, ELVES, THIEVES, BARBARIANS, GHOSTS, SPIRITS,
GOBLINS, ORES, FAIRIES, DEMONS, RANGERS, UNICORNS, PEGASI,
TROLLS, CASTLES, PALACES, RUINS, TEMPLES, KEEPS, DUNGEONS,
TOMBS, CRYPTS, CATACOMBS, etc.). Subject to Paragraph 5(b)
above, nothing herein shall be construed to prevent Interplay
from entering into a licensing agreement with any company
having intellectual properties and/or assets similar in
content to those of Atari Interactive, Hasbro, Inc. and/or any
of their parents, subsidiaries, affiliates, successors, or
assigns, including, but not limited to, Wizards of the Coast.
Interplay shall continue to own the intellectual property
rights in the "Interplay-Derived Elements" of previous games
developed and/or published under the TSR Agreement.
Interplay-Derived Elements means the computer software code,
game play software routines, game or graphics engines, as well
as any designs, likenesses, sound and visual representations
that do not incorporate any Dungeons & Dragons-proprietary
elements, including any of the characters, elements, story
lines, game rules, or realms therein. Interplay-Derived
Elements expressly excludes Dungeons & Dragons-proprietary
materials, including, by way of example, but without
limitation: cluebooks, Dungeons and Dragons-proprietary
artwork, packaging, advertisements, text, translations and any
and all visual representations of Dungeons & Dragons related
intellectual property, including all Dungeons and
Dragons-proprietary characters, trademarks, copyrights and
artwork appearing in any of the products listed on Exhibit A.
For the avoidance of doubt, any visual representation of any
Dungeon & Dragons-proprietary intellectual property shall not
be considered Interplay-Derived Elements. Interplay shall be
free to continue to exploit the Interplay-Derived Elements, or
not, at will and in its sole discretion. Subject to the
foregoing, Atari Interactive and/or Hasbro reserve and
expressly do not waive any rights that either may have to take
action against Interplay for copyright infringement, trademark
infringement, dilution, unfair competition, false advertising
and/or any related
17
claims in connection with Interplay's exercise of the rights
granted herein, however, such allegation by Atari Interactive
and/or Hasbro shall not itself constitute a breach of this
Agreement by Interplay or grounds for termination of any of
the rights granted hereunder.
18