-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HK7pPU8jBwpavcX6GDrKSHcZCMonW5dytZWoUvBhVLwaapSY9K0O1kV2cSddUG2y 7ZFVE3CPR8MXIW4nYCUqdw== 0000898430-00-001482.txt : 20000511 0000898430-00-001482.hdr.sgml : 20000511 ACCESSION NUMBER: 0000898430-00-001482 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 20000510 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: INTERPLAY ENTERTAINMENT CORP CENTRAL INDEX KEY: 0001057232 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 330102707 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-54323 FILM NUMBER: 625140 BUSINESS ADDRESS: STREET 1: 16815 VON KARMAN AVE CITY: IRVINE STATE: CA ZIP: 92606 BUSINESS PHONE: 9495536655 MAIL ADDRESS: STREET 1: 16815 VON KARMAN AVE CITY: IRVINE STATE: CA ZIP: 92606 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: TITUS INTERACTIVE S A CENTRAL INDEX KEY: 0001082183 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: PARC DE L'ESPLANADE 12 RUE ENRICO FERMN STREET 2: ST THIBAULT DE VIGNES CITY: 77 400 FRANCE MAIL ADDRESS: STREET 1: TITUS SOFTWARE CORP STREET 2: 20432 CORISCO ST CITY: CHATSWORTH STATE: CA ZIP: 91311 SC 13D/A 1 AMENDMENT NO. 4 OF SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 4)* INTERPLAY ENTERTAINMENT CORP. (Name of Issuer) Common Stock, par value $.001 per share (Title of Class of Securities) 460615107 (CUSIP Number) Titus Interactive SA c/o Titus Software Corporation 20432 Corisco Street Chatsworth, California 91311 Attention: Mr. Herve Caen, President (818) 709-3692 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) April 14, 2000 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of (S)(S)240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See (S)240.13d-7(d) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act --- but shall be subject to all other provisions of the Act (however, see the Notes). SCHEDULE 13D - ------------------------ CUSIP No. 460615107 - ------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY) Titus Interactive SA - ------------------------------------------------------------------------------------------------------------------------------------ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) (b) [X] - ------------------------------------------------------------------------------------------------------------------------------------ 3 SEC USE ONLY - ------------------------------------------------------------------------------------------------------------------------------------ 4 SOURCE OF FUNDS WC - ------------------------------------------------------------------------------------------------------------------------------------ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) - ------------------------------------------------------------------------------------------------------------------------------------ 6 CITIZENSHIP OR PLACE OF ORGANIZATION France - ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY 13,167,255; see Item 5 OWNED BY ----------------------------------------------------------------------------------------------------------------- EACH 8 SHARED VOTING POWERS REPORTING PERSON WITH 3,571,378; see Item 5 ----------------------------------------------------------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER 13,167,255; see Item 5 ----------------------------------------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 0 - ------------------------------------------------------------------------------------------------------------------------------------ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 16,738,633; see Item 5
- ------------------------------------------------------------------------------------------------------------------------------------ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [X] The amount in Row 11 does not include: (i) 42,843,137 shares of the Issuer's Common Stock that may be issued upon conversion of 719,424 shares of the Issuer's Series A Preferred Stock owned by the Reporting Person, (ii) 100,000 shares of the Issuer's Common Stock that may be issued upon exercise of a Warrant issued to the Reporting Person by the Issuer, and (iii) 50,000 shares of the Issuer's Common Stock that may be issued upon exercise of a Warrant issued to the Reporting Person by the Issuer, beneficial ownership of all of which is disclaimed by the Reporting Person. The amount in Row 11 does include 3,571,378 shares of the Issuer's Common Stock, owned by Brian Fargo, subject to a proxy granted by Brian Fargo to the Reporting Person to vote at the Issuer's next stockholder meeting on matters relating to the issuance by the Issuer of Series A Preferred Stock to the Reporting Person. Beneficial ownership of these 3,571,378 shares of Common Stock owned by Brian Fargo is disclaimed by the Reporting Person. See Item 4 - ------------------------------------------------------------------------------------------------------------------------------------ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 54.8%; see Item 5 - ------------------------------------------------------------------------------------------------------------------------------------ 14 TYPE OF REPORTING PERSON CO - ------------------------------------------------------------------------------------------------------------------------------------
ITEM 1. SECURITY AND ISSUER. This Schedule 13D relates to the Common Stock, par value $.001 per share (the "Common Stock"), of Interplay Entertainment Corp., a Delaware corporation ------------ (the "Issuer"). The principal executive offices of the Issuer are located at ------ 16815 Von Karman Avenue, Irvine, California 92606. ITEM 2. IDENTITY AND BACKGROUND. This Schedule 13D is filed on behalf of Titus Interactive SA, a French corporation (the "Reporting Person"). The Reporting Person's principal business ---------------- is developing and publishing games for personal computers and video game console systems. The address of the Reporting Person's principal business and principal office is Parc de L'Esplanade, 12 rue Enrico Fermi, Saint Thibault des Vignes 77462 France. The names and business addresses of each director and executive officer of the Reporting Person is set forth below. The business address of each of the individuals named below is Parc de L'Esplanade, 12 rue Enrico Fermi, Saint Thibault des Vignes 77462 France. Each of the individuals named below is a French citizen.
Name Title - ---- ----- Herve Caen President Directeur General and Chairman of the Board of Directors Eric Caen President and Director Michel Henri Vulpillat Director Andree Caen Director Leon Aaron Ben Yaya Director
The principal occupation or employment of each of the aforementioned persons, except for Michel Henri Vulpillat, is his or her position of director and/or executive officer of the Reporting Person, as described above. Michel Henri Vulpillat's principal occupation or employment is serving as the sole owner and President of Edge Consulting, a company whose principal business is general business consulting and whose address is 27846 Palos Verdes Drive East, Rancho Palos Verdes, California 90275. During the last five years, neither the Reporting Person nor, to the best knowledge of the Reporting Person, any of the executive officers or directors of the Reporting Person has been convicted in a criminal proceeding, nor were any of the foregoing a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. The source of the consideration for the purchases reported hereon was the working capital of the Reporting Person, some of which was acquired through a public offering of the Reporting Person's securities in France consummated, in part, for the purpose of raising money to acquire the Common Stock. The amount of funds used or to be used by the Reporting Person is described in Item 4. ITEM 4. PURPOSE OF THE TRANSACTION. The Reporting Person has acquired the shares of Common Stock of the Issuer for investment purposes and for the purposes described below. On February 24, 1999, the Reporting Person acquired 21,800 shares of Common Stock through open-market purchases on NASDAQ-NMS. The price per share for such shares was equal to $2.006. On March 18, 1999, the Reporting Person consummated the transactions contemplated by the Stock Purchase Agreement dated March 18, 1999, by and among the Issuer, the Reporting Person and Brian Fargo ("Fargo"), an individual, and ----- the Chief Executive Officer and Chairman of the Board of the Issuer. Such Stock Purchase Agreement, as amended by the Letter Agreement (as defined below), shall be referred to herein as the "Initial Purchase Agreement." Pursuant to the -------------------------- Initial Purchase Agreement, the Reporting Person agreed to purchase up to 5,000,000 shares of Common Stock. A total of 2,500,000 shares of Common Stock were received by the Reporting Person at the closing under the Purchase Agreement on March 18, 1999. Pursuant to the Initial Purchase Agreement, on June 30, 1999 an additional 1,161,771 shares of Common Stock were issued to the Reporting Person and on August 20, 1999 an additional 883,684 shares of Common Stock were issued to the Reporting Person. The aggregate purchase price paid to the Issuer consisted of a cash payment of $10,000,000. As a condition to the closing of the transactions contemplated by the Initial Purchase Agreement, the Reporting Person entered into an agreement with Universal Studios, Inc. ("Universal") and the Issuer, dated March 18, 1999, --------- giving the Reporting Person the option (the "Option") to purchase all (but not less than all) the ------ shares of Common Stock held by Universal (4,658,216 shares of Common Stock) at a price per share equal to the higher of (i) the average of the closing price of the Common Stock as reported on the NASDAQ-NMS for the ten (10) trading days preceding the date of the first public announcement of the closing of the purchase of the Common Stock by the Reporting Person pursuant to the Initial Purchase Agreement (equal to $2.43 per share) or (ii) if during the term of the Option, the Reporting Person or an affiliate of the Reporting Person initiates a tender offer for the Common Stock or otherwise executes an agreement for the merger, consolidation or acquisition of all or substantially all of the issued and outstanding shares of Common Stock, or all or substantially all of the assets of the Issuer ("Merger Agreement"), the price paid to the Issuer's public ---------------- shareholders pursuant to such tender offer or Merger Agreement. On March 18, 1999, in consideration of Universal's grant of the Option, the Reporting Person paid Universal $500,000 cash, which would be applied to the exercise price in the event the Reporting Person exercised the Option. On September 20, 1999, in consideration of Universal's agreement to extend the period in which the Option may be exercised until November 12, 1999, the Reporting Person paid Universal $166,667 cash, which would be applied to the exercise price in the event the Reporting Person exercised the Option. The Option expired unexercised on November 12, 1999. On July 20, 1999, the Reporting Person entered into a Stock Purchase Agreement (the "Additional Purchase Agreement") by and among the Issuer, the ----------------------------- Reporting Person and Fargo. Pursuant to the Additional Purchase Agreement, the Reporting Person agreed to purchase up to 6,250,000 shares of Common Stock (the "Additional Purchase"). On November 9, 1999 (the "Additional Closing"), the ------------------- ------------------ Reporting Person and the Issuer consummated the Additional Purchase for a total purchase price of $25,000,000 consisting of $15,000,000 cash, a Promissory Note in the amount of $5,000,000 and a credit against the purchase price of a $5,000,000 deposit previously made by the Reporting Person with the Issuer. In connection with the Additional Purchase Agreement, the Reporting Person entered into an Exchange Agreement (the "Exchange Agreement") with Fargo on July ------------------ 20, 1999 pursuant to which Fargo agreed to exchange 2,000,000 shares of the Issuer's Common Stock owned by him (the "Fargo Shares") for 386,664 shares ------------ (adjusted for a 4-for-1 stock split of the Reporting Person's common stock in October 1999) of the Reporting Person's common stock (the "Exchanged Shares"), ---------------- based upon a valuation of the Issuer's Common Stock of $4.00 per share and a valuation of the Reporting Person's Common Stock of $20.69 per share (adjusted for a 4-for-1 stock split of the Reporting Person's common stock in October 1999). On November 9, 1999, the Reporting Person and Fargo closed the transactions contemplated by the Exchange Agreement, and Fargo exchanged the Fargo Shares for the Exchanged Shares. In connection with the Additional Purchase Agreement, the Reporting Person also entered into a Stockholder Agreement (the "Stockholder Agreement") with the --------------------- Issuer and Fargo on November 2, 1999. The Stockholder Agreement includes, among other provisions: (a) pursuant to Section 2.1 of the Stockholder Agreement, an agreement by the Reporting Person and Fargo that, until the earliest to occur of (i) the termination of Fargo's employment for Cause or Fargo's resignation for other than Good Reason, (ii) the termination of Herve Caen's employment other than for Cause or Caen's resignation for Good Reason, or (iii) the date that Fargo ceases to hold at least 2,000,000 shares of the Issuer's Common Stock, each of the Reporting Person and Fargo shall vote their shares of the Issuer's Common Stock to elect to the Issuer's board of directors (x) two (2) individuals nominated by Fargo, (y) two (2) individuals nominated by the Reporting Person and (z) three (3) individuals mutually agreed upon by Fargo and the Reporting Person; (b) pursuant to Section 3.4 of the Stockholder Agreement, a right of first refusal in favor of the Issuer, if the proposed transferor is the Reporting Person, and the Reporting Person, if the proposed transferor is Fargo, in the event that either Fargo or the Reporting Person intends to transfer all or a portion of its Common Stock (with certain exceptions from such rights of first refusal, including "de minimis" transfers of shares by Fargo or transfers by the Reporting Person to an affiliate); (c) pursuant to Section 3.6 of the Stockholder Agreement, from the Additional Closing through the earlier of the termination pursuant to Section 2.1 of the Stockholder Agreement or the termination of the Stockholder Agreement in accordance with its terms, neither Fargo nor the Reporting Person, nor any of the Reporting Person's majority-owned subsidiaries will, without the prior written consent of the other party: (i) acquire, offer to acquire, or agree to acquire, directly or indirectly, by purchase or otherwise, any voting securities or direct or indirect rights to acquire any voting securities of the Issuer or the Reporting Person, or any material amount of the assets of the Issuer, or any material amount of the assets of the Issuer or the Reporting Person, as the case may be, or any subsidiary or division thereof outside the ordinary course of business; (ii) make, or in any way participate in, directly or indirectly, any "solicitation" of "proxies" (as such terms are used in the rules of the Securities and Exchange Commission) to vote, or seek to advise or influence any person or entity with respect to the voting of, any voting securities of the Issuer or the Reporting Person, as the case may be, for the purpose of changing or influencing the control of the Issuer or the Reporting Person, as the case may be; or (iii) make any public announcement with respect to, or submit a proposal for, or offer of (with or without conditions) any merger, business combination, recapitalization, restructuring, liquidation or other extraordinary transaction involving the Issuer or the Reporting Person, as the case may be, or its securities or assets; provided, however, the foregoing restrictions -------- ------- shall not (x) preclude the Reporting Person from (A) acquiring the securities contemplated by Article IV of the Stockholder Agreement and the shares of the Issuer's Common Stock pursuant to the Additional Purchase Agreement and the transactions contemplated thereby, including without limitation the transactions contemplated by the Initial Purchase Agreement, (B) filing a Schedule 13D in connection with the transactions contemplated by the Additional Purchase Agreement or the Exchange Agreement, (C) voting its shares of the Issuer's Common Stock within its discretion on any matter submitted for a vote or consent of the Issuer's stockholders, (D) taking any other action contemplated by the Additional Purchase Agreement, or (E) purchasing shares of the Issuer's capital stock pursuant to open-market transactions on a national securities exchange or in the over-the-counter market; provided, further, that the restrictions on the -------- ------- Reporting Person in Section 3.6 of the Stockholder Agreement shall lapse automatically to the extent any person or entity other than the Reporting Person or an affiliate of the Reporting Person takes any action with respect to the matters described in clauses (ii) and (iii) above, or (y) preclude Fargo from (A) acquiring the shares of the Reporting Person's common stock pursuant to the Exchange Agreement or (B) filing an amendment to Schedule 13D; (d) pursuant to Section 4.1 of the Stockholder Agreement, if the Issuer proposes to issue, sell, or grant (collectively, an "issuance") any -------- equity securities or any securities convertible into or exchangeable for equity securities (collectively, the "New Securities"), then the Issuer shall, no later -------------- than ten (10) business days prior to the consummation of such issuance, give written notice to each of Fargo and the Reporting Person of such issuance (the "Notice of Issuance"). Such Notice of Issuance shall describe such issuance, - ------------------- and contain an offer to each of Fargo and the Reporting Person (each, a "stockholder") to sell to such stockholder, at the same price and for the same - ------------ consideration to be paid by the proposed purchasers, such stockholder's pro rata portion (which shall be a percentage, determined immediately prior to such issuance, equal to the percentage of the fully-diluted common stock of the Issuer held by such stockholder). Subject to the foregoing, if common stock is being issued with other securities as a unit, each stockholder who desires to accept such offer must purchase such unit in order for such acceptance to be valid. If any such stockholder fails to accept such offer by written notice within ten (10) business days after its receipt of the Notice of Issuance, the Issuer shall proceed with such issuance, free of any right on the part of such stockholder under Section 4.1 of the Stockholder Agreement in respect thereof. Any issuance of New Securities more than forty-five (45) days after the expiration of such ten business day period, or to a different issuee, or on terms and conditions less favorable to the Issuer in any material respect than those described in the notice to the stockholders, shall be subject to a new notice to and new purchase rights by the stockholders under Section 4.1 of the Stockholder Agreement. Section 4.1 shall not apply to the issuance of any Excluded Securities. For purposes of the Stockholder Agreement, "Excluded Securities" shall mean: (i) ------------------- issuances of securities which have been approved prior to the date hereof (including without limitation issuances under the Issuer's employee stock purchase plans described under Section 5.3 of the Additional Purchase Agreement), provided that such issuances are permitted under the Initial Purchase Agreement and the Additional Purchase Agreement (collectively, the "Purchase Agreements"); (ii) issuances of securities which have been approved by ------------------- the Issuer's board of directors and by the stockholders; (iii) New Securities distributed or set aside to all holders of the Issuer's Common Stock on a per share equivalent basis; (iv) issuances pursuant to the Purchase Agreements; and (v) issuances of New Securities upon the grant, exercise or conversion of (x) options or warrants to purchase shares of the Issuer's capital stock or (y) securities which are convertible into shares of the Issuer's capital stock ((x) and (y) referred to collectively as "Convertible Securities"), in each case ---------------------- where such Convertible Securities have been granted or issued prior to November 2, 1999 or have been granted or issued in accordance with the Stockholder Agreement; (e) pursuant to Section 4.2 of the Stockholder Agreement, in the event that the Issuer proposes to issue, sell or grant any Excluded Securities pursuant to clauses (i), (ii) and (v) in the preceding paragraph, the Issuer shall send a notice of such issuance to the Reporting Person in accordance with the provisions concerning a Notice of Issuance (an "Excluded Securities ------------------- Notice"). Following receipt of an Excluded Securities Notice, the Reporting Person shall have the option to purchase such number of Excluded Securities as are necessary for the Reporting Person to maintain its percentage ownership of the Issuer's fully diluted common stock at the same level as immediately prior to such issuance, at the price and on the other terms and conditions upon which such Excluded Securities are being issued, sold or granted (the "Excluded -------- Securities Option"). The Excluded Securities Option shall be exercisable by the - ----------------- Reporting Person no later than thirty (30) calendar days after the Reporting Person's receipt of an Excluded Securities Notice; provided, however, that in -------- ------- the case of Excluded Securities which are Convertible Securities, the Reporting Person must exercise the Excluded Securities Option no later than thirty (30) calendar days after its receipt of notice from the Issuer of the exercise or conversion, as applicable, of such Excluded Securities; (f) pursuant to Section 5.1 of the Stockholder Agreement, neither Fargo nor the Reporting Person may transfer for value any Issuer capital stock held by it unless the terms and conditions of such transfer include an offer to the other stockholder to include in the transfer to the third party transferee an amount of Issuer capital stock held by such other stockholder (the "Tag-Along --------- Stockholder"), which amount may not exceed the number of shares of Issuer - ----------- capital stock derived by multiplying (i) the aggregate number of shares of Issuer capital stock covered by the offer by (ii) a fraction the numerator of which is the number of shares of Issuer capital stock owned by the Tag-Along Stockholder at the time of the transfer and the denominator of which is the total number of shares of Issuer capital stock held by Fargo and the Reporting Person at the time of the transfer; (g) pursuant to Section 6.1 of the Stockholder Agreement, the Issuer shall not, and shall not permit any subsidiary to, engage in any of the following actions or transactions, or enter into a contract or arrangement to engage in any of such actions or transactions, without the written consent or approval of Fargo and the Reporting Person: (i) Authorize or issue, or obligate itself to issue, any other equity security, including any indebtedness convertible into or exchangeable for shares of equity securities of the Company or issued with (i) shares of Issuer capital stock or (ii) warrants or other rights to purchase Issuer capital stock or any other equity security, without compliance with the provisions of Section 4.1 of the Stockholder Agreement; (ii) Effect any recapitalization, or any dissolution, liquidation, or winding up of the Company; (iii) Permit any subsidiary to issue or sell, or obligate itself to issue or sell, except to the Issuer or any wholly-owned subsidiary, any stock of such subsidiary, without first offering the Reporting Person the right to purchase such stock on the same terms and conditions as those offered to the Issuer by any third party; (iv) Amend its certificate of incorporation or amend or repeal its by-laws; (v) Increase the number of members of the Issuer's board of directors; (vi) Take any action that would constitute a bankruptcy or insolvency event for the Issuer or any subsidiary of the Issuer; or (vii) Guarantee or otherwise become contingently obligated for the payment of indebtedness of any person or entity (other than a wholly-owned subsidiary of the Issuer), where such obligation is not related to the Issuer's business. In connection with the Additional Purchase Agreement, the Issuer agreed to enter into employment agreements with each of Fargo and Herve Caen for a period of three years from the date of the Additional Closing. Fargo shall be employed as Chief Executive Officer and Chairman of the Board of the Issuer, and Herve Caen shall be employed as President of the Issuer. On April 14, 2000, the Reporting Person entered into a Series A Preferred Stock Purchase Agreement (the "Series A Purchase Agreement") with the Issuer --------------------------- pursuant to which the Issuer issued and sold to the Reporting Person 719,424 shares of a newly created class of the Issuer's Series A Preferred Stock, par value $.001 per share (the "Series A Shares") for total aggregate consideration --------------- of $20,000,000. Of the $20,000,000, $10,000,000 was paid by the Reporting Person in cash and $10,000,000 was paid through the cancellation of two promissory notes, each in the amount of $5,000,000, issued by the Issuer to the Reporting Person or affiliates of the Reporting Person. The Series A Shares are convertible, at the option of the Reporting Person, at any time after the earlier to occur of May 31, 2001, or 180 days after the occurrence of an Adjustment Event (as defined below), which is not cured by the Issuer within the Cure Period (as defined below), into a number of shares of Common Stock determined by dividing $27.80 by the Series A Conversion Price in effect on the date of conversion. The Series A Conversion Price is equal to the ------------------------- lower of (i) $2.78 or (ii) the product of (a) 0.85 and (b) the average of the closing price of the Issuer's Common Stock as reported by Nasdaq for the twenty (20) trading days immediately preceding the date of conversion. Notwithstanding the immediately preceding sentence, in the event that a demand for payment is made by Greyrock Capital pursuant to the Guaranty (as defined below) (an "Adjustment Event"), the Series A Conversion Price shall automatically be - ----------------- adjusted to $0.466818926, provided, however, if no amounts are paid by the -------- ------- Reporting Person pursuant to the Guaranty, or, within 180 days of the Adjustment Event (the "Cure Period"), the Issuer reimburses the Reporting Person for any ----------- amounts paid by the Reporting Person pursuant to the Guaranty, the Series A Conversion Price shall automatically be increased to the Series A Conversion Price in effect immediately prior to the Adjustment Event. If, however, the Reporting Person pays any amounts under the Guaranty and such amounts are not reimbursed by the Issuer within the Cure Period, then, as of the first day following the Cure Period, the Series A Conversion Price shall be automatically adjusted to an amount obtained by the following formula (provided, however, that -------- ------- in no event shall the resulting Series A Conversion Price be less than $0.466818926 or more than $2.78): X = 20,000,000 -------------------- Z + 5,000,000 (10-Y) where: X = the Series A Conversion Price; Y = the lesser of (a) $10.00 per share (subject to adjustment for stock splits, combinations and dividends following the date hereof with respect to the Common Stock) or (b) the average closing price per share as reported by Nasdaq for the twenty (20) trading days immediately preceding the last day of the Cure Period; and Z = the greater of (a) $20,000,000 divided by $2.78 (subject to adjustment for stock splits, combinations and dividends following the date hereof with respect to the Common Stock) or (b) $20,000,000 divided by the product of 0.85 and Y. The formula set forth above shall be equitably adjusted in the event of any stock splits, combinations and dividends following the date hereof with respect to the Issuer's Common Stock so as to preserve, as closely as possible, the conversion rights of the Series A Shares. Notwithstanding the foregoing, in no event shall the Series A Shares be convertible into more than 5,504,507 shares of the Issuer's Common Stock unless the issuance of the Series A Shares is approved by the Issuer's stockholders in accordance with Delaware law and the Issuer's Certificate of Incorporation, provided, however, that this limitation will cease to apply upon the occurrence - -------- ------- of an Adjustment Event. The Series A Shares possess a number of voting rights equal to the number of shares of the Issuer's Common Stock into which the Series A Shares may be converted, without regard to any restrictions on when the Series A Shares may be converted and subject to the cap on the conversion of the Series A Shares set forth in the immediately preceding paragraph. As of the date of this filing, the Series A Shares issued to the Reporting Person are entitled to an aggregate of 5,504,507 votes. In connection with the issuance of the Series A Shares, the Issuer issued to the Reporting Person a warrant to purchase up to 350,000 shares of the Issuer's Common Stock at an exercise price of $3.79 per share. This warrant is exercisable by the Reporting Person at any time during the period beginning April 14, 2000 and ending April 14, 2010. Also in connection with issuance of the Series A Shares, the Issuer issued to the Reporting Person a warrant to purchase up to 50,000 shares of the Issuer's Common Stock at an exercise price of $3.79 per share. This warrant is exercisable at any time during the period beginning on March 31, 2001 and ending on April 14, 2010; provided, however, that this warrant is only exercisable if -------- ------- the Issuer's audited pre-tax income for its fiscal year ending December 31, 2000 is less than $2,115,000. As a condition to closing the transactions contemplated by the Series A Purchase Agreement, the Reporting Person agreed to guaranty (the "Guaranty"), up -------- to $20,000,000, any amounts owed by the Issuer to Greyrock Capital, a Division of Banc of America Commercial Financial Corporation (formerly Greyrock Business Credit) under the Issuer's credit agreement with Greyrock Capital. As a further condition to closing the transactions contemplated by the Series A Purchase Agreement, the Reporting Person agreed to provide the Issuer with a secured revolving credit facility in the amount of $5,000,000. The outstanding principal amount under the this credit facility will bear interest, payable quarterly, at the lower of 12% or the highest interest rate allowable under applicable law, and shall be due in full, together with all accrued and unpaid interest, on May 1, 2001. In connection with the $5,000,000 credit facility, the Issuer issued to the Reporting Person a warrant to purchase up to 100,000 shares of the Issuer's Common Stock at an exercise price of $3.79 per share. This warrant, as amended on April 17, 2000, only vests if amounts are drawn under the $5,000,000 credit facility by the Issuer, and only in proportion to amounts drawn under the $5,000,000 credit facility. For example, if the Issuer only borrows $1,000,000 under the credit facility, only one-fifth of this warrant vests. This warrant expires on April 14, 2010. Pursuant to the Series A Purchase Agreement, the Issuer agreed that unless the Reporting Person otherwise agrees in writing, during the period (the "Covenant Period") beginning on April 14, 2000 and ending on the later of (a) - ---------------- the effective date of a registration statement with respect to the Common Stock issuable upon conversion of the Series A Shares or (b) April 30, 2001, the Company will not: . Issue any security that is senior to, or on parity with, the Series A Shares; . Issue a number of voting securities such that the aggregate voting rights held by the Reporting Person would constitute fifty percent or less of the total voting rights of the Issuer's outstanding capital stock, until such time as the issuance of the Series A Shares is approved by the Issuer's stockholders; or . Make any substantial change in the character of the Issuer's business. Also pursuant to the Series A Purchase Agreement, the Issuer agreed that unless the Reporting Person otherwise agrees in writing during, the period (the "Guaranty Period") beginning on April 14, 2000 and ending on the earlier to --------------- occur of (a) if the Reporting Person is not required to pay under the Guaranty, the date upon which the Guaranty is extinguished and (b) if the Reporting Person is required to pay any amounts under the Guaranty, the date upon which such amounts are reimbursed to the Reporting Person in full and the Guaranty is extinguished: . If the Issuer shall commence any material communication concerning the acquisition of properties or assets of the Issuer (including without limitation publishing rights, distribution rights or subsidiaries) having a fair market value in excess of $100,000, the Issuer shall give written notice of such communications to the Reporting Person; . Upon receipt of a bona fide offer from a third party (the "Offer") to acquire ----- any assets of the Issuer (including without limitation publishing rights, distribution rights or subsidiaries) having a fair market value in excess of $100,000, the Issuer will provide written notice of such offer (the "Notice") to ------ the Reporting Person. The Notice shall contain the identity of the proposed purchaser and a summary of all material terms of the Offer. The Reporting Person will have the option, exercisable, if at all, by written notice to the Issuer within twenty (20) business days following receipt of the Notice, to elect to purchase such assets on all of the economic terms of the Offer, and otherwise on commercially reasonable terms; and . The Issuer shall not enter into any agreement for the sale of any assets or properties of the Company (including without limitation publishing rights, distribution rights or subsidiaries) having a fair market value in excess of $100,000. The Issuer, the Reporting Person and Fargo waived applicable restrictions under the Stockholder Agreement in connection with the issuance to the Reporting Person of the Series A Shares. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. The Reporting Person currently has beneficial ownership of 16,738,633 shares of Common Stock, or approximately 54.8% of the shares of Common Stock outstanding. Of these shares, the Reporting Person: (i) has sole power to vote or to direct the vote of 13,167,255 shares, (ii) shares voting power with Fargo, the Issuer's Chief Executive Officer, with respect to 3,571,378 of these shares and (iii) has sole power to dispose or to direct the disposition of 13,167,255 of these shares. On February 24, 1999, the Reporting Person acquired 21,800 shares of Common Stock through open-market purchases on NASDAQ-NMS. The price per share for such shares was equal to $2.006. The Reporting Person acquired 2,500,000 shares of its shares of Common Stock on March 18, 1999 pursuant to the Initial Purchase Agreement. Also pursuant to the Initial Purchase Agreement, on June 30, 1999 (the "Interim ------- Valuation Date"), the Reporting Person received an additional 1,161,771 shares - -------------- of Common Stock (the "Interim Additional Shares"), which Interim Additional ------------------------- Shares equal the difference between (i) the quotient of (a) $10,000,000 divided by (b) the price per share on the Interim Valuation Date, less (ii) the 2,500,000 shares of Common Stock issued on March 18, 1999 (the "Initial Shares"), and on August 20, 1999 (the "Final -------------- ----- Valuation Date"), the Reporting Person received 883,684 shares of Common Stock - -------------- (the "Final Additional Shares"), which number of shares equals the difference ----------------------- between (i) the quotient of (a) $10,000,000 divided by (b) the price per share on the Final Valuation Date, less (ii) the Initial Shares and less (iii) the Interim Additional Shares. The Reporting Person paid an aggregate purchase price of $10,000,000 cash for the Initial Shares, the Interim Additional Shares and the Final Additional Shares. In each of the calculations of the Interim Additional Shares and the Final Additional Shares, the number of shares to be issued to the Reporting Person is based upon the average closing price of the Common Stock on NASDAQ-NMS for the 10 trading days ending the day before the applicable valuation date; provided, that in the event the price per share of Common Stock as so calculated would be less than $2.00 per share, the price per share in any event shall be deemed to be $2.00; and in the event the price per share of Common Stock as so calculated would be more than $4.00 per share, the price per share in any event shall be deemed to be $4.00. On November 9, 1999, the Reporting Person acquired 6,250,000 shares of Common Stock pursuant to the Additional Purchase Agreement for an aggregate purchase price of $25,000,000, consisting of $15,000,000 cash, a Promissory Note in the amount of $5,000,000 and a credit against the purchase price of a $5,000,000 deposit previously made by the Reporting Person with the Issuer. Also on November 9, 1999, the Reporting Person acquired 2,000,000 shares of Common Stock from Fargo pursuant to the Exchange Agreement in exchange for 386,664 shares (adjusted for a 4-for-1 stock split of the Reporting Person's common stock in October 1999) of the Reporting Person's common stock (the "Exchanged Shares"), based upon a valuation of the Issuer's Common Stock of - ----------------- $4.00 per share and a valuation of the Reporting Person's common stock of $20.69 per share (adjusted for a 4-for-1 stock split of the Reporting Person's common stock in October 1999). On April 14, 2000, the Issuer issued to the Reporting Person a warrant to purchase up to 350,000 shares of the Issuer's Common Stock at an exercise price of $3.79 per share. This warrant is exercisable at any time during the period beginning on April 14, 2000 and ending on April 14, 2010. The shares of Common Stock issuable upon exercise of this warrant are included in the number of shares of Common Stock beneficially owned by the Reporting Person set forth in the first sentence of this Item 5. This warrant was issued in connection with the issuance by the Issuer to the Reporting Person of the Series A Shares. The shares of Common Stock beneficially owned by the Reporting Person also includes 3,571,378 shares of Common Stock owned by Fargo, subject to a proxy granted by Fargo to the Reporting Person to vote at the Issuer's next stockholder meeting on matters relating to the issuance of the Series A Shares. This proxy was granted by Fargo to the Reporting Person pursuant to the Series A Purchase Agreement. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. The responses to Items 4 and 5 are incorporated herein by this reference. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit No. ------- Description of Exhibit ------------------------------------------------------------------------------------ 99.1 Stock Purchase Agreement dated March 18, 1999 by and among the Issuer, the Reporting Person and Fargo. (1) 99.2 Letter Agreement dated March 18, 1999 by and among the Issuer, the Reporting Person and Universal. (1) 99.3 Irrevocable Proxy dated March 18, 1999 by Fargo to the Reporting Person. (1) 99.4 Irrevocable Proxy dated March 18, 1999 by Universal to the Reporting Person. (1) 99.5 Letter of Intent dated May 12, 1999 by and among the Issuer, the Reporting Person and Fargo. (2) 99.6 Convertible Promissory Note dated May 12, 1999 issued by Fargo to the Reporting Person. (2) 99.7 Stock Purchase Agreement dated July 20, 1999 by and among the Issuer, the Reporting Person and Fargo. (3) 99.8 Form of Stockholder Agreement by and among the Issuer, the Reporting Person and Fargo. (3) 99.9 Exchange Agreement dated July 20, 1999 by and among the Reporting Person, Fargo, Herve Caen and Eric Caen. (3) 99.10 Stockholder Agreement dated November 2, 1999 by and among the Issuer, the Reporting Person and Fargo. (4) 99.11 Promissory Note dated November 2, 1999 issued by the Reporting Person to the Issuer. (4) 99.12 Stock Purchase Agreement, dated April 14, 2000, by and between the Reporting Person and the Issuer. 99.13 Certificate of Designation of Rights, Preferences, Privileges and Restrictions of Series A Preferred Stock of the Issuer. 99.14 Warrant, dated April 14, 2000, to purchase 350,000 shares of the Issuer's Common Stock issued by the Issuer to the Reporting Person. 99.15 Warrant, dated April 14, 2000, to purchase 100,000 shares of the Issuer's Common Stock issued by the Issuer to the Reporting Person. 99.16 Amendment Number 1 to Warrant to purchase 100,000 shares of the Issuer's Common Stock dated April 17, 2000 by and between the Issuer and the Reporting Person. 99.17 Warrant, dated April 14, 2000, to purchase 50,000 shares of the Issuer's Common Stock issued by the Issuer to the Reporting Person. 99.18 Irrevocable Proxy dated April 14, 2000 by Brian Fargo to the Reporting Person.
(1) Previously filed as an exhibit to the Schedule 13D filed on March 29, 1999 (File No. 005-54323), which exhibit is incorporated herein by this reference. (2) Previously filed as an exhibit to the Schedule 13D/A filed on May 24, 1999 (File No. 005-54323), which exhibit is incorporated herein by this reference. (3) Previously filed as an exhibit to the Schedule 13D/A#2 filed on July 29, 1999 (File No. 005-54323), which exhibit is incorporated herein by this reference. (4) Previously filed as an exhibit to the Schedule 13D/A#3 filed on December 23, 1999 (File No. 005-54323), which exhibit is incorporated herein by this reference. SIGNATURE --------- After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: May 10, 2000 TITUS INTERACTIVE SA, a French corporation By: /s/ Herve Caen ----------------- Herve Caen, President Directeur General EX-99.12 2 STOCK PURCHASE AGREEMENT EXHIBIT 99.12 STOCK PURCHASE AGREEMENT ------------------------ THIS STOCK PURCHASE AGREEMENT ("Agreement") is entered into as of April --------- 14, 2000 by and between INTERPLAY ENTERTAINMENT CORP., a Delaware corporation (the "Company"), TITUS INTERACTIVE SA, a French corporation ("Titus" or the ------- ----- "Investor"). Capitalized terms not otherwise defined herein shall have the - --------- meanings ascribed thereto in Section 14 hereof. THE PARTIES hereby agree as follows: 1. Authorization of Investor Stock. The Company has authorized the issue ------------------------------- and sale of up to seven hundred nineteen thousand four hundred twenty-four (719,424) shares (the "Shares") of its Series A Preferred Stock, par value $.001 per share ("Series A Preferred Stock"). The Series A Preferred Stock has the rights preferences, privileges and restrictions set forth in the Certificate of Designation attached hereto as Exhibit A (the "Certificate of Designation"). --------- 2. Sale and Purchase of Investor Stock. Upon the terms and subject to the ----------------------------------- conditions herein contained, the Company agrees to sell to Investor, and Investor agrees to purchase from the Company, at the Closing (as hereinafter defined) on the Closing Date (as hereinafter defined) the Shares at a price in the aggregate of Twenty Million Dollars ($20,000,000) (the "Purchase Payment"). ---------------- 3. Closing. The closing of the sale to and purchase by Investor of the ------- Shares (the "Closing") shall occur at the offices of Paul, Hastings, Janofsky & ------- Walker LLP, 555 South Flower Street, Twenty-Third Floor, Los Angeles, California, at the hour of 10:00 A.M., Pacific time, on April 12, 2000 or at such different time or day as the Investor and the Company shall agree (the "Closing Date"). At the Closing, the Company shall deliver to Investor a ------------ certificate evidencing the Shares which shall be registered in Investor's name, against delivery to the Company of payment by check or wire transfer in an amount equal to $10,000,000 and surrender of those certain promissory notes of the Company in favor of Investor in the aggregate amount of $10,000,000. 4. Register of Shares; Restrictions on Transfer of Securities; Removal of ---------------------------------------------------------------------- Restrictions on Transfer of Investor Stock. - ------------------------------------------ 4.1 Register of Investor Stock. The Company or its duly appointed -------------------------- agent shall maintain a register for the Series A Preferred Stock (and the shares of Common Stock issuable upon conversion thereof), in which it shall register the issue and sale of all such shares. All transfers of the Series A Preferred Stock shall be recorded on the register maintained by the Company or its agent, and the Company shall be entitled to regard the registered holder of the Shares as the actual holder of the Shares so registered until the Company or its agent is required to record a transfer of such Shares on its register. Subject to Section 4.2(c) hereof, the Company or its agent shall be required to record any such transfer when it receives the shares of Series A Preferred Stock to be transferred duly and properly endorsed by the registered holder thereof or by its attorney duly authorized in writing. 4.2 Restrictions on Transfer. ------------------------- (a) Investor understands and agrees that neither the Shares, nor the shares of the Company's Common Stock issuable upon the conversion thereof (collectively, the "Investor Stock") have been registered under the Securities Act, and that accordingly they will not be fully transferable except as permitted under various exemptions contained in the Securities Act, or upon satisfaction of the registration and prospectus delivery requirements of the Securities Act. Investor acknowledges that it must bear the economic risk of its investment in the Investor Stock for an indefinite period of time (subject, however, to the Company's obligation to effect the registration of the Investor Stock under the Securities Act in accordance with this Agreement) since they have not been registered under the Securities Act and therefore cannot be sold unless they are subsequently registered or an exemption from registration is available. (b) (i) Investor hereby represents and warrants to the Company that it is acquiring the Investor Stock for investment purposes only, for its own account, and not as nominee or agent for any other Person, and not with the view to, or for resale in connection with, any distribution thereof within the meaning of the Securities Act, and (ii) it is an "accredited investor" within the meaning of Regulation D of the Commission under the Securities Act. (c) Investor hereby agrees with the Company as follows: (i) Subject to Section 4.3 hereof, the certificates evidencing the Investor Stock, and each certificate issued in transfer thereof, will bear the following legend: "The securities evidenced by this certificate have not been registered under the Securities Act of 1933 and have been taken for investment purposes only and not with a view to the distribution thereof, and, except as stated in an agreement between the holder of this certificate, or its predecessor in interest, and the issuer corporation, such securities may not be sold or transferred unless there is an effective registration statement under such Act covering such securities or the issuer corporation receives an opinion of counsel (which may be counsel for the issuer corporation) stating that such sale or transfer is exempt from the registration and prospectus delivery requirements of such Act." (ii) The certificates representing such Investor Stock, and each certificate issued in transfer thereof, will also bear any legend required under any applicable state securities law. (iii) Absent an effective registration statement under the Securities Act, covering the disposition of the Investor Stock which Investor acquires, Investor will not sell, transfer, assign, pledge, hypothecate or otherwise dispose of any or all of the Investor Stock without first providing the Company with an opinion of counsel (which may be counsel for the Company) to the effect that such sale, transfer, assignment, pledge, hypothecation or other disposition will be exempt from the registration and the prospectus delivery requirements of the Securities Act and the registration or qualification requirements of any applicable state securities laws, except that no such registration or opinion shall be required with respect to (A) a transfer not involving a change in beneficial ownership, or (B) a sale to be effected in accordance with Rule 144 of the Commission under the Securities Act (or any comparable exemption). (iv) Investor consents to the Company's making a notation on its records or giving instructions to any transfer agent of the Investor Stock in order to implement the restrictions on transfer of the Investor Stock mentioned in this subsection (c). 4.3 Removal of Transfer Restrictions. Any legend endorsed on a -------------------------------- certificate evidencing shares of Investor Stock pursuant to Section 4.2(c)(i) hereof and any stop transfer instructions and record notations with respect to such Investor Stock shall be removed and the Company shall issue a certificate without such legend to the holder of such Investor Stock (a) if such Investor Stock is registered under the Securities Act, or (b) if such Investor Stock may be sold under Rule 144(k) of the Commission under the Securities Act or (c) if such holder provides the Company with an opinion of counsel (which may be counsel for the Company) reasonably acceptable to the Company to the effect that a public sale or transfer of such Investor Stock may be made without registration under the Securities Act. 5. Representations and Warranties by the Company. In order to induce --------------------------------------------- Investor to enter into this Agreement and to purchase the Shares, the Company hereby covenants with, and represents and warrants to, Investor, as of the date hereof, except as set forth on the Schedule of Exceptions delivered to Investor concurrently herewith, as follows (unless the context otherwise requires, the "Company" shall refer to the Company and its Subsidiaries, collectively): 5.1 Organization, Standing, etc. The Company is a corporation duly --------------------------- organized, validly existing and in good standing under the laws of the State of Delaware, and has all requisite power and authority to carry on its business, to own and hold its properties and assets, to enter into this Agreement, to issue the Investor Stock and to carry out the provisions hereof and thereof. The copies of the Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws of the Company which have been delivered to Investor prior to the execution of this Agreement are true and complete and have not been amended or repealed. Subsidiaries of the Company are set forth on Schedule 5.1. ------------ 5.2 Qualification. The Company is duly qualified, licensed or ------------- domesticated as a foreign corporation in good standing in each jurisdiction wherein the nature of its activities or its properties owned or leased makes such qualification, licensing or domestication necessary, except where the failure to be so qualified would not have a Material Adverse Effect on the Company. 5.3 Capital Stock. The authorized capital stock of the Company ------------- consists of 50,000,000 shares of Common Stock, and 5,000,000 shares of Preferred Stock, of which 719,424 shares have been designated as Series A Preferred Stock, and the Company has no authority to issue any other capital stock. No shares of Preferred Stock have been issued prior to the Closing; 30,022,538 shares of Common Stock are issued and outstanding, and such shares are duly authorized, validly issued, fully paid and nonassessable. Except where the failure to do so would not result in a Material Adverse Effect on the Company, the offer, issuance and sale of the shares of Common Stock were (a) registered or qualified under (or were exempt from the registration and prospectus delivery requirements of) the Securities Act, (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws, and (c) accomplished in conformity with all other federal and applicable state securities laws, rules and regulations. As of March 31, 2000, the Company has (A) reserved a total of 149,856 shares of Common Stock for issuance to employees, officers and directors under a 1991 stock option plan, under which options to purchase a total of 149,856 shares have been granted, but neither exercised nor forfeited by the holder thereof, (B) reserved a total of 337,950 shares of Common Stock for issuance to employees, officers and directors under a 1994 stock option plan, under which options to purchase a total of 337,950 shares have been granted, but neither exercised nor forfeited by the holder thereof, and (C) reserved a total of 2,369,025 shares of Common Stock for issuance to employees, officers and directors under a 1997 stock incentive plan, under which options to purchase 2,126,100 shares have been granted, but neither exercised nor forfeited by the holder thereof, (D) reserved a total of 200,000 shares of Common Stock for issuance to employees and officers under an Employee Stock Purchase Plan, of which 128,327 shares have been granted, but neither exercised nor forfeited by the holder thereof, and (E) reserved a total of 861,156 shares of Common Stock for issuance upon the exercise of options granted outside the Company's option plans, of which 572,874 shares have been granted, but neither exercised nor forfeited by the holder thereof. The Company has reserved a total of 400,000 shares for issuance upon exercise of outstanding warrants issued by the Company. Under the terms thereof, to the extent that any outstanding award under the 1991 stock option plan or 1994 stock option plan expires or terminates prior to exercise of such award in full, or if shares issued upon exercise are repurchased by the Company, the unexercised portion or repurchased shares shall be added to the pool of shares under the 1997 stock incentive plan and shall thereafter be available for grant under the terms of such 1997 stock incentive plan. Each of the 1991 stock option plan and 1994 stock option plan has been terminated with respect to future grants of shares of Common Stock. Except as expressly provided in this Agreement, the Company has no outstanding subscription, option, warrant, call, contract, demand, commitment, convertible security or other instrument, agreement or arrangement of any character or nature whatsoever under which the Company is or may be obligated to issue Common Stock, Preferred Stock or other Equity Security (as hereinafter defined) of any kind. Neither the offer nor the issuance or sale of the Investor Stock constitutes or will constitute an event, under any Equity Security or any anti-dilution or similar provision of any agreement or instrument to which the Company is a party or by which it is bound or affected, which shall either increase the number of shares or units of Equity Securities issuable upon conversion of any securities (whether stock or Indebtedness for Borrowed Money (as hereinafter defined)) or upon exercise of any warrant or right to subscribe to or purchase any stock or similar security (including Indebtedness for Borrowed Money), or decrease the consideration per share or unit of Equity Security to be received by the Company upon such conversion or exercise. 5.4 Investor Stock. The Shares have been duly authorized and validly -------------- issued, and upon payment to the Company of the Purchase Payment at the Closing, will be fully paid and nonassessable. The shares of Common Stock issuable upon conversion of the Shares have been reserved for issuance upon such conversion, and when issued in accordance with the Certificate of Designation will be validly issued, fully paid and nonassessable. The Investor Stock, when issued in accordance with the terms of this Agreement and the Certificate of Designation will be free and clear of all Liens and restrictions, other than Liens that might have been created by Investor and restrictions imposed by (i) Section 4.2 hereof, (ii) the Stockholder Agreement, (iii) applicable state securities laws, and (iv) the Securities Act. 5.5 Indebtedness for Borrowed Money. The Company has no Indebtedness ------------------------------- for Borrowed Money except as disclosed on the Balance Sheet. 5.6 Shareholder List. Schedule 5.6 hereto contains a true and complete ---------------- ------------ list of the names and addresses of all persons or entities known to the Company, based on Schedules 13D and/or 13G filed by such persons or entities or otherwise based on the Company's actual knowledge, to be the beneficial holders of more than five percent (5%) of the outstanding Common Stock and of the holders of all outstanding options, warrants or other rights to purchase from the Company more than five percent (5%) of Common Stock. With respect to holders of more than 5% of Common Stock, Schedule 5.6 contains, to the Company's knowledge, a true and ------------ complete description of the number of shares held by each such holder. With respect to each option set forth on such Schedule, Schedule 5.6 sets forth the ------------ date of grant, the number of shares subject thereto, the exercise price, vesting schedule and expiration date. With respect to the warrants set forth on such Schedule, Schedule 5.6 sets forth the date of issue of each warrant, the number ------------ of shares of Common Stock subject to the warrant, the exercise price and expiration date. Except as provided on Schedule 5.6, no holder of Common Stock ------------ or any other security of the Company or any other Person (other than the Investor) is entitled to any preemptive right, right of first refusal or similar right from the Company or, to the Company's knowledge, any Person as a result of the issuance of the Investor Stock or otherwise. Except as provided on Schedule -------- 5.6, there is no voting trust, agreement or arrangement among any of the - --- beneficial holders of Common Stock of the Company affecting the exercise of the voting rights of such stock. 5.7 Corporate Acts and Proceedings. All corporate acts and proceedings ------------------------------ required for the valid authorization, execution and delivery of this Agreement, the offer, issuance and delivery of the Investor Stock and the performance of this Agreement have been lawfully and validly taken or will have been so taken prior to the Closing. 5.8 Compliance with Laws and Other Instruments. The business and ------------------------------------------ operations of the Company have been and are being conducted in accordance with all applicable federal, state and local laws, rules and regulations, except to the extent that noncompliance with laws, rules and regulations would not, individually or in the aggregate, have a Material Adverse Effect on the Company. The execution, delivery and performance by the Company of this Agreement (a) will not require from the Board or stockholders of the Company any consent or approval that has not been validly and lawfully obtained, (b) will not require any authorization, consent, approval, license, exemption of or filing or registration with any domestic or, to best of the Company's knowledge, foreign, court or governmental department, commission, board, bureau, agency or instrumentality of government, except such as shall have been lawfully and validly obtained prior to the Closing, (c) will not cause the Company to violate or contravene (i) any provision of law, (ii) any rule or regulation of any agency or government, domestic or foreign, (iii) any order, writ, judgment, injunction, decree, determination or award, or (iv) any provision of the Amended and Restated Certificate of Incorporation or Amended and Restated Bylaws of the Company, (d) will not violate or be in conflict with, result in a breach of or constitute (with or without notice or lapse of time or both) a default under, any indenture, loan or credit agreement, note agreement, deed of trust, mortgage, security agreement or other agreement, lease or instrument, commitment or arrangement to which the Company is a party or by which the Company or any of its properties, assets or rights is bound or affected, which in any such case would have a Material Adverse Effect on the Company, and (e) will not result in the creation or imposition of any Lien, other than Liens in favor of the Investor. The Company is not in violation of, or (with or without notice or lapse of time or both) in default under, any term or provision of its Amended and Restated Certificate of Incorporation or Amended and Restated Bylaws or of any indenture, loan or credit agreement (including any agreement evidencing Indebtedness for Borrowed Money), note agreement, deed of trust, mortgage, security agreement or other material agreement, lease or other instrument, commitment or arrangement to which the Company is a party or by which any of the Company's properties, assets or rights is bound or affected, which in any such case would have a Material Adverse Effect on the Company. The Company is not subject to any restriction of any kind or character which prohibits the Company from entering into this Agreement or would prevent its performance of or compliance with all or any part of this Agreement or the consummation of the transactions contemplated hereby or thereby. 5.9 Binding Obligations. This Agreement constitutes the legal, valid ------------------- and binding obligation of the Company and is enforceable against the Company in accordance with its terms, except as such enforcement is limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors' rights generally. 5.10 Securities Laws. Based in part upon the representations of --------------- Investor in Section 4.2, the offer, issue and sale of the Investor Stock are and will be exempt from the registration and prospectus delivery requirements of the Securities Act, and have been registered or qualified (or are exempt from registration and qualification) under the registration, permit or qualification requirements of all applicable state securities laws. 5.11 No Brokers or Finders. No Person has, or as a result of the --------------------- transactions contemplated herein will have, any right or valid claim against the Company or the Investor for any commission, fee or other compensation as a finder or broker, or in any similar capacity based upon obligations incurred by the Company. 5.12 Financial Statements. Attached hereto as Schedule 5.12 are (a) the -------------------- ------------- Company's unaudited balance sheet (the "Balance Sheet") as of December 31, 1999 ------------- (the "Balance Sheet Date"), and the unaudited statement of operations for the ------------------ twelve-month period then ended, and (b) the Company's unaudited balance sheet as of October 31, 1999. Included in the Company's Annual Report on Form 10-K for the year ended December 31, 1998 (the "1998 Form 10-K") are the Company's audited balance sheets as of April 30, 1996 and 1997, and December 31, 1997 and 1998, and the audited statements of operations, cash flow and shareholders' equity for each of the periods then ended, together with the related opinion thereon of Arthur Andersen LLP, independent certified public accountants. The foregoing financial statements (i) are in accordance with the books and records of the Company, (ii) present fairly in all material respects, taken as a whole, the financial condition of the Company at the Balance Sheet Date and other dates therein specified and the results of its operations and cash flow for the periods therein specified, and (iii) have been prepared in accordance with generally accepted accounting principles applied on a basis consistent with prior accounting periods ("GAAP"). Specifically, but not by way of limitation, the Balance Sheet discloses all of the material debts, liabilities and obligations of any nature (whether absolute, accrued, contingent or otherwise and whether due or to become due) of the Company at the Balance Sheet Date which must be disclosed on a balance sheet in accordance with GAAP. 5.13 Changes. Since the Balance Sheet Date, except as disclosed on ------- Schedule 5.13 hereto, the Company has not (a) incurred any material debts, - ------------- obligations or liabilities, absolute, accrued, contingent or otherwise, whether due or to become due in excess of $250,000, except current liabilities incurred in the usual and ordinary course of business, none of which (individually or in the aggregate) materially and adversely affects the business, finances, properties or prospects of the Company, (b) discharged or satisfied any Liens other than those securing, or paid any obligation or liability other than, current liabilities shown on the Balance Sheet and current liabilities incurred since the Balance Sheet Date, in each case in the usual and ordinary course of business, (c) mortgaged, pledged or subjected to Lien any of its assets, tangible or intangible, (d) sold, transferred or leased any of its assets of value exceeding $250,000 except in the usual and ordinary course of business, (e) canceled or compromised any debt or claim, or waived or released any right, of value exceeding $250,000, (f) suffered any physical damage, destruction or loss (whether or not covered by insurance) materially and adversely affecting the properties, business or prospects of the Company, (g) encountered any labor difficulties or labor union organizing activities, (h) made or granted any wage or salary increase to any executive officer other than in the ordinary course of business or entered into any employment agreement, (i) issued or sold any shares of capital stock or other securities or granted any options with respect thereto, (j) modified any Equity Security, except to the extent disclosed on Schedule 5.6 hereto, (k) declared or paid any dividends on or made any other - ------------ distributions with respect to, or purchased or redeemed, any of its outstanding Equity Securities, (l) suffered or experienced any change in, or condition affecting, the condition (financial or otherwise) of the Company as a whole other than changes, events or conditions in the usual and ordinary course of its business, none of which (either by itself or in conjunction with all such other changes, events and conditions) has been or could reasonably be expected to be materially adverse, (m) made any change in the accounting principles, methods or practices followed by it or depreciation or amortization policies or rates theretofore adopted, or (n) entered into any agreement, or otherwise obligated itself, to do any of the foregoing. 5.14 Material Agreements of the Company. Except as expressly set ---------------------------------- forth in this Agreement, the Balance Sheet, as disclosed in the Index (compiled pursuant to Item 601 of Regulation S-K of the Commission) to the Company's filings under the Securities Act and the Exchange Act or as disclosed on Schedule 5.14 hereto, the Company is not a party to any written or oral - ------------- agreement, instrument or arrangement not made in the ordinary course of business that is material to the Company and is either (a) an agreement with any labor --- union, (b) an agreement for the purchase of fixed assets or for the purchase of materials, supplies or equipment over $250,000, (c) an agreement for the employment of any officer on other than an at-will basis, (d) an indenture, loan or credit agreement, note agreement, deed of trust, mortgage, security agreement, promissory note or other agreement or instrument relating to or evidencing Indebtedness for Borrowed Money in excess of $250,000 or subjecting any asset or property of the Company to any Lien, (e) a guaranty of any Indebtedness, (f) a lease or agreement under which the Company is lessee of or holds or operates any property, real or personal, owned by any other Person under which payments to such Person exceed $250,000 per annum, (g) a lease or agreement under which the Company is lessor or permits any Person to hold or operate any property, real or personal, owned or controlled by the Company having a value over $250,000 other than in the ordinary course of business, (h) an agreement granting any preemptive right, right of first refusal or similar right to any Person, (i) a covenant not to compete or other restriction on its ability to conduct a business or engage in any other activity, or (j) an agreement to register securities under the Securities Act. To the Company's knowledge, all parties having material contractual arrangements with the Company are in substantial compliance therewith, and none is in default in any material respect thereunder, except for noncompliance or defaults which will not have a Material Adverse Effect on the Company. 5.15 Employees. Brian Fargo and David Perry (collectively, --------- "Designated Key Employees") are in the full-time employ of the Company and/or ------------------------ one or more of its Subsidiaries. To the best of the Company's knowledge, no Designated Key Employee has any plans to terminate his employment with the Company or a Subsidiary, as the case may be, and the Company has no intention of terminating the employment of any Designated Key Employee. To the best of the Company's knowledge, no Designated Key Employee or any other employee of the Company is a party to or is otherwise bound by any agreement or arrangement (including, without limitation, any license, covenant, or commitment of any nature), or subject to any judgment, decree, or order of any court or administrative agency, (a) that would conflict with such employee's obligation diligently to promote and further the interests of the Company or (b) that would conflict with the Company's business as now conducted or as proposed to be conducted. The Company has complied in all material respects with all laws relating to the employment of labor, including provisions relating to wages, hours, equal opportunity, collective bargaining and payment of Social Security and other taxes, and the Company has encountered no material labor difficulties. 5.16 Tax Returns and Audits. All required federal, state and local ---------------------- tax returns of the Company have been accurately prepared and duly and timely filed, and all federal, state and local taxes required to be paid with respect to the periods covered by such returns have been paid. The Company is not delinquent in the payment of any material tax, assessment or governmental charge. Except as set forth on Schedule 5.16 hereto, there is not ------------- currently pending against the Company any tax deficiency proposed or assessed against it and the Company has not executed any waiver of any statute of limitations on the assessment or collection of any tax or governmental charge for any tax period for which the statute of limitations has not expired. Except as set forth on Schedule 5.16 hereto, none of the Company's federal income tax ------------- returns nor any state or foreign income or franchise tax returns has ever been audited by governmental authorities in any of the last five (5) tax years. The reserves for taxes, assessments and governmental charges reflected in the Balance Sheet are and will be sufficient for the payment of all unpaid taxes, assessments and governmental charges payable by the Company with respect to the period ended on the Balance Sheet Date. 5.17 Patents and Other Intangible Assets. ------------------------------------ (a) Except as disclosed on Schedule 5.17 hereto, the Company (i) ------------- owns or has the right to use all patents, trademarks, service marks, trade names, copyrights, licenses and rights with respect to the foregoing, used in or necessary for the conduct of its business as now conducted and proposed to be conducted, (ii) to the Company's knowledge, is not infringing upon or otherwise acting adversely to the right or claimed right of any Person under or with respect to any patent, trademark, service mark, trade name, copyright or license with respect thereto, where such infringement would have a Material Adverse Effect on the Company. (b) The Company owns or has the right to use all product rights, manufacturing rights, trade secrets, including know-how, negative know-how, formulas, patterns, compilations, programs, devices, methods, techniques, processes, inventions, designs, technical data, computer software (in both source code and object code forms and all documentation therefor), including without limitation the Operational Software (as hereinafter defined) (all of the foregoing of which are collectively referred to herein as "intellectual ------------ property") required for or incident to the conduct of the Company's business, as - -------- it is presently conducted, in each case free and clear of any right, Lien or claim of others, including without limitation former employers of its employees, except for rights reserved by the licensors of such intellectual property and rights granted by the Company pursuant to license, publishing and distribution agreements, and except where such right, lien or claim would not have a Material Adverse Effect on the Company. (c) Since its organization, the Company has taken reasonable security measures to protect the secrecy, confidentiality and value of all intellectual property and all Inventions (as defined below). Without limiting the generality of the foregoing, except as set forth on Schedule 5.17, each of ------------- the Company's present employees has signed an agreement with the Company in the form provided to Investor, and each of the Company's past employees has signed an agreement with the Company substantially in the form provided to Investor, except, in either such case, where the failure to do so would not have a Material Adverse Effect on the Company. As used herein, "Inventions" means all ---------- inventions, developments and discoveries which during the period of an employee's or other Person's service to the Company he or she makes or conceives of, either solely or jointly with others, that relate to any subject matter with which his or her work for the Company may be concerned, or relate to or are connected with the business, products, services or projects of the Company, or relate to the actual or demonstrably anticipated research or development of the Company or involve the use of the Company's time, material, facilities or trade secret information. (d) Except for license, publishing and distribution agreements with third parties entered into in the ordinary course of business, and except as disclosed on Schedule 5.17 hereto, the Company has not sold, transferred, ------------- assigned, licensed or subjected to any Lien, any intellectual property, trade secret, know-how, invention, design, process, computer software or technical data, or any interest therein, necessary for the development, manufacture, use, operation or sale of any product listed on Schedules 5.27(a) and 5.27 (b) hereto. (e) No director, officer, employee, agent or shareholder of the Company owns or has any right in the intellectual property of the Company, or any patents, trademarks, service marks, trade names, copyrights, licenses or rights with respect to the foregoing, or any inventions, developments or discoveries used in or necessary for the conduct of the Company's business as now conducted and as proposed to be conducted, which could reasonably be expected to have a Material Adverse Effect on the Company. (f) The Company has not received any communication alleging or stating that the Company or any of its employees or other agents has violated or infringed, or by conducting business as proposed, would violate or infringe, any patent, trademark, service mark, trade name, copyright, trade secret, proprietary right, process or other intellectual property of any other Person, which could reasonably be expected to have a Material Adverse Effect on the Company. 5.18 Employment Benefit Plans; ERISA. Except for the Interplay ------------------------------- Productions 401(k) Profit Sharing Plan (the "Plan"), as described in Schedule ---- -------- 5.18, the Company does not maintain or make contributions to any pension, profit - ---- sharing or other employee retirement benefit plan. The Plan has been maintained in compliance with all applicable laws, ordinances, rules, regulations, permits, orders, writs, judgments, injunctions, decrees, determinations and awards of any agency, government, or arbitrator. The Company has no material liability with respect to the Plan or any other such plan (including, without limitation, any unfunded liability or any accumulated funding deficiency) or any material liability to the Pension Benefit Guaranty Corporation or under Title IV of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), with ----- respect to the Plan or any multi-employer pension benefit plan, nor would the Company have any such liability if the Plan or any multi-employer plan were terminated or if the Company withdrew, in whole or in part, from the Plan or any multi-employer plan. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated by this Agreement will constitute a termination of employment or other event entitling any person to any additional or other benefits, or that would otherwise modify benefits or the vesting of benefits, provided under the Plan. 5.19 Title to Property and Encumbrances; Leases. The Company has good ------------------------------------------ and marketable title to all of its properties and assets, including without limitation the properties and assets reflected in the Balance Sheet and the properties and assets used in the conduct of its business, except for properties disposed of in the ordinary course of business since the Balance Sheet Date and except for properties held under valid and subsisting leases which are in full force and effect and which are not in default, subject to no Lien, except those which are shown and described on the Balance Sheet and except for Permitted Liens (as hereinafter defined). All material leases under which the Company is lessee of any real or personal property are valid, enforceable and effective in accordance with their terms; there is not under any such lease any existing or claimed default by the Company or event or condition which with notice or lapse of time or both would constitute a default by the Company. Except as disclosed on Schedule 5.19 hereto, no material lease under which the Company is lessee of any - ------------- real property contains any provision which either (i) treats a sale or transfer of any or all of the outstanding stock of the Company or a merger of the Company with another Person as an assignment of the Company's leasehold interest, or (ii) otherwise requires the consent of the lessor in the event of any such sale, transfer or merger. 5.20 Condition of Properties. All facilities, machinery, equipment, ----------------------- fixtures, vehicles and other properties owned, leased or used by the Company with fair market value in excess of $250,000 are in good operating condition and repair, subject to ordinary wear and tear, and are adequate and sufficient for the Company's business. 5.21 Insurance Coverage. There is in full force and effect one or ------------------ more policies of insurance issued by insurers of recognized responsibility, insuring the Company and its properties and business against such losses and risks, and in such amounts, as are customary in the case of corporations engaged in the same or similar business and similarly situated. The Company has not been refused any insurance coverage sought or applied for, and the Company has no knowledge of any facts that cause it to believe that the Company will be unable to renew its existing insurance coverage as and when the same shall expire upon terms at least as favorable as those presently in effect, other than possible increases in premiums that do not result from any act or omission of the Company. 5.22 Litigation. Except as disclosed on Schedule 5.22 hereto, there ---------- ------------- is no legal action, suit, arbitration or other legal, administrative or other governmental investigation, inquiry or proceeding (whether federal, state, local or foreign) pending or, to the Company's knowledge, threatened against or affecting (i) the Company or its properties, assets or business (existing or contemplated), or (ii) any Designated Key Employee, before any court or governmental department, commission, board, bureau, agency or instrumentality or any arbitrator, which if adversely determined would have a Material Adverse Effect on the Company. Except as disclosed on Schedule 5.22 hereto, the Company ------------- is not aware of any fact which might result in or form the basis for any such action, suit, arbitration, investigation, inquiry or other proceeding, which if adversely determined would have a Material Adverse Effect on the Company. Neither the Company nor, to the best of the Company's knowledge, any of the Designated Key Employees is in default with respect to any order, writ, judgment, injunction, decree, determination or award of any court or of any governmental agency or instrumentality (whether federal, state, local or foreign). 5.23 Registration Rights. Except as set forth on Schedule 5.23, other ------------------- ------------- than under this Agreement and other agreements entered into with the Investor, the Company has not agreed to register under the Securities Act any of its authorized or outstanding securities. 5.24 Licenses. The Company possesses from the appropriate agency, -------- commission, board and governmental body and authority, whether state, local or federal, all licenses, permits, authorizations, approvals, franchises and rights which are necessary for the Company to engage in the business currently conducted by it and proposed to be conducted (except where the failure to so hold would not have a Material Adverse Effect on the Company), including without limitation the development, manufacture, use, sale and marketing of its existing and proposed products and services; and all such certificates, licenses, permits, authorizations and rights have been lawfully and validly issued and are in full force and effect. 5.25 Interested Party Transactions. Except as disclosed on Schedule ----------------------------- -------- 5.25 hereto, no officer, director or 5% shareholder of the Company or any - ---- Affiliate of any such Person or the Company (other than Investor) has, either directly or indirectly, (a) a material interest in any Person which (i) furnishes or sells services or products which are furnished or sold or are proposed to be furnished or sold by the Company, or (ii) purchases from or sells or furnishes to the Company any goods or services, or (b) a beneficial interest in any transaction, contract or agreement to which the Company is a party or by which it is bound or affected. 5.26 Minute Books. The minute books of the Company made available to ------------ Paul, Hastings, Janofsky & Walker LLP, special counsel for the Investor, contain all resolutions adopted by directors and stockholders since the incorporation of the Company and fairly and accurately reflect, in all material respects, all matters and transactions referred to in such minutes. 5.27 Computer Software. ----------------- (a) Each of the computer software programs developed by the Company that are listed on Schedule 5.27(a) hereto (the "Operational Software") ---------------- -------------------- is functional, complete and operational in all material respects in accordance with its specifications, has been documented in accordance with the Company's standard practices, and the Company possesses both the source code and object code versions thereof. (b) Attached as Schedule 5.27(b) hereto is a true and complete list of ---------------- all computer software games currently in active development by or on behalf of the Company (the "Developing Software"). Schedule 5.27(b) also sets forth ------------------- ---------------- whether each such game is being internally or externally developed and, if externally developed, the name of the third party developer. 5.28 Interplay Web Site and Systems. ------------------------------ (a) The Company owns and has the right to communicate and publish its "Interplay" Internet product offering (the "Web Site") and conduct business -------- on the World Wide Web at the Internet address "interplay.com" and in connection therewith to use the registered service mark and trade name "Interplay" and in so doing is not acting in conflict with any patent, trademark, service mark, trade name, copyright, trade secret, license or other proprietary right with respect thereto, except where such conflict would not have a Material Adverse Effect on the Company. (b) The Company has not received any communication from any Person that the Web Site or the conduct of the Company's business is in violation of any law, rule or regulation or in conflict with any patent, trademark, service mark, trade name, copyright, trade secret, license or other proprietary right with respect thereto, except where such violation or conflict would not have a Material Adverse Effect on the Company. 5.29 Product Returns. Schedule 5.29 hereto sets forth the Company's --------------- ------------- experience with respect to the return of any of its products sold or leased for the three (3) year period ended on December 31, 1999. 5.30 Disclosure. To the Company's knowledge, the information ---------- contained in this Agreement, in the Balance Sheet and the 1998 Form 10-K, and in any writing furnished pursuant hereto or in connection herewith, taken as a whole, is true, complete and correct (except that with respect to the Balance Sheet and the 1998 Form 10-K, the information contained therein shall be true, complete and correct as of the date thereof), and does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or herein or necessary to make the statements therein or herein, in light of the circumstances under which they were made, not misleading. 5.31 Secured Creditors. As of the Closing Date, the Company does not ----------------- have any other creditors holding any security interest in any of the property or assets of the Company, other than Greyrock. 6. Representations and Warranties of Investor. In order to induce the ------------------------------------------ Company to enter into this Agreement and to issue the Shares, Investor hereby covenants with, and represents and warrants to, the Company as follows: 6.1 Organization, Standing, etc Investor is a corporation duly --------------------------- organized, validly existing and in good standing under the laws of France, and has all requisite corporate power and authority to enter into this Agreement, and to carry out the provisions hereof and thereof. 6.2 Corporate Acts and Proceedings. All corporate acts and proceedings ------------------------------ required for the authorization, execution and delivery of this Agreement by Investor, and the performance of this Agreement by Investor, have been lawfully and validly taken or will have been so taken prior to the Closing. 6.3 Compliance with Laws and Other Instruments. The execution, ------------------------------------------ delivery and performance by Investor of this Agreement (a) will not require from the board of directors or stockholders of Investor any consent or approval that has not been validly and lawfully obtained, (b) will not require any authorization, consent, approval, license, exemption of or filing or registration with any court or governmental department, commission, board, bureau, agency or instrumentality of government, except such as shall have lawfully and validly obtained prior to the Closing, (c) will not cause Investor to violate or contravene (i) any provision of law, (ii) any rule or regulation of any agency or government, domestic of foreign, (iii) any order, writ, judgment, injunction, decree, determination or award binding upon Investor, or (iv) any provision of the charter documents of Investor, (d) will not violate or be in conflict with, result in a breach of or constitute (with or without notice or lapse of time or both) a default under, any indenture, loan or credit agreement, note agreement, deed of trust, mortgage, security agreement or other material agreement, lease or instrument, commitment or arrangement to which Investor is a party or by which Investor or any of its properties, assets or rights is bound or affected, which in any case would have a Material Adverse Effect on Investor. 6.4 Binding Obligations. This Agreement constitutes the legal, valid ------------------- and binding obligations of Investor and is enforceable against Investor in accordance with its terms, except as such enforcement is limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors' rights generally. 6.5 No Brokers or Finders. No Person has, or as a result of the --------------------- transactions contemplated herein will have, any right or valid claim against the Company or Investor for any commission, fee or other compensation as a finder or broker, or in any similar capacity, except for Concordia Capital Technology Group, Inc., whose fees will be the responsibility of the Investor. 7. Conditions of Parties' Obligations. ---------------------------------- 7.1 Conditions of Investor's Obligations at the Closing. The --------------------------------------------------- obligation of Investor to purchase and pay for the Investor Stock is subject to the fulfillment prior to or on the Closing Date of the following conditions, any of which may be waived in whole or in part by Investor: (a) No Errors, etc. The representations and warranties of the -------------- Company under this Agreement shall be deemed to have been made again on the Closing Date and shall then be true and correct in all material respects (except to the extent already qualified as to materiality, in which case such representations and warranties shall then be true and correct in all respects). (b) Compliance with Agreement. The Company shall have performed ------------------------- and complied with all agreements and conditions required by this Agreement to be performed or complied with by it on or before the Closing Date. (c) No Default. There shall not exist on the Closing Date any ---------- Default (as hereinafter defined) or Event of Default (as hereinafter defined) or any event or condition which, with the giving of notice or lapse of time or both, would constitute a Default or Event of Default. (d) Certificate of Company. The Company shall have delivered to ---------------------- Investor a certificate dated the Closing Date, executed by the Chief Executive Officer and Chief Financial Officer of the Company, certifying the satisfaction of the conditions specified in subsections (a), (b) and (c) of this Section 7.1. (e) Opinion of the Company's Counsel. The Investor shall have -------------------------------- received from Stradling Yocca Carlson & Rauth, a professional corporation, counsel for the Company, a favorable opinion dated the Closing Date substantially in the form of Exhibit B hereto. --------- (f) Qualification Under State Securities Laws. All registrations, ----------------------------------------- qualifications, permits and approvals required under applicable state securities laws shall have been obtained for the lawful execution, delivery and performance of this Agreement, including without limitation the offer, sale, issue and delivery of the Investor Stock. (g) Supporting Documents. Investor shall have received the -------------------- following: (i) Copies of resolutions of the Board, certified by the Secretary of the Company, authorizing and approving the execution, delivery and performance of this Agreement, and all other documents and instruments to be delivered pursuant hereto and thereto, and taking all such other actions as required by the Delaware General Corporation Law with respect to this Agreement and the transactions contemplated hereby and thereby; (ii) A certificate of incumbency executed by the Secretary of the Company certifying the names, titles and signatures of the officers authorized to execute the documents referred to in subsection (1) above and further certifying that the Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws of the Company and Certificate of Designation delivered to the Investors at the time of the execution of this Agreement have been validly adopted, filed and have not been amended or modified; and (iii) Such additional supporting documentation and other information with respect to the transactions contemplated hereby as Investor or its special counsel, Paul, Hastings, Janofsky & Walker LLP ("Investor Counsel"), ---------------- may reasonably request. (h) Proceedings and Documents. All corporate and other proceedings and ------------------------- actions taken in connection with the transactions contemplated hereby and all certificates, opinions, agreements, instruments and documents mentioned herein or incident to any such transactions, shall be satisfactory in form and substance to Investor and to Investor Counsel. (i) Lender's Consent. The Company's lenders with respect to any ---------------- Indebtedness for Borrowed Money shall have approved this Agreement and the transactions contemplated hereby, and shall otherwise provide such assurances to Investor as Investor may reasonably request with respect to the use of the proceeds from the sale of the Investor Stock and the continuing availability and renewal of such lenders' current credit facility to the Company (or the Company shall have provided such assurances to Investor with respect to a substitute credit facility). (j) Due Diligence. Investor and Investor Counsel shall have completed ------------- their legal due diligence investigation of the Company and its business prospects, and Investor shall be satisfied with the results thereof in its sole discretion (including without limitation investigation of the Company's D&O insurance policies). (k) NASDAQ-NMS Approval. The Company shall have obtained any waiver ------------------- or approval from NASDAQ-NMS required with respect to this Agreement and the issuance of the Investor Stock. (l) Waiver of Existing Rights Agreement. If necessary, the requisite ----------------------------------- percentage of the Holders (as defined therein) party to the Investors' Rights Agreement dated as of October 10, 1996, by and among the Company and the Holders (the "Existing Rights Agreement"), shall have waived the application of the ------------------------- Existing Rights Agreement (including without limitation Section 1.12 thereof) to the issuance of the Investor Stock and the registration rights granted hereunder with respect to the Investor Stock. (m) Government and Other Consents. Any approval, consent or waiting ----------------------------- period required by any governmental agency or authority, or any other Person, necessary or material to the consummation of the transactions contemplated hereby shall have been obtained or expired, as the case may be, including without limitation any approval from NASDAQ and any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. (n) Warrants. The Company shall have executed and delivered to the -------- Investor (a) a Warrant to purchase 350,000 shares of the Company's Common Stock, in the form attached hereto as Exhibit C-1 and (b) a conditional Warrant to ----------- purchase 50,000 shares of the Company's Common Stock, in the form attached hereto as Exhibit C-2 (together with the Warrant referenced in Section 10.2, the ----------- "Warrants"). (o) Certificate of Designation. The Certificate of Designation, in -------------------------- the form attached hereto as Exhibit A, shall have been filed with the Delaware --------- Secretary of State. (p) Extension of Greyrock Line. Greyrock shall have entered into an -------------------------- amendment (i) extending the term of the Company's credit facility through April 30, 2001 on substantially the same terms as the current facility or on terms reasonably acceptable to the Company and Investor, (ii) agreeing to release the $2,500,000 of cash collateral currently held by Greyrock upon receipt of the financial statements referenced in Section 7.2(d) below, (iii) agreeing to release the $1,000,000 guaranty of Herve Caen and the $4,000,000 guaranty of Investor in exchange for the Guaranty, and (iv) consenting to the security interest referenced in Section 8.17 below upon Investor's execution of an intercreditor agreement reasonably acceptable to Greyrock. (q) Accountants' Opinion. Arthur Andersen LLP, the Company's -------------------- accountants, shall have issued an unqualified opinion (without any "going concern" qualification) on the Company's financial statements for the year ended December 31, 1999. (r) Fargo Proxy. Fargo shall have granted to Investor an ----------- irrevocable proxy (the "Fargo Proxy") to vote Fargo's shares of the Company's stock in favor of the transactions contemplated by this Agreement at any meeting of the Company's stockholders. (s) Security Agreement. The Company shall have executed and ------------------ delivered to Investor a Security Agreement, on commercially reasonable terms (the "Security Agreement"), pursuant to which the Company grants to Investor a second priority security interest in its assets. (t) Waiver. The Company, Investor and Fargo shall have executed ------ a waiver of compliance with the terms of Sections 2.6, 3.5 and 3.6 and Article IV of the Stockholder Agreement dated November 2, 1999 among the Company, Investor and Fargo. 7.2 Conditions of Company's Obligations. The Company's obligation to ----------------------------------- issue and sell the Investor Stock to Investor on the Closing Date is subject to the fulfillment prior to or at the Closing Date of the following conditions: (a) No Errors, etc. The representations and warranties of the -------------- Investor in Section 4.2 and Section 6 of this Agreement shall be deemed to have been made again on the Closing Date and shall then be true and correct in all material respects (except to the extent already qualified as to materiality, in which case such representations and warranties shall then be true and correct in all respects). (b) Certain Conditions. All of the conditions precedent specified ------------------ in paragraphs (f), (i), (k), (l) and (m) of Section 7.1 hereof shall have been satisfied. (c) Guaranty. The Investor shall have executed and delivered to -------- the Company a Guaranty, in the form attached hereto as Exhibit D (the --------- "Guaranty"), pursuant to which the Investor guarantees $20,000,000 of the Company's obligations to Greyrock Business Credit. (d) Provision of Financial Statements. By April 30, 2000, or as --------------------------------- soon thereafter as practicable, Investor shall deliver to the Company any documents reasonably required by Greyrock to release to the Company $2.5 million in cash collateral, including, without limitation, the unaudited financial statements of Titus Interactive SA as of and for the six-month period ended December 31, 1999. (e) Waiver. The Company, Investor and Fargo shall have executed ------ a waiver of compliance with the terms of Sections 2.6, 3.5 and 3.6 and Article IV of the Stockholder Agreement dated November 2, 1999 among the Company, Investor and Fargo. (f) 8. Affirmative Covenants of the Company. The Company agrees that unless ------------------------------------ Investor otherwise agrees in writing, from the date hereof through the later of (i) the effective date of registration statement with respect to the Investor Shares or (ii) April 30, 2001 (the "Covenant Period"), unless another period is --------------- expressly provided for in this Section 8, the Company (and each of its Subsidiaries unless the context otherwise requires) will do the following: 8.1 Maintain Corporate Rights and Facilities. Maintain and preserve ---------------------------------------- its corporate existence and all rights, franchises and other authority adequate for the conduct of its business; maintain its properties, equipment and facilities in good order and repair; and conduct its business in an orderly manner without voluntary interruption. 8.2 Maintain Insurance. Maintain in full force and effect a policy or ------------------ policies of insurance issued by insurers of recognized responsibility, insuring it and its properties and business against such losses and risks, and in such amounts, as are customary in the case of corporations of established reputation engaged in the same or a similar business and similarly situated. 8.3 Pay Taxes and Other Liabilities. Pay and discharge, before the ------------------------------- same become delinquent and before penalties accrue thereon, all taxes, assessments and governmental charges upon or against it or any of its properties, and all its other material liabilities at any time existing, except to the extent and so long as (i) the same are being contested in good faith and by appropriate proceedings in such manner as not to cause any materially adverse effect upon its financial condition or the loss of any right of redemption from any sale thereunder, and (ii) it shall have set aside on its books reserves (segregated to the extent required by generally accepted accounting principles) deemed by it adequate with respect thereto. 8.4 Records and Reports. Accurately and fairly maintain its books of ------------------- account in accordance with generally accepted accounting principles, as approved from time to time by a majority of the Board and its independent certified public accountants; permit Investor and its representatives to have access to and to examine its properties, books and records (and to copy and make extracts therefrom) at such reasonable times and intervals as Investor may request and to discuss its affairs, finances and accounts with its officers and auditors, all to such reasonable extent and at such reasonable times and intervals as Investor may request; and furnish Investor: (a) As soon as available, and in any event within thirty (30) days after the close of each monthly accounting period, financial statements prepared on a consolidated basis (together with consolidating statements in support thereof) consisting of a balance sheet of the Company as of the end of such monthly accounting period and statements of income, shareholders' equity and cash flow for such monthly accounting period, and for the portion of the Company's fiscal year ending with the last day of such monthly accounting period, all in reasonable detail, prepared and certified by the chief executive officer or the chief financial officer of the Company as fairly presenting the financial condition as of the balance sheet date and results of operations and cash flows for the period then ended in accordance with generally accepted accounting principles consistently applied, subject to normal year end adjustments which in the aggregate shall not be material; (b) Promptly upon, and in any event within three (3) business days following, the learning of the occurrence of a Default or an Event of Default or a condition or event which with the giving of notice or the lapse of time, or both, would constitute a Default or an Event of Default, a certificate signed by the chief executive officer or chief financial officer of the Company describing such Default, Event of Default or condition or event and stating what steps are being taken to remedy or cure the same; (c) Promptly upon the receipt thereof by the Company or the Board, copies of all reports, all management letters and other detailed information submitted to the Company or the Board by independent accountants in connection with each annual or interim audit or review of the accounts or affairs of the Company made by such accountants; (d) Concurrently with their delivery to the Commission, all reports, registration statements, proxy statements, and any other document, form or report submitted to, or filed with, the Commission; and (e) With reasonable promptness, such other information relating to the finances, properties, business and affairs of the Company and each Subsidiary, as Investor reasonably may request from time to time. Notwithstanding the foregoing, the Company's obligation to provide any such information to the Investor under this Section 8.4 shall be subject to the Company's right to refuse to provide such information if, in the good faith judgment of the Company, such information has not been provided, directly or indirectly, to the general public or to any governmental agency (unless and to the extent filed on a confidential basis), and is confidential and/or competitively sensitive in nature, unless Investor executes an agreement, in form reasonably satisfactory to the Company, pursuant to which Investor agrees (i) to keep such information strictly confidential and not to use it for any purpose not reasonably related to its interest as a stockholder of the Company, and (ii) to comply with all of its obligations under the Securities Act and the Exchange Act with respect to such information. 8.5 Notice of Litigation and Disputes. Promptly notify Investor of --------------------------------- each legal action, suit, arbitration or other administrative or governmental investigation or proceeding (whether federal, state, local or foreign) instituted or threatened against the Company which could materially and adversely affect its condition (financial or otherwise), properties, assets, liabilities, business, operations or prospects, or of any occurrence or dispute which involves a reasonable likelihood of any such action, suit, arbitration, investigation or proceeding being instituted. 8.6 Intentionally Omitted. --------------------- 8.7 Conduct of Business. Conduct its business in accordance with all ------------------- applicable provisions of federal, state, local and foreign law. 8.8 Compliance with Legal Requirements. Comply promptly with all legal ---------------------------------- requirements that applicable law may impose upon it with respect to the transactions contemplated by this Agreement, and cooperate promptly with, and furnish information to, Investor in connection with any such requirements imposed upon the Company in connection therewith or herewith. 8.9 Replacement of Certificates. Upon receipt of evidence reasonably --------------------------- satisfactory to the Company of the loss, theft, destruction, or mutilation of any certificate representing any of the Investor Stock, issue a new certificate representing such Investor Stock in lieu of such lost, stolen, destroyed, or mutilated certificate. 8.10 Compliance with Section 7. Use commercially reasonable efforts to ------------------------- cause the conditions specified in Section 7.1 hereof to be met by the Closing Date. 8.11 Securities Law Filings. Make all filings necessary to perfect in ---------------------- a timely fashion exemptions from (i) the registration and prospectus delivery requirements of the Securities Act and (ii) the registration or qualification requirements of all applicable securities or blue sky laws of any state or other jurisdiction, for the issuance of the Investor Stock to Investor. 8.12 Compliance With Amended and Restated Certificate of Incorporation ----------------------------------------------------------------- and Amended and Restated Bylaws. Perform and observe all requirements of the - ------------------------------- Company's Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws. 8.13 Use of Proceeds. Use the proceeds from the sale of the Investor --------------- Stock hereunder solely for working capital purposes, including product development; provided, however, that the Company shall not use such proceeds to -------- ------- pay more than $250,000 in outstanding Indebtedness for Borrowed Money, except to the extent that the amounts so paid may immediately be re-borrowed. 8.14 HSR Filing. To the extent that Investor is required in ---------- connection with the transactions contemplated hereby, or the transactions contemplated by the Universal Agreement, to file a notification and report form in compliance with the Hart-Scott- Rodino Antitrust Improvements Act of 1976, as amended, or the rules and regulations promulgated thereunder (collectively, the "HSR Act"), the Company shall cooperate fully with Investor to enable Investor ------- to promptly make such filing and to respond to any requests for additional information in connection therewith. The filing fee associated with any required Hart-Scott-Rodino filing shall be borne equally by the Company and the Investor. 8.15 Development of Operating Plan. The Company shall cooperate with ----------------------------- Investor, and Investor's officers, employees and representatives in the development of an extended operating plan for the Company for the Company's fiscal year ending December 31, 2001 (the "Operating Plan"). 8.16 Right of First Refusal. If, during the period (the "Guaranty ---------------------- Period") beginning on the date hereof and ending on the earlier to occur of (I) if Investor is not required to pay under the Guaranty, the date upon which the Guaranty is extinguished and (ii) if Investor is required to pay any amounts under the Guaranty, the date upon which such amounts are reimbursed to Investor in full and the Guaranty is extinguished, (a) the Company shall commence any material communication concerning the acquisition of properties or assets of the Company (including without limitation publishing rights, distribution rights or subsidiaries) having a fair market value in excess of $100,000, the Company shall give written notice of such communications to Investor and (b) upon receipt of a bona fide offer from a third party (the "Offer") to acquire any assets of the Company (including without limitation publishing rights, distribution rights or subsidiaries) having a fair market value in excess of $100,000, the Company will provide written notice of such offer (the "Notice") to Investor. The Notice shall contain the identity of the proposed purchaser and a summary of all material terms of the Offer. Investor shall have the option, exercisable, if at all, by written notice to the Company within twenty (20) business days following receipt of the Notice, to elect to purchase such assets on all of the economic terms of the Offer, and otherwise on commercially reasonable terms. Investor may offset against the purchase price for such assets any amounts then owing to Investor by the Company under the Credit Facility or due to payments made by Investor under the Guaranty. In the event that the purchase price contained in the Offer is other than in cash, Investor may elect to pay, in lieu thereof, an amount of cash equal to the fair market value thereof as mutually determined by the Company and Investor, or, if the parties are unable to agree, by a third party selected by mutual agreement of the Company and Investor. 8.17 Further Assurances. The Company agrees from time to time, at its ------------------ expense, it will promptly execute and deliver all further instruments and documents, and take all further action that may be necessary or reasonably desirable or that Investor may reasonably request, in order to perfect and protect any security interest granted or purported to be granted under the Security Agreement or to enable Investor to exercise and enforce its rights and remedies under the Security Agreement. 8.18 Stockholder Meeting. The Company will use its best efforts to ------------------- call a meeting of its stockholders by July 31, 2000 and will use commercially reasonable efforts to cause the stockholders to approve the transactions contemplated by this Agreement. 9. Negative Covenants of the Company. The Company agrees that unless --------------------------------- Investor otherwise agrees in writing, during the Covenant Period (with respect to Sections 9.5 and 9.6, during the Guaranty Period) the Company (and each of its Subsidiaries unless the context otherwise requires) will not do any of the following: 9.1 Senior Securities. Issue, assume or suffer to exist (a) any ----------------- security that is senior to, or on parity with, the Investor Stock, or (b) any Indebtedness for Borrowed Money that is an Equity Security or is issued with an Equity Security. 9.2 Changes in Type of Business. Make any substantial change in the --------------------------- character of its business. 9.3 Loans; Guarantees. Make any loan or advance to any Person, ----------------- including, without limitation any employee or director of the Company or any Subsidiary, except advances for travel and entertainment expenses and similar expenditures in the ordinary course of business or under the terms of an employee stock option plan or stock purchase agreement approved by the Board, and except for de minimis loans to employees consistent with past practice; or -- ------- guarantee, directly or indirectly, any Indebtedness for Borrowed Money except for trade accounts of the Company or any Subsidiary arising in the ordinary course of business. 9.4 Restrictive Agreements. Enter into or become a party to any ---------------------- agreement or instrument which by its terms would violate or be in conflict with, or restrict the Company's performance of, its obligations under this Agreement. 9.5 Sale of Assets. Enter into any agreement for the sale of any -------------- assets or properties of the Company (including without limitation publishing rights, distribution rights or subsidiaries) having a fair market value in excess of $100,000. 9.6 Greyrock Covenants. Enter into or make any new operating or ------------------ financial position covenants to Greyrock pursuant to any agreement covered by the Guaranty. 9.7 Issuance of Shares. Until the approval of the transactions ------------------ contemplated by this Agreement by the Company's stockholders, the Company shall not issue a number of voting securities such that the sum of (a) the voting securities of the Company held by Investor, plus (b) the voting securities of the Company subject to the Fargo Proxy, would constitute fifty percent (50%) or less of the total voting securities of the Company. 10. Affirmative Covenants of Investor. Investor agrees that, unless the --------------------------------- Company otherwise agrees in writing, Investor will: 10.1 Compliance with Laws. Comply promptly with all legal requirements -------------------- that applicable law may impose upon it with respect to the transactions contemplated by this Agreement, and cooperate promptly with, and furnish information to, the Company in connection with any such requirements imposed upon Investor in connection therewith or herewith. 10.2 Credit Facility; Warrant. Provide the Company with a secured ------------------------ revolving credit facility in the amount of $5,000,000 (the "Credit Facility"), to be evidenced by an agreement in the form attached hereto as Exhibit D-1. The ----------- outstanding amounts under the Credit Facility shall bear interest at the rate of 12% per annum, or the maximum rate permitted by law, whichever is less, payable quarterly, and all outstanding principal and interest will be due on May 1, 2001. As consideration of such Credit Facility, the Company shall issue to Investor a warrant, in the form attached hereto as Exhibit D-2, to purchase 100,000 shares of the Company's Common Stock, which - ----------- warrant shall vest from time to time in proportion to the maximum amount outstanding at any one time under the Credit Facility. 11. Registration of Registrable Stock. ---------------------------------- 11.1 Required Registration. On or before April 15, 2001, the Company --------------------- shall prepare and file a registration statement under the Securities Act, on a form selected by the Company, covering all of the shares of Common Stock issuable upon conversion of the Shares and upon exercise of the Warrants (collectively, the "Registrable Stock") and shall use its best efforts to cause ----------------- such registration statement to become effective as expeditiously as possible and to remain effective until the earlier to occur of the date (a) the Registrable Stock covered thereby has been sold, or (b) by which all Registrable Stock covered thereby may be sold under Rule 144(k). Notwithstanding the foregoing, if the Company enters into an agreement to cause a sale or other disposition of all or substantially all of the assets or outstanding Common Stock of the Company and the Investor would be materially prejudiced in such transaction by holding unregistered Common Stock, then the Company shall promptly register the Registrable Stock. 11.2 Registration Procedures. When the Company effects the ----------------------- registration of the Registrable Stock under the Securities Act pursuant to Section 11.1 hereof, the Company will, at its expense, as expeditiously as possible: (a) In accordance with the Securities Act and the rules and regulations of the Commission, prepare and file with the Commission a registration statement with respect to such securities and use its best efforts to cause such registration statement to become and remain effective for the period described herein, and prepare and file with the Commission such amendments to such registration statement and supplements to the prospectus contained therein as may be necessary to keep such registration statement effective for such period and such registration statement and prospectus accurate and complete for such period; the plan of distribution set forth in such registration statement or in any amendment or supplement shall be subject to the approval of Investor; (b) Furnish to Investor such reasonable number of copies of the registration statement, preliminary prospectus, final prospectus and such other documents as Investor may reasonably request in order to facilitate the public offering of such securities; (c) Use its best efforts to register or qualify the securities covered by such registration statement under such state securities or blue sky laws of such jurisdictions as Investor may reasonably request within twenty (20) days following the original filing of such registration statement, except that the Company shall not for any purpose be required to execute a general consent to service of process or to qualify to do business as a foreign corporation in any jurisdiction where it is not so qualified; (d) Notify Investor, promptly after it shall receive notice thereof, of the date and time when such registration statement and each post-effective amendment thereto has become effective or a supplement to any prospectus forming a part of such registration statement has been filed; (e) Notify Investor promptly of any request by the Commission for the amending or supplementing of such registration statement or prospectus or for additional information; (f) Prepare and file with the Commission, promptly upon the request of Investor, any amendments or supplements to such registration statement or prospectus which, in the opinion of counsel for Investor, is required under the Securities Act or the rules and regulations thereunder in connection with the distribution of the Registrable Stock by Investor; (g) Prepare and promptly file with the Commission, and promptly notify Investor of the filing of, such amendments or supplements to such registration statement or prospectus as may be necessary (i) to correct any statements or omissions if, at the time when a prospectus relating to such securities is required to be delivered under the Securities Act, any event has occurred as the result of which any such prospectus or any other prospectus as then in effect would include an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or (ii) to revise or amend the plan of distribution of the Registrable Stock, as requested by Investor; (h) In case Investor is required to deliver a prospectus at a time when the prospectus then in circulation is not in compliance with the Securities Act or the rules and regulations of the Commission, prepare promptly upon request such amendments or supplements to such registration statement and such prospectus as may be necessary in order for such prospectus to comply with the requirements of the Securities Act and such rules and regulations; and (i) Advise Investor, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such registration statement or the initiation or threatening of any proceeding for that purpose and promptly use its best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued. 11.3 Expenses. With respect to any registration effected pursuant to -------- Section 11.1 hereof, the Company agrees to bear all fees, costs and expenses of and incidental to such registration and the public offering in connection therewith; provided, however, that Investor shall bear its pro rata share of any underwriting discounts or commissions. The fees, costs and expenses of registration to be borne as provided in this Section 11.3 shall include, without limitation, all registration, filing and NASD fees, printing expenses, fees and disbursements of counsel and accountants for the Company, fees and disbursements of counsel for the underwriter or underwriters of such securities (if the Company and/or selling security holders are otherwise required to bear such fees and disbursements), all legal fees and disbursements and other expenses of complying with state securities or blue sky laws of any jurisdictions in which the securities to be offered are to be registered or qualified, reasonable fees and disbursements of one firm of counsel for the Investor (not to exceed $15,000), and the premiums and other costs of policies of insurance against liability of directors and officers arising out of such public offering. 11.4 Indemnification. --------------- (a) The Company will indemnify and hold harmless Investor and any underwriter (as defined in the Securities Act) for Investor, and any Person who controls Investor or such underwriter within the meaning of the Securities Act, and any officer, director, employee, agent, partner or affiliate of Investor, from and against, and will reimburse Investor and each such underwriter, controlling person, officer, director, employee, agent, partner and affiliate with respect to, any and all claims, actions, demands, losses, damages, liabilities, costs and expenses to which Investor or any such underwriter or controlling Person or any such officer, director, employee, agent, partner or affiliate may become subject under the Securities Act or otherwise, insofar as such claims, actions, demands, losses, damages, liabilities, costs or expenses arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in such registration statement, any prospectus contained therein or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the Company will not be liable in any such case to the extent that any such claim, action, demand, loss, damage, liability, cost or expense is caused by an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity in all material respects with information furnished to the Company by Investor, such underwriter or such controlling person or such officer, director, employee, agent, partner or affiliate in writing specifically for use in the preparation thereof. (b) Investor will indemnify and hold harmless the Company, and any Person who controls the Company within the meaning of the Securities Act, from and against, and will reimburse the Company and such controlling Persons with respect to, any and all losses, damages, liabilities, costs or expenses to which the Company or such controlling Person may become subject under the Securities Act or otherwise, insofar as such losses, damages, liabilities, costs or expenses are caused by any untrue or alleged untrue statement of any material fact contained in such registration statement, any prospectus contained therein or any amendment or supplement thereto, or are caused by the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was so made in reliance upon and in conformity in all material respects with written information furnished by Investor to the Company in writing specifically for use in the preparation thereof. Notwithstanding the foregoing, the liability of Investor pursuant to this subsection (b) shall be limited to an amount equal to the per share sale price (less any brokerage or underwriting discount and commissions) multiplied by the number of shares of Registrable Stock sold by Investor pursuant to the registration statement which gives rise to such obligation to indemnify (less the aggregate amount of any damages which Investor has otherwise been required to pay in respect of such losses, damages, liabilities, costs or expenses or any substantially similar losses, damages, liabilities, costs or expenses arising from the sale of such Registrable Stock). (c) Promptly after receipt by a party indemnified pursuant to the provisions of paragraph (a) or (b) of this Section 11.4 of notice of the commencement of any action involving the subject matter of the foregoing indemnity provisions, such indemnified party will, if a claim thereof is to be made against the indemnifying party pursuant to the provisions of paragraph (a) or (b), notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to an indemnified party otherwise than under this Section 11.4 and shall not relieve the indemnifying party from liability under this Section 11.4 except to the extent that such indemnifying party is materially prejudiced by such omission. In case such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party shall have the right to participate in, and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party pursuant to the provisions of such paragraph (a) or (b) for any legal or other expense subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall be liable to an indemnified party for any settlement of any action or claim without the consent of the indemnifying party. No indemnifying party will consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a complete and unconditional release from all liability in respect to such claim or litigation. (d) If the indemnification provided for in subsection (a) or (b) of this Section 11.4 is held by a court of competent jurisdiction to be unavailable to a party to be indemnified with respect to any claims, actions, demands, losses, damages, liabilities, costs or expenses referred to therein, then each indemnifying party under any such subsection, in lieu of indemnifying such indemnified party thereunder, hereby agrees to contribute to the amount paid or payable by such indemnified party as a result of such claims, actions, demands, losses, damages, liabilities, costs or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions which resulted in such claims, actions, demands, losses, damages, liabilities, costs or expenses, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. Notwithstanding the foregoing, the amount Investor shall be obligated to contribute pursuant to this subsection (d) shall be limited to an amount equal to the per share sale price (less any brokerage or underwriting discount and commissions) multiplied by the number of shares of Registrable Stock sold by Investor pursuant to the registration statement which gives rise to such obligation to contribute (less the aggregate amount of any damages which Investor has otherwise been required to pay in respect of such claim, action, demand, loss, damage, liability, cost or expense or any substantially similar claim, action, demand, loss, damage, liability, cost or expense arising from the sale of such Registrable Stock). No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution hereunder from any person who was not guilty of such fraudulent misrepresentation. 11.5 Reporting Requirements Under the Exchange Act. The Company shall --------------------------------------------- timely file such information, documents and reports as the Commission may require or prescribe under Section 13 or 15(d) of the Exchange Act. The Company acknowledges and agrees that the purposes of the requirements contained in this Section 11.5 are (a) to enable Investor to comply with the current public information requirement contained in paragraph (c) of Rule 144 should Investor ever wish to dispose of any of the Registrable Stock without registration under the Securities Act in reliance upon Rule 144 (or any other similar exemptive provision) and (b) to qualify the Company for the use of registration statements on Form S-3. 11.6 Investor Information. The Company may require Investor to -------------------- furnish the Company such information with respect to Investor and the distribution of the Registrable Stock as the Company may from time to time reasonably request in writing as shall be required by law or by the Commission in connection therewith. 11.7 Transferability of Registration Rights. Notwithstanding anything -------------------------------------- to the contrary in this Section 11, the rights of the Investor under this Section 11 shall automatically transfer to any transferee of at least ten percent (10%) of the Registrable Stock in accordance with Section 15.5 hereof. 12. Enforcement. ----------- 12.1 Survival of Representations and Warranties. The representations, ------------------------------------------ warranties, covenants and agreements of the parties hereto contained in this Agreement or in any writing delivered pursuant to the provisions of this Agreement or at the Closing shall survive any examination by or on behalf of any party hereto and shall survive the Closing and the consummation of the transactions contemplated hereby until the date which is twelve (12) months after the Closing Date; provided, however, that each of the representations and warranties contained in Sections 5.4, 5.7 and 5.9 hereof shall survive any examination by or on behalf of any party hereto and shall survive the Closing and the consummation of the transactions contemplated hereby until the expiration of any applicable statute of limitations with respect to such representation and warranty. 12.2 Indemnification. --------------- (a) Subject to Section 12.2(e), the Company hereby covenants and agrees to defend, indemnify and save and hold harmless Investor, together with its officers, directors, shareholders, employees, attorneys and representatives and each Person who controls Investor within the meaning of the Securities Act, from and against any loss, cost, expense, liability, claim or legal damages (including, without limitation, reasonable fees and disbursements of counsel and accountants and other costs and expenses incident to any actual or threatened claim, suit, action or proceeding (each, an "Action") and all costs of ------ investigation) (collectively, the "Damages") arising out of or resulting from ------- (i) any Default, or any inaccuracy in or breach of, or failure to perform or observe, any representation, warranty, covenant or agreement made by the Company or Fargo in this Agreement or in any writing delivered pursuant to this Agreement or at the Closing, or (ii) any claims of third parties claiming compensation, commissions or expenses for services as a broker or finder based upon obligations incurred by the Company. (b) In the event that any indemnified party is made a defendant in or party to any action, suit, proceeding or claim, judicial or administrative, instituted by any third party for Damages or other relief (any such third party action, suit, proceeding or claim being referred to as a "Claim"), the ----- indemnified party (referred to in this clause (b) as the "notifying party") --------------- shall give notice thereof (a "Notice of Claim") as soon as practicable and in --------------- any event within thirty (30) days after the notifying party receives notice thereof. The failure to give such notice shall not affect whether an indemnifying party is liable for reimbursement unless such failure has resulted in the loss of substantive rights with respect to the indemnifying party's ability to defend such Claim, and then only to the extent of such loss. Notice of the intention so to contest and defend shall be given by the indemnifying party to the notifying party within twenty (20) business days after the notifying party's notice of such Claim (but, in all events, at least ten (10) business days prior to the date that an answer to such Claim is due to be filed). Such contest and defense shall be conducted by reputable attorneys employed by the indemnifying party and approved by the indemnified party (which approval will not be unreasonably withheld). The indemnifying party shall have the sole right to control the contest and defense of such Claim. The notifying party shall be entitled, at its own cost and expense (which expense shall not constitute Damages unless the notifying party reasonably determines that the indemnifying party because of a conflict of interest, may not adequately represent, the interests of the indemnified parties, and has provided the indemnifying party with notice of such determination, and only to the extent that such expenses are reasonable), to participate in such contest and defense and to be represented by attorneys of its or their own choosing. The notifying party will cooperate with the indemnifying party in the conduct of such defense. Neither the notifying party nor the indemnifying party may concede, settle or compromise any Claim without the consent of the other party, which consent will not be unreasonably withheld or delayed in light of all factors of importance to such party; provided, however, that if the indemnified party shall fail to consent to the settlement of any Claim where (i) such settlement includes an unconditional release of all claims against the indemnified party and requires no payment on the part of the indemnified party to the claimant or any other party, (ii) such settlement does not require any action on the part of the indemnified party and does not impose terms restricting or adversely affecting the indemnified party's activity, and (iii) the claimant has affirmatively indicated that it will accept such settlement, then the indemnifying party shall no liability with respect to any payment to be made in respect of such claim in excess of the proposed settlement amount. (c) In the event any indemnified party shall have a claim against any indemnifying party that does not involve a Claim, the indemnified party shall deliver a notice of such claim with reasonable promptness to the indemnifying party. The failure to give such notice shall not affect whether an indemnifying party is liable for reimbursement unless such failure has resulted in the loss of substantive rights with respect to the indemnifying party's ability to defend such claim, and then only to the extent of such loss. If the indemnifying party notifies the indemnified party that it does not dispute the claim described in such notice or fails to notify the indemnified party within thirty (30) days after delivery of such notice by the indemnified party whether the indemnifying party disputes the claim described in such notice, the Damages in the amount specified in the indemnified party's notice will be conclusively deemed a liability of the indemnifying party and the indemnifying party shall pay the amount of such Damages to the indemnified party on demand. (d) Any claim for indemnity under this Section 12.2 shall be delivered in writing to the indemnifying party and set forth with reasonable specificity as to the amount claimed and the underlying facts supporting such claim. The indemnifying party shall have thirty (30) days to accept or dispute such claim by written notice to the indemnified party (a "Contest Notice"); -------------- provided, however, that if, at the time a Notice of Claim is submitted to the indemnifying party the amount of the Claim in respect thereof has not yet been determined, such thirty (30) day period shall not commence until a further written notice (a "Notice of Liability") has been sent or delivered by the ------------------- indemnified party to the indemnifying party setting forth the amount of the Claim incurred by the indemnified party that was the subject of the earlier Notice of Claim. Such Contest Notice shall specify the reasons or bases for the objection of the Indemnifying Party to the claim, and if the objection relates to the amount of the Claim asserted, the amount, if any, which the indemnifying party believes is due the indemnified party. If no such Contest Notice is given with such 30-day period, the obligation of the indemnifying party to pay to the indemnified party the amount of the Claim set forth in the Notice of Claim, or subsequent Notice of Liability, shall be deemed established and accepted by the indemnifying party. If, on the other hand, the indemnifying party contests a Notice of Claim or Notice of Liability (as the case may be) within such 30-day period, the indemnified party and the indemnifying party shall thereafter attempt in good faith to resolve their dispute by agreement. If the parties are unable to so resolve their dispute within the immediately succeeding thirty (30) days, such dispute shall be resolved by binding arbitration in Los Angeles, California, as provided in Section 15.13 below. The award of the arbitrator shall be final and binding on the parties and may be enforced in any court of competent jurisdiction. Upon final determination of the amount of the Claim that is the subject of an indemnification claim (whether such determination is the result of the indemnifying party's acceptance of, or failure to contest, a Notice of Claim or Notice of Liability, or of a resolution of any dispute with respect thereto by agreement of the parties or binding arbitration), such amount shall be payable, in cash by the indemnifying party to the indemnified parties who have been determined to be entitled thereto within fifteen (15) days of such final determination of the amount of the Claim due by the indemnifying party. Any amount that becomes due hereunder and is not paid when due shall bear interest at the maximum legal rate per annum from the date due until paid. (e) Anything to the contrary notwithstanding, (i) the Investor shall not be indemnified and held harmless in respect of any Damages unless and until the aggregate amount of such Damages exceeds $100,000, in which event the Investor shall be indemnified and held harmless in respect of all Damages without regard to the foregoing $100,000 limit, and (ii) the liability of the Company to the Investor shall be limited to an amount equal to the Purchase Payment. (f) Investor hereby covenants and agrees to defend, indemnify and save and hold harmless the Company, together with officers, directors, shareholders, employees, attorneys and representatives and each Person who controls the Company within the meaning of the Securities Act from and against any Damages arising out of or resulting from (i) any inaccuracy in breach of, or failure to perform or observe, any representation, warranty, covenant or agreement made by Investor in this Agreement or in any writing or other agreement delivered pursuant hereto, or (ii) any claims of third parties claiming compensation, commissions or expenses for services as a broker or finder based upon obligations incurred by Investor. (g) Except as provided in Section 12.3, the provisions of this Section 12.2 shall be the exclusive remedy or exclusive means to obtain relief, as the case may be, of any party in the event of any breach of any representation, warranty, covenant or agreement contained herein (or in any certificate or other document delivered pursuant hereto) by another party, or with respect to any Action or Claim; provided, however, that this subsection (g) -------- ------- shall not limit any statutory claim, or any claim in tort, which any party may have against the other party. 12.3 Injunctive Relief. (a) Any party may bring a claim seeking ----------------- specific performance by way of injunctive relief before a court of competent jurisdiction to enforce the provisions of this Agreement, (b) any party seeking to enforce a claim for indemnification may bring any claim of indemnification which is not resolved within the thirty day period provided in Section 12.2(b) before a court of competent jurisdiction, and (c) in the event of any breach by either party of Section 14.9, the other party may seek injunctive relief from a court of competent jurisdiction to restrain any such breach. 12.4 No Implied Waiver. Except as expressly provided in this ----------------- Agreement, no course of dealing between the Company and Investor and no delay in exercising any such right, power or remedy conferred hereby or now or hereafter existing at law in equity, by statute or otherwise, shall operate as a waiver of, or otherwise prejudice, any such right, power or remedy. 13. Definitions. Unless the context otherwise requires, the terms defined ----------- in this Section 14 shall have the meanings herein specified for all purposes of this Agreement, applicable to both the singular and plural forms of any of the terms herein defined. All accounting terms defined in this Section 14 and those accounting terms used in this Agreement not defined in this Section 14 shall, except as otherwise provided for herein, be construed in accordance with those generally accepted accounting principles that the Company is required to employ by the terms of this Agreement. If and so long as the Company has any Subsidiary, the accounting terms defined in this Section 14 and those accounting terms appearing in this Agreement but not defined in this Section 14 shall be determined on a consolidated basis for the Company and its Subsidiaries, and the financial statements and other financial information to be furnished by the Company pursuant to this Agreement shall be consolidated and presented with consolidating financial statements of the Company and its Subsidiaries. "Action" shall have the meaning assigned to it in Section 12.2(a). ------ "Affiliate" shall mean any Person which directly or indirectly --------- controls, is controlled by, or is under common control with, the indicated Person. "Agreement" shall mean this Agreement. --------- "Balance Sheet" and "Balance Sheet Date" shall have the meanings ------------- ------------------ assigned to these terms in Section 5.12 hereof. "Board" shall mean the Board of Directors of the Company. ----- "Certificate of Designation" shall have the meaning set forth in -------------------------- Section 1 above. "Claim" shall have the meaning assigned to it in Section 12.2(b). ----- "Closing" and "Closing Date" shall have the meanings assigned to ------- ------------ these terms in Section 3. "Common Stock" shall mean the Company's common stock, $.001 par ------------ value. "Commission" shall mean the Securities and Exchange Commission. ---------- "Covenant Period" shall have the meaning set forth in Section 8. --------------- "Damages" shall have the meaning assigned to it in Section 12.2(a). ------- "Default" shall mean a default or failure in the due observance or ------- performance of any covenant, condition or agreement on the part of the Company or any of its Subsidiaries to be observed or performed under the terms of this Agreement, if such default or failure in performance shall remain unremedied for ten (10) days. "Designated Key Employees" shall have the meaning assigned to it in ------------------------ Section 5.15. "Designee" shall have the meaning assigned to it in Section 7.6(a). -------- "Developing Software" shall have the meaning assigned to it in ------------------- Section 5.27(b). "Equity Security" shall mean any stock or similar security of the --------------- Company or any security (whether stock or Indebtedness for Borrowed Money) convertible or exchangeable, with or without consideration, into or for any stock or similar security, or any security (whether stock or Indebtedness for Borrowed Money) carrying any warrant or right to subscribe to or purchase any stock or similar security, or any such warrant or right. "Event of Default" shall mean (a) the failure of either the Company ---------------- or any Subsidiary to pay any Indebtedness for Borrowed Money, or any interest or premium thereon, within ten (10) days after the same shall become due, whether such Indebtedness shall become due by scheduled maturity, by required prepayment, by acceleration, by demand or otherwise, (b) an event of default under any agreement or instrument evidencing or securing or relating to any such Indebtedness, or (c) the failure of either the Company or any Subsidiary to perform or observe any material term, covenant, agreement or condition on its part to be performed or observed under any agreement or instrument evidencing or securing or relating to any such Indebtedness when such term, covenant or agreement is required to be performed or observed. "Exchange Act" shall mean the Securities Exchange Act of 1934, as ------------ amended. "Existing Rights Agreement" shall have the meaning assigned to it in ------------------------- Section 7.1(p). "Indebtedness" shall mean any obligation of the Company or any ------------ Subsidiary which under generally accepted accounting principles is required to be shown on the balance sheet of the Company or such Subsidiary as a liability. Any obligation secured by a Lien on, or payable out of the proceeds of production from, property of the Company or any Subsidiary shall be deemed to be Indebtedness even though such obligation is not assumed by the Company or Subsidiary. "Indebtedness for Borrowed Money" shall mean (a) all Indebtedness in ------------------------------- respect of money borrowed including, without limitation, Indebtedness which represents the unpaid amount of the purchase price of any property and is incurred in lieu of borrowing money or using available funds to pay such amounts and not constituting an account payable or expense accrual incurred or assumed in the ordinary course of business of the Company or any Subsidiary, (b) all Indebtedness evidenced by a promissory note, bond or similar written obligation to pay money, or (c) all such Indebtedness guaranteed by the Company or any Subsidiary or for which the Company or any Subsidiary is otherwise contingently liable. "Investor Counsel" shall have the meaning assigned to it in Section ---------------- 7.1(g)(3). "Investor Stock" shall have the meaning assigned to it in Section -------------- 4.2. "Lien" shall mean any mortgage, pledge, security interest, ---- encumbrance, lien or charge of any kind, including, without limitation, any conditional sale or other title retention agreement, any lease in the nature thereof and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction and including any lien or charge arising by statute or other law. "Material Adverse Effect" on a Person means a material adverse ----------------------- effect, or any condition, situation or set of circumstances that could reasonably be expected to have an adverse effect, on such Person and its Subsidiaries, taken as a whole. "Operational Software" shall have the meaning assigned to it in -------------------- Section 5.27(a). "Permitted Liens" shall mean (a) Liens for taxes and assessments or --------------- governmental charges or levies not at the time due or in respect of which the validity thereof shall currently be contested in good faith by appropriate proceedings; (b) Liens in respect of pledges or deposits under workers' compensation laws or similar legislation, carriers', warehousemen's, mechanics', laborers' and materialmen's and similar Liens, if the obligations secured by such Liens are not then delinquent or are being contested in good faith by appropriate proceedings; and (c) Liens incidental to the conduct of the business of the Company or any Subsidiary which were not incurred in connection with the borrowing of money or the obtaining of advances or credits and which do not in the aggregate materially detract from the value of its property or materially impair the use thereof in the operation of its business. "Person" shall include any natural person, corporation, trust, ------ association, company, partnership, limited liability company, joint venture and other entity and any government, governmental agency, instrumentality or political subdivision. "Purchase Payment" shall have the meaning assigned to it in Section ---------------- 2. "Registrable Stock" shall have the meaning assigned to it in Section ----------------- 11.1. "Securities Act" shall mean the Securities Act of 1933, as amended. -------------- "Series A Preferred Stock" shall have the meaning assigned to it in ------------------------ Section 1. "Subsidiary" shall mean any corporation, association or other ---------- business entity at least fifty percent (50%) of the outstanding voting stock of which is at the time owned or controlled directly or indirectly by the Company or by one or more of such subsidiary entities or both, where "voting stock" means any shares of stock having general voting power in electing the board of directors (irrespective of whether or not at the time stock of any other class or classes has or might have voting power by reason of any contingency). "Web Site" shall have the meaning assigned to it in Section 5.28(a). -------- 14. Miscellaneous. ------------- 14.1 Waivers and Amendments. With the written consent of Investor, ---------------------- the obligations of the Company and the rights of Investor under this Agreement may be waived (either generally or in a particular instance, either retroactively or prospectively and either for a specified period of time or indefinitely), and with the same consent the Company, when authorized by resolution of its Board, may enter into a supplementary agreement for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement or of any supplemental agreement or modifying in any manner the rights and obligations hereunder of Investor and the Company. Neither this Agreement, nor any provision hereof, may be amended, waived, discharged or terminated orally or by course of dealing, but only by a statement in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, as provided in this Section 14.1. Specifically, but without limiting the generality of the foregoing, the failure of Investor at any time or times to require performance of any provision hereof by the Company shall in no manner affect the right of Investor at a later time to enforce the same. No waiver by any party of the breach of any term or provision contained in this Agreement, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in the Agreement. 14.2 Rights of Investor. Investor shall have the absolute right to ------------------ exercise or refrain from exercising any right or rights which Investor may have by reason of this Agreement or any Investor Stock, including, without limitation, the right to consent to the waiver of any obligation of the Company under this Agreement and to enter into an agreement with the Company for the purpose of modifying this Agreement or any agreement effecting any such modification, and Investor shall not incur any liability to any other shareholder of the Company with respect to exercising or refraining from exercising any such right or rights. 14.3 Notices. All notices, requests, consents and other ------- communications required or permitted hereunder shall be in writing (including telecopy or similar writing) and shall be given, if to the Company to: Interplay Entertainment Corp. 16815 Von Karman Avenue Irvine, California 92606 Attention: Mr. Brian Fargo, Chairman and Chief Executive Officer Telecopier: (949) 252-0667 with a copy to: K.C. Schaaf, Esq. Stradling Yocca Carlson & Rauth, a professional corporation 660 Newport Center Drive, Suite 1600 Newport Beach, California 92660 Telecopier: (949) 725-4100 if to Investor to: Titus Interactive SA c/o Titus Software Corporation 20432 Corisco Street Chatsworth, California 91311 Attention: Mr. Herve Caen, Chairman and Chief Executive Officer Telecopier: (818) 709-6537 with copies to: Titus Interactive SA Parc de l'esplanade 12, Rue Enrico Fermi Saint Thibault des Vignes 77462 Lagny sur Marne Cedex France Telecopier: 011-33-1-60-31-59-60 and Robert A. Miller, Jr., Esq. Paul, Hastings, Janofsky & Walker LLP 555 South Flower Street - 23rd Floor Los Angeles, California 90071 Telecopier: (213) 627-0705 if to Fargo to: Mr. Brian Fargo c/o Interplay Entertainment Corp. 16815 Von Karman Avenue Irvine, California 92606 Telecopier: (949) 252-0667 or to such other address or telecopier number as such party may specify for the purpose by notice to the other party or parties to this Agreement, as the case may be. Any notice, request, consent or other communication hereunder shall be deemed to have been given and received on the day on which it is delivered (by any means including personal delivery, overnight air courier, United States or French mail) or telecopied (or, if such day is not a business day or if the notice, request, consent or communication is not telecopied during business hours of the intended recipient, at the place of receipt, on the next following business day). 14.4 Severability. Should any one or more of the provisions of this ------------ Agreement or of any agreement entered into pursuant to this Agreement be determined to be illegal or unenforceable, all other provisions of this Agreement and of each other agreement entered into pursuant to this Agreement, shall be given effect separately from the provision or provisions determined to be illegal or unenforceable and shall not be affected thereby. 14.5 Assignment; Parties in Interest. Neither this Agreement nor any ------------------------------- interest herein may be assigned by either party hereto without the written consent of the other parties hereto, except that Investor may assign all of its rights hereunder to any Subsidiary of Investor. Subject to the foregoing, all the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto, whether so expressed or not. Subject to the immediately preceding sentence, this Agreement shall not run to the benefit of or be enforceable by any Person other than a party to this Agreement and its successors and assigns. 14.6 Headings. The headings of the Sections and paragraphs of this -------- Agreement have been inserted for convenience of reference only and do not constitute a part of this Agreement. 14.7 Choice of Law; Jurisdiction and Venue. The internal substantive ------------------------------------- laws, and not the laws of conflicts, of the State of California shall govern the enforceability and validity of this Agreement, the construction of its terms and the interpretation of the rights and duties of the parties. The parties hereby consent and agree that the United States District Court for the Central District of California, or the Superior Court of California for the County of Orange will have exclusive jurisdiction over any legal action or proceeding arising out of or relating to this Agreement, and each party consents to the in personam jurisdiction of such courts for the purpose of any such action or proceeding and agrees that venue is proper in such courts. 14.8 Satisfaction of Investor Obligations. The Company and Investor ------------------------------------ hereby agree that upon consummation of the transactions contemplated by this Agreement, Investor shall have satisfied its obligations in full pursuant to Section 9.2 of that certain Stock Purchase Agreement, dated as of July 20, 1999, by and between Investor, the Company and Brian Fargo. 14.9 Publicity. Without the prior consent of the other parties, no --------- party shall, and each party shall cause its directors, officers, employees, representatives and agents not to, make any public statement or press release with respect to the transactions contemplated by this Agreement or otherwise disclose to any Person the existence, terms, content or effect of this Agreement; provided, however, that if a disclosure is required by law, the party -------- required to make such disclosure shall be permitted to make such disclosure but shall use best efforts to consult with the other parties hereto before making the required disclosure. The foregoing restriction shall not limit the applicability of the Nondisclosure Agreements between the Company and Investor dated November 10, 1998, and March 3, 1999, which shall continue in full force and effect in accordance with their respective terms. 14.10 Counterparts. This Agreement may be executed in any number of ------------ counterparts (including by facsimile) and by different parties hereto in separate counterparts, with the same effect as if all parties had signed the same document. All such counterparts shall be deemed an original, shall be construed together and shall constitute one and the same instrument. 14.11 Entire Agreement. This Agreement, and the Exhibits, Schedules, ---------------- certificates, and documents referred to herein constitute the entire agreement of the parties hereto with respect to the subject matter hereof, and supersede all prior understandings with respect to the subject matter hereof, and no representation or warranty not included herein has been relied upon by any party hereto. 14.12 Attorneys' Fees. In the event of any dispute, controversy, or --------------- proceeding between the parties concerning this Agreement or the transactions contemplated hereby, the prevailing party shall be entitled to receive from the non-prevailing party its costs and expenses, including attorneys' fees. 14.13 Arbitration. Except for actions to obtain injunctions or other ----------- equitable remedies, all disputes between the parties hereto shall be determined solely and exclusively by arbitration under, and in accordance with the rules then in effect of, the American Arbitration Association, or any successors thereto ("AAA"), in Los Angeles, California, unless the parties otherwise agree --- in writing. The parties shall, in connection with such arbitration, in addition to any discovery permitted under AAA rules, be permitted to conduct discovery in accordance with Section 1283.05 of the California Code of Civil Procedure, the provisions of which are incorporated herein by this reference. The parties shall jointly select an arbitrator. In the event the parties fail to agree upon an arbitrator within ten (10) days, then each party shall select an arbitrator and such arbitrators shall then select a third arbitrator to serve as the sole arbitrator; provided, that if either party, in such event, fails to select an -------- arbitrator within seven (7) days, such arbitrator shall be selected by the AAA upon application of either party. Judgment upon the award of the agreed upon arbitrator or the so chosen third arbitrator, as the case may be, shall be binding and may be entered in any court of competent jurisdiction. [SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT] IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed by their respective duly authorized officers as of the day and year first above written. INTERPLAY ENTERTAINMENT CORP., a Delaware corporation By: /s/ Brian Fargo ------------------ An Authorized Officer TITUS INTERACTIVE SA, a French corporation By: /s/ Herve Caen ----------------- An Authorized Officer EX-99.13 3 CERTIFICATE OF DESIGNATION OF RIGHTS EXHIBIT 99.13 CERTIFICATE OF DESIGNATION OF RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS OF SERIES A PREFERRED STOCK OF INTERPLAY ENTERTAINMENT CORP. (Pursuant to Section 151(g) of the General Corporation Law of the State of Delaware) The undersigned, Brian Fargo and Manuel Marrero, hereby certify that: FIRST: They are the duly elected and acting Chief Executive Officer and Secretary, respectively, of Interplay Entertainment Corp., a Delaware corporation (the "Corporation"). SECOND: That the Amended and Restated Certificate of Incorporation of the Corporation authorizes 5,000,000 shares of preferred stock, $0.001 par value per share ("Preferred Stock"), none of which have been designated. THIRD: The following is a true and correct copy of resolutions duly adopted by the Board of Directors of the Corporation at a meeting duly held on April 13, 2000, which constituted all requisite action on the part of the Corporation for adoption of such resolutions. RESOLUTIONS WHEREAS, the Board of Directors of the Corporation is authorized to provide for the issuance of Preferred Stock in series, and by filing a certificate pursuant to the applicable law of the State of Delaware, to establish from time to time the number of shares to be included in each such series, and to fix the designations, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof; and WHEREAS, the Board of Directors desires, pursuant to its authority as aforesaid, to designate a new series of Preferred Stock, set the number of shares constituting such series and fix the rights, preferences, privileges and restrictions of such series; NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby designates a new series of Preferred Stock and the number of shares constituting such series and fixes the rights, preferences, privileges and restrictions relating to such shares as follows: Rights, Preferences and Restrictions of Series A Preferred Stock. The ---------------------------------------------------------------- rights, preferences, privileges and restrictions granted to and imposed on the second series of Preferred Stock, which shall be designated "Series A Preferred Stock" and which shall consist of seven hundred nineteen thousand four hundred twenty-four (719,424) shares, are as set forth below. 1. Dividend Provisions. Subject to the rights of any series of ------------------- Preferred Stock which may hereafter come into existence, the holders of shares of Series A Preferred Stock shall be entitled to receive cumulative dividends, out of any assets legally available therefore, prior and in preference to any declaration or payment of any dividend (payable other than in Common Stock or other securities and rights convertible into or entitling the holder thereof to receive, directly or indirectly, additional shares of Common Stock of this Corporation) on the Common Stock of this Corporation, at the rate of six percent (6%) of the Original Series A Issue Price per annum per share, as adjusted for any stock splits, combinations or dividends following the effectiveness of this Certificate of Designation with respect to the Series A Preferred Stock, payable when, as, and if declared by the Corporation's Board of Directors. Such dividends shall be payable in cash or, at the option of the holder of Series A Preferred Stock, in a number of shares of the Corporation's Common Stock equal to the unpaid dividends accrued on such Series A Preferred Stock divided by the lower of (i) the Conversion Price (as defined below) or (ii) (if paid upon the conversion of shares of Series A Preferred Stock) the Alternate Conversion Price (as defined below). 2. Liquidation, Dissolution or Winding Up. -------------------------------------- (a) Preference of Series A Preferred Stock. In the event of any -------------------------------------- liquidation, dissolution, or winding up of the Corporation (in which case the Company shall give the holder(s) of the Series A Preferred Stock ten (10) days prior written notice), whether voluntary or involuntary, subject to the rights of series of Preferred Stock that may hereafter come into existence, holders of each share of Series A Preferred Stock shall be entitled to be paid, out of the assets of the Corporation available for distribution to holders of the Corporation's capital stock, whether such assets are capital, surplus or earnings, an amount equal to Twenty-Seven and 80/100 Dollars ($27.80) per outstanding share (as adjusted for any stock dividends, combinations or splits following the effectiveness of this Certificate of Designation with respect to the Series A Preferred Stock) (the "Original Series A Issue Price"), plus any accrued but unpaid dividends, whether or not declared (collectively, the "Series A Liquidation Amount"), before any sums shall be paid or any assets distributed among the holders of shares of Common Stock or shares ranking junior on liquidation to the Series A Preferred Stock. If the assets of the Corporation shall be insufficient to permit the payment in full to the holders of the Series A Preferred Stock of the amount thus distributable, then, subject to the liquidation preferences of any subsequently designated series of Preferred Stock, the entire assets of the Corporation available for such distribution shall be distributed ratably among the holders of the Series A Preferred Stock, based on the aggregate liquidation preferences of such Series. After such payment shall have been made in full to the holders of the Series A Preferred Stock or funds necessary for such payment shall have been set aside by the Corporation in trust for the account of holders of the Series A Preferred Stock so as to be available for such payment, subject to the rights of any subsequently designated series of Preferred Stock, the remaining assets of the Corporation available for distribution to stockholders shall be distributed ratably among the holders of Common Stock. (b) Consolidation and Merger. A consolidation, reorganization or ------------------------ merger, or similar transaction or series of transactions, (other than a consolidation, reorganization or merger, or similar transaction or series of transactions, in which the holders of voting securities of the Corporation immediately before the consolidation, reorganization or merger, or similar transaction or series of transactions, own (immediately after the consolidation, reorganization or merger, or similar transaction or series of transactions,) voting securities of the surviving or acquiring corporation, or of a parent party of such surviving or acquiring corporation, possessing more than 50% of the voting power of such surviving or acquiring corporation or parent party) of the Corporation or a sale of all or substantially all of the assets of the Corporation (any of which events is hereinafter referred to as a "Reorganization") shall be regarded as a liquidation, dissolution or winding up of the affairs of the Corporation within the meaning of this Section 2. The Corporation shall give each holder of record of Series A Preferred Stock written notice of such impending transaction not later than twenty (20) 2 days prior to the stockholders' meeting called to approve such transaction, or twenty (20) days prior to the closing of such transaction, whichever is earlier, and shall also notify such holders in writing of the final approval of such transaction. Such notice shall describe the then known material terms and conditions of the impending transaction and the provisions of this Section 2. The transaction shall in no event take place sooner than twenty (20) days after the Corporation has given such notice provided for herein; provided, however, that such periods may be shortened and such notice may be waived upon the written consent of the holders of Series A Preferred Stock that represent at least a majority of the voting power of all then outstanding shares of Series A Preferred Stock. (c) Distributions Other Than Cash. Whenever the distribution ----------------------------- provided for herein shall be paid in property other than cash, the value of such distribution shall be the fair market value of such property as mutually determined in good faith by the Board of Directors of the Corporation and the holders of a majority of the Series A Preferred Stock; provided, however, in the event the Board of Directors and the holders of the Series A Preferred Stock can not agree on the fair market value of the property to be distributed, the fair market value of such property shall be determined by a mutually agreed upon third party. 3. No Reissuance of the Preferred Stock. No share or shares of the ------------------------------------ Series A Preferred Stock acquired by the Corporation by reason of purchase, conversion or otherwise shall be reissued. The Corporation may from time to time take such appropriate corporate action as may be necessary to reduce the authorized number of shares of the Series A Preferred Stock accordingly. 4. Conversion. The holders of Series A Preferred Stock shall have ---------- conversion rights as follows (the "Conversion Rights"): (a) Right to Convert. Each share of Series A Preferred Stock ---------------- shall be convertible, at the option of the holder thereof, at any time after the earlier to occur of May 31, 2001 or one hundred eighty (180) days after the occurrence of an Adjustment Event (as defined below) which is not cured during the Cure Period (as defined below) (except as hereinafter provided), at the office of this Corporation or any transfer agent for such stock, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the Original Series A Issue Price by the conversion price applicable to such share, determined as hereafter provided (the "Series A Conversion Price"), in effect on the date of conversion. The initial Series A Conversion Price per share shall be ten percent (10%) of the Original Series A Issue Price for such share; provided, however that the Series A Conversion Price shall be subject to adjustment as set forth in subsection 4(d). Notwithstanding the foregoing, in no event shall the Series A Preferred Stock be convertible into more than 5,504,507 shares of Common Stock (the "Issuance Limit") unless the issuance of the Series A Preferred Stock has been approved by vote of the Company's stockholders in accordance with Delaware law (the "Required Approval") prior to the date of such proposed conversion; provided that this limitation shall cease to apply upon an Adjustment Event. Notwithstanding the foregoing, the Series A Preferred Stock shall not be convertible during the Cure Period (as defined in Section 4(d)(ii)(A) below). (b) Automatic Conversion. Each share of Series A Preferred Stock -------------------- shall automatically be converted into shares of Common Stock at the Series A Conversion Price in effect at the time immediately upon the vote or written consent of holders of a majority of the then-outstanding shares of Series A Preferred Stock, provided such vote or written consent occurs during a period in which the Series A Preferred Stock would be convertible under Section 4(a) above. 3 (c) Mechanics of Conversion. Before any holder of Series A ----------------------- Preferred Stock shall be entitled to convert the same into shares of Common Stock pursuant to subsection 4(a), such holder shall surrender the certificate or certificates therefor, duly endorsed, at the office of this Corporation or of any transfer agent for the Series A Preferred Stock, and give written notice to this Corporation at its principal corporate office of such holder's election to convert the same, and shall state therein the name or names in which the certificate or certificates for shares of Common Stock are to be issued. This Corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder of Series A Preferred Stock, or to the nominee or nominees of such holders, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled as aforesaid, together with all unpaid dividends accruing on the Series A Preferred Stock from the date of issuance through the date of conversion, payable as provided in Section 1 hereof, whether or not declared. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares of Series A Preferred Stock to be converted, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock as of such date. In the event of an automatic conversion pursuant to subsection 4(b), the outstanding shares of Series A Preferred Stock shall be converted automatically without further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent, provided that the Corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon such automatic conversion unless the certificates evidencing such shares of Series A Preferred Stock are delivered to the Corporation or its transfer agent. (d) Conversion Price Adjustments of Preferred Stock. The Series ----------------------------------------------- A Conversion Price shall be subject to adjustment from time to time as follows: (i) Adjustment Based on Market Price. In the event that -------------------------------- the product of (A) the average of the closing prices per share of the Company's Common Stock as reported by Nasdaq for the twenty (20) trading days immediately preceding the date of conversion and (B) 0.85 (such product, the "Alternate Conversion Price") is less than the Series A Conversion Price in effect on the date of conversion, then the Series A Conversion Price shall forthwith be reduced to the Alternate Conversion Price. (ii) Adjustment Upon Default. In the event that Greyrock ----------------------- Capital or any of its successors, transferees or assignees (collectively, "Greyrock") notifies either Titus Interactive SA or Titus Software Corporation (collectively, "Titus") that Greyrock is making demand for payment under that certain Continuing Guaranty dated April 14, 2000 (the "Guaranty"), or in the event of an Event of Default under Section 5.1 of that certain Reimbursement and Security Agreement dated April 14, 2000 among Titus Interactive SA, the Corporation and Interplay OEM, Inc. (the "Reimbursement Agreement"), then, in any of such events (each, an "Adjustment Event"), in addition to the other adjustments under this Section 4(d), the Series A Conversion Price shall be subject to the following adjustments: (A) the Series A Conversion Price shall, automatically upon such Adjustment Event, be reduced to $0.466818926 (subject to adjustment for stock splits, combinations and dividends following the date hereof with respect to the Common Stock); and (B) so long as (a) Titus does not pay any amounts under the Guaranty, or (b) the Adjustment Event under Section 5.1 of the Reimbursement Agreement is 4 cured by the Corporation within one hundred eighty (180) days following the occurrence of the Adjustment Event (the "Cure Period"), the Series A Conversion Price shall, concurrent with such cure, automatically be increased to the Series A Conversion Price in effect immediately prior to the adjustment made pursuant to subsection (A) above; and (C) in the event that (a) Titus pays amounts under the Guaranty and (b) the Adjustment Event is not cured by the Corporation within the Cure Period, then, as of the first day following the end of the Cure Period, the Series A Conversion Price shall be automatically adjusted to an amount obtained by the following formula (provided, however, that in no event shall the resulting Series A Conversion Price be less than $0.466818926 (subject to adjustment for stock splits, combinations and dividends following the date hereof with respect to the Common Stock) or more than $2.78 (subject to adjustment for stock splits, combinations and dividends following the date hereof with respect to the Common Stock): X = 20,000,000 -------------------- Z + 5,000,000 (10-Y) where: X = the new Series A Conversion Price; Y = the lesser of (a) $10.00 per share (subject to adjustment for stock splits, combinations and dividends following the date hereof with respect to the Common Stock) or (b) the average closing price per share as reported by Nasdaq for the twenty (20) trading days immediately preceding the last day of the Cure Period; and Z = the greater of (a) $20,000,000 divided by $2.78 (subject to adjustment for stock splits, combinations and dividends following the date hereof with respect to the Common Stock) or (b) $20,000,000 divided by the product of .85 and Y. The formula set forth above shall be equitably adjusted in the event of any stock splits, combinations and dividends following the date hereof with respect to the Common Stock so as to preserve, as closely as possible, the conversion rights of the Series A Preferred Stock hereunder. (iii) Adjustment for Splits and Dividends. In the event the ----------------------------------- Corporation should at any time or from time to time following the effectiveness of this Certificate of Designation fix a record date for the effectuation of a split or subdivision of the outstanding shares of Common Stock or the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock or other securities or rights convertible into or exercisable for, or entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock (hereinafter referred to as "Common Stock Equivalents") without payment of any consideration by such holder for the additional shares of Common Stock or the Common Stock Equivalents (including the additional shares of Common Stock issuable upon conversion or exercise thereof), then, as of such record date (or the date of such dividend distribution, split or subdivision if no record date is fixed), the Series A Conversion Price shall be appropriately decreased so that the number of shares of Common Stock issuable on conversion of each share of Series A Preferred Stock shall be increased in proportion to such increase of the aggregate of shares of Common Stock outstanding and those issuable with respect to such Common Stock Equivalents. 5 (iv) Adjustment for Combinations. If the number of shares --------------------------- of Common Stock outstanding at any time following the effectiveness of this Certificate of Designation is decreased by a combination of the outstanding shares of Common Stock, then, following the record date of such combination, the Series A Conversion Price shall be appropriately increased so that the number of shares of Common Stock issuable on conversion of each share of the Series A Preferred Stock shall be decreased in proportion to such decrease in outstanding shares. (e) Other Distributions. In the event this Corporation shall ------------------- declare a distribution payable in securities of other persons, evidences of indebtedness issued by this Corporation or other persons, assets (excluding cash dividends) or options or rights not referred to in subsection (iii), then, in each such case, the holders of Series A Preferred Stock shall be entitled to a proportionate share of any such distribution as though they were the holders of the number of shares of Common Stock of the Corporation into which their shares of Series A Preferred Stock are convertible as of the record date fixed for the determination of the holders of Common Stock of the Corporation entitled to receive such distribution. (f) Recapitalizations. If at any time or from time to time there ----------------- shall be a recapitalization of the Common Stock (other than a subdivision, combination or merger or sale of assets transaction provided for elsewhere in this Section 4), provision shall be made so that the holders of Series A Preferred Stock shall thereafter be entitled to receive upon conversion of such Series A Preferred Stock the number of shares of stock or other securities or property of the Corporation or otherwise, to which a holder of Common Stock deliverable upon conversion would have been entitled on such recapitalization. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 4 with respect to the rights of the holders of Series A Preferred Stock after the recapitalization to the end that the provisions of this Section 4 (including adjustment of the Series A Conversion Price then in effect and the number of shares purchasable upon conversion of Series A Preferred Stock) shall be applicable after that event as nearly equivalent as is practicable. (g) No Impairment. This Corporation will not, by amendment of ------------- its Certificate of Incorporation or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by this Corporation, but will at all times in good faith assist in the carrying out of all the provisions of this Section 4 and in the taking of all such action as may be necessary or appropriate in order to protect the conversion rights of the holders of Series A Preferred Stock against impairment. (h) No Fractional Shares and Certificate as to Adjustments. ------------------------------------------------------ (i) No fractional shares shall be issued upon the conversion of any share or shares of Series A Preferred Stock, and the number of shares of Common Stock to be issued shall be rounded to the nearest whole share. Whether or not fractional shares are issuable upon such conversion shall be determined on the basis of the total number of shares of Series A Preferred Stock the holder is at the time converting into Common Stock and the number of shares of Common Stock issuable upon such aggregate conversion (ii) Upon the occurrence of each adjustment or readjustment of the Series A Conversion Price pursuant to this Section 4, this Corporation, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare 6 and furnish to each holder of Series A Preferred Stock a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. This Corporation shall, upon the written request at any time of any holder of Series A Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (A) such adjustment and readjustment, (B) the Series A Conversion Price at the time in effect, and (C) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of a share of Series A Preferred Stock. (iii) Reservation of Stock Issuable Upon Conversion. This --------------------------------------------- Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of Series A Preferred Stock such number of shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Series A Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of Series A Preferred Stock, in addition to such other remedies as shall be available to the holder of such Series A Preferred Stock, this Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to the Corporation's Certificate of Incorporation, as then in effect. (iv) Notices. Any notice required by the provisions of ------- this Section 4 to be given to the holders of shares of Series A Preferred Stock shall be deemed given if deposited in the United States registered or certified mail, postage prepaid, return receipt requested and addressed to each holder of record at his address appearing on the books of this Corporation. 5. Redemption. At any time and from time to time following the ---------- issuance of any shares of Series A Preferred Stock, the Corporation may, in its sole discretion, redeem all or any portion of the outstanding shares of Series A Preferred Stock by paying for each share in cash an amount equal to the Original Series A Issue Price (as adjusted for stock splits, stock dividends or similar events with respect to the Series A Preferred Stock) plus all accrued but unpaid dividends, if any (whether or not declared), such amount being referred to herein as the "Redemption Price" for such shares; provided, however, that the Corporation may not exercise any rights under this Section 5 at any time that the Guaranty is outstanding or Titus or its assignee has not been repaid all amounts due and owing under the Reimbursement Agreement. (i) Surrender of Stock. Within ten (10) business days ------------------ following receipt of written notice from the Corporation of its election to redeem shares of Series A Preferred Stock hereunder, each holder of shares of Series A Preferred Stock to be redeemed shall surrender the certificate or certificates representing such shares to the Corporation, and thereupon the Redemption Price for such shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof, and each surrendered certificate shall be cancelled and retired. In the event less than all shares represented by such certificate are redeemed, a new certificate will be issued representing the unredeemed shares. (ii) Partial Redemption. From and after each date of ------------------ redemption of shares of Series A Preferred Stock (each, a "Redemption Date"), unless there shall have been a default in payment of the Redemption Price, all rights of the holders as to the shares of Series A Preferred Stock to be redeemed on such date (except the right to receive the Redemption Price 7 without interest upon surrender of their certificate or certificates) shall cease with respect to such shares, and such shares shall not thereafter be transferred on the books of the Corporation or be deemed to be outstanding for any purpose whatsoever. (iii) Redemption Mechanics. On the applicable Redemption -------------------- Date, the Corporation shall deposit the aggregate Redemption Prices for the Series A Preferred Stock to be redeemed with a bank or trust company having aggregate capital and surplus in excess of $100,000,000 as a trust fund for the benefit of the respective holders of the shares surrendered for redemption and not yet redeemed. Simultaneously, this Corporation shall deposit irrevocable instructions and authority to such bank or trust company to pay, on and after the applicable Redemption Date, the Redemption Price of the Series A Preferred Stock to the holders thereof upon surrender of their certificates. Any moneys deposited by the Corporation pursuant to this Section 5 for the redemption of shares which are thereafter converted into shares of Common Stock pursuant to Section 4 no later than the close of business on the applicable Redemption Date shall be returned to the Corporation forthwith upon such conversion. The balance of any moneys deposited by the Corporation pursuant to this Section 5 remaining unclaimed at the expiration of one year following the applicable Redemption Date shall thereafter be returned to the Corporation, provided that the shareholder to which such monies would be payable hereunder shall be entitled, upon proof of its ownership of the Series A Preferred Stock and payment of any bond requested by the Corporation, to receive such monies, but without interest, from the applicable Redemption Date. 6. Voting Rights. The holder of each share of Series A Preferred ------------- Stock shall have the right to one vote for each share of Common Stock into which such share of Series A Preferred Stock could then be converted (subject to the limitation set forth in the penultimate sentence of Section 4(a)), and with respect to such vote, such holder shall have full voting rights and powers equal to the voting rights and powers of the holders of Common Stock and shall be entitled, notwithstanding any provision hereof, to notice of any stockholders' meeting in accordance with the Bylaws of this Corporation, and shall be entitled to vote, together with holders of Common Stock, with respect to any question upon which holders of Common Stock have the right to vote as a single class, unless otherwise prohibited by law. Fractional votes shall not, however, be permitted and any fractional voting rights available on an as-converted basis (after aggregating all shares into which shares of Series A Preferred Stock held by each holder could be converted) shall be rounded to the nearest whole number (with one-half being rounded upward). 7. Protective Provisions of Series A Preferred Stock. So long as at ------------------------------------------------- least 100,000 shares of Series A Preferred Stock (as adjusted for stock splits, combinations or similar events) are outstanding, this Corporation shall not, without first obtaining the approval (by vote or written consent, as provided by law) of the holders of a majority of the outstanding shares of Series A Preferred Stock voting as a single class (with each share of Series A Preferred Stock having a number of votes equal to the number of shares of Common Stock into which such share is then convertible): (a) sell, convey, or otherwise dispose of or encumber all or substantially all of its property or business or merge into or consolidate with any other corporation (other than a wholly-owned subsidiary corporation ) or effect any transaction or series of related transactions in which more than fifty percent (50%) of the voting power of the Corporation is disposed of; (b) alter or change the rights, preferences or privileges of the shares of Series A Preferred Stock so as to affect adversely the shares; 8 (c) increase or decrease (other than by redemption or conversion) the total number of authorized shares of Preferred Stock or Common Stock; (d) create (by new authorization, reclassification, recapitalization or otherwise) any class or series of stock or any other securities convertible into equity securities of this Corporation having a preference over, or being on a parity with, the rights, preferences or privileges of the Series A Preferred Stock; (e) effect a reclassification or recapitalization of the outstanding capital stock of the Corporation in which any capital stock has any preference or priority as to dividends or assets senior to or on parity with the preferences of the Series A Preferred Stock; (f) amend or waive any provision of the Corporation's Amended and Restated Certificate of Incorporation relating to the Series A Preferred Stock; (g) authorize or pay any cash dividends with respect to any share or shares of Common Stock; (h) redeem, purchase or otherwise acquire (or pay into or set aside for a sinking fund for such purpose) any share or shares of Common Stock; provided, however, that this restriction shall not apply to the repurchase of shares of Common Stock from employees, officers, directors, consultants or other persons performing services for the Corporation or any subsidiary pursuant to agreements under which the Corporation has the option to repurchase such shares at cost or at cost upon the occurrence of certain events, such as the termination of employment; or (i) effect the dissolution, liquidation or winding up of the Corporation. RESOLVED FURTHER, that the President and Secretary of the Corporation be, and they hereby are, authorized and directed to prepare, execute, verify and file with the Secretary of State of the State of Delaware, a Certificate of Designation in accordance with these resolutions and as required by law. 9 IN WITNESS WHEREOF, the undersigned declare under penalty of perjury that they have read the foregoing Certificate of Designation and know the contents thereof, and that the statements therein are true and correct of their own knowledge. Executed at Irvine, California on April 14, 2000. /s/ Brian Fargo --------------- Brian Fargo, Chief Executive Officer /s/ Manuel Marrero ------------------ Manuel Marrero, Secretary 10 EX-99.14 4 WARRANT TO PURCHASE COMMON STOCK 350,000 SHARES EXHIBIT 99.14 THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SHARES ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") NOR QUALIFIED UNDER THE CALIFORNIA CORPORATE SECURITIES LAW OF 1968, AS AMENDED, (THE "CALIFORNIA SECURITIES LAW"). THIS WARRANT HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR SALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES ACT AND THE SECURITIES LAW. THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE THEREOF MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND COMPLIANCE WITH THE CALIFORNIA SECURITIES LAW OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION AND COMPLIANCE ARE NOT REQUIRED. Warrant to Purchase 350,000 Shares of Common Stock As Herein Described WARRANT TO PURCHASE COMMON STOCK OF INTERPLAY ENTERTAINMENT CORP. This is to certify that, for value received, Titus Interactive SA, or a proper assignee (in each case, the "Holder"), is entitled to purchase, subject to the provisions of this Warrant, from Interplay Entertainment Corp., a Delaware corporation (the "Company"), having its principal place of business at 16815 Von Karman Avenue, Irvine, California 92606, at any time during the period from the date hereof (the "Commencement Date") to 5:00 p.m., California time, on April 14, 2010 (the "Expiration Date") at which time this Warrant shall expire and become void, Three Hundred Fifty Thousand (350,000) shares ("Warrant Shares") of the Company's Common Stock (the "Common Stock"). This Warrant shall be exercisable at Three and 79/100 Dollars ($3.79) per share (the "Exercise Price"). The number of shares of Common Stock to be received upon exercise of this Warrant and the Exercise price shall be adjusted from time to time as set forth below. This Warrant also is subject to the following terms and conditions: 1. Exercise and Payment. -------------------- (a) This Warrant may be exercised in whole or in part at any time from and after the date hereof and before the Expiration Date, but if such date is a day on which federal or state chartered banking institutions located in the State of California are authorized to close, then on the next succeeding day on which such institutions are open. Exercise shall be by presentation and surrender to the Company at its principal office, or at the office of any transfer agent designated by the Company, of (i) this Warrant, (ii) the attached exercise form properly executed, and (iii) either (A) a certified or official bank check or wire payment for the Exercise Price for the number of Warrant Shares specified in the exercise form; or (B) other securities of the Company owned by the Holder and having a fair market value determined as set forth in Section 3 hereof equal to the Exercise Price for the number of Warrant Shares specified in the exercise form; (C) a written notice to the Company that the Holder is exercising the Warrant (or a portion thereof) and authorizing the Company to withhold from issuance a number of shares of Common Stock issuable upon such exercise of the Warrant having a fair market value determined as set forth in Section 3 hereof equal to the Exercise Price for the number of Warrant Shares specified in the exercise form; or (D) any combination of the consideration specified in the foregoing clauses (A), (B) and (C). If this Warrant is exercised in part only, the Company or its transfer agent shall, upon surrender of the Warrant, execute and deliver a new Warrant evidencing the rights of the Holder to purchase the remaining number of Warrant Shares purchasable hereunder. Upon receipt by the Company of this Warrant in proper form for exercise, accompanied by payment as aforesaid, the Holder shall be deemed to be the holder of record of the Common Stock issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such Warrant Shares shall not then be actually delivered to the Holder. (b) Conditions to Exercise. The restrictions in Section 7 shall ---------------------- apply, to the extent applicable by their terms, to any exercise of this Warrant permitted by this Section 1. 2. Reservation of Shares. The Company shall, at all times until the --------------------- expiration of this Warrant, reserve for issuance and delivery upon exercise of this Warrant the number of Warrant Shares which shall be required for issuance and delivery upon exercise of this Warrant. 3. Fractional Interests. The Company shall not issue any fractional -------------------- shares or script representing fractional shares upon the exercise of this Warrant. With respect to any fraction of a share resulting from the exercise hereof, the Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the current fair market value per share of Common Stock, determined as follows: (a) If the Common Stock is listed on a national securities exchange or admitted to unlisted trading privileges on such an exchange or is listed on the National Association of Securities Dealers Automated Quotation System ("NASDAQ"), the current fair market value shall be the last reported sale price of the Common Stock on such exchange or NASDAQ on the last business day prior to the date of exercise of this Warrant or if no such sale is made on such day, the mean of the closing bid and asked prices for such day on such exchange or NASDAQ; (b) If the Common Stock is not so listed or admitted to unlisted trading privileges or quoted on NASDAQ, the current fair market value shall be the mean of the last bid and asked prices reported on the last business day prior to the date of the exercise of this Warrant (i) by NASDAQ, or (ii) if reports are unavailable under clause (i) above, by the National Quotation Bureau Incorporated; or (c) If the Common Stock is not so listed or admitted to unlisted trading privileges and bid and asked prices are not so reported, the current fair market value shall be an amount, not less than book value, determined by the mutual agreement of the Company's Board of Directors and the Holder, in good faith. 4. No Rights as Shareholders. This Warrant shall not entitle the Holder ------------------------- to any rights as a shareholder of the Company, either at law or in equity. The rights of the Holder are limited to those expressed in this Warrant and are not enforceable against the Company except to the extent set forth herein. 2 5. Adjustments in Number and Exercise Prices of Warrant Shares. ----------------------------------------------------------- 5.1 If the Company is recapitalized through the subdivision or combination of its outstanding shares of Common Stock into a larger or smaller number of shares, the number of shares of Common Stock for which this Warrant may be exercised shall be increased or reduced, as of the record date for such recapitalization in the same proportion as the increase or decrease in the outstanding shares of Common Stock, and the exercise price shall be adjusted so that the aggregate amount payable for the purchase of all of the Warrant Shares issuable hereunder immediately after the record date for such recapitalization shall equal the aggregate amount so payable immediately before such record date. 5.2 In the event of any reorganization or reclassification of the outstanding shares of Common Stock (other than a change in par value or from no par value to par value, or from par value to no par value, or as a result of a subdivision or combination) or in the event of any consolidation or merger of the Company with another entity after which the Company is not the surviving entity, at any time prior to the expiration of this Warrant, upon subsequent exercise of this Warrant the Holder shall have the right to receive the same kind and number of shares of Common Stock and other securities, cash or other property as would have been distributed to the Holder upon such reorganization, reclassification, consolidation or merger had the Holder exercised this Warrant immediately prior to such reorganization, reclassification, consolidation or merger, appropriately adjusted for any subsequent event described in this Section 5. The Holder shall pay upon such exercise the Exercise Price that otherwise would have been payable pursuant to the terms of this Warrant. If any such reorganization, reclassification, consolidation or merger results in a cash distribution in excess of the then applicable Exercise Price, the holder may, at the Holder's option exercise this Warrant without making payment of the Exercise Price, and in such case the Company shall, upon distribution to the Holder, consider the Exercise Price to have been paid in full, and in making settlement to the Holder, shall deduct an amount equal to the Exercise Price from the amount payable to the Holder. In the event of any such reorganization, merger or consolidation, the corporation formed by such consolidation or merger or the corporation which shall have acquired the assets of the Company shall execute and deliver a supplement hereto to the foregoing effect, which supplement shall also provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided in this Warrant. 5.3 If the Company shall, at any time before the expiration of this Warrant, dissolve, liquidate or wind up its affairs, the Holder shall have the right to receive upon exercise of this Warrant, in lieu of the shares of Common Stock of the Company that the Holder otherwise would have been entitled to receive, the same kind and amount of assets as would have been issued, distributed or paid to the Holder upon any such dissolution, liquidation or winding up with respect to such Common Stock receivable upon exercise of this Warrant on the date for determining those entitled to receive any such distribution. If any such dissolution, liquidation or winding up results in any cash distribution in excess of the Exercise Price provided by this Warrant, the Holder may, at the Holder's option, exercise this Warrant without making payment of the Exercise Price and, in such case, the Company shall, upon distribution to the Holder, consider the Exercise Price to have been paid in full and, in making settlement to the Holder, shall deduct an amount equal to the Exercise Price from the amount payable to the Holder. 5.4 Whenever the number of Warrant Shares or Exercise Price shall be adjusted as required by the provisions of this Section 5, the Company forthwith shall file in the custody of its 3 secretary or an assistant secretary, at its principal office, an officer's certificate showing the adjusted number of Warrant Shares and Exercise Price and setting forth in reasonable detail the circumstances requiring the adjustment. Each such officer's certificate shall be made available at all reasonable times during reasonable hours for inspection by the Holder. 5.5 If any event occurs of the type contemplated by the provisions of this Section 5 but not expressly provided for by such provisions or definition (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company's board of directors in its reasonable judgment shall make an appropriate adjustment in the number of Warrant Shares obtainable upon exercise of this Warrant so as to protect the rights of the holders of the Warrant. 6. Notices to Holder. So long as this Warrant shall be outstanding (a) ----------------- if the Company shall pay any dividends or make any distribution upon the Common Stock or (b) if the Company shall offer generally to the holders of Common Stock the right to subscribe to or purchase any shares of any class of Common Stock or securities convertible into Common Stock or any similar rights or (c) if there shall be any capital reorganization of the Company in which the Company is not the surviving entity, recapitalization of the capital stock of the Company, consolidation or merger of the Company with or into another corporation, sale, lease or other transfer of all or substantially all of the property and assets of the Company, or voluntary or involuntary dissolution, liquidation or winding up of the Company, then in such event, the Company shall cause to be mailed to the Holder, at least thirty days prior to the relevant date described below (or such shorter period as is reasonably possible if thirty days is not reasonably possible), a notice containing a description of the proposed action and stating the date or expected date on which a record of the Company's shareholders is to be taken for the purpose of any such dividend, distribution of rights, or such reclassification, reorganization, consolidation, merger, conveyance, lease or transfer, dissolution, liquidation or winding up is to take place and the date or expected date, if any is to be fixed, as of which the holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such event. 7. Transfer, Exercise, Exchange, Assignment or Loss of Warrant, Warrant -------------------------------------------------------------------- Shares or Other Securities. - -------------------------- 7.1 This Warrant and the Warrant Shares or any other securities ("Other Securities") received upon exercise of this Warrant shall be subject to restrictions on transferability until registered under the Securities Act of 1933, as amended (the "Securities Act"), unless an exemption from registration is available. Until this Warrant and the Warrant Shares or Other Securities are so registered, this Warrant and any certificate for Warrant Shares or Other Securities issued or issuable upon exercise of this Warrant shall contain a legend on the face thereof, in form and substance satisfactory to counsel for the Company, stating that this Warrant, the Warrant Shares or Other Securities may not be sold, transferred or otherwise disposed of unless, in the opinion of counsel satisfactory to the Company, which may be counsel to the Company, that the Warrant, the Warrant Shares or Other Securities may be transferred without such registration. This Warrant and the Warrant Shares or Other Securities may also be subject to restrictions on transferability under applicable state securities or blue sky laws. 7.2 Until this Warrant, the Warrant Shares or Other Securities are registered under the Securities Act, the Company may require, as a condition of transfer of this Warrant, the 4 Warrant Shares, or Other Securities that the transferee (who may be the Holder in the case of an exercise or exchange) represent that the securities being transferred are being acquired for investment purposes and for the transferee's own account and not with a view to or for sale in connection with any distribution of the security. The Company may also require that transferee provide written information adequate to establish that the transferee is an "accredited investor" within the meaning of Regulation D issued under the Securities Act, a purchaser meeting the requirements of Section 25102(f) of the Securities Law, or otherwise meets all qualifications necessary to comply with exemptions to the Securities Act and Securities Laws, all as determined by counsel to the Company. 7.3 Any transfer permitted hereunder shall be made by surrender of this Warrant to the Company at its principal office or to the Transfer Agent at its offices with a duly executed request to transfer the Warrant, which shall provide adequate information to effect such transfer and shall be accompanied by funds sufficient to pay any transfer taxes applicable. Upon satisfaction of all transfer conditions, the Company or Transfer Agent shall, without charge, execute and deliver a new Warrant in the name of the transferee named in such transfer request, and this Warrant promptly shall be cancelled. 7.4 Upon receipt by the Company of evidence satisfactory to it of loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, of reasonable satisfactory indemnification, or, in the case of mutilation, upon surrender of this Warrant, the Company will execute and deliver, or instruct the Transfer Agent to execute and deliver, a new Warrant of like tenor and date, and any such lost, stolen or destroyed Warrant thereupon shall become void. 7.5 Each Holder of this Warrant, the Warrant Shares and any Other Securities shall indemnify and hold harmless the Company, its directors and officers, and each other person, if any, who controls the Company, against any losses, claims, damages or liabilities, joint or several, to which the Company or any such director, officer or any such person may become subject under the Securities Act, Securities Law or any statute or common law, to the extent that such losses, claims, damages or liabilities, or actions in respect thereof, arise out of or are based upon the disposition by such Holder of the Warrant, the Warrant Shares or Other Securities in violation of this Warrant. 7.6 The issuance of certificates for shares of Common Stock upon exercise of this Warrant shall be made without charge to the Holder for any issuance tax in respect thereof or other cost incurred by the Company in connection with such exercise and the related issuance of shares of Common Stock. Each share of Common Stock issuable upon exercise of this Warrant shall, upon payment of the Exercise Price therefor, be fully paid and nonassessable and free from all liens and charges with respect to the issuance thereof. 7.7 Notwithstanding any other provision hereof, if an exercise of any portion of this Warrant is to be made in connection with a registered public offering or the sale of the Company, the exercise of any portion of this Warrant may, at the election of the holder hereof, be conditioned upon the consummation of the public offering or sale of the Company in which case such exercise shall not be deemed to be effective until the consummation of such transaction. 8. No Impairment. The Company will not, by amendment of its Certificate ------------- of Incorporation or otherwise, avoid or seek to avoid the observance or performance of any of the terms 5 of this Warrant, but will at all times, in good faith, take all such action as may be necessary or appropriate in order to protect the rights of the Holder against impairment. 9. Notices. All notices and other communications required or permitted ------- hereunder shall be in writing and shall be deemed effectively given upon personal delivery or facsimile transmission to the party to be notified, or one (1) day after deposit with a nationally recognized overnight delivery service, all delivery charges paid, or three (3) days after deposit with the United States mail, by registered or certified mail, postage prepaid, in any such case addressed (a) if to Holder, at the address of Holder appearing on the records of the Company, or at such other address as Holder shall have furnished to the Company in writing in accordance with this Section 9, or (b) if to the Company, at its principal office set forth above, or any other address which the Company shall have furnished to Holder in writing in accordance with this Section 9. 10. Amendment. Any provision of this Warrant may be amended or the --------- observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Holder. 11. Governing Law. This Warrant shall be governed by and construed in ------------- accordance with the laws of the State of Delaware. 6 IN WITNESS WHEREOF, the Company has executed this Warrant as of April 14, 2000. Interplay Entertainment Corp. By: /s/ Brian Fargo --------------- Brian Fargo Chief Executive Officer 7 Annex A ------- [FORM OF EXERCISE] (To be executed upon exercise of Warrant) The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, to purchase ________ shares of Common Stock and herewith tenders payment for such shares of Common Stock to the order of __________________ the amount of $__________ in accordance with the terms hereof. The undersigned requests that a certificate for such shares of Common Stock be registered in the name of _______________________________ whose address is ___________________________________. If said number of shares of Common Stock is less than all of the shares of Common Stock purchasable hereunder, the undersigned requests that a new Warrant Certificate representing the remaining balance of the shares of Common Stock be registered in the name of ________________________________________ whose address is ___________________ _____________________________ and that such Warrant Certificate be delivered to ________________________, whose address is _________________________________. Dated: Signature:________________________________________ (Signature must conform in all respects to name of holders as specified on the face of the Warrant Certificate.) __________________________ (Insert Social Security or Taxpayer Identification Number of Holder.) EX-99.15 5 WARRANT TO PURCHASE COMMON STOCK 100,000 SHARES EXHIBIT 99.15 THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SHARES ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") NOR QUALIFIED UNDER THE CALIFORNIA CORPORATE SECURITIES LAW OF 1968, AS AMENDED, (THE "CALIFORNIA SECURITIES LAW"). THIS WARRANT HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR SALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES ACT AND THE SECURITIES LAW. THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE THEREOF MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND COMPLIANCE WITH THE CALIFORNIA SECURITIES LAW OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION AND COMPLIANCE ARE NOT REQUIRED. Warrant to Purchase 100,000 Shares of Common Stock As Herein Described WARRANT TO PURCHASE COMMON STOCK OF INTERPLAY ENTERTAINMENT CORP. This is to certify that, for value received, Titus Interactive SA, or a proper assignee (in each case, the "Holder"), is entitled to purchase, subject to the provisions of this Warrant, from Interplay Entertainment Corp., a Delaware corporation (the "Company"), having its principal place of business at 16815 Von Karman Avenue, Irvine, California 92606, at any time during the period beginning with the initial Borrowing (as defined below) (the "Commencement Date") to 5:00 p.m., California time, on April 14, 2010 (the "Expiration Date") at which time this Warrant shall expire and become void, up to a maximum of One Hundred Thousand (100,000) shares ("Warrant Shares") of the Company's Common Stock (the "Common Stock"). This Warrant shall be exercisable at Three and 79/100 Dollars ($3.79) per share (the "Exercise Price"). The number of shares of Common Stock to be received upon exercise of this Warrant and the Exercise price shall be adjusted from time to time as set forth below. This Warrant also is subject to the following terms and conditions: 1. Exercise and Payment. -------------------- (a) This Warrant shall only vest and be exercisable in the event, and based on the amount, that the Company borrows (a "Borrowing") under that certain Revolving Credit Facility provided for in Section 10.2 of that certain Stock Purchase Agreement, dated as of April 13, 2000, by and between Titus and Interplay (the "Credit Facility"). In the event of a Borrowing, the number of Warrant Shares for which this Warrant shall vest and be exercisable shall equal the total number of Warrant Shares multiplied by a fraction, the numerator of which shall be the maximum principal amount outstanding at any one time under the Credit Facility during the term thereof, and the denominator of which shall be $5,000,000. Warrant Shares becoming exercisable pursuant to the immediately preceding sentence shall remain exercisable regardless of whether any principal amount remains outstanding under the Revolving Credit Facility. For example, if the maximum amount outstanding at any time during the term of the Credit Facility is $3,000,000, this Warrant shall be exercisable for 60,000 Warrant Shares. Following the expiration or termination of the Credit Facility, the Company and Holder shall execute a memorandum setting forth the maximum amount outstanding at any time during the term of the Credit Facility, and shall append such memorandum to this Warrant. (b) This Warrant (to the extent exercisable under Section 1(a) above) may be exercised in whole or in part (but only with respect to the number of Warrant Shares vesting pursuant to Section 1(a) hereof) at any time from and after the initial Borrowing and before the Expiration Date, but if such date is a day on which federal or state chartered banking institutions located in the State of California are authorized to close, then on the next succeeding day on which such institutions are open. Exercise shall be by presentation and surrender to the Company at its principal office, or at the office of any transfer agent designated by the Company, of (i) this Warrant, (ii) the attached exercise form properly executed, and (iii) either (A) a certified or official bank check or wire payment for the Exercise Price for the number of Warrant Shares specified in the exercise form; or (B) other securities of the Company owned by the Holder and having a fair market value determined as set forth in Section 3 hereof equal to the Exercise Price for the number of Warrant Shares specified in the exercise form; (C) a written notice to the Company that the Holder is exercising the Warrant (or a portion thereof) and authorizing the Company to withhold from issuance a number of shares of Common Stock issuable upon such exercise of the Warrant having a fair market value determined as set forth in Section 3 hereof equal to the Exercise Price for the number of Warrant Shares specified in the exercise form; or (D) any combination of the consideration specified in the foregoing clauses (A), (B) and (C). If this Warrant is exercised in part only, the Company or its transfer agent shall, upon surrender of the Warrant, execute and deliver a new Warrant evidencing the rights of the Holder to purchase the remaining number of Warrant Shares purchasable hereunder. Upon receipt by the Company of this Warrant in proper form for exercise, accompanied by payment as aforesaid, the Holder shall be deemed to be the holder of record of the Common Stock issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such Warrant Shares shall not then be actually delivered to the Holder. (b) Conditions to Exercise. The restrictions in Section 7 shall ---------------------- apply, to the extent applicable by their terms, to any exercise of this Warrant permitted by this Section 1. 2. Reservation of Shares. The Company shall, at all times until the --------------------- expiration of this Warrant, reserve for issuance and delivery upon exercise of this Warrant the number of Warrant Shares which shall be required for issuance and delivery upon exercise of this Warrant. 3. Fractional Interests. The Company shall not issue any fractional -------------------- shares or script representing fractional shares upon the exercise of this Warrant. With respect to any fraction of a share resulting from the exercise hereof, the Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the current fair market value per share of Common Stock, determined as follows: (a) If the Common Stock is listed on a national securities exchange or admitted to unlisted trading privileges on such an exchange or is listed on the National Association of Securities Dealers Automated Quotation System ("NASDAQ"), the current fair market value shall be the last reported sale price of the Common Stock on such exchange or NASDAQ on the last business day prior to the date of exercise of this Warrant or if no such sale is made on such day, the mean of the closing bid and asked prices for such day on such exchange or NASDAQ; (b) If the Common Stock is not so listed or admitted to unlisted trading privileges or quoted on NASDAQ, the current fair market value shall be the mean of the last bid and asked prices reported on the last business day prior to the date of the exercise of this Warrant (i) by NASDAQ, or (ii) if reports are unavailable under clause (i) above, by the National Quotation Bureau Incorporated; or 2 (c) If the Common Stock is not so listed or admitted to unlisted trading privileges and bid and asked prices are not so reported, the current fair market value shall be an amount, not less than book value, determined by the mutual agreement of the Company's Board of Directors and the Holder in good faith. 4. No Rights as Shareholders. This Warrant shall not entitle the Holder ------------------------- to any rights as a shareholder of the Company, either at law or in equity. The rights of the Holder are limited to those expressed in this Warrant and are not enforceable against the Company except to the extent set forth herein. 5. Adjustments in Number and Exercise Prices of Warrant Shares. ----------------------------------------------------------- 5.1 If the Company is recapitalized through the subdivision or combination of its outstanding shares of Common Stock into a larger or smaller number of shares, the number of shares of Common Stock for which this Warrant may be exercised shall be increased or reduced, as of the record date for such recapitalization in the same proportion as the increase or decrease in the outstanding shares of Common Stock, and the exercise price shall be adjusted so that the aggregate amount payable for the purchase of all of the Warrant Shares issuable hereunder immediately after the record date for such recapitalization shall equal the aggregate amount so payable immediately before such record date. 5.2 In the event of any reorganization or reclassification of the outstanding shares of Common Stock (other than a change in par value or from no par value to par value, or from par value to no par value, or as a result of a subdivision or combination) or in the event of any consolidation or merger of the Company with another entity after which the Company is not the surviving entity, at any time prior to the expiration of this Warrant, upon subsequent exercise of this Warrant the Holder shall have the right to receive the same kind and number of shares of Common Stock and other securities, cash or other property as would have been distributed to the Holder upon such reorganization, reclassification, consolidation or merger had the Holder exercised this Warrant immediately prior to such reorganization, reclassification, consolidation or merger, appropriately adjusted for any subsequent event described in this Section 5. The Holder shall pay upon such exercise the Exercise Price that otherwise would have been payable pursuant to the terms of this Warrant. If any such reorganization, reclassification, consolidation or merger results in a cash distribution in excess of the then applicable Exercise Price, the holder may, at the Holder's option exercise this Warrant without making payment of the Exercise Price, and in such case the Company shall, upon distribution to the Holder, consider the Exercise Price to have been paid in full, and in making settlement to the Holder, shall deduct an amount equal to the Exercise Price from the amount payable to the Holder. In the event of any such reorganization, merger or consolidation, the corporation formed by such consolidation or merger or the corporation which shall have acquired the assets of the Company shall execute and deliver a supplement hereto to the foregoing effect, which supplement shall also provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided in this Warrant. 5.3 If the Company shall, at any time before the expiration of this Warrant, dissolve, liquidate or wind up its affairs, the Holder shall have the right to receive upon exercise of this Warrant, in lieu of the shares of Common Stock of the Company that the Holder otherwise would have been entitled to receive, the same kind and amount of assets as would have been issued, distributed or paid to the Holder upon any such dissolution, liquidation or winding up with respect to such Common Stock receivable upon exercise of this Warrant on the date for determining those 3 entitled to receive any such distribution. If any such dissolution, liquidation or winding up results in any cash distribution in excess of the Exercise Price provided by this Warrant, the Holder may, at the Holder's option, exercise this Warrant without making payment of the Exercise Price and, in such case, the Company shall, upon distribution to the Holder, consider the Exercise Price to have been paid in full and, in making settlement to the Holder, shall deduct an amount equal to the Exercise Price from the amount payable to the Holder. 5.4 Whenever the number of Warrant Shares or Exercise Price shall be adjusted as required by the provisions of this Section 5, the Company forthwith shall file in the custody of its secretary or an assistant secretary, at its principal office, an officer's certificate showing the adjusted number of Warrant Shares and Exercise Price and setting forth in reasonable detail the circumstances requiring the adjustment. Each such officer's certificate shall be made available at all reasonable times during reasonable hours for inspection by the Holder. 5.5 If any event occurs of the type contemplated by the provisions of this Section 5 but not expressly provided for by such provisions or definition (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company's board of directors in its reasonable judgment shall make an appropriate adjustment in the number of Warrant Shares obtainable upon exercise of this Warrant so as to protect the rights of the holders of the Warrant. 6. Notices to Holder. So long as this Warrant shall be outstanding ----------------- (a) if the Company shall pay any dividends or make any distribution upon the Common Stock or (b) if the Company shall offer generally to the holders of Common Stock the right to subscribe to or purchase any shares of any class of Common Stock or securities convertible into Common Stock or any similar rights or (c) if there shall be any capital reorganization of the Company in which the Company is not the surviving entity, recapitalization of the capital stock of the Company, consolidation or merger of the Company with or into another corporation, sale, lease or other transfer of all or substantially all of the property and assets of the Company, or voluntary or involuntary dissolution, liquidation or winding up of the Company, then in such event, the Company shall cause to be mailed to the Holder, at least thirty days prior to the relevant date described below (or such shorter period as is reasonably possible if thirty days is not reasonably possible), a notice containing a description of the proposed action and stating the date or expected date on which a record of the Company's shareholders is to be taken for the purpose of any such dividend, distribution of rights, or such reclassification, reorganization, consolidation, merger, conveyance, lease or transfer, dissolution, liquidation or winding up is to take place and the date or expected date, if any is to be fixed, as of which the holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such event. 7. Transfer, Exercise, Exchange, Assignment or Loss of Warrant, Warrant -------------------------------------------------------------------- Shares or Other Securities. - -------------------------- 7.1 This Warrant and the Warrant Shares or any other securities ("Other Securities") received upon exercise of this Warrant shall be subject to restrictions on transferability until registered under the Securities Act of 1933, as amended (the "Securities Act"), unless an exemption from registration is available. Until this Warrant and the Warrant Shares or Other Securities are so registered, this Warrant and any certificate for Warrant Shares or Other Securities issued or issuable upon exercise of this Warrant shall contain a legend on the face thereof, in form and substance satisfactory to counsel for the Company, stating that this Warrant, the Warrant Shares 4 or Other Securities may not be sold, transferred or otherwise disposed of unless, in the opinion of counsel satisfactory to the Company, which may be counsel to the Company, that the Warrant, the Warrant Shares or Other Securities may be transferred without such registration. This Warrant and the Warrant Shares or Other Securities may also be subject to restrictions on transferability under applicable state securities or blue sky laws. 7.2 Until this Warrant, the Warrant Shares or Other Securities are registered under the Securities Act, the Company may require, as a condition of transfer of this Warrant, the Warrant Shares, or Other Securities that the transferee (who may be the Holder in the case of an exercise or exchange) represent that the securities being transferred are being acquired for investment purposes and for the transferee's own account and not with a view to or for sale in connection with any distribution of the security. The Company may also require that transferee provide written information adequate to establish that the transferee is an "accredited investor" within the meaning of Regulation D issued under the Securities Act, a purchaser meeting the requirements of Section 25102(f) of the Securities Law, or otherwise meets all qualifications necessary to comply with exemptions to the Securities Act and Securities Laws, all as determined by counsel to the Company. 7.3 Any transfer permitted hereunder shall be made by surrender of this Warrant to the Company at its principal office or to the Transfer Agent at its offices with a duly executed request to transfer the Warrant, which shall provide adequate information to effect such transfer and shall be accompanied by funds sufficient to pay any transfer taxes applicable. Upon satisfaction of all transfer conditions, the Company or Transfer Agent shall, without charge, execute and deliver a new Warrant in the name of the transferee named in such transfer request, and this Warrant promptly shall be cancelled. 7.4 Upon receipt by the Company of evidence satisfactory to it of loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, of reasonable satisfactory indemnification, or, in the case of mutilation, upon surrender of this Warrant, the Company will execute and deliver, or instruct the Transfer Agent to execute and deliver, a new Warrant of like tenor and date, and any such lost, stolen or destroyed Warrant thereupon shall become void. 7.5 Each Holder of this Warrant, the Warrant Shares and any Other Securities shall indemnify and hold harmless the Company, its directors and officers, and each other person, if any, who controls the Company, against any losses, claims, damages or liabilities, joint or several, to which the Company or any such director, officer or any such person may become subject under the Securities Act, Securities Law or any statute or common law, to the extent that such losses, claims, damages or liabilities, or actions in respect thereof, arise out of or are based upon the disposition by such Holder of the Warrant, the Warrant Shares or Other Securities in violation of this Warrant. 7.6 The issuance of certificates for shares of Common Stock upon exercise of this Warrant shall be made without charge to the Holder for any issuance tax in respect thereof or other cost incurred by the Company in connection with such exercise and the related issuance of shares of Common Stock. Each share of Common Stock issuable upon exercise of this Warrant shall, upon payment of the Exercise Price therefor, be fully paid and nonassessable and free from all liens and charges with respect to the issuance thereof. 5 7.7 Notwithstanding any other provision hereof, if an exercise of any portion of this Warrant is to be made in connection with a registered public offering or the sale of the Company, the exercise of any portion of this Warrant may, at the election of the holder hereof, be conditioned upon the consummation of the public offering or sale of the Company in which case such exercise shall not be deemed to be effective until the consummation of such transaction. 8. No Impairment. The Company will not, by amendment of its Certificate ------------- of Incorporation or otherwise, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times, in good faith, take all such action as may be necessary or appropriate in order to protect the rights of the Holder against impairment. 9. Notices. All notices and other communications required or permitted ------- hereunder shall be in writing and shall be deemed effectively given upon personal delivery or facsimile transmission to the party to be notified, or one (1) day after deposit with a nationally recognized overnight delivery service, all delivery charges paid, or three (3) days after deposit with the United States mail, by registered or certified mail, postage prepaid, in any such case addressed (a) if to Holder, at the address of Holder appearing on the records of the Company, or at such other address as Holder shall have furnished to the Company in writing in accordance with this Section 9, or (b) if to the Company, at its principal office set forth above, or any other address which the Company shall have furnished to Holder in writing in accordance with this Section 9. 10. Amendment. Any provision of this Warrant may be amended or the --------- observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Holder. 11. Governing Law. This Warrant shall be governed by and construed in ------------- accordance with the laws of the State of Delaware. 6 IN WITNESS WHEREOF, the Company has executed this Warrant as of April 14, 2000. Interplay Entertainment Corp. By: /s/ Brian Fargo ---------------------------- Brian Fargo Chief Executive Officer 7 Annex A ------- [FORM OF EXERCISE] (To be executed upon exercise of Warrant) The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, to purchase ________ shares of Common Stock and herewith tenders payment for such shares of Common Stock to the order of __________________ the amount of $__________ in accordance with the terms hereof. The undersigned requests that a certificate for such shares of Common Stock be registered in the name of _______________________________ whose address is ___________________________________. If said number of shares of Common Stock is less than all of the shares of Common Stock purchasable hereunder, the undersigned requests that a new Warrant Certificate representing the remaining balance of the shares of Common Stock be registered in the name of ________________________________________ whose address is _____________________________ and that such Warrant Certificate be delivered to ________________________, whose address is _________________________________. Dated: Signature:________________________________________ (Signature must conform in all respects to name of holders as specified on the face of the Warrant Certificate.) __________________________ (Insert Social Security or Taxpayer Identification Number of Holder.) EX-99.16 6 AMENDMENT NO. 1 OF WARRANT TO PURCHASE COMMON STOCK EXHIBIT 99.16 AMENDMENT NUMBER 1 OF WARRANT TO PURCHASE COMMON STOCK OF INTERPLAY ENTERTAINMENT CORP. THIS AMENDMENT NUMBER 1 OF WARRANT TO PURCHASE COMMON STOCK OF INTERPLAY ENTERTAINMENT CORP. (this "Amendment") is entered into as of April 17, 2000 by --------- and between INTERPLAY ENTERTAINMENT CORP., a Delaware corporation (the "Company"), and TITUS INTERACTIVE SA, a French corporation ("Titus"), with ------- ----- reference to the following facts: A. On April 14, 2000, the Company issued to Titus that certain Warrant to Purchase Common Stock of Interplay Entertainment Corp. (the "Warrant") granting Titus the right to purchase up to 100,000 shares of the Company's common stock under the terms and conditions set forth therein. B. The Company and Titus desire to amend the Warrant. NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS: I. The paragraph immediately following the title of the Warrant is deleted in its entirety and replaced with the following: "This is to certify that, for value received, Titus Interactive SA, or a proper assignee (in each case, the `Holder'), is entitled to purchase, subject to the provisions of this Warrant, from Interplay Entertainment Corp., a Delaware corporation (the `Company'), having its principal place of business at 16815 Von Karman Avenue, Irvine, California 92606, at any time during the period beginning with the initial Borrowing (as defined below) (the `Commencement Date') to 5:00 p.m., California time, on April 14, 2010 (the `Expiration Date') at which time this Warrant shall expire and become void, up to a maximum of One Hundred Thousand (100,000) shares (`Warrant Shares') of the Company's Common Stock (the `Common Stock'). This Warrant shall be exercisable at Three and 79/100 Dollars ($3.79) per share (the `Exercise Price'). The number of shares of Common Stock to be received upon exercise of this Warrant and the Exercise price shall be adjusted from time to time as set forth below. This Warrant also is subject to the following terms and conditions:" II. Section 1(a) of the Warrant is deleted in its entirety and replaced with the following: "(a) This Warrant shall only vest and be exercisable in the event, and based on the amount, that the Company borrows (a 'Borrowing') under that certain Revolving Credit Facility provided for in Section 10.2 of that certain Stock Purchase Agreement, dated as of April 14, 2000, by and between Titus and Interplay (the 'Credit Facility'). In the event of a Borrowing, the number of Warrant Shares for which this Warrant shall vest and be exercisable shall equal the total number of Warrant Shares multiplied by a fraction, the numerator of which shall be the maximum principal amount outstanding at any one time under the Credit Facility during the term thereof, and the denominator of which shall be $5,000,000. Warrant Shares becoming exercisable pursuant to the immediately preceding sentence shall remain exercisable regardless of whether any principal amount remains outstanding under the Revolving Credit Facility. For example, if the maximum amount outstanding at any time during the term of the Credit Facility is $3,000,000, this Warrant shall be exercisable for 60,000 Warrant Shares. Following the expiration or termination of the Credit Facility, the Company and Holder shall execute a memorandum setting forth the maximum amount outstanding at any time during the term of the Credit Facility, and shall append such memorandum to this Warrant." III. The first sentence of Section 1(b) is deleted in its entirety and replaced with the following: "This Warrant (to the extent exercisable under Section 1(a) above) may be exercised in whole or in part (but only with respect to the number of Warrant Shares vesting pursuant to Section 1(a) hereof) at any time from and after the initial Borrowing and before the Expiration Date, but if such date is a day on which federal or state chartered banking institutions located in the State of California are authorized to close, then on the next succeeding day on which such institutions are open." IV. The Warrant and this Amendment constitute the entire agreement between the parties on the subject matter hereof, and no amendment of the terms herein or therein shall be valid unless made in a writing signed by the parties. Delaware law shall govern the interpretation and enforcement of this Amendment without regard to conflicts of laws principles. Unless otherwise defined herein, terms used herein shall bear the same respective meanings ascribed to such terms in the Warrant. Except as amended hereby, the Warrant remains in full force and effect. This Amendment may be executed in counterparts. IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed by their respective duly authorized officers as of the day and year first above written. INTERPLAY ENTERTAINMENT CORP., a Delaware corporation By: /s/ Brian Fargo ----------------- An Authorized Officer TITUS INTERACTIVE SA, a French corporation By: /s/ Herve Caen ---------------- An Authorized Officer -2- EX-99.17 7 WARRANT TO PURCHASE COMMON STOCK 50,000 EXHIBIT 99.17 THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SHARES ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") NOR QUALIFIED UNDER THE CALIFORNIA CORPORATE SECURITIES LAW OF 1968, AS AMENDED, (THE "CALIFORNIA SECURITIES LAW"). THIS WARRANT HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR SALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES ACT AND THE SECURITIES LAW. THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE THEREOF MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND COMPLIANCE WITH THE CALIFORNIA SECURITIES LAW OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION AND COMPLIANCE ARE NOT REQUIRED. Warrant to Purchase 50,000 Shares of Common Stock As Herein Described WARRANT TO PURCHASE COMMON STOCK OF INTERPLAY ENTERTAINMENT CORP. This is to certify that, for value received, Titus Interactive SA, or a proper assignee (in each case, the "Holder"), is entitled to purchase, subject to the provisions of this Warrant, from Interplay Entertainment Corp., a Delaware corporation (the "Company"), having its principal place of business at 16815 Von Karman Avenue, Irvine, California 92606, at any time during the period from March 31, 2001 (the "Commencement Date") to 5:00 p.m., California time, on April 14, 2010 (the "Expiration Date") at which time this Warrant shall expire and become void, Fifty Thousand (50,000) shares ("Warrant Shares") of the Company's Common Stock (the "Common Stock"). This Warrant shall be exercisable at Three and 79/100 Dollars ($3.79) per share (the "Exercise Price"). The number of shares of Common Stock to be received upon exercise of this Warrant and the Exercise price shall be adjusted from time to time as set forth below. This Warrant also is subject to the following terms and conditions: 1. Exercise and Payment. -------------------- (a) This Warrant shall only be exercisable if the Company's audited pre-tax income for the fiscal year ended December 31, 2000 is less than Two Million One Hundred Fifteen Thousand Dollars ($2,115,000). (b) This Warrant may be exercised in whole or in part at any time from and after March 31, 2001 (or such later date on which the Company's audit of its financial statements for the fiscal year ended December 31, 2000 is finalized) and before the Expiration Date, but if such date is a day on which federal or state chartered banking institutions located in the State of California are authorized to close, then on the next succeeding day on which such institutions are open. Exercise shall be by presentation and surrender to the Company at its principal office, or at the office of any transfer agent designated by the Company, of (i) this Warrant, (ii) the attached exercise form properly executed, and (iii) either (A) a certified or official bank check or wire payment for the Exercise Price for the number of Warrant Shares specified in the exercise form; or (B) other securities of the Company owned by the Holder and having a fair market value determined as set forth in Section 3 hereof equal to the Exercise Price for the number of Warrant Shares specified in the exercise form; (C) a written notice to the Company that the Holder is exercising the Warrant (or a portion thereof) and authorizing the Company to withhold from issuance a number of shares of Common Stock issuable upon such exercise of the Warrant having a fair market value determined as set forth in Section 3 hereof equal to the Exercise Price for the number of Warrant Shares specified in the exercise form; or (D) any combination of the consideration specified in the foregoing clauses (A), (B) and (C). If this Warrant is exercised in part only, the Company or its transfer agent shall, upon surrender of the Warrant, execute and deliver a new Warrant evidencing the rights of the Holder to purchase the remaining number of Warrant Shares purchasable hereunder. Upon receipt by the Company of this Warrant in proper form for exercise, accompanied by payment as aforesaid, the Holder shall be deemed to be the holder of record of the Common Stock issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such Warrant Shares shall not then be actually delivered to the Holder. (b) Conditions to Exercise. The restrictions in Section 7 shall ---------------------- apply, to the extent applicable by their terms, to any exercise of this Warrant permitted by this Section 1. 2. Reservation of Shares. The Company shall, at all times until the --------------------- expiration of this Warrant, reserve for issuance and delivery upon exercise of this Warrant the number of Warrant Shares which shall be required for issuance and delivery upon exercise of this Warrant. 3. Fractional Interests. The Company shall not issue any fractional -------------------- shares or script representing fractional shares upon the exercise of this Warrant. With respect to any fraction of a share resulting from the exercise hereof, the Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the current fair market value per share of Common Stock, determined as follows: (a) If the Common Stock is listed on a national securities exchange or admitted to unlisted trading privileges on such an exchange or is listed on the National Association of Securities Dealers Automated Quotation System ("NASDAQ"), the current fair market value shall be the last reported sale price of the Common Stock on such exchange or NASDAQ on the last business day prior to the date of exercise of this Warrant or if no such sale is made on such day, the mean of the closing bid and asked prices for such day on such exchange or NASDAQ; (b) If the Common Stock is not so listed or admitted to unlisted trading privileges or quoted on NASDAQ, the current fair market value shall be the mean of the last bid and asked prices reported on the last business day prior to the date of the exercise of this Warrant (i) by NASDAQ, or (ii) if reports are unavailable under clause (i) above, by the National Quotation Bureau Incorporated; or (c) If the Common Stock is not so listed or admitted to unlisted trading privileges and bid and asked prices are not so reported, the current fair market value shall be an amount, not less than book value, determined by the mutual agreement of the Company's Board of Directors and the Holder in good faith. 2 4. No Rights as Shareholders. This Warrant shall not entitle the Holder ------------------------- to any rights as a shareholder of the Company, either at law or in equity. The rights of the Holder are limited to those expressed in this Warrant and are not enforceable against the Company except to the extent set forth herein. 5. Adjustments in Number and Exercise Prices of Warrant Shares. ----------------------------------------------------------- 5.1 If the Company is recapitalized through the subdivision or combination of its outstanding shares of Common Stock into a larger or smaller number of shares, the number of shares of Common Stock for which this Warrant may be exercised shall be increased or reduced, as of the record date for such recapitalization in the same proportion as the increase or decrease in the outstanding shares of Common Stock, and the exercise price shall be adjusted so that the aggregate amount payable for the purchase of all of the Warrant Shares issuable hereunder immediately after the record date for such recapitalization shall equal the aggregate amount so payable immediately before such record date. 5.2 In the event of any reorganization or reclassification of the outstanding shares of Common Stock (other than a change in par value or from no par value to par value, or from par value to no par value, or as a result of a subdivision or combination) or in the event of any consolidation or merger of the Company with another entity after which the Company is not the surviving entity, at any time prior to the expiration of this Warrant, upon subsequent exercise of this Warrant the Holder shall have the right to receive the same kind and number of shares of Common Stock and other securities, cash or other property as would have been distributed to the Holder upon such reorganization, reclassification, consolidation or merger had the Holder exercised this Warrant immediately prior to such reorganization, reclassification, consolidation or merger, appropriately adjusted for any subsequent event described in this Section 5. The Holder shall pay upon such exercise the Exercise Price that otherwise would have been payable pursuant to the terms of this Warrant. If any such reorganization, reclassification, consolidation or merger results in a cash distribution in excess of the then applicable Exercise Price, the holder may, at the Holder's option exercise this Warrant without making payment of the Exercise Price, and in such case the Company shall, upon distribution to the Holder, consider the Exercise Price to have been paid in full, and in making settlement to the Holder, shall deduct an amount equal to the Exercise Price from the amount payable to the Holder. In the event of any such reorganization, merger or consolidation, the corporation formed by such consolidation or merger or the corporation which shall have acquired the assets of the Company shall execute and deliver a supplement hereto to the foregoing effect, which supplement shall also provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided in this Warrant. 5.3 If the Company shall, at any time before the expiration of this Warrant, dissolve, liquidate or wind up its affairs, the Holder shall have the right to receive upon exercise of this Warrant, in lieu of the shares of Common Stock of the Company that the Holder otherwise would have been entitled to receive, the same kind and amount of assets as would have been issued, distributed or paid to the Holder upon any such dissolution, liquidation or winding up with respect to such Common Stock receivable upon exercise of this Warrant on the date for determining those entitled to receive any such distribution. If any such dissolution, liquidation or winding up results in any cash distribution in excess of the Exercise Price provided by this Warrant, the Holder may, at the Holder's option, exercise this Warrant without making payment of the Exercise Price and, in such case, the Company shall, upon distribution to the Holder, consider the Exercise Price to have been 3 paid in full and, in making settlement to the Holder, shall deduct an amount equal to the Exercise Price from the amount payable to the Holder. 5.4 Whenever the number of Warrant Shares or Exercise Price shall be adjusted as required by the provisions of this Section 5, the Company forthwith shall file in the custody of its secretary or an assistant secretary, at its principal office, an officer's certificate showing the adjusted number of Warrant Shares and Exercise Price and setting forth in reasonable detail the circumstances requiring the adjustment. Each such officer's certificate shall be made available at all reasonable times during reasonable hours for inspection by the Holder. 5.5 If any event occurs of the type contemplated by the provisions of this Section 5 but not expressly provided for by such provisions or definition (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company's board of directors in its reasonable judgment shall make an appropriate adjustment in the number of Warrant Shares obtainable upon exercise of this Warrant so as to protect the rights of the holders of the Warrant. 6. Notices to Holder. So long as this Warrant shall be outstanding (a) ----------------- if the Company shall pay any dividends or make any distribution upon the Common Stock or (b) if the Company shall offer generally to the holders of Common Stock the right to subscribe to or purchase any shares of any class of Common Stock or securities convertible into Common Stock or any similar rights or (c) if there shall be any capital reorganization of the Company in which the Company is not the surviving entity, recapitalization of the capital stock of the Company, consolidation or merger of the Company with or into another corporation, sale, lease or other transfer of all or substantially all of the property and assets of the Company, or voluntary or involuntary dissolution, liquidation or winding up of the Company, then in such event, the Company shall cause to be mailed to the Holder, at least thirty days prior to the relevant date described below (or such shorter period as is reasonably possible if thirty days is not reasonably possible), a notice containing a description of the proposed action and stating the date or expected date on which a record of the Company's shareholders is to be taken for the purpose of any such dividend, distribution of rights, or such reclassification, reorganization, consolidation, merger, conveyance, lease or transfer, dissolution, liquidation or winding up is to take place and the date or expected date, if any is to be fixed, as of which the holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such event. 7. Transfer, Exercise, Exchange, Assignment or Loss of Warrant, Warrant -------------------------------------------------------------------- Shares or Other Securities. - -------------------------- 7.1 This Warrant and the Warrant Shares or any other securities ("Other Securities") received upon exercise of this Warrant shall be subject to restrictions on transferability until registered under the Securities Act of 1933, as amended (the "Securities Act"), unless an exemption from registration is available. Until this Warrant and the Warrant Shares or Other Securities are so registered, this Warrant and any certificate for Warrant Shares or Other Securities issued or issuable upon exercise of this Warrant shall contain a legend on the face thereof, in form and substance satisfactory to counsel for the Company, stating that this Warrant, the Warrant Shares or Other Securities may not be sold, transferred or otherwise disposed of unless, in the opinion of counsel satisfactory to the Company, which may be counsel to the Company, that the Warrant, the Warrant Shares or Other Securities may be transferred without such registration. This Warrant and 4 the Warrant Shares or Other Securities may also be subject to restrictions on transferability under applicable state securities or blue sky laws. 7.2 Until this Warrant, the Warrant Shares or Other Securities are registered under the Securities Act, the Company may require, as a condition of transfer of this Warrant, the Warrant Shares, or Other Securities that the transferee (who may be the Holder in the case of an exercise or exchange) represent that the securities being transferred are being acquired for investment purposes and for the transferee's own account and not with a view to or for sale in connection with any distribution of the security. The Company may also require that transferee provide written information adequate to establish that the transferee is an "accredited investor" within the meaning of Regulation D issued under the Securities Act, a purchaser meeting the requirements of Section 25102(f) of the Securities Law, or otherwise meets all qualifications necessary to comply with exemptions to the Securities Act and Securities Laws, all as determined by counsel to the Company. 7.3 Any transfer permitted hereunder shall be made by surrender of this Warrant to the Company at its principal office or to the Transfer Agent at its offices with a duly executed request to transfer the Warrant, which shall provide adequate information to effect such transfer and shall be accompanied by funds sufficient to pay any transfer taxes applicable. Upon satisfaction of all transfer conditions, the Company or Transfer Agent shall, without charge, execute and deliver a new Warrant in the name of the transferee named in such transfer request, and this Warrant promptly shall be cancelled. 7.4 Upon receipt by the Company of evidence satisfactory to it of loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, of reasonable satisfactory indemnification, or, in the case of mutilation, upon surrender of this Warrant, the Company will execute and deliver, or instruct the Transfer Agent to execute and deliver, a new Warrant of like tenor and date, and any such lost, stolen or destroyed Warrant thereupon shall become void. 7.5 Each Holder of this Warrant, the Warrant Shares and any Other Securities shall indemnify and hold harmless the Company, its directors and officers, and each other person, if any, who controls the Company, against any losses, claims, damages or liabilities, joint or several, to which the Company or any such director, officer or any such person may become subject under the Securities Act, Securities Law or any statute or common law, to the extent that such losses, claims, damages or liabilities, or actions in respect thereof, arise out of or are based upon the disposition by such Holder of the Warrant, the Warrant Shares or Other Securities in violation of this Warrant. 7.6 The issuance of certificates for shares of Common Stock upon exercise of this Warrant shall be made without charge to the Holder for any issuance tax in respect thereof or other cost incurred by the Company in connection with such exercise and the related issuance of shares of Common Stock. Each share of Common Stock issuable upon exercise of this Warrant shall, upon payment of the Exercise Price therefor, be fully paid and nonassessable and free from all liens and charges with respect to the issuance thereof. 7.7 Notwithstanding any other provision hereof, if an exercise of any portion of this Warrant is to be made in connection with a registered public offering or the sale of the Company, the exercise of any portion of this Warrant may, at the election of the holder hereof, be conditioned 5 upon the consummation of the public offering or sale of the Company in which case such exercise shall not be deemed to be effective until the consummation of such transaction. 8. No Impairment. The Company will not, by amendment of its Certificate ------------- of Incorporation or otherwise, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times, in good faith, take all such action as may be necessary or appropriate in order to protect the rights of the Holder against impairment. 9. Notices. All notices and other communications required or permitted ------- hereunder shall be in writing and shall be deemed effectively given upon personal delivery or facsimile transmission to the party to be notified, or one (1) day after deposit with a nationally recognized overnight delivery service, all delivery charges paid, or three (3) days after deposit with the United States mail, by registered or certified mail, postage prepaid, in any such case addressed (a) if to Holder, at the address of Holder appearing on the records of the Company, or at such other address as Holder shall have furnished to the Company in writing in accordance with this Section 9, or (b) if to the Company, at its principal office set forth above, or any other address which the Company shall have furnished to Holder in writing in accordance with this Section 9. 10. Amendment. Any provision of this Warrant may be amended or the --------- observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Holder. 11. Governing Law. This Warrant shall be governed by and construed in ------------- accordance with the laws of the State of Delaware. 6 IN WITNESS WHEREOF, the Company has executed this Warrant as of April 14, 2000. Interplay Entertainment Corp. By: /s/ Brian Fargo --------------- Brian Fargo Chief Executive Officer 7 Annex A ------- [FORM OF EXERCISE] (To be executed upon exercise of Warrant) The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, to purchase ________ shares of Common Stock and herewith tenders payment for such shares of Common Stock to the order of __________________ the amount of $__________ in accordance with the terms hereof. The undersigned requests that a certificate for such shares of Common Stock be registered in the name of _______________________________ whose address is ___________________________________. If said number of shares of Common Stock is less than all of the shares of Common Stock purchasable hereunder, the undersigned requests that a new Warrant Certificate representing the remaining balance of the shares of Common Stock be registered in the name of __________ ____________________ whose address is _____________________________ and that such Warrant Certificate be delivered to ________________________, whose address is _________________________________. Dated: Signature:________________________________________ (Signature must conform in all respects to name of holders as specified on the face of the Warrant Certificate.) __________________________ (Insert Social Security or Taxpayer Identification Number of Holder.) EX-99.18 8 IRREVOCABLE PROXY EXHIBIT 99.18 IRREVOCABLE PROXY The undersigned, Brian Fargo, as record owner of 3,571,378 shares (the "Shares") of the Common Stock of INTERPLAY ENTERTAINMENT CORP., a Delaware corporation (the "Company"), hereby revokes all previous proxies and irrevocably designates TITUS INTERACTIVE SA ("Titus") as proxy of the undersigned (the "Proxy"), to (a) attend and vote at any and all meetings of the stockholders of the Company, (b) execute any and all written consents of stockholders of the Company and (c) otherwise act for the undersigned with respect to the Shares in the same manner and with the same effect as if the undersigned were personally present at any such meeting and voting the Shares, or personally acting on any such matters submitted to stockholders for approval or consent, in favor of the transactions contemplated by that certain Stock Purchase Agreement dated as of April 14, 2000 (the "Purchase Agreement") between the Company and Brian Fargo, including the issuance of 719,424 shares of Series A Preferred Stock and warrants to purchase an aggregate of 500,000 shares of the Company's Common Stock (collectively, the "Transaction"). The undersigned authorizes the Proxy to substitute any other person to act hereunder (provided that such substitution is in connection with the merger of the Proxy with another entity or the sale of all or substantially all of the Proxy's assets to another entity), and to file this irrevocable proxy and any such substitute with the Secretary of the Company. This proxy is irrevocable until December 31, 2001 and is coupled with an interest, and is given in consideration of the making of an equity investment in the Company by Titus pursuant to the terms and conditions of the Purchase Agreement. Dated: April 14, 2000 /s/ Brian Fargo ------------------------ Brian Fargo -----END PRIVACY-ENHANCED MESSAGE-----