EXHIBIT 99.2
CONVERTIBLE PROMISSORY NOTE
$5,000,000.00 May 12, 1999
Irvine, California
The undersigned, Interplay Entertainment Corp. (the "Company"), hereby
promises to pay to the order of Titus Interactive SA or its assignee (the
"Holder") the principal amount of FIVE MILLION DOLLARS ($5,000,000.00) with
interest on the unpaid principal balance at the rate of six percent (6.0%) per
annum until principal and interest have been paid in full. Such interest shall
accrue on the basis of actual days based on a 365-day year. Unless earlier
accelerated or converted in accordance with the terms hereof, the entire amount
of principal and interest shall be due and payable in full on the earlier of (a)
August 31, 1999 or (b) the date upon which the Company and Holder mutually agree
not to consummate the transactions contemplated by the Letter Agreement (as
defined below) (in any case, the "Maturity Date"). Principal and interest shall
be paid in lawful money of the United States. This Note may not be prepaid
without the prior written consent of the Holder which may be granted or withheld
in Holder's discretion.
Each payment made pursuant to this Note shall be credited first on
interest then due and the remainder on principal; and interest shall thereupon
cease to accrue upon the principal so credited.
This Note is issued to the Holder pursuant to that certain Letter of
Intent of even date herewith among the Company, the Holder and Brian Fargo (the
"Letter Agreement") and is entitled to the benefits thereof.
"Event of Default" shall mean the occurrence or existence of any one or
more of the following: (i) failure of the Company to make any payment when due
of principal or interest on this Note; (ii) if the Company shall become
insolvent or file a petition under any chapter of the United Sates Bankruptcy
Code or a petition to take advantage of any other bankruptcy or insolvency law;
(iii) if a custodian, receiver or trustee of all or any part of the Company's
property shall be appointed and not be dismissed within 60 days; (iv) if any
assignment for the benefit of the Company's creditors shall be made; (v) if the
Company admits in writing its inability to pay its debts generally as they
become due; (vi) the Company breaches any covenant contained herein (other than
that covered by clause (i) above) or in the Letter Agreement or in any other
agreement by which the Company is bound to the Holder, and the Company fails to
cure such breach for a period of thirty (30) days after the Company receives
notice of such breach from the Holder; (vii) any of the representations or
warranties of the Company contained in the Letter Agreement were untrue in any
material respect when made; (viii) the acceleration of the indebtedness
outstanding pursuant to that certain Loan and Security Agreement dated June 16,
1997 between the Company and Greyrock Business Credit, as amended to date (the
"Greyrock Indebtedness"); or (ix) any event which constitutes (or with the
giving of notice or lapse of time or both would
constitute) a default under any material indebtedness (defined as any
indebtedness equal to $100,000 or more) of the Company owed to a bank,
commercial lender or other financial institution (other than the Greyrock
Indebtedness). Upon the occurrence of any Event of Default, the unpaid principal
amount of and accrued interest on this Note shall automatically become
immediately due and payable, without presentment, demand, protest or other
requirements of any kind, all of which are hereby expressly waived by the
Company.
Principal and interest shall be paid in lawful money of the United States
and shall be made to Holder c/o Titus Software Corporation, 20432 Corisco
Street, Chatsworth, California 91311, or at such other place as Holder shall
have designated to the Company in writing for such purpose.
Until this Note has been paid in full, at any time on or after the
Maturity Date, the unpaid balance of this Note may be converted, at the option
of Holder, in whole or in part, into a number of fully paid and nonassessable
shares of the Company's Common Stock (the "Common Stock") which shall equal the
quotient of (a) the unpaid balance of this Note which Holder so elects to
convert divided by (b) the price per share of Common Stock. The "price per share
of Common Stock*" shall be the average closing price (appropriately adjusted for
stock dividends, stock splits or combinations) of the Common Stock on the NASDAQ
National Market System, as reported in The Wall Street Journal or other
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nationally recognized publication or service that reports such data, for the ten
(10) consecutive trading days immediately preceding the effective date of
registration of the Common Stock in accordance with the terms of the Initial
Stock Purchase Agreement (as defined in the Letter Agreement).
The conversion of this Note into Common Stock may be effected at any time
on or after the Maturity Date, on any business day prior to payment in full, by
the Holder providing the Company with Holder's written irrevocable election to
convert (such notice to be effective upon receipt by the Company, including by
facsimile, at its principal executive offices), and thereupon the indebtedness
owed under this Note which is so converted shall be extinguished. Holder shall
be deemed the holder of record of the number of shares of Common Stock into
which this Note is so converted as of the effective date of such notice.
Promptly after its receipt of such notice, the Company shall notify its transfer
agent of such conversion, and cause such transfer agent to issue a stock
certificate therefor in the name of Holder as promptly as practicable, and in
any event within fifteen (15) business days thereafter.
The Company shall at all times reserve and keep available for issuance
upon the conversion of the unpaid balance or any portion thereof of this Note
such number of its authorized but unissued shares of Common Stock as will be
sufficient to permit the conversion in full of the unpaid balance of this Note.
The Company agrees to pay all costs, including reasonable attorneys'
fees, incurred by the Holder in enforcing payment or conversion hereof, or its
other rights hereunder or under the Letter Agreement, and hereby waives to the
full extent permitted by law, all rights to plead any statute of limitations as
a defense to any action hereunder.
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The Company will not, by amendment of its certificate of incorporation or
through reorganization, consolidation, merger, dissolution, stock split, stock
dividend, issue or sale of securities, sale of assets or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of this Note, but will at all times in good faith assist in the carrying out of
all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder of this Note against
impairment. Without limiting the generality of the foregoing, the Company will
take all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the conversion of the unpaid balance of this Note at the time
outstanding.
In case (1) the Company shall take a record of the holders of its Common
Stock (or other stock or securities at the time receivable upon the conversion
of the unpaid balance of this Note) for the purpose of entitling them to receive
any dividend or other distribution, or any right to subscribe for or purchase
any shares of stock of any class or any other securities, or to receive any
other right, or (2) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation, or any conveyance of all
or substantially all of the assets of the Company to another corporation, or (3)
of any voluntary dissolution, liquidation or winding-up of the Company, then,
and in each such case, the Company will mail or cause to be mailed to Holder a
notice specifying, as the case may be, (a) the date on which a record is to be
taken for the purpose of such dividend, distribution or right, and stating the
amount and character of such dividend, distribution or right, or (b) the date on
which such reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up is to take place, and the time, if any is
to be fixed, as of which the holders of record of Common Stock (or such stock or
securities at the time receivable upon the conversion of the unpaid balance of
this Note) shall be entitled to exchange their shares of Common Stock (or such
other stock or securities) for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be mailed at least
thirty (30) days prior to the date therein specified.
This Note shall be governed by, and construed and enforced in accordance
with, the internal laws (and not the law of conflicts) of the State of
California.
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[CONVERTIBLE PROMISSORY NOTE SIGNATURE PAGE]
IN WITNESS WHEREOF, the Company has caused this Note to be executed as of
the day and year first written above.
INTERPLAY ENTERTAINMENT CORP.,
a Delaware corporation
By: /s/ Brian Fargo
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Name: Brian Fargo
Title: Chief Executive Officer
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