<PAGE>
As Filed With the Securities and Exchange Commission on August 4, 1998
Registration No. 333-_____
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington. D.C. 20549
--------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
INTERPLAY ENTERTAINMENT CORP.
(Exact name of registrant as specified in its charter)
Delaware 33-0102707
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
16815 Von Karman Avenue, Irvine, California 92606
(Address of Principal Executive Offices) (Zip Code)
-------------------------
EMPLOYEE STOCK PURCHASE PLAN
AMENDED AND RESTATED 1997 STOCK INCENTIVE PLAN
INCENTIVE STOCK OPTION AND NONQUALIFIED STOCK OPTION PLAN - 1994
INCENTIVE STOCK OPTION, NONQUALIFIED STOCK OPTION
AND RESTRICTED STOCK PURCHASE PLAN - 1991
LEHRBERG EMPLOYMENT AGREEMENT
(Full titles of the plans)
------------------------
Christopher J. Kilpatrick, President
Interplay Entertainment Corp.
16815 Von Karman Avenue
Irvine, California 92606
(Name and address of agent for service)
(949) 553-6655
(Telephone number, including area code, of agent for service)
Copy to:
Nick E. Yocca, Esq.
K.C. Schaaf, Esq.
Stradling Yocca Carlson & Rauth, a Professional Corporation
660 Newport Center Drive, Suite 1600, Newport Beach, California 92660
(949) 725-4000
Page 1 of 9 Pages
Exhibit Index on Page 8
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=======================================================================================================
Proposed Maximum Proposed Maximum
Title Of Securities Amount To Be Offering Price Aggregate Offering Amount of
To Be Registered Registered/(1)/ Per Share Price Registration Fee
=======================================================================================================
<S> <C> <C> <C> <C>
Common Stock,
$0.001 par value 3,871,247 shares (2) $22,588,809 (2) $6,664
=======================================================================================================
</TABLE>
(1) Includes additional shares of Common Stock that may become issuable
pursuant to the anti-dilution adjustment provisions of the Employee Stock
Purchase Plan (the "Purchase Plan"), the Amended and Restated 1997 Stock
Incentive Plan (the "1997 Plan"), the Incentive Stock Option and Nonqualified
Stock Option Plan-1994 (the "1994 Plan"), the Incentive Stock Option,
Nonqualified Stock Option and Restricted Stock Purchase Plan-1991 (the "1991
Plan"), the Employment Agreement, dated December 1, 1991, as amended (the
"1991 Employment Agreement"), and the Employment Agreement, dated March 28,
1994, by and between the Registrant and Richard S.F. Lehrberg, as amended
(the "1994 Employment Agreement," and collectively with the 1991 Employment
Agreement, the "Lehrberg Employment Agreement").
(2) In accordance with Rule 457(h), the aggregate offering price of
1,962,972 shares of Common Stock registered hereby which would be issued upon
exercise of options granted under the 1991 Plan, the 1994 Plan, the 1997 Plan
and the Lehrberg Employment Agreement is based upon the per share exercise
price of such options, the weighted average of which is approximately $4.75
per share. With respect to the remaining 1,708,275 shares of Common Stock
registered hereby which would be issued upon exercise of the remaining
options and rights to purchase which Registrant is authorized to issue under
its 1991 Plan, the 1994 Plan and the 1997 Plan, the aggregate offering price
is estimated solely for purposes of calculating the registration fee, in
accordance with Rule 457(h) on the basis of the price of securities of the
same class, as determined in accordance with Rule 457(c), using the average
of the high and low price reported by the Nasdaq National Market for the
Common Stock on July 29, 1998, which was $7.0625 per share. For the purposes
of the 200,000 shares of Common Stock to be issued under the Purchase Plan,
the aggregate offering price was estimated using a per share price of $6.00,
or 85% of $7.0625, which price per share is the estimated basis at which the
shares will be issued pursuant to the Purchase Plan.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
- ------------------------------------------------
The following documents are incorporated herein by reference:
(a) The Company's Registration Statement on Form S-1 (Registration No.
333-48473) as filed with the Securities and Exchange Commission (the
"Commission") on March 23, 1998, as amended;
(b) The description of the Registrant's Common Stock that is contained
in the Registrant's Registration Statement on Form 8-A filed under Section 12 of
the Exchange Act, including any amendment or report filed for the purpose of
updating that description.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-
effective amendment which indicates that all securities offered have been sold
or which deregisters all of such securities then remaining unsold, shall be
deemed to be incorporated herein by reference and to be a part hereof from the
date of filing of such documents, except as to any portion of any future annual
or quarterly report to stockholders or document that is not deemed filed under
such provisions. For the purposes of this registration statement, any statement
in a document incorporated by reference shall be deemed to be modified or
superseded to the extent that a statement contained in this registration
statement modifies or supersedes a statement in such document. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this registration statement.
Item 6. Indemnification of Directors and Officers.
- --------------------------------------------------
The Company's Bylaws provide that the Company will indemnify its
directors and officers and may indemnify its employees and other agents to the
fullest extent permitted by the General Corporation Law of the State of Delaware
(the "DGCL"). The Company believes that indemnification under its Bylaws covers
at least negligence and gross negligence by indemnified parties, and permits the
Company to advance litigation expenses in the case of stockholder derivative
actions or other actions, against an undertaking by the indemnified party to
repay such advances if it is ultimately determined that the indemnified party is
not entitled to indemnification. The Company maintains liability insurance for
its officers and directors.
In addition, the Company's Certificate of Incorporation provides that,
pursuant to the DGCL, its directors shall not be liable for monetary damages for
breach of the directors' fiduciary duty to the Company and its stockholders.
This provision in the Certificate of Incorporation does not eliminate the
directors' fiduciary duty, and in appropriate circumstances equitable remedies
such as injunctive or other forms of non-monetary relief will remain available
under the DGCL. In addition, each director will continue to be subject to
liability for breach of the director's duty of loyalty to the Company for acts
or omissions not in good faith or involving intentional misconduct, for knowing
violations of law, for actions leading to improper personal benefit to the
director, and for payment of dividends or approval of stock repurchases or
redemptions that are unlawful under the DGCL. The provision also does not
affect a director's responsibilities under any other law, such as the federal
securities laws or state or federal environmental laws.
The Company has entered into separate indemnification agreements with
its directors and officers. These agreements require the Company, among other
things, to indemnify them against liabilities that may arise by reason of their
status or service as directors or officers (other than liabilities arising from
actions not taken in good faith or in a manner the indemnitee believed to be
opposed to the best interests of the Company), and to advance their expenses
incurred as a result of any proceeding against them as to which they could be
indemnified. Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "1933 Act"), may be permitted to
directors, officers or persons controlling the Company pursuant to the foregoing
provisions, the Company has been informed that in the opinion of the Commission,
such indemnification is against public policy as expressed in the 1933 Act and
is therefore unenforceable.
<PAGE>
Item 8. Exhibits.
- -----------------
The following exhibits are filed as part of this Registration Statement:
Number Description
------ -----------
4.1 Amended and Restated 1997 Stock Incentive Plan (the "1997 Plan")
(incorporated by reference to Exhibit 10.1 to the Company's
Registration Statement on Form S-1, Registration No. 333-48473).
4.2 Form of Stock Option Agreement pertaining to the 1997 Plan
(incorporated by reference to Exhibit 10.2 to the Company's
Registration Statement on Form S-1, Registration No. 333-48473).
4.3 Form of Restricted Stock Purchase Agreement pertaining to the
1997 Plan (incorporated by reference to Exhibit 10.3 to the
Company's Registration Statement on Form S-1, Registration No.
333-48473).
4.4 Incentive Stock Option and Nonqualified Stock Option Plan-1994
(the "1994 Plan") (incorporated by reference to Exhibit 10.4 to
the Company's Registration Statement on Form S-1, Registration
No. 333-48473).
4.5 Form of Nonqualified Stock Option Agreement pertaining to the
1994 Plan (incorporated by reference to Exhibit 10.5 to the
Company's Registration Statement on Form S-1, Registration No.
333-48473).
4.6 Incentive Stock Option, Nonqualified Stock Option and Restricted
Stock Purchase Plan-1991 (the "1991 Plan") as amended
(incorporated by reference to Exhibit 10.6 to the Company's
Registration Statement on Form S-1, Registration No. 333-48473).
4.7 Form of Incentive Stock Option Agreement pertaining to the 1991
Plan (incorporated by reference to Exhibit 10.7 to the Company's
Registration Statement on Form S-1, Registration No. 333-48473).
4.8 Form of Nonqualified Stock Option Agreement pertaining to the
1991 Plan (incorporated by reference to Exhibit 10.8 to the
Company's Registration Statement on Form S-1, Registration No.
333-48473).
4.9 Employee Stock Purchase Plan (incorporated by reference to
Exhibit 10.10 to the Company's Registration Statement on Form S-
1, Registration No. 333-48473).
4.10 Employment Agreement between the Company and Richard S.F.
Lehrberg, dated December 1, 1991, as amended.
4.11 Employment Agreement between the Company and Richard S.F.
Lehrberg, dated March 28, 1994, as amended (incorporated by
reference to Exhibit 10.28 to the Company's Registration
Statement on Form S-1, Registration No. 333-48473).
5.1 Opinion of Stradling Yocca Carlson & Rauth, a Professional
Corporation, Counsel to the Registrant.
23.1 Consent of Stradling Yocca Carlson & Rauth, a Professional
Corporation (included in the Opinion filed as Exhibit 5.1).
23.2 Consent of Arthur Andersen LLP, independent auditors.
24.1 Power of Attorney (included on signature page to the Registration
Statement at page S-1).
<PAGE>
Item 9. Undertakings.
- ---------------------
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) shall not
-------- -------
apply if the information required to be included in a post-effective amendment
by these paragraphs is contained in periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Irvine, State of California, on the 4th day of
August, 1998.
INTERPLAY ENTERTAINMENT CORP.
By: /s/ BRIAN FARGO
-------------------------------------------------
Brian Fargo
Chairman of the Board and Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of Interplay Entertainment
Corp., do hereby constitute and appoint Brian Fargo and Christopher J.
Kilpatrick, or either of them, our true and lawful attorneys and agents, to sign
for us or any of us in our names and in the capacities indicated below, any and
all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto and other documents
required in connection therewith, and to do any and all acts and things in our
names and in the capacities indicated below, which said attorneys and agents, or
either of them, may deem necessary or advisable to enable said corporation to
comply with the Securities Act of 1933, as amended, and any rules, regulations,
and requirements of the Securities and Exchange Commission, in connection with
this Registration Statement; and we do hereby ratify and confirm all that the
said attorneys and agents, or either of them, shall do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ BRIAN FARGO
_______________________________
Brian Fargo Chairman of the Board of Directors July 31, 1998
and Chief Executive Officer
(Principal Executive Officer)
/s/ CHRISTOPHER J. KILPATRICK
_______________________________
Christopher J. Kilpatrick President and Director July 31, 1998
/s/ JAMES C. WILSON
_______________________________
James C. Wilson Chief Financial Officer July 31, 1998
(Principal Financial and
Accounting Officer)
/s/ RICHARD S.F. LEHRBERG
_______________________________
Richard S.F. Lehrberg Executive Vice President and July 30, 1998
Director
</TABLE>
<PAGE>
Signature Title Date
--------- ----- ----
/s/ MARK PINKERTON
- -------------------------
Mark Pinkerton Director July 30, 1998
/s/ CHARLES S. PAUL
- -------------------------
Charles S. Paul Director July 31, 1998
/s/ PAUL A. RIOUX
- -------------------------
Paul A. Rioux Director July 28, 1998
/s/ DAVID R. DUKES
- -------------------------
David R. Dukes Director July 31, 1998
<PAGE>
EXHIBIT INDEX
Sequential
Number Description Page Number
------ ----------- -----------
4.1 Amended and Restated 1997 Stock Incentive Plan (the
"1997 Plan") (incorporated by reference to Exhibit
10.1 to the Company's Registration Statement on Form
S-1, Registration No. 333-48473).
4.2 Form of Stock Option Agreement pertaining to the 1997
Plan (incorporated by reference to Exhibit 10.2 to the
Company's Registration Statement on Form S-1,
Registration No. 333-48473).
4.3 Form of Restricted Stock Purchase Agreement pertaining
to the 1997 Plan (incorporated by reference to Exhibit
10.3 to the Company's Registration Statement on Form S-1,
Registration No. 333-48473).
4.4 Incentive Stock Option and Nonqualified Stock Option
Plan-1994 (the "1994 Plan") (incorporated by reference
to Exhibit 10.4 to the Company's Registration Statement
on Form S-1, Registration No. 333-48473).
4.5 Form of Nonqualified Stock Option Agreement pertaining
to the 1994 Plan (incorporated by reference to Exhibit
10.5 to the Company's Registration Statement on Form S-1,
Registration No. 333-48473).
4.6 Incentive Stock Option, Nonqualified Stock Option and
Restricted Stock Purchase Plan-1991 (the "1991 Plan") as
amended (incorporated by reference to Exhibit 10.6 to
the Company's Registration Statement on Form S-1,
Registration No. 333-48473).
4.7 Form of Incentive Stock Option Agreement pertaining to
the 1991 Plan (incorporated by reference to Exhibit 10.7
to the Company's Registration Statement on Form S-1,
Registration No. 333-48473).
4.8 Form of Nonqualified Stock Option Agreement pertaining
to the 1991 Plan (incorporated by reference to Exhibit
10.8 to the Company's Registration Statement on Form S-1,
Registration No. 333-48473).
4.9 Employee Stock Purchase Plan (incorporated by reference
to Exhibit 10.10 to the Company's Registration Statement
on Form S-1, Registration No. 333-48473).
4.10 Employment Agreement between the Company and Richard S.F.
Lehrberg, dated December 1, 1991, as amended.
<PAGE>
4.11 Employment Agreement between the Company and Richard S.F.
Lehrberg, dated March 28, 1994, as amended (incorporated
by reference to Exhibit 10.28 to the Company's Registration
Statement on Form S-1, Registration No. 333-48473).
5.1 Opinion of Stradling Yocca Carlson & Rauth, a Professional
Corporation, Counsel to the Registrant.
23.1 Consent of Stradling Yocca Carlson & Rauth, a Professional
Corporation (included in the Opinion filed as Exhibit 5.1).
23.2 Consent of Arthur Andersen LLP, independent auditors.
24.1 Power of Attorney (included on signature page to the
Registration Statement at page S-1).
<PAGE>
EXHIBIT 4.10
------------
LEHRBERG EMPLOYMENT AGREEMENT
<PAGE>
July 22, 1998
Christopher J. Kilpatrick
President
Interplay Entertainment Corp.
16815 Von Karman Avenue
Irvine, California 92606
RE: Stock Options
Dear Chris:
This letter shall confirm that, as a holder of a non-statutory option (the
"Option") to purchase 510,374 shares of Common Stock of Interplay Entertainment
Corp., a Delaware corporation ("Interplay"), I hereby agree that the Option
shall not be assignable or transferable except by will or the laws of descent
and distribution and during my lifetime, the Option will only be exercisable by
me.
Please confirm Interplay's agreement to these terms, by countersigning in
the space provided below.
Sincerely,
/s/ RICHARD S.F. LEHRBERG
Richard S.F. Lehrberg
ACCEPTED AND AGREED:
INTERPLAY ENTERTAINMENT CORP.
By: /s/ CHRISTOPHER J. KILPATRICK
--------------------------------------
Christopher J. Kilpatrick, President
<PAGE>
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT (this "Amendment") is dated as of
this 30th day of March, 1992 by and between INTERPLAY PRODUCTIONS, a California
corporation (the "Company") and DICK LEHRBERG (the "Employee").
WHEREAS, the Company and the Employee entered into an Employment Agreement
dated December 1, 1991; and
WHEREAS, the Company and the Employee desire to amend the Employment
Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed as follows:
1. Exhibit A to the Employment Agreement is amended to provide that the
option shall be for an aggregate of 95,684 shares.
2. Except as set forth above, the Employment Agreement remains in full
force and effect, and is unaltered or amended as of this date.
INTERPLAY PRODUCTIONS
By: /s/ BRIAN FARGO
-----------------------------------
Brian Fargo, President
"Company"
/s/ RICHARD LEHRBERG
---------------------------------------
Dick Lehrberg
"Employee"
<PAGE>
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), made this 1st day of December,
1991, by and between INTERPLAY PRODUCTIONS, a California corporation (the
"Company") and DICK LEHRBERG ("Employee").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Company desires to employ Employee and Employee desires to be
employed by the Company upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed as follows:
1. Employment. The Company hereby employs Employee as Vice President, and
-----------
Employee hereby accepts employment by the Company upon the terms and conditions
herein set forth. The primary place of employment shall be at Palo Alto,
California, or at such other location as the Company and Employee may jointly
designate.
2. Term. The term of this Agreement shall commence on January 1, 1992,
-----
and shall expire on the two (2) year anniversary date thereafter, unless sooner
terminated by either party hereto as hereinafter set forth.
3. Duties. Employee will, during the term hereof:
-------
(a) faithfully and diligently do and perform all such acts and duties
and furnish such services as the Board of Directors or the President of the
Company shall reasonably and lawfully direct, and do and perform all acts in the
ordinary course of the Company's business (with such limits as the Board or the
President of the Company may prescribe) necessary and conducive to the Company's
best interests; and
(b) devote his full time, energy, and skill to the business of the
Company and to the promotion of the Company's best interests, except for
vacations and absences made necessary because of illness, provided, however,
that the following activities shall not violate this Section and provided that
such activities do not unreasonably interfere with Employee's obligations to the
Company:
(i) reasonable efforts in connection with the "winding down" of
Employee's consulting business;
(ii) passive investments permitted under Subsection 8(a) below:
(iii) service as a member of a board of directors or advisory
board of a non-competitive entity; and
(iv) voluntary contributions of time or resources to charitable
and/or community organizations.
<PAGE>
(c) Notwithstanding the above, the Company acknowledges that the
Employee has substantial ongoing contractual obligations which make it
impossible for Employee to provide immediate full-time services to the Company.
Therefore, the Company and the Employee agree that all service obligations of
Employee, and the Company's fixed salary obligations under Paragraph 4(a)(i),
shall be reduced by multiplying such obligations by the following percentages:
<TABLE>
<CAPTION>
Amount of Reduction of Employee's
Date and Company's Obligations
---- ---------------------------------
<S> <C>
December 1, 1991 66-2/3%
January 1, 1991 50%
February 1, 1991 33-1/3%
March 1, 1991 0%
</TABLE>
4. Compensation.
-------------
(a) Subject to the provisions of Paragraph 6 and 7 hereof, the
Company shall pay to Employee for all services to be performed by Employee
during the term of this Agreement;
(i) a fixed annual salary of eighty-four thousand dollars
($84,000) per annum, payable at the rate of seven thousand ($7,000.00) per
month, in periodic payments in accordance with the Company's practices for
other executive, managerial, and supervisory employees, as such practices
may be determined from time to time. The Board of Directors of the Company
will review such fixed salary annually and, in its discretion, may grant
increases thereof based upon Employee's performance;
(ii) an advance against bonuses under Subsection 4(a)(iii),
below, equal to one thousand dollars ($1,000) per month, prorated and
payable concurrently with the periodic salary payments provided in
Subsection 4(a)(i), above;
(iii) a bonus equal to ten percent (10%) of the difference between
net profits after taxes of the Company for the fiscal year ended March 31,
1989 (the "Base Year") on the one hand, which the Company and Employee
agree is $633,258 for purposes of this Agreement, and, on the other, each
fiscal year of Employee's employment by the Company commencing on December
1, 1991 and continuing until the earlier of (i) termination of Employee's
employment with the Company or (ii) such time as Employee and the Company
mutually agree to modify this provision. Net profits after tax shall be
determined in accordance with generally accepted accounting principles. The
bonus calculated hereunder shall not exceed two hundred and fifty thousand
($250,000.00) per fiscal year. Any bonus with respect to any stub year
shall be calculated by (a) multiplying the net profits after taxes of the
Company in the Base Year by (b) the number of days of a partial year as to
which the bonus is to be paid, divided by 365 (the "Proration Ratio") and
subtracting such number from (x) the net profits after taxes of the Company
for the full year in which the stub period occurred, multiplied by (y) the
Proration Ratio. In calculating net profits after tax for the purpose of
this Subsection, the deduction from revenues for all compensation paid or
accrued to Brian Fargo and/or members of his immediate family shall be
limited for calculation purposes (but shall not limit actual compensation)
to an amount
2
<PAGE>
equal to two hundred and fifty thousand dollars ($250,000.00). The Company
shall accrue an amount (without any prepayment funding obligation) equal to
Employee's bonus which shall be deemed earned but unpaid compensation until
such time as such bonus is paid to Employee. Employee shall be entitled to
draw up to 75% against the reserve on a semi-annual basis, provided,
however, that Employee agrees to endeavor to coordinate such withdrawals
with the Company so as not to unreasonably impair the Company's cash flow
during any time of the year when the business cash requirements are
greatest.
(iv) Any additional or special compensation, such as incentive
pay or bonuses, based upon Employee's performance, as the Board of
Directors in its discretion, may from time to time determine. Any payments
under this Paragraph 4(a)(iv) shall be paid at such time as may be
determined by the Board of Directors of the Company; and
(v) A special, nonrecurring bonus of $5,000 on January 1, 1992,
$5,000 on February 1, 1992, $5,000 on March 1, 1992 and $5,000 on April 1,
1992.
All such payments will be subject to such deductions as may be required to be
made pursuant to law, government regulation or order, or by agreement with, or
consent of, Employee. Advances against bonuses paid under Paragraph 4(a)(ii) or
(iii), to the extent not earned in the year in which they are paid, shall be
carried over to subsequent periods and credited against future bonus payments
(but not credited under any circumstances against compensation due under
Paragraph 4(a)(i)).
(b) In addition to the salary payments set forth above, the Company
agrees that during the term of this Agreement:
(i) Employee shall be entitled to advancements, reimbursements,
and/or use of a Company credit card for all reasonable expenses actually
and necessarily incurred by him on its behalf in the course of this
employment hereunder, for which he shall submit vouchers in a form
satisfactory to the Company and which are approved by the Company in its
reasonable discretion;
(ii) Employee shall be entitled to receive securities of the
Company pursuant to the terms set forth on Exhibit A.
5. Benefits. Employee shall be entitled to participate in such life
--------
insurance, medical, dental, pension, vacation and retirement plans and other
programs as may be approved from time to time by the Company for the benefit of
its employees. With regard to insurance plans (other than disability), Employee
may alternatively request that the Company pay the costs of Employee's present
insurance policies; provided, however, that the Company shall not be required to
pay costs of coverage in excess of those which would otherwise be paid for
coverage provided to Employer's employees at a similar level through the
Company's insurance plans.
6. Disability. Company shall procure and maintain for Employee a policy
----------
of disability insurance with benefits equal to eighty percent (80%) of
Employee's monthly compensation. In the event that Employee is permanently
disabled, as determined by the disability insurance carrier, Employee's
obligation to perform such services will terminate and the Company may terminate
this Agreement upon notice equal to the waiting period for the commencement of
disability benefits provided under the policy of disability insurance. In the
event of such termination (a) Employee's
3
<PAGE>
compensation as defined in Paragraph 4(a)(i-iii) hereof shall terminate at the
end of the notice period, and (b) Employee will not be entitled to the Severance
Pay described in Paragraph 7 hereof.
7. Termination.
-----------
(a) Employee's employment with the Company will be terminated (1) by
reason of Employee's death, (2) by reason of Employee becoming permanently
disabled as defined in Paragraph 6, (3) by the Company for cause, (4) by reason
of Employee voluntarily terminating this Agreement, or (5) by the Company,
provided, however, that the Company cannot terminate the Employee without cause
until after June 1, 1992. For purposes of the preceding sentence, "cause" shall
be deemed to exist if, and only if: (i) Employee willfully refuses to perform
services hereunder; (ii) Employee materially breaches any provision of this
Agreement; (iii) Employee engages in acts of dishonesty or fraud in connection
with his services hereunder; or (iv) Employee engages in other serious
misconduct of such a nature that the continued employment of Employee may
reasonably be expected to adversely affect the business or properties of the
Company. In the event of termination of employment pursuant to this
subparagraph (a), then, except as otherwise provided in Paragraph 6 and 7, all
obligations of the Company hereunder shall terminate.
(b) If Employee's employment with the Company shall terminate by
Employee's death or disability, Employee's estate shall be entitled to payment
of any portion of his compensation pursuant to subparagraph 4(a)(i-iii) which is
earned but unpaid as of the date of termination.
(c) If Employee's employment with the Company shall terminate by the
Company with cause or by Employee voluntarily, Employee shall be entitled to
payment of any portion of his compensation pursuant to subparagraph 4(a)(i-iii)
which is earned but unpaid as of the date of termination.
(d) If Employee's employment with the Company shall terminate by the
Company without cause, Employee shall be entitled to any portion of his
compensation pursuant to subparagraph 4(a)(i-iii) which is earned but unpaid as
of the date of termination and to severance pay equal to the lesser of $42,000
or the compensation which would be paid to Employee under Paragraph 4(a)(i)
through the end of the term of this Agreement. No severance pay shall be paid
as a result of the termination of this Agreement on the two (2) year anniversary
date.
(e) In the event of a change in "control" of the Company, as "control"
is defined under Section 160(a) of the California Corporations Code. If
Employee's employment with the Company shall be terminated by the Company,
whether voluntarily or involuntarily, in connection with such change in control,
Employee shall be entitled to any portion of his compensation pursuant to
subparagraph 4(a)(i-iii) which is earned but unpaid as of the date of
termination and to severance pay equal to Employee's compensation pursuant to
subparagraph 4(a)(i) for a period six (6) months following the date of
termination of employment.
8. Restrictive Covenant. During the term of this Agreement, Employee
--------------------
shall not:
(a) within the State of California, engage in, or work for, or own,
manage, operate, control or participate in the ownership, management, operation
or control of, or be connected with, or have any financial interest in, any
individual, partnership, firm, corporation or
4
<PAGE>
institution engaged in the same or similar activities to those now or hereafter
carried on by the Company, provided, however, that passive investment (not
exceeding ten percent of the voting power) in publicly-held corporations outside
the Company;
(b) solicit any of employees, agents or representatives of the Company
for employment or independent contract outside the Company; and
(c) directly or indirectly divert or attempt to divert from the
Company any business in which the Company has been actively engaged during the
term hereof, nor interfere with the relationships of the Company with its
dealers, distributors, sources of supply or customers.
Any breach of this restrictive covenant by Employee will result in the
forfeiture by Employee and all other persons of any and all rights to Severance
Pay unpaid at the time of breach and in such event the Company shall have no
further obligation to pay any amounts related thereto.
9. Nondisclosure of Confidential Information: Discoveries and
----------------------------------------------------------
Developments. Employee acknowledges that the Company may disclose certain
- -------------
confidential information to Employee during the term of this Agreement to enable
him to perform his duties hereunder. Employee hereby covenants and agrees that
he will not, without the prior written consent of the Company, during the term
of this Agreement or at any time thereafter, disclose or permit to be disclosed
to any third party by any method whatsoever any of the confidential information
of the Company. For purposes of this Agreement, "confidential information"
shall include, but not be limited to, any and all records, notes, memoranda,
data, ideas, processes, methods, techniques, systems, formulas, patents, models,
devices, programs, computer software, writings, research, personal information,
customer information, the Company's financial information, plans, or any other
information of whatever nature in the possession or control of the Company which
ahs not been published or disclosed to the general public, or which gives to the
Company an opportunity to obtain an advantage over competitors who do not know
of or use it. Confidential information shall not include information which (i)
is generally known or becomes part of the public domain through no fault of
Employee; (ii) is disclosed by Company to third parties without restriction on
subsequent disclosure; (iii) was known to Employee prior to the commencement of
his relationship with the Company; (iv) is provided to Employee by a third party
without breach of any separate non-disclosure agreement; or (v) is required to
be disclosed under applicable law. Employee further agrees that if his
employment hereunder is terminated for any reason, he will leave with the
Company and will not take originals or copies of any and all records, papers,
programs, computer software and documents and all matter of whatever nature
which bears secret or confidential information of the Company.
Employee agrees promptly to reduce to writing and to disclose and assign,
and hereby does assign, to the Company, its parent, subsidiaries, successors,
assigns and nominees, all inventions, discoveries, improvements, copyrightable
material, trademarks, programs, computer software and ideas concerning the same,
capable of use in connection with the business of the Company, which Employee
may make or conceive, either solely or jointly with others, during the period of
his employment by the Company, its parent, subsidiaries or successors; provided,
however, that Section 2870 of the California Labor Code (a copy of which is
attached hereto as Exhibit B) exempts from this provision any invention as to
which Employee can prove the following:
5
<PAGE>
(i) Employee developed the invention entirely on his own time;
(ii) Employee did not use any equipment, supplies, facility or
trade secret information of the Company in the invention's development; and
(iii) At the time the invention was conceived or reduced to
practice, it did not relate to the Company's business or the Company's
actual or demonstrably anticipated research or development; and
(iv) The invention did not result from work that Employee
performed for the Company.
Employee acknowledges that all original works of authorship and mask works
which are made by him (solely or jointly with others) after the date hereof and
within the scope of his employment and which are protectable by copyright or
under the Semiconductor Chip Protection Act of 1984 are "works made for hire" as
that term is defined in the United States Copyright Act (17 USC, Section 101).
All works which Employee has developed prior to this date and which are to be
retained as the property of Employee are set forth on Exhibit C.
Employee further acknowledges that in the event that such works of
authorship or mask works are not deemed to be "works made for hire," Employee
will assign all right, title and interest in such works of authorship or mask
works, and without limiting the foregoing, all programs, computer software,
ideas, inventions, discoveries, improvements, copyrightable material and
trademarks of Employee not listed on Exhibit C to the Company.
Without limiting the foregoing, Employee agrees, without charge to the
Company and at the Company's expense, to execute, acknowledge and deliver to the
Company all such papers, including applications for patents, applications for
copyright and trademark registrations, and assignments thereof, as may be
necessary, and at all times to assist the Company, its parent, subsidiaries,
successors, assigns and nominees in every proper way to patent or register said
programs, computer software, ideas, inventions discoveries, improvements,
copyrightable material or trademarks in any and all countries and to vest title
thereto in the Company, its parent, subsidiaries, successors, assigns or
nominees.
Employee will promptly report to the Company all discoveries, inventions,
or improvements of whatsoever nature conceived or made by him at any time he was
employed by the Company, its parent, subsidiaries or successors. All such
discoveries, inventions and improvements which are applicable in any way to the
Company's business shall be the sole and exclusive property of the Company.
The covenants set forth in this paragraph which are made by Employee are in
consideration of the employment, or continuing employment of, and the
compensation paid to, Employee during his employment by the Company. The
foregoing covenants will not prohibit Employee from disclosing confidential or
other information to other employees of the Company or to third parties to the
extent that such disclosure is necessary to the performance of his duties under
this Agreement.
6
<PAGE>
Any breach of the covenants in this Paragraph will result in the forfeiture
by Employee of any and all rights to Severance Pay unpaid at the time of breach
and in such event the Company shall have no further obligation to pay any
amounts related thereto.
10. Additional Remedies. The parties to this Agreement acknowledge that
-------------------
the subject matter of this Agreement relates to the establishment of a
relationship of trust based upon the unique characteristics of each of the
parties. Consequently, each of the parties shall be entitled, in addition to
any other remedies and damages available, to injunctive relief to restrain the
violation of the commitments hereunder by the other party or by any person or
persons acting on such other party's behalf, including without limitation, the
restrictions in Paragraphs 8 and 9 above.
11. Nonassignment. This Agreement is personal to Employee and Company and
-------------
shall not be assigned by either party without the express written consent of the
other party, neither party may hypothecate, delegate, encumber, alienate,
transfer or otherwise dispose of his/its rights and duties hereunder.
12. Waiver. The waiver by either party of a breach by the other party of
------
any provision of this Agreement shall not be construed as a waiver of any
subsequent breach.
13. Severability. If any clause, phrase, provision or portion of this
------------
Agreement or the application thereof to any person or circumstance shall be
invalid or unenforceable under any applicable law, such event shall not affect
or render invalid or unenforceable the remainder of the Agreement and shall not
affect the application of any clause, provision, or portion hereof to other
persons or circumstances.
14. Benefit. The provisions of this Agreement shall inure to the benefit
-------
of Employee and the Company, and each of their permitted successors and assigns,
and shall be binding upon the Company and Employee, and each of their heirs,
personal representatives and successors, executors, administrators, or trustees,
as applicable.
15. Relevant Law. This Agreement shall be construed and enforced in
------------
accordance with the laws of the State of California.
16. Notices. All notices, requests, demands and other communications in
-------
connection with this Agreement shall be made in writing and shall be deemed to
have been given when delivered by hand or 48 hours after mailing at any general
or branch United States Post Office, by registered or certified mail, postage
prepaid, addressed as follows, or to such other address as shall have been
designed in writing by the addressee:
(a) If the Company:
Interplay Productions
3710 S. Susan, Suite 100
Santa Ana, California 92704
Attn: Brian Fargo, President
7
<PAGE>
(b) If to Employee:
Dick Lehrberg
1085 University Avenue
Palo Alto, California 94301
17. Legal Expenses. The prevailing party in any legal action brought by
--------------
one party against the other and arising out of this Agreement shall be entitled,
in addition to any other rights and remedies available to it at law or in
equity, to reimbursement for its costs and expenses (including court costs and
reasonable fees for attorneys and expert witnesses) incurred with respect to any
such action. The term "prevailing party" for the purposes of this Section shall
include a defendant has by motion, judgment, verdict or dismissal by the court,
successfully defended against any claim that has been asserted against it.
18. Entire Agreement. This Agreement sets forth the entire understanding
----------------
of the parties and supersedes all prior agreements, arrangements, and
communications, whether oral or written, pertaining to the subject matter
hereof; and this Agreement shall not be modified or amended except by written
agreement of the Company and Employee.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first set forth above.
EMPLOYER:
INTERPLAY PRODUCTION
By:/s/ BRIAN FARGO
------------------------------------
EMPLOYEE:
/s/ DICK LEHRBERG
---------------------------------------
Dick Lehrberg
8
<PAGE>
EXHIBIT A
Securities
Employee shall have the right to purchase 93,159 shares of Common
Stock of the Company (the "Shares") at $1.38 (the "Purchase Price"). The
Company represents that there are 941,000 shares of Common Stock outstanding as
of this date.
The Shares will be subject to vesting in accordance with the
following schedule:
<TABLE>
<CAPTION>
Shares Vested
Date On Such Date
---- -------------
<S> <C>
Signing 32,935
02/01/92 9,410
08/01/92 9,410
02/01/93 9,410
08/01/93 9,410
02/01/94 9,410
08/01/94 4,705
02/01/95 8,469
</TABLE>
The Employee will enter into a Buy-Sell Agreement with the Company
providing the Company with a right to repurchase the Shares upon termination of
employment, regardless of the reason of such termination, on the following
terms:
(a) If the Shares are unvested, the Company will have a right to repurchase
such Shares equal to the initial Purchase Price.
(b) If the Shares are vested, and termination of employment is (i) a result
of a voluntary decision of the Employee, the repurchase price shall be equal to
the Employee, the repurchase price shall be equal to the initial purchase price,
plus 10%, unless termination is within the first year of this Agreement, in
which case the repurchase price shall be the initial purchase price; (ii) by the
Company for cause, the repurchase price shall be equal to the initial purchase
price; and (iii) if the termination is by the Company without cause, or is a
result of death or disability, the purchase price shall be equal to the book
value at the time of termination, plus ten percent (10%) or, if higher, the
value the Company receives for shares of Common Stock after such repurchase in a
public offering, merger or other transaction in which the Company receives at
least $1,000,000 and which closes within 30 days after the repurchase of Shares
from the Employee.
The purchase price for the Shares shall be paid by the issuance of the
promissory note providing for repayment at such time, or from time to time, as
the Employee shall voluntarily decide.
<PAGE>
The promissory note shall bear interest at the rate of 7% simple interest per
annum until paid. The promissory note shall be secured solely by the Shares and
the Company will have no general right of recourse against Employee as a result
of a default under the promissory note. The Shares shall not be subject to
transfer until the promissory note has been repaid in full and the restrictions
set forth in the Buy-Sell Agreement have been satisfied.
2
<PAGE>
EXHIBIT B
California Labor Code Section 2870
Employment Agreements; Assignment of Right
------------------------------------------
"(a) Any provision in an employment agreement which provides that an
employee shall assign or offer to assign any of his or her rights in an
invention to his or her employer shall not apply to an invention that the
employee developed entirely on his or her own time without using the employer's
equipment, supplies, facilities, or trade secret information except for those
inventions that either:
(1) Relate at the time of conception or reduction to practice of the
invention to the employer's business, or actual or demonstrably anticipated
research or development of the employer.
(2) Result from any work performed by the employee for the employer.
(b) to the extent a provision in an employment agreement purports to
require an employee to assign an invention otherwise excluded from being
required to be assigned under subdivision (a), the provision is against the
public policy of this state and is unenforceable."
<PAGE>
EXHIBIT C
Employee's Prior Developed Works
<PAGE>
EXHIBIT 5.1
-----------
SYCR OPINION
Stradling Yocca Carlson & Rauth
A PROFESSIONAL CORPORATION
ATTORNEYS AT LAW
660 NEWPORT CENTER DRIVE, SUITE 1600
NEWPORT BEACH, CALIFORNIA 92660-6441
TELEPHONE (949) 725-4000
FACSIMILE (949) 725-4100
SAN FRANCISCO OFFICE
44 MONTGOMERY STREET, SUITE 2950
SAN FRANCISCO, CALIFORNIA 94104
TELEPHONE (415) 765-9180
FACSIMILE (415) 765-9187
July 31, 1998
Interplay Entertainment Corp.
16815 Von Karman Avenue
Irvine, California 92606
Re: Registration Statement on Form S-8 (Employee Stock Purchase Plan,
Amended and Restated 1997 Stock Incentive Plan, Incentive Stock
Option and Nonqualified Stock Option Plan--1994, Incentive Stock
Option, Nonqualified Stock Option and Restricted Stock Purchase
Plan--1991, and Lehrberg Employment Agreement)
Ladies and Gentlemen:
At your request, we have examined the form of Registration Statement on
Form S-8 (the "Registration Statement") being filed by Interplay Entertainment
Corp., a Delaware corporation (the "Company"), with the Securities and Exchange
Commission in connection with the registration under the Securities Act of 1933,
as amended, of an aggregate of 3,871,247 shares of the Company's common stock,
$.001 par value ("Common Stock"), issuable under the Company's Employee Stock
Purchase Plan, Amended and Restated 1997 Stock Incentive Plan, Incentive Stock
Option and Nonqualified Stock Option Plan 1994, Incentive Stock Option,
Nonqualified Stock Option and Restricted Stock Purchase Plan 1991, and Lehrberg
Employment Agreement (the "Plans").
We have examined the proceedings heretofore taken and are familiar with the
additional proceedings proposed to be taken by the Company in connection with
the authorization, issuance and sale of the securities referred to above.
Based on the foregoing, it is our opinion that the 3,871,247 shares of
Common Stock, when issued under the Plans and against full payment therefor in
accordance with the respective terms and conditions of the Plans, will be
legally and validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
STRADLING YOCCA CARLSON & RAUTH
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated March 20, 1998
included in Interplay Entertainment Corp.'s Form S-1 registration statement for
the year ended December 31, 1997 and to all references to our Firm included in
this registration statement.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Orange County, California
July 31, 1998
