<PAGE>

                                                                   EXHIBIT 10.38


                 REIMBURSEMENT, SECURITY AND PLEDGE AGREEMENT
                 --------------------------------------------

     THIS REIMBURSEMENT AND SECURITY AGREEMENT (this "Agreement") is made and
entered into as of April 14, 2000, by and among TITUS INTERACTIVE SA, a French
corporation ("Titus"), INTERPLAY ENTERTAINMENT CORP., a Delaware Corporation
(successor by merger to Interplay Productions, a California Corporation)
("Interplay") and INTERPLAY OEM, INC., a California corporation ("Interplay OEM"
and jointly and severally with Interplay, the "Borrower").

                                   RECITALS
                                   --------

     WHEREAS, on or about June 16, 1997, Greyrock Capital (formerly Greyrock
Business Credit)  ("Greyrock Capital") and the Borrower entered into that
certain Loan and Security Agreement dated June 16, 1997, as amended by that
Amendment to Loan Documents dated December 20, 1999, that Letter Agreement dated
March 22, 2000 and that Amendment to Loan Documents dated April 14, 2000 (as
amended, the "Loan and Security Agreement");

     WHEREAS, pursuant to the Loan and Security Agreement, Greyrock Capital
agreed to loan to the Borrower the sum of twenty five million dollars
($25,000,000) excluding interest and fees thereon with a maturity date of April
30, 2001 (the "Maturity Date");

     WHEREAS, Titus executed and delivered to Greyrock Capital that certain
Continuing Guaranty, dated April 14, 2000 (the "Guaranty") for the sum of up to
Twenty Million Dollars ($20,000,000) with respect to all present and future
indebtedness, liabilities and obligations of the Borrower to Greyrock Capital
pursuant to the Loan and Security Agreement;

     WHEREAS, in consideration for Titus' execution of the Guaranty, Borrower
desires to grant to Titus a security interest in the Borrower's interest in
certain collateral;

     NOW THEREFORE, in consideration of the mutual covenants and conditions set
forth herein, and for such other good and valuable consideration, receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:

1.   DEFINITIONS
     -----------

     Unless a particular word or phrase is otherwise defined or the context
otherwise requires, capitalized words and phrases used in this Agreement and
other agreements and documents in connection herewith shall have the meanings
provided below.
<PAGE>

     "Accounts" shall mean all "accounts" (as defined in the Code), accounts
      --------
receivable, contract rights and general intangibles relating thereto, notes,
drafts, and other forms of obligations owed to or owned by Borrower arising or
resulting from the sale of goods or the rendering of services.

     "Code" shall mean the Uniform Commercial Code as adopted and in effect in
      ----
the State of California from time to time.

     "Deposit Account" shall have the meaning set forth in Section 105 of the
      ---------------
Code.

     "Equipment" shall mean all of Borrower's present and hereafter acquired
      ---------
machinery, molds, computers, printers, telecommunications equipment, machine
tools, motors, furniture, equipment, furnishings, fixtures, trade fixtures,
motor vehicles, tools, parts, dyes, jigs, goods and other tangible personal
property (other than Inventory) of every kind and description used in Borrower's
operations or owned by Borrower and any interest in any of the foregoing, and
all attachments, accessories, accessions, replacements, substitutions, additions
or improvements to any of the foregoing, wherever located.

     "Financing Documents" means this Agreement, the Guaranty, financing
      -------------------
statements (Form UCC-1), continuation statements (Form UCC-2), all evidence of
corporate authority, and all instruments, certificates and agreements at any
time delivered to Titus pursuant to any of the foregoing, and all written
amendments, modifications, renewals, extensions and rearrangements of, and
substitutions for, any of the foregoing.

     "General Intangibles" shall mean all general intangibles of Borrower,
      -------------------
whether now owned or hereafter created or acquired by Borrower, including,
without limitation, all choses in action, causes of action, corporate or other
business records, Deposit Accounts, inventions, designs, drawings, blueprints,
patents, patent applications, trademarks and the goodwill of the business
symbolized thereby, names, trade names, trade secrets, goodwill, copyrights,
registrations, licenses, franchises, customer lists, security and other
deposits, rights in all litigation presently or hereafter pending for any cause
or claim (whether in contract, tort or otherwise), and all judgments now or
hereafter arising therefrom, all claims of Borrower against Titus, rights to
purchase or sell real or personal property, rights as a licensor or licensee of
any kind, royalties, telephone numbers, proprietary information, purchase
orders, contract rights, distribution rights, publishing rights, development
rights, and all insurance policies and claims insurance, liability insurance,
property insurance and other insurance), tax refunds and claims, computer
programs, video games, source codes, discs, tapes and tape files, claims under
guaranties, security interests or other security held by or granted to Borrower,
all rights to indemnification and all other intangible property of every kind
and nature (other than Receivables).

     "Intellectual Property" shall mean all present and future designs, patents,
      ---------------------
patent rights and applications therefor, trademarks and registrations or
applications therefor,

                                      -2-
<PAGE>

trade names, inventions, copyrights and all applications and registrations
therefor, software or computer programs, source codes, license rights, trade
secrets, methods, processes, know-how, drawings, specifications, descriptions,
and all memoranda, notes and records with respect to any research and
development, whether now owned or hereafter acquired, all goodwill associated
with any of the foregoing, and proceeds of all of the foregoing, including,
without limitation, proceeds of insurance policies thereon.

     "Inventory" shall mean all of Borrower's now owned and hereafter acquired
      ---------
goods, merchandise or other personal property, wherever located, to be furnished
under any contract of service or held for sale or lease (including all raw
materials, work in process, finished goods and goods in transit), and all
materials and supplies of every kind, nature and description which are or might
be used or consumed in Borrower's business or used in connection with the
manufacture, packing, shipping, advertising, selling or finishing of such goods,
merchandise or other personal property, and all warehouse receipts, documents of
title and other documents representing any of the foregoing.

     "Obligations" means all loans, advances, debts, liabilities and
      -----------
obligations, for the performance of covenants, tasks or duties or for payment of
monetary amounts (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable) owing by Borrower to
Titus, and all covenants and duties regarding such amounts, of any kind or
nature, present or future, whether or not evidenced by any note, agreement or
other instrument, arising under this Agreement, any of the other Financing
Documents or that certain Five Million Dollar ($5,000,000) revolving loan (the
"Revolving Loan") provided for in Section 10.2 of that certain Stock Purchase
 --------------
Agreement, dated April 14, 2000 by and between Titus and Interplay.  This term
shall include all principal, interest, (including all interest which accrues
after the commencement of any case or proceeding in bankruptcy, after the
insolvency of, or the reorganization of Borrower, whether or not allowed in such
proceeding), fees, charges, expenses, attorneys' fees and any other sum
chargeable to Borrower under this Agreement, any of the other Financing
Documents or the Revolving Loan.

     "Person" shall mean and include natural persons, corporations, limited
      ------
partnerships, general partnerships, limited liability companies, joint stock
companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions thereof.

     "Receivables" shall mean all of Borrower's now owned and hereafter acquired
      -----------
accounts (whether or not earned by performance), letters of credit, contract
rights, chattel paper, instruments, securities, documents and all other forms of
obligations at any time owing to Borrower, all guaranties and other security
therefor, all merchandise returned to or repossessed by Borrower, and all rights
of stoppage in transit and all other rights or remedies of an unpaid vendor,
lienor or secured party.

                                      -3-
<PAGE>

2.   REIMBURSEMENT AND PAYMENT TERMS
     -------------------------------

     2.1  In the event that any demand is made upon Titus pursuant to the
Guaranty for payment of any amounts due thereunder (a "Guaranty Payment"),
Borrower hereby agrees to pay to Titus an amount equal to the Guaranty Payment
on the date that the Guaranty Payment is due (unless another time is mutually
agreed to by Borrower and Titus), together with all fees, expenses and charges,
if any, payable to Greyrock Capital for or under the Guaranty in addition to the
Guaranty Payment.

     2.2  Borrower shall pay to Titus interest on any and all amounts unpaid and
due by Borrower to Titus pursuant to Section 2.1 hereof for each day from the
date such amounts became due until paid in full, payable on demand, at a rate
equal to the lesser of (i) 12% per annum or (ii) the highest interest rate
allowable under applicable law; and

     2.3  All payments made by Borrower to Titus hereunder shall be made in
lawful currency of the United States and in immediately available funds via wire
transfer to an account designated in writing by Titus or by such other means as
may be designated by Titus in writing to Borrower.

3.   SECURITY INTEREST
     -----------------

     3.1  To secure the payment and performance of the Obligations including all
renewals, extensions, amendments, restructurings and refinancings of any or all
of the Obligations, Borrower hereby grants to Titus a continuing security
interest in all of the following, whether nor owned or hereafter acquired, and
wherever located (collectively, the "Collateral"): all Inventory, Equipment,
Receivables, General Intangibles and Intellectual Property, Pledged Securities
(as defined in paragraphs 4.1 and 4.1 below), including, without limitation, all
of Borrower's Deposit Accounts, all money, all collateral in which Greyrock
Capital is granted a security interest pursuant to any other present or future
agreement, all property now or at any time in the future in Greyrock Capital's
possession, and all proceeds (including proceeds of any insurance policies,
proceeds of proceeds and claims against third parties) all products of the
foregoing, and all books and records related to any of the foregoing.  The
security interest in the Collateral granted by Borrower to Titus hereunder is
intended to be a second priority security interest second only to the security
interest in the Collateral granted by Borrower to Greyrock Capital pursuant to
the Loan and Security Agreement until such time as the obligations owing by
Borrower to Greyrock Capital pursuant to the Loan and Security Agreement have
been paid in full at which time this Agreement shall grant to Titus a first
priority security interest in the Collateral.

                                      -4-
<PAGE>

4.   PLEDGE
     ------

     4.1  To secured the payment and performance of the Obligations, Interplay,
Interplay OEM and any of their subsidiaries (each hereinafter referred to as a
"Pledgor" and collectively referred to as "Pledgors") hereby delivers, pledges
and grants a security interest in and assigns to Titus all Pledgors' right,
title and interest in and to all securities or limited liability company
interests now or hereafter owned by Pledgors, including without limitation,
those more particularly described on Exhibit A attached hereto, together with
all distributions, dividends, substitutions, conversions or proceeds thereof
(all in suitable form for transfer by delivery or accompanied by duly executed
instruments of transfer or assignments in blank, and any required transfer tax
stamps), as well as all general intangibles, investment property and securities
entitlements relating thereto and proceeds resulting therefrom.

     4.2  In the case of certificated securities, each Pledgor under paragraph
4.1 shall promptly deposit with Titus, any certificates, stock, securities,
warrants, options or other documents representing and of the rights pledged. In
the case of uncertificated securities, each Pledgor hereby agrees to give
written instructions to the issuer thereof to register the pledge hereunder in
the books and records maintained by such issuer, and to obtain from such issuer
a Confirmation of Issuer in the form satisfactory to Titus to confirm that the
Issuer has so registered said pledge. Such certificates, stock, equity
securities, warrants, options, voting or other rights and all proceeds thereof
shall stand pledged and assigned as collateral security of the Obligations in
the same manner as the property described in paragraphs 4.1 and 4.2 hereof. (All
of the property described in paragraphs 4.1 and 4.2 hereof is hereinafter
collectively called the "Pledged Securities.")

5.   EVENTS OF DEFAULT
     -----------------

     The occurrence of any of the following shall constitute an event of default
("Event of Default") under this Agreement:

     5.1  If Borrower shall fail to pay to Titus when due any amounts due under
Section 2 hereunder.

     5.2  If Borrower shall fail to fully perform or observe, when and as
required, any covenant, condition, or agreement contained in this Agreement or
any other Financing Document, other than the payment of principal and/or
interest, and such non-performance or non-observance shall continue for a period
of ten (10) days after written notice thereof by Titus to Borrower.

     5.3  If Borrower shall (i) file a petition seeking relief under Title 11 of
the United States Code, as amended from time to time (the "U.S. Bankruptcy
Code'), or file an answer consenting to, admitting the material allegations of,
or otherwise not

                                      -5-
<PAGE>

controverting, a petition filed against it seeking relief under the U.S.
Bankruptcy Code, or (ii) file a petition or answer seeking relief under the
provisions of any other now-existing or future-applicable bankruptcy,
insolvency, or other similar federal or state law providing for the
reorganization, winding up or liquidation of business organizations or for an
arrangement, composition, extension or adjustment with creditors.

     5.4  If -

               (i)   an order for relief shall be entered against Borrower under
the U.S. Bankruptcy Code, which order is not stayed; or

               (ii)  an entered order, judgment, or decree by operation of law
or by a court having jurisdiction in the premises which is not stayed (A)
adjudges Borrower a bankrupt or insolvent under, or ordering relief against
Borrower under, or approves as properly filed, a petition seeking relief against
Borrower under the provisions of any other now-existing or future-applicable
bankruptcy, insolvency or other similar federal or state law providing for the
reorganization, winding up, or liquidation of business organizations or for any
arrangement, composition, extension or adjustment with creditors; (B) appoints a
receiver, liquidator, assignee, trustee or custodian for Borrower or with
respect to any substantial part of its properties; or (C) orders the
reorganization, winding up or liquidation of Borrower's affairs; or (D) if
Borrower voluntarily or involuntarily dissolves or is dissolved, terminates or
is terminated; or

               (iii) any involuntary petition is filed against Borrower seeking
any relief available under the U.S. Bankruptcy Code or any other law described
in this Section without the petition being dismissed within sixty (60) days
after filing.

     5.5  If Borrower shall (i) make a general assignment for the benefit of its
creditors; (ii) consent to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, or custodian of Borrower or of all or
substantially all of its property; (iii) admit its insolvency or inability to
pay its debts generally as such debts become due; or (iv) take any action
initiating the dissolution of Borrower.

     5.6  If Borrower shall enter into any agreement with all or a significant
number of its creditors regarding any moratorium or other indulgence with
respect to its debts, or the participation of such creditors or their
representatives in the supervision, management, or control of the business of
Borrower.

     5.7  If a final judgment for the payment of money in excess of One Million
Dollars ($1,000,000) shall be entered against Borrower which is not satisfied
within ninety (90) days of the entry thereof, unless an appeal is pending and
all appropriate appellate bonds or other security have been posted, if required.

                                      -6-
<PAGE>

     5.8  If any execution, levy or attachment is placed on the personal
property or other assets of Borrower, or any portion thereof, and is not
released or satisfied within ninety (90) days thereof.

     5.9  If Borrower shall conceal, remove or permit to be concealed all or any
part of its properties and assets, with the intent to hinder or defraud its
creditors, or make or suffer any transfer of any of its properties or assets
which may be fraudulent under any bankruptcy, fraudulent conveyance, or similar
law, or shall make any transfer of its property to or for the benefit of
creditors at a time when other creditors similarly have not been paid.

     5.10 If any of the Events of Default described herein shall occur and
Borrower shall fail to give written notice to Titus forthwith on the occurrence
of such Event of Default.

6.   REMEDIES; ACCELERATION
     ----------------------

     6.1  If an Event of Default shall occur under Section 4 hereof, then, at
the option of Titus, the entire unpaid principal balance owing hereunder and all
accrued, unpaid interest thereon shall immediately become due and payable to
Titus, without notice of default, demand for payment or presentment, protest or
notice of nonpayment or dishonor, or any other notices or demands of any kind or
nature. From and after the date of an Event of Default, the unpaid balance owing
under this Agreement shall continue to bear interest at the rate specified in
Section 2.2 hereof plus five percent (5%) (or, if lower, the maximum amount
allowable under applicable law) until the amounts owing hereunder are paid in
full. Titus shall also have all the rights and remedies of a secured party under
the California Commercial Code and the Code or other applicable law, including
the power of sale upon notice, and all rights and remedies provided in this
Agreement, all of which rights and remedies shall, to the fullest extent
permitted by law, be cumulative.

     6.2  Without limiting the generality of the foregoing and subject to the
remaining provisions of this Section 5, upon any Event of Default which has not
been expressly waived in writing, Titus may, at its option, do any one or more
or all of the following acts (subject to the limitations on the rights of Titus
set forth in that certain Subordination Agreement (the "Subordination
Agreement"), dated as of April 14, 2000, by and among Titus, Borrower and
Greyrock Capital), as Titus in its complete and sole discretion may determine
and at such time or times and in such sequence as Titus in its complete and sole
discretion may determine subject only to, where noted, any applicable notice
requirement:

               (i)  Exercise any and all the rights and remedies available to
secured parties under applicable law in foreclosure or otherwise;

                                      -7-
<PAGE>

               (ii)  Institute legal proceedings for the specific performance of
any covenant or agreement undertaken by Borrower under this Agreement or under
any other Financing Document, or for aid in the execution of any power or remedy
herein granted or available at law or in equity;

               (iii) Institute legal proceedings for the sale or assignment,
under the judgment or decree of any court of competent jurisdiction, of any or
all of the Collateral;

               (iv)  Immediately take possession, personally or by agents or
attorneys, of any part or all of the Collateral, without process of law, and
without being responsible for loss or damage (except such damages as result from
Titus' willful misconduct); or

               (v)   Sell or otherwise dispose of all or any part of the
Collateral (free from any and all claims of Borrower or any other party claiming
by, through, or under Borrower at law, in equity or otherwise), at any one or
more public or private sales, in such place or places, at such time or times,
for cash or credit and upon such terms as Titus may in its complete and sole
discretion determine. All demands for performance, notice of sale,
advertisements, manner of sale and presence of the Collateral at any sale,
except only as provided by California Commercial Code Section 9504(3), are
hereby specifically waived by Borrower. Any sale may be conducted by Titus, who
may do other acts required to be done under California Commercial Code Section
9504(3), may deliver possession of the Collateral so sold to the purchaser or
purchasers thereof and Titus in its own right and free from any claim of
Borrower and from any right of redemption, and may purchase and hold any of the
Collateral at any sale. The power of sale hereunder shall not be exhausted by
one or more sales, and Titus may from time to time adjourn any sale.

     6.3  Any written notice given pursuant to California Commercial Code
Section 9504(3) in the manner described in Section 9 hereof at least ten (10)
days before the date of any act undertaken pursuant to Section 5.2 (vi) hereof
shall be deemed to be reasonable prior notice of such act, and specifically, but
without limitation, any notice of sale so given shall be deemed reasonable
notification of the time and place of any public sale hereunder and reasonable
notification of the time after which any private sale or other notification of
the time after which any private sale or other intended disposition to be made
hereunder is to be made. In compliance with the foregoing, Titus may (but shall
not be required to) give all notices required under California Commercial Code
Section 9504(3) within any notice given to Borrower by Titus of an Event of
Default.

     6.4  During the existence of any Event of Default, Titus may (subject to
the limitations set forth in the Subordination Agreement) terminate Borrower's
authority to collect all or any portion of Borrower's gross revenues or other
accounts which constitute Collateral (the "Subject Accounts"), including its
outstanding accounts receivable, contract payment rights and other rights to
receive payments for services rendered or to

                                      -8-
<PAGE>

be rendered, by written notice to Borrower in the manner set forth in Section 9
hereof. During the existence of an Event of Default, (i) Borrower shall deliver
and provide access to Titus and Titus shall have the right to possession of all
books, records and other data or information relating to the Subject Accounts,
(ii) Titus shall have the right to send a notice of assignment or a notice of
Titus' security interest in the Subject Accounts to any and all Persons
contractually or otherwise obligated to pay a or any portion of the Subject
Accounts, (iii) Titus shall have the right to place one or more of its employees
or agents, and Borrower shall grant full and complete access to Titus, into all
of Borrower's offices and other business locations to collect funds on behalf of
Titus, and (iv) Titus shall have the sole right to collect the Subject Accounts
and any other Collateral. During the existence of an Event of Default with
respect to the collection by Titus of Borrower's Subject Accounts and other
Collateral:

               (i)   Titus shall have the right to endorse, assign or deliver in
its name or the name of Borrower any and all checks, drafts and other
instruments for the payment of money relating to the accounts receivable or
other Collateral and Borrower hereby waives notice of presentment, protest and
non-payment of any instrument so endorsed.

               (ii)  Borrower irrevocably appoints Titus as Borrower's attorney-
in-fact coupled with an interest with power (A) to endorse Borrower's name upon
any notes, acceptances, checks, drafts, money orders or other evidences of
payment or Collateral that may come into Titus's possession in connection with
the collection of the Subject Accounts, (B) to sign Borrower's name to any
invoice or bill relating to any of the Subject Accounts or other Collateral,
drafts against any third party payers, assignments or verifications of the
accounts and notices to third party payers, (C) to send invoices, claims and
bills with respect to Borrower's outstanding Subject Accounts, (D) to collect or
to direct the collection of all checks or other payments received with respect
to Borrower's Subject Accounts, and (E) to do all other acts and things
necessary to carry out the provisions of and to enforce Titus's rights under
this Agreement or any other Financing Document, all of which are hereby ratified
and approved as the acts and deeds of Borrower.

               (iii) Titus shall have the right, in its sole discretion, without
notice to or consent of Borrower, to sue upon or otherwise collect, extend the
time for payment of, compromise or settle for cash, credit or otherwise upon any
terms, any of the Subject Accounts or other Collateral, or release the obligor
therefrom.

               (iv)  Titus shall not be responsible nor liable for any shortage,
discrepancy, damage, loss or destruction of any part of the Collateral wherever
the same may be located and regardless of the cause thereof, except to the
extent that it results from Titus's gross negligence or willful misconduct.
Titus shall not, under any circumstances or in any event whatsoever, have any
liability for any error, omission or delay of any kind occurring in the
settlement, collection or payment of any of the

                                      -9-
<PAGE>

accounts receivable or any instrument received in payment thereof or for any
damage resulting therefrom. Titus does not, as a result of this Agreement or in
any assignment or otherwise, assume any of Borrower's obligations under any
contract or agreements, and Titus shall not be responsible in any manner for the
performance by Borrower of any of the terms and conditions thereof, including,
without limitation, Borrower's contracts with other third party payers.

     6.5  In the event that Titus seeks to obtain possession of any of the
Collateral by court process, Borrower hereby irrevocably waives any bonds and
any surety or security relating thereto required by any statute, court rule or
otherwise as an incident to such process or such, possession, and waives any
demand for possession prior to the commencement of any proceeding, suit or
action. Borrower also waives the right to demand a jury in any action in which
Titus is a party with respect to this Agreement or any other Financing Document.

     6.6  Titus shall apply the proceeds from the collection, sale or other
disposition of the Collateral and any other amounts held by it as Collateral
hereunder in the following order:

               (i)   To the payment of all of Titus' actual costs and expenses,
if any (including actual attorneys' fees and costs), in preserving or collecting
the Collateral or Titus's interest in the Collateral and in enforcing or
exercising any rights or remedies or realizing against the security of the
Collateral, including costs and expenses for appraisals, storage, insurance,
advertising and sale;

               (ii)  To the payment of the Obligations in such order as Titus,
in its sole discretion, shall determine; and

               (iii) After payment in full of all of the Obligations (including
those otherwise not due and payable at the time of the application referred to
in Sections 5.6 (i) and 5.6 (ii) hereof), to the payment to Borrower of any
surplus then remaining from such proceeds or otherwise as a court of competent
jurisdiction may direct.

     6.7  The collection, sale or other disposition of all or any part of the
Collateral by Titus pursuant to this Article 5 shall not be deemed to relieve
Borrower of any of its Obligations except to the extent the proceeds thereof are
applied by Titus to the payment of such Obligations.  For purposes of this
Agreement, Titus shall not be deemed to have accepted any property other than
cash in satisfaction of the Obligations unless Titus expressly elects to do so
under the provisions of California Commercial Code Section 9505.

7.   BORROWER'S REPRESENTATIONS AND WARRANTIES
     -----------------------------------------

                                      -10-
<PAGE>

     Borrower represents and warrants to Titus as of the date hereof that:

     7.1  By virtue of the execution and delivery of this Agreement and the
other Financing Documents including the provision of written notices as required
under the California Commercial Code, Titus shall have obtained a perfected
security interest in the Collateral as security for the repayment of the
Obligations, which security interest is enforceable against Borrower and all
other Persons in accordance with its terms, and all filings, recordations and
other actions necessary or advisable under any laws to perfect and protect such
security interest will have been duly taken, except in the case of proceeds
consisting of nonidentifiable cash proceeds as provided in California Commercial
Code Section 9306 and instruments possession of which by Titus is required in
order for Titus to perfect its security interest in the Collateral.

     7.2  Borrower is a corporation duly formed, validly existing and in good
standing under the laws of the State of Delaware.  Borrower has full right,
power and authority to (i) enter into this Agreement, (ii) execute and deliver
this Agreement and any other Financing Document, (iii) comply with the
covenants, conditions and agreements hereof and thereof and (iv) own or lease
its properties and carry on its business activities as, and in the places where,
such properties and assets are now operated or owned or such business is now
conducted or presently proposed to be conducted, except where failure to do so
would not have a material adverse effect on the Borrower.

     7.3  This Agreement and the other Financing Documents constitute the legal,
valid and binding obligation of Borrower, enforceable against Borrower in
accordance with its terms.  All consents, corporate authorizations, approvals,
resolutions, authorizations, or actions required of Borrower for the execution,
delivery and performance of, and for the consummation of the transactions and
performance of the Obligations of Borrower contemplated by this Agreement and
the other Financing Documents have been or will be obtained as of the date of
this Agreement.

     7.4  Each Pledgor is, and at the time of delivery of the Pledged Securities
to Titus will be, the sole holder of record and the sole beneficial owner of the
Pledged Securities pledged by such Pledgor free and clear of any Lien thereon or
affecting the title thereto, except for (i) any Lien created in connection with
the Loan and Security Agreement, and (ii) any Lien created by this Agreement.

     7.5  All of the Pledged Securities have been duly authorized, validly
issued and are fully paid and non-assessable.

     7.6  Such Pledgor has the right and requisite authority to pledge assign,
transfer, deliver, deposit and set over the Pledged Securities pledged to Titus
as provided herein.

                                      -11-
<PAGE>

     7.7  None of the Pledged Securities has been issued or transferred in
violation of the securities registration, securities disclosure or similar laws
of any jurisdiction to which such issuance or transfer may be subject.

8.   COVENANTS OF BORROWER
     ---------------------

     Borrower covenants and agrees that until all of Obligations are satisfied
in full:

     8.1  Borrower shall not sell, convey, or otherwise dispose of any of the
Collateral or any interest therein except in the ordinary course of business, or
create or incur, or permit to exist any pledge, mortgage, lien, levy,
attachment, charge, encumbrance or security interest whatsoever in or with
respect to any of the Collateral, or the proceeds thereof, other than that
created by this Agreement and those granted to Greyrock Capital pursuant to the
Loan and Security Agreement, without the prior written consent of Titus, which
consent may be withheld in the sole discretion of Titus.

     8.2  Borrower shall not change its principal place of business without the
prior written consent of Titus, which consent may be withheld in the sole
discretion of Titus.

     8.3  Borrower shall, at its sole cost and expense, defend and protect
Titus's right, title, property and security interest in and to the Collateral
against the claims and demands of any Person, including appearing in and
defending any action or proceeding which may adversely affect Borrower's title
to or Titus's interest in the Collateral.

     8.4  Borrower has not executed and hereafter will not execute any security
agreement or financing statement covering any of the Collateral except in favor
of Titus or Greyrock Capital pursuant to the Loan and Security Agreement and
will keep the Collateral free and clear of all pledges, mortgages, liens,
levies, attachments, charges, encumbrances or security interests whatsoever of
any kind or nature and those granted herein or to Greyrock Capital pursuant to
the Loan and Security Agreement.

     8.5  Borrower will immediately notify Titus in writing of any event or
circumstance which materially affects the value of the Collateral, the ability
of Borrower to collect or dispose of the Collateral, or the rights and remedies
of Titus in relation thereto, including the levy of legal process against the
Collateral and the adoption of any marketing order, arrangement or procedure
affecting the Collateral, except where such events occur due to the security
interest of Greyrock Capital in the Collateral.

     8.6  Borrower shall defend, indemnify and hold Titus harmless from and
against any and all losses, costs, damages, liabilities or expenses, including,
but not limited to, reasonable attorneys' fees that Titus may sustain or incur
by reason of defending or protecting its security interest or the priority
thereof occasioned by Borrower's breach of any covenant contained in this
Section 7 or enforcing payment of the indebtedness hereby secured, or in the
prosecution or defense of any action or proceeding concerning any matter growing
out of or connected with this Agreement, the

                                      -12-
<PAGE>

other Financing Documents, the Obligations, or the Collateral, except to the
extent such losses, costs, damages, liabilities, expenses or fees are caused by
the gross negligence or willful misconduct of Titus.

9.   ADDITIONAL WAIVERS BY BORROWER
     ------------------------------

     Borrower waives any right to require Titus to proceed against any other
Person or to proceed against or exhaust the Collateral or any other security
which Titus, may now or hereafter have, or, with respect to the Obligations or
any other indebtedness of Borrower now or hereafter existing in favor of Titus,
pursue any other right or remedy in Titus's power and Borrower waives all
defenses arising by reason of any disability or other defense of Borrower or any
other Person, or by reason of the cessation from any cause whatsoever of the
liability of Borrower or any other Person.  Until all of the Obligations are
fully performed and satisfied, Borrower shall not have any right of subrogation,
and Borrower waives any right to enforce any remedy which Titus now has or may
hereafter have against any other Person under this Agreement or otherwise, and
waives any benefit of and any right to participate in the Collateral or any
other security whatsoever now or hereafter held by Borrower.  Borrower hereby
subordinates to and in favor of Titus, all rights, titles and interests now
possessed by Borrower or which Borrower may hereafter acquire in or with respect
to any of the property which is or may hereafter be or become included as part
of the Collateral, to the end and with the intent that the security interest
granted hereunder in favor of Titus shall be and remain prior and preferred to
any security interest, pledge, lien, charge or claim of Borrower of, on or with
respect to any such property until the Obligations are fully performed and
satisfied.

10.  NOTICES
     -------

     All notices, requests, demands and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
delivered to the party to whom notice is to be given, either (i) by personal
delivery (in which case such notice shall be deemed given as of the date of
delivery), (ii) by facsimile transmission, effective upon confirmation of
receipt from the recipient party (including automatic mechanical confirmation)
or (iii) by first class mail, registered or certified, return receipt requested,
postage prepaid (in which case such notice shall be deemed given on the third
(3rd) day following the date of such mailing), and properly addressed as
follows:

If to Borrower:  Interplay Entertainment Corp., 16815 Von Karman Ave, Irvine, CA
92606; Attention: Mr. Brian Fargo; Facsimile: (949) 252-0667

If to Titus: Titus Interactive SA, Parc de L'Esplanade, 12 rue Enrico Fermni,
Saint Thibault des Vignes 77 100; Attention: Mr. Herve Caen; Facsimile: 011-33-
1-60-31-5960

     Either party hereto may change its address for the purposes of this Section
9 by giving the other party written notice of the new address in the manner set
forth in this Section 9.

                                      -13-
<PAGE>

11.  COSTS OF COLLECTION
     -------------------

     If the amounts due hereunder are not paid when and as due, Borrower hereby
agrees to pay all costs of collection, including, but not limited to, actual
attorneys' fees and expenses, incurred by the Titus hereof on account of such
collection, whether or not suit is instituted.

12.  GOVERNING LAW AND SEVERABILITY
     ------------------------------

     This Agreement and the rights and Obligations of the parties under any
other Financing Document shall in all respects be governed by and construed and
interpreted in accordance with the laws of the State of California applicable to
transactions entered into and to be wholly performed within the State of
California.  Borrower and Titus agree that all actions and proceedings relating
directly or indirectly hereto shall be litigated in the State of California, and
Borrower and Titus expressly consent to the jurisdiction of any California
Superior Court and to venue therein, and consents to the service of process in
any such action or proceedings, in addition to any other manner permitted by
law, by compliance with the provisions of this Section 11.  Nothing in this
Agreement or any other Financing Document shall be construed so as to require or
permit the commission of any act contrary to law, and wherever there is any
conflict between any provision of this Agreement or any other Financing Document
and any present or future statute, law, ordinance or regulation, contrary to
which the parties have no power to contract, the latter shall prevail, and the
provisions of this Agreement so affected shall be curtailed and limited, but
only to the extent necessary to bring them within the requirements of the law,
and the remainder hereof and thereof shall continue in full force and effect.

13.  MISCELLANEOUS
     -------------

     13.1  This Agreement and the other Financing Documents embody the entire
agreement between the Borrower and Titus with respect to the transactions
contemplated herein and supersede all prior proposals, agreements and
undertakings relating to the subject matter hereof.

     13.2  Borrower may not assign this Agreement or any other Financing
Document or assign or delegate any of its rights or Obligations hereunder or
thereunder, without the prior written consent of Titus. Subject to the
foregoing, this Agreement and the other Financing Documents shall be binding
upon and inure to the benefit of, and bind, the parties hereto and thereto and
their respective heirs, legal representatives, successors and assigns. Titus may
assign its rights and delegate its duties under this Agreement or under any
other Financing Document.

                                      -14-