STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT (the "Agreement") is made and entered into as of
the 23rd day of March, 1999, by and between ACTIVISION, INC., a Delaware
corporation (the "Company") and Xxxxxx X. Xxxxxx (the "Optionee").
WHEREAS, the Company and the Optionee have entered into that certain
Employment Agreement dated as of the date hereof (the "Employment
Agreement").
WHEREAS, the Company considers it desirable and in its best interests
that Optionee be granted the option to purchase an aggregate of One Million
(1,000,000) shares of Common Stock of the Company, par value $.000001 per
share (the "Common Shares"), upon the terms and conditions set forth in this
Agreement.
WHEREAS, on March 23, 1999, the Stock Option and Compensation Committee
of the Board of Directors approved the granting of the option pursuant to the
terms of this Agreement.
NOW, THEREFORE, for good and valuable consideration paid by the Optionee
to the Company, the adequacy of which is hereby acknowledged, and the mutual
covenants hereinafter set forth, the parties agree as follows:
1. Grant of Option. The Company hereby grants to the Optionee the
right and option (hereinafter the "Option") to purchase all or any part of an
aggregate of One Million (1,000,000) Common Shares (subject to adjustment as
provided in Paragraph 6 hereof), on the terms and conditions set forth herein
2. Purchase Price. The purchase price of the Common Shares covered by
the Option shall be $10.50 per share (subject to adjustment as provided in
Paragraph 6 hereof) (the "Purchase Price").
3. Term of the Option. The Option shall vest and be exercisable as
follows: (i) the Option shall be exercisable as to 200,000 shares, at any
time after the date hereof and prior to the Expiration Date (as defined in
Section 16), (ii) the Option shall be exercisable as to an additional 200,000
shares, at any time after the first anniversary of the date hereof and prior
to the Expiration Date, (iii) the Option shall be exercisable as to an
additional 200,000 shares, at any time after the second anniversary of the
date hereof and prior to the Expiration Date, (iv) the Option shall be
exercisable as to an additional 200,000 shares, at any time after the third
anniversary of the date hereof and prior to the Expiration Date, (v) the
Option shall be exercisable as to an additional 200,000 shares, at any time
after the fourth anniversary of the date hereof and prior to the Expiration
Date, and (vi) the Option shall be exercisable as set forth in Sections 7(b)
and 16(c).
4. Method of Exercising Option.
4.1 The Optionee may exercise the Option in whole or in part (to
the extent that it is exercisable in accordance with its terms) by giving
written notice to the Company, specifying therein the number of Common Shares
which the Optionee then elects to purchase or with respect to which the
Option is being exercised, and the method by which the Optionee intends to
pay for the Common Shares. The date on which the notice is given to the
Company is hereinafter referred to as the "Date of Exercise."
4.2 As soon as practicable after receipt by the Company of such
notice and of payment in full of the Purchase Price of all the Common Shares
with respect to which the Option has been exercised, a certificate or
certificates representing such Common Shares shall be issued in the name of
the Optionee and shall be delivered to the Optionee.
4.3 The Optionee may pay the Purchase Price in one of the
following manners:
(a) Cash Exercise; Exchange of Shares. The Optionee shall
deliver the Purchase Price (A) in immediately available funds or (B) by
surrendering to the Company certificate(s) representing a number of shares of
common stock of the Company with a value equal to Purchase Price, where the
value of such shares of common stock is equal to the average of the closing
sale prices of such common stock for the five (5) trading days immediately
prior to (but not including) the Date of Exercise.
(b) Cashless Exercise. The Optionee shall surrender this
Option to the Company, in which event the Company shall issue to the Optionee
the number of Common Shares determined as follows:
X = (Y* (A-B))/A
where:
X = the number of Common Shares to be issued to the Optionee;
Y = the number of Common Shares with respect to which this Option is
being exercised;
A = the average of the closing sale prices of the common stock of the
Company for the five (5) trading days immediately prior to (but not
including) the Date of Exercise;
B = the Purchase Price.
4.4 For purposes of Rule 144 promulgated under the Securities Act,
it is intended, understood and acknowledged that the Common Shares issued in
a cashless exercise transaction shall be deemed to have been acquired by the
Optionee, and the holding period for the Common Shares shall be deemed to
have been commenced, on the date hereof.
5. Availability of Shares. The Company, during the term of this
Option, at all times shall keep available the number of shares of common
stock required to satisfy the Option. The Company shall utilize its best
efforts to comply with the requirements of each regulatory commission or
agency having jurisdiction in order to issue and sell the Common Shares to
satisfy the Option. Such compliance will be a condition precedent to the
right to exercise the Option. The inability of the Company to effect such
compliance with any such regulatory commission or agency which counsel for
the Company deems necessary for the lawful issuance and sale of the Common
Shares to satisfy this Option shall relieve the Company from any liability
for failure to issue and sell the Common Shares to satisfy the Option for
such period of time as such compliance is not effectuated.
6. Adjustments.
6.1 Stock Splits and Combinations. If prior to the exercise of
any option granted hereunder the Company shall have effected one or more
stock split-ups, stock dividends, or other increases or reductions of the
number of shares of its common stock outstanding without receiving
compensation therefor in money, services or property, the number of Common
Shares subject to the option hereby granted shall (a) if a net increase shall
have been effected in the number of outstanding shares of the Company's
Common Shares, be proportionately increased and the cash consideration
payable per Common Share shall be proportionately reduced; and (b) if a net
reduction shall have been effected in the number of outstanding shares of the
Company's Common Shares, be proportionately reduced and the cash
consideration payable per Common Share be proportionately increased.
6.2 Reclassification, Exchange or Substitution. Except as set
forth in Section 7 below, if the Common Shares issuable upon exercise of this
Option shall be changed into the same or different number of shares of any
other class or classes of shares, whether by capital reorganization,
reclassification, exchange or otherwise (other than pursuant to a subdivision
or combination of shares as provided for in clause (a) above), the holder of
this Option shall on its exercise be entitled to purchase, in lieu of the
Common Shares which the Optionee would have become entitled to purchase but
for such change, a number of shares of such other class or classes of stock
equivalent to the number of Common Shares that would have been subject to
purchase by the Optionee on exercise of this Option immediately before such
change.
7. Change of Control. In the event that the Optionee is an employee
of the Company at the moment immediately prior to a Change of Control (as
defined herein), the Optionee shall be entitled to receive all benefits
described in this Section 9.
7.1 For purposes of this Agreement, a "Change of Control" shall be
deemed to occur upon the occurrence of any of the following events:
(a) any "person" or "group" (as such terms are used in
Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and the rules and regulations promulgated thereunder),
other than any "person" or "group" with which the Optionee is an Affiliate,
is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5
under the Exchange Act), directly or indirectly, of more than 15% of the
total outstanding voting stock of the Company;
(b) the individuals who constitute the Board as of the date
of this Agreement (the "Incumbent Board") cease to constitute a majority of
the Board, for any reason(s) other than (A) the voluntary resignation of one
more Board members; (B) the removal of one or more directors by the Company's
shareholders for good cause; provided, however (1) that if the nomination or
election of any new director of the Company was approved by a majority of the
Incumbent Board, such new director shall be deemed a member of the Incumbent
Board and (2) that no individual shall be considered a member of the
Incumbent Board if such individual initially assumed office as a result of
either an actual or threatened "Election Contest" (as described in Rule
14a-11 promulgated under the Securities Exchange Act of 1934, as amended) or
as a result of a solicitation of proxies or consents by or on behalf of any
"person" or "group" identified in clause (a)(i) above; or
(c) the Company consolidates with, or merges with or into
another person or entity or conveys, transfers, leases or otherwise disposes
of all or substantially all of its assets to any person or entity, or any
person or entity consolidates with or merges with or into the Company;
provided, however that (A) the Optionee is not an Affiliate of such person or
entity and (B) any such transaction shall not constitute a Change of Control
if the shareholders of the Company immediately before such transaction own,
directly or indirectly, immediately following such transaction in excess of
sixty-five percent (65%) of the combined voting power of the outstanding
voting securities of the corporation or other person or entity resulting from
such transaction in substantially the same proportion as their ownership of
the voting securities of the Company immediately before such transaction.
(d) For purposes of this subsection, the term "Affiliate"
means, with respect to any individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind (each a "Person"), any other
Person that directly or indirectly controls or is controlled by or under
common control with such Person. For the purposes of this definition,
"control," when used with respect to any Person, means the possession, direct
or indirect, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise; and the terms of "affiliated,"
"controlling" and "controlled" have meanings correlative to the foregoing.
7.2 Upon the occurrence of a Change of Control, this Option, to
the extent not previously exercised, shall immediately vest and become
exercisable in full for a period of ten (10) years commencing on the date of
the Change of Control without regard to Sections 16(b), (c) or (d).
8. Notice of Adjustments. The Company shall give notice of each
adjustment or readjustment of the purchase price or the number of Common
Shares or other securities issuable upon exercise of this Option to the
Optionee at the Optionee address as shown on the Company's books.
9. No Change. The form of this Option need not be changed because of
any adjustment in the Purchase Price or in the number of Common Shares
purchasable upon its exercise. An Option issued after any adjustment upon
any partial exercise or in replacement may continue to express the same
Purchase Price and the same number of Common Shares (appropriately reduced in
the case of partial exercise) and such Purchase Price and number of Common
Shares shall be considered to have been so changed as of the close of
business on the date of adjustment.
10. Replacement. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Option and, in
the case of loss, theft or destruction, on delivery of any indemnity
agreement or bond reasonably satisfactory in form and amount to the Company,
or in the case of mutilation, surrender and cancellation of this Option, the
Company at its expense will execute and deliver, in lieu of this Option, a
new Option of like tenor.
11. Restrictions. The holder of this Option, by acceptance hereof,
represents, warrants and covenants as follows:
11.1 This Option and the right to purchase the Common Shares is
personal to the holder and shall not be transferred to any other person,
other than by will or the laws of descent and distribution. Notwithstanding
the foregoing, the Optionee may, at any time and from time to time, transfer
all or any part of his rights under this Option and the right to purchase the
Common Shares to his spouse or children, or to a trust created by the
Optionee for the benefit of the Optionee or his immediate family or to a
corporation or other entity controlled by the Optionee and in which the
Optionee or members of his immediate family have all of the economic
interests.
11.2 The Company may postpone the issuance and delivery of Common
Shares upon any exercise of the Option until (a) the admission of such Common
shares to listing on any stock exchange or exchanges on which Common Shares
of the Company of the same class are then listed and (b) the completion of
such registration or other qualification of such Common Shares under any
state or federal law, rule or regulation as the Company shall determine to be
necessary or advisable. The Optionee shall make such representations and
furnish such information as may, in the opinion of counsel for the Company,
be appropriate to permit the Company, in light of the then existence or non-
existence with respect to such Common Shares of an effective Registration
Statement under the Securities Act of 1933, as amended, to issue the Common
Shares in compliance with the provisions of that or any comparable act.
11.3 The Company may cause the following legend to be set forth on
each certificate representing Common Shares or any other security issued or
issuable upon exercise of the Option unless counsel for the Company is of the
opinion as to any such certificate that such legend is unnecessary:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE ACT, THE AVAILABILITY OF WHICH IS ESTABLISHED BY AN OPINION
FROM COUNSEL TO THE COMPANY.
12. No Rights as Optionee. Nothing contained herein shall be construed
to confer upon the Optionee any right to be continued in the employ of the
Company or as a director of the Company or derogate from any right of the
Company to retire, request the resignation of, or discharge the Optionee at
any time, with or without cause. The Optionee shall not, by virtue hereof,
be entitled to any rights of a stockholder in the Company, either at law or
in equity, and the rights of the Optionee are limited to those expressed
herein and are not enforceable against the Company except to the extent set
forth herein.
13. Shareholder's Rights. Except for transfers pursuant to Section
11(a) above or in the event of the Optionee's death as provided in Section 16
below, this Option is non-transferable by the Optionee. On any attempt to
transfer or otherwise dispose of this Option other than pursuant to the terms
hereof, this Option shall immediately become null and void. The Optionee
shall have no rights as a shareholder with respect to the Common Shares until
payment of the Option price and delivery to the Optionee of the Common Shares
as provided herein.
14. Withholding. In the event that the Optionee elects to exercise
this Option or any part thereof, and if the Company shall be required to
withhold any amounts by reason of any federal, state or local tax laws, rules
or regulations in respect of the issuance of Common Shares to the Optionee
pursuant to the Option, the Company shall be entitled to deduct and withhold
such amounts from any payments to be made to the Optionee. In any event, the
Optionee shall make available to the Company promptly when requested by the
Company sufficient funds to meet the requirements of such withholding; and
the Company shall be entitled to take and authorize such steps as it may deem
advisable in order to have such funds available to the Company out of any
funds or property due or to become due to the Optionee. Notwithstanding the
foregoing, the Optionee may request the Company not to withhold any or all of
the amounts otherwise required to be withheld; provided that the Executive
provides the Company with sufficient documentation as may be required by
federal, state or local tax laws, rules or regulations supporting his request
that such amount is not required to be withheld, in which case the Company
may, in its reasonable discretion, reduce such withholding amounts to the
extent permitted by applicable laws, rules and regulations.
15. Registration Rights. The Company hereby covenants and agrees to
promptly file, no later than 60 days from the date hereof, a registration
statement on Form S-8 (the "Registration Statement") with the Securities and
Exchange Commission with respect to the Common Shares, including a reoffer
prospectus, to the extent required.
16. Termination of Option. Except as otherwise stated herein,
including Section 7(b), the Option, to the extent not theretofore exercised,
shall terminate upon the first of the following dates to occur (the
"Expiration Date"):
16.1 In the event of the Optionee's death or Disability (as defined
in the Employment Agreement), this Option, to the extent exercisable at the
Date of Termination (as defined in the Employment Agreement), in the case of
death, may be exercised by the estate of the Optionee or any person who
acquired the Option by bequest or inheritance, or, in the case of Disability,
may be exercised by the Optionee or his legal representative, in accordance
with the terms of this Option, at any time prior to twelve (12) months
following such death or Disability, as the case may be, after which the
Option shall terminate and shall no longer be exercisable;
16.2 In the event of the termination of the Optionee's employment
for Cause and by the Optionee upon a Resignation (each as defined in the
Employment Agreement), this Option and all rights granted hereunder shall be
forfeited and deemed canceled and no longer exercisable on and after the 30th
day following the date of such termination of employment, unless the Board
determines otherwise; and
16.3 In the event that the Executive's employment is terminated by
the Company Without Cause or by the Executive for Good Reason (each as
defined in the Employment Agreement), this Option and all rights granted
hereunder shall, upon the Date of Termination (as defined in the Employment
Agreement), immediately vest and become exercisable (if not already vested
and exercisable), and may be exercised by the Optionee in whole or in part at
any time or from time to time prior to the later of the fifth anniversary of
the Date of Termination or January 12, 2009, after which time the Option
shall terminate and shall no longer be exercisable; or
16.4 January 12, 2009, the tenth anniversary of this Agreement.
17. Validity and Construction. This Option shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware.
Such construction is vested in the board and its construction shall be final
and conclusive.
18. Amendment. The Board of Directors of the Company may, with the
consent of the Optionee, at any time or from time to time amend the terms of
this Option.
19. Notices. Any notice which either party hereto may be required or
permitted to give to the other shall be in writing, and may be delivered
personally or by mail, postage prepaid, or overnight courier, addressed as
follows: if to the Company, at its office at 0000 Xxxxx Xxxx Xxxxxxxxx,
Xxxxx Xxxxxx, Xxxxxxxxxx 00000, or at such other address as the Company by
notice to the Optionee may designate in writing from time to time; and if to
the Optionee, at the address shown below his signature on this Option
Certificate, or at such other address as the Optionee by notice to the
Company may designate in writing from time to time. Notices shall be
effective upon receipt.
20. Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and to the extent not prohibited
herein, their respective heirs, successor, assigns and representatives.
Nothing in this Agreement, expressed or implied, is intended to confer on any
person other than the parties hereto and as provided above, their respective
heirs, successors, assigns and representatives any rights, remedies,
obligations or liabilities.
[SIGNATURE PAGES BEGIN ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the parties have executed this Option Certificate as
of the date set forth above.
ACTIVISION, INC.
By /s/ Xxxxx X. Xxxxx
---------------------------
Name: Xxxxx X. Xxxxx
Title: Co-Chairman
ACCEPTED:
/s/ Xxxxxx X. Xxxxxx
---------------------------
Xxxxxx X. Xxxxxx
0000 Xxxx Xxx
---------------------------
Address
Xxxxxxx Xxxxx, XX 00000
---------------------------
City, State, Zip Code
Social Security Number: __________________
