EXHIBIT 10.10
EMPLOYMENT AGREEMENT
Employment Agreement, dated as of January 12, 1999, by and between
ACTIVISION, INC.., a Delaware corporation with its principal offices at 0000
Xxxxx Xxxx Xxxxxxxxx, Xxxxx Xxxxxx, XX 00000 (the "COMPANY"), and XXXXXX X.
XXXXXX (the "EXECUTIVE").
RECITALS:
WHEREAS, the Board of Directors of the Company (the "BOARD") has determined
that it is in the best interests of the Company and its stockholders to assure
that the Company will have the continued dedication of the Executive by
providing him with the compensation and benefit arrangements contained herein;
WHEREAS, the Board approved the execution and delivery of this Agreement by
the Company at a meeting of the Board held on January 12, 1999;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. POSITION AND DUTIES.
(a) The Company agrees to continue to employ the Executive, and
the Executive agrees to continue to be employed, as Chairman and Chief
Executive Officer of the Company, subject to the supervision of, and
reporting only to, the Board. The Executive shall have such senior executive
powers, duties, authorities and responsibilities as are consistent with the
Executive's position and title and as have historically been performed by
Executive, including acting as co-chairman of any meeting of the Board,
supervising financing, acquisitions and similar major strategic transactions
and strategic planning for the Company consistent with his title and
position, supervising the President and Chief Operating Officer of the
Company and managing all non-operating activities of the Company, including
corporate governance, organizational structure, acquisitions and financing,
senior executive compensation, stock and stock option issuances and stock
option plan management. At all times during the period of Executive's
employment, the Executive shall, unless he otherwise elects, be nominated for
election by the shareholders of the Company to the Board.
(b) During the Employment Period (as defined in Section 2 below) and
excluding any periods of vacation, the Executive agrees to devote such time,
attention and efforts to the business and affairs of the Company as may be
necessary to discharge the duties and responsibilities assigned to the Executive
hereunder and to use the Executive's reasonable best
efforts to perform faithfully and efficiently such duties and responsibilities.
(c) It shall not be a violation of this Agreement for the Executive
to engage in any activity which is, in the good faith opinion of the Executive,
not inconsistent with the Company's interests and prospects, including, without
limitation, (a) serving on civic or charitable boards or committees; (b) serving
as an officer or director of any Company that is not in a Competitive Business
(as defined herein); (c) delivering lectures, fulfilling speaking engagements or
teaching at educational institutions; (d) managing personal investments; and (e)
attending conferences conducted by business organizations; provided, however,
that such activity does not significantly interfere with the performance of
Executive's duties and responsibilities hereunder. It is expressly understood
and agreed that to the extent that any activity has been conducted by the
Executive prior to the date of this Agreement, the continued conduct of such
activity (or the conduct of an activity similar in nature and scope thereto)
during the Employment Period shall be deemed not to interfere with the
performance of the Executive's duties and responsibilities to the Company and
shall not constitute a violation of this Agreement.
(d) Except for periodic travel assignments, the Executive shall not,
without his consent, be required to perform services for the Company at any
place other than the principal place of the Company's business which shall at
all times, unless the Executive otherwise consents, be within a 20 mile radius
of the Company's current principal place of business. Notwithstanding anything
herein to the contrary, the Executive may, at his sole discretion and upon prior
written notice to the Board, relocate at any time to New York City, New York in
connection with the establishment by the Company of executive offices in such
city.
2. EMPLOYMENT PERIOD. The employment of the Executive under the terms of
this Agreement shall become effective on the date hereof and terminate on March
31, 2004 (the "EMPLOYMENT PERIOD"). Notwithstanding anything contained herein
to the contrary, the Executive's employment pursuant to the terms of this
Agreement is subject to termination pursuant to Section 5 below.
3. COMPENSATION. The Executive shall receive the following compensation
(the Compensation") for his services hereunder:
(a) BASE SALARY. The Company shall pay to the Executive a base
salary ("Base Salary") in respect of each fiscal year of the Company or portion
thereof during the Employment Period. Commencing on January 12, 1999, the
initial Base Salary for the fiscal year ending March 31, 1999 shall be $297,500.
Commencing on April 1, 1999, the Base Salary for the fiscal year ending March
31, 2000 shall be automatically increased to $350,000. Thereafter, on April 1
of each year of the Employment Period, beginning on April 1, 2000, the Base
Salary shall automatically increase to an amount equal to one hundred ten (110%)
percent of the Base Salary for the prior fiscal year. The Company may withhold
from any amounts payable under this Agreement all applicable tax, Social
Security and other legally required withholding pursuant to any law or
regulation ("WITHHOLDING"). The Base Salary shall be paid in accordance with
the customary payroll practices of the Company at regular intervals, but in no
event less frequently than every month, as the Company may establish from time
to time for senior executive employees of the Company. The Board shall conduct
an annual performance appraisal and salary review on behalf of the Executive and
may adjust the Base Salary for any succeeding fiscal year, but never below the
Base Salary that would have been in effect during such succeeding fiscal year in
accordance with this Section 3(a). Any period of less than a full fiscal year
which the Base Salary is calculated shall be pro rata.
(b) ANNUAL BONUS. The Executive shall be entitled to receive an
annual bonus for each fiscal year (the "ANNUAL BONUS"), beginning with the
fiscal year ending March 31, 2000, based upon the Company achieving mutually
agreed upon financial and business objectives for the fiscal year with respect
to which the Annual Bonus accrues. Such financial and business objectives for
each fiscal year shall be (i) agreed to by the Executive and the Board not later
than fifteen (15) days prior to the beginning of each fiscal year and shall be
(ii) made in accordance with Section 11 of the Company's 1998 Incentive Plan.
The Company shall pay each Annual Bonus to the Executive no later than thirty
(30) days after the completion of the Company's audited consolidated financial
statements by the Company's auditors for the subject fiscal year. Each Annual
Bonus payment shall be subject to Withholding. Along with the payment of each
Annual Bonus, the Company shall also deliver to the Executive a written
statement setting forth the basis of its calculation of such Annual Bonus. The
Executive and the Executive's representatives shall have the right, at the
Executive's cost, to inspect the records of the Company with respect to the
calculation of any such Annual Bonus, to make copies of said records utilizing
the Company's facilities without charge, and to have free and full access
thereto upon reasonable notice during the normal business hours of the Company.
Any period of less than a full fiscal year which the Annual Bonus is calculated
shall be pro rata. The Annual Bonus is intended to qualify as a Performance
Award under Section 11 of the Company's 1998 Incentive Plan and shall be subject
to the conditions and limitations of such section.
(c) PERFORMANCE BONUS. The Board, in its sole discretion, may award
to the Executive a performance bonus at any time in such amount and in such form
as the Board may determine (the "PERFORMANCE BONUS"), after taking into
consideration other compensation paid or payable to the Executive under this
Agreement, as well as the financial and non-financial progress of the business
of the Company and the contributions of the Executive toward that progress. Any
Performance Bonus shall be subject to Withholding. Any period of less than a
full fiscal year which the Performance Bonus is calculated shall be pro rata.
With respect to the fiscal year ending March 31, 1999, the Company shall award
to the Executive a Performance Bonus based upon the achievement by the Company
of its strategic and financial objectives as heretofore presented to the Board.
4. BENEFITS.
(a) MEDICAL, ETC. The Executive shall be entitled to such medical
and other benefits, including hospitalization, disability, life and health
insurance, to the extent offered by the Company, as are customarily made
available to senior executive officers of the Company and upon the same terms.
The Executive shall also be entitled to receive those benefits and
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privileges that the Company currently, and may at any time in the future,
provide for its executive officers upon the same terms.
(b) EXPENSES. The Executive shall be reimbursed by the Company for
all reasonable travel, entertainment, conference expenses, organization dues and
other expenses incurred by the Executive in connection with the performance of
Executive's services under this Agreement, subject to the Company's policies in
effect from time to time with respect to such expenses, including the
requirements with respect to reporting and documentation of such expenses.
(c) OFFICE AND SUPPORT STAFF. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, including personal secretarial and other
assistance, at least equal to the most favorable of the foregoing provided to
the Executive by the Company at any time during the 90-day period immediately
preceding the date of this Agreement, or, if more favorable to the Executive, as
provided at any time after such date to Executive or other senior executive
officers of the Company.
(d) VACATION. The Executive shall be entitled to four (4) weeks paid
vacation each fiscal year during the Employment Period, in addition to regular
paid holidays provided to all employees of the Company; provided that unused
vacation time shall not be carried over to any subsequent year. Vacation time
shall be taken as determined by the Executive in his reasonable and good faith
discretion; provided that such time taken is mutually convenient to the Company
and not disruptive to the Company's activities or the Executive's
responsibilities.
(e) LIFE INSURANCE. The Company shall purchase and maintain a
renewable term insurance policy or policies for a period of ten (10) years
commencing as soon as practicable after the date hereof covering the life of the
Executive in an amount of $3,000,000 naming the Executive's estate or any other
person designated by the Executive as beneficiary of such policy or policies.
The Executive has the right to require the Company at any time to prepay all of
the premiums associated with such policy or policies so as to ensure such
policies remain in force for the full ten (10) year period.
5. TERMINATION. The employment by the Company of the Executive shall be
terminated as provided in this Section 5:
(a) DEATH. Upon the Executive's death ("DEATH").
(b) DISABILITY.
(i) The Company or the Executive, upon not less than thirty (30)
days written notice to the other party ("DISABILITY NOTICE"), may terminate the
employment by the Company of the Executive if the Executive has been unable, by
reason of physical or mental disability, to render, for 120 successive days or
for shorter periods aggregating 210 days or more
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in any twelve month period, services of the character contemplated by this
Agreement and will be unable to resume providing such services within a
reasonable period of time by reason of such disability (such circumstances
being referred to as "DISABILITY").
(ii) The determination of whether the Executive has become
disabled within the meaning of this Section 5(b) shall be made (A) in the case
of a termination of employment by the Company, by a medical doctor selected by
the Company, or (B) in the case of a termination of employment by the Executive,
by Executive's medical doctor. In the event the Company gives a notice of
termination of employment under this Section 5(b), the Executive or his
representative may at any time prior to the effective date of termination
contest the termination and cause a determination of Disability to be made by
Executive's medical doctor. In the event the Executive gives a notice of
termination of employment under this Section 5(b), the Company may at any time
prior to the effective date of termination contest the termination and cause a
determination of Disability to be made by a medical doctor selected by the
Company. In either case, if such medical doctors do not agree with regard to
the determination of Disability, they shall mutually choose a third medical
doctor to examine the Executive, and the Disability determination of such third
medical doctor shall be binding upon both the Company and the Executive.
(c) WITHOUT CAUSE. By the Company, for any reason other than Death,
Cause or Disability, but only upon a vote of a majority of the entire Board at a
meeting duly called and held at which Executive shall have the right to be
present and be heard.
(d) CAUSE. By the Company, for Cause, but only upon a vote of a
majority of the entire Board at a meeting duly called and held at which
Executive shall have the right to be present and be heard. The term "Cause"
means (i) any act of fraud or embezzlement in respect of the Company or its
funds, properties or assets; or (ii) conviction of the Executive of a felony
relating to his actions as an executive of the Company under the laws of the
United States or any state thereof (provided that all rights of appeal have been
exercised or have lapsed) unless such acts were committed in the reasonable,
good faith belief that his actions were in the best interests of the Company and
its stockholders and would not violate criminal law; or (iii) willful misconduct
or gross negligence by the Executive in connection with the performance of his
duties that has caused or is highly likely to cause severe harm to the Company;
or (iv) intentional dishonesty by the Executive in the performance of his duties
hereunder which has a material adverse effect on the Company.
(e) RESIGNATION. By the Executive, other than for Good Reason, as
hereinafter defined ("RESIGNATION").
(f) GOOD REASON. By the Executive, for Good Reason. As used herein,
the term "GOOD REASON" means that, without the Executive's prior written
consent, there shall have occurred: (i) a reduction in the Executive's Base
Salary other than the dollar amount of the Annual Bonus or the dollar amount of
the Performance Bonus; (ii) a material reduction in the Executive's benefits;
(iii) the assignment to the Executive of any duties inconsistent with the
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Executive's position, duties, responsibilities, authority or status with the
Company or a change in Executive's reporting responsibilities, titles or offices
as in effect prior to such assignment or change; (iv) the Company's material
breach or failure to perform, when due, any of its obligations under this
Agreement, unless cured within 10 days after receipt of written notice by the
Company from the Executive specifically identifying the manner in which the
Executive believes the Company has materially breached such obligations; (v) any
purported termination of Executive's employment which is not effected pursuant
to a Notice of Termination satisfying the applicable requirements with respect
to Section 6 of this Agreement; or (vi) a determination by the Executive, made
in good faith, that the Executive is not able to discharge his duties
effectively by reason of directives from the Board, a Change of Control or
similar circumstances.
6. NOTICE AND DATE OF TERMINATION. Any termination of the Executive's
employment under Section 5, other than by reason of Death, shall be communicated
by written Notice of Termination from the terminating party to the other party
hereto. For purposes of this Agreement, a "NOTICE OF TERMINATION" shall mean a
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated. The effective date of any termination of the
Executive's employment (the "DATE OF TERMINATION") shall be:
(a) if the Executive's employment is terminated by Death, the date of
the Executive's death;
(b) if the Executive's employment is terminated by the Company
Without Cause or by the Executive for Good Reason, 30 days after Notice of
Termination is given;
(c) if the Executive's employment is terminated by reason of
Disability, (i) 30 days after the Disability Notice or (ii) upon a final
determination, pursuant to Section 5(b)(ii) above, as the case may be, whichever
is later; provided that the Executive shall not have returned to the full-time
performance of his duties during such period; and
(d) if the Executive's employment is terminated on account of Cause
or Resignation, the date specified in the Notice of Termination, which shall be
no less than ten (10) nor more than 30 days after such Notice of Termination is
given.
7. COMPENSATION UPON TERMINATION. The Executive shall be entitled to the
following Compensation from the Company upon termination of employment pursuant
to Section 5 in full discharge of the Company's obligations (each a "TERMINATION
COMPENSATION"):
(a) COMPENSATION UPON DEATH. In the event of termination of the
Executive's employment upon Death, the Executive's heirs, successors or legal
representatives shall be entitled to receive: (i) the Base Salary through the
Date of Termination; (ii) any unpaid Annual Bonus and Performance Bonus for any
prior fiscal year; (iii) pro rata Annual Bonus for the current fiscal year; (iv)
an amount equal to 300% of the dollar amount of the Base Salary paid or payable
to the Executive hereunder for the Company's most recent fiscal year immediately
prior
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to the Executive's date of death; (v) reimbursement due to Executive pursuant
to Section 4(b); (vi) the Executive's then current spouse and minor children,
if any, shall receive the same level of health/medical insurance or coverage
that was provided to Executive immediately prior to the Executive's death for
a two year period, with the cost of such continued insurance or coverage
being borne by the Company. All such payments shall be in addition to any
payments the Executive's widow, beneficiaries or estate may be entitled to
receive pursuant to any pension or employee benefit plan or life insurance
policy maintained by the Company. In addition, all options granted to the
Executive to purchase shares of common stock of the Company, whether granted
pursuant to this Agreement or granted at any time prior hereto or hereafter,
then held by the Executive shall immediately vest and become exercisable
until the later of the fifth anniversary of the Date of Termination or
January 12, 2009.
(b) COMPENSATION UPON DISABILITY. In the event of termination of the
Executive's employment for Disability, the Executive shall be entitled to
receive: (i) the Base Salary through the Date of Termination; (ii) any unpaid
Annual Bonus and Performance Bonus for any prior fiscal year; (iii) the pro rata
portion of the Annual Bonus and Performance Bonus for the fiscal year in which
the Date of Termination occurs; (iv) reimbursement due to Executive pursuant to
Section 4(b); (v) an amount equal to three hundred (300%) percent of the average
Base Salary paid or payable to the Executive hereunder for the Company's three
most recent fiscal years immediately prior to the Executive's disability
termination less the amount, if any, of any payments received by the Executive
from any Company-funded disability insurance plan, payable in installments at
least as frequent as monthly, subject to Withholding for the longer of two (2)
years or the balance of the Employment Period; and (vi) the Executive and his
then current spouse and minor children, if any, shall receive the same level of
health/medical insurance or coverage provided immediately prior to such
disability termination for the longer of two (2) years or the balance of the
Employment Period, with the cost of such continued insurance or coverage being
borne by the Company. In addition, all options granted to the Executive to
purchase shares of common stock of the Company, whether granted pursuant to this
Agreement or granted at any time prior hereto or hereafter, then held by the
Executive shall immediately vest and become exercisable until the later of the
fifth anniversary of the Date of Termination or January 12, 2009.
(c) COMPENSATION UPON RESIGNATION OR TERMINATION FOR CAUSE. In the
event of termination of the Executive's employment upon Resignation or
termination for Cause, the Executive shall be entitled to receive the; and (iii)
reimbursement due to Executive pursuant to Section 4(b).
(d) COMPENSATION UPON TERMINATION BY EXECUTIVE FOR GOOD REASON OR BY
THE COMPANY WITHOUT CAUSE. In the event the Executive's employment is
terminated by the Executive for Good Reason or by the Company Without Cause,
then the Executive shall be entitled to receive: (i) the Base Salary through the
Date of Termination; (ii) any unpaid Annual Bonus and Performance Bonus for any
prior fiscal year; (iii) the pro rata portion of the Annual Bonus and
Performance Bonus for the fiscal year in which the Date of Termination occurs;
(iv) reimbursement due to Executive pursuant to Section 4(b); (v) an amount (the
"SEVERANCE
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PAYMENT") equal to the dollar amount of the Base Salary and Annual Bonus paid
or payable to the Executive hereunder for the Company's most recent fiscal
year immediately prior to the Executive's termination multiplied by the
greater of (A) three, or (B) the number of months remaining in the term of
this Agreement had the Executive's employment not been terminated, divided by
twelve; and (vi) the Executive and his then current spouse and minor
children, if any, shall receive the same level of health/medical insurance or
coverage provided immediately prior to such termination for the longer of two
(2) years or the balance of the Employment Period, with the cost of such
continued insurance or coverage being borne by the Company; provided,
however, that the Company shall not be required to provide any such coverage
after such time as Executive becomes entitled to receive (without regard to
any individual waivers of coverage or other similar arrangements) comparable
health/medical benefits of the same type from another employer or recipient
of Executive's services. In addition, all options granted to the Executive
to purchase shares of common stock of the Company, whether granted pursuant
to this Agreement or granted at any time prior hereto or hereafter, then held
by the Executive shall immediately vest and become exercisable until the
later of the fifth anniversary of the Date of Termination or January 12, 2009.
(e) The Executive shall not be required to mitigate the amount of any
payment provided for in this Section 7 or in Section 9(c) by seeking other
employment or otherwise, nor shall the amount of any payment or benefit provided
for in this Section 7 or in Section 9(c) be reduced by any compensation earned
by him as the result of employment by another employer or by retirement benefits
after the Date of Termination, or otherwise, except as specifically provided in
this Section 7 or in Section 9(c).
(f) All amount to be paid to the Executive hereunder shall be paid to
the Executive in a lump sum no later than ten days following the Date of
Termination.
8. GRANT OF STOCK OPTION. In addition to the Compensation described in
Section 3 hereof, the Company shall, on or before March 31, 1999, enter into a
Stock Option Agreement with the Executive granting the Executive options (the
"OPTIONS") to purchase 1,000,000 shares of common stock of the Company (the
"SHARES") at the market price on the date of the grant.
9. CHANGE OF CONTROL. In the event that the Executive is an employee of
the Company at the moment immediately prior to a Change of Control (as defined
herein), the Executive shall be entitled to receive all benefits described in
this Section 9.
(a) For purposes of this Agreement, a "CHANGE OF CONTROL" shall be
deemed to occur upon the occurrence of any of the following events:
(i) 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 Executive 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
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voting stock of the Company;
(ii) 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 or 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
(iii) 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 Executive 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.
(iv) 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.
(b) In the event that the Executive is an employee of the Company at
the moment immediately prior to a Change of Control:
(i) the Company shall pay ("CHANGE OF CONTROL COMPENSATION")
to the Executive additional compensation in the form of cash equal to, on the
date of a Change of Control and with respect to the Options and all other
options to acquire shares of common stock of the Company granted to the
Executive prior to the date of the Change of Control (whether or not all such
options have vested or are exercisable on such date) (collectively, the Options
and
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such other options are referred to as "OUTSTANDING OPTIONS"), the product of
(x) the number of shares of common stock of the Company underlying each of
the Outstanding Options and (y) the amount, if any, that the exercise price
of any Outstanding Options or the Closing Share Value (as defined below),
whichever is less, exceeds the Initial Share Value (as defined below);
(ii) with respect to each Outstanding Option, in the event that
the Closing Share Value is greater than the exercise price of any such
Outstanding Options, then the Executive shall have the right to, separately with
respect to each of the Outstanding Options, to either (A) retain the Outstanding
Options, (B) exercise the Outstanding Options, or (C) forfeit the Outstanding
Options and receive, in exchange therefor, a cash payment equal to the number of
shares of common stock of the Company underlying the Outstanding Options
multiplied by the amount that the Closing Share Value exceeds the exercise price
of the Outstanding Options; and
(iii) upon the occurrence of a Change of Control, all
Outstanding Options shall immediately vest and become exercisable for a period
of ten (10) years commencing on the Date of Termination without regard to
Executive's continued employment with the Company pursuant to this Agreement and
without regard to the terms of any option agreement or option certificate
applicable to any Outstanding Options.
(c) In the event that the Executive's employment is terminated by the
Executive upon Resignation during the six month period following the three month
anniversary of the effective date of the Change of Control, or by the Executive
for Good Reason, or by the Company Without Cause, at any time during the nine
month period following the effective date of the Change of Control, the
Executive shall receive, in addition to the amounts payable pursuant to Section
7(c), (i) the pro rata portion of the Annual Bonus and Performance Bonus for the
fiscal year in which the Change of Control occurs, computed through the Date of
Termination; (ii) an amount equal to the dollar amount of the Base Salary and
Annual Bonus paid or payable to the Executive hereunder for the Company's most
recent fiscal year immediately prior to the Executive's termination multiplied
by the greater of (A) five, or (B) the number of months remaining in the term of
this Agreement had the Executive's employment not been terminated, divided by
twelve; and (iii) the Executive and his then current spouse and minor children,
if any, shall receive the same level of health/medical insurance or coverage
provided immediately prior to such Change of Control for the longer of two (2)
years or the balance of the Employment Period, with the cost of such continued
insurance or coverage being borne by the Company; provided, however, that the
Company shall in not be required to provide any such coverage after such time as
Executive becomes entitled to receive (without regard to any individual waivers
of coverage or other similar arrangements) comparable health/medical benefits of
the same type from another employer or recipient of Executive's services. All
amounts to be paid to the Executive pursuant to this Section (c) shall be paid
to the Executive not later than ten days following the Date of Termination.
(d) If in the opinion of tax counsel selected by the Executive and
reasonably acceptable to the Company, the Executive has or will receive any
compensation or recognize any income (whether or not pursuant to this Agreement
or any plan or other arrangement of the Company and whether or not the
Executive's employment with the Company has terminated)
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which constitute an "excess parachute payment" within the meaning of Section
280G(b)(1) of the Internal Revenue Code of 1986, as amended (the "Code") (or
for which a tax is otherwise payable under Section 4999 of the Code), then
the Company shall pay the Executive an additional amount (the "ADDITIONAL
AMOUNT") equal to the sum of (i) all taxes payable by the Executive under
Section 4999 of the Code with respect to (A) all such excess parachute
payments (or otherwise) and (B) the Additional Amount, plus (ii) all federal,
state and local income taxes payable by Executive with respect to the
Additional Amount. The amounts payable pursuant to this Section 9(d) shall
be paid by the Company to the Executive concurrently with the payment of such
compensation or recognition of income giving rise to the Company's
obligations under this Section 9(d).
(e) For purposes of this subsection:
(i) "INITIAL SHARE VALUE" shall mean the average of the
Closing Prices of the shares of common stock of the Company for the period
commencing on the 180th day prior to the date of the Change of Control and
ending on the 150th day prior to the date of the Change of Control;
(ii) "CLOSING SHARE VALUE" shall mean the Closing Price of the
shares of common stock of the Company on the date of the Change of Control; and
(iii) the "CLOSING PRICE" of a share of common stock of the
Company on any date shall mean the last sale price, regular way, or, in case no
such sale takes place on such date, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the such shares are listed or admitted to
trading or, if such shares are not listed or admitted to trading on any national
securities exchange, the last quoted price, or if not so quoted, the average of
the highest bid and lowest ask prices in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc. Automated
Quotation System or, if such system is no longer used, the principal other
automated quotation system that may then be in use or, if such shares are not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making market in the shares as such
person is selected from time to time by the Board or, if there are no
professional market makers making a market in the shares, then the value as
determined in good faith judgement of the Board.
10. ADVANCES. The Company may, upon written consent of the Board, make an
advance to the Executive against any compensation or other amounts to be paid by
the Company to the Executive (an "ADVANCE"). Any amounts due under this
Agreement to the Executive shall, at the election of the Company, be offset by
any then outstanding Advances. In the event of Executive's termination of
employment, Executive agrees that the Company shall have the right to offset the
amount of any and all outstanding Advance(s) against any compensation or any
other amounts due to the Executive from the Company, and that any remaining
balance of the Advance(s) shall be repaid by the Executive within ninety (90)
days after the termination of Executive's employment by the Company.
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11. NON-COMPETITION AND NON-SOLICITATION.
(a) NON-COMPETITION PROHIBITED ACTIVITIES. During the term of
his employment hereunder and for two (2) years thereafter (the
"NON-COMPETITION PERIOD"), the Executive shall not engage (including, without
limitation, as an officer, director, shareholder, owner, partner, joint
venturer, member or in a managerial capacity, or as an employee, independent
contractor, consultant, advisor or sales representative) in any Competitive
Business (as hereinafter defined) in the Territory (as hereinafter defined).
For purposes of determining whether the Executive is permitted to be a
shareholder of a corporation engaged in a Competitive Business, the
Executive's ownership of less than 5% of the issued and outstanding
securities of a company whose securities are publicly-traded in any U.S. or
non-U.S. securities exchanges or quotation system shall be permitted.
(b) NON-SOLICITATION PROHIBITED ACTIVITIES. During the
Non-Competition Period and in the Territory, the Executive covenants and
agrees that he shall not solicit, directly or indirectly, any person who is,
at that time, or who was at any time within three (3) months prior to that
time, an employee of the Company for the purpose or with the intent of
enticing such employee away from or out of the employ of the Company.
(c) As used herein, the term "COMPETITIVE BUSINESS" shall mean any
business engaged in publishing and distributing video games and entertainment
software for personal computers.
(d) As used herein, the term "TERRITORY" shall mean:
(i) The following counties in the State of California:
Alameda, Alpine, Xxxxxx, Butte, Calaveras, Colusa, Contra Costa, Del Norte, El
Dorado, Fresno, Xxxxx, Humboldt, Imperial, Inyo, Xxxx, Kings, Lake, Lassen, Los
Angeles, Madera, Marin, Mariposa, Mendocino, Merced, Modoc, Mono, Monterey,
Napa, Nevada, Orange, Placer, Plumas, Riverside, Sacramento, San Xxxxxx, San
Bernardino, San Diego, San Francisco, San Xxxxxxx, San Xxxx Obispo, San Mateo,
Santa Xxxxxxx, Santa Xxxx, Xxxxxx, Sierra, Siskiyou, Xxxxxx, Sonoma, Stanislaus,
Sutter, Tehama, Trinity, Tulare, Tuolumne, Ventura, Yolo, and Yuba;
(ii) Each and every county or other political or geographical
subdivision in the balance of the United States of America and the dependent
territories of the United States of America; and
(iii) Each and every county or other political or geographical
subdivision in the world.
(e) The foregoing prohibitions in subsections (a) and (b) shall
bind the Executive only so long as the Company pays him the Termination
Compensation pursuant to Section 7 or the Change of Control Compensation
pursuant to Section 9 during the Non-
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Competition Period and otherwise complies with its obligations hereunder.
12. CONFIDENTIAL INFORMATION. The Executive has executed or, if not
previously executed, agrees to execute and be bound by the terms and conditions
of the Company's Employee Proprietary Information Agreement ("PROPRIETARY
INFORMATION AGREEMENT"), attached hereto as Appendix A.
13. UNENFORCEABILITY. If any of the rights or restrictions contained or
provided for in this Agreement shall be deemed by a court of competent
jurisdiction to be unenforceable by reason of the extent, duration or
geographical scope, the parties hereto contemplate that the court shall reduce
such extent, duration, geographical scope and enforce this Agreement in its
reduced form for all purposes in the manner contemplated hereby. Should any of
the provisions of this Agreement require judicial interpretation, it is agreed
that the court interpreting or construing this Agreement shall not apply a
presumption that any provision shall be more strictly construed against one
party by reason of the rule of construction that a document is to be construed
more strictly against the party who itself or through its agents prepared the
same, it being agreed that both parties and their respective agents have
participated in the preparation of this Agreement.
14. INJUNCTIVE RELIEF. The Executive agrees that the restrictions and
covenants contained in Section 11 and in the Proprietary Information Agreement
are necessary for the protection of the Company and any breach thereof will
cause the Company irreparable damages for which there is no adequate remedy at
law. The Executive further agrees that, in the event of a breach by the
Executive of any of Executive's obligations thereunder, the Company shall have
the absolute right, in addition to any other remedy that might be available to
it, to obtain from any court having jurisdiction, such equitable relief as might
be appropriate, including temporary, interlocutory, preliminary and permanent
decrees or injunctions enjoining any further breach of such provisions.
15. INDEMNIFICATION AND ATTORNEYS' FEES. Subject to applicable laws,
during the Employment Period and thereafter, the Company shall indemnify, hold
harmless and defend the Executive from all damages, claims, losses, and costs
and expenses (including reasonable attorney's fees) arising out of, in
connection with, or relating to all acts or omissions taken or not taken by him
in good faith while performing services for the Company, and shall further
promptly reimburse the Executive for all expenses (including attorney's fees)
incurred in enforcing the benefits of this Agreement. The Company shall use its
best efforts to continue to maintain, an insurance policy covering the officers
and directors of the Company against claims and/or lawsuits at least as
favorable as such policy that is currently in effect, and the Company shall
cause the Executive to be covered under such policy upon the same terms and
conditions as other similarly situated officers and directors during the
Employment Period and for a period of at least six (6) years thereafter.
16. MISCELLANEOUS.
(a) SEVERABILITY. If any provision of this Agreement is determined
to be invalid
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or unenforceable, it shall not affect the validity or enforceability of any
of the other remaining provisions hereof.
(b) NOTICES. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when (i) delivered personally; (ii) sent by facsimile or
other similar electronic device and confirmed; (iii) delivered by courier or
overnight express; or (iv) three business days after being sent by registered or
certified mail, postage prepaid, addressed as follows:
If to the Company:
Activision, Inc.
0000 Xxxxx Xxxx Xxxxxxxxx
Xxxxx Xxxxxx, XX 00000
Attention: General Counsel
with a copy to:
Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
If to the Executive:
Xxxxxx X. Xxxxxx
0000 Xxxx Xxx
Xxxxxxx Xxxxx, XX 00000
or to such other address as a party may furnish to the other party in writing in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.
(c) WAIVER. No waiver by either party hereto of any breach of any
provision of this Agreement shall be deemed a waiver of any preceding or
succeeding breach of such provision or any other provision herein contained.
(d) GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California, without
giving effect to the conflict of law principles thereof; provided, however, that
Section 11 of this Agreement shall be governed by, and construed in accordance
with, the laws of the state in which the Executive has his principal office.
(e) ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
of the parties hereto with respect to the subject matter hereof, and is intended
to supersede all prior
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employment negotiations, understandings and agreements. No provision of this
Agreement may be waived or changed, except by a writing signed by the party
to be charged with such waiver or change.
(f) SUCCESSORS: BINDING AGREEMENT. Neither of the parties hereto
shall have the right to assign this Agreement or any rights or obligations
hereunder without the prior written consent of the other party; provided,
however, that this Agreement shall inure to the benefit or and be binding upon
the successors and assigns of the Company upon any sale of all or substantially
all of the Company's assets, or upon any merger or consolidation of the Company
with or into any other corporation, all as though such successors and assigns of
the Company and their respective successors and assigns were the Company.
Insofar as the Executive is concerned this Agreement, being personal, cannot be
assigned.
(g) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be an original, but together shall constitute one and the
same instrument.
(h) HEADINGS. The headings and captions set forth in this Agreement
are for ease of reference only and shall not be deemed to constitute a part of
the agreement formed hereby or be relevant to the interpretation of any
provisions of this Agreement.
(i) SATURDAYS, SUNDAYS AND HOLIDAYS. Whenever any determination is
to be made or action to be taken on a date specified in this Agreement, if such
date shall fall upon a Saturday, Sunday or a legal holiday in the State of
California, the date for such determination or action shall be extended to the
first business day immediately thereafter.
[SIGNATURE PAGES BEGIN ON THE FOLLOWING PAGE]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
ACTIVISION, INC.
By:
-------------------------------------
Name:
Title:
----------------------------------------
Xxxxxx X. Xxxxxx
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