Document:

Exhibit 10.5

 

REPLACEMENT BONUS AGREEMENT

 

This Agreement (the “Agreement”),
dated as of December 1, 2007 (the “Effective Date”),
by and between ACTIVISION, INC., a Delaware corporation with its principal
offices at 3100 Ocean Park Boulevard, Santa Monica, CA 90405 (the “Company”), and ROBERT A. KOTICK (the
“Executive”).

 

RECITALS:

 

WHEREAS, the Company and the Executive entered into an
employment agreement dated May 22, 2000 (the “Original
Employment Agreement”);

 

WHEREAS,
on December 29, 2006, the parties amended the Original Employment Agreement
(the “Amended Employment Agreement”)
to remove certain provisions that may have resulted in adverse consequences for
the Executive under Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”);

 

WHEREAS,
pursuant to the Amended Employment Agreement, the parties agreed to negotiate
in good faith to promptly develop benefits reasonably comparable to those
forgone by the Executive under the Original Employment Agreement;

 

WHEREAS, the Company, Vivendi, S.A., a Societe Anonyme organized under
the laws of France (“Vivendi”),
Vivendi Games Acquisition Company LLC, a limited liability company organized
under the laws of the State of Delaware (“Vivendi LLC”), Vivendi Games, Inc., a
Delaware corporation (“Games”),
and Sego Merger Corporation, a Delaware corporation (“Merger Sub”), have
proposed to enter into a Business Combination Agreement (“BCA”) in order to
combine the respective businesses of Games and the Company, pursuant to which,
among other things, (i) Vivendi shall purchase (the “Share Purchase”) from
the Company a number of newly issued shares of common stock, par value
$0.000001 per share, of the Company (“Company Common Stock”) and (ii) Merger Sub
shall be merged with and into Games (the “Merger” and, together with the Share
Purchase, the “Combination
Transactions”) pursuant to which (x) each share of common stock,
par value $0.01 per share, of Games shall be converted into the right to
receive a number of shares of Company Common Stock equal to the Exchange Ratio
(as defined in the BCA) and (y) Games shall become a wholly-owned subsidiary of
the Company;

 

WHEREAS, concurrently
with the execution of the BCA and this Agreement, the Executive and the Company
have entered into an Amended and Restated Employment Agreement (the “New Employment Agreement”), which
amends and supersedes the Amended Employment Agreement; and

 

WHEREAS, in entering into the New Employment
Agreement, the Executive waived his rights under the Amended Employment
Agreement in connection with the Combination Transactions to (i) elect to
receive a cash payment in respect of all stock options held by him equal to, as
to each share of Company Common Stock subject to such stock options, the excess
of the closing price of the Company Common Stock on the date of the Combination
Transactions over the option exercise price, (ii) accelerated vesting of all
unvested stock options on the date of the Combination Transactions and (iii)
resign for any reason during the six (6) month period following the three (3) month
anniversary of the Combination Transactions and receive a severance payment
equal to five (5) times the sum of his base salary and most recent annual
bonus, a pro-rata annual bonus for the year of resignation and two years of
health insurance continuation; and

 

NOW, THEREFORE, in consideration for the Executive’s
relinquishment of certain rights as described in the Amended Employment
Agreement and the Executive’s entering into the New Employment Agreement, the
parties hereto hereby agree as follows:

 

 

1.             Replacement
Bonuses

 

(a)           Cash Bonuses. The Executive shall be
entitled to two cash bonuses (the “Cash Bonuses”) payable as follows:

 

(i)            Five million
dollars ($5,000,000) (the “First
Bonus”) shall be paid in a cash lump sum not later than December
31, 2007; and

 

(ii)           Five million
dollars ($5,000,000) (the “Second
Bonus”) shall be paid in a cash lump sum on the date the Combination
Transactions are consummated (the “Consummation
Date”) provided that the Executive is continuously employed by
the Company Group (as defined in the New Employment Agreement) through the
Consummation Date.

 

(b)           RSU Bonus.

 

(i)            Grant. On the Consummation Date, the
Company shall grant the Executive 363,637
Restricted Stock Units (“RSUs”)
pursuant to the Company’s 2007 Incentive Plan (the “2007 Plan”) provided that the Executive is continuously
employed by the Company Group through the Consummation Date. Each RSU shall
represent the right to receive one share of the Company Common Stock upon
satisfaction of, and in accordance with, the provisions of this Agreement and,
to the extent not inconsistent with the provisions of this Agreement, the 2007
Plan. One-third (1⁄3) of the RSUs shall vest on each of December 31, 2008,
2009 and 2010 (each, a “Vesting
Date”) provided that the Executive is continuously employed by
the Company through the applicable Vesting Date.

 

(ii)           Termination of Employment. In the event of
a termination of the Executive’s employment with the Company Group for any
reason other than a termination by the Company for Cause (as defined in the New
Employment Agreement), all unvested RSUs shall immediately vest in full. In the
event of a termination of the Executive’s employment by the Company for Cause,
the Executive shall forfeit any rights to the unvested portion of the RSUs.

 

(iii)          Settlement of RSU Bonus. The shares of
Company Common Stock subject to the RSUs shall be delivered, to the extent
vested in accordance with the provisions hereof, within thirty (30) days
following each Vesting Date (or such earlier vesting date that occurs in
accordance with Section 1(b)(ii), if any); provided, however,
that if, at the time of the Executive’s termination that constitutes a “separation
from service” within the meaning of the default rules under Section 409A of the
Code, the Executive is a specified employee for purposes of Section 409A of the
Code (as determined under the Company’s uniform written methodology for
determining specified employees), then settlement of any RSUs prior to the
6-month anniversary of the Executive’s date of termination shall be delayed and
shall not occur until the first business day following the 6-month anniversary
of the Executive’s date of termination.

 

(c)           Alternative Transaction. In the event that
the Combination Transactions are not consummated on or prior to June 30, 2009,
but the Company enters into another agreement 

 

2

 

pursuant to which a Change of Control (as
such term is defined in the New Employment Agreement) is consummated on or
prior to June 30, 2009 (an “Alternative Transaction”), the Executive shall be
entitled to the Second Bonus and the RSU Bonus in accordance with Sections
1(a)(ii) and 1(b); provided, however, that, for purposes of
Sections 1(a)(ii) and 1(b), references to the Consummation Date will be deemed
to refer to the consummation date of the Alternative Transaction.

 

(d)           Failure to Timely Consummate a Transaction.
Notwithstanding the foregoing, if the Combination Transactions or an
Alternative Transaction is not consummated on or prior to June 30, 2009, the
Executive shall have no entitlement to, and the Company shall not be obligated
to pay to the Executive, the Second Bonus or the RSU Bonus.

 

2.             Miscellaneous

 

(a)           Taxation. The Company may withhold from any
payments made under the Agreement all federal, state, city or other applicable
taxes as shall be required pursuant to any law, governmental regulation or
ruling.

 

(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.

  3100 Ocean Park Boulevard

  Santa Monica, CA 90405

  Attention: General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
  with
  a copy to:

  	
  Shearman
  & Sterling LLP

  599 Lexington Avenue

  New York, NY 10022

  Attention: Linda E. Rappaport

  
	
   

  	
   

  	
   

  
	
   

  	
  If
  to the Executive:

  	
  Robert
  A. Kotick

  c/o Activision, Inc.

  3100 Ocean Park Boulevard

  Santa Monica, CA 90405

  
	
   

  	
   

  	
   

  
	
   

  	
  with
  a copy to:

  	
  Wachtell,
  Lipton, Rosen & Katz

  51 West 52nd St.

  New York, NY 10019

  Attention: Michael Segal

  

 

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.

 

3

 

(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.

 

(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 or contemporaneous employment
negotiations, understandings and agreements (whether written or oral),
including the Amended Employment Agreement. 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; provided, however, that this
Agreement shall be binding upon and inure to the benefit of the Executive and
his executors, administrators and legal representatives.

 

(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)            Survivability. The provisions of this
Agreement shall survive the termination or expiration of this Agreement.

 

[SIGNATURE
PAGES BEGIN ON THE FOLLOWING PAGE]

 

4

 

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first above written.

 

	
   

  	
  ACTIVISION, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert J. Morgado

  	
   

  
	
   

  	
   

  	
  Name: Robert Morgado

  
	
   

  	
   

  	
  Title: Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/ Robert A. Kotick 

  	
   

  
	
   

  	
   

  	
  Robert A. KotickExhibit 10.6

 

REPLACEMENT BONUS AGREEMENT

 

This Agreement (the “Agreement”),
dated as of December 1, 2007 (the “Effective Date”),
by and between ACTIVISION, INC., a Delaware corporation with its principal
offices at 3100 Ocean Park Boulevard, Santa Monica, CA 90405 (the “Company”), and  BRIAN G. KELLY (the “Executive”).

 

RECITALS:

 

WHEREAS, the Company and the Executive entered into an
employment agreement dated May 22, 2000 (the “Original
Employment Agreement”);

 

WHEREAS,
on December 29, 2006, the parties amended the Original Employment Agreement
(the “Amended Employment Agreement”)
to remove certain provisions that may have resulted in adverse consequences for
the Executive under Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”);

 

WHEREAS,
pursuant to the Amended Employment Agreement, the parties agreed to negotiate
in good faith to promptly develop benefits reasonably comparable to those
forgone by the Executive under the Original Employment Agreement;

 

WHEREAS, the Company, Vivendi, S.A., a Societe Anonyme organized under
the laws of France (“Vivendi”),
Vivendi Games Acquisition Company LLC, a limited liability company organized
under the laws of the State of Delaware (“Vivendi LLC”), Vivendi Games, Inc., a
Delaware corporation (“Games”),
and Sego Merger Corporation, a Delaware corporation (“Merger Sub”), have
proposed to enter into a Business Combination Agreement (“BCA”) in order to
combine the respective businesses of Games and the Company, pursuant to which,
among other things, (i) Vivendi shall purchase (the “Share Purchase”) from
the Company a number of newly issued shares of common stock, par value
$0.000001 per share, of the Company (“Company Common Stock”) and (ii) Merger Sub
shall be merged with and into Games (the “Merger” and, together with the Share
Purchase, the “Combination
Transactions”) pursuant to which (x) each share of common stock,
par value $0.01 per share, of Games shall be converted into the right to
receive a number of shares of Company Common Stock equal to the Exchange Ratio
(as defined in the BCA) and (y) Games shall become a wholly-owned subsidiary of
the Company;

 

WHEREAS, concurrently
with the execution of the BCA and this Agreement, the Executive and the Company
have entered into an Amended and Restated Employment Agreement (the “New Employment Agreement”), which
amends and supersedes the Amended Employment Agreement; and

 

WHEREAS, in entering into the New Employment
Agreement, the Executive waived his rights under the Amended Employment
Agreement in connection with the Combination Transactions to (i) elect to
receive a cash payment in respect of all stock options held by him equal to, as
to each share of Company Common Stock subject to such stock options, the excess
of the closing price of the Company Common Stock on the date of the Combination
Transactions over the option exercise price, (ii) accelerated vesting of all
unvested stock options on the date of the Combination Transactions and (iii)
resign for any reason during the six (6) month period following the three (3) month
anniversary of the Combination Transactions and receive a severance payment
equal to five (5) times the sum of his base salary and most recent annual
bonus, a pro-rata annual bonus for the year of resignation
and two years of health insurance continuation; and

 

NOW, THEREFORE, in consideration for the Executive’s
relinquishment of certain rights as described in the Amended Employment
Agreement and the Executive’s entering into the New Employment Agreement, the
parties hereto hereby agree as follows:

 

 

1.             Replacement
Bonuses

 

(a)                                  Cash Bonuses. The Executive shall be
entitled to two cash bonuses (the “Cash Bonuses”) payable as follows:

 

(i)                                     Five
million dollars ($5,000,000) (the “First
Bonus”) shall be paid in a cash lump sum not later than December
31, 2007; and

 

(ii)                                  Five
million dollars ($5,000,000) (the “Second
Bonus”) shall be paid in a cash lump sum on the date the
Combination Transactions are consummated (the “Consummation Date”) provided that the Executive is
continuously employed by the Company Group (as defined in the New Employment
Agreement) through the Consummation Date.

 

(b)                                 RSU Bonus.

 

(i)                                     Grant. On the Consummation Date, the
Company shall grant the Executive 363,637
Restricted Stock Units (“RSUs”)
pursuant to the Company’s 2007 Incentive Plan (the “2007 Plan”) provided that the Executive is continuously
employed by the Company Group through the Consummation Date. Each RSU shall
represent the right to receive one share of the Company Common Stock upon
satisfaction of, and in accordance with, the provisions of this Agreement and,
to the extent not inconsistent with the provisions of this Agreement, the 2007
Plan. The RSUs shall vest in full on December 31, 2010 (the “Vesting Date”) provided that
the Executive is continuously employed by the Company through the Vesting Date.

 

(ii)                                  Termination of Employment. In the event of
a termination of the Executive’s employment with the Company Group for any
reason other than a termination by the Company for Cause (as defined in the New
Employment Agreement), all unvested RSUs shall immediately vest in full. In the
event of a termination of the Executive’s employment by the Company for Cause,
the Executive shall forfeit any rights to the unvested portion of the RSUs.

 

(iii)                               Settlement of RSU Bonus. The shares of
Company Common Stock subject to RSUs that vest pursuant to Section 1(b)(i)
hereof shall be delivered within thirty (30) days following the Vesting Date. The
shares of Company Common Stock subject to RSUs that vest pursuant to Section
1(b)(ii) hereof shall be delivered within thirty (30) days following the date
of termination; provided, however, that if, at the time of the
Executive’s termination that constitutes a “separation from service” within the
meaning of the default rules under Section 409A of the Code, the Executive is a
specified employee for purposes of Section 409A of the Code (as determined
under the Company’s uniform written methodology for determining specified
employees), then settlement of any RSUs prior to the 6-month anniversary of the
Executive’s date of termination shall be delayed and shall not occur until the
first business day following the 6-month anniversary of the Executive’s date of
termination.

 

(c)                                  Alternative Transaction. In the event that
the Combination Transactions are not consummated on or prior to June 30, 2009,
but the Company enters into another agreement 

 

2

 

pursuant to which a Change of Control (as
such term is defined in the New Employment Agreement) is consummated on or
prior to June 30, 2009 (an “Alternative Transaction”), the Executive shall be
entitled to the Second Bonus and the RSU Bonus in accordance with Sections
1(a)(ii) and 1(b); provided, however, that, for purposes of
Sections 1(a)(ii) and 1(b), references to the Consummation Date will be deemed
to refer to the consummation date of the Alternative Transaction.

 

(d)                                 Failure to Timely Consummate a Transaction.
Notwithstanding the foregoing, if the Combination Transactions or an
Alternative Transaction is not consummated on or prior to June 30, 2009, the
Executive shall have no entitlement to, and the Company shall not be obligated
to pay to the Executive, the Second Bonus or the RSU Bonus.

 

2.                                      Miscellaneous

 

(a)                                  Taxation. The Company may withhold from any
payments made under the Agreement all federal, state, city or other applicable
taxes as shall be required pursuant to any law, governmental regulation or
ruling.

 

(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. 

  3100 Ocean Park Boulevard 

  Santa Monica, CA 90405 

  Attention: General Counsel

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  with a copy to:

  	
   

  	
  Shearman & Sterling
  LLP 

  599 Lexington Avenue 

  New York, NY 10022

  Attention: Linda E. Rappaport

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  If to the Executive:

  	
   

  	
  Brian G. Kelly 

  c/o Activision, Inc. 

  3100 Ocean Park Boulevard 

  Santa Monica, CA 90405

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  with a copy to:

  	
   

  	
  Wachtell,
  Lipton, Rosen & Katz  

  51 West 52nd St. 

  New York, NY 10019  
 Attention: Michael Segal

  

 

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.

 

3

 

(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 New
York, without giving effect to the conflict of law principles thereof.

 

(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 or contemporaneous employment
negotiations, understandings and agreements (whether written or oral),
including the Amended Employment Agreement. 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; provided, however,
that this Agreement shall be binding upon and inure to the benefit of the
Executive and his executors, administrators and legal representatives.

 

(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)                                     Survivability. The provisions of this
Agreement shall survive the termination or expiration of this Agreement.

 

[SIGNATURE
PAGES BEGIN ON THE FOLLOWING PAGE]

 

4

 

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first above written.

 

 

	
   

  	
  ACTIVISION, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert J. Morgado

  
	
   

  	
   

  	
  Name: Robert Morgado 

  
	
   

  	
   

  	
  Title: Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Brian G. Kelly 

  
	
   

  	
   

  	
  Brian G. Kelly

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