OPTION AGREEMENT
OPTION AGREEMENT, dated as of March 14, 1997, between ACTV
Entertainment, Inc., a Delaware corporation (the "Corporation") and ▇▇▇▇▇
▇▇▇▇▇▇▇ (the "Holder").
WHEREAS, the Corporation desires to grant to the Holder, the right and
option to purchase shares (the "Option Shares") of Class B Common Stock, $.01
par value per share (the "Class B Stock"), of the Corporation, on the terms
and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the receipt of $1.00 and other good
and valuable consideration, the receipt of which is hereby acknowledged, the
parties hereby agree as follows:
SECTION 1. OPTION TO PURCHASE COMMON STOCK.
a. The Corporation hereby grants to the Holder an option (the
"Option") to purchase from the Corporation 100,000 Option Shares, at a
purchase price of $.10 per Option Share (the "Option Price"). The Holder's
right and option to purchase the Option Shares shall vest, subject to
subsection 1(d) and Section b, as follows: (i) 34,000 Option Shares vest
July 1, 1997, (ii) 22,000 Option Shares vest on January 1, 1998; (iii) 22,000
Option Shares vest July 1, 1998; (iv) 22,000 Option Shares vest January 1,
1999 (each an "Installment") at the Option Price, so long as the Holder is
employed by the Corporation. Said right shall be cumulative. With respect to
each Installment, the "Option Period" shall commence on the date said
Installment vests and terminate on March 14, 2007.
b. Except as limited by Section 5, an Installment may be exercised,
in whole or part, by the Holder by delivery to the Corporation, at any time
during the Option Period, of a written notice (the "Option Notice"), which
Option Notice shall state the Holder's intention to exercise the Option, the
date on which the Holder proposes to purchase the Option Shares (the "Closing
Date") and the number of Option Shares to be purchased on the Closing Date,
which Closing Date shall be no later than 30 days nor earlier than 10 days
following the date of the Option Notice. Upon receipt by the Corporation of
an Option Notice from the Holder, the Holder shall be obligated to purchase
that number of Option Shares to be purchased on the Closing Date set forth in
the Option Notice.
c. The purchase and sale of Option Shares acquired pursuant to the
terms of this Option Agreement shall be made on the Closing Date at the
offices of the Corporation. Delivery of the stock certificate or other
instrument registered in the name of the Holder, evidencing the Option Shares
being purchased on the Closing Date, shall be made by the Corporation to the
Holder on the Closing Date against the delivery to the Corporation of a
certified or bank check in the full amount of the aggregate purchase price
therefor.
d. Should ACTV, Inc. ("ACTV") undergo a Change in Control, as
defined below, or should another corporation which can exercise control over
the Corporation sell or attempt to sell all or substantially all of the
assets of said Corporation, or should more than 50% of its voting power be
acquired by a party which is not affiliated with or controlled by ACTV, then
all of the Holder's rights to exercise the Option for all the Option Shares
shall be accelerated so that the Installments to purchase all Option Shares
shall be fully vested at the time of said event at the exercisable price of
$.10 per share. A Change in Control shall be the occurrence of any one of
the following events:
(i) A person (other than a person who is an officer or a
Director of ACTV on the effective date hereof), including a "group" as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934,
becomes, or obtains the right to become, the beneficial owner of ACTV's
securities having 30% or more of the combined voting power of then
outstanding securities of ACTV that may be cast for the election of directors
of ACTV;
(ii) At any time, a majority of the Board-nominated slate of
candidates for the Board of ACTV is not elected;
(iii) ACTV consummates a merger in which it is not the
surviving entity;
(iv) Substantially all ACTV's assets are sold; or
(v) ACTV's stockholders approve the dissolution or liquidation
of ACTV.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE HOLDER. The
Holder hereby represents and warrants to the Corporation that in the event
the Holder acquires any Option Shares, such Option Shares will be acquired
for his own account, for investment and not with a view to the distribution
thereof. The holder understands the Option Shares will not be registered
under the Securities Act of 1933, as amended (the "Securities Act"), and that
they must be held indefinitely unless a subsequent disposition thereof is
registered under the Securities Act or the transaction is exempt from
registration. The certificate or certificates representing any Option Shares
shall bear the following restrictive legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933; OR (ii) TO THE EXTENT APPLICABLE, RULE 144
UNDER
SUCH ACT (OR SIMILAR RULE UNDER THE SECURITIES ACT RELATING TO THE
DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH
OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER,
THAN AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT IS
AVAILABLE. IN ADDITION, THIS CERTIFICATE OF STOCK AND THE SHARES
REPRESENTED HEREBY ARE HELD SUBJECT TO THE TERMS AND CONDITIONS
CONTAINED IN AN AGREEMENT BY AND AMONG THE SHAREHOLDERS OF THE
CORPORATION AND THE CORPORATION DATED AS OF MARCH 6, 1997, AND ALL
AMENDMENTS THERETO, AND MAY NOT BE TRANSFERRED EXCEPT IN ACCORDANCE
WITH THE TERMS AND PROVISIONS THEREOF. A COPY OF SUCH AGREEMENT
WILL BE FURNISHED BY THE CORPORATION UPON REQUEST."
SECTION 3. REORGANIZATION; MERGERS; SALES; ETC. If, at any time during
the Option Period, there shall be any capital reorganization,
reclassification of the Common Stock (the term "Common Stock" shall mean the
Company's Class A Common Stock and/or the Class B Stock) (other than a change
in par value or from par value to no par value or from no par value to par
value or as a result of a stock dividend or subdivision, split-up or
combination of shares), the consolidation or merger of the Corporation with
or into another corporation or of the sale of all or substantially all the
properties and assets of the Corporation as an entirety to any other
corporation or Person, the unexercised and fully vested portion of this
Option shall, after such reorganization, reclassification, consolidation,
merger or sale, be exercisable for the kind and number of shares of stock or
other securities or property of the Corporation or of the corporation
resulting from such consolidation or surviving such merger or to which such
properties and assets shall have been sold to which the Holder would have
been entitled if the Holder had held shares of Class B Stock issuable
upon the exercise hereof immediately prior to such reorganization,
reclassification, consolidation, merger or sale. The provisions of this
Section 3 shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers and sales.
SECTION 4. ADJUSTMENT OF OPTION SHARES AND OPTION PRICE.
a. The number of Option Shares subject to this Option during the
Option Period shall be cumulative as to all prior dates of calculation and
shall be adjusted for any stock dividend, subdivision, split-up or
combination of Common Stock.
b. The Option Price shall be subject to adjustment from time to
time as follows:
If, at any time during the Option Period, the number of shares of Common
Stock outstanding is altered by a stock dividend payable in shares of Common
Stock or by a subdivision or split-up or combination of shares of Common
Stock, then, immediately
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following the record date fixed for the determination of holders of shares of
Common Stock, entitled to receive such subdivision or split-up or
combination, the Option Price shall be appropriately increased or decreased
and the number of shares of Common Stock issuable upon the exercise hereof
shall be increased or decreased, pursuant to the formula set forth in
Section 4.c.
c. Upon each adjustment of the Option Price pursuant to the
provisions of this Section 4, the number of shares of Common Stock issuable
upon the exercise thereof shall be adjusted to the nearest full share of
Common Stock by multiplying a number equal to the Option Price in effect
immediately prior to such adjustment by the number of shares of Common Stock
issuable immediately prior to such adjustment and dividing the product so
obtained by the adjusted Option Price.
d. Should additional shares of Class A Common Stock, $.01 par
value, over and above the 4,000,000 shares presently authorized, be issued
after the effective date of this Option Agreement, then the number of shares
issuable upon exercise of this Option shall be increased by the same
percentage that the total number of issued Class A Common Stock has been
increased.
e. The Corporation will use it best efforts to amend its
certificate of incorporation to authorize additional Class B Stock should the
number of shares of Class B Stock issuable upon exercise of the Option be
increased in accordance with the terms of this agreement.
SECTION 5. TERMINATION OF THE OPTIONS.
a. TERMINATION OF OPTIONS IN GENERAL. Subject to subsection 5(b),
the Option granted hereby shall terminate and the Option shall no longer be
exercisable after March 14, 2007.
b. OPTION RIGHTS UPON DEATH, DISABILITY, RESIGNATION. If a Holder
dies or becomes disabled while employed by the Corporation, ACTV, Inc. or any
affiliate or subsidiary of ACTV, Inc. (collectively, the "ACTV Group"), or
resigns from employment with the ACTV Group prior to his complete exercise
of the Option, the Holder (or his heirs) may exercise his Option at any time
during the option period, to the extent that the Holder was entitled to
exercise the Option at the date such event, and the Class B Stock underlying
the Option shall convert into Class A Stock on the second anniversary of the
occurrence of such death, disability or resignation.
SECTION 6. TERMINATION OF EMPLOYMENT. In the event that the Holder is
terminated from employment with the ACTV Group for any reason during the
Option Period, the (i) all Options granted to the Holder hereunder shall
become vested and immediately exercisable at an exercise price of $.10 per
share adjusted for any stock splits
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and capital reorganizations having a similar effect, subsequent to the
effective date hereof, (ii) all Options may be exercised at any time during
the Option Period and (iii) anything herein to the contrary notwithstanding,
the Shares underlying the Options, whether exercised prior or subsequent to the
termination shall not convert to Class A Stock except as set forth in the
applicable Shareholder Agreement.
SECTION 7. TRANSFER OF OPTION; SUCCESSORS AND ASSIGNS. This
Agreement (including the Option) and all rights hereunder shall not be
transferable at any time without the prior written consent of the
Corporation. This Agreement and all the rights hereunder shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors, approved assigns and approved transferees.
SECTION 8. NOTICES. All notices or other communications which
are required or permitted hereunder shall be in writing and sufficient if
delivered personally or sent by registered or certified mail, postage
prepaid, return receipt requested, addressed as follows:
If to the Corporation:
ACTV Entertainment, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
If to the Holder, to:
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▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. If mailed as
aforesaid, any such communication shall be deemed to have been given on the
third business day following the day on which the piece of mail containing
such communication is posted.
SECTION 9. GOVERNING LAW. This agreement shall be governed by,
and construed in accordance with the laws of the State of Delaware.
SECTION 10. ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties hereto with respect to the transactions
contemplated herein and supersedes all previously written or oral
negotiations, commitments, representations and agreement.
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SECTION 11. AMENDMENTS AND MODIFICATIONS. This Agreement, or any
provision hereof, may not be amended, changed or modified without the prior
written consent of each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Option Agreement
to be executed and delivered as of the date first above written.
ACTV ENTERTAINMENT, INC.
By: /s/ ▇ ▇▇▇▇▇
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AGREED TO AND ACCEPTED BY
HOLDER:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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Signature
▇▇▇▇▇ ▇▇▇▇▇▇▇
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Print Name
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