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As filed with the Securities and Exchange Commission on June 15, 1998.
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ACTIVISION, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-2606438
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3100 Ocean Park Boulevard
Santa Monica, California 90405
(310) 255-2000
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
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Robert A. Kotick
Chairman of the Board and Chief Executive Officer
ACTIVISION, INC.
3100 Ocean Park Boulevard
Santa Monica, California 90405
(310) 255-2000
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
Copies To:
Robinson Silverman Pearce Aronsohn & Berman LLP
1290 Avenue of the Americas
New York, New York 10104
Attention: Kenneth L. Henderson, Esq.
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box: [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box: [ ]
CALCULATION OF REGISTRATION FEE
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Proposed
Maximum Proposed Amount
Title of Offering Maximum of
Each Class of Amount Price Aggregate Registra-
Securities to to be Per Offering tion
be Registered Registered Share(1) Price Fee
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Common Stock,
$.000001
par value 161,117 shares $9.65625 $1,555,787 $472
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(1) Estimated solely for purposes of calculating the registration fee
pursuant to the provisions of Rule 457(c) under the Securities Act of
1933, as amended, based on the average of the reported last high and
low sales prices on the Nasdaq National Market on June 9, 1998.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.
- -----------------------------------------------------------------------------
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JUNE 15, 1998
161,117 Shares
ACTIVISION, INC.
Common Stock
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This Prospectus relates to 161,117 shares of Common Stock (the
"Common Stock"), par value $.000001 per share, of Activision, Inc. (the
"Company") being offered for the account of certain of the Company's
stockholders (each a "Selling Stockholder" and collectively the "Selling
Stockholders"). See "Selling Stockholders." The shares of Common Stock
offered hereby were issued to the Selling Stockholders in connection with (i)
the issuance by the Company to Id Software, Inc. ("id Software") of a warrant
to purchase 150,000 shares of Common Stock (the "Warrant") pursuant to a
software license agreement and (ii) the issuance by the Company to the
holders of all of the issued and outstanding capital stock of NBG USA, Inc.
(NBG USA"), of 11,117 shares of Common Stock in exchange for all of the
outstanding capital stock of NBG USA owned by such stockholders.
The Company is a leading international publisher, developer and
distributor of interactive entertainment software. The Company's products
span a wide range of product genres, including action, adventure, strategy
and simulation, and have included best selling titles such as MechWarrior 2,
Hexen II, Nightmare Creatures, Heavy Gear, Dark Reign, Blood Omen, Pitfall
and Shanghai. Since its founding in 1979, the Company has published hundreds
of entertainment software products for a variety of personal computer ("PC")
and console systems. See "The Company."
The Common Stock is traded in the NASDAQ National Market System
under the symbol "ATVI." On June 11, 1998, the last sale price for the
Common Stock as reported on the NASDAQ National Market System was $10.00 per
share.
No underwriting is being utilized in connection with this
registration of Common Stock and, accordingly, the shares of Common Stock are
being offered without underwriting discounts. The expenses of this
registration will be paid by the Company. Normal brokerage commissions,
discounts and fees will be payable by the Selling Stockholders.
For a discussion of certain matters which should be considered by
prospective investors, see "Risk Factors" commencing on page 2.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is , 1998.
RISK FACTORS
Before purchasing any of the shares of Common Stock offered hereby,
prospective investors should carefully consider the following factors in
addition to the other information in this Prospectus.
Fluctuations in Quarterly Results; Future Operating Results Uncertain;
Seasonality
The Company's quarterly operating results have varied significantly in
the past and will likely vary significantly in the future depending on
numerous factors, several of which are not under the Company's control. Such
factors include, but are not limited to, demand for the Company's products
and those of its competitors, the size and rate of growth of the interactive
entertainment software market, development and promotional expenses relating
to the introduction of new products, changes in computing platforms, product
returns, the timing of orders from major customers, delays in shipment, the
level of price competition, the timing of product introduction by the Company
and its competitors, product life cycles, software defects and other product
quality problems, the level of the Company's international revenues, and
personnel changes. In particular, during the past few fiscal years the
Company's operating results for the quarters ended June 30 have been less
favorable than in other quarters as a result of the release of fewer new
products during the June 30 quarters in accordance with the Company's product
release schedules. Products are generally shipped as orders are received,
and consequently, the Company operates with little or no backlog. Net
revenues in any quarter are, therefore, substantially dependent on orders
booked and shipped in that quarter.
The Company's expenses are based in part on the Company's product
development and marketing budgets. Many of the costs incurred by the Company
to produce and sell its products are expensed as such costs are incurred,
which is often long before a product ever is released. In addition, a large
portion of the Company's expenses are fixed. As the Company increases its
production and sales activities, current expenses will increase and, if sales
from previously released products are below expectations, net income is
likely to be disproportionately affected.
Due to all of the foregoing, revenues and operating results for any
future quarter are not predictable with any significant degree of accuracy.
Accordingly, the Company believes that period-to-period comparisons of its
operating results are not necessarily meaningful and should not be relied
upon as indications of future performance.
The Company's business has experienced and is expected to continue to
experience significant seasonality, in part due to consumer buying patterns.
Net revenues and net income typically are significantly higher during the
fourth calendar quarter, due primarily to the increased demand for consumer
software during the year-end holiday buying season. Net revenues and net
income in other quarters are generally lower and vary significantly as a
result of new product introductions and other factors. The Company expects
its net revenues and operating results to continue to reflect significant
seasonality.
Dependence On New Product Development; Product Delays
The Company's future success depends in part on the timely introduction
of successful new products to replace declining revenues from older products.
If, for any reason, revenues from new products were to fail to replace
declining revenues from older products, the Company's business, operating
results and financial condition would be materially and adversely affected.
In addition, the Company believes that the competitive factors in the
interactive entertainment software marketplace create the need for higher
quality, distinctive products that incorporate increasingly sophisticated
effects and the need to support product releases with increased marketing,
resulting in higher development, acquisition and marketing costs. The lack
of market acceptance or significant delay in the introduction of, or the
presence of a defect in, one or more products could have a material adverse
effect on the Company's business, operating results and financial condition,
particularly in view of the seasonality of the Company's business. Further,
because a large portion of a product's revenue generally is associated with
initial shipments, the delay of a product introduction expected near the end
of a fiscal quarter may have a material adverse effect on operating results
for that quarter.
The Company has, in the past, experienced significant delays in the
introduction of certain new products. The timing and success of interactive
entertainment products remain unpredictable due to the complexity of product
development, including the uncertainty associated with technological
developments. Although the Company has implemented substantial development
controls, there likely will be delays in developing and introducing new
products in the future. There can be no assurance that new products will be
introduced on schedule, or at all, or that they will achieve market
acceptance or generate significant revenues.
Reliance on Third Party Developers and Independent Contractors
The percentage of products published by the Company that are developed
by independent third party developers has increased over the last several
fiscal years. From time to time, the Company also utilizes independent
contractors for certain aspects of internal product development and
production. The Company has less control over the scheduling and the quality
of work by independent contractors and third party developers than that of
its own employees. A delay in the work performed by independent contractors
and third party developers or poor quality of such work may result in product
delays. Although the Company intends to continue to rely in part on products
that are developed primarily by its own employees, the Company's ability to
grow its business and its future operating results will depend, in
significant part, on the Company's continued ability to maintain
relationships with skilled independent contractors and third party
developers. There can be no assurance that the Company will be able to
maintain such relationships.
Uncertainty of Market Acceptance; Short Product Life Cycles
The market for entertainment systems and software has been characterized
by shifts in consumer preferences and short product life cycles. Consumer
preferences for entertainment software products are difficult to predict and
few entertainment software products achieve sustained market acceptance.
There can be no assurance that new products introduced by the Company will
achieve any significant degree of market acceptance, that such acceptance
will be sustained for any significant period, or that product life cycles
will be sufficient to permit the Company to recoup development, marketing and
other associated costs. In addition, if market acceptance is not achieved,
the Company could be forced to accept substantial product returns to maintain
its relationships with retailers and its access to distribution channels.
Failure of new products to achieve or sustain market acceptance or product
returns in excess of the Company's expectations would have a material adverse
effect on the Company's business, operating results and financial condition.
Product Concentration; Dependence On Hit Products
A key aspect of the Company's strategy is to focus its development and
acquisition efforts on selected, high quality entertainment software
products. The Company derives a significant portion of its revenues from a
select number of high quality entertainment software products released each
year, and many of these products have substantial production or acquisition
costs and marketing budgets. During fiscal 1997, two titles accounted for
approximately 23% and 16% respectively, of the Company's consolidated net
revenues. During fiscal 1998, two other titles accounted for approximately
24% and 9% respectively, of the Company's consolidated net revenues. The
Company anticipates that a limited number of products will continue to
produce a disproportionate amount of revenues. Due to this dependence on a
limited number of products, the failure of one or more of the Company's
principal new releases to achieve anticipated results may have a material
adverse effect on the Company's business, operating results and financial
condition.
The Company's strategy also includes as a key component developing and
releasing products that have franchise value, such that sequels, enhancements
and add-on products can be released over time, thereby extending the life of
the property in the market. While the focus on franchise properties, if
successful, results in extending product life cycles, it also results in the
Company depending on a limited number of titles for its revenues. There can
be no assurance that the Company's existing franchise titles can continue to
be exploited as successfully as in the past. In addition, new products that
the Company believes will have potential value as franchise properties may
not achieve market acceptance and therefore may not be a basis for future
releases.
Changes in Technology and Industry Standards
The consumer software industry is undergoing rapid changes, including
evolving industry standards, frequent new platform introductions and changes
in consumer requirements and preferences. The introduction of new
technologies, including operating systems such as Microsoft's Windows 98,
technologies that support multi-player games, and new media formats such as
on-line delivery and digital video disks ("DVD"), could render the Company's
previously released products obsolete or unmarketable. The development cycle
for products utilizing new operating systems, microprocessors or formats may
be significantly longer than the Company's current development cycle for
products on existing operating systems, microprocessors and formats and may
require the Company to invest resources in products that may not become
profitable. There can be no assurance that the mix of the Company's future
product offerings will keep pace with technological changes or satisfy
evolving consumer preferences, or that the Company will be successful in
developing and marketing products for any future operating system or format.
Failure to develop and introduce new products and product enhancements in a
timely fashion could result in significant product returns and inventory
obsolescence and could have a material adverse effect on the Company's
business, operating results and financial condition.
Limited Protection of Intellectual Property and Proprietary Rights; Risk of
Litigation
The Company holds copyrights on its products, manuals, advertising and
other materials and maintains trademark rights in the Company name, the
Activision logo, and the names of products owned by the Company. The Company
regards its software as proprietary and relies primarily on a combination of
trademark, copyright and trade secret laws, employee and third-party
nondisclosure agreements and other methods to protect its proprietary rights.
Unauthorized copying is common within the software industry, and if a
significant amount of unauthorized copying of the Company's products were to
occur, the Company's business, operating results and financial condition
could be adversely effected. There can be no assurance that third parties
will not assert infringement claims against the Company in the future with
respect to current or future products. As is common in the industry, from
time to time the Company receives notices from third parties claiming
infringement of intellectual property rights of such parties. The Company
investigates these claims and responds as it deems appropriate. Any claims
or litigation, with or without merit, could be costly and could result in a
diversion of management's attention, which could have a material adverse
effect on the Company's business, operating results and financial condition.
Adverse determinations in such claims or litigation could also have a
material adverse effect on the Company's business, operating results and
financial condition.
Policing unauthorized use of the Company's products is difficult, and
while the Company is unable to determine the extent to which piracy of its
software products exists, software piracy can be expected to be a persistent
problem. In selling its products, the Company relies primarily on "shrink
wrap" licenses that are not signed by licensees and, therefore, may be
unenforceable under the laws of certain jurisdictions. Further, the Company
enters into transactions in countries where intellectual property laws are
not well developed or are poorly enforced. Legal protections of the
Company's rights may be ineffective in such countries.
Risk of Software Defects
Software products such as those offered by the Company frequently
contain errors or defects. Despite extensive product testing, in the past
the Company has released products with defects and has discovered software
errors in certain of its product offerings after their introduction. In
particular, the PC hardware environment is characterized by a wide variety of
non-standard peripherals (such as sound cards and graphics cards) and
configurations that make pre-release testing for programming or compatibility
errors very difficult and time-consuming. There can be no assurance that,
despite testing by the Company, errors will not be found in new products or
releases after commencement of commercial shipments, resulting in a loss of
or delay in market acceptance, which could have a material adverse effect on
the Company's business, operating results and financial condition.
Industry Competition; Competition For Shelf Space
The interactive entertainment software industry is intensely
competitive. Competition in the industry is principally based on product
quality and features, the compatibility of products with popular platforms,
company or product line brand name recognition, access to distribution
channels, marketing effectiveness, reliability and ease of use, price and
technical support. Significant financial resources also have become a
competitive factor in the entertainment software industry, principally due to
the substantial cost of product development and marketing that is required to
support best-selling titles. In addition, competitors with broad product
lines and popular titles typically have greater leverage with distributors
and other customers who may be willing to promote titles with less consumer
appeal in return for access to such competitor's most popular titles.
The Company's competitors range from small companies with limited
resources to large companies with substantially greater financial, technical
and marketing resources than those of the Company. The Company's competitors
currently include Electronic Arts, LucasArts, Microsoft, Sega, Nintendo,
Sony, Cendant, GT Interactive, Broderbund, Midway, Interplay, Virgin and
Eidos, among many others.
As competition increases, significant price competition, increased
production costs and reduced profit margins may result. Prolonged price
competition or reduced demand would have a material adverse effect on the
Company's business, operating results and financial condition. There can be
no assurance that the Company will be able to compete successfully against
current or future competitors or that competitive pressures faced by the
Company will not have a material adverse effect on its business, operating
results and financial condition.
Retailers typically have a limited amount of shelf space, and there is
intense competition among entertainment software producers for adequate
levels of shelf space and promotional support from retailers. As the number
of entertainment software products increases, the competition for shelf space
has intensified, resulting in greater leverage for retailers and distributors
in negotiating terms of sale, including price discounts and product return
policies. The Company's products constitute a relatively small percentage of
a retailer's sale volume, and there can be no assurance that retailers will
continue to purchase the Company's products or promote the Company's products
with adequate levels of shelf space and promotional support.
Dependence on Distributors and Retailers; Risk of Customer Business Failure;
Product Returns
Certain mass market retailers have established exclusive buying
relationships under which such retailers will buy consumer software only from
one intermediary. In such instances, the price or other terms on which the
Company sells to such retailers may be adversely effected by the terms
imposed by such intermediary, or the Company may be unable to sell to such
retailers on terms which the Company deems acceptable. The loss of, or
significant reduction in sales attributable to, any of the Company's
principal distributors or retailers could materially adversely effect the
Company's business, operating results and financial condition.
Retailers in the computer industry have from time to time experienced
significant fluctuations in their businesses and there have been a number of
business failures among these entities. The insolvency or business failure
of any significant retailer or other wholesale purchaser of the Company's
products could have a material adverse effect on the Company's business,
operating results and financial condition. Sales are typically made on
credit, with terms that vary depending upon the customer and the nature of
the product. The Company does not hold collateral to secure payment.
Although the Company has obtained insolvency risk insurance to protect
against any bankruptcy filings that may be made by its customers, such
insurance contains a significant deductible as well as a co-payment
obligation, and the policy does not cover all instances of non-payment. In
addition, the Company maintains a reserve for uncollectible receivables that
it believes to be adequate, but the actual reserve which is maintained may
not be sufficient in every circumstance. As a result of the foregoing, a
payment default by a significant customer could have a material adverse
effect on the Company's business, operating results and financial condition.
The Company also is exposed to the risk of product returns from
retailers and other wholesale purchasers. Although the Company provides
reserves for returns that it believes are adequate, and although the
Company's agreements with certain of its customers place certain limits on
product returns, the Company could be forced to accept substantial product
returns to maintain its relationships with retailers and its access to
distribution channels. Product returns that exceed the Company's reserves
could have a material adverse effect on the Company's business, operating
results and financial condition.
Dependence on Key Personnel
The Company's success depends to a significant extent on the performance
and continued service of its senior management and certain key employees.
Competition for highly skilled employees with technical, management,
marketing, sales, product development and other specialized training is
intense, and there can be no assurance that the Company will be successful in
attracting and retaining such personnel. Specifically, the Company may
experience increased costs in order to attract and retain skilled employees.
Although the Company enters into term employment agreements with many of its
skilled employees and certain other key personnel, there can be no assurance
that such employees will not leave the Company or compete against the
Company. The Company's failure to attract or retain qualified employees
could have a material adverse effect on the Company's business, operating
results and financial condition.
Risks Associated With International Operations; Currency Fluctuations
International sales and licensing accounted for 23%, 58% and 67% of the
Company's total revenues in the fiscal years 1996, 1997 and 1998,
respectively. The Company intends to continue to expand its direct and
indirect sales, marketing and localization activities worldwide. Such
expansion will require significant management time and attention and
financial resources in order to develop adequate international sales and
support channels. There can be no assurance, however, that the Company will
be able to maintain or increase international market demand for its products.
International sales are subject to inherent risks, including the impact of
possible recessionary environments in economies outside the United States,
the costs of transferring and localizing products for foreign markets, longer
receivable collection periods and greater difficulty in accounts receivable
collection, unexpected changes in regulatory requirements, difficulties and
costs of staffing and managing foreign operations, and political and economic
instability. There can be no assurance that the Company will be able to
sustain or increase international revenues or that the foregoing factors will
not have a material adverse effect on the Company's future international
revenues and, consequently, on the Company's business, operating results and
financial condition. The Company currently does not engage in currency
hedging activities. Although exposure to currency fluctuations to date has
been insignificant, there can be no assurance that fluctuations in currency
exchange rates in the future will not have a material adverse impact on
revenues from international sales and licensing and thus the Company's
business, operating results and financial condition.
Risks Associated with Acquisitions
The Company is integrating the operations of its recently acquired
CentreSoft and NBG subsidiaries with its previously existing European
operations. This process, as well as the process of managing two significant
new international operations, will require substantial management time and
effort and could divert the attention of management from other matters. In
addition, there is a risk of loss of key employees, customers and vendors of
the recently acquired operations as well as existing operations as this
process is implemented. There is no assurance that the Company will be
successful in integrating these operations or that, if the operations are
combined, there will not be adverse effects on its business.
Consistent with its strategy to enhance distribution and product
development capabilities, the Company intends to continue to pursue
acquisitions of companies and intellectual property rights and other assets
that can be purchased or licensed on acceptable terms and which the Company
believes can be operated or exploited profitably. Some of these transactions
could be material in size and scope. While the Company will continually be
searching for appropriate acquisition opportunities, there can be no
assurance that the Company will be successful in identifying suitable
acquisitions. If any potential acquisition opportunities are identified,
there can be no assurance that the Company will consummate such acquisitions
or if any such acquisition does occur, that it will be successful in
enhancing the Company's business or be accretive to the Company's earnings.
As the entertainment software business continues to consolidate, the Company
faces significant competition in seeking acquisitions and may in the future
face increased competition for acquisition opportunities, which may inhibit
its ability to complete suitable transactions. Future acquisitions could
also divert substantial management time, could result in short term
reductions in earnings or special transaction or other charges and may be
difficult to integrate with existing operations or assets.
The Company may, in the future, issue additional shares of Common Stock
in connection with one or more acquisitions, which may dilute its
shareholders. Additionally, with respect to most of its future acquisitions,
the Company's shareholders may not have an opportunity to review the
financial statements of the entity being acquired, or to evaluate the
benefits of the intellectual property rights being purchased or licensed, or
to vote on any such acquisitions.
Risk of CentreSoft Vendor Defections; Vendor Concetration
The Company's recently acquired CentreSoft subsidiary performs software
distribution services in the United Kingdom and, via export, in other
European territories for a variety of entertainment software publishers, many
of which are competitors of the Company. These services are generally
performed under limited term contracts, some of which provide for
cancellation in the event of a change of control. While the Company expects
to use reasonable efforts to retain these vendors, there can be no assurance
that the Company will be successful in this regard. The cancellation or non-
renewal of one or more of these contracts could have a material adverse
effect on the Company's business, operating results and financial condition.
Three of CentreSoft's vendors accounted for 38.2%, 11.8% and 11.1%,
respectively, of CentreSoft's net revenues in fiscal year 1998. The net
revenues from these vendors represented 17.9%, 5.5% and 5.2%, respectively,
of total net revenues of the Company.
THE COMPANY
Activision is a leading international publisher, developer and
distributor of interactive entertainment software. The Company's products
span a wide range of product genres, including action, adventure, strategy
and simulation, and have included best selling titles such as MechWarrior 2,
Hexen II, Nightmare Creatures, Heavy Gear, Dark Reign, Blood Omen, Pitfall
and Shanghai. Since its founding in 1979, the Company has published hundreds
of entertainment software products for a variety of personal computer and
console platforms.
The Company currently focuses its publishing, development and
distribution efforts on products designed for PCs, the Sony PlayStation
console system and the Nintendo 64 console system.
The Company's strategy includes the following elements:
Publish high quality titles. The Company seeks to differentiate its
titles through the highest quality production values and superior gaming
play, supported by comprehensive trade and consumer marketing programs
coordinated with product releases. Accordingly, the Company must support the
development, production, acquisition and marketing of its titles with the
resources necessary to create best selling products. In order to reduce the
financial risks associated with the higher development and marketing budgets
required to support this strategy, the Company pursues a combination of
internally and externally developed titles; between products based on proven
technology and newer technology; and between PC and console products.
Focus on franchise properties. The Company focuses its publishing and
developing activities principally on titles that are, or have the potential
to become, franchise properties with sustainable consumer appeal and brand
recognition. These titles can thereby serve as the basis for sequels,
prequels, mission packs and other add-ons and related new titles that can be
released over an extended period of time. The Company believes that the
publishing and distribution of products based in large part on franchise
properties will enhance revenue predictability. The Company currently is
publishing products based on several franchise properties, including Quake,
Hexen, Zork, Pitfall and Shanghai. The Company also has rights to several
other properties that it believes may have franchise value, including Heavy
Gear, Dark Reign, Battlezone, Heretic, Nightmare Creatures, Asteroids, and
Jack Nicklaus Golf.
Expand direct distribution capabilities. In North America, the
Company's products are sold primarily on a direct basis to major computer and
software retailing organizations, consumer electronic stores and discount
warehouses. In international territories, the Company's products are sold
both direct to retail and through third party distribution and licensing
arrangements. In order to maximize the revenues to be generated by each of
its products, the Company is expanding its worldwide direct distribution
capabilities. The Company believes that a dedicated internal sales force and
direct distribution to retailers provide significant competitive advantages,
including the ability to compete more effectively for shelf space, to create
additional point-of-sale promotional opportunities, to more properly manage
inventory levels, and to increase margins by eliminating third party
distributors. Consistent with this strategy, the Company has concluded
several acquisitions in the past six months in an effort to bolster its
direct distribution capabilities in international markets.
Continue to grow original equipment manufacturer (OEM") revenues. The
Company also generates significant revenue throughout the world as a result
of arrangements with OEMs, in which the Company's titles are sold together
with hardware or peripheral devices manufactured by the OEM. The Company
believes that OEM bundle arrangements expand the distribution of its titles
to a broader and more diverse audience, and it intends to continue
aggressively pursuing these arrangements.
Enhance Product Flow. In order to expand the Company's library of
titles, intellectual property rights and talent base, the Company is actively
engaged in the exploration of acquisition opportunities in the software
development business. Consistent with this strategy, in August 1997 the
Company acquired Raven Software Corporation ("Raven"), an entertainment
software developer based in Madison, Wisconsin that has created numerous best
selling titles, including Heretic, Hexen: Beyond Heretic and Hexen II. In
addition, in order to create a closer relationship with independent
developers, the Company from time to time makes investments and acquires
minority equity interests in independent developers at the same time as it
acquires publishing rights to the developers' products.
The Company's principal executive offices are located at 3100 Ocean Park
Blvd., Santa Monica, California 90405, and its telephone number is (310) 255-
2000. The Company also maintains offices in the United Kingdom, France,
Germany Japan, Australia and Madison, Wisconsin. The Company's World Wide
Web home page is located at http://www.activision.com.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Common Stock being offered hereby for the account of the Selling
Stockholders. Upon the exercise of the Warrant and the issuance of the
underlying shares of Common Stock, the Company will receive $10.38 per share,
or aggregate proceeds, assuming the Warrant is fully exercised, of
$1,557,000. The Company intends to use any net proceeds from the exercise of
the Warrant for working capital.
SELLING STOCKHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of Common Stock by the Selling Stockholders as of June
9, 1998, and the number of shares of Common Stock being offered by this
Prospectus.
Beneficial Ownership of Number of
Common Stock Shares of
Prior to the Offering Common
--------------------------- Stock
Number of Percentage Being
Name of Selling Shareholder Shares of Class(2) Registered
------------ ----------- ----------
Id Software, Inc.
18601 LBJ Freeway #615
Mesquite, Texas 75150 . . . . . . . 300,000 1.5%* 150,000
Stefan Plambeck
2006 Marshall Avenue
St. Paul, MN 55104 . . . . . . . . . 8,226 (1) 8,226
Detlef Erhardt
Fasanweg 3
93133Burglengenfeld
GERMANY. . . . . . . . . . . . . . . 132,914 (1) 1,390
Ingrid Herrmann
Fasanweg 3
93133Burglengenfeld
GERMANY. . . . . . . . . . . . . . . 132,914 (1) 1,390
Jim Harries
3720 18th Avenue South
Minneapolis, MN . . . . . . . . . 111 (1) 111
All Selling Stockholders
as a group . . . . . . . . . . . . 574,165 3.0%* 161,117
____________
* Assumes complete exercise of the Warrant owned by id Software and other
warrants owned by id Software to purchase a total of 300,000 shares of
Common Stock.
(1) Less than 1%.
(2) Percentages are based on 19,016,915 shares of Common Stock that were
issued and outstanding as of May 31, 1998.
The Company has entered into a series of license agreements with id
Software pursuant to which the Company has been granted the right to
distribute certain of id Software's entertainment software products and has
entered into a share exchange agreement (the NBG USA Share Exchange
Agreement") with all of the holders of the outstanding capital stock of NBG
USA. The acquisition of NBG USA was related to the acquisition in November
1997 of NBG Germany and Target, companies previously owned by Mr. Erhardt and
Ms. Herrmann . Other than such contracts, none of the Selling Stockholders
has had a material relationship with the Company within the past three years.
The transaction contemplated by the NBG USA Share Exchange Agreement was
consummated on March 12, 1998. Pursuant to the NBG USA Share Exchange
Agreement, the NBG USA Selling Stockholders agreed not to sell, pledge, gift,
hypothecate or otherwise dispose of shares of Common Stock received in the
transaction until the issuance by the Company of its first earnings press
release including at least thirty days of combined operations of the Company
and NBG USA.
In order to ensure that the representations, warranties and covenants
made by the NBG USA stockholders under the NBG USA Share Exchange Agreement
are not breached, and in order to provide a source of indemnification to the
Company pursuant to such agreement, the former NBG USA stockholders deposited
in escrow pursuant to a warranty escrow agreement a total of 1,112 shares of
Common Stock, to be held until the earlier of (i) the date on which the first
audited results of the combined enterprises' financial statements are
published, (2) March 12, 1999, or (3) the date set forth in a joint written
direction executed by the Company and the former NBG USA stockholders.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 55,000,000
shares of capital stock, $.000001 par value, consisting of 50,000,000 shares
of Common Stock and 5,000,000 shares of preferred stock. As of May 31, 1998,
approximately 19,016,915 shares of Common Stock were outstanding. The Common
Stock is listed in the NASDAQ National Market System under the symbol "ATVI."
Each outstanding share of Common Stock entitles the holder to one vote
on all matters submitted to a vote of stockholders, including the election of
directors. There is no cumulative voting in the election of directors, which
means that the holders of a majority of the outstanding shares of Common
Stock can elect all of the directors then standing for election. Subject to
preferences which may be applicable to any outstanding shares of preferred
stock, holders of Common Stock are entitled to such distributions as may be
declared from time to time by directors of the Company out of funds legally
available therefor. The Company has not paid, and has no current plans to
pay, dividends on its Common Stock. The Company intends to retain all
earnings for use in its business.
Holders of Common Stock have no conversion, redemption or preemptive
rights to subscribe to any securities of the Company. All outstanding shares
of Common Stock are fully paid and nonassessable. In the event of any
liquidation, dissolution or winding-up of the affairs of the Company, holders
of Common Stock will be entitled to share ratably in the assets of the
Company remaining after provision for payment of liabilities to creditors and
preferences applicable to outstanding shares of preferred stock.
The rights, preferences and privileges of holders of Common Stock are
subject to the rights of the holders of any outstanding shares of preferred
stock. At present, no shares of preferred stock are outstanding. As of June
, 1998, the Company had approximately 5,000 stockholders of record,
excluding banks, brokers and depository companies that are stockholders of
record for the account of beneficial owners.
The transfer agent for the Common Stock of the Company is Continental
Stock Transfer & Trust Company, 2 Broadway, New York, New York 10004.
PLAN OF DISTRIBUTION
The Common Stock may be sold from time to time by the Selling
Stockholders, or by pledgees, donees, transferees or other successors in
interest. Such sales may be made on one or more exchanges or in the
over-the-counter market, or otherwise, at prices and at terms then prevailing
or at prices related to the then current market price, or in negotiated
transactions. The shares may be sold by one or more of the following,
without limitation: (a) a block trade in which the broker or dealer so
engaged will attempt to sell the shares as agent but may position and resell
a portion of the block as principal to facilitate the transaction, (b)
purchases by a broker or dealer as principal and resale by such broker or
dealer or for its account pursuant to the Prospectus, as supplemented, (c) an
exchange distribution in accordance with the rules of such exchange, and (d)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers. In addition, any securities covered by this Prospectus which
qualify for sale pursuant to Rule 144 may be sold under Rule 144 rather than
pursuant to this Prospectus, as supplemented. From time to time the Selling
Stockholders may engage in short sales, short sales against the box, puts and
calls and other transactions in securities of the Company or derivatives
thereof, and may sell and deliver the shares in connection therewith.
From time to time Selling Stockholders may pledge their shares pursuant
to the margin provisions of their respective customer agreements with their
respective brokers. Upon a default by a Selling Stockholder, the broker may
offer and sell the pledged shares of Common Stock from time to time as
described above.
All expenses of registration of the Common Stock (other than commissions
and discounts of underwriters, dealers or agents), estimated to be
approximately $8,500, shall be borne by the Company. As and when the Company
is required to update this Prospectus, it may incur additional expenses in
excess of this estimated amount.
LEGAL MATTERS
Certain legal matters in connection with the shares of Common Stock
offered hereby have been passed upon for the Company by Robinson Silverman
Pearce Aronsohn & Berman LLP, New York, New York.
EXPERTS
The consolidated financial statements and financial statement schedule
of the Company and its subsidiaries as of March 31, 1998 and 1997 and for
each of the years in the three year period ended March 31, 1998, have been
incorporated by reference herein and in the registration statement in
reliance upon the report of KPMG Peat Marwick LLP, independent certified
public accountants, incorporated by reference herein, and upon the authority
of said firm as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Securities and Exchange Commission (the "SEC"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the SEC at its offices at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
regional offices of the SEC located at Seven World Trade Center, New York,
New York 10048 and at Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511. Copies of such materials can be
obtained by mail from the Public Reference Section of the SEC at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates,
and can also be obtained electronically through the SEC's Electronic Data
Gathering, Analysis and Retrieval system at the SEC's Web site
(http://www.sec.gov). The Company's Common Stock is listed on the Nasdaq
National Market and copies of such reports and other information can also be
inspected at the offices of the Nasdaq National Market, 1735 K Street, N.W.,
Washington, D.C. 20006.
The Company has filed with the SEC a registration statement on Form S-3
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations promulgated thereunder, with
respect to the Common Stock offered hereby. This Prospectus, which
constitutes a part of the Registration Statement, does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto, as permitted by the rules and regulations of the SEC. For
further information with respect to the Company and the Common Stock offered
hereby, reference is made to the Registration Statement, including the
exhibits thereto and the financial statements, notes and schedules filed as a
part thereof, which may be inspected and copied at the public reference
facilities of the SEC referred to above. Statements contained in this
Prospectus as to the contents of any contract or other document are not
necessarily complete, and in each instance reference is made to the full text
of such contract or document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference.
The Company furnishes stockholders with annual reports containing
audited financial statements and with proxy material for its annual meetings
complying with the proxy requirements of the Exchange Act.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents which have been filed by the Company with the
SEC are incorporated in this Prospectus by reference:
1. The Company's Annual Report on Form 10-K for the year ended March
31, 1998, which contains audited consolidated balance sheets of the Company
and subsidiaries as of March 31, 1998 and 1997, and related consolidated
statements of operations, changes in shareholders' equity and cash flows for
each of the years in the three year period ended March 31, 1998.
2. All other reports filed by the Company pursuant to Section 13(a) or
15(d) of the Exchange Act since March 31, 1998.
All reports and other documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to
the filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in and to
be a part of this Prospectus from the date of filing of such reports and
documents.
Any statement contained herein or in a document which is incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement in any subsequently filed
document that is also deemed to be incorporated by reference herein modifies
or supersedes such prior statement.
This Prospectus incorporates documents by reference which are not
presented or delivered herewith. These documents are available upon written
or oral request from the Company, without charge, to each person to whom a
copy of this Prospectus has been delivered, other than exhibits to those
documents. Requests should be directed to the Office of the Secretary,
Activision, Inc., 3100 Ocean Park Boulevard, Santa Monica, California 90405
(telephone (310) 255-2000).
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements included or incorporated by reference into this
Prospectus constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. All such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the
Company, or industry results, to be materially different from any future
results, performance, or achievements expressed or implied by such forward-
looking statements. Such factors include the various matters described
herein under "Risk Factors" and various other factors described in the
Company's other filings with the Commission.
SPECIAL NOTE REGARDING THE YEAR 2000 PROBLEM
Many computer systems and applications currently use two digits to
define the applicable year. As a result, date-sensitive systems may
recognize the year 2000 as 1900 or not at all, which could cause
miscalculations or system failures.
The Company has assessed its computerized systems to determine their
ability to correctly identify the year 2000 and is devoting the necessary
internal and external resources to replace, upgrade or modify all significant
systems which do not correctly identify the year 2000. The Company
anticipates that all of its systems will be year 2000 compliant well before
the end of 1999. In addition, the Company has determined the extent to which
its operations may be affected by the compliance efforts of its significant
suppliers and is taking the necessary steps to minimize the problems.
Based on current information, the costs of addressing the year 2000
issue have not and are not expected to have a material adverse impact on the
Company's financial position, results of operations or cash flows.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
No dealer, salesman or other person has been authorized to give any
information or to make representations other than those contained in this
Prospectus, and if given or made, such information or representations must
not be relied upon as having been authorized by the Company or the Selling
Stockholders. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create an implication that the
information herein is correct as of any time subsequent to its date. This
Prospectus does not constitute an offer of solicitation by anyone in any
jurisdiction in which such offer or solicitation is not authorized or in
which the person making such offer of solicitation is not qualified to do so
or to anyone to whom it is unlawful to make such offer or solicitation.
-------------
TABLE OF CONTENTS
Page
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
The Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Selling Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Description of Capital Stock . . . . . . . . . . . . . . . . . . . . . . 11
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Available Information. . . . . . . . . . . . . . . . . . . . . . . . . . 12
Documents Incorporated by Reference. . . . . . . . . . . . . . . . . . . 13
Special Note Regarding Forward-Looking Statements . . . . . . . . . . . 14
Special Note Regarding The Year 2000 Problem . . . . . . . . . . . . . . 14
------------
161,117 Shares
ACTIVISION, INC.
Common Stock
-------------
PROSPECTUS
-------------
_____________, 1998
=============================================================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table itemizes the expenses incurred by the Company
in connection with the offering of the Common Stock being registered. All
the amounts shown are estimates except the Securities and Exchange Commission
(the "Commission") registration fee.
Item Amount
Registration Fee - Securities and Exchange Commission $472
Legal Fees and Expenses. . . . . . . . . . . . . . 5,000
Accounting Fees and Expenses . . . . . . . . . . . 3,000
TOTAL . . . . . . . . . . . . . . . $8,472
=====
Item 15. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law ("DGCL"), paragraph
B of Article SIXTH of the Company's Amended and Restated Certificate of
Incorporation and paragraph 5 of Article VII of the Company's By-laws provide
for the indemnification of the Company's directors and officers in a variety
of circumstances, which may include liabilities under the Securities Act of
1933, as amended (the "Securities Act").
Paragraph B of Article SIXTH of the Amended and Restated Certificate of
Incorporation provides mandatory indemnification rights to any officer or
director of the Company who, by reason of the fact that he or she is an
officer or director of the Company, is involved in a legal proceeding of any
nature. Such indemnification rights shall include reimbursement for expenses
incurred by such officer or director in advance of the final disposition of
such proceeding in accordance with the applicable provisions of the DGCL.
Paragraph 5 of Article VII of the Company's By-laws currently provide that
the Company shall indemnify its directors and officers to the fullest extent
permitted by the DGCL.
Paragraph A of Article SIXTH of the Amended and Restated Certificate of
Incorporation contains a provision which eliminates the personal liability of
a director to the Company and its stockholders for certain breaches of his or
her fiduciary duty of care as a director. This provision does not, however,
eliminate or limit the personal liability of a director (i) for any breach of
such director's duty of loyalty to the Company or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) under the Delaware statutory provision
making directors personally liable, under a negligence standard, for unlawful
dividends or unlawful stock repurchases or redemptions, or (iv) for any
transaction from which the director derived an improper personal benefit.
This provision offers persons who serve on the Board of Directors of the
Company protection against awards of monetary damages resulting from
negligent (except as indicated above) and "grossly" negligent actions taken
in the performance of their duty of care, including grossly negligent
business decisions made in connection with takeover proposals for the
Company. As a result of this provision, the ability of the Company or a
stockholder thereof to successfully prosecute an action against a director
for a breach of his duty of care has been limited. However, the provision
does not affect the availability of equitable remedies such as an injunction
or rescission based upon a director's breach of his duty of care.
It is currently unclear as a matter of law what impact these provisions
will have regarding securities law violations. The Commission takes the
position that indemnification of directors, officers and controlling persons
against liabilities arising under the Securities Act is against public policy
as expressed in the Securities Act and therefore is unenforceable.
Item 16. Exhibits
(a) Exhibits:
5.1 Opinion of Robinson Silverman Pearce Aronsohn & Berman LLP as to
legality of securities being registered.
10.1 Form of Warrant to purchase 150,000 shares of Common Stock granted
to Id Software, Inc. by Activision, Inc.
10.2 Form of Registration Rights Agreement between Id Software, Inc. and
Activision, Inc. relating to the 150,000 shares of Common Stock
underlying the Warrant.
23.1 Consent of Robinson Silverman Pearce Aronsohn & Berman LLP
(included as part of Exhibit 5.1).
23.2 Consent of KPMG Peat Marwick LLP.
24.1 Power of attorney (included on signature page).
Item 17. Undertakings
The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the Prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply
if the registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by
the Company pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The Company hereby further undertakes that, for purposes of determining
any liability under the Securities Act, each filing of the Company's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
The Company hereby further undertakes to deliver or cause to be
delivered with the Prospectus, to each person to whom the Prospectus is sent
or given, the latest annual report to security holders that is incorporated
by reference in the Prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X are not set forth in the Prospectus, to deliver, or cause to
be delivered to each person to whom the Prospectus is sent or given, the
latest quarterly report that is specifically incorporated by reference in the
Prospectus to provide such interim financial information.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or
paid by a director, officer or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Company will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized in the City of Los Angeles, State of California, on
June 12, 1998.
ACTIVISION, INC.
By:/s/ Robert A. Kotick
---------------------------
Robert A. Kotick, Chairman and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Robert A. Kotick and Brian G. Kelly,
and each or any of them, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments
(including post-effective documents in connection therewith), with the
Securities and Exchange Commission, granting unto each said attorney-in-fact
and agent full power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent or either of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Name Title Date
/s/ Robert A. Kotick Chairman, Chief Executive June 12, 1998
- ------------------------ Officer (Principal Executive
(Robert A. Kotick) Officer) and Director
/s/ Brian G. Kelly Chief Operating Officer, June 12, 1998
- ------------------------ President and Director
(Brian G. Kelly)
/s/ Barry J. Plaga Chief Financial Officer June 12, 1998
- ------------------------ (Principal Financial
(Barry J. Plaga) and Accounting Officer)
/s/ Harold A. Brown Director June 12, 1998
- ------------------------
(Harold A. Brown)
/s/ Barbara S. Isgur Director June 12, 1998
- ------------------------
(Barbara S. Isgur)
/s/ Steven T. Mayer Director June 12, 1998
- ------------------------
(Steven T. Mayer)
Director June, 1998
- ------------------------
(Robert J. Morgado)
EXHIBIT INDEX
Page Number
in Signed
Registration
Exhibit No. Description Statement
5.1 Opinion of Robinson Silverman Pearce Aronsohn & Berman
LLP as to legality of securities being registered.
10.1 Form of Warrant to purchase 150,000 shares of Common
Stock
granted to Id Software, Inc. by Activision, Inc.
10.2 Form of Registration Rights Agreement between Id
Software,
Inc. and Activision, Inc. relating to the 150,000 shares of
Common Stock underlying the Warrant.
23.1 Consent of Robinson Silverman Pearce Aronsohn & Berman
LLP (included as part of Exhibit 5.1).
23.2 Consent of KPMG Peat Marwick LLP.
24.1 Power of attorney (included on signature page).
Exhibit 5.1
ROBINSON SILVERMAN PEARCE ARONSOHN & BERMAN LLP
1290 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10104
(212) 541-2000
FACSIMILE: (212) 541-4630
June 12, 1998
Activision, Inc.
3100 Ocean Park Blvd.
Santa Monica, CA 90405
Re: Activision, Inc.
Registration Statement on Form S-3
Ladies and Gentlemen:
We refer to the Registration Statement on Form S-3 (the
"Registration Statement") to be filed by Activision, Inc., a Delaware
corporation (the "Company"), on or about the date hereof with the Securities
and Exchange Commission in connection with the registration under the
Securities Act of 1933, as amended, with respect to 161,117 shares of the
Company's common stock, par value $.000001 per share (the "Common Stock")
held by certain of the Company's stockholders.
We are familiar with the Amended and Restated Certificate of
Incorporation, as amended, and the By-laws of the Company and have examined
originals or copies, certified or otherwise identified to our satisfaction,
of such other documents, evidence of corporate action, certificates and other
instruments, and have made such other investigations of law and fact, as we
have deemed necessary or appropriate for the purposes of this opinion.
Based upon the foregoing, it is our opinion that:
(a) The Company has been duly incorporated and is validly existing
under the laws of the State of Delaware.
(b) The 11,117 shares of Common Stock being registered for the
account of certain of the Company's stockholders have been duly authorized
and are validly issued, fully paid and nonassessable. The 150,000 shares of
Common Stock being registered on account of the warrant issued to Id
Software, Inc. have been duly authorized and, when issued upon exercise of
such warrant and payment of the purchase price therefor, will be validly
issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and to the use of our name wherever appearing in
such Registration Statement, including the Prospectus consisting a part
thereof, and any amendment thereto. In giving this consent, we do not
thereby admit that we are in the category of persons whose consent is
required under Section 7 of the Act, or the Rules and Regulations of the
Commission thereunder.
Very truly yours,
/s/ Robinson Silverman Pearce
Aronsohn & Berman LLP
Exhibit 10.1
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT. AS A
CONDITION TO SALE OR OTHER TRANSFER OF THIS SECURITY, THE COMPANY MAY, AT ITS
OPTION, REQUIRE THE PROPOSED TRANSFEROR HEREOF TO DELIVER TO THE COMPANY AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT SUCH
REGISTRATION OR QUALIFICATION IS NOT REQUIRED FOR SUCH PROPOSED SALE OR OTHER
TRANSFER.
ACTIVISION, INC.
Incorporated Under the Laws of Delaware
WARRANT
To Purchase 150,000 Shares of
Common Stock ($.000001 par value)
1. Basic Terms. This certifies that, for value received, Id Software, Inc.
("id Software") is the registered owner of this Warrant and entitled, subject
to the terms and conditions of this Warrant, (a) at any time and from time to
time, in whole or in part, from and after the date hereof until the
Expiration Date set forth in Paragraph 3 below, to purchase Seventy-Five
Thousand (75,000) shares of the Common Stock, par value $0.000001 (the
"Common Stock"), of Activision, Inc. (the "Company") from the Company, and
(b) an additional Seventy-Five Thousand (75,000) shares of Common Stock at
any time and from time to time, in whole or in part, from and after the date
the "master disk," as such term is defined in the License Agreement defined
below, is delivered to the Company in accordance with the terms of the
License Agreement, in each case at the Purchase Price set forth in Paragraph
2 below, on delivery of this Warrant to the Company with the exercise form
duly executed and payment of the Purchase Price in the manner set forth in
Paragraph 2 below.
This Warrant is issued pursuant to that certain Quake III License
Agreement between id Software and the Company dated as of March 30, 1998 (the
"License Agreement"). Any profit or gain id Software makes on this Warrant
and/or the underlying stock shall not be considered as an Advance as that
term is used in the License Agreement and shall not be recoupable by
Activision.
2. Purchase Price. The purchase price (the "Purchase Price") for each
share of Common Stock shall be $10.38; provided, however, that the Purchase
Price shall be subject to adjustment from time to time as provided in
Sections 10 and 11 hereof. The Purchase Price shall be payable in cash or by
certified or official bank or bank cashier's check payable to the order of
the Company, or by any other means consented to by the Company.
3. When Exercisable. This Warrant shall be exercisable in accordance with
Section 1 hereof and shall expire on the Expiration Date, which shall be at
11:59 p.m, Los Angeles, California, time, on March 30, 2001, provided,
however, that, if the aggregate amount of revenue recorded (on an accrual
basis) by the Company by such date from sales and/or distributions of product
units of Quake III, pursuant to the License Agreement is in excess of
$2,500,000, then this Warrant shall continue to be exercisable until and
shall expire on March 30, 2008, unless terminated sooner under Paragraph 13
of this Warrant. This Warrant shall expire, become void and be of no further
force or effect after the Expiration Date.
4. Company's Covenants as to Common Stock. Shares deliverable on the
exercise of this Warrant shall, at delivery and upon payment of the Purchase
Price, be fully paid and non-assessable, free from taxes, liens, and charges
with respect to their purchase. The Company shall take any necessary steps
to assure that the par value per share of the Common Stock issuable hereunder
is at all times equal to or less than the then current Purchase Price per
share of the Common Stock issuable pursuant to this Warrant. The Company
shall at all times reserve and hold available sufficient shares of Common
Stock to satisfy the terms of this Warrant.
5. Method of Exercise. The purchase rights represented by this Warrant are
exercisable at the option of the registered owner in whole at any time, or in
part, from time to time, within the periods specified in Sections 2 and 3
hereof. In case of the exercise of this Warrant for less than all shares
purchasable, the Company shall cancel the Warrant and execute and deliver a
new Warrant of like tenor and date for the balance of the shares purchasable.
6. Limited Rights of Owner. This Warrant does not entitle the owner to any
voting rights or other rights as a shareholder of the Company, or to any
other rights whatsoever except the rights herein expressed. No dividends are
payable or will accrue on this Warrant or the shares purchasable hereunder
until, and except to the extent that, this Warrant is exercised.
7. Exchange for Other Denominations. This Warrant is exchangeable, on its
surrender by the registered owner to the Company, for new Warrants of like
tenor and date representing in the aggregate the right to purchase the number
of shares purchasable hereunder in denominations designated by the registered
owner at the time of surrender.
8. Transfer. Except as otherwise provided herein, this Warrant is
transferable only on the books of the Company by the registered owner in
person or by attorney, on surrender of this Warrant, properly endorsed. The
Warrant will be immediately transferrable following issuance provided such
transfer complies with applicable federal and state securities laws.
9. Recognition of Registered Owner. Prior to due presentment for
registration of transfer of this Warrant, the Company may treat the
registered owner as the person exclusively entitled to receive notices and
otherwise to exercise rights hereunder.
10. Effect of Stock Split, etc. If the Company, by stock split, stock
dividend, reverse split, reclassification of shares, or otherwise, changes as
a whole the outstanding Common Stock into a different number or class of
shares or other securities of the Company, then: (1) the number and/or class
of shares or other securities of the Company as so changed shall, for the
purposes of this Warrant, replace the shares outstanding immediately prior to
the change, and (2) the Warrant Purchase Price in effect, and the number of
shares or other securities of the Company purchasable under this Warrant,
immediately prior to the date upon which the change becomes effective, shall
be proportionately adjusted (the price to the nearest cent). Irrespective of
any adjustment or change in the Warrant Purchase Price or the number of
shares or other securities of the Company purchasable under this or any other
Warrant of like tenor, the Warrants theretofore and thereafter issued may
continue to express the Warrant Purchase Price per share and the number of
shares purchasable as the Warrant Purchase Price per share and the number of
shares purchasable were expressed in the Warrant when initially issued. The
provisions of this Section 10 shall similarly apply to successive changes of
the kinds described herein.
11. Effect of Merger, etc. If the Company consolidates with or merges into
another corporation, the registered owner shall thereafter be entitled, upon
exercise of this Warrant, to purchase, with respect to each share of Common
Stock purchasable hereunder immediately before the consolidation or merger
becomes effective, the securities or other consideration to which a holder of
one share of Common Stock is entitled to receive in the consolidation or
merger without any change in or payment in addition to the Warrant purchase
price in effect immediately prior to the merger or consolidation. The
Company shall take any necessary steps in connection with a consolidation or
merger to assure that all the provisions of this Warrant shall thereafter be
applicable, as nearly as reasonably may be, to any securities or other
consideration so deliverable on exercise of this Warrant. The Company shall
not consolidate or merge unless, prior to consummation, the successor
corporation (if other than the Company) assumes the obligations of this
paragraph by written instrument executed and mailed to the registered owner
at the address of the owner on the books of the Company. A sale, lease or
other transfer of all or substantially all the assets of the Company for a
consideration (apart from the assumption of obligations) consisting primarily
of securities is a consolidation or merger for the foregoing purposes. The
provisions of this Section 11 shall similarly apply to successive mergers or
consolidations or sales, leases or transfers.
12. Notice of Adjustment. On the happening of an event requiring an
adjustment of the Warrant Purchase Price or the shares purchasable hereunder,
the Company shall forthwith give written notice to the registered owner
stating the adjusted Warrant purchase price and the adjusted number and kind
of securities or other property purchasable hereunder resulting from the
event and setting forth in reasonable detail the method of calculation and
the facts upon which the calculation is based. The Board of Directors of the
Company, acting in good faith, shall determine the calculation.
13. Notice and Effect of Dissolution, etc. In case a voluntary or
involuntary dissolution, liquidation, or winding up of the Company (other
than in connection with a consolidation or merger covered by Paragraph 11
above) is at any time proposed, the Company shall give at least 30 days'
prior written notice to the registered owner. Such notice shall contain:
(1) the date on which the transaction is to take place; (2) the record date
(which shall be at least 30 days after the giving of the notice) as of which
holders of Common Stock will be entitled to receive distributions as a result
of the transaction; (3) a brief description of the transaction; (4) a brief
description of the distributions to be made to holders of Common Stock as a
result of the transaction; and (5) an estimate of the fair value of the
distributions. On the date of the transaction, if it actually occurs, this
Warrant and all rights hereunder shall terminate.
14. Registration of Common Stock. Neither this Warrant nor the shares of
Common Stock issuable upon exercise hereof have been registered under the
Securities Act of 1933, as amended, or any state securities laws. The
initial Holder hereof, by accepting this Warrant, represents and warrants
that it is purchasing this Warrant for its own account for investment and not
with a view to or for sale in connection with any distribution thereof except
in conformity with the provisions of the Securities Act of 1933, as amended,
and the Rules and Regulations promulgated thereunder, and further agrees that
neither this Warrant nor the shares issuable on exercise hereof may be sold
or transferred in the absence of an effective registration statement under
the Securities Act of 1933, or an opinion of counsel satisfactory to the
Company to the effect that there is an exemption from such registration. In
addition, the Holder hereof agrees to deliver to the Company a similar
written statement with respect to any shares of Common Stock purchased upon
the exercise of this Warrant unless such shares have at the time of issuance
been registered under the Securities Act of 1933, as amended, and any
applicable state securities laws, or the holder can demonstrate the
availability of a federal exemption from registration not requiring same.
15. Notices. Any notice, demand, request, consent, approval, declaration,
delivery or other communication hereunder to be made pursuant to the
provisions of this Agreement shall be sufficiently given or made if in
writing and either delivered in person with receipt acknowledged, sent by
overnight courier with receipt acknowledged, or facsimile transmission with
receipt acknowledged, or sent by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to Activision, to:
Activision, Inc.
3100 Ocean Park Blvd.
Santa Monica, California 90405
Fax: (310) 255-2155
Attention: President and Chief Operating Officer
If to id Software, to:
Id Software, Inc.
18601 LBJ Freeway #615
Mesquite, Texas 75150
Attention: Todd Hollenshead
Chief Executive Officer
With copy to: D Wade Cloud, Jr.
Hiersche, Martens, Hayward, Drakeley &
Urbach, P.C.
15303 Dallas Parkway
Suite 700, LB 17
Dallas, Texas 75248
or at such other address as may be substituted by notice given as
herein provided.
16. Governing Law. This Warrant shall be construed in accordance with and
governed by the laws of the State of Delaware without regard to principles of
conflict of laws.
17. Amendment. This Agreement may be amended only by a writing executed by
all parties.
18. Descriptive Headings. The descriptive headings of the several Sections
of this Warrant are inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and
delivered by a duly authorized representative as of the 30th day of March,
1998.
ACTIVISION, INC.
By:____________________________________
Name: Brian Kelly
Title: President and Chief Operating
Officer
Assignment Form
(To be executed by the registered owner to transfer the Warrant)
For value received the undersigned hereby sells, assigns, and transfers to
Name
_____________________________________________________________________________
Address
_____________________________________________________________________________
_____________________________________________________________________________
this Warrant and irrevocably appoints
__________________________________________ attorney (with full power of
substitution) to transfer this Warrant on the books of the Company.
Dated:_______________________ __________________________________________
(Please sign exactly as name appears on
Warrant)
Taxpayer ID No:___________________________
SIGNATURE GUARANTEED
__________________________________________
(Name of bank, trust company or broker)
By:_______________________________________
Name:_____________________________________
Its:______________________________________
Address:__________________________________
__________________________________________
Exercise Form
(To be executed by the registered owner to purchase Common Stock pursuant to
the Warrant)
To: Activision, Inc.
3100 Ocean Park Blvd.
Santa Monica, California 90405
Attention: Chief Financial Officer
The undersigned hereby (1) irrevocably elects to exercise the right to
purchase ______ shares of your Common Stock pursuant to this Warrant, and
encloses payment of $____________ therefor; (2) requests that a certificate
for the shares be issued in the name of the undersigned and delivered to the
undersigned at the address below; and (3) if such number of shares is not all
of the shares purchasable hereunder, that a new Warrant of like tenor for the
balance of the remaining shares purchasable hereunder be issued in the name
of the undersigned and delivered to the undersigned at the address below.
Dated:______________ ____________________________________________________
(Please sign exactly as name appears on Warrant)
Address:
____________________________________________________
____________________________________________________
Taxpayer ID No:
____________________________________________________
Investment Letter
To: Activision, Inc.
3100 Ocean Park Blvd.
Santa Monica, California 90405
Attention: Chief Financial Officer
ln connection with the undersigned's purchase of shares of Common Stock
of Activision, Inc. pursuant to the exercise of a Warrant, the undersigned
hereby represents that it is acquiring said shares for its own account for
investment and not with a view to or for sale in connection with any
distribution of said shares.
Dated:_______________ ____________________________________________________
By:_________________________________________________
(Signature)
____________________________________________________
(Printed or Typed Name)
Exhibit 10.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement"), is made and
entered into as of March 30, 1998, between Activision, Inc., a Delaware
corporation ("Activision"), and Id Software, Inc., a
Texas corporation ("id Software").
R E C I T A L S
A. Activision and id Software have entered into that certain Quake III
License Agreement of even date herewith, which provides in part that
Activision will issue the Warrant (as defined below) and register for public
sale the 150,000 shares of Activision Common Stock issuable to id Software
upon the exercise of the Warrant.
B. This Agreement sets forth the agreement of the parties with respect
to such registration.
NOW THEREFORE, in consideration of the premises and the agreements
contained herein, the parties hereby agree as follows:
1. Definitions. The following terms shall have the following
respective meanings for purposes of this Agreement:
"Commission" means the United States Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder, all as the same
shall be in effect from time to time.
"Holder" means id Software and any other person who holds Shares
registered or required to be registered pursuant to this Agreement.
"License Agreement" means that certain Quake III License Agreement dated
as of March 30, 1998, between Activision, Inc. and id Software.
"Registration Date" shall mean the date on which the final prospectus
covering the Shares (or any portion thereof) is transmitted for filing with
the Commission pursuant to Rule 424(b) under the Securities Act.
"Registration Statement" shall mean the Registration Statement on Form
S-3 covering the Shares to bc filed by Activision in accordance with this
Agreement.
Rule 144 means Rule 144 promulgated by the Commission under the
Securities Act, which Rule provides in part that, under certain
circumstances, "restricted securities" may be sold pursuant to the exemption
from registration contained in Section 4(1) of the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder, all as the same shall
be in effect from time to time.
"Shares" shall mean the 150,000 shares, $.000001 par value, of
Activision Common Stock purchasable from Activision pursuant to the exercise
of the Warrant.
"Warrant" shall mean that certain Warrant (exercisable to purchase the
Shares) issued by Activision to id Software as of March 30, 1998, pursuant to
the terms of the License Agreement.
2. Registration Statement. The parties agree that the Warrant and the
Shares are "restricted securities" as that term is defined in Rule 144. So
that id Software may exercise the Warrant and sell the Shares to the public,
should it desire to do so in its sole and absolute discretion, Activision
covenants and agrees that it shall prepare and file the Registration
Statement with the Commission no later than May 31, 1998, and use its
commercially reasonable best efforts to cause the Registration Statement to
become effective.
The prospectus forming part of the Registration Statement will state
that id Software intends to sell Shares under Rule 144 to the extent the
Shares become eligible for sale under such Rule after the date of the
prospectus, and/or will contain such other disclosures as may be required by
the Commission in order to permit id Software to discontinue using the
prospectus and make any sales thereafter under Rule 144, to the extent the
Shares become eligible for sale under Rule 144 after the date of the
prospectus.
Activision may require each selling Holder to furnish to it such
information regarding the distribution of such Holder's Shares as is required
by law to be disclosed in a registration statement and Activision may exclude
from any registration the Shares of any such Holder who unreasonably fails to
furnish such information within a reasonable time after receiving such
request.
Id Software and each Holder covenants and agrees that (i) it will not
offer or sell any Shares under the Registration Statement until it has
received copies of the final prospectus included therein as amended or
supplemented and notice from Activision that the Registration Statement and
any post-effective amendments thereto have become effective, and (ii) id
Software, each Holder and their respective officers, directors and affiliates
will comply with the prospectus delivery requirements of the Securities Act
as applicable to them in connection with the sale of Shares pursuant to the
Registration Statement.
After the Registration Statement has been declared effective by the
Commission, Activision shall keep the Registration Statement effective until
the earlier to occur of the following:
(a) the Warrant has been exercised in full and 100% of the Shares
have, in one or more separate transactions, (i) been sold, transferred
or otherwise disposed of (or could have been sold, transferred or
otherwise disposed of) under the exemption from registration contained
in Section 4(1) of the Securities Act (including Rule 144), or (ii)
could at the time be sold under Rule 144 by the person or persons who
are at the time the holder or holders of the Shares;
(b) the Warrant has not been exercised, but if it were to be
exercised, 100% of the Shares could at the time be sold under the
exemption from registration contained in Section 4(1) of the Securities
Act (including Rule 144) by such holder or holders;
(c) id Software has given notice to Activision in accordance with
the notice provisions of the License Agreement that Activision need not
continue to maintain the effectiveness of the Registration Statement;
(d) the Warrant has expired unexercised; or
(e) the fourth anniversary of the date on which the Registration
Statement was declared effective by the Commission.
In furtherance thereof Activision shall use its best efforts to amend or
supplement the Registration Statement and prospectus used in connection
therewith from time to time, during such period and to the extent necessary
in order to comply with applicable laws and regulations.
3. Registration Procedures. Activision further covenants and agrees
that it will, as expeditiously as reasonably possible:
(a) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the prospectus used in
connection therewith as may be necessary to keep the Registration
Statement effective and to comply with the provisions of the Securities
Act and the Exchange Act with respect to the sale or other disposition
of the Shares;
(b) as soon as available, furnish to id Software such number of
copies of the Registration Statement and of each amendment or supplement
thereto, and of each prospectus (including each preliminary prospectus
or summary prospectus) included therein, in conformity with the
requirements of the Securities Act, and such other documents, as id
Software may reasonably request;
(c) use its best efforts to list the Shares on any securities
exchange on which the Activision Common Stock is then listed;
(d) otherwise use irs best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, but no later than
18 months after the Registration Date, an earnings statement which shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule
158 thereunder.
4. Notification to id Software. After the effective date of the
Registration Statement:
(a) Activision will notify id Software of the issuance of any stop
order suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for such purpose.
Immediately upon receipt of any such notice, id Software shall cease to
offer or sell any Shares pursuant to the Registration Statement.
Activision will use its best efforts to prevent the issuance of any such
stop order and, if any such stop order is issued, obtain as soon as
possible the withdrawal or revocation thereof, and will notify id
Software at the earliest practicable date of the date on which id
Software may offer and sell Shares pursuant to the Registration
Statement.
(b) Activision will notify id Software promptly if any event shall
occur or if any state of facts shall exist that, in the judgment of
Activision, should be set forth in any preliminary or final prospectus
then being used by id Software in connection with the sale of any
Shares. Immediately upon receipt of such notice, id Software shall
cease to offer or sell any Shares pursuant to such preliminary or final
prospectus, cease to deliver or use such preliminary or final prospectus
and, if so requested by Activision, use its best efforts to return to
Activision, at Activision's expense, all copies (other than permanent
file copies) of such preliminary or final prospectus. Activision will,
as promptly as practicable, take such action as may be necessary to
amend or supplement such preliminary or final prospectus in order to set
forth or reflect such event or state of facts.
(c) If Activision determines in its good faith judgment that the
filing of the Registration Statement in accordance with Section 2 or the
use of any prospectus would require the disclosure of material
information which Activision has a bona fide business purpose for
preserving as confidential or the disclosure of which would impede
Activision's ability to consummate a significant transaction, upon
written notice of such determination by Activision, the rights of id
Software or any other Holder to offer, sell or distribute any Shares
pursuant to the Registration Statement or to require Activision to take
action with respect to the registration or sale of Shares pursuant to
the Registration Statement will, for a period of up to 60 days in
respect of a single such notice or event or series of related events in
any 12 month period, be suspended until the date upon which Activision
notifies id Software and all other Holders in writing that suspension of
such rights for the grounds set forth in this Section 4(c) is no longer
necessary.
5. Demand Registration. At any time following the fourth anniversary
of the date on which the Registration Statement was declared effective by the
Commission, if (a) Activision has withdrawn or abandoned the Registration
Statement pursuant to Section 2(e) of this Agreement, and (b) the Holder has
not sold, transferred or otherwise disposed of all the Shares, the Holder
may, at its election, give notice to Activision that the Holder demands a
registration of all or part of the remaining Shares under the Securities Act
and agrees to pay for the expense of such registration.
Upon receipt of such notice Activision shall use its commercially
reasonable best efforts to effect registration of such of the remaining
Shares as are covered by the notice on a registration statement on such Form
as may be required under the circumstances (such registration statement will
also be deemed to be the Registration Statement unless the context otherwise
requires).
The terms and provisions of Sections 2, 3, 4, 7 and 8 of this Agreement
shall also apply to such registration and Registration Statement unless the
context otherwise requires.
6. Expenses. All expenses incident to performance of or compliance
with this Agreement, including, without limitation, all registration and
filing fees (including all filing fees incident to any filing, if any, with
the National Association of Securities Dealers, Inc.), listing fees, if any,
and expenses, printing expenses, fees and disbursements of counsel and
accountants for Activision, expenses of any audits incident to or required by
the registration and expenses of complying with securities laws, shall be
paid by Activision, provided, that Activision shall not be liable for the
fees and disbursements of counsel for id Software or any transfer taxes,
fees, discounts or commissions in respect of the Shares sold by id Software.
7. Indemnification.
(a) In the event of the registration of the Shares under the
Securities Act pursuant to this Agreement, Activision shall indemnify
and hold harmless id Software and each other person (including each
underwriter) who participated in the offering of such Shares and each
other person, if any, who controls such participating person within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which id Software or any such
participating person or controlling person may become subject under the
Securities Act or any other statute or at common law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any alleged untrue statement of any
material fact contained, as of the Registration Date, in any
Registration Statement under which such securities were registered under
the Securities Act, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereto, or (ii) any
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
shall reimburse id Software or any such participating person or
controlling person for any legal or any other expenses reasonably
incurred by id Software or any such participating person or controlling
person in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that Activision
shall not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any alleged
untrue statement or alleged omission made in the Registration Statement,
preliminary prospectus, prospectus or amendment or supplement in
reliance upon and in conformity with written information furnished to
Activision by id Software specifically for use therein or (in the case
of any registration if Activision is not a party to the underwriting
agreement) so furnished for such purpose by any underwriter. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of id Software or any such
participating person or controlling person, and shall survive the
transfer of such Shares by id Software.
(b) In the event of any registration of any Shares under the
Securities Act pursuant to this Agreement, id Software agrees to
indemnify and hold harmless Activision, its directors and officers and
each other person, if any, who controls Activision within the meaning of
the Securities Act against any losses, claims, damages or liabilities,
joint or several, to which Activision or any such director or officer or
any such person may become subject under the Securities Act or any other
statute or at common law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon information provided in writing to Activision by id Software for
use in connection with such registration and which is contained, on the
Registration Date, in any Registration Statement under which Shares were
registered under the Securities Act at the request of id Software, any
preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereto; provided, that id Software shall not be
required pursuant to this Section 7(b) to contribute any amount in
excess of the aggregate proceeds to id Software of the Shares being
offered by id Software pursuant to the Registration Statement.
8. State Securities Laws. The parties understand and acknowledge
that: (a) Section 18 of the Securities Act provides that state securities or
blue sky laws requiring the registration or qualification of securities shall
not apply to "covered securities," as that term is defined in Section 18; and
(b) the Common Stock of Activision is a "covered security" by virtue of being
listed on the NASDAQ National Market System. The parties agree that should
the Common Stock cease to be a covered security for any reason, all the
provisions of this Agreement, including, without limitation, the
indemnification provisions of Section 6 hereof, shall also extend and apply
to any necessary state securities registration or qualification of the
Shares.
9. Miscellaneous.
(a) Assignment. This Agreement may be assigned by id Software only
as part of a sale, transfer or other disposition of the Warrant (or of
the Shares, if they have been purchased in a transaction exempt from
registration under the Securities Act). They may be assigned by
Activision only as part of a transaction to which Section 11 of the
Warrant applies and then only if the assignee expressly assumes and
agrees to perform the obligations of Activision under this Agreement.
(b) No Inconsistent Agreements. Activision has not and will not
hereafter enter into any agreement with respect to its securities which
is inconsistent with the rights granted to id Software in this
Agreement.
(c) Amendments and Waivers. Except as otherwise provided herein,
the provisions of this Agreement may not be amended, modified or
supplemented, and waiver or consents to departure from the provisions
hereof may not be given unless in writing signed by the party sought to
be charged.
(d) Notice Generally. Any notice, demand, request, consent,
approval declaration, delivery or other communication hereunder to be
made pursuant to the provisions of this Agreement shall be sufficiently
given or made if in writing and either delivered in person with receipt
acknowledged, sent by overnight courier with receipt acknowledged, or
facsimile transmission with receipt acknowledged, or sent by registered
or certified mail, return receipt requested, postage prepaid, addressed
as follows:
If to Activision, to:
Activision, Inc.
3100 Ocean Park Blvd.
Santa Monica, California 90405
Attention: President and Chief Operating Officer
If to id Software, to:
Id Software, Inc.
18601 LBJ Freeway #615
Mesquite, Texas 75150
Attention: Todd Hollenshead
Chief Executive Officer
With copy to: D. Wade Cloud, Jr.
Hiersche, Martens, Hayward, Drakeley & Urbach,
P.C.
15303 Dallas Parkway
Suite 700, LB 17
Dallas, Texas 75248
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Every notice,
demand, request, consent, approval, declaration, delivery or other
communication hereunder shall be deemed to have been duly given or
served on the date of personal delivery thereof (with receipt
acknowledged), or upon receipt if sent by overnight courier or by mail.
Failure or delay in delivering copies of any notice, demand, request,
approval, declaration, delivery or other communication to the person
designated above to receive a copy shall in no way adversely affect the
effectiveness of such notice, demand, request, approval, declaration,
delivery or other communication.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties hereto.
(f) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning
hereof.
(g) Governing Law. This Agreement shall be governed by the laws
of the State of California, without regard to the conflicts of laws
principles thereof.
(h) Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement shall
be prohibited by or invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions
of this Agreement.
(i) Entire Agreement. This Agreement represents the entire
agreement and understanding of the parties hereto in respect of the
subject matter hereof.
(j) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date first above written.
ACTIVISION, INC.
By:____________________________________________
Name: Brian Kelly
Title: President and Chief Operating Officer
ID SOFTWARE, INC.
By:____________________________________________
Name: Todd Hollenshead
Title: Chief Executive Officer
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Activision, Inc.
We consent to the use of our report incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the prospectus.
KPMG Peat Marwick LLP
Los Angeles, California
June 12, 1998