Exhibit 10.3

 

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December 6, 2005

 

Stephen G. Wereb

578 Joost Avenue

San Francisco, California 94127

 

Dear Steve:

 

This letter confirms the terms of your employment by Activision Publishing, Inc.
(“Employer”), on the terms and conditions set forth below.

 

1.                                      Term

 

(a)                                  The initial term of your employment under
this agreement shall commence on January 1, 2005 and expire on December 31, 2007
unless earlier terminated as provided below (the “initial term”).

 

(b)                                 Employer shall have the irrevocable option
to extend the initial term of this agreement beyond the initial period for an
additional successive one-year period. The initial term and the option period,
if exercised, shall be referred to as the “term.”

 

(c)                                  Employer may exercise the option granted to
it under this agreement by giving written notice to Employee at least sixty (60)
days prior to the expiration of the initial term.

 

2.                                      Salary

 

(a)                                  In full consideration for all rights and
services provided by you under this agreement, you shall receive an annual base
salary of $230,000.

 

(b)                                 Base salary payments shall be made in
accordance with Employer’s then prevailing payroll policy. The base salary
referred to in Paragraph 2(a) shall constitute your minimum base salary during
the applicable period. On an annual basis, your base salary shall be reviewed to
determine if an increase above the minimum is appropriate. Any decision
regarding whether to change your base salary shall be made in the sole
discretion of management

 

(c)                                  Employer shall not be required to actually
use your services during the term of this agreement. You will not be permitted
or authorized to act on behalf of Employer if Employer is not utilizing your
services unless specifically authorized in writing to the contrary by Employer.
If Employer chooses not to use your services, Employer will continue to pay your
base salary, health benefits and 401(k) contributions. Payment of your base
salary during the term of your employment under this agreement will discharge
Employer’s obligations to you hereunder. Your obligations to Employer under this
agreement generally, and specifically with regard to Paragraph 9, shall continue
throughout the term of this agreement. Moreover, you have an obligation to abide
by the terms of the Employee Proprietary Information Agreement executed by you.

 

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(d)                                 In addition to your base salary, you may be
eligible to receive an annual discretionary bonus targeted at fifty percent
(50%) of your annual base salary (pro-rated for the amount of time that you
actually perform services for Employer during a particular fiscal year). The
amount of this bonus, if any, is within the sole and absolute discretion of the
Employer’s Board of Directors (or the Compensation Committee of the Board of
Directors). Certain of the criteria that will be considered to evaluate your
eligibility for a bonus are your achievement of specific objectives and/or your
contribution to the success of the corporate goals and objectives. Employer’s
overall financial performance will also be considered in determining whether any
bonus is awarded and, if so, the amount. Discretionary bonuses, if granted, are
generally paid to employees in May. You must remain continuously employed by
Employer through the date on which the discretionary bonus is paid to be
eligible to receive a bonus. Employer retains the right to modify, at any time,
any and all of the criteria used to determine whether Employee is eligible for a
bonus and, if so, the amount of any such bonus.

 

(e)                                  You also are being granted, under the
Activision Inc. (“company”) existing or modified Board-approved stock option
plan, a non-qualified stock option (“NQSO”) to purchase 40,000 shares of the
company’s common stock. The option to purchase 40,000 shares referred to above
will vest ratably over five years, with one fifth of the amount granted vesting
at the end of each year. The option will have an exercise price that will be the
market low of such common stock on the date that it is issued, and will be
governed in all other respects by the company’s stock option plan in effect at
the time of the grant. You may be eligible for such additional stock option
grants commensurate with your position with Employer as the Board of Directors
(or Compensation Committee of the Board of Directors), in its sole discretion,
may award to you from time to time.

 

3.                                      Relocation Benefits

 

Employer shall reimburse you for the customary and reasonable expenses actually
incurred by you in connection with your relocation to Los Angeles to include but
not limited to (i) the moving of your personal and household goods to the Los
Angeles area and for storage of household goods if necessary for a period of up
to six (6) months, (ii) the one-time, non-recurring closing costs associated
with both the sale of your current home (excluding realtor fee), and the
purchase of a new home in the Los Angeles area, (iii) the travel and expenses
associated with up to two (2) house hunting trips, and (iv) for customary and
reasonable corporate temporary living expenses for up to six (6) months pending
your actual settlement in the Los Angeles area provided that you provide
Employer with documentation which adequately evidences such expenses. Employer
will provide tax assistance (gross-up) for those relocation related benefits
that are treated as taxable. Additional, detailed relocation benefits will be
communicated to you separately and will be governed by the applicable policy
covering such items.

 

4.                                      Title

 

You are being employed under this agreement in the position of Vice President,
Finance and Corporate Controller.

 

5.                                      Duties

 

You shall personally and diligently perform, on a full-time and exclusive basis,
such services as Employer or any of its related or affiliated entities or
divisions may reasonably require. You are

 

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also required to read, review and observe all of Employer’s existing policies,
procedures, rules and regulations as well as those adopted by Employer during
the term of your employment. You will at all times perform all of the duties and
obligations required by you under this agreement in a loyal and conscientious
manner and to the best of your ability and experience.

 

6.                                      Expenses

 

To the extent you incur necessary and reasonable business expenses in the course
of your employment, you shall be reimbursed for such expenses, subject to
Employer’s then current policies regarding reimbursement of such business
expenses.

 

7.                                      Other Benefits

 

You shall be entitled to those benefits which are standard for persons in
similar positions with Employer, including coverage under Employer’s health,
life insurance and disability plans, and eligibility to participate in
Employer’s 401(k) plan. Nothing paid to you under any such plans and
arrangements (nor any bonus or stock options which Employer’s Board of Directors
(or the Compensation Committee of such Board of Directors), in its sole and
absolute discretion, shall provide to you)) shall be deemed in lieu, or paid on
account, of your base salary. You expressly agree and acknowledge that after the
expiration or early termination of the term of your employment under this
agreement, you are entitled to no additional benefits, except as specifically
provided under the benefit plans referred to above and those benefit plans in
which you subsequently may become a participant, and subject in each case to the
terms and conditions of each such plan. Notwithstanding anything to the contrary
set forth above, you shall be entitled to receive those benefits provided by
COBRA upon the expiration or earlier termination of this agreement.

 

8.                                      Vacation and Paid Holidays

 

(a)                                  You will be entitled to paid vacation days
in accordance with the normal vacation policies of Employer in effect from time
to time, provided that in no event shall you be entitled to less than fifteen
(15) days of paid vacation per year.

 

(b)                                 You shall be entitled to all paid holidays
given by Employer to its full-time employees.

 

9.                                      Protection of Employer’s Interests

 

(a)                                  Duty of Loyalty. During the term of your
employment, you will not compete in any manner, whether directly or indirectly,
as a principal, employee, agent or owner, with Employer, or any affiliate of
Employer, except that the foregoing will not prevent you from holding at any
time less than five percent (5%) of the outstanding capital stock of any company
whose stock is publicly traded.

 

(b)                                 Property of Employer. All rights worldwide
with respect to any and all intellectual or other property of any nature
produced, created or suggested by you during the term of your employment or
resulting from your services which (i) relate in any manner at the time of
conception or reduction to practice to the actual or demonstrably anticipated
business of Employer, (ii) result from or are suggested by any task assigned to
you or any work performed by you on behalf of Employer, or (iii) are based on
any property owned or idea conceived by Employer, shall be deemed

 

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to be a work made for hire and shall be the sole and exclusive property of
Employer. You agree to execute, acknowledge and deliver to Employer, at
Employer’s request, such further documents, including copyright and patent
assignments, as Employer finds appropriate to evidence Employer’s rights in such
property.

 

(c)                                  Confidentiality. Any confidential and/or
proprietary information of Employer or any affiliate of Employer shall not be
used by you or disclosed or made available by you to any person except as
required in the course of your employment, and upon expiration or earlier
termination of the term of your employment, you shall return to Employer all
such information which exists in written or other physical form (and all copies
thereof) under your control. Without limiting the generality of the foregoing,
you acknowledge signing and delivering to Employer the Activision Employee
Proprietary Information Agreement and you agree that all terms and conditions
contained in such agreement, and all of your obligations and commitments
provided for in such agreement, shall be deemed, and hereby are, incorporated
into this agreement as if set forth in full herein. The provisions of this
paragraph shall survive the expiration or earlier termination of this agreement.

 

(d)                                 Covenant Not to Solicit. After the
expiration of the term of this agreement or earlier termination of your
employment pursuant to Paragraphs 10 (a) or (b) of this agreement for any reason
whatsoever, you shall not, either alone or jointly, with or on behalf of others,
directly or indirectly, whether as principal, partner, agent, shareholder,
director, employee, consultant or otherwise, at any time during a period of one
(1) year following such expiration or termination, offer employment to, or
directly or indirectly solicit the employment or engagement of, or otherwise
entice away from the employment of Employer or any affiliated entity, either for
your own account or for any other person firm or company, any person who was
employed by Employer or any such affiliated entity during the term of your
employment, whether or not such person would commit any breach of his or her
contract of employment by reason of his or her leaving the service of Employer
or any affiliated entity.

 

10.                               Termination

 

(a)                                  Employer. At any time during the term of
this agreement, Employer may terminate your employment under this agreement for
your (i) willful, reckless or gross misconduct, (ii) negligent performance of
any work on behalf of Employer; (iii) conviction of a felony or of any crime
involving dishonesty or moral turpitude; (iv) inability or refusal to perform
your job duties; (v) action or omission that causes material injury to Employer
or its business interests; (vi) breach of the duty of loyalty.

 

(b)                                 Employee. You may terminate your employment
under this agreement (and, thereby, forfeit your right to receive any
compensation or benefits under this agreement) (i) upon any relocation of the
place at which you primarily are performing your services to Employer to a
location which is outside Los Angeles County or (ii) if Employer elects to not
actually use your services and continues to pay your base salary pursuant to
Paragraph 2(c) above for a period of one hundred twenty (120) consecutive days.

 

(c)                                  Death or Disability. In the event of your
death during the term of this agreement, this agreement shall terminate and
Employer only shall be obligated to pay your estate or legal representative the
salary provided for above to the extent earned by you prior to your death. In
the event that you have or develop a disability that causes you to be unable to
perform the duties

 

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required of you under this agreement, even with Employer providing you a
reasonable accommodation, then Employer shall have the right, at its option, to
terminate your employment under this agreement. Employee acknowledges that
should such disability continue for a period of more than 12 weeks during any
12-month period, or if Employee is occupying a key position or performing key
duties with Employer at the time of such absence, any further absence would
likely cause Employer an undue hardship and/or substantial and grievous injury.
Unless and until employment is terminated under this provision, in any period of
disability during which you are unable to perform the services required of you
under this agreement, your base salary shall be payable to the extent of, and
subject to, Employer’s policies and practices then in effect with regard to sick
leave, vacation days and disability benefits.

 

(d)                                 Termination of Obligations. In the event of
the termination of your employment under this agreement pursuant to Paragraph 10
(a) or 10 (b), all obligations of Employer to you under this agreement shall
immediately terminate.

 

11.                               Use of Employee’s Name

 

Employer shall have the right, but not the obligation, to use your name or
likeness for any publicity or advertising purpose.

 

12.                               Assignment

 

Employer may assign this agreement or all or any part of its rights under this
agreement to any entity which succeeds to all or substantially all of Employer’s
assets (whether by merger, acquisition, consolidation, reorganization or
otherwise) or which Employer may own substantially, and this agreement shall
inure to the benefit of such assignee.

 

13.                               No Conflict with Prior Agreements

 

You represent to Employer that neither your commencement of employment under
this agreement nor the performance of your duties under this agreement conflicts
or will conflict with any contractual commitment on your part to any third
party, nor does it or will it violate or interfere with any rights of any third
party.

 

14.                               Representations and Warranties

 

Employee represents and warrants that he has provided Employer with complete and
accurate information regarding his skills and experience. Employee further
represents and warrants that he has the skills and abilities to perform the job
responsibilities for which he is being hired (see paragraphs 4 and 5, above)
based on his skills and experience. Based on Employee’s representations
regarding his skills and abilities, Employer has agreed to hire and compensate
Employee pursuant to the terms of this agreement.

 

15.                               General Provisions

 

(a)                                  Entire Agreement. This agreement supersedes
all prior or contemporaneous agreements and statements, whether written or oral,
concerning the terms of your employment with Employer, and no amendment or
modification of this agreement shall be

 

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binding unless it is set forth in a writing signed by both Employer and
Employee. To the extent that this agreement conflicts with any of Employer’s
policies, procedures, rules or regulations, this agreement shall supersede the
other policies, procedures, rules or regulations.

 

(b)                                 No Broker. You have given no indication,
representation or commitment of any nature to any broker, finder, agent or other
third party to the effect that any fees or commissions of any nature are, or
under any circumstances might be, payable by Employer or any affiliate of
Employer in connection with your employment under this agreement.

 

(c)                                  Waiver. No waiver by either party of any
breach by the other party of any provision or condition of this agreement shall
be deemed a waiver of any similar or dissimilar provision or condition at the
same or any prior or subsequent time.

 

(d)                                 Prevailing Law. Nothing contained in this
agreement shall be construed so as to require the commission of any act contrary
to law and wherever there is any conflict between any provision of this
agreement and any present or future statute, law, ordinance or regulation, the
latter shall prevail, but in such event the provision of this agreement affected
shall be curtailed and limited only to the extent necessary to bring it within
legal requirements.

 

(e)                                  Expiration. This agreement does not
constitute a commitment of Employer with regard to your employment, express or
implied, other than to the extent expressly provided for herein. Upon expiration
of the term of this agreement, it is the contemplation of both parties that your
employment with Employer shall cease, and that neither Employer nor you shall
have any obligation to the other with respect to your continued employment. In
the event that your employment continues for a period of time following the term
unless and until agreed to in a new subscribed written document, such
continuation of your employment shall be “at will,” and may be terminated
without obligation at any time by either party giving notice to the other.

 

(f)                                    Choice of Law. This agreement shall be
governed by and construed in accordance with the laws of the State of California
without regard to conflict of law principles.

 

(g)                                 Immigration. In accordance with the
Immigration Reform and Control Act of 1986, employment under this agreement is
conditioned upon satisfactory proof of your identity and legal ability to work
in the United States.

 

(h)                                 Venue and Jurisdiction. The parties agree
that all actions or proceedings initiated by either party hereto arising
directly or indirectly out of this agreement shall be litigated in federal or
state court in Los Angeles, California. The parties hereto expressly submit and
consent in advance to such jurisdiction and agree that service of summons and
complaint or other process or papers may be made by registered or certified mail
addressed to the relevant party at the address set forth below. The parties
hereto waive any claim that a federal or state court in Los Angeles, California,
is an inconvenient or an improper forum.

 

(i)                                     Severability. If any provision of this
agreement is held to be illegal, invalid or unenforceable under existing or
future laws effective during the term of this agreement, such provisions shall
be fully severable, the agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part of this
agreement, and the remaining

 

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provisions of this agreement shall remain in full force and effect and shall not
be affected by the illegal, invalid or unenforceable provision or by its
severance from this agreement. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as part of this
agreement a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and be legal and enforceable.

 

(j)                                     Legal Counsel. Employee acknowledges
that he has been given the opportunity to consult with legal counsel of his own
choosing regarding this agreement. Employee understands and agrees that
Activision’s General Counsel, or any other attorney or member of management who
has discussed any term or condition of this agreement with him, is only acting
on behalf of the company and not on behalf of Employee.

 

(k)                                  Right to Negotiate. Employee hereby
acknowledges that he has been given the opportunity to participate in the
negotiation of the terms of this agreement.

 

(l)                                     Services Unique. You recognize that the
services being performed by you under this agreement are of a special, unique,
unusual, extraordinary and intellectual character giving them a peculiar value,
the loss of which cannot be reasonably or adequately compensated for in damages
in the event of a breach of this agreement by you (particularly, but without
limitation, with respect to the provisions hereof relating to the exclusivity of
your services and the provisions of paragraph 9 of this agreement).

 

(m)                               Injunctive Relief. In the event of a breach or
threatened breach of this agreement, you hereby agree that any remedy at law for
any breach or threatened breach of this agreement will be inadequate and,
accordingly, each party hereby stipulates that the other is entitled to obtain
injunctive relief for any such breaches or threatened breaches. The injunctive
relief provided for in this paragraph is in addition to, and is not in
limitation of, any and all other remedies at law or in equity otherwise
available to the applicable party. The parties agree to waive the requirement of
posting a bond in connection with a court’s issuance of an injunction.

 

(n)                                 Remedies Cumulative. The remedies in this
paragraph are not exclusive, and the parties shall have the right to pursue any
other legal or equitable remedies to enforce the terms of this agreement.

 

(o)                                 Attorneys’ Fees and Costs. If either party
brings an action to enforce, interpret or apply the terms of this agreement or
declare its rights under this agreement, the prevailing party in such action,
including all appeals, shall receive all of its or his attorneys’ fees, experts’
fees, and all of its or his costs, in addition to such other relief as may be
granted.

 

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16.                               Notices

 

All notices which either party is required or may desire to give the other shall
be in writing and given either personally or by depositing the same in the
United States mail addressed to the party to be given notice as follows:

 

To Employer:

 

3100 Ocean Park Boulevard

 

 

Santa Monica, California 90405

 

 

Attention: Senior Vice President,

 

 

Business Affairs and General Counsel

 

 

 

To Employee:

 

578 Joost Avenue

 

 

San Francisco, California 94127

 

Either party may by written notice designate a different address for giving of
notices. The date of mailing of any such notices shall be deemed to be the date
on which such notice is given.

 

17.                               Headings

 

The headings set forth herein are included solely for the purpose of
identification and shall not be used for the purpose of construing the meaning
of the provisions of this agreement.

 

If the foregoing accurately reflects our mutual agreement, please sign where
indicated.

 

ACCEPTED AND AGREED TO:

 

 

 

Employer

Employee

 

 

By:

 

 

By:

 

 

 

George Rose

 

Steve Wereb

 

Senior Vice President, Business

 

 

 

Affairs and General Counsel

 

 

 

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