Exhibit 10.13

 

AMENDED AND RESTATED ACTIVISION BLIZZARD, INC.

 

2008 INCENTIVE PLAN

 

NOTICE OF PERFORMANCE SHARE AWARD

 

You have been awarded Performance Shares of Activision Blizzard, Inc. (the
“Company”), as follows:

 

·                                          Your name:  [to come]

 

·                                          Total number of Performance Shares
awarded:  [to come], representing the maximum number of Performance Shares that
may become Earned Performance Shares (as such term is defined in the Award
Terms)

 

·                                          Date of Grant:  [to come]

 

·                                          Grant ID:  [to come]

 

·                                          Your Award of Performance Shares is
governed by the terms and conditions set forth in:

 

·                                          this Notice of Performance Share
Award;

 

·                                          the Performance Share Award Terms
attached hereto as Exhibit A (the “Award Terms”); and

 

·                                          the Company’s Amended and Restated
2008 Incentive Plan, the receipt of a copy of which you hereby acknowledge.

 

·                                          Please sign and return to the Company
this Notice of Performance Share Award, which bears an original signature on
behalf of the Company.  You are urged to do so promptly.

 

·                                          Please return the signed Notice of
Performance Share Award to:

 

Activision Blizzard, Inc.
3100 Ocean Park Boulevard
Santa Monica, CA  90405
Attn:  Stock Plan Administration

 

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You should retain the enclosed duplicate copy of this Notice of Performance
Share Award for your records.

 

Any capitalized term used but not otherwise defined herein shall have the
meaning ascribed to such term in the Award Terms.

 

 

 

ACTIVISION BLIZZARD, INC.

 

 

 

 

 

 

 

 

 

 

 

Chris B. Walther

 

 

Chief Legal Officer

 

 

 

 

 

Date:

 

 

 

 

 

 

 

 

ACCEPTED AND AGREED:

 

 

 

 

 

 

 

 

[to come]

 

 

 

 

 

Date:

 

 

 

 

2

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EXHIBIT A

 

AMENDED AND RESTED ACTIVISION BLIZZARD, INC.

 

2008 INCENTIVE PLAN

 

PERFORMANCE SHARE AWARD TERMS

 

1.                                       Definitions.

 

(a)           For purposes of these Award Terms, the following terms shall have
the meanings set forth below:

 

“Award” means the award described on the Grant Notice.

 

“Award Terms” means these Performance Share Award Terms.

 

“Cause” has the meaning given to such term in the Employment Agreement.

 

“Change of Control” has the meaning given to such term in the Employment
Agreement.

 

“Common Shares” means the shares of common stock, par value $0.000001 per share,
of the Company or any security into which such Common Shares may be changed by
reason of any transaction or event of the type referred to in Section 10 hereof.

 

“Company” means Activision Blizzard, Inc. and any successor thereto.

 

“Company-Sponsored Equity Account” means an account that is created with the
Equity Account Administrator in connection with the administration of the
Company’s equity plans and programs, including the Plan.

 

“Date of Grant” means the Date of Grant of the Award set forth on the Grant
Notice.

 

“Date of Termination” has the meaning given to such term in the Employment
Agreement.

 

“Disability” has the meaning given to such term in the Employment Agreement.

 

“Earned Performance Shares” means the number of Performance Shares ranging from
0 to the number of Performance Shares set forth on the Grant Notice earned for
the applicable Performance Period based on the achievement of the applicable
performance measure.

 

“Employment Agreement” means the Employment Agreement, [to come], between
Grantee and the Company.

 

“Employment Period” has the meaning given to such term in the Employment
Agreement.

 

“Employment Violation” means any material breach by Grantee of the Employment
Agreement for so long as the terms of such employment agreement shall apply to
Grantee (with any breach of the post-termination obligations contained therein
deemed to be material for purposes of these Award Terms).

 

“Equity Account Administrator” means the brokerage firm utilized by the Company
from time to time to create and administer accounts for participants in the
Company’s equity plans and programs, including the Plan.

 

Appendix-1

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“Good Reason” has the meaning given to such term in the Employment Agreement.

 

“Grantee” means the recipient of the Award named on the Grant Notice.

 

“Grant Notice” means the Notice of Performance Share Award to which these Award
Terms are attached as Exhibit A.

 

“Look-back Period” means, with respect to any Employment Violation by Grantee,
the period beginning on the date which is 12 months prior to the date of such
Employment Violation by Grantee and ending on the date of computation of the
Recapture Amount with respect to such Employment Violation.

 

“Missed TSR Performance Period” has the meaning set forth in
Section 2(b)(iii)(B).

 

“Missed TSR Performance Shares” has the meaning set forth in
Section 2(b)(iii)(B).

 

“Performance Period” means each of the calendar year periods specified in
Section 2(a).

 

“Performance Period Measurement Date” shall have the meaning set forth in
Section 2(a).

 

“Performance Shares” means the units subject to the Award, which represent the
conditional right to receive Common Shares in accordance with the Grant Notice
and these Award Terms, unless and until such units become vested or are
forfeited to the Company in accordance with the Grant Notice and these Award
Terms.

 

“Plan” means the Amended and Restated Activision Blizzard, Inc. 2008 Incentive
Plan, as amended from time to time.

 

“Recapture Amount” means, with respect to any Employment Violation by Grantee,
the gross gain realized or unrealized by Grantee upon all vesting of Performance
Shares or delivery or transfer of Vested Shares during the Look-back Period with
respect to such Employment Violation, which gain shall be calculated as the sum
of:

 

(i)            if Grantee has received any Vested Shares during such Look-back
Period and sold such Vested Shares, an amount equal to the product of (A) the
sales price per Vested Share times (B) the number of such Vested Shares sold at
such sales price; plus

 

(ii)           if Grantee has received any Vested Shares during such Look-back
Period and not sold such Vested Shares, an amount equal to the product of
(A) the greatest of the following:  (1) the Market Value per Share of Common
Shares on the date such Vested Shares were issued or transferred to Grantee,
(2) the arithmetic average of the per share closing sales prices of Common
Shares as reported on NASDAQ for the 30 trading day period ending on the trading
day immediately preceding the date of the Company’s written notice of its
exercise of its rights under Section 13 hereof, or (3) the arithmetic average of
the per share closing sales prices of Common Shares as reported on NASDAQ for
the 30 trading day period ending on the trading day immediately preceding the
date of computation, times (B) the number of such Vested Shares which were not
sold.

 

“Release” has the meaning given to such term in the Employment Agreement.

 

“Release Date” means the 70th day after the following dates, as required by the
context (i) Date of Termination or (ii) date of a Change of Control, provided
that, as of such date, the Release has become irrevocable and effective pursuant
to its terms.

 

“Release Period” means the 70 day period commencing on the (i) Date of
Termination or (ii) date of a Change of Control, as applicable.

 

“Resignation” has the meaning given to such term in the Employment Agreement.

 

Appendix-2

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“Section 409A” means Section 409A of the Code and the guidance and regulations
promulgated thereunder.

 

“Target Operating Performance Shares” has the meaning set forth in
Section 2(b)(i).

 

“Target Performance Shares” means 50% of the total number of Performance Shares
specified on the Notice of Performance Share Award and for each Performance
Period means 12.5% of the total number of Performance Shares specified in the
Grant Notice.

 

“Target TSR Performance Shares” has the meaning set forth in
Section 2(b)(iii)(A).

 

“Term Sheet” means the Corporate Governance Term Sheet approved by the Delaware
Court of Chancery in connection with the settlement of In re Activision, Inc.
Shareholder Derivative Litigation, C.D. Cal. Case No. CV06-4771 MRP (JTLx); In
re Activision Shareholder Derivative Litigation, L.A.S.C. Case No. SC090343.

 

“Threshold Goal” shall have the meaning set forth in Section 2(c).

 

“Total Shareholder Return” or “TSR” shall refer to the compound annual total
rate of return on the Company’s common stock or the compound annual total rate
of return of the NASDAQ Composite Index, as applicable, assuming the
reinvestment of dividends (stock price appreciation assuming dividend
reinvestments, with such dividend reinvestments calculated based on same-day
reinvestment into the common stock on the ex-dividend date) for a specified
Performance Period, based on the calculation methodology described herein.  For
each Performance Period, TSR will be based on the common stock price
appreciation (or depreciation) between (x) a beginning calculated stock price
equal to the average of the Company’s closing common stock price as reported on
NASDAQ for the thirty trading day period immediately prior to the commencement
of the applicable Performance Period (not including the first day of the
Performance Period) and (y) an ending calculated stock price equal to the
average of the Company’s closing common stock price as reported on NASDAQ for
the thirty trading day period immediately prior to the end of the applicable
Performance Period (not including the last day of the Performance Period).   The
NASDAQ Composite Index TSR will be determined over the same periods of time and
in the same manner as set forth in the preceding sentence.  All inputs of data
in the calculation of TSR for the Company and the NASDAQ Composite Index will be
sourced from Bloomberg L.P. (or such other comparable reporting service that the
Committee may designate from time to time).

 

“Vested Shares” means Common Shares to which the holder of the Performance
Shares becomes entitled upon vesting thereof in accordance with Section 2, 3 or
4 hereof.

 

“Withholding Taxes” means any taxes, including, but not limited to, social
security and Medicare taxes and federal, state and local income taxes, required
to be withheld under any applicable law.

 

(b)           Any capitalized term used but not otherwise defined herein shall
have the meaning ascribed to such term in the Plan.

 

2.             Vesting.  Except as otherwise set forth in these Award Terms, the
Performance Shares shall vest in accordance with the terms and conditions set
forth in this Section 2.  Each Performance Share, upon vesting thereof, shall
entitle the holder thereof to receive one Common Share (subject to adjustment
pursuant to Section 10 hereof).

 

(a)           Performance Period; Performance Period Measuring Date.  [to come]

 

(b)           Target Performance Shares; Earned Performance Shares; Performance
Goals.  Based on the level of achievement of the relevant performance goal (as
described below), on each Performance Period Measurement Date, the actual number
of Earned Performance Shares relating to the applicable Performance Period will
be determined.  For each Performance Period, the number of Earned Performance
Shares will be determined based on the Company’s achievement of the following
performance goals:  [to come]

 

Appendix-3

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(c)           Threshold Goal.  [to come]

 

(d)           Committee’s Authority.  The determination of the level to which
the performance goals have been satisfied and the number of Earned Performance
Shares resulting from such satisfaction of the performance goals shall be
determined in the sole discretion of the Committee and shall be final and
conclusive on Grantee.

 

(e)           Termination of the Performance Shares.  Any outstanding
Performance Shares that are not vested by [to come] shall be immediately
forfeited to the Company without payment of consideration by the Company.

 

3.                                       Termination of Employment.

 

(a)           Termination for Cause or Resignation.  In the event that Grantee’s
employment is terminated by the Company for Cause or pursuant to his
Resignation, as of the Date of Termination all Performance Shares relating to
any Performance Period that includes or follows the Date of Termination shall
cease to vest and shall immediately be forfeited to the Company without payment
of consideration by the Company.  If Grantee’s Date of Termination occurs on or
between January 2, [to come] and the date on which the Threshold Goal has been
certified as being achieved, Grantee shall be eligible to vest in the
Performance Shares relating to the Performance Period from January 1, [to come]
through December 31, [to come] on the Performance Measurement Vesting Date of
March 31, [to come], to the extent that the Company’s relevant performance goals
are achieved (as determined in accordance with these Award Terms) and provided
that the Threshold Goal is achieved.

 

(b)           Termination without Cause; resignation for Good Reason; Death or
Disability.  In the event that Grantee’s employment is terminated by the Company
without Cause, pursuant to his resignation for Good Reason, or as a result of
his death or Disability, Grantee shall vest in a number of Performance Shares
equal to the number of Earned Performance Shares he would have vested in if he
had remained employed through the end of the applicable Performance
Period(s) during which the Date of Termination occurs, as determined on the
applicable Performance Measurement Date.  Such Earned Performance Shares, and
any Vested Shares that have yet to settle as of the Date of Termination, shall
be settled pursuant to Section 8 hereof; provided, however, that any accelerated
vesting pursuant to this Section 3(b) and the Earned Performance Shares subject
to such accelerated vesting shall, except in the case of death, (i) be subject
to the execution by Grantee of an effective and irrevocable Release during the
Release Period and (ii) be settled on the Release Date provided that, if the
Release Period begins in one taxable year and ends in the subsequent taxable
year such settlement shall occur on the later of the Release Date or the first
business day of such subsequent taxable year.  If the Release has not become
effective pursuant to its terms as of the Release Date, then Grantee shall not
be entitled to such accelerated vesting, and the Company shall have no further
obligations in connection therewith.  Any outstanding Performance Shares that
are not vested on the applicable Performance Measurement Date(s) (after giving
effect to the immediately preceding sentence) and any Performance Shares for
which the Performance Period had not yet commenced as of the Date of Termination
shall be immediately forfeited to the Company without payment of consideration
by the Company.

 

4.             Change of Control.  In the event of a Change of Control during
Grantee’s Employment Period, Grantee shall vest in the number of Target
Performance Shares applicable to each Performance Period in which the date of
the Change of Control occurs (without regard to the achievement of any level of
performance goals except as set forth in clause (ii) of this sentence) on the
later of (i) the date of the Change of Control and (ii) the date that the
Threshold Goal is certified as being achieved, and such Target Performance
Shares shall be deemed Earned Performance Shares and shall be settled pursuant
to Section 8 hereof; provided, however, that any accelerated vesting pursuant to
this Section 4 and the Target Performance Shares subject to such accelerated
vesting (x) shall be subject to the execution by Grantee of an effective and
irrevocable Release during the 70 days following the Change of Control and
(y) shall be settled on the Release Date provided that, if the Release Period
begins in one taxable year and ends in the subsequent taxable year such
settlement shall occur on the later of the Release Date or the first business
day of such subsequent taxable year.  If the Release has not become effective
pursuant to its terms as of the Release Date, then Grantee shall not be entitled
to such accelerated vesting, and the Company shall have no further obligations
in connection therewith.  Any outstanding Performance Shares that are not vested
(after giving effect to the immediately preceding sentence) on the date of the
Change of Control, or, if later, the date that the Threshold Goal is certified
as being achieved, and any Performance Shares for which the Performance Period
had not yet

 

Appendix-4

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commenced as of Change of Control shall be immediately forfeited to the Company
without payment of consideration by the Company.

 

5.             Tax Withholding.  The Company shall have the right to require
Grantee to satisfy any Withholding Taxes resulting from the vesting of any
Performance Shares, the issuance or transfer of any Vested Shares or otherwise
in connection with the Award at the time such Withholding Taxes become due.  The
Company shall determine the method or methods Grantee may use to satisfy any
Withholding Taxes contemplated by this Section 5, which may include any of the
following:  (a) by delivery to the Company of a bank check or certified check or
wire transfer of immediately available funds; (b) through the delivery of
irrevocable written instructions, in a form acceptable to the Company, that the
Company withhold Vested Shares otherwise then deliverable having a value equal
to the aggregate amount of the Withholding Taxes (valued in the same manner used
in computing the amount of such Withholding Taxes); or (c) by any combination of
(a) and (b) above.  Notwithstanding anything to the contrary contained herein,
(i) the Company or any of its subsidiaries or affiliates shall have the right to
withhold from Grantee’s compensation any Withholding Taxes contemplated by this
Section 5 and (ii) the Company shall have no obligation to deliver any Vested
Shares unless and until all Withholding Taxes contemplated by this Section 5
have been satisfied.

 

6.             Reservation of Shares.  The Company shall at all times reserve
for issuance or delivery upon vesting of the Performance Shares such number of
Common Shares as shall be required for issuance or delivery upon vesting
thereof.

 

7.             Dividend Equivalents.  In the event that any cash dividends are
declared and paid on Common Shares to which the holder of the Earned Shares
would have been entitled to if they had been vested on the date of such
declaration, such dividends shall be paid (without interest) following the date
that the related Earned Performance Shares are settled pursuant to Section 8;
provided, however, that no such dividend equivalents shall be paid if the
Performance Shares have been forfeited to the Company in accordance with
Section 2, 3 or 4 hereof prior to payment thereof.  Notwithstanding the
foregoing, in no event shall any such dividend equivalents be paid later than
the 45th day following the year in which the related Performance Shares vest. 
For purposes of the time and form of payment requirements of Section 409A, such
dividend equivalents shall be treated separately from the Performance Shares.

 

8.             Receipt and Delivery.  As soon as administratively practicable
(and, in any event, within 30 days) after any Performance Measurement Date, the
Company shall (i) effect the issuance or transfer of the resulting Vested
Shares, (ii) cause the issuance or transfer of such Vested Shares to be
evidenced on the books and records of the Company, and (iii) cause such Vested
Shares to be delivered to a Company-Sponsored Equity Account in the name of the
person entitled to such Vested Shares (or, with the Company’s consent, such
other brokerage account as may be requested by such person); provided, however,
that, in the event such Vested Shares are subject to a legend as set forth in
Section 16 hereof, the Company shall instead cause a certificate evidencing such
Vested Shares and bearing such legend to be delivered to the person entitled
thereto.

 

9.             Committee Discretion.  Except as may otherwise be provided in the
Plan, the Committee shall have sole discretion to (a) interpret any provision of
the Plan, the Grant Notice and these Award Terms, (b) make any determinations
necessary or advisable for the administration of the Plan and the Award, and
(c) waive any conditions or rights of the Company under the Award, the Grant
Notice or these Award Terms.  Without intending to limit the generality or
effect of the foregoing, any decision or determination to be made by the
Committee pursuant to these Award Terms, including whether to grant or withhold
any consent, shall be made by the Committee in its sole and absolute discretion,
subject only to the terms of the Plan.  Subject to the terms of the Plan, the
Committee may amend the terms of the Award prospectively or retroactively;
provided, however, no such amendment may materially and adversely affect the
rights of Grantee taken as a whole without Grantee’s consent.  Without intending
to limit the generality or effect of the foregoing, the Committee may amend the
terms of the Award (i) in recognition of unusual or nonrecurring events
(including, without limitation, events described in Section 10 hereof) affecting
the Company or any of its subsidiaries or affiliates or the financial statements
of the Company or any of its subsidiaries or affiliates, (ii) in response to
changes in applicable laws, regulations or accounting principles and
interpretations thereof, or (iii) to prevent the Award from becoming subject to
any adverse consequences under Section 409A.

 

Appendix-5

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10.           Adjustments.  Notwithstanding anything to the contrary contained
herein, pursuant to Section 12 of the Plan, the Committee will make or provide
for such adjustments to the Award as are equitably required to prevent dilution
or enlargement of the rights of Grantee that would otherwise result from (a) any
stock dividend, extraordinary dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Company,
(b) any change of control, merger, consolidation, spin-off, split-off, spin-out,
split-up, reorganization, partial or complete liquidation or other distribution
of assets, or issuance of rights or warrants to purchase securities, or (c) any
other corporate transaction or event having an effect similar to any of the
foregoing.  Moreover, in the event of any such transaction or event, the
Committee, in its discretion, may provide in substitution for the Award such
alternative consideration (including, without limitation, cash or other equity
awards), if any, as it may determine to be equitable in the circumstances and
may require in connection therewith the surrender of the Award.

 

11.           Registration and Listing.  Notwithstanding anything to the
contrary contained herein, the Company shall not be obligated to issue or
transfer any Performance Shares or Vested Shares, and no Performance Shares or
Vested Shares may be sold, assigned, transferred, pledged, hypothecated or
otherwise disposed of or encumbered in any way, unless such transaction is in
compliance with (a) the Securities Act of 1933, as amended, or any comparable
federal securities law, and all applicable state securities laws, (b) the
requirements of any securities exchange, securities association, market system
or quotation system on which securities of the Company of the same class as the
securities subject to the Award are then traded or quoted, (c) any restrictions
on transfer imposed by the Company’s certificate of incorporation or bylaws, and
(d) any policy or procedure the Company has adopted with respect to the trading
of its securities, in each case as in effect on the date of the intended
transaction.  The Company is under no obligation to register, qualify or list,
or maintain the registration, qualification or listing of, Performance Shares or
Vested Shares with the SEC, any state securities commission or any securities
exchange, securities association, market system or quotation system to effect
such compliance.  Grantee shall make such representations and furnish such
information as may be appropriate to permit the Company, in light of the then
existence or non-existence of an effective registration statement under the
Securities Act of 1933, as amended, relating to Performance Shares or Vested
Shares, to issue or transfer Performance Shares or Vested Shares in compliance
with the provisions of that or any comparable federal securities law and all
applicable state securities laws.  The Company shall have the right, but not the
obligation, to register the issuance or transfer of Performance Shares or Vested
Shares or resale of Performance Shares or Vested Shares under the Securities Act
of 1933, as amended, or any comparable federal securities law or applicable
state securities law.

 

12.           Transferability.  Except as otherwise permitted under the Plan or
this Section 12, the Performance Shares shall not be transferable by Grantee
other than by will or the laws of descent and distribution.  With the Company’s
consent, Grantee may transfer Performance Shares for estate planning purposes or
pursuant to a domestic relations order; provided, however, that any transferee
shall be bound by all of the terms and conditions of the Plan, the Grant Notice
and these Award Terms and shall execute an agreement in form and substance
satisfactory to the Company in connection with such transfer; and provided,
further that Grantee will remain bound by the terms and conditions of the Plan,
the Grant Notice and these Award Terms.

 

13.           Employment Violation.  In the event of an Employment Violation,
the Company shall have the right to require (i) the forfeiture by Grantee to the
Company of any outstanding Performance Shares or Vested Shares which have yet to
settle pursuant to Section 8 hereof and (ii) payment by Grantee to the Company
of the Recapture Amount with respect to such Employment Violation; provided,
however, that, in lieu of payment by Grantee to the Company of the Recapture
Amount, Grantee, in his or her discretion, may tender to the Company the Vested
Shares acquired during the Look-back Period with respect to such Employment
Violation and Grantee shall not be entitled to receive any consideration from
the Company in exchange therefor.  Any such forfeiture of Performance Shares and
payment of the Recapture Amount, as the case may be, shall be in addition to,
and not in lieu of, any other right or remedy available to the Company arising
out of or in connection with such Employment Violation, including, without
limitation, the right to terminate Grantee’s employment if not already
terminated and to seek injunctive relief and additional monetary damages.

 

Appendix-6

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14.                                 Compliance with Applicable Laws and
Regulations and Company Policies and Procedures.

 

(a)           Grantee is responsible for complying with (a) any federal, state
and local taxation laws applicable to Grantee in connection with the Award,
(b) any federal and state securities laws applicable to Grantee in connection
with the Award, (c) the requirements of any securities exchange, securities
association, market system or quotation system on which securities of the
Company of the same class as the Shares are then traded or quoted, (d) any
restrictions on transfer imposed by the Company’s certificate of incorporation
or bylaws, and (e) any policy or procedure the Company maintains or may adopt
with respect to the trading of its securities.

 

(b)           The Award is subject to the terms and conditions of the Term
Sheet, and any Company policies or procedures adopted in connection with the
Company’s implementation of the Term Sheet, including, without limitation, any
policy requiring or permitting the Company to recover any gains realized by
Grantee in connection with the Award.

 

15.           Section 409A.

 

(a)           Payments contemplated with respect to the Award are intended to
comply with Section 409A (including the provisions for exceptions or exemption
from Section 409A), and all provisions of the Plan, the Grant Notice and these
Award Terms shall be construed and interpreted in a manner consistent with the
requirements for avoiding taxes or penalties under Section 409A. 
Notwithstanding the foregoing, (i) nothing in the Plan, the Grant Notice and
these Award Terms shall guarantee that the Award is not subject to taxes or
penalties under Section 409A and (ii) if any provision of the Plan, the Grant
Notice or these Award Terms would, in the reasonable, good faith judgment of the
Company, result or likely result in the imposition on Grantee or any other
person of taxes, interest or penalties under Section 409A, the Committee may, in
its sole discretion, modify the terms of the Plan, the Grant Notice or these
Award Terms, without the consent of Grantee, in the manner that the Committee
may reasonably and in good faith determine to be necessary or advisable to avoid
the imposition of such taxes, interest or penalties; provided, however, that
this Section 15 does not create an obligation on the part of the Committee or
the Company to make any such modification.  Each issuance or transfer of Vested
Shares shall be deemed a separate payment for purposes of Section 409A.

 

(b)           Neither Grantee nor any of Grantee’s creditors or beneficiaries
shall have the right to subject any deferred compensation (within the meaning of
Section 409A) payable with respect to the Award to any anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance, attachment or garnishment. 
Except as permitted under Section 409A, any deferred compensation (within the
meaning of Section 409A) payable to Grantee or for Grantee’s benefit with
respect to the Award may not be reduced by, or offset against, any amount owing
by Grantee to the Company.

 

(c)           Notwithstanding anything to the contrary contained herein, if the
Committee determines in good faith that the Performance Shares do not qualify
for the “short-term deferral exception” under Section 409A, (i) (x) if Grantee
is a “specified employee” (as defined in Section 409A) and (y) a delay in the
issuance or transfer of Vested Shares to Grantee or his or her estate or
beneficiaries hereunder by reason of Grantee’s “separation from service” (as
defined in Section 409A) with the Company or any of its subsidiaries or
affiliates is required to avoid tax penalties under Section 409A but is not
already provided for by this Award, the Company shall cause the issuance or
transfer of such Vested Shares to Grantee or Grantee’s estate or beneficiary
upon the earlier of (A) the date that is the first business day following the
date that is six months after the date of Grantee’s separation from service or
(B) Grantee’s death and (ii) for purposes of Section 4 hereof, a Change of
Control shall not have occurred unless such Change of Control is a “change in
the ownership or effective control” or a “change in the ownership of a
substantial portion of the assets” of the Company, in each case, as determined
in accordance with Section 409A, and, if a Change of Control has not occurred as
a result of the application of this clause (ii) of this Section 15(b), the
issuance or transfer of any Vested Shares shall occur on the date of Grantee’s
separation from service as determined in accordance with Section 409A.

 

16.           Legend.  The Company may, if determined by it based on the advice
of counsel to be appropriate, cause any certificate evidencing Vested Shares to
bear a legend substantially as follows:

 

Appendix-7

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“THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE ACT.”

 

17.           No Right to Continued Employment.  Nothing contained in the Grant
Notice or these Award Terms shall be construed to confer upon Grantee any right
to be continued in the employ of the Company or any of its subsidiaries or
affiliates or derogate from any right of the Company or any of its subsidiaries
or affiliates to retire, request the resignation of, or discharge Grantee at any
time, with or without cause.

 

18.           No Rights as Stockholder.  No holder of Performance Shares shall,
by virtue of the Grant Notice or these Award Terms, be entitled to any right of
a stockholder of the Company, either at law or in equity, and the rights of any
such holder are limited to those expressed, and are not enforceable against the
Company except to the extent set forth in the Plan, the Grant Notice and these
Award Terms.

 

19.           Severability.  In the event that one or more of the provisions of
these Award Terms shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.

 

20.           Governing Law.  To the extent that federal law does not otherwise
control, the validity, interpretation, performance and enforcement of the Grant
Notice and these Award Terms shall be governed by the laws of the State of
Delaware, without giving effect to principles of conflicts of laws thereof.

 

21.           Successors and Assigns.  The provisions of the Grant Notice and
these Award Terms shall be binding upon and inure to the benefit of the Company,
its successors and assigns, and Grantee and, to the extent applicable, Grantee’s
permitted assigns under Section 12 hereof and Grantee’s estate or
beneficiary(ies) as determined by will or the laws of descent and distribution.

 

22.           Notices.  Any notice or other document which Grantee or the
Company may be required or permitted to deliver to the other pursuant to or in
connection with the Grant Notice or these Award Terms shall be in writing, and
may be delivered personally or by mail, postage prepaid, or overnight courier,
addressed as follows:  (a) if to the Company, at its office at 3100 Ocean Park
Boulevard, Santa Monica, California 90405, Attn:  Stock Plan Administration, or
such other address as the Company by notice to Grantee may designate in writing
from time to time; and (b) if to Grantee, at the address shown in the Employment
Agreement, or such other address as Grantee by notice to the Company may
designate in writing from time to time.  Notices shall be effective upon
receipt.

 

23.           Conflict with Employment Agreement or Plan.  In the event of any
conflict between the terms of the Employment Agreement and the terms of the
Grant Notice or these Award Terms, the terms of the Grant Notice or these Award
Terms, as the case may be, shall control.  In the event of any conflict between
the terms of the Employment Agreement, the Grant Notice or these Award Terms and
the terms of the Plan, the terms of the Plan shall control.

 

24.           Deemed Agreement.  By accepting the Award, Grantee is deemed to be
bound by the terms and conditions set forth in the Plan, the Grant Notice and
these Award Terms.

 

Appendix-8

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