Exhibit 10.40

 

Exhibit [      ]

 

EXECUTIVE STOCK OPTION AGREEMENT

 

Stock Option #                     

 

For                     Shares

 

 

Issued Pursuant to the
2003 Incentive Plan of

 

ACTIVISION, INC.

 

THIS STOCK OPTION AGREEMENT (THIS “AGREEMENT”) CERTIFIES that
on                                           (the “Issuance
Date”)                                                                            (the
“Holder”) was granted an option (the “Option”) to purchase at the option price
of $                        per share, all or any part
of                                           fully paid and non-assessable
shares (“Shares”) of common stock, par value $.000001 per share, of ACTIVISION,
INC., a Delaware corporation (the “Company”), upon and subject to the following
terms and conditions:

 

1.                                       TERMS OF THE PLAN.  THE OPTION IS
GRANTED PURSUANT TO, AND IS SUBJECT TO THE TERMS AND CONDITIONS OF, THE
COMPANY’S 2003 INCENTIVE PLAN (THE “PLAN”), THE TERMS, CONDITIONS AND
DEFINITIONS OF WHICH ARE HEREBY INCORPORATED HEREIN AS THOUGH SET FORTH AT
LENGTH, AND THE RECEIPT OF A COPY OF WHICH THE HOLDER HEREBY ACKNOWLEDGES BY HIS
SIGNATURE BELOW.  CAPITALIZED TERMS USED HEREIN SHALL HAVE THE MEANINGS SET
FORTH IN THE PLAN, UNLESS OTHERWISE DEFINED HEREIN.

 

2.                                       EXPIRATION.  THIS OPTION SHALL EXPIRE
ON [                 ], UNLESS EXTENDED OR EARLIER TERMINATED IN ACCORDANCE
HEREWITH.

 

3.                                       EXERCISE.  [(A)]  EXCEPT AS OTHERWISE
PERMITTED UNDER THE PLAN OR THE HOLDER’S WRITTEN EMPLOYMENT AGREEMENT WITH THE
COMPANY, IF ANY, THIS OPTION MAY BE EXERCISED OR SURRENDERED DURING THE HOLDER’S
LIFETIME ONLY BY THE HOLDER OR HIS/HER GUARDIAN OR LEGAL REPRESENTATIVE.  EXCEPT
AS OTHERWISE PERMITTED UNDER THE PLAN OR THE HOLDER’S WRITTEN EMPLOYMENT
AGREEMENT WITH THE COMPANY, IF ANY, THIS OPTION SHALL NOT BE TRANSFERABLE BY THE
HOLDER OTHERWISE THAN BY WILL OR BY THE LAWS OF DESCENT AND DISTRIBUTION.  WITH
THE COMPANY’S CONSENT WHICH MAY GRANTED OR WITHHELD IN ITS SOLE DISCRETION,
OPTIONS MAY BE TRANSFERRED TO CERTAIN PERMITTED ASSIGNEES, SUCH AS CERTAIN
RELATIVES OF, OR ENTITIES CONTROLLED BY, THE PARTICIPANT, AS MORE FULLY SET
FORTH IN SECTION 8.3 OF THE PLAN; PROVIDED, HOWEVER, SUCH CONSENT SHALL ONLY BE
REQUIRED IN THE EVENT ANY SUCH TRANSFER IS NOT OTHERWISE PERMITTED UNDER THE
PLAN OR THE HOLDER’S WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY, IF ANY.

 

This Option shall vest and be exercisable as follows:

 

Vesting Date

 

Shares Vested at Vesting Date

 

Cumulative Shares

 

 

 

 

 

 

 

[vesting schedule]

 

 

 

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This Option shall be exercised by the Holder (or by her executors,
administrators, guardian or legal representative) as to all or part of the
Shares, by the giving of written notice of exercise to the Company, specifying
the number of Shares to be purchased, accompanied by payment of the full
purchase price for the Shares being purchased.  Full payment of such purchase
price shall be made at the time of exercise and shall be made (i) in cash or by
certified check or bank check or wire transfer of immediately available funds,
(ii) with the consent of the Company, by tendering previously acquired Shares
(valued at their then Fair Market Value (as defined in the Plan), as determined
by the Company as of the date of tender) that have been owned for a period of at
least six months (or such other period to avoid accounting charges against the
Company’s earnings), or (iii) with the consent of the Company, a combination of
(i) and (ii).  Such notice of exercise, accompanied by such payment, shall be
delivered to the Company at its principal business office or such other office
as the Company may from time to time direct, and shall be in such form,
containing such further provisions as the Company may from time to time
prescribe.  In no event may this Option be exercised for a fraction of a Share. 
The Company shall effect the transfer of Shares purchased pursuant to an Option
as soon as practicable, and, within a reasonable time thereafter, such transfer
shall be evidenced on the books of the Company.  No person exercising this
Option shall have any of the rights of a holder of Shares subject to this Option
until certificates for such Shares shall have been issued following the exercise
of such Option.  No adjustment shall be made for cash dividends or other rights
for which the record date is prior to the date of such issuance.

 

[(b)                             Reload Option.  Add provision for reload
feature for those key executives who qualify for such feature, as follows:  Upon
exercise of the Option pursuant to clause (a), above, the Holder shall receive a
new option (the “Reload Option”) to purchase at the option price equal to the
Fair Market Value of the Shares on the date of Option exercise, all or any part
of that number of Shares equal to (i) the number of Shares delivered to the
Company by the holder, or withheld from Shares otherwise issuable to the holder
upon exercise, in payment of the exercise price of the Option or the tax
withholding obligations attributable thereto and/or (ii) that number of Shares
with a then Fair Market Value equal to the amount of the withholding obligations
paid in cash by the holder.  The Reload Option shall expire
                                             unless extended or earlier
terminated in accordance herewith.  [Reload Options shall fully vest immediately
upon issuance.]  All other terms and conditions (other than the vesting
schedule) of this Agreement and the Plan apply to the Reload Options.]

 

4.                                       TERMINATION OF EMPLOYMENT.  IN THE
EVENT OF THE TERMINATION OF EMPLOYMENT OR SEPARATION FROM SERVICE OF THE HOLDER
FOR ANY REASON (OTHER THAN DEATH OR DISABILITY AS PROVIDED BELOW), THIS OPTION,
TO THE EXTENT NOT PREVIOUSLY EXERCISED OR EXPIRED, SHALL BE DEEMED CANCELLED AND
TERMINATED ON THE DAY OF SUCH TERMINATION OR SEPARATION, UNLESS (I) THE HOLDER’S
WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY, IF ANY, PROVIDES OTHERWISE, IN
WHICH CASE THE TERMS CONTAINED IN SUCH EMPLOYMENT AGREEMENT SHALL CONTROL OR
(II) THE COMPANY DECIDES, IN ITS SOLE DISCRETION, TO EXTEND THE TERM OF THIS
OPTION, SUBJECT TO THE TERMS OF THE PLAN.

 

5.                                       DEATH.  IN THE EVENT THE HOLDER DIES
WHILE EMPLOYED BY THE COMPANY OR ANY OF ITS SUBSIDIARIES OR AFFILIATES, OR
DURING HIS TERM AS A DIRECTOR OF THE COMPANY OR ANY OF ITS SUBSIDIARIES OR
AFFILIATES, AS THE CASE MAY BE, THIS OPTION, TO THE EXTENT NOT PREVIOUSLY
EXPIRED OR EXERCISED, SHALL, TO THE EXTENT EXERCISABLE ON THE DATE OF DEATH, BE
EXERCISABLE BY THE ESTATE OF THE HOLDER OR BY ANY PERSON WHO ACQUIRED THIS
OPTION BY BEQUEST OR INHERITANCE, AT ANY TIME WITHIN

 

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ONE YEAR AFTER THE DEATH OF THE HOLDER, UNLESS THE HOLDER’S WRITTEN EMPLOYMENT
AGREEMENT WITH THE COMPANY, IF ANY, PROVIDES OTHERWISE, IN WHICH CASE THE TERMS
CONTAINED IN SUCH EMPLOYMENT AGREEMENT SHALL CONTROL, PROVIDED, HOWEVER, THAT IF
THE TERM OF SUCH OPTION WOULD EXPIRE BY ITS TERMS WITHIN SIX MONTHS AFTER THE
OPTIONEE’S DEATH, THE TERM OF SUCH OPTION SHALL BE EXTENDED UNTIL SIX MONTHS
AFTER THE OPTIONEE’S DEATH, PROVIDED FURTHER, HOWEVER, THAT IN NO INSTANCE MAY
THE TERM OF THE OPTION, AS SO EXTENDED, EXCEED THE MAXIMUM TERM ESTABLISHED
PURSUANT TO SECTIONS 4.5(B)(II) OR 4.5(C) OF THE PLAN (IF APPLICABLE).

 

6.                                       DISABILITY.  IN THE EVENT OF THE
TERMINATION OF EMPLOYMENT OF THE HOLDER OR THE SEPARATION FROM SERVICE OF THE
HOLDER DUE TO DISABILITY, THE HOLDER, OR HER GUARDIAN OR LEGAL REPRESENTATIVE,
SHALL HAVE THE UNQUALIFIED RIGHT TO EXERCISE ANY PORTION OF THIS OPTION WHICH
HAS NOT BEEN PREVIOUSLY EXERCISED OR EXPIRED AND WHICH THE HOLDER WAS ELIGIBLE
TO EXERCISE AS OF THE FIRST DATE OF TOTAL DISABILITY (AS DETERMINED BY THE
COMPANY), AT ANY TIME WITHIN ONE YEAR AFTER SUCH TERMINATION OR SEPARATION,
UNLESS THE HOLDER’S WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY, IF ANY,
PROVIDES OTHERWISE, IN WHICH CASE THE TERMS CONTAINED IN SUCH EMPLOYMENT
AGREEMENT SHALL CONTROL, PROVIDED, HOWEVER, THAT IF THE TERM OF SUCH OPTION
WOULD EXPIRE BY ITS TERMS WITHIN SIX MONTHS AFTER SUCH TERMINATION OR
SEPARATION, THE TERM OF SUCH OPTION SHALL BE EXTENDED UNTIL SIX MONTHS AFTER
SUCH TERMINATION OR SEPARATION, PROVIDED FURTHER, HOWEVER, THAT IN NO INSTANCE
MAY THE TERM OF THE OPTION, AS SO EXTENDED, EXCEED THE MAXIMUM TERM ESTABLISHED
PURSUANT TO SECTION 4.5(B)(II) OR 4.5(C) OF THE PLAN (IF APPLICABLE).  THE TERM
“DISABILITY” SHALL, FOR PURPOSES OF THIS SHARE OPTION AGREEMENT, BE DEFINED IN
THE SAME MANNER AS SUCH TERM IS DEFINED IN THE HOLDER’S WRITTEN EMPLOYMENT
AGREEMENT WITH THE COMPANY, IF ANY.  IN THE EVENT (I) SUCH TERM IS NOT DEFINED
IN THE HOLDER’S EMPLOYMENT AGREEMENT WITH THE COMPANY OR (II) THE HOLDER DOES
NOT HAVE A WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY, THE TERM “DISABILITY”
SHALL HAVE THE SAME MEANING AS “TOTAL DISABILITY” IN SECTION 22(E)(3) OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED.

 

7.                                       CHANGE OF CONTROL.  IF THE HOLDER IS AN
ACTIVE EMPLOYEE OF THE COMPANY OR ANY OF ITS SUBSIDIARIES AT THE TIME THERE
OCCURS A “CHANGE OF CONTROL” OF THE COMPANY AND THE HOLDER’S EMPLOYMENT IS
TERMINATED BY THE COMPANY OR ANY OF ITS SUBSIDIARIES OTHER THAN FOR CAUSE (AS
DEFINED BELOW) WITHIN TWELVE (12) MONTHS FOLLOWING SUCH CHANGE OF CONTROL, OR
SUCH LONGER PERIOD AS THE COMMITTEE MAY DETERMINE, THE PORTION, IF ANY, OF THIS
OPTION WITH RESPECT TO WHICH THE RIGHT TO EXERCISE HAS NOT YET ACCRUED, SHALL
IMMEDIATELY VEST AND BE EXERCISABLE IN FULL, EFFECTIVE UPON SUCH TERMINATION,
FOR A PERIOD OF 30 DAYS THEREAFTER, OR SUCH LONGER PERIOD AS THE COMMITTEE MAY
DETERMINE.  NOTWITHSTANDING THE FOREGOING, IN THE EVENT THE HOLDER HAS A WRITTEN
EMPLOYMENT AGREEMENT WITH THE COMPANY WHICH CONTAINS TERMS RELATING TO A “CHANGE
OF CONTROL,” ALL SUCH TERMS SHALL SUPPLEMENT THIS SECTION 7, AND TO THE EXTENT
THAT THERE MAY BE CONFLICTING TERMS BETWEEN THIS OPTION AND THE TERMS OF SUCH
EMPLOYMENT AGREEMENT, THE TERMS OF SUCH EMPLOYMENT AGREEMENT SHALL GOVERN THE
TREATMENT OF THIS OPTION IN THE EVENT OF A “CHANGE OF CONTROL” OF THE COMPANY. 
FOR PURPOSES OF THIS OPTION, “CHANGE OF CONTROL” SHALL HAVE THE MEANING
SPECIFIED IN THE HOLDER’S WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY, IF
ANY.  IN THE EVENT (I) SUCH TERM IS NOT DEFINED IN THE HOLDER’S EMPLOYMENT
AGREEMENT WITH THE COMPANY OR (II) THE HOLDER DOES NOT HAVE A WRITTEN EMPLOYMENT
AGREEMENT WITH THE COMPANY, A “CHANGE OF CONTROL” OF THE COMPANY SHALL BE DEEMED
TO OCCUR IF:

 

A.                                       THERE SHALL HAVE OCCURRED A CHANGE OF
CONTROL OF A NATURE THAT WOULD BE REQUIRED TO BE REPORTED IN RESPONSE TO ITEM
6(E) OF SCHEDULE 14A OF REGULATION 14A

 

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PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE “EXCHANGE
ACT”), AS IN EFFECT ON THE DATE HEREOF, WHETHER OR NOT THE COMPANY IS THEN
SUBJECT TO SUCH REPORTING REQUIREMENT, PROVIDED, HOWEVER, THAT THERE SHALL NOT
BE DEEMED TO BE A CHANGE OF CONTROL OF THE COMPANY IF IMMEDIATELY PRIOR TO THE
OCCURRENCE OF WHAT WOULD OTHERWISE BE A CHANGE OF CONTROL OF THE COMPANY (I) THE
HOLDER IS THE OTHER PARTY TO THE TRANSACTION (A “CONTROL EVENT”) THAT WOULD
OTHERWISE RESULT IN A CHANGE OF CONTROL OF THE COMPANY OR (II) THE HOLDER IS AN
EXECUTIVE OFFICER, TRUSTEE, DIRECTOR OR MORE THAN 5% EQUITY HOLDER OF THE OTHER
PARTY TO THE CONTROL EVENT OR OF ANY ENTITY, DIRECTLY OR INDIRECTLY, CONTROLLING
SUCH OTHER PARTY;

 

B.                                      THE COMPANY MERGES OR CONSOLIDATES WITH,
OR SELLS ALL OR SUBSTANTIALLY ALL OF ITS ASSETS TO, ANOTHER COMPANY (EACH, A
“TRANSACTION”), PROVIDED, HOWEVER, THAT A TRANSACTION SHALL NOT BE DEEMED TO
RESULT IN A CHANGE OF CONTROL OF THE COMPANY IF (I) IMMEDIATELY PRIOR THERETO
THE CIRCUMSTANCES IN (A)(I) OR (A)(II) ABOVE EXIST, OR (II) (1) THE SHAREHOLDERS
OF THE COMPANY, IMMEDIATELY BEFORE SUCH TRANSACTION OWN, DIRECTLY OR INDIRECTLY,
IMMEDIATELY FOLLOWING SUCH TRANSACTION IN EXCESS OF FIFTY PERCENT (50%) OF THE
COMBINED VOTING POWER OF THE OUTSTANDING VOTING SECURITIES OF THE CORPORATION OR
OTHER ENTITY RESULTING FROM SUCH TRANSACTION (THE “SURVIVING CORPORATION”) IN
SUBSTANTIALLY THE SAME PROPORTION AS THEIR OWNERSHIP OF THE VOTING SECURITIES OF
THE COMPANY IMMEDIATELY BEFORE SUCH TRANSACTION AND (2) THE INDIVIDUALS WHO WERE
MEMBERS OF THE COMPANY’S BOARD OF DIRECTORS IMMEDIATELY PRIOR TO THE EXECUTION
OF THE AGREEMENT PROVIDING FOR SUCH TRANSACTION CONSTITUTE AT LEAST A MAJORITY
OF THE MEMBERS OF THE BOARD OF DIRECTORS OR THE BOARD OF TRUSTEES, AS THE CASE
MAY BE, OF THE SURVIVING CORPORATION, OR OF A CORPORATION OR OTHER ENTITY
BENEFICIALLY DIRECTLY OR INDIRECTLY OWNING A MAJORITY OF THE OUTSTANDING VOTING
SECURITIES OF THE SURVIVING CORPORATION; OR

 

C.                                       THE COMPANY ACQUIRES ASSETS OF ANOTHER
COMPANY OR A SUBSIDIARY OF THE COMPANY MERGES OR CONSOLIDATES WITH ANOTHER
COMPANY (EACH, AN “OTHER TRANSACTION”) AND (I) THE SHAREHOLDERS OF THE COMPANY,
IMMEDIATELY BEFORE SUCH OTHER TRANSACTION OWN, DIRECTLY OR INDIRECTLY,
IMMEDIATELY FOLLOWING SUCH OTHER TRANSACTION 50% OR LESS OF THE COMBINED VOTING
POWER OF THE OUTSTANDING VOTING SECURITIES OF THE CORPORATION OR OTHER ENTITY
RESULTING FROM SUCH OTHER TRANSACTION (THE “OTHER SURVIVING CORPORATION”) IN
SUBSTANTIALLY THE SAME PROPORTION AS THEIR OWNERSHIP OF THE VOTING SECURITIES OF
THE COMPANY IMMEDIATELY BEFORE SUCH OTHER TRANSACTION OR (II) THE INDIVIDUALS
WHO WERE MEMBERS OF THE COMPANY’S BOARD OF DIRECTORS IMMEDIATELY PRIOR TO THE
EXECUTION OF THE AGREEMENT PROVIDING FOR SUCH OTHER TRANSACTION CONSTITUTE LESS
THAN A MAJORITY OF THE MEMBERS OF THE BOARD OF DIRECTORS OR THE BOARD OF
TRUSTEES, AS THE CASE MAY BE, OF THE OTHER SURVIVING CORPORATION, OR OF A
CORPORATION OR OTHER ENTITY BENEFICIALLY DIRECTLY OR INDIRECTLY OWNING A
MAJORITY OF THE OUTSTANDING VOTING SECURITIES OF THE OTHER SURVIVING
CORPORATION, PROVIDED, HOWEVER, THAT AN OTHER TRANSACTION SHALL NOT BE DEEMED TO
RESULT IN A CHANGE OF CONTROL OF THE COMPANY IF IMMEDIATELY PRIOR THERETO THE
CIRCUMSTANCES IN (A)(I) OR (A)(II) ABOVE EXIST.

 

For purposes of this Section 7, “Cause” shall mean (unless a different
definition is used in the Holder’s written employment agreement with the
Company, if any, in which case such different definition shall apply to the
Holder) any of the following:

 

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X.                                        MATERIAL BREACH BY THE HOLDER OF HIS
OR HER EMPLOYMENT AGREEMENT, IF ANY, OR MATERIAL FAILURE BY THE HOLDER TO
PERFORM HIS OR HER DUTIES (OTHER THAN AS A RESULT OF INCAPACITY DUE TO PHYSICAL
OR MENTAL ILLNESS) DURING HIS OR HER EMPLOYMENT WITH THE COMPANY AFTER WRITTEN
NOTICE OF SUCH BREACH OR FAILURE AND THE HOLDER FAILED TO CURE SUCH BREACH OR
FAILURE TO THE COMPANY’S REASONABLE SATISFACTION WITHIN FIVE (5) DAYS AFTER
RECEIVING SUCH WRITTEN NOTICE;

 

Y.                                      MATERIAL BREACH BY THE HOLDER OF HIS OR
HER EMPLOYEE PROPRIETARY INFORMATION AGREEMENT OR OTHER SIMILAR ARRANGEMENT
ENTERED INTO BY THE HOLDER IN CONNECTION WITH HIS OR HER EMPLOYMENT BY THE
COMPANY; OR

 

Z.                                        ANY ACT OF FRAUD, MISAPPROPRIATION,
MISUSE, EMBEZZLEMENT OR ANY OTHER MATERIAL ACT OF DISHONESTY IN RESPECT OF THE
COMPANY OR ITS FUNDS, PROPERTIES, ASSETS OR OTHER EMPLOYEES.

 

8.                                       EMPLOYMENT VIOLATION.  IN CONSIDERATION
OF THE GRANTING AND BY ACCEPTANCE OF THIS OPTION, THE HOLDER HEREBY AGREES THAT
THE TERMS OF THIS SECTION 8 SHALL APPLY TO THE OPTION.  THE HOLDER ACKNOWLEDGES
AND AGREES THAT EACH EXERCISE OF THIS OPTION AND EACH WRITTEN NOTICE OF EXERCISE
DELIVERED TO THE COMPANY AND EXECUTED BY THE HOLDER SHALL SERVE AS A
REAFFIRMATION OF AND CONTINUING AGREEMENT BY THE HOLDER TO COMPLY WITH THE TERMS
CONTAINED IN THIS SECTION 8.

 

The Company and the Holder acknowledge and agree that if the Holder materially
breaches his or her employment agreement (it being understood that any breach of
the post-termination obligations contained therein shall be deemed to be
material) for so long as the terms of such employment agreement shall apply to
the Holder (each an “Employment Violation”), the Company shall have the right to
require (i) the termination and cancellation of the unexercised portion of this
Option, if any, whether vested or unvested, and (ii) payment by the Holder to
the Company of the Recapture Amount (as defined below).  The Company and the
Holder further agree that such termination of unexercised Options 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 any such Employment Violation including, without limitation, the
right to terminate the Holder’s employment if not already terminated, seek
injunctive relief and additional monetary damages.

 

For purposes of this Section 8, the “Recapture Amount” shall mean the gross gain
realized or unrealized by the Holder upon each exercise of this Option during
the period beginning on the date which is twelve (12) months prior to the date
of the Holder’s Employment Violation and ending on the date of computation (the
“Look-back Period”), which gain shall be calculated as the sum of:

 

A.                                       IF THE HOLDER HAS EXERCISED ANY PORTION
OF THIS OPTION DURING THE LOOK-BACK PERIOD AND SOLD ANY OF THE SHARES ACQUIRED
ON EXERCISE THEREAFTER, AN AMOUNT EQUAL TO THE PRODUCT OF (X) THE SALES PRICE
PER SHARE SOLD MINUS THE EXERCISE PRICE PER SHARE TIMES (Y) THE NUMBER OF SHARES
AS TO WHICH THIS OPTION WAS EXERCISED AND WHICH WERE SOLD AT SUCH SALES PRICE;
PLUS

 

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B.                                      IF THE HOLDER HAS EXERCISED ANY PORTION
OF THIS OPTION DURING THE LOOK-BACK PERIOD AND NOT SOLD ANY OF THE SHARES
ACQUIRED ON EXERCISE THEREAFTER, WITH RESPECT TO EACH OF SUCH SHARES AN AMOUNT
EQUAL TO THE PRODUCT OF (X) THE GREATEST OF THE FOLLOWING: (1) THE FAIR MARKET
VALUE PER SHARE ON THE DATE OF EXERCISE, (2) THE ARITHMETIC AVERAGE OF THE PER
SHARE CLOSING SALES PRICES AS REPORTED ON NASDAQ FOR THE THIRTY (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 THIS SECTION 8, OR (3) THE
ARITHMETIC AVERAGE OF THE PER SHARE CLOSING SALES PRICES AS REPORTED ON NASDAQ
FOR THE THIRTY (30) TRADING DAY PERIOD ENDING ON THE TRADING DAY IMMEDIATELY
PRECEDING THE DATE OF COMPUTATION, MINUS THE EXERCISE PRICE PER SHARE TIMES (Y)
THE NUMBER OF SHARES AS TO WHICH THIS OPTION WAS EXERCISED AND WHICH WERE NOT
SOLD;

 

provided, however, in lieu of payment by the Holder to the Company of the
Recapture Amount determined pursuant to clause (b) above, the Holder, in his or
her discretion, may tender to the Company the Shares acquired upon exercise of
this Option during the Look-back Period and the Optionee shall not be entitled
to receive any consideration from the Company in exchange therefor.

 

9.                                       ADJUSTMENTS.  IN THE EVENT THAT THE
COMPANY SHALL DETERMINE THAT ANY DIVIDEND OR OTHER DISTRIBUTION (WHETHER IN THE
FORM OF CASH, SHARES OF COMMON STOCK OF THE COMPANY, OTHER SECURITIES, OR OTHER
PROPERTY), RECAPITALIZATION, STOCK SPLIT, REVERSE STOCK SPLIT, REORGANIZATION,
MERGER, CONSOLIDATION, SPLIT-UP, SPIN-OFF, COMBINATION, REPURCHASE, OR EXCHANGE
OF SHARES OF COMMON STOCK OF THE COMPANY OR OTHER SECURITIES, THE ISSUANCE OF
WARRANTS OR OTHER RIGHTS TO PURCHASE SHARES OF COMMON STOCK OF THE COMPANY, OR
OTHER SECURITIES, OR OTHER SIMILAR CORPORATE TRANSACTION OR EVENT AFFECTS THE
SHARES, SUCH THAT AN ADJUSTMENT IS DETERMINED BY THE COMPANY TO BE APPROPRIATE
IN ORDER TO PREVENT DILUTION OR ENLARGEMENT OF THE BENEFITS OR POTENTIAL
BENEFITS INTENDED TO BE MADE AVAILABLE TO THE HOLDER, THEN THE COMPANY SHALL, IN
SUCH MANNER AS THE COMPANY MAY DEEM EQUITABLE, ADJUST ANY OR ALL OF (I) THE
NUMBER AND TYPE OF SHARES OF COMMON STOCK OF THE COMPANY SUBJECT TO THIS OPTION,
AND (II) THE GRANT OR EXERCISE PRICE WITH RESPECT TO THIS OPTION, OR, IF DEEMED
APPROPRIATE, MAKE PROVISION FOR A CASH PAYMENT TO THE HOLDER.

 

10.                                 DELIVERY OF SHARE CERTIFICATES.  WITHIN A
REASONABLE TIME AFTER THE EXERCISE OF THIS OPTION, THE COMPANY SHALL CAUSE TO BE
DELIVERED TO THE PERSON ENTITLED THERETO A CERTIFICATE FOR THE SHARES PURCHASED
PURSUANT TO THE EXERCISE OF THIS OPTION.  IF THIS OPTION SHALL HAVE BEEN
EXERCISED WITH RESPECT TO LESS THAN ALL OF THE SHARES SUBJECT TO THIS OPTION,
THE COMPANY SHALL ALSO CAUSE TO BE DELIVERED TO THE PERSON ENTITLED THERETO A
NEW STOCK OPTION AGREEMENT IN REPLACEMENT OF THIS STOCK OPTION AGREEMENT IF
SURRENDERED AT THE TIME OF THE EXERCISE OF THIS OPTION, INDICATING THE NUMBER OF
SHARES WITH RESPECT TO WHICH THIS OPTION REMAINS AVAILABLE FOR EXERCISE, OR THE
COMPANY SHALL MAKE A NOTATION IN ITS BOOKS AND RECORDS TO REFLECT THE PARTIAL
EXERCISE OF THIS OPTION.

 

11.                                 WITHHOLDING.  IN THE EVENT THAT THE HOLDER
ELECTS TO EXERCISE THIS OPTION OR ANY PART THEREOF, AND IF THE COMPANY OR ANY
SUBSIDIARY OR AFFILIATE OF THE COMPANY SHALL BE REQUIRED TO WITHHOLD ANY AMOUNTS
BY REASONS OF ANY FEDERAL, STATE OR LOCAL TAX LAWS, RULES OR REGULATIONS IN
RESPECT OF (A) THE ISSUANCE OF SHARES TO THE HOLDER PURSUANT TO THIS OPTION, OR
(B) THE EXERCISE OR DISPOSITION (IN WHOLE OR IN PART) OF THE OPTION, THE COMPANY
OR SUCH SUBSIDIARY OR

 

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AFFILIATE SHALL BE ENTITLED TO DEDUCT AND WITHHOLD SUCH AMOUNTS FROM ANY
PAYMENTS TO BE MADE TO THE HOLDER.  IN ANY EVENT, THE HOLDER SHALL MAKE
AVAILABLE TO THE COMPANY OR SUCH SUBSIDIARY OR AFFILIATE, PROMPTLY WHEN
REQUESTED BY THE COMPANY OR SUCH SUBSIDIARY OR AFFILIATE, SUFFICIENT FUNDS TO
MEET THE REQUIREMENTS OF SUCH WITHHOLDING; AND THE COMPANY OR SUCH SUBSIDIARY OR
AFFILIATE SHALL BE ENTITLED TO TAKE AND AUTHORIZE SUCH STEPS AS IT MAY DEEM
ADVISABLE IN ORDER TO HAVE SUCH FUNDS AVAILABLE TO THE COMPANY OR SUCH
SUBSIDIARY OR AFFILIATE OUT OF ANY FUNDS OR PROPERTY DUE OR TO BECOME DUE TO THE
HOLDER.

 

12.                                 RESERVATION OF SHARES.  THE COMPANY HEREBY
AGREES THAT AT ALL TIMES THERE SHALL BE RESERVED FOR ISSUANCE AND/OR DELIVERY
UPON EXERCISE OF THIS OPTION SUCH NUMBER OF SHARES AS SHALL BE REQUIRED FOR
ISSUANCE OR DELIVERY UPON EXERCISE HEREOF.

 

13.                                 RIGHTS OF HOLDER.  NOTHING CONTAINED HEREIN
SHALL BE CONSTRUED TO CONFER UPON THE HOLDER ANY RIGHT TO BE CONTINUED IN THE
EMPLOY OF THE COMPANY AND/OR ANY SUBSIDIARY OR AFFILIATE OF THE COMPANY OR
DEROGATE FROM ANY RIGHT OF THE COMPANY AND/OR ANY SUBSIDIARY OR AFFILIATE OF THE
COMPANY TO RETIRE, REQUEST THE RESIGNATION OF, OR DISCHARGE THE HOLDER AT ANY
TIME, WITH OR WITHOUT CAUSE.  THE HOLDER SHALL NOT, BY VIRTUE HEREOF, BE
ENTITLED TO ANY RIGHTS OF A SHAREHOLDER IN THE COMPANY, EITHER AT LAW OR IN
EQUITY, AND THE RIGHTS OF THE HOLDER ARE LIMITED TO THOSE EXPRESSED HEREIN AND
ARE NOT ENFORCEABLE AGAINST THE COMPANY EXCEPT TO THE EXTENT SET FORTH HEREIN.

 

14.                                 EXCLUSION FROM PENSION COMPUTATIONS.  BY
ACCEPTANCE OF THE GRANT OF THIS OPTION, THE HOLDER HEREBY AGREES THAT ANY INCOME
REALIZED UPON THE RECEIPT OR EXERCISE HEREOF, OR UPON THE DISPOSITION OF THE
SHARES RECEIVED UPON ITS EXERCISE, IS SPECIAL INCENTIVE COMPENSATIONS AND, TO
THE EXTENT PERMISSIBLE UNDER APPLICABLE LAW, SHALL NOT BE TAKEN INTO ACCOUNT AS
“WAGES”, “SALARY” OR “COMPENSATION” IN DETERMINING THE AMOUNT OF ANY PAYMENT
UNDER ANY PENSION, RETIREMENT, INCENTIVE, PROFIT SHARING, BONUS OR DEFERRED
COMPENSATION PLAN OF THE COMPANY OR ANY OF ITS SUBSIDIARIES OR AFFILIATES.

 

15.                                 REGISTRATION; LEGEND.  THE COMPANY MAY
POSTPONE THE ISSUANCE AND DELIVERY OF SHARES UPON ANY EXERCISE OF THIS OPTION
UNTIL (A) THE ADMISSION OF SUCH SHARES TO LISTING ON ANY STOCK EXCHANGE OR
EXCHANGES ON WHICH SHARES OF THE COMPANY OF THE SAME CLASS ARE THEN LISTED AND
(B) THE COMPLETION OF SUCH REGISTRATION OR OTHER QUALIFICATION OF SUCH SHARES
UNDER ANY STATE OR FEDERAL LAW, RULE OR REGULATION AS THE COMPANY SHALL
DETERMINE TO BE NECESSARY OR ADVISABLE.  THE HOLDER SHALL MAKE SUCH
REPRESENTATIONS AND FURNISH SUCH INFORMATION AS MAY, IN THE OPINION OF COUNSEL
FOR THE COMPANY, BE APPROPRIATE TO PERMIT THE COMPANY, IN LIGHT OF THE THEN
EXISTENCE OR NON-EXISTENCE WITH RESPECT TO SUCH SHARES OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, TO ISSUE
THE SHARES IN COMPLIANCE WITH THE PROVISIONS OF THAT OR ANY COMPARABLE ACT.

 

The Company may cause the following or a similar legend to be set forth on each
certificate representing Shares or any other security issued or issuable upon
exercise of this Option unless counsel for the Company is of the opinion as to
any such certificate that such legend is unnecessary:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED FOR SALE, SOLD
OR OTHERWISE TRANSFERRED EXCEPT

 

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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, THE AVAILABILITY OF WHICH IS ESTABLISHED BY AN OPINION FROM
COUNSEL TO THE COMPANY.

 

16.                                 AMENDMENT.  THE COMPANY MAY, WITH THE
CONSENT OF THE HOLDER, AT ANY TIME OR FROM TIME TO TIME AMEND THE TERMS AND
CONDITIONS OF THIS OPTION, AND MAY AT ANY TIME OR FROM TIME TO TIME AMEND THE
TERMS OF THE PLAN.

 

17.                                 NOTICES.  ANY NOTICE WHICH EITHER PARTY
HERETO MAY BE REQUIRED OR PERMITTED TO GIVE TO THE OTHER SHALL BE IN WRITING,
AND MAY BE DELIVERED PERSONALLY OR BY MAIL, POSTAGE PREPAID, OR OVERNIGHT
COURIER, ADDRESSED AS FOLLOWS: IF TO THE COMPANY, AT ITS OFFICE AT 3100 OCEAN
PARK BOULEVARD, SANTA MONICA, CALIFORNIA 90405, ATTN: GENERAL COUNSEL, OR AT
SUCH OTHER ADDRESS AS THE COMPANY BY NOTICE TO THE HOLDER MAY DESIGNATE IN
WRITING FROM TIME TO TIME; AND IF TO THE HOLDER, AT THE ADDRESS SHOWN BELOW HER
SIGNATURE ON THIS STOCK OPTION AGREEMENT, OR AT SUCH OTHER ADDRESS AS THE HOLDER
BY NOTICE TO THE COMPANY MAY DESIGNATE IN WRITING FROM TIME TO TIME.  NOTICES
SHALL BE EFFECTIVE UPON RECEIPT.

 

18.                                 INTERPRETATION.  A DETERMINATION OF THE
COMMITTEE AS TO ANY QUESTIONS WHICH MAY ARISE WITH RESPECT TO THE INTERPRETATION
OF THE PROVISIONS OF THIS OPTION AND OF THE PLAN SHALL BE FINAL AND BINDING. 
THE COMMITTEE MAY AUTHORIZE AND ESTABLISH SUCH RULES, REGULATIONS AND REVISIONS
THEREOF AS IT MAY DEEM ADVISABLE.

 

19.                                 MISCELLANEOUS.  IN THE EVENT OF A CONFLICT
BETWEEN ANY OF THE TERMS CONTAINED IN THIS OPTION AND THE TERMS CONTAINED IN THE
HOLDER’S WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY, IF ANY, THE TERMS SET
FORTH IN SUCH EMPLOYMENT AGREEMENT SHALL GOVERN.

 

[Remainder of page intentionally blank.]

 

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IN WITNESS WHEREOF, the parties have executed this Stock Option Agreement as of
the date first set forth above.

 

 

ACTIVISION, INC.

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

 

 

Date:

 

 

 

 

 

Attest:

 

 

 

 

 

 

 

ATTEST:

 

 

 

 

 

 

 

 

Option Holder

 

 

 

 

 

 

 

 

Address

 

 

 

 

 

 

 

 

City

State

Zip Code

 

 

 

 

 

 

 

Social Security Number

 

 

9

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