Exhibit 10.1





 


 


August 20, 2004


 


William Chardavoyne


1721 Elm Avenue


Manhattan Beach, California 90266


 


Dear Bill:


 


This letter agreement, dated August 20, 2004 (this “agreement”),
confirms the terms of your employment by Activision Publishing, Inc. (“Employer”),
on the terms and conditions set forth below.


 


1.         Term


 


            This agreement shall
commence effective as of the date set forth above and shall continue until
terminated in accordance with the terms specifically set forth in this
agreement.


 


2.         Salary


 


            (a)       In full consideration for all rights and
services provided by you under this agreement, you shall receive an annual base
salary (“Base Salary”) of $365,000.


 


            (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 may 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 executive management and/or the Compensation Committee of the
Board of Directors of Employer.


 


            (c)       In addition to your base salary, you may
be eligible to receive an annual discretionary bonus (“Annual Bonus”) targeted
at sixty percent (60 %) of your annual Base Salary (which may be pro-rated for
the amount of time that you actually perform services for Employer during a
particular fiscal year).  The amount of
this Annual 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 an Annual Bonus is 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 Annual Bonuses, if granted, are
generally paid to employees in May of each year.  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, so long as such Annual Bonus modifications are applied
consistently to other employees in similar officer positions.


 


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3.         Title


 


            You are being employed
under this agreement in the position of Executive Vice President and Chief
Financial Officer.


 


4.         Duties


 


            You
shall personally and diligently perform, on a full-time and exclusive basis,
such services consistent with your position or consistent with duties involved
in the transition of your position as Employer and its Board of Directors/
Committees of the Board of Directors may reasonably require.  You 
are 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.


 


5.         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.


 


6.              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 in this
agreement or 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, or as required by applicable
law.  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.


 


7.         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
twenty (20) days of paid vacation per year.


 


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


 


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8.         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 and/or resulting from your services
to Employer 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 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 and expense, such further documents,
including copyright and patent assignments, as Employer reasonably 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, in furtherance of
or 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 termination of your employment
pursuant to Paragraph 9(a) or the termination of this agreement pursuant to
Paragraph 9(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.


 


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9.         Termination


 


            (a)       For Cause.  At any time
during the continuation of this agreement, Employer may terminate your
employment under this agreement for Cause defined as your (i) willful, reckless
or gross misconduct or fraud, (ii) gross negligent performance of job
responsibilities, and (iii) conviction of or pleading no contest to a felony or
crime involving dishonesty or moral turpitude.


 


            (b)       Without Cause.  The parties
agree that this agreement may be terminated for convenience without Cause by
either party on no less than twelve (12) months prior written notice and such
termination shall not be deemed to constitute a wrongful discharge or a
wrongful termination of your employment by Employer or a breach by Employer or
by you of any term of this agreement and/or any other duty or obligation,
expressed or implied, which the parties may owe each other pursuant to any
principle or provision of law. The date on which such written termination
notice is received by either you or Employer is referred to in this agreement
as “Termination Notice Date”.


 


            (c)       Death or Disability.  In the event of your death during the
continuation of this agreement, this agreement shall terminate and Employer
only shall be obligated to pay your estate or legal representative only the
amounts set forth in Paragraph 9(d)(ii) below. 
In the event you are unable, with reasonable accommodation, to perform
the essential services required of your position as a result of any physical or
mental condition (“disability”), then Employer shall have the right, at its
option, to terminate your employment under this agreement, and Employer shall
be obligated to pay you only the amounts set forth in Paragraph 9(d)(iii)
below.  You acknowledge and agree that
your ability to continuously perform your duties for Employer is an essential
part of your position and that any inability to perform such duties during the
term of this agreement for a period of 60 or more consecutive days or an
aggregate of 90 or more days during any 12-month period would create an undue
hardship for Employer and the operation of its business.  Unless and until so terminated, during any
period of disability during which you are unable, with reasonable
accommodation, 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 and disability
benefits.


 


            (d)       Termination of Obligations.
 In the event of the termination of your
employment under this agreement pursuant to Paragraphs 9(a), 9(b) or 9(c), all
obligations of Employer to you under this agreement shall immediately terminate
except as follows:


 


i.                        Termination
Without Cause.  In the
event either party terminates this agreement pursuant to Paragraph 9(b), then
the following shall apply:


a.               You and Employer shall
promptly agree on a reasonable transition plan acceptable to Employer in its
reasonable discretion which shall allow, among other matters, for an orderly
transition of your responsibilities as a Chief Financial Officer to another
individual who is then engaged or will be engaged by Employer to perform such
duties, including, without limitation full understanding of Employer’s financial,



 


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                        accounting and forecasting
systems, corporate reporting, internal controls, internal and external
communications, staffing matters and your continuing participation and
assistance with any then on-going corporate litigation matters. You agree to
devote such time as is reasonably required to conduct such transition timely
and effectively, including on full time, exclusive basis in the initial stages
of such transition if the executive management of Employer determines such
level of your involvement in the transition process to be reasonable and
desirable. You hereby acknowledge and agree that while Employer may agree in
its discretion to a shorter transition schedule, it is anticipated that transition
process may continue for a minimum of one (1) month to as long as six (6)
months from the Termination Notice Date. The parties acknowledge that
notwithstanding the actual duration of transition process, your status as
employee of Employer will continue for the full period of twelve (12) months
from the Termination Notice Date and you will continue to provide such advisory
services until the end of your employment consistent with your prior position
with Employer as Employer may reasonably request.


b.              Conditioned on your full,
complete and continuing compliance with the conditions set forth in Paragraph
9(d)(i)(a) above, you shall receive: (i) continuing payments of your Base
Salary then in effect, payable in accordance with Employer normal payroll practices
for a period of twelve (12) months following the Termination Notice Date;
(ii) full Annual Bonus for the fiscal year during which  the Termination Notice Date  occurs to the extent such Annual Bonus is
awarded to you pursuant to the terms of Paragraph 2(c) of this agreement by the
Board of Directors (or the Compensation Committee of such Board of Directors),
payable in accordance with Employer’s normal practices applicable to Annual
Bonus payments; (iii) should the Termination Notice Date occur during the
course of any fiscal year such that there are then fewer than twelve (12)
months remaining in such fiscal year at the time of such termination (it being
understood that Employer’s fiscal year is April to March), the portion of the
Annual Bonus for the following fiscal year if such Annual Bonus is awarded
pursuant to the terms of Paragraph 2(c) of this agreement by the Board of
Directors (or the Compensation Committee of such Board of Directors) pro-rated
for the number of months to allow you to receive your bonus payment for the
full twelve (12) month period from the Termination Notice Date (such bonus
payment to be calculated and paid out in accordance with Employer’s normal
practices applicable to Annual Bonus 


 


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                        payments); and (iv)
continuing reimbursement of expenses if any due to you pursuant to Paragraph
5.  For illustration purposes and for
avoidance of doubt, in regards to Paragraphs 9(d)(i)(b)(i), (ii) and (iii), it
is the understanding of the parties that should this agreement, for example, be
terminated without cause effective as of Termination Notice Date on October 31,
2004, you will receive:


•                  Continuing Base Salary payments through
October 31, 2005;


•                  Annual Bonus for Employer’s fiscal year 2005
ending March 31, 2005, to the extent earned, and payable on or about May 2005
if such continues to be Employer’s normal payment time period for the
disbursement of bonuses; and


•                  Annual Bonus for Employer’s fiscal year 2006
ending March 31, 2006, to the extent earned, pro-rated for the month of
April-October 2006, and payable on or about May 2006 if such continues to be
Employer’s normal payment time period for the disbursement of bonuses


•                  Above payments are conditioned on your full,
complete and continuing compliance with the conditions set forth in Paragraph
9(d)(i)(a).


ii.                     Compensation
upon Death.  In the
event this agreement is terminated as a result of your death, your heirs,
successors or legal representatives shall receive: (i) the Base Salary through
the date of termination of this agreement; (ii) any unpaid Annual Bonus
for any previously completed fiscal year if such Annual Bonus is awarded to you
pursuant to the terms of Paragraph 2(c) of this agreement by the Board of
Directors (or the Compensation Committee of such Board of Directors) and remain
not paid; (iii) the pro rata portion of the Annual Bonus for the fiscal year in
which termination occurs to the extent such Annual Bonus is awarded to you
pursuant to the terms of Paragraph 2(c) of this agreement by the Board of
Directors (or the Compensation Committee of such Board of Directors); (v)
reimbursement of expenses due to you pursuant to Paragraph 5.  Bonus payments will be made notwithstanding
the fact that you are not employed by Employer at the time such payment is
paid. All such payments shall be in addition to any payments or benefits your
widow, beneficiaries or estate may be entitled to receive pursuant to any
pension or employee benefit plan or life insurance policy 


 


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                              maintained by Employer; and
(v) all payments and benefits due you under any of Employee’s employee benefit
plans.


iii.                                                                        Compensation
upon Disability.  In the
event this agreement is terminated as a result of your disability, you shall
receive: (i) the Base Salary through the date of your termination; (ii) any
unpaid Annual Bonus for any previously completed fiscal year if such Annual
Bonus is actually awarded to you pursuant to the terms of Paragraph 2(c) of
this agreement by the Board of Directors (or the Compensation Committee of such
Board of Directors) and remain not paid in whole or in part; (iii) the pro rata
portion of the Annual Bonus for the fiscal year in which your termination
occurs to the extent such Annual Bonus is awarded pursuant to the terms of
Paragraph 2(c) of this agreement by the Board of Directors (or the Compensation
Committee of such Board of Directors); (iv) reimbursement of expenses due to
you pursuant to Paragraph 5. Bonus payments will be made notwithstanding the
fact that you are not employed by Employer at the time such payment is paid.


(e)             Disposition of Stock Options Upon Termination.  Upon termination of your employment for any
reason, the following terms shall apply to the Options to acquire shares of
common stock of Activision, Inc. that may have been issued to you during the
course of your employment with Employer prior to such termination (“Options”):


 


(i)                                     In the event of termination of your
employment without Cause and conditioned on your full, complete and continuing
compliance with the conditions set forth in Paragraph 9(d)(i)(a) above, all
such stock options shall continue to vest and be exercisable for a period of
twelve (12) months following the Termination Notice Date, provided that at all times during such period your remain
an employee.  Upon termination of such
twelve (12) month period or earlier termination of your employment, all then
unvested stock options shall be cancelled and only vested stock options shall
continue to be exercisable until the earlier of (a) the end of the 30th day
after such date, or (b) the expiration of such stock option pursuant to the
terms of the stock option agreement for such stock option; and upon the
expiration of such period, all stock options then remaining unexercised shall
be cancelled.


 


(ii)                                  In the event of your termination of
employment by reason of your death or disability, all such stock options shall
cease to vest immediately as of the date of such termination of your
employment, all unvested stock options shall be cancelled and only vested stock
options shall continue to be exercisable until the earlier of (a) the end of
the 30th day after the date of such termination of your employment, or (b) the
expiration of such stock option pursuant to the terms of the stock option
agreement 


 


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                                                for such stock option; and upon the
expiration of such period, all stock options then remaining unexercised shall
be cancelled.


 


(iii)                               In the event of termination of your
employment for Cause, or by your material breach of this agreement, all such
stock options, whether or not vested, shall expire immediately on the date of
termination of your employment and all such stock options shall immediately be
cancelled and no longer continue vest or be exercisable as of the date of
termination of your employment.


 


(iv)                              In the event of termination of your
employment for any reason not otherwise described in Paragraphs 9(e)(i)-(iii),
all such stock options shall cease to vest immediately as of the date of such
termination of your employment, all unvested stock options shall be cancelled
and only vested stock options shall continue to be exercisable until the
earlier of (a) the end of the 30th day after the date of such termination of
your employment, or (b) the expiration of such stock option pursuant to the
terms of the stock option agreement for such stock option; and upon the
expiration of such period, all stock options then remaining unexercised shall
be cancelled.


 


10.      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.


 


11.      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.


 


12.      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.


 


13.      Representations and
Warranties


 


            You represent and
warrant that you have provided Employer with complete and accurate information
regarding your skills and experience. 
Employee further represents and warrants that you have the skills and
abilities to perform the job responsibilities for which you are being hired (see paragraphs 3 and 4, above) based on your skills and
experience.  Based on your 


 


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representations regarding your skills and abilities, Employer has
agreed to hire and compensate you pursuant to the terms of this agreement.


 


14.      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 binding unless it is set forth in a writing signed by
both Employer and you.  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. 
Without limiting the generality of the foregoing, you acknowledge that
this agreement supersedes your prior written agreement with Employer dated
April 1, 2002 and any related letters 
and memorandums of understanding, and such agreement and related letters
and memorandums are hereby declared terminated and of no further force and
effect.


 


            (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)       No Employment Commitments.  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.


 


            (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.  Employer acknowledges that
Employee has satisfied this condition.


 


            (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 


 


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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 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.  You acknowledge that you have been given the
opportunity to consult with legal counsel of his own choosing regarding this
agreement.  You understand and agree that
Activision’s General Counsel, or any other attorney or member of management who
has discussed any term or condition of this agreement with you, is only acting
on behalf of the company and not on behalf of Employee.


 


            (k)       Right to Negotiate.  You hereby acknowledges that you have 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 8 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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15.      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:

  	
   

  	
  1721 Elm Avenue

  
	
   

  	
   

  	
  Manhattan Beach,
  California 90266

  



 


            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.


 


16.      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:

  	
   

  	
   

  
	
   

  	
   

  	
  Ron Doornink

  	
   

  	
   

  	
   

  	
  William Chardavoyne

  
	
   

  	
   

  	
  Chief Executive Officer

  	
   

  	
   

  	
   

  	
   

  



 


 


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