Exhibit 10.3


 


STOCK OPTION AGREEMENT


 


	
  Stock Option

  	
  #03000705/

  	
   

  	
  For 1,000,000
  Shares

  
	
   

  	
  03000706/03000707

  	
   

  	
   

  



 


ACTIVISION,
INC.


 


THIS STOCK OPTION
AGREEMENT (THIS “OPTION AGREEMENT”) CERTIFIES that on June 15, 2005 (the “Issuance
Date”), Michael Griffith (the “Holder”) was granted an option (the “Option”) to
purchase at the option price of $17.12 per share, all or any part of 1,000,000
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.             General
Terms of the Option. The Option is granted as a material inducement
to the Holder’s entering into employment with the Company pursuant to an
employment agreement dated June 15, 2005 (the “Employment Agreement”). In
addition, this Option has been granted pursuant to and is subject to the terms
and conditions of the Company’s 2003 Incentive Plan (the “Plan”), and the terms
and conditions of the Plan shall be deemed to be incorporated herein by
reference and made a part of this Option. Holder hereby acknowledges by his
signature below that he has received a copy of the Plan. Capitalized terms used
herein shall have the meanings set forth in the Plan, unless otherwise defined
herein.


 


2.             Expiration.
This Option shall expire on June 30, 2015, unless extended or
earlier terminated in accordance herewith.


 


3.             Exercise.
Except as otherwise permitted under the Plan, 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,
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.


 


This Option shall
vest and be exercisable as follows (except as otherwise provided in this Option
Agreement or the Employment Agreement:


 


	
  Vesting
  Date

  	
   

  	
  Shares Vested at Vesting Date

  	
   

  	
  Cumulative Shares

  
	
  June 30,
  2006

  	
   

  	
  70,000

  	
   

  	
  70,000

  
	
  June 30,
  2007

  	
   

  	
  70,000

  	
   

  	
  140,000

  
	
  June 30,
  2008

  	
   

  	
  70,000

  	
   

  	
  210,000

  
	
  June 30,
  2009

  	
   

  	
  70,000

  	
   

  	
  280,000

  
	
  June 30,
  2010

  	
   

  	
  720,000

  	
   

  	
  1,000,000

  



 


This Option shall
be exercised by the Holder (or by his 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.


 


4.             Tranches
Subject to Acceleration. Pursuant to Paragraph 2(e) of the
Employment Agreement, of the 720,000 Shares scheduled to vest on June 30,
2010, 350,000 Shares may be subject to accelerated vesting if Holder shall
achieve certain performance objectives to be mutually determined by Holder and
the Company at the rate of 116,666 Shares to vest on June 30, 2007 for
achievement of such performance objectives during the Company’s fiscal year 2007,
116,666 Shares to vest on June 30, 2008 for achievement of such
performance objectives during the Company’s fiscal year 2008, and 116,667
Shares to vest on June 30, 2009 for achievement of such performance
objectives during the Company’s fiscal year 2009. In addition, pursuant to
Paragraph 9(d) (i) of the Employment Agreement, of the 720,000 Shares
scheduled to vest on June 30, 2010, a pro rata (based upon the amount of
time between the Issuance Date and the date of the death of the Holder) portion
of 650,000 Shares may be subject to immediate vesting upon the death of the
Holder.


 


5.             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 the Company decides, in its sole discretion,
to extend the term of this Option, subject to the terms of the Plan, except
that if your employment is terminated by the Company other than for Cause (as
defined in the Employment Agreement), the term of this Option shall be extended
and shall be exercisable for a period of thirty (30) days following the date of
termination.


 


6.             Death.
In the event the Holder dies while employed by the Company or any of
its subsidiaries or affiliates, 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 one year after the death
of the Holder, provided, however, that
if the term of such Option would expire by its terms


 


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within six months after the Optionee’s death, the term of such Option
shall be extended until six months after the Optionee’s death.


 


7.             Disability.
In the event of the termination of employment of the Holder or the separation
from service of the Holder due to the Disability (as defined in Paragraph 9(c) of
the Employment Agreement) of the Holder, the Holder, or his 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 Disability, at any time
within one year after such termination or separation, 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.


 


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 the
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 the 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)           as to any Shares acquired by the
Holder upon exercise of any portion of this Option during the Look-back Period
and thereafter sold, 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


 


(b)           as to any Shares acquired by the
Holder upon exercise and not thereafter sold, 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,


 


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(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 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.             Registration;
Postponement. 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 shall have the right to
register the Shares underlying this Option on a Form S-8 or S-3 to
facilitate their resale by the Holder.


 


10.           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,
option or exercise price with respect to this Option, or, if deemed
appropriate, make provision for a cash payment to the Holder.


 


11.           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 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,


 


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or the Company shall make
a notation in its books and records to reflect the partial exercise of this
Option.


 


12.           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
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 hi 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.


 


13.           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.


 


14.           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.


 


15.           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.


 


16.           Legend.
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 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


 


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


 


17.           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 tune to time amend the terms of the Plan.


 


18.           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 his signature on this 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.


 


19.           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.


 


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


 


	
   

  	
  ACTIVISION, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ George Rose

  
	
   

  	
  Name: George Rose

  
	
   

  	
  Title: Sr. Vice President & General Counsel

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  June 15, 2005

  	
   

  
	
   

  	
   

  
	
   

  	
  Attest:

  	
  /s/ Danielle Kim

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Accepted and Confirmed:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Michael Griffith

  	
   

  	
   

  	
   

  
	
  MICHAEL GRIFFITH

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
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  Social Security
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