Document:

EXHIBIT 10.3

 

THQ INC.

 

PERFORMANCE ACCELERATED

RESTRICTED STOCK UNIT

DEFERRED COMPENSATION PLAN

 

1.                                       Definitions.

 

(a)                                  “Account”
means the separate account maintained on the books of the Company for each
Participant pursuant to Section 4.

 

(b)                                 “Board
means the Board of Directors of the Company.

 

(c)                                  “Company”
means THQ Inc., a Delaware corporation.

 

(d)                                 “Common
Stock” means the common stock, par value $0.01 per share, of the Company.

 

(e)                                  “Director”
means any member of the Board who is not an employee of the Company or any of
its subsidiaries.

 

(f)                                    “Disability”
means that the Participant (i) is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, or (ii) is, by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than 12 months, receiving income replacement benefits for a period
of not less than 3 months under an accident and health plan covering employees
of the Company.

 

(g)                                 “Dividend
Equivalent Stock Units” means the additions to the Participant’s Account
described in Section 4.

 

(h)                                 “Effective
Date” means August 18, 2005.

 

(i)                                     “Participant”
means a Director who elects to participate in this Plan as provided in Section 3.

 

(j)                                     “Performance
Accelerated Restricted Stock Units” means Performance Accelerated Restricted
Stock Units granted to the Participant under the Stock Option Plan.

 

(k)                                  “Plan”
means the THQ Inc. Performance Accelerated Restricted Stock Unit Deferred
Compensation Plan.  The Plan is a
sub-plan under the Stock Option Plan.

 

(l)                                     “Section 409A”
means Section 409A of the Internal Revenue Code of 1986, as amended.

 

(m)                               “Stock
Option Plan” means the THQ Inc. Amended and Restated 1997 Stock Option Plan.

 

2.                                       Administration.

 

(a)                                  The
Plan shall be administered by the Board. 
The Board shall also have the authority to make, amend, interpret, and
enforce all appropriate rules and regulations for the administration of
the Plan and decide any and all questions as may arise in connection with the
interpretation or application of the Plan. 
The Board may delegate some or all of its powers and authority hereunder
to the Compensation Committee of the Board, as the Board deems appropriate.

 

(b)                                 The
decision or action of the Board (or the Compensation Committee) in respect to
any question arising out of or in connection with the administration,
interpretation and application of the Plan and the rules and regulations
promulgated hereunder shall be final, conclusive and binding upon Participants
and all other persons having or claiming any interest in the Plan.

 

 

3.                                       Participation.

 

(a)                                  A
Director may elect to participate in the Plan by filing a written election with
the Company, on such form as may be prescribed by the Board, to defer 50% or
100% of Director’s grant of Performance Accelerated Restricted Stock Units made
in any calendar year.

 

(b)                                 Except
as provided below, a deferral election shall become effective on the first day
of the calendar year following the date the election is made.  A new deferral election must be made by a
Participant for each calendar year.

 

(c)                                  Notwithstanding
anything contained herein to the contrary, each person who is a Director on the
Effective Date, may make a deferral election that will be effective for
Performance Accelerated Restricted Stock Units granted after the election and
in the year the Effective Date occurs, provided it is made within 30
days after the Effective Date.  A person
who becomes a Director after the Effective Date may make a deferral election
within 30 days after becoming a Director; such election, however, shall be
effective only with respect to Performance Accelerated Restricted Stock Units
granted after the date such election is made.

 

4.                                       Account.

 

The Performance Accelerated Restricted Stock Units
that are deferred pursuant to a Participant’s deferral election shall be
credited to the Participant’s Account. 
Whenever any cash dividends are declared on the Common Stock, on the
date such dividend is paid the Company will credit the Account of the
Participant with a number of Dividend Equivalent Units equal to the result of
dividing (i) the product of (x) the total number of Performance
Accelerated Restricted Stock Units and Dividend Equivalent Units credited to
the Participant’s Account on the record date for such dividend and (y) the per
share amount of such dividend by (ii) the Fair Market Value (as such term
is defined in the Stock Option Plan) of one share of Common Stock on the date
such dividend is paid by the Company to the holders of Common Stock.

 

5.                                       Payment
of Accounts.

 

(a)                                  Payment
of the Participant’s Account shall be made in a lump sum in accordance with the
Participant’s election filed with the Company, on such form as may be
prescribed by the Board: (i) within 30 days after the Participant’s
termination of service as a Director for any reason (including Disability), (ii) on
the date specified in the election or (iii) the earlier of the date
specified in the election or within 30 days after the Participant’s termination
of service as a Director for any reason (including Disability).  The Participant may change the time of
payment of the Account by filing a new election form with the Company, provided
that (i) the new form is filed at least 12 months prior to the date of
Account would otherwise have been paid and (ii) the new election specifies
a payment date that is not less than 5 years from the date the Account would
otherwise have been paid.

 

The Participant’s Account shall also be paid in a lump
sum within 30 days after a Change in Control.

 

(b)                                 In
the event of a Participant’s death prior to payment of the Account, the lump
sum payment shall be made to the Participant’s beneficiary as provided in Section 6.

 

(c)                                  Notwithstanding
anything contained herein the contrary, in the event payment of the Account is
to be made by reason of the Participant’s termination of service as a Director,
other than by reason of death or Disability, no payment shall be made until six
months after such termination of service if the Participant is a specified
employee as defined in Internal Revenue Code Section 409A.

 

 

(d)                                 Payment
of the Account shall be made in shares of Common Stock, with one share payable
for each Performance Accelerated Restricted Stock Unit and each Dividend
Equivalent Unit credited to the Participant’s Account.

 

(e)                                  A
“Change of Control” shall be deemed to occur if (i) any one person, or
more than one person acting as a group, acquires ownership of stock of the
Company that, together with stock held by such person or group, constitutes 50%
or more of the total fair market value or the total voting power of the Company’s
then outstanding stock; or (ii) any one person, or more than one person
acting as a group, acquires (or has acquired during the 12-month period ending
on the date of the most recent acquisition by such person or persons),
ownership of stock of the Company possessing 35% or more of the total voting
power of the Company’s then outstanding stock or (iii) during any period
of not more than 12 months, a majority of the members of the Board are replaced
by directors whose appointment or election is not endorsed by a majority of the
members of the Board prior to the date of appointment or election; or (iv) any
one person, or more than one person acting as a group, other than the entity
that is controlled by the shareholders of the Corporation as provided in
paragraph (b) of Q&A 14 of IRS Notice 2005-1, acquires
(or has acquired during the 12-month period ending on the date of the most
recent acquisition by such person or persons) assets from the Company that have
a total gross fair market value equal to or more than 40% of the total gross
fair market value of all of the assets of the Company immediately prior to such
acquisition or acquisitions.  For
purposes of this paragraph, “person” and “group” shall have the meanings
ascribed to such terms in IRS Notice 2005-1 Q&A 12, 13 and 14 and
this paragraph shall otherwise be interpreted in a manner consistent with
Q&A 12, 13 and 14 of Notice 2005-1 and any subsequent guidance or
regulations relating to Section 409A.

 

6.                                       Beneficiary
Designation.

 

Each Participant shall have the right, at any time, to
designate any person or persons as his beneficiary or beneficiaries to whom
payment under the Plan shall be paid in the event of his death prior to payment
to the Participant of his or her Account. 
Any beneficiary designation may be made or changed by a Participant by a
written instrument, in such form prescribed by the Board, which is filed with
the Company prior to the Participant’s death. If a Participant fails to
designate a beneficiary, or if all designated beneficiaries predecease the
Participant, then the Account shall be paid to the Participant’s estate.

 

7.                                       Amendment;
Cessation of Deferrals.

 

(a)                                  The
Board may amend the Plan at any time in whole or in part; provided that
no amendment may adversely affect the rights of a Participant to receive
amounts properly credited to the Participant’s Account in accordance with the
Plan prior to such amendment.

 

(b)                                 The
Board may, in its sole discretion, cease future deferrals under the Plan at any
time.  In such event, payment of the
Accounts of Participants will continue to be made as provided in Section 5.

 

8.                                       Miscellaneous.

 

(a)                                  The
Company’s obligation to make payment under the Plan shall be contractual only
and all payments hereunder shall be made by the Company from its general assets
at the time and in the manner provided for in the Plan.

 

 

(b)                                 Neither
a Participant nor any other person shall have any right to sell, assign,
transfer, pledge, anticipate, or otherwise encumber, the amounts, if any,
payable hereunder, to the Participant or such other person.  No part of the amounts payable under the Plan
shall be subject to seizure or sequestration for the payment of any debts,
judgments, alimony or separate maintenance owed by a Participant or any other
person, nor be transferable by operation of law in the event of a Participant’s
or any other person’s bankruptcy or insolvency.

 

(c)                                  The
provisions of Section 5.7 of the Stock Option Plan shall apply in the
event of a stock split, stock dividend, recapitalization or other event
described therein, except that the determination of adjustments shall be made
by the Board.

 

(d)                                 Neither
the Participant nor any other person shall have any rights as a stockholder of
the Company under the Plan with respect to the Performance Accelerated
Restricted Stock Units or Dividend Equivalent Stock Units credited to the
Participant’s Account until the shares of Common Stock are issued to the
Participant or the beneficiary of the Participant.

 

(e)                                  This
Plan shall be governed by, and construed and enforced in accordance with, the
laws of the State of Delaware, without reference to principles of conflict of
laws.

 

(f)                                    This
Plan in intended to comply, and shall be administered in a manner that is
intended to comply, with Section 409A and shall be construed and
interpreted in accordance with such intent. 
Any provision of this Plan that would cause the Plan to fail to satisfy Section 409A
shall be amended to comply with Section 409A on a timely basis, which may
be made retroactively, in accordance with regulations and other guidance issued
under Section 409A.Exhibit 10.1

 

 

September 9, 2005

 

Thomas
Tippl

3033
Burning Tree Lane

Cincinnati,
OH  45237

 

 

Dear Mr. Tippl:

 

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

 

1.                                      Term

 

(a)                                  The
initial term of your employment under this Agreement shall commence on October 1,
2005 or such other date as the parties may mutually agree (the “Effective Date”)
and expire on September 30, 2010 (the
“Expiration Date”) unless earlier terminated as provided in Paragraph 9
below or as may be extended as provided in Paragraph 1(b) below (the “Employment
Period”).

 

(b)                                 If,
at any time during the Employment Period, your Total Compensation exceeds
$15,000,000, Employer shall have the option to extend the Employment Period for
up to an additional three-year period, commencing on October 1, 2010 and
expiring no later than September 30, 2013. 
For purposes of this Agreement, “Total Compensation” shall mean the
total of (i) your cumulative Base Salary through the date of
determination, (ii) your cumulative Annual Bonuses through such date, (iii) the
realized and unrealized gains (based upon the closing price of the common stock
of Activision, Inc. (“Activision”) as reported on The NASDAQ Stock Market
on the applicable date) from any and all vested stock options issued to you, (iv) the
market value of all vested restricted stock grants issued to you plus the
amounts you realized from the sale of any shares sold by you which were the
subject of such restricted stock grants.

 

(c)                                  Employer
may exercise the option granted to it under Paragraph 1(b) by giving
written notice to you no later than June 30, 2010, which notice shall
state the exact length of the Employment Period as so extended.

 

2.                                      Salary

 

(a)                                  In
full consideration for all rights and services provided by you under this
Agreement, you shall receive the compensation set forth in this Paragraph 2.
Commencing on your payroll start date, you shall receive an annual base salary
of $450,000 for the period until October 1, 2006; provided that the
aggregate of base salary payments through the period ending September 30,
2006 will not be less than $350,000. 
Thereafter, on October 1 of each year of the Employment Period,
beginning on October 1, 2006, your Base Salary shall automatically
increase to an amount equal to one hundred four (104%) percent of the Base
Salary for the prior year.

 

(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

 

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Salary during the
applicable period, and your Base Salary may be increased above the minimum at
any time if Activision’s Board of Directors (or the Compensation Committee of
such Board of Directors), in its sole and absolute discretion, elects to do
so.  In the event of an increase in your
Base Salary beyond the applicable minimum Base Salary for a particular period,
such increased Base Salary shall then constitute your minimum Base Salary for
each subsequent year under this Agreement.

 

(c)                                  Employer
shall not be required to actually use your services during the term of this
Agreement.  You will not be permitted or
authorized to act on behalf of Employer if Employer is not utilizing your
services unless specifically authorized in writing to the contrary by Employer.
All of your obligations to Employer under this Agreement generally, and
specifically with regard to Paragraph
8, shall continue throughout the term of this Agreement and shall remain
in full force and effect.  Moreover, you
have an obligation to abide by the terms of the Employee Proprietary
Information Agreement executed by you and Employer’s corporate governance
policies.

 

(d)                                 You
will receive a signing bonus of $100,000 payable on Effective Date.

 

(e)                                  In addition to your Base Salary, you may be
eligible to receive an annual discretionary bonus (the “Annual Bonus”). Your
target Annual Bonus during the term of this Agreement will be 75% of the then
applicable Base Salary, provided that the actual amount of the Annual Bonus, if
any, is within the sole and absolute discretion of the Activision’s Board of
Directors (or the Compensation Committee of the Board of Directors) and will be
based upon your achievement of certain mutually agreed objectives and goals
and/or your contribution to the success of Employer’s financial and business
objectives and goals for the fiscal year with respect to which the Annual Bonus
is calculated, such determination made by Activision’s Board of Directors (or
the Compensation Committee of the Board of Directors) in its sole discretion.
The Annual Bonus may take the form of, without limitation, cash, shares of
common stock of Activision and/or options to purchase such shares, as
determined by the Compensation Committee in its sole discretion. Employer’s
overall financial performance will also be considered in determining whether
any of the Annual Bonus is awarded and, if so, the amount. The Annual Bonus, if
granted, is generally paid to employees in May. Except as otherwise set forth
in this Agreement, you must remain continuously employed by Employer through
the date on which the Annual Bonus is paid to be eligible to receive such
Annual Bonus. Any Annual Bonus shall be subject to withholding.

 

(f)                                    Pursuant to the Activision 2003 Incentive
Plan (“Plan”), you will, on or before the Effective Date, be granted a
non-qualified stock option (the “Option”) to purchase an aggregate of 600,000
shares of the Activision’s common stock in three tranches of 200,000 shares
each.  As to the First Tranche of 200,000
shares covered by the Option, such option will vest ratably over the five years
following the Effective Date, with 20% of the amount vesting at the end of each
year.  As to the Second Tranche of
200,000 shares covered by the Option, such option will not vest until the end
of the fifth year following the Effective Date (subject to possible earlier
vesting in three equal annual installments if Employee shall achieve certain
performance objectives to be mutually determined by you and Employer for the
fiscal years 2007, 2008 and 2009) and will thereupon fully vest in its entirety
(on a “cliff-vesting” basis). As to the Third Tranche of 200,000 shares covered
by the Option, such option will not vest until the end of the fifth year
following the Effective Date and will thereupon fully vest in its entirety (on
a “cliff-vesting” basis). The Option

 

2

 

will have an exercise price
per share that will be the fair market value on the grant date and will be
governed in all other respects by (and you agree to enter into) Activision’s
standard form of stock option agreement for similar grants of “inducement”
options.

 

(f)                                    You
may be eligible for such additional stock option grants commensurate with your
position with Employer as the Board of Directors (or Compensation Committee of
the Board of Directors), in its sole discretion, may award to you from time to
time in connection with any extensions of this Agreement’s contract term.

 

(g)                                 In consideration for abandoning certain
benefits with your prior employer and forgoing certain other executive
opportunities and related equity participations, pursuant to the Plan, you also
will receive, on or before the Effective Date, a restricted stock grant (the “Grant”)
of the number of shares of Activision’s common stock (the “Restricted Shares”)
(any fractional shares resulting from this computation shall be rounded up to
the next whole number) equal to $1,500,000 divided by the fair market value on the grant date (“Market
Price”), which Restricted Shares will vest ratably over the third, fourth and
fifth years following the Effective Date, with one third of the amount granted
vesting at the end of each of the third, fourth and fifth years following the
Effective Date.

 

(h)                                 Within six months of
the Effective Date, you shall relocate your principal residence to within a 60-minute
vehicle commute of Employer’s headquarters (Santa Monica, California).  At the time of relocation, Employer shall pay
for the following costs: (i) all closing costs associated with buying and
selling a home, including real estate commissions for the sale of your existing
principal residence; (ii) all moving costs for household goods; and (iii) $420,000
mortgage assistance (“Mortgage Assistance”), payable $7,000.00 each month for
60 months. In addition, Employer will reimburse you for the actual incremental
income taxes paid by you by reason of the inclusion in your income of the
payments to you of the amounts set forth in clauses (i) and (ii), as well
as for the first 36 months of the payments of the amounts set forth in clause
(iii), of the immediately preceding sentence Prior to your relocation, Employer
will reimburse you for your reasonable commuting costs between your current
residence and Los Angeles.

 

(i)                                     Employer
will reimburse you for reasonable, one time legal, accounting and tax costs
relating to the adjustments in your expatriate status resulting from your
transfer to Southern California, such reimbursement not to exceed $25,000 in
the aggregate. These reimbursements will be grossed up to account for any
income taxes due. Employer reserves the right in its discretion to pay these
amounts directly to the service providers.

 

3.                                      Appointment;
Title; Reporting

 

You
are being employed under this Agreement in the position of Chief Financial
Officer of Employer. You shall report to the President and Chief Executive
Officer of Employer.

 

You
will also be appointed to the Board of Directors of Employer, your appointment
to become effective as of the Effective Date.

 

3

 

4.                                      Duties

 

You
shall personally and diligently perform, on a full-time and exclusive basis,
such services as Employer or any of its related or affiliated entities or
divisions may reasonably require.  You
are 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. You will not engage in any outside business activities
nor serve on the board of directors or trustees of any entity without the prior
approval of the Co-Chairmen of Activision.

 

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 Activision’s
Employee Stock Purchase Plan and Employer’s 401(k) plan (with Employer matching
your contributions to such 401K plan in accordance with Employer’s matching
policy).  In addition to the foregoing
benefits, Employer will provide you during the Employment Period, at Employer’s
expense, with a supplemental term life insurance policy with a benefit amount
of $2,000,000 through a carrier of Employer’s choice. Nothing paid to you under
any such plans and arrangements (nor any bonus or stock options which
Activision’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 and except as specifically
provided under the benefit plans referred to above and those benefit plans in
which you subsequently may become a participant, and subject in each case to
the terms and conditions of each such plan. 
Notwithstanding anything to the contrary set forth above, you shall be
entitled to receive those benefits provided by COBRA or CAL-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) paid vacation days 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
owe a duty of loyalty to Employer, which includes, but is not limited to, your
not competing 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)                                 Policy Compliance. You
confirm that you have read, understand and will comply with the terms of
Employer Corporate Governance Policies, including but not limited to Code of
Business Conduct and Ethics and Code of Ethics for Senior Executive and Senior
Financial Officers, and any reasonable amendments thereto which you receive.

 

(c)                                  Property of Employer.  All rights worldwide with respect to any and
all intellectual or other property of any nature produced, created or suggested
by you during the term of your employment or resulting from your services which
(i) relate in any manner at the time of conception or reduction to practice
to the actual or demonstrably anticipated business of Employer, (ii) result
from or are suggested by any task assigned to you or any work performed by you
on behalf of Employer, or (iii) are based on any property owned or idea
conceived by Employer, shall be deemed to be a work made for hire and shall be
the sole and exclusive property of Employer. 
You agree to execute, acknowledge and deliver to Employer, at Employer’s
request, such further documents, including copyright and patent assignments, as
Employer finds appropriate to evidence Employer’s rights in such property.

 

(d)                                 Confidentiality.  Any confidential and/or proprietary
information of Employer or any affiliate of Employer shall not be used by you
or disclosed or made available by you to any person except as required in the
course of your employment, and upon expiration or earlier termination of the
term of your employment, you shall return to Employer all such information
which exists in written or other physical form (and all copies thereof) under
your control.  Without limiting the
generality of the foregoing, you acknowledge signing and delivering to Employer
the Activision Employee Proprietary Information Agreement as of the Effective
Date 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.  You also
acknowledge that upon termination of your employment for any reason whatsoever,
you will promptly deliver to Employer or surrender to Employer’s representative
all Employer property, including without limitation, all documents and other
materials (and all copies thereof) relating to Employer’s business, all
identification and access cards, all contact lists and third party business
cards however and wherever preserved, and any equipment provided by Employer,
including computers, telephones, personal digital assistants, memory cards and
similar devices which you possess or have in your custody or under your
control. The provisions of this paragraph shall survive the expiration or
earlier termination of this Agreement.

 

(e)                                  Non-Competition.  During your Employment Period and for a
period of one year following the expiration of the Employment Period, you shall
not engage (including, without limitation, as an officer, director,
shareholder, owner, partner, joint venturer, member or in a managerial
capacity, or as an employee, independent contractor, consultant, advisor or
sales

 

5

 

representative)
in any Competitive Business (as hereinafter defined) in the Territory (as
hereinafter defined). For purposes of determining whether you are permitted to
be a shareholder of a corporation engaged in a Competitive Business, the
Executive’s direct or indirect ownership (alone or together with a group) of
less than 5% of the issued and outstanding securities of a company whose
securities are publicly-traded in any U.S. or non-U.S. securities exchanges or
quotation system shall be permitted. As used herein, the term “Competitive
Business” shall mean any business engaged in publishing and distributing video
games and entertainment software for personal computers.  As used herein, the term “Territory” shall
mean:

 

(1) The
following counties in the State of California: Alameda, Alpine, Amador, Butte,
Calaveras, Colusa, Contra Costa, Del Norte, El Dorado, Fresno, Glenn, Humboldt,
Imperial, Inyo, Kern, Kings, Lake, Lassen, Los Angeles, Madera, Marin,
Mariposa, Mendocino, Merced, Modoc, Mono, Monterey, Napa, Nevada, Orange,
Placer, Plumas, Riverside, Sacramento, San Benito, San Bernardino, San Diego,
San Francisco, San Joaquin, San Luis Obispo, San Mateo, Santa Barbara, Santa
Cruz, Shasta, Sierra, Siskiyou, Solano, Sonoma, Stanislaus, Sutter, Tehama,
Trinity, Tulare, Tuolumne, Ventura, Yolo, and Yuba;

 

(2) Each
and every county or other political or geographical subdivision in the balance
of the United States of America and the dependent territories of the United
States of America; and

 

(3) Each
and every county or other political or subdivision in the world.

 

(f)                                    Covenant Not to Solicit. 
During the Employment Period and for a period of two years following the
expiration of the Employment Period 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: (a) 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; or (b) directly or indirectly solicit, induce or entice
any client, customer, contractor, licensor, agent, partner or other business
relationship of Employer to terminate, discontinue, renegotiate or otherwise
cease or modify their relationship with Employer. You expressly acknowledge and
agree that the restrictions contained in this paragraph are reasonably tailored
to protect Employer’s confidential information and trade secrets, and are
reasonable in all circumstances in scope, duration and all other respects. It
is expressly agreed by the parties that if for any reason whatsoever any one or
more of such restrictions shall (either taken by itself or themselves together)
be adjudged to go beyond what is reasonable in all circumstances for the
protection of the legitimate interests of Employer, the parties agree that the
prohibitions shall be in effect and upheld to the fullest extent permissible
under applicable laws.

 

6

 

9.                                      Termination

 

(a)                                  Employer.  At
any time during the Employment Period, Employer may terminate your employment
under this Agreement for Cause, defined as your (i) willful, reckless or
gross misconduct, (ii) material breach by you of the Agreement, which
shall continue uncured for a period of 45 days after written notice to you of
such material breach consistent with the cure provisions described later in
this Paragraph, (iii) conviction of or plea of no contest to a felony or
crime involving dishonesty or moral turpitude, (iv) breach of duty of
loyalty, or (v) violation of Employer’s corporate governance
policies.  In addition, but subject to
the provisions of Paragraphs 9(e)(iii) and 9(f)(ii) below, Employer
may terminate your employment under this Agreement at any time without Cause
and such termination shall not be deemed to constitute a wrongful discharge of
Employee or a wrongful termination of Employee’s employment by Employer or a
breach by Employer of any term of this Agreement and/or any other duty or
obligation, expressed or implied, which Employer may owe to Employee pursuant
to any principle or provision of law.  In
the case of any termination for Cause pursuant to clause (ii), Employer shall
give written notice of termination to you (“Notice of Cause Termination”), and
shall specify the date of such termination, which shall not be earlier than 45
days after the date on which notice is given to you.  Such notice shall specify the particular acts
or circumstances that purport to constitute Cause for such termination.  You shall be given the opportunity within 30
days after receiving such notice to explain why Cause for such termination does
not exist or to cure any such basis for Cause. 
Within 15 days after any such explanation, you will be given the final
decision regarding whether Cause exists. 
If the final decision is that Cause exists, your employment with
Employer shall be terminated under Paragraph 9(a)(ii) pursuant to the
Notice of Cause Termination as of the date of termination specified in the
notice.  If the final decision is that
Cause does not exist, your employment with Employer shall not be terminated
under Paragraph 9(a)(ii) pursuant to such Notice of Cause Termination.

 

(b)                                 Employee.  You may terminate your employment under this
Agreement in the event of Employer’s relocation to a location more than 25
miles from Los Angeles County.

 

(c)                                  Death or Disability. 
In the event of your death during the term of this Agreement, this
Agreement shall terminate and Employer shall be obligated to pay only your
estate or legal representative the amounts set forth in Paragraph 9(e)(i) below
and further comply with provisions of Paragraph 9(f)(iii).  In the event that you have or develop a
Disability, then Employer shall have the right, at its option, to terminate
your employment under this Agreement, subject to the provisions of Paragraphs
9(e)(ii) and 9(f)(iii) below. Unless and until so terminated, during
any period of Disability during which you are unable to perform the services
required of you under this Agreement, your Base Salary shall be payable to the
extent of, and subject to, Employer’s policies and practices then in effect
with regard to sick leave and disability benefits.  “Disability” shall be determined in
accordance with the definitions set forth in the Employer’s disability
insurance policies and shall be determined by a physician mutually agreed upon
by you and Employer.  If you and Employer
are unable to agree on such a physician, you and Employer shall each appoint
one physician and those two physicians shall appoint a third physician who
shall make such a determination.  You
shall cooperate and make yourself available for any medical examination
reasonably required by Employer with respect to any determination of your
Disability.

 

(d)                                 Performance Termination. 
At any time during the
Employment Period, Employer may terminate your employment under this
Agreement by reason of your failure to perform the

 

7

 

functions of your
position at the level appropriate for Employer, provided that you shall have been
given written notice of such performance deficiencies and shall have failed to
cure such performance deficiencies within 18 months following such notice if
the notice occurs during the first year of Employment Period and 12 months
following such notice at any time thereafter. For purposes of this Agreement,
Performance Termination shall not be deemed termination without cause.

 

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

 

(i)                                                 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
prior fiscal year; (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
earned; (iv) an amount equal to 300% of the dollar amount of the Base
Salary paid or payable to you for Employer’s most recent fiscal year
immediately prior to your date of death; (v) reimbursement of approved
expenses due to you pursuant to Paragraphs 2(h) and 5; (vi) immediate
vesting of a pro rata (based upon the amount of time between the Effective Date
and the date of your death) portion of the unvested portion of the second and third
tranches of the Option issued to you pursuant to Paragraph 2(e); and (vii) your
then current spouse and minor children, if any, shall receive the same level of
health/medical insurance or coverage that was provided to you immediately prior
to your death for a two (2) year period, with the cost of such continued
insurance or coverage being borne by Employer. All such payments shall be in
addition to any payments your widow, beneficiaries or estate may be entitled to
receive pursuant to any pension or employee benefit plan or life insurance
policy maintained by Employer.

 

(ii)                                              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 prior fiscal year; (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 earned; (iv) reimbursement of approved expenses due to you
pursuant to Paragraphs 2(h) and 5; (v) an amount equal to three
hundred (300%) percent of the dollar amount of the Base Salary paid or payable
to you for Employer’s most recent fiscal year immediately prior to your
Disability termination, (vi) the long-term monthly disability payments
according to Employer’s benefit plan for Executives and (vii) you and your
then current spouse and minor children, if any, shall receive the same level of
health/medical insurance or coverage provided immediately prior to such Disability
termination for a two year

 

8

 

period,
with the cost of such continued insurance or coverage being borne by Employer

 

(iii)                                           Compensation
upon Termination Without Cause.  In
the event your employment under this Agreement is terminated by Employer
without Cause, or by you pursuant to Paragraph 9(b), then you shall receive: (i) the
Base Salary through the date of your termination; (ii) any unpaid Annual
Bonus for any prior fiscal year; (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 earned; (iv) reimbursement of approved expenses due you
pursuant to Paragraphs 2(h) and 5; (v) 100% of the Base Salary
payable to you from the date of termination through the Expiration Date had
your employment not been terminated, such Base Salary to be determined in
accordance with the terms of Paragraph 2(a) of this Agreement and to be
paid on a salary continuation basis as and when normally paid by Employer; and (vi) continued
monthly payments of the remaining balance of Mortgage Assistance pursuant to
Paragraph 2(h).

 

(iv)                                          Compensation
upon Termination For Cause. In the event your employment under this
Agreement is terminated by Employer for Cause, then you shall receive: (i) the
Base Salary through the date of your termination; and (ii) reimbursement
of approved expenses due you pursuant to Paragraphs 2(h) and 5.

 

(v)                                             Compensation
upon Termination For Performance Deficiency. In the event your employment
under this Agreement is terminated by Employer pursuant to Paragraph 9(d), then
you shall receive: (i) Base Salary through date of termination; (ii) any
unpaid Annual Bonus for any prior fiscal year; (iii) reimbursement of
approved expenses due you pursuant to Paragraphs 2(h) and 5; and (iv) continued
monthly payments of the remaining balance of Mortgage Assistance pursuant to
Paragraph 2(h). 

 

(vi)                                          Payment Limitations. Notwithstanding the foregoing, to the
extent any of the provisions of this Paragraph 9(e) allow for payments of Base
Salary, Annual Bonus or Mortgage Assistance subsequent to your termination,
such payments will occur and continue only for so long as you do not become
employed at any time subsequent to your termination by a corporation or other entity engaged in a Competitive Business or
otherwise become engaged in directly or indirectly in a Competitive Business. 

 

(f)                                    Disposition of Stock Options
and Restricted Shares Upon Termination.  Upon termination of your
employment for any reason, the following terms shall apply to the stock options
issued to you pursuant to this Agreement under Paragraphs 2(e) and (f) and
Restricted Shares issued to you pursuant to Paragraph 2(g), respectively:

 

(i)                                     In
the event of termination of your employment for Cause, or as a result of
Performance Termination:

 

9

 

(1)                                  All
stock options granted to you under this Agreement, 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;

 

(2)                                  You
will be allowed to vest such number of Restricted Shares then unvested, so that
the aggregate number of Restricted Shares already vested as of the termination
date but not yet sold, if any, and such newly-vested Restricted Shares is equal
to: $1,500,000, less net, after tax proceeds of any Restricted Shares vested
and sold by you as of the date of termination, and the resulting remainder
divided by the Market Price of the Restricted Shares on the date of
termination. All other Restricted Shares then remaining unvested
shall be cancelled. Nothing set forth in this Paragraph 9(f)(i) shall be deemed to
require Employer to issue any Restricted Shares in addition to the Restricted
Shares then vested or unvested, already granted to you as of the date of
termination pursuant to the terms of this Agreement.

 

(ii)                                  In
the event of termination of your employment by Employer without Cause  or by you pursuant to
Paragraph 9(b):

 

(1)                                  All
stock options granted to you under this Agreement shall continue to vest and be
exercisable through the Expiration Date in accordance with same respective
vesting schedules and under same terms had your employment not be terminated,
but subject to the Valuation Limit determination as described in more detail in
Exhibit A to this Agreement;

 

(2)                                  You
will be allowed to vest Restricted Shares in accordance with same respective
vesting schedule and under same terms had your employment not be
terminated, but subject to the Valuation Limit determination described in more
detail in Exhibit A to this Agreement;

 

(3)                                  To
the extent any of the provisions of this Paragraph 9(f)(ii) allow vesting
of Restricted Shares and vesting and exercise of stock options subsequent to
your termination, such vesting and/or will occur and/or continue only for so
long as you do not become employed at any time subsequent to your termination by a
corporation or other entity engaged in a Competitive Business. Should you become employed at any
time subsequent to your termination without cause by a

 

10

 

corporation or other entity engaged in a Competitive
Business or otherwise become engaged directly or indirectly in a Competitive
Business, (a) all stock options and Restricted Shares granted to you under
this Agreement shall cease to vest immediately as of the date of such
employment, (b) all then unvested stock options and Restricted Shares
shall be cancelled, and only vested stock options shall continue to be
exercisable until the earlier of (i) the end of the 30th day after you
commence engaging in a Competitive Business, or (ii) 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. Notwithstanding the foregoing, in the
event such employment or engagement in a Competitive Business is in breach of
Paragraph 8(d) of this Agreement, then all Restricted Shares and stock
options granted to you under this Agreement, whether or not vested, shall
expire immediately on the date you commence engaging in a Competitive Business
and all such Restricted Shares and stock options shall immediately be cancelled
and no longer continue vest or be exercisable as of the date of your employment
or engagement in a Competing Business.

 

(4)                                  Nothing set forth in this
Paragraph 9(f)(ii) shall be deemed to require Employer to issue any
Restricted Shares or grant to you any stock options in addition to the
Restricted Shares and stock options, then vested or unvested, already issued to
you as of the date of termination pursuant to the terms of this Agreement.

 

(iii)                               In
the event of your termination of employment by reason of your death or
disability:

 

(1)                                  All
stock options granted to you under this Agreement shall cease to vest
immediately as of the date of such termination of your employment, all unvested
stock options shall be cancelled (except in the event of death, with regard to
Second Tranche and Third Tranche only, the stock options in such tranches will
vest as of the date of termination in the amount determined pro-rata based on
the length of your employment), 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;

 

11

 

(2)                                  You
will be allowed to vest such number of Restricted Shares then unvested, so that
the aggregate number of Restricted Shares already vested as of the termination
date but not yet sold, if any, and such newly-vested Restricted Shares is equal
to: $1,500,000, less net, after tax proceeds of any Restricted Shares vested
and sold by you as of the date of termination, and the resulting remainder
divided by the Market Price of the Restricted Shares on the date of
termination. All other Restricted Shares then remaining unvested
shall be cancelled. Nothing set forth in this Paragraph 9(f)(iii) shall be deemed to
require Employer to issue any Restricted Shares in addition to the Restricted
Shares then vested or unvested, already granted to you as of the date of
termination pursuant to the terms of this Agreement.

 

(iv)                              In
the event of termination of your employment for any reason not otherwise
described in Paragraphs 9(f)(i)-(iii), including without limitation, by reason
of your breach of this Agreement, all stock options granted to you under this
Agreement, 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 to vest or be exercisable as of the date of
termination of your employment. All Restricted Shares then remaining unvested
also shall be cancelled.

 

10.                               No Shop Clause

 

During the Employment Period, you shall not seek or
negotiate for employment other than with Employer, its subsidiary or affiliate,
with the exception of (i) the final 120 days of the Employment Period, or (ii) any
time after the delivery by the Employer of written notice of performance
deficiencies in accordance with Paragraph 9(d), provided that you first provide
Employer with written notice of your intent to seek external employment and
such interviews may occur strictly subject to your continuing obligations under
this Agreement, including, without limitation, your duty of loyalty, compliance
with Employer’s corporate governance policies and confidentiality obligations.

 

11.                               Use
of Employee’s Name

 

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

 

12.                               Assignment

 

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

 

12

 

13.                               No
Conflict with Prior Agreements

 

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

 

14.                               Successors

 

(a)                                  This Agreement is personal to you and without
the prior written consent of Employer shall not be assignable by you otherwise
than by will or the laws of descent and distribution.  This Agreement shall inure to the benefit of
and be enforceable by your legal representatives.

 

(b)                                 This Agreement shall
inure to the benefit of and be binding upon Employer and its successors and
assigns, including any successor by reason of merger, sale of all or
substantially all of the assets of Employer or by operation of law.

 

15.                               Minimum
Ownership Position

 

At all
times during the term on or after the second anniversary of the Effective date,
you shall own a number of shares of Activision’s common stock that have an “aggregate
market value” which is at least equal to the greater of (a) 1.50 times
your annual Base Salary set forth in Paragraph 2(a) or (b) ten
percent (10%) of the total amount realized by you from all option exercises
within two years of the Effective Date, determined for each option so exercised
to be an amount equal to the Market Price (as defined in Paragraph 2(g)) of
Activision’s shares on the applicable exercise date over the exercise price per
share of such options.  For purposes of
this Agreement, “aggregate market value” shall be the product of the Market
Price and the total number of Activision’s shares owned by you as of the
applicable date.  All Activision
restricted stock grants to you shall be included for these purposes in the
foregoing calculation.  Employer shall in
good faith monitor such ownership position. 
You also agree to comply with any additional reasonable stock ownership
guidelines that may be adopted by the Board of Directors and apply to Employer’s
senior executives.

 

16.                               General
Provisions

 

(a)                                  Entire Agreement. 
This Agreement, together with the Employee Proprietary Information Agreement,
and stock option agreement, supersede 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 these agreements
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.

 

(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

 

13

 

any nature are, or under
any circumstances might be, payable by Employer or any affiliate of Employer in
connection with your employment under this Agreement.

 

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

 

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

 

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

 

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

 

(g)                                 Immigration.  The parties
acknowledge and agree that you are not a citizen of the United States of
America and your expatriate status will require adjustment in connection with
your acceptance of this position.  The
effectiveness of this Agreement is expressly not conditioned upon successful
adjustment of your immigration status and receipt of documents from Immigration
and Naturalization Service. Loss of your immigration status in the United
States during the Employment Period will result in Employer providing
compensation of no less than undertaken in the provisions of paragraphs 9 (e) (iii) and
9 (f) (ii), provided such loss is not as a result of your direct action,
inaction or omission in the visa or work permit process..

 

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

 

(i)                                     Severability.  If
any provision of this Agreement is held to be illegal, invalid or unenforceable
under existing or future laws effective during the term of this Agreement, such
provisions shall be fully severable, the Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of this Agreement, and the remaining provisions of this
Agreement shall remain in full force and effect and shall not be

 

14

 

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 or any other advisor of your own choosing regarding this
Agreement.  You understand and agree that
Employer’s General Counsel, or any other attorney or member of management who
has discussed any term or condition of this Agreement with him, is only acting
on behalf of the Employer and not on your behalf.

 

(k)                                  Right to Negotiate.  You hereby acknowledge that you have been
given the opportunity to participate in the negotiation of the terms of this
Agreement. You acknowledge and confirm that you have read this Agreement, fully
understand its terms and contents and have had the opportunity to ask Employer
about any questions, concerns or issues you may have on connection with this
Agreement or its terms.

 

(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 Paragraphs 8
and 10 of this Agreement).

 

(m)                               Injunctive Relief.  In the event of a breach of or threatened
breach of the provisions of this Agreement regarding the exclusivity of your
services and the provisions of Paragraphs 8 and 10 of this Agreement you agree
that any remedy of law would be inadequate.  Accordingly you agree that
Employer is entitled to obtain injunctive relief for 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 your attorneys’ fees, experts’ fees,
and all of its or your costs, in addition to such other relief as may be
granted.

 

(p)                                 Amendment.  This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.  The parties shall cooperate in good faith in
making any amendments to this Agreement that may be necessary to avoid
imposition of any penalty tax imposed under Section

 

15

 

409A
of the Internal Revenue Code of 1986, as amended (the “Code”), or the
regulations thereunder.

 

(q)                                 Deferred Compensation.  Notwithstanding anything to the contrary in
this Agreement, in the event that it is determined that any payment to be made
under this Agreement is considered “nonqualified deferred compensation” subject
to Section 409A of the Code or the regulations thereunder, payment under
this Agreement shall be delayed for six months following the termination of
employment of Employee.  Any such
deferred amount shall be included in Total Compensation notwithstanding any
such deferral.

 

(p)                                 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.

 

16

 

17.                               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 You:

  	
   

  	
  3033 Burning Tree Lane

  
	
   

  	
   

  	
   

  	
  Cincinnati, OH 45237

  

 

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.

 

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

 

ACCEPTED AND AGREED TO:

 

	
  Employer

  	
  Employee

  	
   

  
	
   

  	
   

  	
   

  
	
  ACTIVISION PUBLISHING, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
   

  	
   

  

 

17

 

Exhibit A

 

Provisions Applicable to Vesting

 of
Restricted Shares and Stock Options

 in the
Event of Termination Without Cause

pursuant to Paragraph 9(f)(ii)

 

Section 1

 

(a) The term “Valuation Limit”
shall mean the number obtained by multiplying (a) 2.5 by (b) the number that is equal
to the sum of your initial Base Salary and targeted Annual Bonus during the
first year of the Employment Period, times the number of full and partial years
worked as of the date of termination. For purposes of this definition, any
partial year of employment will be pro-rated based on the number of whole
months actually worked through the year of termination.

 

(b) 
The term “Aggregate Earned Value” shall mean the
aggregate of the value of Restricted Shares vested by you prior to termination
and the value of the stock options you may have exercised, if any, prior to
termination. Accordingly, Aggregate Earned Value shall be determined by adding
two components:

 

(i) The value of Restricted Shares obtained by
multiplying the number of Restricted Shares you may have vested as of the
termination date, whether then sold or unsold, 
by the Market Price of Restricted Shares on the date of their respective
vesting; and

 

(ii) The value of exercised stock options, which
shall be equal to the net, pre tax proceeds actually realized by you from the
exercise of any stock options prior to termination and sale of shares issued
upon such exercise. In the event you exercise a stock option but do not sell
and still hold the shares issued upon such exercise as of the termination date,
the proceeds realized by you with respect to those shares shall be deemed to be
the remainder obtained by subtracting (i) the total price paid upon
exercise of the option for such shares from (ii) the Market Price.

 

(c) The term “Future Shares
Value” shall mean
the number of Restricted Shares that have vested after the termination date,
multiplied by the Market Price of such Restricted Shares on the date of their
respective vesting.

 

(d) The term “Future Options
Value” shall mean
the number equal to the net, pretax proceeds realized by you from the exercise
of any stock options after the termination date and the sale of stock issued
pursuant to those stock options, regardless of whether such options may have
vested before or after your termination. In the event you exercise a stock
option but do not sell the shares issued upon such exercise at the time the
Future Options Value is calculated, the proceeds realized by you with respect
to those

 

18

 

shares
shall be deemed to be the remainder obtained by subtracting (i) the total
price paid upon exercise of the option for such shares from (ii) the
Market Price.

 

Section 2.

 

(a) 
You and Employer acknowledge and agree that in the event of your termination
without cause or by you pursuant to Paragraph 9(b) or as a result of your
loss of immigration status and legal ability to work for Employer in the United
States as referenced in Paragraph 16(g) of the Employment Agreement:, you will be allowed to continue to
vest Restricted Shares and stock options issued to you pursuant to this
Agreement prior to termination until such time as the sum of the Aggregate
Earned Value, the Future Shares Value and the Future Options Value exceeds the
Valuation Limit.

 

i.                  If
on the date of your termination, the Aggregate Earned Value equals to or
exceeds the Valuation Limit, then you will not be entitled to vest any
additional Restricted Shares or stock options and any then remaining unvested
Restricted Shares and stock options shall be cancelled. You may then sell any
vested Restricted Shares or exercise any then vested stock options in
accordance with their terms;

 

ii.               If
on the date of your termination, the Aggregate Earned Value is less than the
Valuation Limit, you will be allowed to continue to vest Restricted Shares and
stock options subsequent to your termination until such time as the aggregate
of the Future Shares Value and the Future Options Value is equal to or exceeds
the amount by which the Valuation Limit exceeds the Aggregate Earned Value on
the termination date. When the Valuation Limit is so reached, you will not be entitled to vest any additional Restricted
Shares or stock options and any then remaining unvested Restricted Shares and
stock options shall be cancelled. You may sell any vested Restricted Shares or
exercise any then vested stock options in accordance with their terms.

 

19

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