Document:

Exhibit 10.17

STOCK
OPTION AGREEMENT

	
  Stock Option #

  	
  For

  	
  Shares

  

 

Issued Pursuant to the

Amended and Restated 2003 Incentive Plan of

ACTIVISION, INC.

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

1.                                             Terms of the Plan. 
The Option is granted pursuant to, and is subject to the
terms and conditions of, the Company’s Amended and Restated 2003 Incentive Plan
(the “Plan”), the terms, conditions and definitions of which are hereby
incorporated herein as though set forth at length, and the receipt of a copy of
which the Holder hereby acknowledges by his signature below.  Capitalized terms used herein shall have the
meanings set forth in the Plan, unless otherwise defined herein.  The option granted hereby is not intended to
be an “incentive stock option” as such term is defined in Section 422 of the
Code.

2.                                       Expiration.  This
Option shall expire on                              ,
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.

4.                                       This
Option shall vest and be exercisable as follows:

	
  Vesting Date

  	
   

  	
  Shares Vested at Vesting Date

  	
   

  	
  Cumulative Shares

  Vested at Vesting Date

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

This Option shall be
exercised by the Holder (or by her executors, administrators, guardian or legal
representative) as to all or part of the Shares, by the giving of written
notice of exercise to the Company, specifying the number of Shares to be
purchased, accompanied by payment of the full purchase price for the Shares
being purchased.  Full payment of such
purchase price shall be made at the time of exercise and shall be made (i) in
cash or by certified check or bank check or wire transfer of immediately
available funds, (ii) with the consent of the Company, by tendering previously
acquired Shares (valued at their then Fair Market Value (as defined in the
Plan), as determined by the Company as

 1
 

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.

5.                                       Termination of Service.  Upon termination of the Holder’s service
as a Director or other position with the Board of Directors for any reason
(except death or disability which are described in paragraphs 6 and 7 below),
the following terms shall apply to this Option:

(a)                                  In
the event of termination of the Holder’s service as a Director or other
position with the Board of Directors, this Option, whether or not vested, shall
expire immediately and shall be deemed cancelled and no longer continue to vest
or be exercisable as of the date of such termination.  The term “Cause” shall be defined as the
Holder’s (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)                                 In
the event of termination of the Holder’s service as a Director or other
position with the Board of Directors by the Company without Cause, this Option
shall cease to vest immediately as of the date of such termination, the
unvested portion of this Option shall be cancelled and only the vested portion
of this Option shall continue to be exercisable until the earlier of (i) the
end of the 30th day after the date of such termination of service,
or (ii) the expiration of this Option pursuant to the terms set forth herein;
and upon the expiration of such period, such portion of this Option then
remaining unexercised shall be cancelled; and

(c)                                  In
the event of termination of the Holder’s service as a Director or other position
with the Board of Directors for any reason not otherwise described in
paragraphs 5(a) and (b) (except for death or disability), this Option shall
cease to vest immediately as of the date of such termination, the unvested
portion of this Option shall be cancelled and only the vested portion of this
Option shall continue to be exercisable until the earlier of (i) the end of the
30th day after the date of such termination of service,
or (ii) the expiration of this Option pursuant to the terms set forth herein;
and upon the expiration of such period, such portion of this Option then
remaining unexercised shall be cancelled.

6.                                       Death.  In
the event the Holder dies during his term as a Director or other position with
the Board of Directors of the Company or any of its subsidiaries or affiliates,
as the case may be, this Option, to the extent not previously expired or
exercised, shall, to the extent exercisable on the date of death, be
exercisable by the estate of the Holder or by any person who acquired this Option
by bequest or inheritance, at any time within one year after the death of the
Holder, provided, however, that
if the term of such Option would expire by its terms within six months after
the Optionee’s death, the term of such Option shall be extended until six
months after the Optionee’s death.

7.                                       Disability.  In
the event of the separation from service as a Director or other position with
the Board of Directors of the Company of the Holder due to total disability,
the Holder, or her guardian or

 2
 

legal representative,
shall have the unqualified right to exercise any portion of this Option which
has not been previously exercised or expired and which the Holder was eligible
to exercise as of the first date of total disability (as determined by the
Company), at any time within one year after such termination or separation, 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.  The term
“total disability” shall, for purposes of this Share Option Agreement, be
defined in the same manner as such term is defined in Section 22(e)(3) of the
Internal Revenue Code of 1986, as amended.

8.                                       Adjustments.  In
the event that the Company shall determine that any dividend or other
distribution (whether in the form of cash, shares of common stock of the
Company, other securities, or other property), recapitalization, stock split,
reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of shares of common stock of the Company
or other securities, the issuance of warrants or other rights to purchase
shares of common stock of the Company, or other securities, or other similar
corporate transaction or event affects the Shares, such that an adjustment is
determined by the Company to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
to the Holder, then the Company shall, in such manner as the Company may deem
equitable, adjust any or all of (i) the number and type of shares of common
stock of the Company subject to this Option, and (ii) the grant or exercise
price with respect to this Option, or, if deemed appropriate, make provision
for a cash payment to the Holder.

9.                                       Delivery of Share Certificates.  Within a reasonable time after the
exercise of this Option, the Company shall cause to be delivered to the person
entitled thereto a certificate for the Shares purchased pursuant to the
exercise of this Option.  If this Option
shall have been exercised with respect to less than all of the Shares subject
to this Option, the Company shall also cause to be delivered to the person entitled
thereto a new Stock Option Agreement in replacement of this Stock Option
Agreement if surrendered at the time of the exercise of this Option, indicating
the number of Shares with respect to which this Option remains available for
exercise, or the Company shall make a notation in its books and records to
reflect the partial exercise of this Option.

10.                                 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 in order to have such funds available to the Company or
such subsidiary or affiliate out of any funds or property due or to become due
to the Holder.

11.                                 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.

12.                                 Rights of Holder. 
Nothing contained herein shall be construed to confer upon
the Holder any right to continue service with 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,

 3
 

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.

13.                                 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.

14.                                 Registration; Legend. 
The Company may postpone the issuance and delivery of Shares
upon any exercise of this Option until (a) the admission of such Shares to
listing on any stock exchange or exchanges on which Shares of the Company of
the same class are then listed and (b) the completion of such registration or
other qualification of such Shares under any state or federal law, rule or
regulation as the Company shall determine to be necessary or advisable.  The Holder shall make such representations
and furnish such information as may, in the opinion of counsel for the Company,
be appropriate to permit the Company, in light of the then existence or
non-existence with respect to such Shares of an effective Registration
Statement under the Securities Act of 1933, as amended, to issue the Shares in
compliance with the provisions of that or any comparable act.

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

THE SECURITIES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE ACT, THE AVAILABILITY OF WHICH IS ESTABLISHED BY AN
OPINION FROM COUNSEL TO THE COMPANY.

15.                                 Amendment.  The
Company may, with the consent of the Holder, at any time or from time to time
amend the terms and conditions of this Option, and may at any time or from time
to time amend the terms of the Plan.

16.                                 Notices.  Any
notice which either party hereto may be required or permitted to give to the
other shall be in writing, and may be delivered personally or by mail, postage
prepaid, or overnight courier, addressed as follows: if to the Company, at its
office at 3100 Ocean Park Boulevard, Santa Monica, California 90405, Attn:
General Counsel, or at such other address as the Company by notice to the
Holder may designate in writing from time to time; and if to the Holder, at the
address shown below her signature on this Stock Option Agreement, or at such
other address as the Holder by notice to the Company may designate in writing
from time to time.  Notices shall be
effective upon receipt.

17.                                 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.

[Remainder of page intentionally
blank.]

 4
 

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

	
  

  	
  ACTIVISION, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
    Name:

  
	
   

  	
   

  	
    Title:

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  
					

 

 

	
  ACCEPTED:

  
	
   

  
	
   

  	
   

  
	
  Option Holder

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Address

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  City

  	
  State

  	
  ZipCode

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Social Security Number

  	
   

  
				

 

 5Exhibit 10.18

ACTIVISION, INC.

[2001/2002/AMENDED AND RESTATED 2003] INCENTIVE PLAN

NOTICE
OF SHARE OPTION AWARD

You have been awarded an Option to purchase Shares of
Common Stock of Activision, Inc. (the “Company”),
as follows:

	
  ·      Your name:

  	
  [

  	
   

  	
  ]

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  ·      Total number of Shares purchasable upon
  exercise of the Option awarded:

  	
  [

  	
   

  	
  ]

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  ·      Exercise Price:   US$

  	
  [

  	
   

  	
  ]
  per Share

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  ·      Date of Grant:

  	
  [

  	
   

  	
  ]

  
	
   

  	
   

  	
   

  	
   

  	 

	
  ·      Expiration Date:

  	
  [

  	
   

  	
  ]

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  ·      Grant ID:

  	
  [

  	
   

  	
  ]

  	 

																			

 

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

·                  this Notice of
Share Option Award;

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

·                  the Company’s [2001/2002/Amended and Restated 2003]
Incentive Plan, the receipt of a copy of which you hereby acknowledge.

·                  [Your Award of Restricted Shares has been made in connection with your
employment agreement with the Company or one of its subsidiaries or affiliates
as a material inducement to your entering into or renewing employment with such
entity pursuant to such agreement, and is also governed by any applicable terms
and conditions set forth in such agreement.]

·                  Schedule for Vesting:  Except as otherwise provided under the Award
Terms, the Option awarded to you will vest and become exercisable as follows,
provided you remain continuously employed by the Company or one of its
subsidiaries or affiliates through each such date:

Schedule for Vesting

 

	
  Date of Vesting

  	
   

  	
  No. of Shares Vesting 

  at Vesting Date

  	
   

  	
  Cumulative No. of Shares 

  Vested at Vesting Date

  	
   

  
	
  First
  anniversary of Date of Grant

  	
   

  	
  [

  	
   

  	
  ]

  	
   

  	
  [

  	
   

  	
  ]

  	
   

  
	
  Second
  anniversary of Date of Grant

  	
   

  	
  [

  	
   

  	
  ]

  	
   

  	
  [

  	
   

  	
  ]

  	
   

  

 

   
 

 

	
  Third anniversary of Date of
  Grant

  	
   

  	
  [

  	
   

  	
  ]

  	
   

  	
  [

  	
   

  	
  ]

  	
   

  
	
  [Fourth anniversary of Date of
  Grant]

  	
   

  	
  [

  	
   

  	
  ]

  	
   

  	
  [

  	
   

  	
  ]

  	
   

  
	
  [Fifth anniversary of Date of
  Grant]

  	
   

  	
  [

  	
   

  	
  ]

  	
   

  	
  [

  	
   

  	
  ]

  	
   

  

 

·                  The Option is [not] intended to be an “incentive stock
option,” as such term is defined in Section 422 of the Code.  [To the extent
the Option does not qualify as an incentive stock option, the Option or the
portion thereof which does not so qualify shall constitute a separate
nonqualified stock option.]

·                  To accept your Award of the Option,
you must sign and return to the Company this Notice of Share Option Award,
which bears an original signature on behalf of the Company.  You are urged to do so promptly.

·                  Please return the signed Notice of Share Option Award to the
Company at:

Activision, Inc.

3100 Ocean Park Boulevard

Santa Monica, CA  90405

Attn:  Stock Plan Administration

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

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

	
   

  	
  ACTIVISION, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Date:

  	
   

  
				

 

 

ACCEPTED AND AGREED:

 

	
   

  	
   

  	
   

  
	
  [Name of Holder]

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
				

 

 2

EXHIBIT
A

ACTIVISION,
INC.

AMENDED
AND RESTATED 2003 INCENTIVE PLAN

SHARE
OPTION AWARD TERMS

(NON-OFFICER FORM)

1.                                       Definitions.

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

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

“Award Terms” means these Share
Option Award Terms.

“Cause” (i) shall
have the meaning given to such term in any employment agreement or offer letter
between the Holder and the Company or any of its subsidiaries or affiliates in effect
from time to time or (ii) if the Holder is not party to any agreement or offer
letter with the Company or any of its subsidiaries or affiliates or any such
agreement or offer letter does not contain a definition of “cause,” shall mean
the Holder’s (A) willful, reckless or gross misconduct or fraud,
(B) grossly negligent performance of job responsibilities,
(C) indictment on charges related to, conviction of, or pleading no
contest to, a felony or crime involving dishonesty or moral turpitude, or (D) breach
of any proprietary information, confidentiality, “work for hire,”
non-solicitation or similar agreement between the Holder and the Company or any
of its subsidiaries or affiliates.

“Common Stock” means the
Company’s common stock, $0.000001 par value per share.

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

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

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

“Disability” (A)
shall have the meaning given to such term in, or otherwise be determined in
accordance with, any employment agreement or offer letter between the Holder
and the Company or any of its subsidiaries or affiliates in effect from time to
time or (B) if the Holder is not party to any agreement or offer letter with
the Company or any of its subsidiaries or affiliates or any such agreement or
offer letter does not contain a definition “disability” or otherwise provide a
method for determining whether the Holder is disabled, shall mean “permanent
and total disability” as defined in section 22(e)(3) of the Code, as
interpreted by the Company (with such interpretation to be final, conclusive
and binding for purposes of these Award Terms).

“Employment Violation”
means any material breach by the Holder of his or her employment agreement with
the Company or one of its subsidiaries or affiliates for so long as the terms
of such employment agreement shall apply to the Holder (with any breach of the
post-termination obligations contained therein deemed to be material for
purposes of these Award Terms).

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

“Exercise Price” means the
exercise price set forth on the Grant Notice.

“Expiration Date” means the
expiration date set forth on the Grant Notice.

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

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

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

“Option” means the
option to purchase shares of Common Stock awarded to the Holder on the terms
and conditions described in the Grant Notice and these Award Terms.

“Plan” means the Activision,
Inc. [2001/2002/Amended and Restated 2003]
Incentive Plan, as amended from time to time.

“Recapture
Amount” means, with
respect to any Employment Violation by the Holder, the gross gain realized or
unrealized by the Holder upon all exercises of the Option during the Look-back
Period with respect to such Employment Violation, which gain shall be
calculated as the sum of:

(i)                                     if
the Holder has exercised any portion of the Option during such Look-back Period
and sold any of the Shares acquired on exercise thereafter, an amount equal to
the product of (A) the sales price per Share sold minus the Exercise Price
times (B) the number of Shares as to which the Option was exercised and which
were sold at such sales price; plus

(ii)                                  if
the Holder has exercised any portion of the Option during such Look-back Period
and not sold any of the Shares acquired on exercise thereafter, an amount equal
to the product of (A) the greatest of the following: (1) the Fair Market
Value per share of Common Stock on the date of exercise, (2) the arithmetic
average of the per share closing sales prices of Common Stock as reported on
NASDAQ for the 30 trading day period ending on the trading day immediately
preceding the date of the Company’s written notice of its exercise of its
rights under Section 10 hereof, or (3) the arithmetic average of the per
share closing sales prices of Common Stock as reported on NASDAQ for the 30
trading day period ending on the trading day immediately preceding the date of

 2
 

computation, minus the
Exercise Price, times (B) the number of Shares as to which the Option was
exercised and which were not sold.

“Shares” means the
shares of Common Stock or other securities purchasable upon exercise of the
Option.

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

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

2.                                       Expiration.  Except as otherwise set forth in these Award
Terms, the Option shall expire and no longer be exercisable on the Expiration
Date.

3.                                       Vesting
and Exercise.

(a)                                  Vesting
Schedule.  Except as otherwise set
forth in these Award Terms, the Option shall vest, and thereupon become exercisable,
in accordance with the “Schedule for Vesting” set forth on the Grant Notice.

(b)                                 Exercisable
Only by Holder; Transferability. 
Except as otherwise permitted under the Plan, the Option may be
exercised during the Holder’s lifetime only by the Holder.  With the Committee’s consent, all or part of
the Option may be transferred in accordance with Section [10.4/7.3] of the Plan.  EXCEPT AS OTHERWISE PERMITTED UNDER THE PLAN
AND THESE AWARD TERMS, THE OPTION SHALL NOT BE TRANSFERABLE BY THE HOLDER OTHER
THAN BY WILL OR THE LAWS OF DESCENT AND DISTRIBUTION.

(c)                                  Procedure
for Exercise.  The Option may be
exercised by the Holder as to all or any of the Shares as to which it has
vested (i) by following the procedures for exercise established by the
Equity Account Administrator and posted on the Equity Account Administrator’s
website from time to time or (ii) with the Company’s consent, by giving
the Company written notice of exercise, in such form as may be prescribed by
the Company from time to time, specifying the number of Shares to be purchased.

(d)                                 Payment
of Exercise Price.  To be valid, any
exercise of the Option must be accompanied by full payment of the aggregate
Exercise Price of the Shares being purchased. 
Such payment shall be made (i) in cash or by certified check or bank
check or wire transfer of immediately available funds, (ii) if securities
of the Company of the same class as the Shares are then traded or quoted on a
national securities exchange, the Nasdaq Stock Market, Inc. or a national quotation
system sponsored by the National Association of Securities Dealers, Inc. and
with the Company’s consent, through the delivery of irrevocable written
instructions, in form acceptable to the Company, to the Equity Account
Administrator (or, with the Company’s consent, such other brokerage firm as may
be requested by the person exercising the Option) to sell some or all of the
Shares being purchased upon such exercise and to thereafter deliver promptly to
the Company from the proceeds of such sale an amount in cash equal to the
aggregate Exercise Price of the Shares being purchased, or (iii) with the
Company’s consent, any combination of (i) or (ii) above.

 3
 

(e)                                  No
Fractional Shares.  In no event may
the Option be exercised for a fraction of a Share.

(f)                                    No
Adjustment for Dividends or Other Rights. 
No adjustment shall be made for cash dividends or other rights for which
the record date is prior to the date as of which the issuance or transfer of
Shares to the person entitled thereto has been evidenced on the books and
records of the Company pursuant to clause (ii) of Section 3(g) hereof
following exercise of the Option.

(g)                                 Issuance
and Delivery of Shares.  As soon as
practicable (and, in any event, within 30 days) after the valid exercise of the
Option, the Company shall (i) effect the issuance or transfer of the
Shares purchased upon such exercise, (ii) cause the issuance or transfer
of such Shares to be evidenced on the books and records of the Company, and
(iii) cause such Shares to be delivered to a Company-Sponsored Equity
Account in the name of the person entitled to such Shares (or, with the
Company’s consent, such other brokerage account as may be requested by such
person); provided, however, that, in the event such Shares are
subject to a legend as set forth in Section 11 hereof, the Company shall
instead cause a certificate evidencing such Shares and bearing such legend to
be delivered to the person entitled thereto.

(h)                                 Partial
Exercise.  If the Option shall have
been exercised with respect to less than all of the Shares purchasable upon
exercise of the Option, the Company shall make a notation in its books and
records to reflect the partial exercise of the Option and the number of Shares
that thereafter remain available for purchase upon exercise of the Option.

4.                                       Termination
of Employment.

(a)                                  Cause.  In the event that the Holder’s employment is
terminated by the Company or any of its subsidiaries or affiliates for Cause
prior to the vesting in full of the Option, as of the date of such termination
of employment the Option shall (i) cease to vest, (ii) no longer be
exercisable, whether or not vested, and (iii) be immediately cancelled.

(b)                                 Death
or Disability.  In the event that the
Holder dies while employed by the Company or any of its subsidiaries or
affiliates or the Holder’s employment with the Company or any of its
subsidiaries or affiliates is terminated due to the Holder’s Disability, in
each case prior to the vesting in full of the Option, the Option shall
(i) cease to vest as of the date of the Holder’s death or the first date
of such Disability (as determined by the Committee), as the case may be, and
(ii) to the extent vested as of the date of the Holder’s death or such
first date of such Disability, as the case may be, be exercisable in accordance
with these Award Terms until the earlier of (A) the first anniversary of
the date of the Holder’s death or such termination of employment, as the case
may be, and (B) the Expiration Date or, if the Expiration Date is a date
within six months after the date of the Holder’s death or such termination of
employment, the date that is six months after the Holder’s death or such
termination of employment, as the case may be (provided, however,
that, if the Option is intended to qualify as an incentive stock option (as
such term is defined in Section 422 of the Code), in no instance may the
term of the Option exceed any maximum term established pursuant to the Plan
with respect thereto), after which the Option shall no longer be exercisable
and shall be cancelled.

(c)                                  Other.  Unless the Committee decides otherwise, in
the event that the Holder’s employment is terminated for any reason not
addressed by Section 4(a) or 4(b) hereof

 4
 

prior to the vesting in
full of the Option, the Option shall (i) cease to vest as of the date of such
termination of employment and (ii) to the extent vested as of the date of such
termination of employment, be exercisable in accordance with these Award Terms
until the earlier of (A) the 30th day after the date of such termination of employment
and (B) the Expiration Date, after which the Option shall no longer be
exercisable and shall be cancelled.

5.                                       Tax
Withholding.  The Company shall have
the right to require the Holder to satisfy any Withholding Taxes resulting from
the exercise (in whole or in part) of the Option, the issuance or transfer of
any Shares upon exercise of the Option or otherwise in connection with the
Award at the time such Withholding Taxes become due.  The Holder shall be entitled to satisfy any
Withholding Taxes contemplated by this Section 5 (a) by delivery to the
Company of  a certified check or bank
check or wire transfer of immediately available funds; (b) if securities of the
Company of the same class as the Shares are then traded or quoted on a national
securities exchange, the Nasdaq Stock Market, Inc. or a national quotation
system sponsored by the National Association of Securities Dealers, Inc. and
with the Company’s consent, through the delivery of irrevocable written
instructions, in form acceptable to the Company, to the Equity Account
Administrator (or, with the Company’s consent, such other brokerage firm as may
be requested by the person exercising the Option) to sell some or all of the
Shares being purchased upon such exercise and to thereafter deliver promptly to
the Company from the proceeds of such sale an amount in cash equal to the
aggregate amount of such Withholding Taxes; or (c) with the Company’s
consent, by any combination of (a) and (b) above.  Notwithstanding anything to the contrary
contained herein, (i) the Company or any of its subsidiaries or affiliates
shall have the right to withhold from the Holder’s compensation any Withholding
Taxes contemplated by this Section 5 and (ii) the Company shall have no
obligation to deliver any Shares upon exercise of the Option unless and until
all Withholding Taxes contemplated by this Section 5 have been satisfied.

6.                                       Reservation
of Shares.  The Company shall at all
times reserve for issuance or delivery upon exercise of the Option such number
of shares of Common Stock or other securities as shall be required for issuance
or delivery upon exercise thereof.

 5
 

7.                                       Committee
Discretion.  Except as may otherwise
be provided in the Plan, the Committee shall have sole discretion to (a)
interpret any provision of the Plan, the Grant Notice and these Award Terms,
(b) make any determinations necessary or advisable for the administration of
the Plan and the Award, and (c) waive any conditions or rights of the Company
under the Award, the Grant Notice or these Award Terms, or amend, alter,
accelerate, suspend, discontinue or terminate the Award, the Grant Notice or
these Award Terms; provided, however, that, except as provided in
Section 8 or 9 hereof, without the consent of the Holder, no such amendment,
alteration, suspension, discontinuation or termination of the Award, the Grant
Notice or these Award Terms may materially and adversely affect the rights or
obligations of the Holder in respect of the Award, taken as a whole.  Without intending to limit the generality or
effect of the foregoing, any decision or determination to be made by the
Committee pursuant to these Award Terms, including whether to grant or withhold
any consent, shall be made by the Committee in its sole and absolute
discretion, subject only to the terms of the Plan.  By accepting and agreeing to the Award, the
Holder consents to any such amendment, alteration, suspension, discontinuation
or termination of the Award, the Grant Notice or these Award Terms that
(i) is effected in accordance with Section 8 or 9 hereof or
(ii) does not materially and adversely affect the rights or obligations of
the Holder in respect of the Award, taken as a whole.

8.                                       Adjustments.  Notwithstanding anything to the contrary
contained herein, to prevent the dilution or enlargement of benefits or
potential benefits intended to be made available under the Plan, in the event
of any corporate transaction or event such as a stock dividend, extraordinary
dividend or other similar distribution (whether in the form of cash, shares of
Common Stock, 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 or
other securities, the issuance of warrants or other rights to purchase shares
of Common Stock or other securities, or other similar corporate transaction or
event affecting shares of Common Stock, then the Award shall be adjusted in
accordance with Section [10.9/7.6]
of the Plan.  In addition, the Committee
is authorized to make such adjustments as it deems appropriate in the terms and
conditions of, and the criteria included in, the Award in recognition of
unusual or nonrecurring events (including, without limitation, events described
in the preceding sentence) affecting the Company or any of its subsidiaries or
affiliates or the financial statements of the Company or any of its
subsidiaries or affiliates, or in response to changes in applicable laws,
regulations or accounting principles.  It
is intended that the Award will not be subject to any adverse consequences
under Section 409A of the Code; however, the Committee is authorized to make
such adjustments as it deems appropriate to the terms and conditions of the
Award in order to prevent the Award from becoming subject to any adverse
consequences under Section 409A of the Code.

9.                                       Registration
and Listing.  Notwithstanding
anything to the contrary contained herein, the Option may not be exercised, and
the Option and Shares purchasable upon exercise of the Option may not be
purchased, sold, assigned, transferred, pledged, hypothecated or otherwise
disposed of or encumbered in any way, unless such transaction is in compliance
with (a) the Securities Act of 1933, as amended, or any comparable federal
securities law, and all applicable state securities laws, (b) the requirements
of any securities exchange, securities association, market system or quotation
system on which securities of the Company of the same class as the Shares are then
traded or quoted, (c) any restrictions on transfer imposed by the Company’s
certificate of incorporation or bylaws, and (d) any policy or procedure the
Company has adopted with respect to the trading of its securities, in each case
as in effect on the date of the intended transaction.  The Company is under no obligation to
register, qualify or list, or maintain the

 6
 

registration, qualification or listing of, the Option
or Shares with the SEC, any state securities commission or any securities
exchange, securities association, market system or quotation system to effect
such compliance.  The Holder shall make
such representations and furnish such information as may be appropriate to
permit the Company, in light of the then existence or non-existence of an effective
registration statement under the Securities Act of 1933, as amended, relating
to the Option or Shares, to issue or transfer the Option or Shares in
compliance with the provisions of that or any comparable federal securities law
and all applicable state securities laws. 
The Company shall have the right, but not the obligation, to register
the issuance or resale of the Option or Shares under the Securities Act of
1933, as amended, or any comparable federal securities law or applicable state
securities law.

10.                                 Employment
Violation.  The terms of this Section
5 shall apply to the Option if the Holder is or becomes subject to an
employment agreement with the Company or any of its subsidiaries or
affiliates.  In the event of an
Employment Violation, the Company shall have the right to require (i) the
termination and cancellation of the Option, whether vested or unvested, and
(ii) payment by the Holder to the Company of the Recapture Amount with
respect to such Employment Violation; provided, however, that, in
lieu of payment by the Holder to the Company of the Recapture Amount, the
Holder, in his or her discretion, may tender to the Company the Shares acquired
upon exercise of the Option during the Look-back Period with respect to such
Employment Violation and the Holder shall not be entitled to receive any
consideration from the Company in exchange therefor.  Any such termination of the Option and
payment of the Recapture Amount, as the case may be, shall be in addition to,
and not in lieu of, any other right or remedy available to the Company arising
out of or in connection with such Employment Violation, including, without
limitation, the right to terminate the Holder’s employment if not already
terminated and to seek injunctive relief and additional monetary damages.

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

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

 7
 

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

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

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

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

16.                                 Successors
and Assigns.  The provisions of the
Grant Notice and these Award Terms shall be binding upon and inure to the
benefit of the Company, its successors and assigns, and the Holder and, to the
extent applicable, the Holder’s permitted assigns under Section 3(b)
hereof and the Holder’s estate or beneficiary(ies) as determined by will or the
laws of descent and distribution.

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

18.                                 Conflict
with Employment Agreement or Plan. 
In the event of any conflict between the terms of any employment
agreement or offer letter between the Holder and the Company or any of its
subsidiaries or affiliates in effect from time to time and the terms of the
Grant Notice or these Award Terms, the terms of the Grant Notice or these Award
Terms, as the case may be, shall control. 
In the event of any conflict between the terms of any employment
agreement or offer letter between the Holder and the Company or any of its
subsidiaries or affiliates in effect from time to time, the Grant Notice or
these Award Terms and the terms of the Plan, the terms of the Plan shall
control.

 8

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