Document:

Exhibit 10.2

 

AMENDED
AND RESTATED ACTIVISION BLIZZARD, INC.

 

2008
INCENTIVE PLAN

 

NOTICE OF STOCK OPTION AWARD

 

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

 

·                  Your name:  Brian
Hodous

 

·                  Total number of Shares purchasable upon
exercise of the Stock Option awarded:  200,000

 

·                  Exercise Price: 
US$ 12.46 per Share

 

·                  Date of Grant:  August 7,
2009

 

·                  Expiration Date:  August 7,
2019

 

·                  Grant ID: 
08001731

 

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

 

·                  this Notice of Stock Option Award;

 

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

 

·                  the Company’s Amended and Restated 2008 Incentive Plan, the receipt of a copy
of which you hereby acknowledge.

 

·                  Your Stock Option Award 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 Stock 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

  	
   

  
	
  July 31, 2010

  	
   

  	
  75,000

  	
   

  	
  75,000

  	
   

  
	
  July 31, 2011

  	
   

  	
  75,000

  	
   

  	
  150,000

  	
   

  
	
  July 31, 2012

  	
   

  	
  50,000

  	
   

  	
  200,000

  	
   

  

 

Notwithstanding the
foregoing, the portion of the Option scheduled to vest on July 31, 2012
shall vest on July 31, 2011 following a determination by the Committee that
the 2010 annual 

 

 

operating plan “Activision
Publishing + Blizzard Retail” operating income objectives established by the
Committee in connection with the establishment of the annual bonus goals for
Activision Publishing, Inc.’s President and Chief Executive Officer for
that year have been met or exceeded, provided you remain employed by the
Company or one of its subsidiaries or affiliates through such vesting date.

 

·                  The Stock Option is not intended to be an “incentive
stock option,” as such term is defined in Section 422 of the Code.

 

·                  Please
sign and return to the Company this Notice of Stock 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 Stock Option Award to the Company at:

 

	
   

  	
  Activision Blizzard, Inc.

  3100 Ocean Park Boulevard

  Santa Monica, CA 90405

  Attn:  Stock Plan Administration

  

 

You
should retain the enclosed duplicate copy of this Notice of Stock 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
  BLIZZARD, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Ann E.Weiser

  
	
   

  	
   

  	
  Ann E. Weiser

  
	
   

  	
   

  	
  Chief Human Resources Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date: 

  	
  October 21, 2009

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ACCEPTED
  AND AGREED:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Brian Hodous

  	
   

  	
   

  
	
  Brian
  Hodous

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  October 19, 2009

  	
   

  	
   

  
					

 

2

 

EXHIBIT
A

 

AMENDED AND RESTATED ACTIVISION
BLIZZARD, INC.

 

2008 INCENTIVE PLAN

 

STOCK OPTION AWARD TERMS

 

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.

 

“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 that the
Holder (A) engaged in misconduct or gross negligence in the performance of
his or her duties or willfully and continuously failed or refused to perform
any duties reasonably requested in the course of his or her employment; (B) engaged
in fraud, dishonesty, or any other improper conduct that causes, or in the sole
and absolute discretion of the Company has the potential to cause, harm to the
Company Group, including the business reputation or financial condition of any
member of the Company Group; (C) violated any lawful directives or
policies of the Company Group or any applicable laws, rules or
regulations; (D) materially breached his or her employment agreement,
proprietary information agreement or any other agreement with the Company
Group; (E) committed, was indicted on charges related to, convicted of, or
pled guilty or no contest to, a felony or crime involving dishonesty, moral
turpitude or which could reflect negatively upon the Company Group of otherwise
impede its operations; or (F) breached his or her fiduciary duties to the
Company Group.

 

“Common Shares” means the shares of common stock, par value $0.000001
per share, of the Company or any security into which such Common Shares may be
changed by reason of any transaction or event of the type referred to in Section 8
hereof.

 

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

 

“Company Group” means the Company or any of its subsidiaries or other
affiliates.

 

“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.

 

 

“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 Stock 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 Stock Option to purchase
Common Shares awarded to the Holder on the terms and conditions described in
the Grant Notice and these Award Terms.

 

“Plan” means the Amended and Restated Activision Blizzard, Inc.
2008 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 Stock
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 Stock 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 Stock Option was exercised and which were sold at
such sales price; plus

 

(ii)                                  if the Holder has exercised any portion
of the Stock 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 Market Value per Share of Common Shares
on the date of exercise, (2) the arithmetic average of the per share
closing sales prices of Common Shares 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 11
hereof, or (3) the arithmetic average of the per share closing sales
prices of Common Shares as reported on NASDAQ for the 30 trading day period
ending on the trading day immediately preceding the date of 

 

A-2

 

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

 

“Section 409A” means Section 409A of the Code and
the guidance and regulations promulgated thereunder.

 

“Shares” means the Common Shares
purchasable upon exercise of the Stock Option.

 

“Term Sheet” means the Corporate Governance Term Sheet approved
by the Delaware Court of Chancery in connection with the settlement of In re Activision, Inc. Shareholder Derivative Litigation,
C.D. Cal. Case No. CV06-4771 MRP (JTLx); In re
Activision Shareholder Derivative Litigation, L.A.S.C. Case No. SC090343.

 

“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.  The Stock
Option shall expire on the Expiration Date and, after such expiration, shall no
longer be exercisable.

 

3.                                      Vesting and Exercise.

 

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

 

(b)                                 Exercisable Only by the Holder. 
Except as otherwise permitted under the Plan or Section 10 hereof,
the Stock Option may be exercised during the Holder’s lifetime only by the
Holder or, in the event of the Holder’s legal incapacity to do so, by the
Holder’s guardian or legal representative acting on behalf of the Holder in a
fiduciary capacity under state law and/or court supervision.

 

(c)                                  Procedure for Exercise. 
The Stock Option may be exercised by the Holder as to all or any of the
Shares as to which the Stock Option 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 Stock Option must be accompanied by
full payment of the aggregate Exercise Price of the Shares being
purchased.  The Company shall determine the
method or methods the Holder may use to make such payment, which may include
any of the following:  (i) by bank
check or certified 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 

 

A-3

 

Dealers, Inc., through the delivery of irrevocable
written instructions, in a 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 Stock 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, (iii) by tendering previously owned shares
(valued at their Market Value per Share as of the date of tender), (iv) through
the withholding of Shares otherwise deliverable upon exercise, or (v) any
combination of (i), (ii), (iii) or (iv) above or any other manner
permitted pursuant to the Plan.

 

(e)                                  No Fractional Shares. 
In no event may the Stock 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 Stock Option.

 

(g)                                  Issuance and Delivery of Shares. 
As soon as practicable (and, in any event, within 30 days) after the
valid exercise of the Stock 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 14 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 Stock Option shall have been exercised with respect to less than
all of the Shares purchasable upon exercise of the Stock Option, the Company
shall make a notation in its books and records to reflect the partial exercise
of the Stock Option and the number of Shares that thereafter remain available
for purchase upon exercise of the Stock 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, as of the date of such termination of
employment the Stock Option shall (i) cease to vest, if not then fully
vested, (ii) no longer be exercisable, whether or not vested, and (iii) be
immediately cancelled.

 

(b)                                 Death. In the event that the Holder dies while employed by
the Company or any of its subsidiaries or affiliates, the Stock Option shall (i) continue
to vest until July 31, 2011 as if the Holder’s employment had continued
until that date and (ii) be exercisable in accordance with these Award
Terms until August 30, 2011, after which the Stock Option shall no longer
be exercisable and shall be immediately cancelled.  To the extent not vested as of July 31,
2011, the Stock Option shall be cancelled as of that date and shall no longer
be exercisable.

 

A-4

 

(c)                                  Without Cause or Following Relocation of
Employment Without Consent. In the event that the Holder’s employment is
terminated by the Company or any of its subsidiaries or affiliates without
Cause or by the Holder pursuant to Section 10(c) of the Employment
Agreement, the Stock Option shall (i) continue to vest until July 31,
2011 as if the Holder’s employment had continued until that date and (ii) be
exercisable in accordance with these Award Terms until August 30, 2011,
after which the Stock Option shall no longer be exercisable and shall be
immediately cancelled; provided, however, that if the waiver and
release executed by the Holder in accordance with the Employment Agreement does
not become effective and irrevocable in its entirety in accordance with the
Employment Agreement, the Stock Option shall (i) cease to vest as of the
termination date, if not then fully vested, (ii) no longer be exercisable,
whether or not vested, and (iii) be cancelled.  In any case, to the extent not vested as of July 31,
2011, the Stock Option shall be cancelled as of that date and shall no longer
be exercisable.

 

(d)                                 Other.  Unless the
Committee determines otherwise, in the event that the Holder’s employment is
terminated for any reason not addressed by Section 4(a), 4(b) or 4(c) hereof,
the Stock 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 Stock Option shall no longer be exercisable
and shall be immediately cancelled.  To
the extent not vested as of the date of such termination of service, the Stock
Option shall be immediately cancelled and shall no longer be exercisable.

 

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
Stock Option, the issuance or transfer of any Shares upon exercise of the Stock
Option or otherwise in connection with the Award at the time such Withholding
Taxes become due.  The Company shall
determine the method or methods the Holder may use to satisfy any Withholding
Taxes contemplated by this Section 5, which may include any of the
following:  (a) by delivery to the
Company of a bank check or certified 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., through the delivery of
irrevocable written instructions, in a 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 Stock 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; (c) by
tendering previously owned shares (valued at their Market Value per Share as of
the date of tender); (d) through the withholding of Shares otherwise
deliverable upon exercise; or (e) by any combination of (a), (b), (c) or
(d) 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
Stock Option unless and until all Withholding Taxes contemplated by this Section 5
have been satisfied.

 

A-5

 

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

 

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.  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.  Subject to the terms of the Plan, the
Committee may amend the terms of the Award prospectively or retroactively;
however, no such amendment may materially and adversely affect the rights of
the Holder taken as a whole without the Holder’s consent.  Without intending to limit the generality or
effect of the foregoing, the Committee may amend the terms of the Award (i) in
recognition of unusual or nonrecurring events (including, without limitation,
events described in Section 8 hereof) affecting the Company or any of its
subsidiaries or affiliates or the financial statements of the Company or any of
its subsidiaries or affiliates, (ii) in response to changes in applicable
laws, regulations or accounting principles and interpretations thereof, or (iii) to
prevent the Award from becoming subject to Section 409A.

 

8.                                      Adjustments. 
Notwithstanding anything to the contrary contained herein, pursuant to Section 12
of the Plan, the Committee will make or provide for such adjustments to the
Award as are equitably required to prevent dilution or enlargement of the
rights of the Holder that would otherwise result from (a) any stock
dividend, extraordinary dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Company, (b) any
change of control, merger, consolidation, spin-off, split-off, spin-out,
split-up, reorganization, partial or complete liquidation or other distribution
of assets, or issuance of rights or warrants to purchase securities, or (c) any
other corporate transaction or event having an effect similar to any of the
foregoing.  Moreover, in the event of any
such transaction or event, the Committee, in its discretion, may provide in
substitution for the Award such alternative consideration (including, without
limitation, cash or other equity awards), if any, as it may determine to be
equitable in the circumstances and may require in connection therewith the
surrender of the Award.

 

9.                                      Registration and Listing. 
Notwithstanding anything to the contrary contained herein, the Stock
Option may not be exercised, and the Stock Option and Shares purchasable upon
exercise of the Stock 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
registration, qualification or listing of, the Stock Option or Shares with the
SEC, any state securities commission or any securities exchange, securities
association, market system 

 

A-6

 

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 Stock
Option or Shares, to issue or transfer the Stock 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 Stock Option or Shares under the Securities Act of 1933, as
amended, or any comparable federal securities law or applicable state
securities law.

 

10.                               Transferability. 
Except as otherwise permitted under the Plan or this Section 10,
the Stock Option shall not be transferable by the Holder other than by will or
the laws of descent and distribution. 
Subject to the terms of the Plan, with the Company’s consent, the Holder
may transfer all or part of the Stock Option for estate planning purposes or
pursuant to a domestic relations order; provided, however, that
any transferee shall be bound by all of the terms and conditions of the Plan,
the Grant Notice and these Award Terms and shall execute an agreement in form
and substance satisfactory to the Company in connection with such transfer; and
provided  further that the Holder will remain bound by the terms
and conditions of the Plan, the Grant Notice and these Award Terms.

 

11.                               Employment Violation. 
The terms of this Section 11 shall apply to the Stock 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 Stock 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 Stock 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 Stock 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.

 

12.                               Compliance with Applicable Laws and
Regulations and Company Policies and Procedures.

 

(a)                                 The Holder is responsible for complying
with (a) any federal, state and local taxation laws applicable to the
Holder in connection with the Award, (b) any federal and state securities
laws applicable to the Holder in connection with the Award, (c) 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, (d) any restrictions on transfer imposed
by the Company’s certificate of incorporation or bylaws, and (e) any
policy or procedure the Company maintains or may adopt with respect to the
trading of its securities.

 

(b)                                 The Award is subject to the terms and
conditions of the Term Sheet, and any Company policies or procedures adopted in
connection with the Company’s implementation 

 

A-7

 

of the Term Sheet, including, without limitation, any
policy requiring or permitting the Company to recover any gains realized by the
Holder in connection with the Award.

 

13.                               Section 409A. 
As the Exercise Price is equal to the fair market value of a Share on
the Date of Grant, payments contemplated with respect to the Award are intended
to be exempt from Section 409A, and all provisions of the Plan, the Grant
Notice and these Award Terms shall be construed and interpreted in a manner
consistent with the requirements for avoiding taxes or penalties under Section 409A.  Notwithstanding the foregoing, (i) nothing
in the Plan, the Grant Notice and these Award Terms shall guarantee that the
Award is not subject to taxes or penalties under Section 409A and (ii) if
any provision of the Plan, the Grant Notice or these Award Terms would, in the
reasonable, good faith judgment of the Company, result or likely result in the
imposition on the Holder or any other person of taxes, interest or penalties
under Section 409A, the Committee may, in its sole discretion, modify the
terms of the Plan, the Grant Notice or these Award Terms, without the consent
of the Holder, in the manner that the Committee may reasonably and in good
faith determine to be necessary or advisable to avoid the imposition of such
taxes, interest or penalties; provided, however, that this Section 13
does not create an obligation on the part of the Committee or the Company to
make any such modification.

 

14.                               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.”

 

15.                               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.

 

16.                               No Rights as Stockholder. 
No holder of the Stock 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.

 

17.                               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.

 

18.                               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 Delaware, without giving
effect to principles of conflicts of laws thereof.

 

A-8

 

19.                               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.

 

20.                               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.

 

21.                               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.

 

22.                               Deemed Agreement. 
By accepting the Award, the Holder is deemed to be bound by the terms
and conditions set forth in the Plan, the Grant Notice and these Award Terms.

 

A-9Exhibit 10.3

 

AMENDED
AND RESTATED ACTIVISION BLIZZARD, INC.

 

2008 INCENTIVE PLAN

 

NOTICE OF RESTRICTED SHARE UNIT
AWARD

 

You
have been awarded Restricted Share Units of Activision Blizzard, Inc. (the
“Company”), as follows:

 

·                  Your name:  Brian
Hodous

 

·                  Total number of Restricted Share Units
awarded:  60,000

 

·                  Date of Grant:  August 7,
2009

 

·                  Grant ID: 
08001758

 

·                  Your Award of Restricted Share Units is governed by
the terms and conditions set forth in:

 

·                  this Notice of Restricted Share Unit
Award;

 

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

 

·                  the Company’s Amended and Restated 2008
Incentive Plan, the receipt of a copy of which you hereby acknowledge.

 

·                  Your Award of Restricted Share Units 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 Restricted Share Units awarded to you will
vest 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 Restricted

  Share Units Vesting at

  Vesting Date

  	
   

  	
  Cumulative No. of

  Restricted Share Units

  Vested at Vesting Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  July 31, 2011

  	
   

  	
  30,000

  	
   

  	
  30,000

  	
   

  
	
  July 31, 2012

  	
   

  	
  30,000

  	
   

  	
  60,000

  	
   

  

 

Notwithstanding the
foregoing, the Restricted Share Units scheduled to vest on July 31, 2012
shall vest on July 31, 2011 following a determination by the Committee that
the 2009 annual 

 

 

operating plan “Activision
Publishing + Blizzard Retail” operating income objectives established by the
Committee in connection with the establishment of the annual bonus goals for
Activision Publishing, Inc.’s President and Chief Executive Officer for
that year (the “Performance Conditions”) have been met or exceeded, provided
you remain employed by the Company or one of its subsidiaries or affiliates
through such vesting date.

 

·                  Please
sign and return to the Company this Notice of Restricted Share Unit Award,
which bears an original signature on behalf of the Company.  You are urged to do so promptly.

 

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

 

	
   

  	
  Activision Blizzard, Inc.

  3100 Ocean Park Boulevard

  Santa Monica, CA 90405

  Attn:  Stock Plan Administration

  

 

You
should retain the enclosed duplicate copy of this Notice of Restricted Share
Unit 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
  BLIZZARD, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Ann E.Weiser

  
	
   

  	
   

  	
  Ann E. Weiser

  
	
   

  	
   

  	
  Chief Human Resources Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date: 

  	
  October 21, 2009

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ACCEPTED
  AND AGREED:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Brian Hodous

  	
   

  	
   

  
	
  Brian
  Hodous

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date: 

  	
  October 19, 2009

  	
   

  	
   

  
					

 

2

 

EXHIBIT
A

 

AMENDED AND RESTATED ACTIVISION
BLIZZARD, INC.

 

2008 INCENTIVE PLAN

 

RESTRICTED SHARE UNIT AWARD TERMS

 

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.

 

“Cause” (i) shall have the meaning given to
such term in any employment agreement or offer letter between Grantee and the
Company or any of its subsidiaries or affiliates in effect from time to time or
(ii) if Grantee 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 that Grantee (A) engaged
in misconduct or gross negligence in the performance of his or her duties or
willfully and continuously failed or refused to perform any duties reasonably
requested in the course of his or her employment; (B) engaged in fraud,
dishonesty, or any other improper conduct that causes, or in the sole and
absolute discretion of the Company has the potential to cause, harm to the
Company Group, including the business reputation or financial condition of any
member of the Company Group; (C) violated any lawful directives or
policies of the Company Group or any applicable laws, rules or
regulations; (D) materially breached his or her employment agreement,
proprietary information agreement or any other agreement with the Company
Group; (E) committed, was indicted on charges related to, convicted of, or
pled guilty or no contest to, a felony or crime involving dishonesty, moral
turpitude or which could reflect negatively upon the Company Group of otherwise
impede its operations; or (F) breached his or her fiduciary duties to the
Company Group.

 

“Common Shares” means the shares of common stock, par value $0.000001
per share, of the Company or any security into which such Common Shares may be
changed by reason of any transaction or event of the type referred to in Section 9
hereof.

 

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

 

“Company Group” means the Company or any of its subsidiaries or other
affiliates.

 

“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.

 

“Employment Violation” means any material breach by Grantee 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
Grantee (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.

 

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

 

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

 

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

 

“Plan” means the Amended and Restated Activision Blizzard, Inc.
2008 Incentive Plan, as amended from time to time.

 

“Recapture
Amount” means, with respect to any Employment Violation by Grantee, the gross
gain realized or unrealized by Grantee upon all vesting of Restricted Share
Units or delivery or transfer of Vested Shares during the Look-back Period with
respect to such Employment Violation, which gain shall be calculated as the sum
of:

 

(i)                                     if Grantee has received any Vested Shares
during such Look-back Period and sold such Vested Shares, an amount equal to
the product of (A) the sales price per Vested Share times (B) the
number of such Vested Shares sold at such sales price; plus

 

(ii)                                  if Grantee has received any Vested Shares
during such Look-back Period and not sold such Vested Shares, an amount equal
to the product of (A) the greatest of the following: (1) the Market
Value per Share of Common Shares on the date such Vested Shares were issued or
transferred to Grantee, (2) the arithmetic average of the per share
closing sales prices of Common Shares 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 12
hereof, or (3) the arithmetic average of the per share closing sales
prices of Common Shares as reported on NASDAQ for the 30 trading day period
ending on the trading day immediately preceding the date of computation, times (B) the
number of such Vested Shares which were not sold.

 

“Restricted Share Units” means units subject to the Award, which
represent the conditional right to receive Common Shares in accordance with the
Grant Notice and these 

 

A-2

 

Award Terms, unless and until such units become vested
or are forfeited to the Company in accordance with the Grant Notice and these
Award Terms.

 

“Section 409A” means Section 409A of the Code and the guidance
and regulations promulgated thereunder.

 

“Term Sheet” means the Corporate Governance Term Sheet approved
by the Delaware Court of Chancery in connection with the settlement of In re Activision, Inc. Shareholder Derivative Litigation,
C.D. Cal. Case No. CV06-4771 MRP (JTLx); In re
Activision Shareholder Derivative Litigation, L.A.S.C. Case No. SC090343.

 

“Vested Shares” means Common Shares to which the holder of the
Restricted Share Units becomes entitled upon vesting thereof in accordance with
Section 2 or 3 hereof.

 

“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.                                      Vesting.  Except as
otherwise set forth in these Award Terms, the Restricted Share Units shall vest
in accordance with the “Schedule for Vesting” set forth on the Grant
Notice.  Each Restricted Share Unit, upon
vesting thereof, shall entitle the holder thereof to receive one Common Share
(subject to adjustment pursuant to Section 9 hereof).

 

3.                                      Termination of Employment.

 

(a)                                 Cause.  In the event
that Grantee’s employment is terminated by the Company or any of its
subsidiaries or affiliates for Cause, as of the date of such termination of
employment all Restricted Share Units shall cease to vest and any outstanding
Restricted Share Units and Vested Shares that have yet to settle pursuant to Section 7
hereof shall immediately be forfeited to the Company without payment of
consideration by the Company.

 

(b)                                 Without Cause or Following Relocation of
Employment Without Consent. In the event that Grantee’s employment is terminated
by the Company or any of its subsidiaries or affiliates without Cause or by
Grantee pursuant to Section 10(c) of the Employment Agreement, the
Restricted Share Units, if any, that would have ultimately vested in accordance
with the “Schedule for Vesting” set forth on the Grant Notice if Grantee’s
employment had continued until July 31, 2011 shall vest as of the 60th day following
the termination date (without giving effect to the possible acceleration of
vesting due to satisfaction of the Performance Conditions if the termination
date is on or prior to December 31, 2009, and only giving effect to the
accelerated vesting due to satisfaction of the Performance Conditions if the
termination date occurs on or after January 1, 2010 and the Committee makes
or has made the needed determination related to satisfaction of the Performance
Conditions on or prior to the 60th day following the termination date); provided,
however, that if the waiver and release to be executed by Grantee in
accordance with the Employment Agreement does not become effective and
irrevocable in its entirety in accordance with the Employment Agreement, with
the exception of 

 

A-3

 

any Vested Shares that have yet to settle pursuant to Section 7
hereof, the Restricted Share Units cease to vest as of the termination date and
shall be forfeited to the Company without payment of consideration by the
Company on the 60th day following the termination date.  To the extent not vested as of the termination
date or capable of vesting in accordance with this Section 3(b), with the
exception of any Vested Shares that have yet to settle pursuant to Section 7
hereof, the Restricted Share Units shall immediately be forfeited to the
Company without payment of consideration by the Company.

 

(c)                                  Death.  In the event
Grantee dies while employed by the Company or any of its subsidiaries or
affiliates, the Restricted Share Units, if any, that would have ultimately
vested in accordance with the “Schedule for Vesting” set forth on the Grant
Notice if Grantee’s employment had continued until July 31, 2011 shall
immediately vest (without giving effect to the possible acceleration of vesting
due to satisfaction of the Performance Conditions if Grantee dies on or prior
to December 31, 2009, and only giving effect to the accelerated vesting
due to satisfaction of the Performance Conditions if Grantee dies on or after January 1,
2010 and the Committee makes or has made the needed determination related to
satisfaction of the Performance Conditions on or prior to the date of Grantee’s
death).  To the extent not vested as of
the date of Grantee’s death (whether in accordance with this Section 3(c) or
otherwise), with the exception of any Vested Shares that have yet to settle pursuant
to Section 7 hereof, the Restricted Share Units shall immediately be
forfeited to the Company without payment of consideration by the Company.

 

(d)                                 Other.  Unless the
Committee determines otherwise in the event that Grantee’s employment is
terminated for any reason not addressed by Section 3(a), 3(b) or 3(c),
as of the date of such termination of employment all Restricted Share Units
shall cease to vest and, with the exception of any Vested Shares that have yet
to settle pursuant to Section 7 hereof, shall immediately be forfeited to
the Company without payment of consideration by the Company.

 

4.                                      Tax Withholding. 
The Company shall have the right to require Grantee to satisfy any
Withholding Taxes resulting from the vesting of any Restricted Share Units, the
issuance or transfer of any Vested Shares or otherwise in connection with the
Award at the time such Withholding Taxes become due.  The Company shall determine the method or
methods Grantee may use to satisfy any Withholding Taxes contemplated by this Section 4,
which may include any of the following:  (a) by
delivery to the Company of a bank check or certified check or wire transfer of
immediately available funds; (b) through the delivery of irrevocable
written instructions, in a form acceptable to the Company, that the Company
withhold Vested Shares otherwise then deliverable having a value equal to the
aggregate amount of the Withholding Taxes (valued in the same manner used in
computing the amount of such Withholding Taxes); or (c) 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 Grantee’s compensation any Withholding Taxes contemplated by this
Section 4 and (ii) the Company shall have no obligation to deliver
any Vested Shares unless and until all Withholding Taxes contemplated by this Section 4
have been satisfied.

 

A-4

 

5.                                      Reservation of Shares. 
The Company shall at all times reserve for issuance or delivery upon
vesting of the Restricted Share Units such number of Common Shares as shall be
required for issuance or delivery upon vesting thereof.

 

6.                                      Dividend Equivalents. 
In the event that any cash dividends are declared and paid on Common
Shares to which the holder of the Restricted Share Units would be entitled upon
vesting thereof, such holder shall be paid, on the payment date for such
dividend, the amount that such holder would have received if the Restricted
Share Units had vested, and the Common Shares to which such holder was
thereupon entitled had been issued and outstanding and held of record by such
holder, as of the record date for such dividend; provided, however,
that no such dividend equivalents shall be paid if the Restricted Share Units
have been forfeited to the Company in accordance with Section 3 hereof
prior to payment thereof. 
Notwithstanding the foregoing, in no event shall any such dividend
equivalents be paid later than the 45th day following the year in which the related
dividends are paid.  For purposes of the
time and form of payment requirements of Section 409A, such dividend
equivalents shall be treated separately from the Restricted Share Units.

 

7.                                      Receipt and Delivery. 
As soon as administratively practicable (and, in any event, within 30
days) after any Restricted Share Units vest, the Company shall (i) effect
the issuance or transfer of the resulting Vested Shares, (ii) cause the
issuance or transfer of such Vested Shares to be evidenced on the books and
records of the Company, and (iii) cause such Vested Shares to be delivered
to a Company-Sponsored Equity Account in the name of the person entitled to
such Vested 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 Vested Shares are subject to a legend as set forth in Section 15
hereof, the Company shall instead cause a certificate evidencing such Vested
Shares and bearing such legend to be delivered to the person entitled thereto.

 

A-5

 

8.                                      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.  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.  Subject to the terms of the Plan, the
Committee may amend the terms of the Award prospectively or retroactively;
however, no such amendment may materially and adversely affect the rights of
Grantee taken as a whole without Grantee’s consent.  Without intending to limit the generality or
effect of the foregoing, the Committee may amend the terms of the Award (i) in
recognition of unusual or nonrecurring events (including, without limitation,
events described in Section 9 hereof) affecting the Company or any of its
subsidiaries or affiliates or the financial statements of the Company or any of
its subsidiaries or affiliates, (ii) in response to changes in applicable
laws, regulations or accounting principles and interpretations thereof, or (iii) to
prevent the Award from becoming subject to any adverse consequences under Section 409A.

 

9.                                      Adjustments. 
Notwithstanding anything to the contrary contained herein, pursuant to Section 12
of the Plan, the Committee will make or provide for such adjustments to the
Award as are equitably required to prevent dilution or enlargement of the
rights of Grantee that would otherwise result from (a) any stock dividend,
extraordinary dividend, stock split, combination of shares, recapitalization or
other change in the capital structure of the Company, (b) any change of
control, merger, consolidation, spin-off, split-off, spin-out, split-up,
reorganization, partial or complete liquidation or other distribution of
assets, or issuance of rights or warrants to purchase securities, or (c) any
other corporate transaction or event having an effect similar to any of the
foregoing.  Moreover, in the event of any
such transaction or event, the Committee, in its discretion, may provide in
substitution for the Award such alternative consideration (including, without
limitation, cash or other equity awards), if any, as it may determine to be
equitable in the circumstances and may require in connection therewith the
surrender of the Award.

 

10.                               Registration and Listing. 
Notwithstanding anything to the contrary contained herein, the Company
shall not be obligated to issue or transfer any Restricted Share Units or
Vested Shares, and no Restricted Share Units or Vested Shares may be 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 securities subject
to the Award 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 registration, qualification or
listing of, Restricted Share Units or Vested Shares with the SEC, any state
securities commission or any securities exchange, securities association,
market system or quotation system to effect such compliance.  Grantee shall make such representations and
furnish such information as may be 

 

A-6

 

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 Restricted Share Units or
Vested Shares, to issue or transfer Restricted Share Units or Vested 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 transfer of Restricted Share Units or Vested Shares or resale of
Restricted Share Units or Vested Shares under the Securities Act of 1933, as
amended, or any comparable federal securities law or applicable state
securities law.

 

11.                               Transferability. 
Except as otherwise permitted under the Plan or this Section 11, the
Restricted Share Units shall not be transferable by Grantee other than by will
or the laws of descent and distribution. 
With the Company’s consent, Grantee may transfer Restricted Share Units
for estate planning purposes or pursuant to a domestic relations order; provided,
however, that any transferee shall be bound by all of the terms and
conditions of the Plan, the Grant Notice and these Award Terms and shall
execute an agreement in form and substance satisfactory to the Company in
connection with such transfer; and provided, further that Grantee
will remain bound by the terms and conditions of the Plan, the Grant Notice and
these Award Terms.

 

12.                               Employment Violation. 
The terms of this Section 12 shall apply to the Restricted Share
Units if Grantee 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 forfeiture by Grantee to
the Company of any outstanding Restricted Share Units or Vested Shares which
have yet to settle pursuant to Section 7 hereof and (ii) payment by
Grantee to the Company of the Recapture Amount with respect to such Employment
Violation; provided, however, that, in lieu of payment by Grantee
to the Company of the Recapture Amount, Grantee, in his or her discretion, may
tender to the Company the Vested Shares acquired during the Look-back Period
with respect to such Employment Violation and Grantee shall not be entitled to
receive any consideration from the Company in exchange therefor.  Any such forfeiture of Restricted Share Units
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 Grantee’s employment if not already
terminated and to seek injunctive relief and additional monetary damages.

 

A-7

 

13.                               Compliance with Applicable Laws and
Regulations and Company Policies and Procedures.

 

(a)                                 Grantee is responsible for complying with
(a) any federal, state and local taxation laws applicable to Grantee in
connection with the Award, (b) any federal and state securities laws
applicable to Grantee in connection with the Award, (c) 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, (d) any restrictions on transfer imposed by the
Company’s certificate of incorporation or bylaws, and (e) any policy or
procedure the Company maintains or may adopt with respect to the trading of its
securities.

 

(b)                                 The Award is subject to the terms and
conditions of the Term Sheet, and any Company policies or procedures adopted in
connection with the Company’s implementation of the Term Sheet, including,
without limitation, any policy requiring or permitting the Company to recover
any gains realized by Grantee in connection with the Award.

 

14.                               Section 409A.

 

(a)                                 Payments contemplated with respect to the
Award are intended to comply with Section 409A, and all provisions of the
Plan, the Grant Notice and these Award Terms shall be construed and interpreted
in a manner consistent with the requirements for avoiding taxes or penalties
under Section 409A.  Notwithstanding
the foregoing, (i) nothing in the Plan, the Grant Notice and these Award
Terms shall guarantee that the Award is not subject to taxes or penalties under
Section 409A and (ii) if any provision of the Plan, the Grant Notice
or these Award Terms would, in the reasonable, good faith judgment of the
Company, result or likely result in the imposition on Grantee or any other
person of taxes, interest or penalties under Section 409A, the Committee
may, in its sole discretion, modify the terms of the Plan, the Grant Notice or
these Award Terms, without the consent of Grantee, in the manner that the
Committee may reasonably and in good faith determine to be necessary or
advisable to avoid the imposition of such taxes, interest or penalties; provided,
however, that this Section 14 does not create an obligation on the
part of the Committee or the Company to make any such modification.

 

(b)                                 Neither Grantee nor any of Grantee’s
creditors or beneficiaries shall have the right to subject any deferred
compensation (within the meaning of Section 409A) payable with respect to
the Award to any anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment or garnishment. 
Except as permitted under Section 409A, any deferred compensation
(within the meaning of Section 409A) payable to Grantee or for Grantee’s
benefit with respect to the Award may not be reduced by, or offset against, any
amount owing by Grantee to the Company.

 

(c)                                  Notwithstanding anything to the contrary
contained herein, if (i) the Committee determines in good faith that the
Restricted Share Units do not qualify for the “short-term deferral exception”
under Section 409A, (ii) Grantee is a “specified employee” (as
defined in Section 409A) and (iii) a delay in the issuance or
transfer of Vested Shares to Grantee or his or her estate or beneficiaries
hereunder by reason of Grantee’s “separation from service” (as defined in Section 409A)
with the Company or any of its subsidiaries or affiliates is required to avoid
tax penalties under Section 409A but is not already provided for by this
Award, the Company shall cause the issuance or transfer of such Vested Shares
to Grantee or Grantee’s 

 

A-8

 

estate or beneficiary upon the earlier of (A) the
date that is the first business day following the date that is six months after
the date of Grantee’s separation from service or (B) Grantee’s death.

 

15.                               Legend.  The Company
may, if determined by it based on the advice of counsel to be appropriate,
cause any certificate evidencing Vested 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.”

 

16.                               No Right to Continued Employment. 
Nothing contained in the Grant Notice or these Award Terms shall be
construed to confer upon Grantee 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 Grantee at any time, with or without cause.

 

17.                               No Rights as Stockholder. 
No holder of Restricted Share Units 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.

 

18.                               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.

 

19.                               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 Delaware, without giving
effect to principles of conflicts of laws thereof.

 

20.                               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 Grantee and, to the extent applicable, Grantee’s permitted assigns
under Section 11 hereof and Grantee’s estate or beneficiary(ies) as
determined by will or the laws of descent and distribution.

 

21.                               Notices.  Any notice or
other document which Grantee 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 

 

A-9

 

such other address as the Company by notice to Grantee
may designate in writing from time to time; and (b) if to Grantee, at the
address shown in any employment agreement or offer letter between Grantee and
the Company or any of its subsidiaries or affiliates in effect from time to
time, or such other address as Grantee by notice to the Company may designate
in writing from time to time.  Notices
shall be effective upon receipt.

 

22.                               Conflict with Employment Agreement or
Plan.  In the event of any conflict between the
terms of any employment agreement or offer letter between Grantee 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 Grantee 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.

 

23.                               Deemed Agreement. 
By accepting the Award, Grantee is deemed to be bound by the terms and
conditions set forth in the Plan, the Grant Notice and these Award Terms.

 

A-10

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